Today is a victory in my book as all the indexes managed to hang on to positive gains and close green across the board. The clearly most positive development behind the higher prices today, after such a strong move yesterday, was that volume expanded on both the NYSE and on the Nasdaq. And for the first time in a month volume was above the 50 day volume average on the nasdaq. The NYSE still lagged the 50 day volume average. Had prices fallen today and volume picked up, that might have been bearish. But the fact that the indexes were able to hold on to today’s gains, especially after some mid-day selling, was definitely positive.
The best action today came in the form of my personal portfolio. I did better today than even yesterday and can say that out of all of my longs that I am currently holding all of them look very good and all of them are very green. To go along with all my nice holdings, their is the Russell 2000 index just sitting there confirming the strength in this market by its daily price action since August 1st. Overall, the indexes are looking very good, despite the low volume, and the individual charts are looking very good. And proper breakouts from sound patterns are working again! When great chart patterns are being rewarded to even a greater degree than normal, you must take advantage. So until this rally fails, continue to enjoy the charts.
The most interesting internal stat I saw today, after the close, was that the put/call ratio has come down to its lowest level since June to .64. This is a big drop from 1.08 just two days ago. This shows that complacency has already entered the market as many traders have turned bullish on the Fed’s 50 basis point cut. Not that they are wrong at all, the Fed move is bullish. But in the short term, the options players are making a lot of bullish bets and the market likes to normally do the opposite of what these guys do. Before the big rally on Fed day, the put/call was up to 1.15 intraday.
The other noticeable stat comes from the Investors Intelligence Survey. The bulls have made an incredible leap from 40% to 53% in a very short time, while bears have fallen from 38% to 27% during the same period. This shows that the newsletter writers have also embraced this move. The only bullish spin to put on this move is that while the bulls are near the level they were before the selloff, some of the voting members who were on the sidelines last time are now bears this time. So 7% of those on the sidelines have joined the bearish camp and stayed there.
Besides this, there is not much else new to add today that was not discussed yesterday. Hopefully, this trend continues to keep moving along to the upside. I am positioned in many very green charts and have a lot of money working that was just on the sidelines not too long ago. Also watching some of these stocks I am long that sold off hard in August hit new highs makes me feel great that I did not panic and instead played by the rules and held on to them. I am now reaping the gains in stocks like OMTR MA VDSI etc… .There were some stocks that looked like they were breaking down, but were still not below the 200 day moving averages, that I got rid of that I am now seeing hit new all-time highs without me. Those few stocks hurt. I can only imagine what it might have been like if I panicked in August and sold out all of my stocks. With a ton of these stocks and leading stocks hitting new all-time highs I am sure many are very upset right now.
I did this with HURC. I sold it all out in August as it appeared that it was ready to selloff. It never sold off hard and after a little more downside it found support right at the 200 day moving average before bouncing back. Look at it now. Nice. However, there are about 80 current holdings of mine that were held the entire way through the August selloff due to their strong charts. So I did follow my rules and my rules are helping me make some good money. The best gains are coming off my new longs. But by already holding many top stocks my account is climbing the ranks faster than most trading friends I know. However, I do know a couple of similar style active investor friends who are beating me. So it is all good baby!!! Aloha and I will see you in the chat room!!
