A lot of good earnings helped the market shake off some recent selling as stocks rose across the board with leaders leading the way.
At the close, the Nasdaq led the way with a 1.4% gain as the index reclaimed its 50 dma, the SP 600 followed with a 1% gain, the SP 500 was up .85%, and the DJIA put in a very solid .7% gain. Leading stocks were the clear winners, with the IBD 100 up 1.6%. Big cap tech was the best on the day, however, as the Nasdaq 100 rallied 1.65%.
Volume was lower on the NYSE but higher on the Nasdaq. The higher volume, on the Nasdaq, along with the perfect bounce off the 50 dma is just what you want to see when an index flirts with this line. The rally on higher volume shows that big money is looking to buy stocks STILL on the dips.
Breadth was positive on the NYSE and the Nasdaq as advancers beat decliners by a 2-to-1 margin.
The good news about today’s bounce was clearly in leading stocks. Seeing so many of my holdings make such strong gains as they did today is very encouraging for further upside. All of my Featured stocks and speculative stocks that followed-through immediately after I purchased them are still rallying despite the recent selling that hit the market.
The fact that Thirty-eight stocks in the IBD 100 were up over 2%, I would say that is as positive as any that the rally still has legs and room to run.
Today’s action was much more welcomed than action before today. I have recently been unable to find high quality Featured type stocks. However, today I added to one and found a new one and a speculative issue has Featured potential. This is much better than before. This is especially good considering some longs were on the borderline of cracking. Today’s action helped fix that situation quickly.
Other great signs that this rally still has legs is the fact the SP 500 is hitting six year highs and the DJIA is hitting all-time highs. It is hard to want to short a market hitting all time highs. The bears continue to call for a top but they continue to be wrong. It has been this way the whole way off the October 2002 bottom. I doubt it is going to change while our President is in office. These bearish prognastications are normally due to the individuals hate of our current leader rather than the actual conditions of the economy. Shame on you.
If the reports and reactions to earnings from SUNW, EBAY, and YHOO are any indication, the reports from Ford, MSFT, and BMY should be taken very well. Another indication these stocks might do well is that all the chat rooms that I monitor have amateur day traders trying to short these stocks at every uptick.
The rooms I monitor are LOADED with bears. They think every rally is a chance to sell. That tells me that the crowd is SUPER WRONG and more upside is probably coming. The II survey released today shows 52% bulls and 21% bears. However, these are professionals and this survey has a HORRIBLE track record of predicting tops and the bulls can stay very high for a very long time before a top is in place. I have not had a chance to check out the AAII survey but I am sure more people are bearish now than they were a week ago.
I still believe you should be careful with new longs and try not to make any one position more than 5% of your portfolio right now. Unless, the chart is perfect, I still believe slight caution is warranted here. We are up a lot from the August lows so that needs to be kept in mind when taking new positions.
I hope everyone had a great day; have a great night. And I will see you tomorrow in the chat room. Aloha!!
