A positive Case-Shiller report helped stocks run at the open as volume surged into the market. The higher volume wasn’t a surprise given Monday’s Jewish holiday. Stocks were hit a blow when Consumer Confidence came in lower than expected with a reading of 53.1. Traders initial reaction was negative sending prices lower. The market was able to find support near Monday’s mid point of its move. Leaders came out strong and finished strong with volume above Monday’s level. By the end of the day the major indexes notched a distribution day with leading stocks ending higher on increased trade.
This market held up reasonably well considering the negative consumer confidence numbers. On 4 seperate occasions stocks had the chance to crater but were able to find support each and every time. Volume was higher than Monday, but it was below average which indicates to me insitutions weren’t out selling in droves. We can roll over tomorrow with the GDP report out in the morning, but still do not have the amount of heavy distribution. More importantly we do not have leading stocks breaking down. Instead we have leaders higher on volume when the overall market is putting in a distribution day. I am certainly seeing a rotation occuring and its moving into leading stocks.
It may seem that you are seeing the talk about leading stocks as repetitive but it is ultra-important. We need the quality growth stocks to lead this market and we are witnessing at this moment.
Remember, whatever the reason for this rally, we are going higher. Until we see major distribution and our leading stocks crack there is no reason to fight the trend we have in place.
New highs once again killed new lows with only 7 hitting the NASDAQ and NYSE. Over 400 was seen on the NASDAQ and NYSE. The exact number really doesn’t matter, all we need to know is new highs are smashing new lows. Remember, in order to find Monster Stocks it is important new highs trounce new lows.
I continue to see the bears out in full force on the net calling for another pullback. A few have even called this churning, now keep in mind that churning occurs over weeks with no price movement on huge volume. This is not churning, it is rotation into leading stocks and it will sneak up on many traders. Again, seeing “churning” is simply a front for bears who think this market should be lower. Given the economy and the amount of money being printed by the Federal Reserve I can not dispute their claims. However, history has shown when the money supply is increased (in our case doubled) it finds its way into stocks. This time is not any different from our past, yet we continue to see folks fighting the trend.
Opinions mean very little, no, nothing to the market. When leaders begin to fall and the market racks up heavy distribution then it is time to pair back. Until then, take it stock by stock and cut your losses short. Keep positive.
