Volume Ends Mixed, but Stocks Close Higher

The market opened up the week on a positive note, but on mixed volume.  Stocks saw positive price action as small cap stocks led the way.  NASDAQ volume was up while NYSE volume was down, but the action was on the NASDAQ.  There were plenty of healthy stock gains as our leaders continued to show strength.  It was a great way to start off the week, continuing the accumulation we saw at the end of last week.

The important piece of the puzzle is we are having quality stocks moving quite nicely.  We continue to see bases being hammered out properly.  All of last year we saw awkward breakouts out of improper bases and many of them returning to their pivots.  Some even would bounce off their pivot and continue moving higher.  This time around, we are seeing proper breakouts and continued strength.  This continued strength and bases continuing to setup, leads us to believe we have higher prices to go.

The only real issue we have with this market is the lack of accumulation.  Just at the end of January and early February heavy distribution riddled the market.  We haven’t had the time to build up accumulation that you would normally see in past uptrends.  However, we still are in an abnormal market and economic situation.  Let the charts guide you as we allow them to guide us.

The biggest mistake many traders make is allowing opinions to infiltrate their trading.  Often times we form opinions that are based upon emotion rather than fact.  Charts, price and volume action is fact.  However, if you think the market will go down because it is too high is not a fact.  It merely is a feeling, but we know that “too high” can go much higher.  In order to hold onto a monster stock you’ll have to be able to fend off these opinions.  Most often to a novice or even seasoned investor a stock will proceed moving higher even though it may look too high.  Do not let your emotions get in the way of you trading.

We’ll need to see continued strength here, but it appears we’ll get it.  The market only has one true distribution day in the past two weeks with plenty of accumulation.  Beware of chasing a stock, because even in a uptrend you can see a quick pull back shaking you out of your position.  Stay disciplined and cut your losses.  Let those winners run.