Strong End of Day Action as Volume Pulls Back

The day began with a bang with volume running much higher than Friday’s levels, but the strong price action and volume didn’t gain traction.  Institutions simply stood aside today, but this week wasn’t expected to be one filled with big volume.  Once again, some top quality fundamental growth names did break out today.  On top of leading growth companies our big cap leaders continued moving higher.  Although volume was lower the strong end of day action, lifting off the lows gave a bullish tint to the day.

A psychological level for the NASDAQ is 2400, even numbers tend to draw attention, was able to hold during today’s action.  It appeared before the 3 o’clock hour the market was beginning to roll over as the NASDAQ took out the 2400 level.  However, it wasn’t before long support came to the rescue and pushed the NASDAQ back above 2400.  Again, the end of day action spun a little bullish tone for the day.

The uptrend continues to remain intact as we’ve avoided continued distribution and stalling.  At the moment, with a few distribution days and a day of stalling we can throw out the distribution day notched on quadruple witching.  Why?  Volume explodes in the morning session as options expire and does not reflect true market action.  As quadruple witching Friday wore, volume fell considerably showing institutions simply weren’t dumping stocks.  The lack of distribution and stalling doesn’t scream a “top” in the market.

Most important our market leaders continue to build upon their uptrends.  If the market leaders begin to roll over, like we saw in January the market would be more suspect.  We haven’t seen the evidence of this uptrend showing an end soon with leaders continue to act strong.  Every market top will show weakening leadership and this time will be no different.

Remember to always cut your losses, it will keep you in the game.  Hoping a stock will make a comeback is a dangerous game to play.  Once you cut a loss, you don’t have to ignore your stock.  Often times strong fundamental growth stories will come back to form a base on base pattern and will breakout again.  Be cautious, a second failure is a warning sign buyers aren’t willing to scoop up shares.  Always cut your losses and let your winners run.

Stay disciplined and as this uptrend continues we’ll continue to keep our eyes on the leaders.