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Small Caps Lead the Way as Volume Ends Mixed
By BigWave_Trader on April 12, 2010
A late day push by sellers took stocks off their highs of the day, but finishing in the green. The US dollar index made a push towards its high of the day at the end of the trading session fueling sellers to put pressure on stocks. Volume ended mixed with the NYSE volume coming in slightly higher and the NASDAQ slightly lower. Small caps, the Russell 2000 led the way once again continuing to dominate the market. This uptrend doesn’t have any quit with a few high quality fundamental growth stories pushing higher on volume today. As long as we continue to see stocks setup and move higher this uptrend will stay intact.
We had plenty of leaders add to their gains today as well as new ones breaking out from bases. Again, we need to continue to see the leaders act well and fresh stocks breaking out of bases. This market is continuing to cough up strong stocks and we are not complaining. The stock last week where I noticed weakness it was able to rebound on heavy volume a sign this market is healthy and the uptrend is intact.
An oscillator I tend to take a peek at is the McClellan Oscillator and has been quiet reliable since the March ’09 lows. Here you will see both the NYSE and NASDAQ are at neutral levels. While we could go lower, but with the oscillator at neutral and with plenty of stocks moving higher it is hard to fathom there would be much downside risk. On the flip side, if we didn’t have these strong fundamental growth stories breaking out then I would be more cautious and trimming positions.
Remember, the leaders is your main focus because they will give an “early tell” on what the market is doing. In January, we had a few leaders breaking down through their 50dma prior to the market moving 2 or 3%. The Russell 2000 ended up correcting 10% at its lows and if you weren’t paying attention you could have gotten burned. It is prudent to take a look at the fundamental growth leaders to gauge the health of the market.
If leaders are breaking down and the market is holding up you may be missing new leadership emerge. Always take the time to scan the market. Often times you can miss the rotation into a new leadership group. At Big Wave Trading we are constantly scanning the market finding opportunities and we strive not to miss an opportunity.
Stay disciplined by cutting your losses!
Posted in Commentary