When it was all over, the Nasdaq led the way with a 1.2% gain, the DJIA rallied 1%, the SP 500 and SP 600 gained .9%, and the NYSE rallied .8%. The Nasdaq, DJIA, and SP 500 all regained their 50 day moving averages, adding more positive news to the gains. The one questionable index was the IBD 100. Leading stocks came in with only a 1% gain, underperforming the Nasdq. Like I keep telling you, in the most powerful “real” bull market rallies, this index outperformes the whole market to the upside and underperforms the market to the downside. We still are not seeing a huge bullish divergence in this index, leaving questions about this rally.

Volume was higher on both exchanges, with volume rising 15% on the Nasdaq and 4% on the NYSE. However, the higher volume may be an accumulation day but it is not a “real” accumulation day. Why? There was no real volume. Volume was still below the 50 day volume average, showing that the big funds still have no interest in accumulating stock here. This is the retail crowd, mixed with a bit of dip buying and short squeezing. Though the gains are good, we should not be confused that this is a great market. It is not.

It is also important to compare the retail crowd buying in comparison to the real institutional buying. If we look at the accumulation/distribution of the indexes you can get a more clear picture of the overall volume structure. The SP 500 still has a D+, clearly showing sellers are showing up on the down days and buyers are absent on the up days. The NYSE carries a C+, the DJIA carries a D+, and the Nasdaq is the best with a B-. Yet, with the better rating on the Nasdaq, the big-caps are still outperforming this index since November. This shows you that the big-caps are seeing distribution as they rise and the Nasdaq is not seeing distribution as it falls. This might be confusing to some but, trust me, this isn’t that difficult to understand.

Breadth was positive, today, on both exchanges. Advancers beat decliners by a 3-to-1 margin on the NYSE and by a 2-to-1 margin on the Nasdaq. The most impressive number came via the 52-week new highs. There were 495 new highs to 61 new lows. But on the NYSE, there were 290 new highs and only 10 new lows (five were closed-end funds). So this breadth clearly shows that even though this market may not have a ton of quality leading it, there is still a lot of leadership out there. The put/call ratio finally fell below 1 again, closing at .95. However, this index still clearly shows the crowd too bearish. That is why we keep going up. Too many people are for sure we are going down and the market does the opposite of what everyone thinks.

Overall, today, was a very positive day. However, without volume over the 50 day volume average on the index and with no Featured quality longs showing up again, it is hard to get excited over today’s action. To me, it appears, to just be a typical bullish low-volume push-the-momentum-stocks-around kind of market. With only two trading days left this weekend, I am sure there is more gunning the bulls could do to give the shorts a typical short squeeze beating. This tape reinforces the old saying that you should never short a dull tape. Unless you have volume on the sell-offs, you are always in a position to have a short squeeze attempt to destroy you.

Overall, since February 27th, we are still in a trading range. Therefore, anything that happens between the Feb 27 highs and the March 14 lows is just noise. This market is still range bound and since we have a short week I want to remind everyone that you should not take too much away from today’s action–much less the rest of the week’s action. However, within this trading range, we are sitting on a follow-through attempt that has now seen a bit of a follow-through. So we have to keep a neutral to bullish bias. The bearish bias can remain but the facts say that we have to respect the trend. That trend is sideways to up and nothing else, right now. Just don’t fall in love with this market. It very well could rollover, if we keep getting these low volume rallies. Remember, all it would take is a few days of heavy distribution to completely wreck this rally. So stay on your toes and try to stay unbiased.

If you have kept your bearish bias the entire time (which is fine) but you did not leave your emotions at home and have decided to not go long any of the great stocks I have given you since February 27th, you have to be feeling a bit humbled. This shows why panicking NEVER works. Many stocks that did not sell-off on lower volume during the pullback should NEVER have been sold by traders. Yet after a little bit of selling, almost everyone threw the baby out with the bathwater. Not me. That is why I am long a lot of small cap stocks that are making big gains and even with 60% of the account invested my account is hitting new highs AGAIN.

There has been plenty of action in small-cap stocks since February 27th and stocks like CLRT CIMT JSDA SLP LMRA TTG VDSI FALC SNCI JAX show why you should always play what the market gives you, no matter what your opinion on the market is. If the market gives you a perfect smooth chart setup, with max green BOP, TONS of accumulation, low volume pullbacks, and good fundamentals, you take it, no matter what!! I never pass on a green chart, no matter what. The only question is how much do I take? That depends on the market. Bullish markets constitute you buy more. Downtrending markets mean you buy less.

Enjoy the rest of this relaxing week. After the long weekend we will be coming back to the start of earnings season–which officially kicks off April 10 with AA reporting. Keep in mind, expectations for EPS YOY results is for a 3.7% gain. That is down from 8.7%, earlier this year. Don’t you find that a bit scary how far they have come down???? Also, the expected 3.7% YOY gain will be the first gain in 14 quarters of non-double digit growth. As earnings go, so goes the market. Also positive pre-announcements are running 20-40% lower compared to any quarter the past four quarters. This along with GDP growth slowing, as I keep saying, is the best leading indicator for the stock market. The GDP and EPS growth is slowing. Is the stock market next? According to history, it is supposed to be.

We will see what the next two days bring us. Aloha and I will see you in the chat room!

At the close, the SP 600 led the way to the downside with a 2.3% loss, the Nasdaq followed with a 2.2% loss, and the DJIA, NYSE, and SP 500 all finished 2% lower. The SP 500 now has an Accumulation/Distribution rating of E. The worse news behind the numbers is the fact that all these indexes managed to close at or near their LOD. That tells me that the selling is not done and that funds couldn’t sell stocks fast enough. The IBD 100 lost 2.6%, leading the overall market. But the losses could have been much worse. Some of the reasons the losses were not worse was that after the selloff from two weeks ago many bad stocks have been replaced by more defensive issues. If the IBD 100 still would have had the same components as two weeks ago on Tuesday, it would have been much uglier.

Volume was much higher on the NYSE and the Nasdaq. Volume rose by 33% or slightly more on both exchanges. The selling today was well above the 50 day volume average and was higher than ANY day of the attempted rally from March 5. Breadth was negative on both exchanges by a near 4-to-1 or 9-to-2 margin. There were a 114 new highs to 206 new lows and the Nasdaq only produced seven of those new highs. The new high list is dominated by weak miscellaneous closed end funds. If you take out those stocks, the breadth of new highs to new lows is a much worse 92 to 206. The most telling tale of the market is in the IBD industry groups. Just like on the Tuesday that this all started, only 1 out of 197 groups were higher. It was a VERY UGLY day.

The biggest losers today were again the Building-Resident/Comm group and the Finance-Mortg & Rel group. Both lost a tad over 5% each, as every stock in both sector continue to get CRUSHED. If you read my post yesterday you saw my writing on the homebuilder group. As you saw today, they all continued their blowups. It didn’t take a crystal ball to tell they were going to fall further. All you needed was a book on TA. The most intriguing hunt on my part was trying to find the next AHM LEND and NEWC. I believe CCRT and ACF are the next two stocks to really get taken to the woodshed. If you are a gold member, you can see a list of ALL the ugly stocks ready to crash in the shorts section.

The other clear trend that emerged for me today, that solidifies my views that this market is finished, was the fact that I saw the old leaders that were the big winners from the March 2003 bull market get taken out for a beating. Whether it was the Gold group, Oil, Steel, Metals, Investment Banks, or Airlines, they all are getting hit and many of the top gainers (like TS GG GDP LEH ZNH) are clearly rolling over, topping, or straight up breaking down from long-term support. The old leaders are now dead. To me this clearly signals that the rally from 2003 is over.

And speaking of rallies being over, the sell-off today signals to me that the rall attempt from the March 5th lows is over. The rally is dead! I don’t care that we have not broken through the old lows yet. The fact that we failed right at the 50 dma on HUGE trade, compared to the rally, proves that the market is done. The leaders breaking down only confirms it.

Classic TA worked this time. The big sell-off, followed by a low volume rally to the 50 dma, that then led to another sell-off is TA 101 on how a bearish market should act. Everyone was looking for the sell-off which then led to everyone trying to outstmart the TA playbook by expecting it to fail. That led to the actual failure. You have to love the psychology of the stock market. I am not tooting my horn but this is yet another top that I have nailed by simply following TA 101.

And, btw, it wasn’t me that nailed it really; it was the market. The market quit giving me high quality Featured stocks in January, then only gave me speculative longs until late February, that then led to the one big sell-off two weeks ago today. By following the actual market price and volume, and not the talking heads on CNBC or in the Wall Street Journal, it has now paid off. And paid off even more in the amount of money saved not staying long stocks that are in clear downtrends. I know many people that are becoming bagholders and are even buying this dip. That is pure gambling.

Like IBD said today, for the market to right itself, it will probably take many weeks to three months before we can repair this SEVERE damage. The blowups in the subprime, homebuilding, and soon investment banking stocks is so severe that the TA damage is so ugly that it will take months and not weeks to fix. My charts are now gone. In both my longs scans I found nothing and only found a handful that had pretty charts. I have not seen this kind of damage to individual stocks that have left such ugly chart patterns and so little pretty charts since March 2000. If you are still long, that little bit of personal experience and observation should have you a bit worried. This is not the time to try to make money. This is the time to keep it.

I simply see NOTHING positive out there. Nothing. I can not think of any great looking chart or any economic number that I see that makes me think the market can rally off of. Maybe that in itself is a contrarian positive but with the put/call falling to .66 yesterday it seemed the crowd got pretty bullish in a short time. However, the put/call spiked up to 1.46 today; so the fear is back. The VIX had a nice spike which is always good to see. I would love to see the market really tank and the VIX go to 30. That ensure that the next bull market will produce many 100-500% winners for us in a six to twelve month time frame.

I have been saying since the selloff two weeks ago on Tuesday that cash is king. Well CASH IS KING STILL!!!!!!!!!!! But if you are royalty and you know how to make money on the long side and your account balances shows YOU that YOU are a good investor on the long side, you might want to consider going short now. This is the time to start shorting. If we bottom and reverse, cut your losses. However, in a historical standpoint, the trend is now down on all time frames. The damage to the charts shows that more downside is probably in store. With so much damage and so few retail investors giving up yet, we are set up for more selling.

Folks, there is some serious damage out there. I mean damage like I have not seen since March 2000. Either we bottom here or the subprime loan debacle is going to open up a major bear market. I would lean on the bearish side. I am going short nine stocks (if I can get filled) in the morning. I am now shorting. Does that mean I quit going long stocks? No. There is always a bull market somewhere. But I don’t settle for second best. Unless my charts are all green and in a perfect smooth pattern, I will not go long. I have bought stocks the past two weeks and I still will if the proper pattern sets up. But right now, I can see the big money is to be made on the short side now. 3 out of 4 stocks follow the general market trend. That trend is down.

Aloha and I will see you in the chat room.

At the close, there was only one index up, like I said earlier. That was the SP 400 with a .2% gain. The rest of the market finished in the red. The Nasdaq led to the downside with a .4% loss, the SP 500 lost .3%, and the NYSE, SP 600, and DJIA all lost .1%. Not bad but the market was in the green, until a late day selloff. The IBD 100 and IBD 85-85 index were both up .1%, outperforming the broad market. However, like I stated yesterday, this outperformance to the upside is lame compared to how much it led the market to the downside.

Volume was lower across the board; which is normally what you would like to see on a pullback. However, the losses were very small and most of the day the market was in the green (minus the Nassy). So I would call this a lame day of buying that was met, on the big board, with heavier selling in the last hour. That is not constructive action after such a hard selloff. That is the second day in a row stocks have climbed most of the day to then lose those buyers and then be met by sellers.

Breadth was positive on the NYSE by a 9-to-8 margin and positive on the Nasdaq by a 3-to-2 margin. There were 95 new highs to 76 new lows. The new highs now beating the new lows indicates there could still be some more momentum to the upside. However, with the Accumulation/Distribution ratings on the Nasdaq and SP 500 a C and a D respectively, the continued rally will probably be nothing more than a continuation of an oversold short squeezing bounce.

Another negative is that the typical laggards led again today. This laggard, this time, was the Oil & Gas industry. The whole lot rose 1.5% or more in the IBD industry groups. This group saw some nice upside thanks to crude oil rallying 1.9% to $61.82. Leadership in this group and not a brand new exciting group is typical of bounces and not starts of powerful bull markets.

There is another reading that favors more upside in the short-term. The investors intelligence survey came out with bulls dropping to 46% and bears rising to 27%. That indicates there is some fear starting to show up in the newsletter writers. However, until both of these numbers actually cross and are both in the 30-40 range, a really solid bottom normally does not happen in the market. When these numbers cross, they have an uncanny ability to coincide with a market bottom.

Today was day two of an attempted rally that started yesterday. Like I said yesterday, as long as there is no distribution days and/or we don’t undercut the recent lows we have to be prepared for a follow-through. The best follow-throughs happen between day four and seven (4-10 is acceptable). So Friday will be the first possible day that can happen. As long as nothing bad happens tomorrow, it could happen. I know a lot of people are ready to short the hell out of the market. However, if you read your “How to Short Stocks” book, you will know the best time to short is months AFTER a real top has clearly been in place. We are just now starting to selloff so we are still in a very volatile and wild area where anything is possible. No true trend has been established yet.

But my charts ALL say that this is only a bounce. There is nothing really setting up in BEAUTIFUL chart patterns. On ALL previous pullbacks since October 2002, I have had TONS or at least many handfuls of nice charts with a lot of green BOP setting up for breakouts. That is NOT the case this time. I am finding a lot of shorts and those shorts are almost all producing gains immediately (ie, OMG). That tells me that shorting will probably end up being the right game in the not to distant future.

But then there are stocks like TTEC and TRCR. If you went long those two stocks the past two to six months, you have no clue that the market has just gone through a nasty selloff and many traders are confused as can be. That is the beauty of the market; there is always a bull market somewhere.

However, besides a few stocks, like these, this market does not look like the big boys are interested in it right now. The past two days simply have not had that institutional push that you normally see on real bottoms. Such small gains after such big losses is not bullish. The bulls look like they are running out of momentum but if the sellers do not take control soon we simply can not be surprised if we see this bounce last a bit longer. However, everything is setting up for a failure. I could be wrong but for some odd reason I doubt it.

Cash is king!!! Stay patient, don’t chase performance on the upside or downside, and be prepared for more volatility in the upcoming days. There is no way we are done with all the fireworks. There is sure to be more wild and choppy action before any clear trend develops. That trend looks like it will be a downtrend. But the smart play is to stand aside and stay agnostic right now.

Aloha and I will see you in the chat room.

At the close, the DJIA led the way to the upside with a .2% gain, the SP 500 and Nasdaq closed .1% higher, and the SP 600, once again, diverged closing lower by .2%. The IBD 100 did not lead but it did not lag either. Instead it kept pace with the SP 500 and the Nasdaq, closing .1% higher.

Volume was much higher on both exchanges as quadruple witching contributed to the HUGE spike in volume. Trading for the last day were stock index futures, stock index options, stock options and single stock futures. These days, like always, are hard to analyze on an accumulation/distribution basis. However, on days where the market does nothing like today, it doesn’t matter.

Breadth was negative on both exchanges, diverging from price, with decliners over advancers by a 6-to-5 margin on the NYSE and by a 8-to-7 margin on the Nasdaq.

The biggest movers of the day came in the form of Gold stocks which got hit pretty hard. This is normal, for old leaders. They come back from the dead after the “real” run and then everyone thinks that this run will be as good as the last one. Sadly, there normal is never another run. The AMEX Gold Bugs dropping 1.5% and the Philly Gold & Silv Index losing 1.4% show the true intnetion of the big boys. They are selling these stocks and some of the “true” leaders like GG on a weekly show the same patterns EVERY old leader shows. Goodnight gold.

For the week the SP 500 led the way with a 1.2% gain, the DJIA followed with a 1.1% gain, the Nasdaq followed with a .8% gain, and the SP 600 lagged with a .2% loss. Leading stocks, in the form of the IBD 100, rallied .5%. This is the first time in a while I don’t remember this index leading. However, the fact that the SP 600 is lagging so bad and the IBD 100 is still keeping up keeps me positive.

Overall it was a pretty darn good week, considering all the positioning I had to do in my portfolio. I took a lot of gains/small losses this week on over 150 different stocks. But despite all this moving around in my portfolio, my account did pretty darn well. I know one thing, had I not taken profits and cut some laggards I would not have ended the week with gains. Discipline always works better than hope.

Today was not a big deal, unless you consider another all-time high by the DJIA and six year highs in the SP 500 to be news. For me, there is nothing of importance with this, besides the fact that it just confirms that this market and economy is currently still very strong–sorry bears, facts say you are wrong AGAIN.

We are starting to enter that time of the year where traders start taking vacations and get prepared for the upcoming Holidays. Normally this means stocks drift to the upside. Last year that did not happen. In 2004 we drifted up on low volume only to break really hard in January. Nobody knows what will happen this year but be cautious of a low volume drift higher. They have a good track record of ending badly.

However, with a backdrop of the PPI, the personal income report, the spending report, the LEI, and 3Q GDP, lower prices would not surprise me. I wouldn’t mind them to be honest. The gains this week on the Nasdaq and SP 500 did come on heavier volume and since the last couple of trading weeks are on lower volume a low volume pullback would be welcomed here.

I hope you are having a great weekend and I will see you at Investors Paradise.

New Swing Longs: CACB GMRK VPFG MFG FSLR ISSC

Adding To Longs: NHWK BOBJ PFWD

New Swing Shorts: NONE

**stocks up 25% or more have % gain listed since long position taken**

Longs Up On The Day: JST-131 HMSY-40 INWK-55 CXW-37 IHS-95 ICE-41 STEC-73 IAAC-49 BMA-34 PCCC-37 SVNT-89 SEIC-26 TYL-54 CPA-55 OMTR-79 MA-95 MAMA-83 UAHC-25 SOFO-98 PERY-35 MALL-36 GENT-42 GRRF SRSL NITE JCG ISE FMCN BOT CELG RENT NHWK OTEX TSRA RKT SKX DECK TATTF SQM EVEP LFL TMO BLUD HOS INAP CCO LRCX OPTM NLST OSIR EFUT ULTR EXLS CBF GSIC FTGX NMGC ADBE BOBJ MFB PFWD MDF OPLK BITI OEH WOLF AZK AEZ AYE NWL ACGL AGR NHP MCRS CCBL HURN HNZ CMCSA RAH HCSG PNW BMRN EOC INMD PRCP

Stocks On Radar Screen: GMKT PKTR WFD CRK XTXI NTGR DIGE BRG KSW HTZ IPHS GOLF ENTU SWKS DAR GILT CLWT CBRX DSCM ADL CTCI HTI GE FLIR PBH PHLY NUVA LYTS MAT EMC CTC TLEO MEL VRSN NAVI TMI TPK FRGB WBKC

Selling Some Of My Holdings: LCC IGT BONT CVO ASCA CRT MOS AZS PRFT TSYS MBLX ACHN

Completely Selling My Holdings: TSEM MSTR ROG VOCS SMSC LMRA AXTI