I heard many complain that we did not finish higher today on the Nasdaq. I, however, disagree with them and find it more bullish that we finished a tad lower. That shows me that we are consolidating the gains, since the November 28th follow-through day from the IBD indexes, quite well. If we would have sold off today on heavier volume, then I wouldn’t consider the days action bullish. But the fact the we sold off a little and the volume was lower is exactly how you want to see the market pullback after adding on some solid gains.

Don’t forget that the DJIA finished higher, even though volume was extremely low, and that the IBD 100 and IBD 85-85 indexes finished higher. The big caps and leading stocks seemed to hold up well on a day of profit taking. So the people that were not happy with the Nasdaq do not have to look too far to find some other positives in the market.

The fact that we have not sold off at all since the follow-through day has to be taken as a great sign for the bulls, considering that the market was starting to look like it was read to fall apart. Even though we have not had an up day where volume was just simply huge, the market is still offering up enough stocks with solid fundamentals that the rally is working. Obviously, if there was more volume, the gains would be bigger and the longs would be more interesting. Right now, there are very few longs that look beautiful. Instead most only bring a little smile to my face. I still do not see anything out there that makes me want to jump up and down full of joy.

This market, this year, has taught us all something very important that I am not sure many appreciate. The market this year has looked like it is going to top multiple times and every time that it looks like the market is about ready to break wide open it almost always goes on to rally. During the years of 2004-2006 I had to convince people over and over that the market was not done rallying. Every time we would start to selloff, everyone would tell me that “this is it, it is all over.” But every time we would selloff, I would see many new top stocks with pretty bases setup.

That continued until this year. When stocks started selling off in February, very few fresh new longs showed up. Instead it took a while but eventually the market got its legs together and then some new longs showed up. The exact same thing happened in August except the lows in August were decently easy to spot since sentiment got so poor and there were a lot of charts holding up well into the selling. The rally that came off those lows, as many subscribers know, produced many quick big gains from top stocks that took off immediately. All the laggards however were quick to rollover.

So when the selling started in November it appeared that the top was finally in as all our leading four-horseman stocks started selling off on heavy volume for the first time. There was no time before when all these leaders sold off on heavy volume. However, as soon as these stocks started selling off, the stocks that were breaking down started to hammer out short-term lows putting a floor in this market which then turned the leaders around and now have them back into high ground or near high ground. If this hasn’t just been amazing to everyone, then it is obvious you have not been watching the market close enough.

Those that have been watching this market know that the constant rallies in the face of this strong distribution is just amazing. However, the new highs in the leading stocks are coming this time without something: volume. Where is the volume? Where is the accumulation? There is none. What we have instead is a market that seems to have been so oversold that a rally had to happen.

The past few weeks I went out of my way to show you the sentiment in the market on almost a daily basis. Well I do that during bad markets because it is very important to follow. When a real bottom is put in there are a lot of sentiment indicators that hit certain levels that confirm the price and volume that a market has probably put in a low. Well if we use the August lows as the bottom, then the market is still in a period to continue to rally. But if we count the selloff from November as negating the August rally, which is what I believe we have to do when you look at the SP 600 and Russell 2000, then we simply have not had the bearish or fear needed to put in a bottom.

Instead we have put in a short-term bottom due to the market being extremely oversold. If that is the case, then the low volume on this rally makes perfect sense. If this rally was on huge volume, I am sure I would have a lot of pretty green BOP filled charts that work (like RICK) instead of charts that are working but that don’t look at hot (like ELMG and its yellow BOP). So the fact that there are so few hot charts and new leaders breaking out from sound bases and that the current leaders off the 2003 lows (GOOG RIMM BIDU AAPL AMZN) that are now hitting new highs with negative divergences in almost every technical indicator including overall volume.

The first stock we can look at is GOOG. If you notice that GOOG is very close to its November highs but look at the bottom part of your charts. Where is the volume on this rally? Now look at the RS. Do you notice that it is well below the old highs? Then look at the moneystream. Notice its negative divergence. Now look at the BOP. Notice the negative divergence? This is just one example.

The next weak past winner I am watching is RIMM. I technically should be short a little of this stock but my luck on the short side has been iffy recently and almost all of my nicer looking longs have been producing solid gains during the market’s uptrend. As long as the market continues to drift higher, I have to stay away from shorting RIMM until it sets up in a picture perfect historically high odd trade.

Right now, the stock is weaker than all the others as it put in a lower high at the end of November with the RS line coming in well below the old high in early November. That high came with four days of distribution that has been followed by a few days of a low volume rally. If the stock fails again, I might begin to poke a little and try another round of shorting this former leader. However, it would probably be wiser to wait for the 200 day moving average to catch up more to price before getting too big on a short in this stock. If you look at the moneystream you can see that it is making new lows well below the early November s lows. This, despite the price being above the November lows. Also the BOP is red and ugly still just like it was when it started selling off. So it is obvious there is not a lot of accumulating interest in this stock anymore. A weekly chart shows three weeks of distribution the past four which clearly tells you what is going on with RIMM.

BIDU is another leader that is at the old highs in early November but yet nothing else about the stock is. There are negative divergences in almost every indicator with the RS well below the early November highs and moneystream is even in worse shape. The only thing going for it is that BOP is turning green but with the rally coming on lower and lower volume BIDU appears to be headed the same fate RIMM and GOOG are headed for soon.

The strongest leader relative to the market is AAPL with its RS line well into new high ground. While the RS line is deeper into new high ground than price it isn’t by much and then the moneystream is still no where near new highs. That line is still well below the old highs in November. The BOP has also turned negative to where it was still dancing around the zero line early in November.

The point of this is to show you that the leaders that everyone is still talking about as the for sure thing that is a safe haven in any market are all starting to weaken. This is the first time they have sold off on heavy volume and rallied on lower volume to such extremes with all the technical divergence. This action in the leading stocks along with the weak rally in the market with few hot new longs is what continues to keep my mind cautious on the rally. However, even though I am cautious and I expect this thing to fail it sure doesn’t mean that I am just going to ignore the long side and miss gains in stocks that can rally fast in a short period of time.

Sure there are not a lot of RICK stocks out there but there are plenty of EGN stocks out there. And being long EGN is a lot safer than being short stocks that are not moving down. I know a lot of people shorting banks, home builders, and mortgage stocks down here. It is just shocking because most of these stocks have been destroyed and have no chance of going to zero. However, what is obvious to everyone usually no longer works and I think those short sellers are in that situation. Not only are they in that situation but those that continue to believe that AAPL, RIMM, BIDU, and GOOG will always be a safe place to put money to continue to rack up gains are also in that situation.

The best bet is to keep bets small, keep them focused on the long side in the top stocks in leading industries until we get some real distribution in this market, cut your losses fast if they don’t move up immediately, and do not focus on the short side just yet. There are markets that are meant to be traded and then there are market that can be traded but shouldn’t. That is what this market is to newbies. This is not the market where we are going to get a TASR or TZOO. We are not going to get those until we have a serious selloff in equities.

I know some think that we have had a real selloff already. But no real selloff is under 20% and no real selloff comes with a bottom without fear. Where is the fear? It sure seems pretty darn complacent to me. As long as the complacency continues to reward the longs I will be complacent and ride the trend up with my friends like EGN RICK FFH and OTEX. Now if only the speculative former max green stocks like AGX would move like the other slow safe Utilities, Telco, Soap, and Insurance stocks. Then we could have some fun. Instead we must be happy with a 25% gain in all the stocks that give us that. We will not be getting many 100% to 300% gains in this choppy market. Enjoy what you can get when you can get it. This is not the type of market to be on full margin. The 2005 lows was the last one that had enough fear to produce a gain like 550% in six months in ERS. Since then, there has been nothing.

Aloha and I will see you in the chat room where I will do my best to find the next TASR. Just don’t expect me to find it until after we have a real bear market. ALOHA!!!

At the close, the SP 600 rose .4%, the Nasdaq and the SP 500 rose .3%, and the DJIA gained .04%. All of this sounds pretty good but the IBD 100, which is full of top rated leading stocks, only gained .2%. On a day of small gains, you still would like to see leaders outperform the broad market. A negative divergence normally shows up before prices head lower. But I am sure in a market like that, this would be impossible (sarcasm). Oil was the most powerful group today, with the Oil&Gas-Field Services group rising 1.7% and the Oil&Gas-Drilling group rising 1.6%.

Volume was higher on both exchanges and advancers beat decliners by a 5-to-3 margin on the NYSE and by a 9-to-7 margin on the Nasdaq.

Despite the gains on higher volume than the day before, we still have the same problems, with volume being below the 50 day volume average and there being very few Featured stocks breaking out of sound bases for growth investors. This market is just doing the same thing it has been doing all week. The old saying goes never short a dull market. But I guess option players didn’t get that message as the put/call ratio jumped over 1 again. This shows that the price gains are probably going to continue to happen, even if volume doesn’t show up. The players who are around are not that bright, shorting a rising market.

Seriously, folks, how much more is there possibly that I can say about this market? I have gone over this same scenario we are in, over and over. My thesis remains the same. Everything that I have discussed the past eight trading sessions remains true now. Nothing has changed. We still have a dull, non-growth stock uptrend on very low volume. Not pretty, but still a trend.

Hopefully, we will get some more volume, later this week, as earnings season starts. AA came out and beat estimates but there are still many more to come so I will not jump to any conclusions on these numbers just yet. The one thing to remember is that for 18 straight quarters we have grown YOY EPS in the SP 500 at a 10% or higher clip. This is the first quarter that projections are for under 10%. In fact they were for 8% and have now been lowered to 3.7% via Thomson Financial. We will see how this turns out.

The Fed releases its minutes from last month’s FOMC policy meeting to Congress. The verbiage in this report is always market moving so I assume it will be tomorrow also. Before I leave, please read the last eight daily market analysis post-if you have not already. Aloha and I will see you in the chat room!

At the close, the SP 600 led the way with a .8% gain, retaking its 50 day moving average. The NYSE rallied .7%, the SP 500 and Nasdaq each gained .6%, and the DJIA gained .5%. The IBD 100 led again, for the second straight day in a row, with a .8% gain. That is two days now that the index has been on pace or kept ahead of the market. NYSE volume was slightly lower and the volume on the Nasdaq was lower by 4%, indicating that big institutional firms still have no interest in snapping up large amounts of shares here. Advancers beat decliners by a 5-to-2 margin on the NYSE and by a 2-to-1 margin on the Nasdaq. New highs beat new lows by 211 to 68. The breadth and new highs show that there still appears to be more upside left in this dead cat, high put/call (1.1) ratio bounce.

I am still only calling this a bounce, because I am not seeing ANY new stocks appear on my scans with green beautiful charts. And I am not seeing any accumulation what-so-ever on the indexes. We are going into day six of the rally attempt. If we do not get a 1.7% gain on heavier volume tomorrow or on day seven, the chances of us getting a rally that will produce anything special is greatly reduced. Remember how long it took the rally off the July/August lows to get started last year? It was well over 10 days. That launched one of the weakest rallies I have EVER been a part of. Only 180 stocks made 100% gains or more during that advance. That is stunningly pathetic. The longer we wait on the follow-through, the less of a chance we have of having a great rally. I am not looking for a follow-through to happen and even if we get one I expect it to fail shortly after. We really have a LOT/TON of work to do to fix the mess that the February 27th sell-off created.

However, there are a TON of impatient traders out there that have learned NOTHING from history’s greatest traders. Livermore, Loeb, O’Neil, Baruch all knew how important it was to sit on cash and not invest when the odds were not in your favor. How do you know when the odds are not in your favor? When the indexes are not in a serious uptrend or downtrend. When they are going back and forth like this it has always been the cash play that has been the smart play. The impatient and history ignorant traders that are swinging for the fences in this market are going to eventually be served a very painful reminder on why it is not smart to make overly bullish or bearish bets in a market that is confusing like this one is. These traders will NEVER learn and it is probably for the better as they ensure an even more liquid market for trend traders to enter.

If you feel like you are missing out on the action, then trade with a little bit of your money. Just don’t make any stupid bearish or bullish bets with all your cash in this market. There is for sure to be more wild price action in the coming weeks, depending on what the FOMC has to say. That meeting wraps up tomorrow at its usual 2:15EST. Nothing new is expected to come out and the Fed is expected to hold rates steady at 5.25% for the sixth straight time. The wording in the statement is what all commentators will be focusing on. It seems that a slowing economy and inflation is what is occurring now in our markets. If that is the case I sure wouldn’t be looking for the Fed to be cutting rates anytime soon.

Tomorrow the fireworks will all be over the Fed. However, we are setting up for a positive open tomorrow, on the back of good earnings reports from ORCL and ADBE. This positive open is sure to cause the early shorts more pain. Everyone was asking me three weeks ago why I wasn’t shorting everywhere. Well the past two days of gains is one of the reason. The other reason is simply history. The best time to short stocks is FIVE TO SEVEN MONTHS AFTER THEY HAVE TOPPED. Being too early has cost many great traders many profits. I am not one of these traders who will lose my profits by trying to be a hero. I don’t want the top and the bottom. I want the big meaty middle; the filet-mignon, if you will.

Before I wrap it up for the night and go out to see the movie “300,” I want to bring to your attention one key stat I saw today: The Singular Research group offered a report today stating that margin debt is at a new all-time record of $296 million in February. This is considered a contrarian indicator and signals that the crowd overall is very bullish buying stocks on margin. Do you know when the last all-time high was? It was in March of 2000. The month that the meltdown in tech and internet stocks started. Take it for what it is but this report has not seen those numbers since the last IMPORTANT top in the stock market. The current short interest on the NYSE is very low and the amount of share buybacks are still very bullish overall for the market but the crowd is going out on a limb buying stocks and in the long-term that could be very negative. On the short-term though it is hard to argue with all the share buybacks.

Which side is right? We don’t know yet. CASH IS KING!!! right now. Until we get a clear trend and truly know which side is the right side, I will continue to play the beautiful longs that setup and the ugly shorts that setup. There isn’t a lot on either side, which tells me we still have more time to tire and frustrate the weak traders and investors, in this market. I hope you had a great day. I had a TON of errands to run and had to help out a vehicle-less friend all day so I apologize for the lack of showing up in the chat room today.

Aloha and I will see you in the chat room tomorrow. Remember, CASH IS KING!!!

At the close, the SP 600 led to the downside with a 1.8% loss, the Nasdaq lost 1.5%, the NYSE ended with a 1.3% loss, the SP 500 fell 1.1%, and the DJIA did the best with only a 1% loss. The clearly bad news came in leading stocks. The IBD 100 lost 2.5%, well outpacing the overall market. 36 of the 100 stocks in the current list managed a 2% or more loss. That is as clear as a signal that there is that this market is not healthy. Leading stocks simply do not fall this far, in relation to the overall market, unless there is real weakness in the market.

Volume was lower across the board, on Friday. But if you look at the final volume figures you will see they were, once again, well above the 50 day volume average. And according to my weekly chart of the Nasdaq, on TCNet, volume this week was the most ever for a weekly volume total. Considering that the largest weekly volume ever comes after four years of gains should be a HUGE RED FLAG on this market. The weekly volume on the NYSE, according to TCNet, was the third highest weekly volume total ever. Just like with the Nasdaq, the NYSE’s losses on this much volume is very bearish coming off a four-year uptrend.

Breadth was downright horrible today, on both exchanges, with decliners beating advancers by a 3-to-1 margin. Only three out of the 197 industry groups in IBD finished in the green. And new lows outpaced new highs, 136 to 103. If this was a normal pullback, breadth would not be this bad, more groups would be green, and there would still be more new highs than new lows. These are readings we have not seen, off a first week of selling after an uptrend, since the October 2002 bottom.

The worst groups of the day are the same groups that everyone was making money on the last bull cycle. Steel-Specialty Alloy fell 3.5%, Metals Ores fell 3.7%, and Metal Prod-Distributor fell 3.3%. The infomercials on the radio and TV are all over the place telling people to buy gold. Unfortunately, once again, for mom and pop retail investor these salesman are selling their three year plus gains right on top of their head. Just make note about all the gold infomercials you see and hear on the TV and radio. Just like internet stocks in 2000, the commodity bull is being talked about everywhere by everyone. That means only one thing: it is over or almost over. Heavy volume breakdowns and/or churning is all I see on all my oil and gold charts.

For the weak, it was nothing but ugliness, the Nasdaq swooned 5.9%, the SP 500 and 600 tanked 5.8%, the SP 500 fell 4.4%, and the DJIA held up a bit better with a 4.2% loss. The key test to really see how weak the market was can be seen in the IBD 100. That index lost 7.9% for the week. I hate to tell every trapped bull or perma-bull out there who refuses to change their market bias this but you need to understand this leading index leading this much to the downside is your full blown confirmation that this pullback is different this time. The IBD 100, if the market was fine, would may have seen figures like a 3% loss for the week. Instead, the IBD 100 and IBD 85-85 index took a bear bath, confirming the internal weakness of the market.

Friday’s selling ended the hopes of many that the price decline on Tuesday was just a one day affair. The weak bounce on Wednesday and Thursday with such poor breadth indicated that the selling was probably not over and that is what we got on Friday–more selling. There are a lot of charts out there in individual stocks that got rocked on Tuesday and that has caused almost all of the pretty charts out there to turn into ugly charts or just charts that I just don’t want to have any part of. It is going to take weeks to months to create strong bases that will help stocks launch big long sustained gains. Until these charts get prettier, cash is king.

I planned on penning a lot more this weekend but I am still as sick as a dog. I can barely get out of bed and that is going to cause me to keep this report short. I simply can not think right now, with a runny nose, soar throat, and nagging cough. I don’t get sick often, but I am sick as can be right now. Hopefully, this will go away by the end of the week. The one good thing I can say about being sick right now is that I am not missing out on a lot of action that will make me a ton of money. The name of the game has switched to making a living to protecting my capital so that when the market rights itself I can take all of that money and invest in top stocks breaking out of perfect bases in an uptrending market. Trading or investing here is almost for sure to lead you to losses. These choppy and changing market environments are no place to place big bets on longs or shorts. However, shorting is working out much better right now than the long side.

If you seriously do not understand where we are in the cycle, please go read all of my postings from Tuesday to today. This will go over many different items that will show you why this pullback is different from all the other pullbacks since the uptrend started in March 2003.

I apologize for being under the weather. Hopefully, I will be fully recovered by Monday morning. Aloha and I will see you in the chat room.

At the close, the SP 600 fell .9%, the Nasdaq dropped .8% falling below its 50 dma, the DJIA fell .7%, and the SP 500 did the best only falling .5%. Leading stocks fared worse, with the IBD 85-85 falling 1.1%.

Volume came in slightly lower on both the NYSE and the Nasdaq, putting a positive spin on the selling. Higher volume would have given another clear distribution day. However, the lower volume shows that the big boys were not falling over each other to get out of their holdings.

Breadth was negative on both exchanges; on the Nasdaq decliners beat advancers by a 2-to-1 ratio and on the NYSE decliners beat advancers by a 5-to-3 ratio.

The good news from today is that volume was lower. The bad news is that stocks went down. I am not sure that is bad news in the larger scheme of things as it is very healthy to pullback in a strong market so you can gather momentum for another run.

Constantly going up everyday sets us up for a big quick pullback. Those are the kind of pullbacks that can break market careers as traders can not handle the emotional toll a one day price decline can do to wipe out months of gains.

The good news is that there are not that many AXR type stocks out there in comparison to the gains we have seen since the rally started in August. However, as each day has gone by the past week, I have added fewer longs and sold off more positions than I have at any time during the rally.

This is the first week of the rally where I have found very few nice looking charts but have had plenty of stocks give clear sell signals via climax runs, breaking of support, or just wild price and volume movements that should not be tolerated in a good long.

But with all of this I am obviously still long as many stocks continue to form, breakout, and move higher from beautiful consolidation patterns. The only problem is the new buys are failing; they were not doing that the past five plus months. Now they are.

As I have talked about all last week and even before that, this market is very late in its overall cycle of bull markets. IBD even made mention of it today and they brought up key points that I have not made about historical market cycles.

This is what was posted in the Big Picture: A look at the bigger picture shows the market in a long-term uptrend. Wall Street has been in a confirmed bull market for nearly four years; it’s been in an overall uptrend since hitting bottom in October 2002, 51 months ago. That rates as one of the longest positive market trends in history, ranking near the run-ups of the booming 1920s, 1950s and 1990s.

This is very important to consider, if you are making new buys. You are late late late. Where were you in 2003? Where were you in October 05? Where were you when I was one of a VERY FEW market commentators buying stocks off the July/August lows last year? If you were not buying stocks then and are buying stocks now, don’t come bitching to me that you are losing money. Uhm, guess what? I am too. You are supposed to when you are long in a market that is not going up. The question is how much are you up compared to how much you are losing now? For me that is the most important question. I am up a good amount off the lows and have NO PROBLEM giving up some gains to MAKE SURE that the top is in.

God knows the last thing I want to do is be like the rest of the lemmings that sell a stock simply because the market is selling off and they got scared. Trading emotionally is very stupid and will kill EVERY trader. This is, once again, why I don’t watch my stocks intraday. In bull markets they will breakdown and come back so often it will make you sick.

I know a trader who lost his position in PSPT that way. This is how I lost my position in OMRI. Stupid emotional trading. That is for the weak. I am not the weak. Emotions have no business in this market. Only discipline, preparation, and execution will make you sound money consistently year in and year out.

It is not time to sell stocks yet. There are simply too many stocks with beautiful chart patterns that are moving up. Until we get a couple more distribution days and I clearly see the Nasdaq fail here I am not going to short.

History OVER AND OVER tells us the best time to short is AFTER the market has already CLEARLY topped. Anticipation will kill most short sellers, like it has every selloff since the market took off in 2003.

Here are some signs of weakening if leading stocks are any indication of the overall market. AXR huge ugly reversal–you don’t see that in bull markets. AAPL breakout to new highs quickly followed by a reversal on heavy volume after announcing great earnings–you don’t see that in bull markets. This refers to the start of a bull market. This is the type of action you see at the end of an uptrend.

There are a TON of earnings this week and if they keep coming in the way they are it is going to be the worst reporting period since 2002. Tons of stocks are giving very weak guidance; estimates are being lowered all over the place.

Stay disciplined, cut losers fast, if your stock does not go up immediately after you buy it sell 1/2, and make sure you ONLY buy quality in this kind of market environment if you must go long right now. I am still taking what my scans give me and as you can see they are not giving me much.

THAT IS ABOUT A CLEAR SIGNAL AS ANY THAT THIS IS NOT THE BEST MARKET TO BE INVESTING IN. IF THIS WAS A NORMAL PULLBACK PLENTY OF STOCKS WOULD BE SHOWING UP ON MY SCANS AS NEW POSSIBLE LONGS. THEY ARE NOT SHOWING UP YET AND MIGHT NOT.

We shall see what the full plate of earnings brings us tomorrow and the rest of the week. I will be standing on the sidelines, making small buys, and carefully managing my portfolio until the market can clear up a bit.

Aloha and I will see you in the Chat Room!

At the close, the Nasdaq lost .8%, the DJIA lost .7%, and the SP 500 lost .6%. The bad news comes from two fronts: the SP 600 lost 1.5% and the IBD 100 fell 1.1%. Growth stocks and leading stocks stunk up the joint, today. The action in leading stocks shows that the market is weaker than the big cap indexes are telling us it is.

Volume ticked lower on both the NYSE and the Nasdaq appearing to brunt the damage of the selling. However, the refusal to follow through on the powerful gains yesterday after that crazy day on Wednesday tells me something is not right and that the market is weaker than the non-distribution day that it had today is telling us.

Here is a hint of that weakness. Breadth was negative on both the NYSE and the Nasdaq by around a 3-to-1 margin. That is a very weak day considering all the indexes were not down 1% or more.

For the week, the Nasdaq gained .8%, the DJIA fell .5%, the SP 500 fell .6%, and the SP 600 showed the real weakness underneath the market falling 1.6%.

There is no doubt this was a crazy week. Following the big intraday gains on Wednesday, stocks quickly reversed making one big round trip into the red. That looked UGLY as can be until the last hour when stocks were bid up all the way to the close. A very crazy day.

It then only got more crazy on Thursday as the buying continued and stocks roared ahead with strong gains, making the Wednesday session looking like a strong shakeout.

Enter today. The indexes gapped lower, moved even lower, but once again found support to drift into the close. It appears that every dip is being supported by the bulls. However, their powder is looking like it is drying up.

Why do I say that? Look at the SP 600. It finally cracked and broke down through the 50 dma. the NYSE, SP 500, DJIA, and the Nasdaq are right at those lines. If they don’t get above the Wednesday highs soon, it appears that they will join the SP 600 to the downside as breadth is getting very weak and I am getting way less high quality stocks on my scans.

The comfort to the possible selling comes via the big caps. Those indexes are still all in uptrends and even the Nasdaq 100 is holding the 50 dma after falling below it earlier in December. If big caps keep getting the bids and small caps keep selling, it will be obvious that this rally is in its late stages and that will have me start looking for weakness when they decide to stop rallying.

With all this caution, however, the facts must still be acted upon. The indexes are all still in uptrends in the long-term and intermediate term time frames. It is the sub-intermediate and short-term time frames that the indexes are either in sideways or downtrends. This is not enough time frames in the negative to start looking for shorts. Normally you want to see three time frames line up on your side (the bear side) if you want to start shorting.

Until the downtrend starts on the intermediate term, it is silly to start shorting in anticipation of falling prices. Stocks are still going up MUCH MORE than they are going down. The new buys are still working well. If they don’t they are being cut quickly avoiding much losses. Until 3 out of 4 longs I buy reverse on me after buying them, I must remain bullish. Most longs I continue to touch over $10 are still working out very well. Even the cheap ones are. They just fail more often. But when they don’t fail, they outperform unlike any other kind of stock.

Today was a very weak day and much weaker than the indexes tell. Today is the first day I am officially “worried” about this rally.

We will see what Monday brings us. Enjoy your weekend, rest well, and watch some NFL and college football games.

Aloha and I will see you on Monday.

At the close, the Nasdaq and the SP 500 led the way with a .9% gain, the DJIA followed with a .8% gain, and the SP 600 lagged again with a .6% gain. The IBD 100 managed to stay with the top indexes, pulling off a .9% gain. The big bopper came in the form of the Semiconductor Index. This laggard delivered a 1.9% gain.

Volume was higher on both the NYSE and the Nasdaq. It wasn’t a clear very strong sign of accumulation but coming off the recent consolidation it was an accumulation day none-the-less.

Breadth was higher on both exchanges, with winners over losers by a 3-to-2 margin on the Nasdaq and by and by a 5-to-3 margin on the NYSE.

Today was a bit of a mixed day for me, despite the markets gains. I had many stocks give me partial sell signals again and still did not have too many new longs come up on my scans. A lot of stocks, on the other hand, did very well today and some of my best stocks did surprisingly very well.

This basically shows a market that is rotating around with money moving from sector to sector. I guess that is why almost everday this week in the IBD Industry Group tables the top 10 winners and losers were all over the tables.

The indexes are all still doing very well and that supports further upside for the markets despite everyone thinking we need a rest. After such a strong move this morning a lot of traders expected selling to hit the market. It didn’t happen and if it did, buyers didn’t let prices slip a bit.

There is nothing new about this market that I have not spoken about in the past seven post. The trend is still up and nothing is changing it yet.

Even if this is just a Santa Claus rally, I don’t care. A rally is a rally, and if stocks are moving up, I want to be long. If it is the “right” rally or the “wrong” rally, I don’t care. I just want to make money. And the market is still offering longs so I will keep taking them and will continue this until the market rolls over.

The only real troubling thing is that I had a lot of charts to go over tonight and could find only four or five new longs. Normally, with over 600 charts in my scan I should have 8-10 new longs. So the rally could be ready to fizzle. I don’t know. Nobody does. If they say they do, they are full of shit.

Until this trend changes, I am not changing my bullish positioning. Aloha and I will see you at Investors Paradise.

New Swing Longs: DWSN AEZ HLTH WOLF JCG

Adding To Existing Long: AMSF

**stocks up 25% or more since I went long have number**

Longs Up On The Day: LNET-30 JST-112 STEC-69 MEH-71 HMSY-35 SVNT-87 CHINA-71 IMKTA-25 IIVI-27 PSPT-32 HRT-56 BMA-32 IAAC-47 PCCC-35 SEIC-25 IGLD-57 AOI-37 TTEC-60 FFH-25 DIVX-39 LWAY-41 HRZ-77 DA-55 CXW-33 MIKR-25 OMTR-72 AUXL-42 PLB-32 BUF-25 AKAM-250 PERY-33 ABI-33 PTT-85 GENT-35 ININ FTK AMSF UCTT LRCX CAM FMCN COH CNH INAP CELG RKT PRFT OTEX NYX RBN NITE MAIL BTJ LINTA RCRC NSTC TSRA NU OMNI NHWK SQM DECK ROG CCO EVEP HOS ISE BMC OPTM NLST SNCR MBLX CBF OSIR BMTI QI ICFI KALU KOG HA THK AGR TMO BBI SFL PFWD SPRT ADBE RRC ACGL PNW IGT NHP ISBC TZIX CCBL ETR ZILG APLX WGA NRGP

Stocks On Radar: XTO MKL TRCR BRG AB LVS VEH SVVS ONT MVIS ITWO MSO SPLS AHO TLEO EMC GMRK SVM DFC

Take Some Profits/Cut Some Losses: MSTR RAH OPLK AZS SUAI FTEK CKSW INPC ACP SRSL

Sell All: ADL NUE TRT

At the close, the SP 500 and DJIA fell a meager .1% and the Nasdaq and SP 600 fell .5%. The obvious bad news came in the IBD 100 as that index lost 1.3%, clearly signaling leading stocks were the hardest hit.

Volume was higher on the NYSE but still below the 50 day volume average. The Nasdaq’s volume came in slightly higher. That gave the Nasdaq its 3rd distribution day in four weeks.

The selling in NYSE did not seem that severe as volume was under the average and stocks closed near the higher levels of the day. The Nasdaq’s distribution also did not have that feel of extremely strong selling.

Breadth was negative on the NYSE with decliners beating advancers by a 9-to-7 ratio and decliners over advancers by a 3-to-2 ratio on the Nasdaq.

Steel stocks were the worst hit of the sectors today, with the IBD Steel-Specialty Aloy group getting crushed 4.9% and the Steel-Products getting creamed 3.3%. This goes to show once again yesterday’s leaders are not normally tomorrow’s or today’s leaders. These are the old leaders and most of these chart pattern have the same patterns many stocks have on their last breath. I don’t trust this group at all. NEXT!

I guess I should move on to the Fed speech. Well, no surprise, the Fed decided to leave the Fed rate alone at 5.25% for the fourth straight time. There was one dissenting member Richmond Fed Lacker who wanted a rate hike.

In its policy statement recent indicators showed that “economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market.” Looking forward, the Fed said “the economy seems likely to expand at a moderate pace.”

“Inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand,” the statement said.

The FOMC said further hikes are still possible, saying that “the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”

I still remain caution that a pullback could be possible but the action in the market continues to show me buyers are taking every dip they can get. This can change at any time but for now it has not.

Some stocks are starting to show signs that momentum money is tired. Stocks like MAMA shooting up a lot show a lot of money is chasing few speculative issues now. Before a lot of stocks might have taken bids like this. But many issues like SWAT show what is really going on with most pure speculative issues. This is a sign of a tired market.

The poor breadth in my top stocks of 404 issues showing only 113 up shows that it was a weak day but in saying that at the same time I only had a few complete sells out of 285 stocks. There are a lot of stocks that needed some good profits locked in and a lot of stocks that need to have most sold now because they are not immediately moving up since breaking out. There are about 50 of these. So obviously I am raising cash here, by just reacting to how my stocks are acting. I am only making 2 new buys and selling partial shares in about 50-60 stocks.

I still don’t know what this pullback will be. I have a lot of beautiful charts still but a lot more are now in that limbo stage where they could go either way. This is the first time I have seen this in this whole uptrend. This is officially day one where I have sold what I would consider a lot more than I am buying or interested in.

The key here is to be prepared for gains or losses. Right now is not the time to start buying tons of stocks because they are pulling back. This one could last longer than the others and adding to losses is a LOSER and LOSING game.

Just because the market looks ready to pullback, REMEMBER, it might not. So play the middle and be ready for either move. That way NOTHING can surprise you. Patience will pay off here.

You sure don’t want to sell all your stocks and see stocks like MAMA start popping up left and right before the “real” rollover starts. It is best to wait for the market to tell us it is ready to rollover. I would look for a 1% down day across the board on heavy volume. When I see that…then I might get worried. For now I am just ready.

Aloha and I will see you at Investors Paradise.

New Swing Longs: PRXI ATX

Adding To: NONE

New Swing Shorts: NONE

**stocks w/ number up 25% or more since I went long**

Longs Up: HRT-58 PCCC-31 LWAY-41 DA-53 IAAC-45 FTEK-45 DIVX-28 TRBN-35 OMTR-73 MAMA-76 PERY-32 PLB-29 MFRI-49 PTT-74 GLDN SRSL ININ IIG CCO RCRC RENT BTJ GRRF DLB NU CELG BMTI SAI CTCM QI EXLS TSG MDF TGEN CLRT GLBC RHA HURN CMCSA HNZ SFL AZK RWT PSMT ZILG

Stocks On Radar: DLIA TDS CNP CBG KBR EROC MKV ONSM BIOM ED HHGP KR SPI EE THS VRSN MEL NI AMCR….Utilities in general are on my watchlist.

Some Examples Of Stocks I Am Taking Partial Profits/Losses On: MAMA TSG BEZ GSL OPTM REGN MEH NLST ANAD TWLL HRZ NUE IDEV

Complete Cut All Your Losses/Take All Your Gains: ULTI NEWP SWAT