Also helping to lift stocks was a couple of merger and acquisition related announcements. Kirk Kerkorian has made a $4.5 billion bid for DCX and WEBM agreed to be acquired by Software AG. WEBM rose 27% on the announcement. This now puts the 1Q M&A deals up 27% over this time last year. $1.1 trillion worth of M&A deals this year has us on pace to beat last years record. More amazing is private equity deals. Those have risen 47%, year-over-year in 2007 so far.

Combine the positive jobless claims with the M&A deals, and with most traders taking Thursday off to have a very long weekend, and you had a recipe perfect for higher stock prices, despite oil climbing back over $64 on the news that the EIA saying that oil inventories declined for the eight-week in a row.

At the closing bell, the Nasdaq led the way with a .5% gain, the NYSE and the SP 500 followed with .3% gains, and the SP 600 and the DJIA lagged with .2% gains. A tad more troublesome is the IBD 100. That index only managed a .2% gain, well lagging the Nasdaq on the session.

Volume was lower on both the NYSE and the Nasdaq by about 10%. The lower volume was well below the 50 day volume average and was the lowest total of the year. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. There were 413 new highs to 53 new lows–and on the NYSE there were 234 new highs to only 13 new lows.

Today was another day of a low volume rally that saw the indexes barely move higher but once again shake off early weakness to do so. This is not a great trend we have developing, since the follow-through day on March 21st. Since that follow through day the market was been higher in seven sessions. All seven sessions have failed to have volume over the 50 day volume average and only two of the up sessions have come with volume heavier than the day before. This is a low volume rally that will not last much longer unless we get some clear accumulation days in here by big institutional traders. Until we have volume come in over the 50 day volume average on the upside, we are open to a severe sell-off still. Bottom line is that I would not take much away from this week’s holiday shortened trading.

For the week it was very positive with all indexes closing higher. The Nasdaq led the way with a 2.1% gain, the NYSE followed with a 1.8% gain, the DJIA was right behind with a 1.7% gain, the SP 500 rose 1.6%, and the SP 600 gained 1.5%. I could go into more detail about this weeks action but it would be silly to do so. All you need to know is that it was a holiday short week. The bulls almost always have control of these weeks. This week was no exception.

There is no doubt that we are still in rally mode but everything in my gut tells me we are not going far from here. Now I will change my stance in seconds, if I start to see Featured stocks with consistent great EPS and sales growth breakout from fresh bases and the markets start moving higher on HUGE volume. However, all I keep seeing is the old leaders breakout from choppy bases, defensive and utility issues climbing, and little small sub-$10 momo stocks moving. This does not make a safe big bull market. If we start seeing some more buying here on a lot of volume I will be much happier. However, unless we see it soon, we are increasing our chances of failure each day that passes that volume on the up days remain under the 50 day volume average.

Can we make money here? Of course! If you are a subscriber at least on the silver level you can see for yourself that almost EVERYTHING that I have touched since the February 27th sell-off is either higher or has not violated a complete cut loss area. However, there is nothing over $10 breaking out from bases seven weeks long that have perfect accumulation/distribution and max green BOP. In March 2003, October 2004, and November 2005 there were plenty of beautiful charts. Even after the move in August 2006 there were a few SWEET gems. However, since March 21st there has been very few. The stocks that do have perfect charts are just not Featured quality. If this market takes a turn for the worse, these stocks will not fall 8%–they will fall 20% or more before violating a key cut loss level. So I can not recommend them for newbies.

Give me a sell-off of 20% or more and a VIX near 20-30 and the next follow-through we get you will see the power of this strategy. Right now, very few people are making a killing. Remember back in March 2003 when the VIX was at 33? I had many stocks make 300-500% gains. So what can we compare it to now. How about KNOL. KNOL is up 301% for me since I purchased it. If the VIX was three times higher than now and around 36, KNOL would be up 900%. So basically you can take a look at my returns below this commentary and then double or triple them and then you will see the potential gains in a “REAL” bull market. Not a low volume snooze-fest higher.

Speaking of the VIX: The VIX fell 10.2% this week. LOL. With the VIX that low, you can forget about many MFW or TRCR type of stocks showing up. Normally I can find 10-20 MFW and TRCR type of stocks. Not in this market. However, the drop in VIX puts complacency in the market and that is bearish for stock prices. Another bearish item is the put/call ratio. That ratio after falling below .7 yesterday is still low at .74. Also, early on in the realmoney.com polls, bulls are beating bears 60% to 19%. The crowd appears to bullish again….for now. And we all know how quick this can change. More choppiness? Probably.

So remember, until we get more quality Featured type stocks, keep your buys small in this speculative crap that is getting action. Also if you are brand new and are still inexperienced (you know who you are) and you buy a stock and it goes against you the next day, think about selling 25% to 33%. Also in these speculative stocks, don’t be afraid to take some gains at 25% or so. These things like to reverse in the kind of market environment we are in so you need to stay on your toes. Breakouts should work right away! Especially in rough markets. If they don’t move up right away, newbies, think of selling some down.

Before I move on to wishing everyone a Happy Easter, I want to talk about the March employment numbers. Expectations for 135,000 was well taken care of when headlines produced a gain of 180,000. Along with that nice gain, the previous two months employment figures were revised up. But more amazing, despite this “horrible-evil-economy-that-GWB-has-created,” unemployment came in at five-year lows at 4.4%, beating expectations of a tick up to 4.6% from 4.5% . That is simply incredible. This also comes with average hourly earnings rising .3%. That is a 4% gain year-over-year. Even though the economy is showing signs of slowing, these numbers show just how great this economy still is despite the slowdown.

Wall-street took the news quite well with the SP futures rising 5.75 and the NQ futures rising 10.75. Stocks were closed today, obviously, but futures still traded for a little while.

Earnings season officially starts next week when AA reports on Tuesday. Analyst are expecting gains of 3.7% in YOY earnings this quarter. That is down from 8.7% estimates, earlier this year (not a good sign). 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. Historically you can watch the trend of the GDP growth and earnings growth of an economy and see that they are the best predictor of what direction the stock market will take. GDP and earnings lead the market.

With that I wish everyone a Happy Easter and Passover. Enjoy the time with loved ones. Aloha and I will see you in the chat room.

Market Commentary At Big Wave Trading Bronze Level One.

Top Holdings Up This Week – Signal Date

KNOL 301% – 1/12/06
AKAM 220% – 9/30/05
TRCR 188% – 1/12
TTEC 172% – 8/25
JSDA 139% – 12/20
TNH 132% – 10/26
OMTR 125% – 9/15
CCOI 107% – 9/27
MEH 105% – 8/30
HRZ 104% – 9/27
CLRT 98% – 11/30
PRGX 97% – 1/12
AOI 94% – 11/19
EVEP 93% – 11/16
MFW 91% – 1/29
BONT 87% – 10/3
NEXC 81% – 10/25
CPA 79% – 9/15
CHINA 78% – 8/16
IMKTA 74% – 8/28
SLP 73% – 2/5
BAM 73% – 11/17/05
DA 67% – 1/25/06
MOS 65% – 10/12
EPHC 64% – 12/20
ULTR 64% – 10/27
HURN 63% – 9/13
IIVI 63% – 8/30
PERY 61% – 10/4
ANO 58% – 2/14
CXW 58% – 5/19
XIDE 56% – 1/29
KHDH 55% – 5/30
APLX 53% – 9/28
BMTI 52% – 10/25
IMMU 52% – 12/19
ONT 52% – 12/21
BMA 52% – 10/24
DECK 51% – 9/13
OEH 48% – 11/20
VDSI 48% – 1/4

New Swing Longs: Silver Level Two

New Swing Shorts: Silver Level Two

Stocks On My Watchlist: Gold Level Three

Complete Profits/Losses: Gold Level Three

Partial Profits/Losses: Gold Level Three

MauiTrader Forums: Gold Level Three

MauiTrader Chat Room: Gold Level Three

Longs Up On The Day: Gold Level Three

Shorts Up On The Day: Gold Level Three

Also helping to lift stocks was a couple of merger and acquisition related announcements. Kirk Kerkorian has made a $4.5 billion bid for DCX and WEBM agreed to be acquired by Software AG. WEBM rose 27% on the announcement. This now puts the 1Q M&A deals up 27% over this time last year. $1.1 trillion worth of M&A deals this year has us on pace to beat last years record. More amazing is private equity deals. Those have risen 47%, year-over-year in 2007 so far.

Combine the positive jobless claims with the M&A deals, and with most traders taking Thursday off to have a very long weekend, and you had a recipe perfect for higher stock prices, despite oil climbing back over $64 on the news that the EIA saying that oil inventories declined for the eight-week in a row.

At the closing bell, the Nasdaq led the way with a .5% gain, the NYSE and the SP 500 followed with .3% gains, and the SP 600 and the DJIA lagged with .2% gains. A tad more troublesome is the IBD 100. That index only managed a .2% gain, well lagging the Nasdaq on the session.

Volume was lower on both the NYSE and the Nasdaq by about 10%. The lower volume was well below the 50 day volume average and was the lowest total of the year. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. There were 413 new highs to 53 new lows–and on the NYSE there were 234 new highs to only 13 new lows.

Today was another day of a low volume rally that saw the indexes barely move higher but once again shake off early weakness to do so. This is not a great trend we have developing, since the follow-through day on March 21st. Since that follow through day the market was been higher in seven sessions. All seven sessions have failed to have volume over the 50 day volume average and only two of the up sessions have come with volume heavier than the day before. This is a low volume rally that will not last much longer unless we get some clear accumulation days in here by big institutional traders. Until we have volume come in over the 50 day volume average on the upside, we are open to a severe sell-off still. Bottom line is that I would not take much away from this week’s holiday shortened trading.

For the week it was very positive with all indexes closing higher. The Nasdaq led the way with a 2.1% gain, the NYSE followed with a 1.8% gain, the DJIA was right behind with a 1.7% gain, the SP 500 rose 1.6%, and the SP 600 gained 1.5%. I could go into more detail about this weeks action but it would be silly to do so. All you need to know is that it was a holiday short week. The bulls almost always have control of these weeks. This week was no exception.

There is no doubt that we are still in rally mode but everything in my gut tells me we are not going far from here. Now I will change my stance in seconds, if I start to see Featured stocks with consistent great EPS and sales growth breakout from fresh bases and the markets start moving higher on HUGE volume. However, all I keep seeing is the old leaders breakout from choppy bases, defensive and utility issues climbing, and little small sub-$10 momo stocks moving. This does not make a safe big bull market. If we start seeing some more buying here on a lot of volume I will be much happier. However, unless we see it soon, we are increasing our chances of failure each day that passes that volume on the up days remain under the 50 day volume average.

Can we make money here? Of course! If you are a subscriber at least on the silver level you can see for yourself that almost EVERYTHING that I have touched since the February 27th sell-off is either higher or has not violated a complete cut loss area. However, there is nothing over $10 breaking out from bases seven weeks long that have perfect accumulation/distribution and max green BOP. In March 2003, October 2004, and November 2005 there were plenty of beautiful charts. Even after the move in August 2006 there were a few SWEET gems. However, since March 21st there has been very few. The stocks that do have perfect charts are just not Featured quality. If this market takes a turn for the worse, these stocks will not fall 8%–they will fall 20% or more before violating a key cut loss level. So I can not recommend them for newbies.

Give me a sell-off of 20% or more and a VIX near 20-30 and the next follow-through we get you will see the power of this strategy. Right now, very few people are making a killing. Remember back in March 2003 when the VIX was at 33? I had many stocks make 300-500% gains. So what can we compare it to now. How about KNOL. KNOL is up 301% for me since I purchased it. If the VIX was three times higher than now and around 36, KNOL would be up 900%. So basically you can take a look at my returns below this commentary and then double or triple them and then you will see the potential gains in a “REAL” bull market. Not a low volume snooze-fest higher.

Speaking of the VIX: The VIX fell 10.2% this week. LOL. With the VIX that low, you can forget about many MFW or TRCR type of stocks showing up. Normally I can find 10-20 MFW and TRCR type of stocks. Not in this market. However, the drop in VIX puts complacency in the market and that is bearish for stock prices. Another bearish item is the put/call ratio. That ratio after falling below .7 yesterday is still low at .74. Also, early on in the realmoney.com polls, bulls are beating bears 60% to 19%. The crowd appears to bullish again….for now. And we all know how quick this can change. More choppiness? Probably.

So remember, until we get more quality Featured type stocks, keep your buys small in this speculative crap that is getting action. Also if you are brand new and are still inexperienced (you know who you are) and you buy a stock and it goes against you the next day, think about selling 25% to 33%. Also in these speculative stocks, don’t be afraid to take some gains at 25% or so. These things like to reverse in the kind of market environment we are in so you need to stay on your toes. Breakouts should work right away! Especially in rough markets. If they don’t move up right away, newbies, think of selling some down.

Before I move on to wishing everyone a Happy Easter, I want to talk about the March employment numbers. Expectations for 135,000 was well taken care of when headlines produced a gain of 180,000. Along with that nice gain, the previous two months employment figures were revised up. But more amazing, despite this “horrible-evil-economy-that-GWB-has-created,” unemployment came in at five-year lows at 4.4%, beating expectations of a tick up to 4.6% from 4.5% . That is simply incredible. This also comes with average hourly earnings rising .3%. That is a 4% gain year-over-year. Even though the economy is showing signs of slowing, these numbers show just how great this economy still is despite the slowdown.

Wall-street took the news quite well with the SP futures rising 5.75 and the NQ futures rising 10.75. Stocks were closed today, obviously, but futures still traded for a little while.

Earnings season officially starts next week when AA reports on Tuesday. Analyst are expecting gains of 3.7% in YOY earnings this quarter. That is down from 8.7% estimates, earlier this year (not a good sign). 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. Historically you can watch the trend of the GDP growth and earnings growth of an economy and see that they are the best predictor of what direction the stock market will take. GDP and earnings lead the market.

With that I wish everyone a Happy Easter and Passover. Enjoy the time with loved ones. Aloha and I will see you in the chat room.

There were two more headlines of interest: The University of Michigan consumer confidence survey was revised down to 88.4 from 88.8 and the Chicago Purchasing Managers index rose to 61.7 in March from 47.9 in February. Anything over 50 on the CPMI indicates expansion.

However, news that the Bush administration via the Commerce Department are going to put economic sanctions/tariffs on China to protect the US paper producers from unfair subsidies. That sent stocks and the dollar lower. I hate ANY kind of economic sanction but we will see how this turns out.

It turned out, for the day, stocks weren’t that worried over it and they managed to recoup almost all of the losses that were sustained from the intraday highs. This was the second day in a row stocks have reversed after selling off hard in early hours of trading.

When the closing bell rang, stocks ended up mixed all over the board. The Nasdaq led the way with a .2% gain, the SP 400 gained .1%, and the DJIA ticked higher by .05%. On the downside, the NYSE led the way with a .2% loss, the SP 500 followed with a .1% loss, and the SP 600 ticked slightly lower by .03% basically closing flat. Leading stocks, via the IBD 100, closed flat with a 0.0% move. Like I said, boring. If you fell asleep before the market opened and woke up after the bell, you might question if it really opened.

The Nasdaq, SP 500, and DJIA are all below their 50 day moving averages and the NYSE, SP 400, and SP 600 are above their 50 day moving averages, showing you exactly how mixed this market really is, not only today but the past week.

Volume ticked higher today on both the NYSE and the Nasdaq. However, volume does not really matter today. What does matter is knowing this was not churning because volume was below the 50 day volume average; signaling the big boys were not interested in pushing the market around today.

Advancers beat decliners by a 6-to-5 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. The fact that the NYSE was down today but breadth was up is very positive and shows you which index is leading. Speaking of leading, just look at the 52-week new highs. There were 132 NH on the NYSE and only 11 NL. On the Nasdaq it was 85 NH to 45 NL. Obviously, the strength, is clearly in the NYSE. Metals, Steel, Oil, and Food stocks; the NYSE is their home.

If you still don’t believe me that this market is boring and trendless, check out these numbers. For the week, the Nasdaq and the SP 500 lost 1.1%, the DJIA and SP 600 lost 1%, and the NYSE lost .8%. For the quarter (A FULL THREE MONTHS), the SP 600 showed some action with a 3% gain (that is very impressive). But the rest of the indexes spent the last three months going nowhere. The NYSE gained 1.3%, the DJIA rose .9%, the Nasdaq gained .3%, and the SP 500 gained .2%. You have to give the SP-600 some credit, because a 12% annual gain is very nice, but the rest of the indexes show you why Jesse Livermore and many of the greatest traders only traded when the indexes were in clear trends. I hope you made money but if you did not make any money…how much did you trade this year? Was it worth it? Or was “sitting” the right play?

There was one pocket of action, on Friday. The Homebuilder-Residential/Commercial group tanked another 3% today. This sector continues to show you why you should NEVER buy stocks that are a “bargain,” are “cheap,” are “values,” and that you think have “bottomed.” How many dip buyers keep getting killed here? I know quite a few people buying these stocks thinking they are picking up bargains. Good luck fighting through all that resistance.

Oh my, so after a week and a half, since the follow-through day, here we are still waiting for another day of substantial gains on a surge in volume that will help produce many stocks breaking out of sound bases. Well, you may be waiting, but I really don’t care anymore. LOL. Bu the fact that we have not had an accumulation day since the follow-through is troublesome. Remember just because we are holding above the lows and have had only one distribution day–that, yes, can be taken as bullish–we still need more gains on higher volume if this is going to hold.

This market has some real problems. If we are going to be going higher, trust me, I will play it. Hell, I am already playing it with 200 stocks. But the fact that the Featured select group of stocks is still only 58% invested a week and a half since the follow-through day is very very very troublesome. You want another troublesome fact? The Nasdaq is below the close of the follow-through day and since then has seen no accumulation days and one distribution day.

I am 100% sure that by now, if this market was really ready to blast-off, we would have the Featured select at 100% invested, I would not be long 200 stocks with 130 of them being pure speculative to half-way-speculative issues (stocks not of Featured quality), I would not continue to find only speculative stocks to go long, there would be more Featured quality stocks breaking out of bases, and there would be more Featured quality stocks setting up in bases. We do NOT have this happening. This is not a market for growth/momentum investors. If you are looking to hit a home run, you probably need to adjust your stance and swing. Because this market has a powerful pitching rotation that is on fire right now. Single, double, and MAYBE a triple, if you are lucky is all that growth investors can expect, with the VIX still below 20.

I guess with so many people expecting the worse and the put/call still over 1 at 1.05 shows that there is a lot of bearishness out there. However the AAII poll this week showed bears come way down and bulls go over 50%. Also, this weekend, the realmoney.com poll shows 54% bulls, only 19% bearish, and 26% neutral (or confused, whatever you want to call it). So to me it seems the crowd is now bullish. How confusing can it get????? But really the smart trader knows not to really care or give a damn. Until you get pretty green charts in stocks with excellent fundamentals we know it is just noise.

The dip buyers can continue to step in here and believe nothing is wrong and can continue to buy stocks thinking they will go to the moon. But the fact that we have the government stepping in with sanctions, poor economic numbers, lower GDP growth, inflation, and a new Congress that is about to raise taxes by not extending the Bush tax cuts and you have a disaster waiting to happen. What is wrong here? You retail money that is NOW just buying stocks (I can see this data via mutual fund inflows–January and February inflows were HUGE) are buying at the top AGAIN. These inflows always happen right at the end or near the end of a trend. What is wrong? You are four years too late! Where were you in October 2002? Where were you in March 2003? If you are just now buying stocks, you should look in the mirror and ask yourself who is really buying your stocks; you or the media that convinced you the evil George W. Bush’s economy was doomed to fail? Since the tax cuts the Nasdaq is up 90% and the SP 600 is up 137%. Yeah, tax cuts don’t work, do they?

Next week is a short week, with Good Friday occurring on…Friday. And we are also coming upon earnings season. We start to get numbers this week but the real action officially kicks off on the 10th when AA reports. There might be one minor problem this time, which you can add to the list of problems I have already mentioned, as wall street is looking for earnings to come in 4% to 6% higher YOY. Not bad you say? Yes, you are right. But the problem lies in the fact that earnings have come in over double digits for the past 14 quarters.

If earnings do not come in at double digits, this will be the first time since 2003 that we have not seen this. If you don’t think that is potential bearish, you really don’t understand the stock market. GDP growth and EPS growth is the two clear leading indicators for stock markets. Not just the US stock market, ALL MARKETS ALL OVER THE WORLD GOING BACK YEARS AND YEARS AND YEARS. Find a country check out the GDP growth and then watch the stock market follow. How is the USA GDP growth looking? I am a question asking fool tonight!!!

Expect more choppy and meaningless trading this week. I am only predicting this so that we actually get a follow-through to the downside or upside here. Normally, whatever I think will happen does not happen. So I predict the market will flatline and be choppy intraday every day next week.

This market is still in a very weak bullish phase. But it is still in a bullish trend so there is no reason to bet against it. I am sure the safe time to short will be soon; but with all these beautiful green charts in these tiny small cheap crap stocks I have to take them. They are working (80% of them) and some are producing some nice gains and have chart patterns for potential big gains. However, if the market weakens expect them to go with it. But that is why I am only 56% invested. Which is AMAZINGLY (not really, just showing you how discipline works) similar to the Featured select only being 58% invested. CASH IS STILL KING!!! KING, I TELL YOU!!

Aloha and I will see you in the chat room. I am tired and stressed out (not from the market; from socialized medicine…the only medicine on Maui).

Market Commentary At Big Wave Trading Bronze Level One.

Top Holdings Up This Week – Signal Date

KNOL 295% – 1/12/06
AKAM 230% – 9/30/05
TRCR 161% – 1/12
TTEC 157% – 8/25
OMTR 131% – 9/15
JSDA 108% – 12/20
TNH 107% – 10/26
CCOI 107% – 9/27
HRZ 103% – 9/27
PRGX 97% – 1/12
BONT 87% – 10/3
MEH 83% – 8/30
EVEP 80% – 11/16
AOI 76% – 11/19
CLRT 75% – 11/30
CHINA 74% – 8/16
IMKTA 72% – 8/28
CPA 66% – 9/15
EPHC 66% – 12/20
DA 65% – 1/25/06
IIVI 61% – 8/30
PERY 59% – 10/4
ULTR 58% – 10/27
CXW 57% – 5/19
HURN 57% – 9/13
XIDE 56% – 1/29
APLX 54% – 9/28
BMTI 52% – 10/25
MFW 50% – 1/29
DECK 50% – 9/13
KHDH 49% – 5/30
OEH 48% – 11/20

New Swing Longs: Silver Level Two

New Swing Shorts: Silver Level Two

Stocks On My Watchlist: Gold Level Three

Complete Profits/Losses: Gold Level Three

Partial Profits/Losses: Gold Level Three

MauiTrader Forums: Gold Level Three

MauiTrader Chat Room: Gold Level Three

Longs Up On The Day: Gold Level Three

Shorts Up On The Day: Gold Level Three

There were two more headlines of interest: The University of Michigan consumer confidence survey was revised down to 88.4 from 88.8 and the Chicago Purchasing Managers index rose to 61.7 in March from 47.9 in February. Anything over 50 on the CPMI indicates expansion.

However, news that the Bush administration via the Commerce Department are going to put economic sanctions/tariffs on China to protect the US paper producers from unfair subsidies. That sent stocks and the dollar lower. I hate ANY kind of economic sanction but we will see how this turns out.

It turned out, for the day, stocks weren’t that worried over it and they managed to recoup almost all of the losses that were sustained from the intraday highs. This was the second day in a row stocks have reversed after selling off hard in early hours of trading.

When the closing bell rang, stocks ended up mixed all over the board. The Nasdaq led the way with a .2% gain, the SP 400 gained .1%, and the DJIA ticked higher by .05%. On the downside, the NYSE led the way with a .2% loss, the SP 500 followed with a .1% loss, and the SP 600 ticked slightly lower by .03% basically closing flat. Leading stocks, via the IBD 100, closed flat with a 0.0% move. Like I said, boring. If you fell asleep before the market opened and woke up after the bell, you might question if it really opened.

The Nasdaq, SP 500, and DJIA are all below their 50 day moving averages and the NYSE, SP 400, and SP 600 are above their 50 day moving averages, showing you exactly how mixed this market really is, not only today but the past week.

Volume ticked higher today on both the NYSE and the Nasdaq. However, volume does not really matter today. What does matter is knowing this was not churning because volume was below the 50 day volume average; signaling the big boys were not interested in pushing the market around today.

Advancers beat decliners by a 6-to-5 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. The fact that the NYSE was down today but breadth was up is very positive and shows you which index is leading. Speaking of leading, just look at the 52-week new highs. There were 132 NH on the NYSE and only 11 NL. On the Nasdaq it was 85 NH to 45 NL. Obviously, the strength, is clearly in the NYSE. Metals, Steel, Oil, and Food stocks; the NYSE is their home.

If you still don’t believe me that this market is boring and trendless, check out these numbers. For the week, the Nasdaq and the SP 500 lost 1.1%, the DJIA and SP 600 lost 1%, and the NYSE lost .8%. For the quarter (A FULL THREE MONTHS), the SP 600 showed some action with a 3% gain (that is very impressive). But the rest of the indexes spent the last three months going nowhere. The NYSE gained 1.3%, the DJIA rose .9%, the Nasdaq gained .3%, and the SP 500 gained .2%. You have to give the SP-600 some credit, because a 12% annual gain is very nice, but the rest of the indexes show you why Jesse Livermore and many of the greatest traders only traded when the indexes were in clear trends. I hope you made money but if you did not make any money…how much did you trade this year? Was it worth it? Or was “sitting” the right play?

There was one pocket of action, on Friday. The Homebuilder-Residential/Commercial group tanked another 3% today. This sector continues to show you why you should NEVER buy stocks that are a “bargain,” are “cheap,” are “values,” and that you think have “bottomed.” How many dip buyers keep getting killed here? I know quite a few people buying these stocks thinking they are picking up bargains. Good luck fighting through all that resistance.

Oh my, so after a week and a half, since the follow-through day, here we are still waiting for another day of substantial gains on a surge in volume that will help produce many stocks breaking out of sound bases. Well, you may be waiting, but I really don’t care anymore. LOL. Bu the fact that we have not had an accumulation day since the follow-through is troublesome. Remember just because we are holding above the lows and have had only one distribution day–that, yes, can be taken as bullish–we still need more gains on higher volume if this is going to hold.

This market has some real problems. If we are going to be going higher, trust me, I will play it. Hell, I am already playing it with 200 stocks. But the fact that the Featured select group of stocks is still only 58% invested a week and a half since the follow-through day is very very very troublesome. You want another troublesome fact? The Nasdaq is below the close of the follow-through day and since then has seen no accumulation days and one distribution day.

I am 100% sure that by now, if this market was really ready to blast-off, we would have the Featured select at 100% invested, I would not be long 200 stocks with 130 of them being pure speculative to half-way-speculative issues (stocks not of Featured quality), I would not continue to find only speculative stocks to go long, there would be more Featured quality stocks breaking out of bases, and there would be more Featured quality stocks setting up in bases. We do NOT have this happening. This is not a market for growth/momentum investors. If you are looking to hit a home run, you probably need to adjust your stance and swing. Because this market has a powerful pitching rotation that is on fire right now. Single, double, and MAYBE a triple, if you are lucky is all that growth investors can expect, with the VIX still below 20.

I guess with so many people expecting the worse and the put/call still over 1 at 1.05 shows that there is a lot of bearishness out there. However the AAII poll this week showed bears come way down and bulls go over 50%. Also, this weekend, the realmoney.com poll shows 54% bulls, only 19% bearish, and 26% neutral (or confused, whatever you want to call it). So to me it seems the crowd is now bullish. How confusing can it get????? But really the smart trader knows not to really care or give a damn. Until you get pretty green charts in stocks with excellent fundamentals we know it is just noise.

The dip buyers can continue to step in here and believe nothing is wrong and can continue to buy stocks thinking they will go to the moon. But the fact that we have the government stepping in with sanctions, poor economic numbers, lower GDP growth, inflation, and a new Congress that is about to raise taxes by not extending the Bush tax cuts and you have a disaster waiting to happen. What is wrong here? You retail money that is NOW just buying stocks (I can see this data via mutual fund inflows–January and February inflows were HUGE) are buying at the top AGAIN. These inflows always happen right at the end or near the end of a trend. What is wrong? You are four years too late! Where were you in October 2002? Where were you in March 2003? If you are just now buying stocks, you should look in the mirror and ask yourself who is really buying your stocks; you or the media that convinced you the evil George W. Bush’s economy was doomed to fail? Since the tax cuts the Nasdaq is up 90% and the SP 600 is up 137%. Yeah, tax cuts don’t work, do they?

Next week is a short week, with Good Friday occurring on…Friday. And we are also coming upon earnings season. We start to get numbers this week but the real action officially kicks off on the 10th when AA reports. There might be one minor problem this time, which you can add to the list of problems I have already mentioned, as wall street is looking for earnings to come in 4% to 6% higher YOY. Not bad you say? Yes, you are right. But the problem lies in the fact that earnings have come in over double digits for the past 14 quarters.

If earnings do not come in at double digits, this will be the first time since 2003 that we have not seen this. If you don’t think that is potential bearish, you really don’t understand the stock market. GDP growth and EPS growth is the two clear leading indicators for stock markets. Not just the US stock market, ALL MARKETS ALL OVER THE WORLD GOING BACK YEARS AND YEARS AND YEARS. Find a country check out the GDP growth and then watch the stock market follow. How is the USA GDP growth looking? I am a question asking fool tonight!!!

Expect more choppy and meaningless trading this week. I am only predicting this so that we actually get a follow-through to the downside or upside here. Normally, whatever I think will happen does not happen. So I predict the market will flatline and be choppy intraday every day next week.

This market is still in a very weak bullish phase. But it is still in a bullish trend so there is no reason to bet against it. I am sure the safe time to short will be soon; but with all these beautiful green charts in these tiny small cheap crap stocks I have to take them. They are working (80% of them) and some are producing some nice gains and have chart patterns for potential big gains. However, if the market weakens expect them to go with it. But that is why I am only 56% invested. Which is AMAZINGLY (not really, just showing you how discipline works) similar to the Featured select only being 58% invested. CASH IS STILL KING!!! KING, I TELL YOU!!

Aloha and I will see you in the chat room. I am tired and stressed out (not from the market; from socialized medicine…the only medicine on Maui).

After all the crazy intraday action was over, the NYSE led the way higher, thanks to being loaded with metal, steel, and oil stocks, with a .7% gain. The SP 500 and SP 600 rallied .4%, and the Nasdaq rallied .03%. The good news came in the form of leading stocks as both the IBD 100 and the IBD 85-85 closed higher by .7%. The only troubling part was that many stocks suffered some big hits. But besides the stocks that got whooped, there were plenty of stocks producing enough gains to make up for it.

Volume came in slightly lower on the Nasdaq and the NYSE. While the light volume rally reversal might not be that bullish, it was still a lot better than stocks not rebounding at all and giving up another distribution day. So it is hard to really complain about the action today. The fact that stocks closed higher, even on the light volume, is impressive on a short-term basis.

Advancers beat decliners on both exchanges, with leaders beating losers by a 5-to-3 margin on the NYSE and by a very narrow margin on the Nasdaq. There were 223 new highs to 83 new lows, showing that the majority of stocks are still hitting new highs not new lows. Yes, the breadth of these moves compared to where we were last time is negative but it seems nothing matters to this messed-up market.

The Nasdaq and SP 500 do seem to be finding it tough to fight through their 50 day moving averages. These indexes also have weak RS lines. This signals that maybe with the overbought condition we could expect stocks to go lower. But, once again, there is a slight problem. The put/call ratio is still over 1 at 1.14, signaling that more than likely there is still too much fear in this market and the resistance at the 50 day moving average should turn into a bullish development as prices cross over this line. Another factor supporting that is the IBD 100 and IBD 85-85 having strong RS lines during this most recent month’s action. That, along with 7 of the top 10 industry groups today coming today from the top 17 IBD sectors, shows that the market should be able to continue with its upside bias.

However, I am not sure how this is going to work. And even if it is going to work, how it is going to make us big safe money (there is such a thing, non-Featured-grasping friends). You simply do not see this kind of overall action in positive bullish markets that have nothing wrong with them. The fact that even after the recent gains we have very few stocks breaking out of long nice bases and instead have to buy the leaders as they pullback to 50 day moving averages, that most have ridden since 2003, is just pathetic. Oil, Steel, and Metal stocks are starting to get green again but this time they are doing so after very troublesome downtrends. These type of rallies this late tend to fail more than succeed. Also you don’t see top stocks breakout of bases and then fail like you saw in RECN, MOV, and SIMO. This simply does not happen after a real correction that leads to a new follow-through to a new bull phase. This rally still has that feeling that we are going to see a failure eventually. When? How the hell do I know! My track record is pretty shitty when it comes to calling that China top.

Everyone that I know that trades like me sees pretty much the same thing, so I am for sure that my analysis on this market is DEAD ON. Everyone is also tired and worn out and I can definitely echo that feeling. The other feeling we all share is the fact that CASH IS KING still!! It is much wiser to keep cash heavy here for a higher odds play. The best and greatest traders of all time ALL knew the big money was made in the sitting; not in the acting. Sitting and holding onto your stock as it keeps going higher, instead of selling for quick profits; and sitting on the sidelines waiting for everything to line up so you can go all-in and start making a killing on your new purchases, instead of just trying to trade every day in every single market environment was one of the most important part to all the success of these traders. The most important part is always and will always be to CUT YOUR LOSSES SHORT WHEN YOU ARE WRONG, RIGHT AFTER YOU GO LONG.

I am going in for an MRI tomorrow to check on some nerve damage that I seem to be suffering in my L1 to L5 region. Therefore, I am not sure how much I will be around tomorrow. In case I am not around that much, remember, CASH IS STILL KING! Aloha and I will see you in the chat room.

At the closing bell, the DJIA, Nasdaq, NYSE and SP 500 all closed with .8% losses. The SP 400 and SP 600 held up well, only falling .4%, showing where today’s leadership could be found. Despite the big cap indexes closing near their LOD, the small-cap indexes both showed positive intraday reversals off the lows. The IBD 100 and IBD 85-85 both held up better than the market, only falling .7%. That is bullish divergence by leading stocks, despite all the negative headlines. But even with these indexes holding up well, the best industry on the day in the IBD 197 industry group was the Food-Flour & Grain group moving higher by 2.4%. Yippee! That makes for an exciting bull market. Combine that with old leaders, other defensive issues, and health service stocks and you have the stuff of a boring slow low-VIX market that decides to keep going higher despite four-years of gains without a 10% pullback in the DJIA.

Volume was higher today on the NYSE by 10% and higher on the Nasdaq by 17%, thus giving the market its first distribution day since the follow-through day last Wednesday. Remember, a distribution day here and there at the beginning of a rally is normal. What will not be normal is about four to five distribution days within a span of a couple of weeks to four weeks. At the same time, however, the best bull markets do not normally flash a distribution day within the first week without having another big day of gains after the follow-through.

Breadth was negative on both exchanges, by around the same margin, with the Nasdaq and NYSE producing two decliners to every stock that advanced. There were 177 new highs to 73 mew lows. There are still no divergences showing up in these statistics. The put/call ratio also jumped to 1.16, indicating that there is still fear in this market. And in the Investors Intelligence survey bulls climbed to 48.4% and bears declined to 27.5%. These stats, to say the least, are very ambiguous when it comes to telling us how the market feels. There are still a lot of bulls out there, the Investors Intelligence came in with bulls rising to 48.4% and bears falling to 27.5%, in the most recent poll. So take that in also.

Some of the weakest action, once again, came from the homebuilders, as the Philly Housing index fell 2.2% and the IBD Building-Residential/Commercial group fell 2%. The Auto-Manufacturing group fell 2.4%, along with Metal Product-Fasteners 2.4% fall, to help lead the way lower. The homebuilders woes today was blamed on BZH and possibly not helped by the news NEWC will file for bankruptcy this week (the stock is now at $1.11 on the pink sheets from $45 on the Nasdaq in August 2006–buy and hold? No thanks). The auto group’s woes were blamed on the news that GM will not make a bid for DCX. Is that really a surprise? What would GM do? Send the Union in to destroy DCX next.

The worst bit of news, that I personally heard, today, was the fact that Ben is clearly telling us that inflation is “uncomfortably high.” This is as clear as a signal that you can have that he has no intention of cutting rates anytime soon. I will go so far as to say more rate hikes are even possible. The other bit of info he dropped on us was that the sub-prime market would not hurt the economy but that it will hurt housing. Really, Ben? Thanks. I tell you what, with that kind of information, we should all just go ahead and stick our head in the sand. I really doubt the sub-prime market is not going to effect the economy. I guarantee you that it does. This sub-prime activity was a bubble and the housing market was a bubble. Bubbles take years to unravel. What was Ben going to say? “Oh crap, all hell is breaking loose in the housing market and this is going to spill over to consumer spending and savings and hurt the market.” You are not going to ever hear that. Ben, the economy is clearly slowing and we have inflation. Not good!

However, despite what is going on underneath, we still only make money on the actual price and volume of the indexes. Those indexes are technically in an uptrend following the March 21st follow-through day and until we either violate the lows or get a few more distribution days soon there is no reason to fight the trend. Even though that trend is giving us an extremely small amount of quality stocks breaking out of quality bases. What it is giving us is a lot of small and cheap stocks breaking out of pretty bases. There is nothing wrong with that but it sure in the heck is a lot harder to buy a ton of a stock that has either no earnings, no sales, horrible liquidity, or is too volatile. The extremely pretty charts in the IBD Featured quality longs are simply not there. Sure there are stocks like JAX tonight that come along with a beautiful chart and OK but not great fundamentals. But until I get a chart like that in a stock that has growth like SMSI, it is hard to buy more than 5% of my account (that would be like 20% or more to you) in any of the stocks I am getting currently. In fact, TESOF, is the only stock this year where I have put 5% of my money into. If you have TCNet and you use the BOP indicator, you know why I bought so much and why I am still long 90% of my stock still.

This brings me to my point: I still don’t see how this market can rally much from here without more downside. The leadership in this market is pathetic, the low VIX, and the fact that we were not even in a correction for a full month really bothers me. The best stock market rallies do not start without stocks with amazing fundamentals breaking out of green beautiful bases. They also do not start with VIX under 20 and with a correction lasting only a month. The minimum you need a correction to last is at least two months. Most rallies that started after a correction started and did not spend at least two months in a bear market failed. The best rallies see markets go through at least three months of a correction. This helps set up beautiful bases in the next leaders, as the old leaders fall and the new leaders slowly move up for the next bull. This low VIX, lack of leadership, and weak rally after a short correction all just looks wrong. These are all signs of a market near the end of its rally stage, and if there are more gains to come, a market that will not be going very much further before more selling hits it.

We shall see what tomorrow holds. Aloha and I will see you in the chat room.

However, I have reviewed my charts and can honestly say that nothing has changed. The gap up this morning and steady drift all day gave way to a selloff sometime after 2pm EST. That was a pretty nasty selloff and that has now happened for the third day in a row. Combine that with the lower volume and you have another technical negative. This bounce should see some volume if it is going to have any staying power.

Tomorrow is the first day we can have a follow through. We are looking for the markets to rally 1.7% on higher volume either Friday or sometime in the next seven to ten days. If we get a distro day or we undercut the lows, this rally can be called off.

Also, if you look, I only had one long. And if you are a gold member you will notice the “stocks on radar screen” has a very small amount of stocks on it. This would not be the case if this was a proper bottom. There are very few SGIC TESOF LPSN INXI charts out there. The pretty colorful green charts are not there yet.

Sorry for the lack of writing. But I have to make a good impression on the family. Everything will be back to normal this weekend. I will have a full Friday market analysis. Also if you keep checking back, I will have the analysis of the longs and shorts updated sometime in the future. Probably tomorrow morning.

Aloha and I will see you in the chat room.

When the closing bell rang, the SP 600 led the way higher with a 2.1% gain, the Nasdaq and the NYSE followed with 1.9% gains, the SP 400 and SP 500 finished higher by 1.6% and 1.5%, and the DJIA lagged the other indexes with a 1.3% gain. The IBD 100 led outdid the rest of the market, with a 2.9% gain. However, the relative strength of today’s gain in comparison to how much it led on the days that it led to the downside leaves much to be desired.

Even though those price gains look beyond impressive, there was something missing; volume. Volume was lower on both the NYSE and the Nasdaq. There is nothing wrong with that except normally on big up days you like to see volume much higher than on the days where stocks dropped. The lower volume indicates the big boys were not eager to buy stocks at these levels. To me it looks more like a big short squeeze jam, for now.

Breadth was very positive, on both stock exchanges, today. 196 out of 197 IBD industry groups were either higher or flat today (only the Metal Prod-Fasteners group was down). Advancers beat decliners by a near 5-to-1 ratio on the NYSE and by a 4-to-1 ratio on the Nasdaq. This, to me, seems very extreme and is not something I am used to seeing at bottoms (if this is going to become a bottom). That is just something to keep in mind. Especially considering that new lows beat new highs today, by 85 to 79. More new 52-week lows than 52-week highs, and we had 4/5-to-1 positive breadth and are less than 10% off the highs? That seems like negative divergence to me. Just another “warning flag” on this rally being possibly nothing more than an oversold rally.

The fact, also, that the top three groups were Banks-Foreign (up 4.7%), Steel-Specialty Alloy (up 4.5%), and Metal Prod-Distr (up 4.4%) show that this rally is probably not the start of the real deal based on the thesis that old leaders do not lead new bull market cycles. If this is a bottom, then we have some poor leadership of past winners that have many many charts broken and/or destroyed. The fact is the stocks in these groups ALL have UGLY charts. The whole lot of them. They are all ugly. You do not see that with new leaders in new bull markets.

Tuesday was the first day of an attempted stock market rally. We now need to see some big gains on MUCH HIGHER VOLUME within the next four to ten trading days to start feeling more safe going back in on the long side. However, a follow-through does not guarantee we are out of the woods yet. The damage to these index charts are HUGE and there are UGLY charts everywhere. These normally need weeks and weeks if not months and months to fix themselves. Also unless the follow-through is on a gain of 1.7% or more with HUGE volume, I would not be too comfortable with the gains. You also do not want to see the market undercut the recent lows before we see these gains. If the major market indexes break their recent lows by even .10, the rally attempt is dead.

The one statistic everyone is talking about (and now IBD is also) is the put/call ratio. Yes, that ratio does indicate that players are making very bearish bets. However, the total ratio now stands at 1.22 which is down from the 1.8 area before the selloff started. Still though this indicator is a big head-scratcher. If this reading was happening after a long downtrend, I would take it as very bullish. However, the high number before the selloff and a still high number now is just confusing to me. I think it may help with this short squeeze rally. However, if this market is only being held up by short sellers being squeezed, when this rally does fizzle out (if it does) it could get ugly. Bottom line: let the price and volume action of the indexes be your guide during this volatile period. Let this indicator die. I know I am going to start not talking about this indicator for a while, unless something shocking happens to it.

Do not be quick to buy this bounce. Don’t expect that this rally will fail and don’t expect this rally to succeed. If you do that and prepare for either outcome you will be way ahead of the game. Trust me, most people, simply can not do this. However, this is necessary during the current market. You simply do not know and NOBODY knows what is going to happen next. Today shows why it is not smart to chase performance. After Monday, a lot of traders, thought now it was a “for sure” time to short the market as it really cracked open. Wrong. Once again, the market, does the opposite of what everyone expects. The best time to short is if the rally in stocks fails near resistance or their 50/200 dmas on low volume. If after a low volume rally you start to see your stock selloff again that is your clear signal to short that stock. Make sure it doesn’t pay a dividend and make sure it is breaking down on HUGE volume and the low volume rally is on very low volume. This will help increase your odds of being right on the short side.

Also in this market environment, I am sure you sold a stock that you have now seen rally back and then some (ROCM FTGX). Big deal!! If your chart broke critical support and you sold to protect yourself from further losses but that stock has rallied back, don’t worry about it. You did the right thing. When I look at ROCM or FTGX, for example, I now see very ugly chart patterns that I would not want to be long if I was going to be making a new buy. Unless, that chart is perfect, move on. Keep your money in your best performing stocks in this environment and don’t worry if you sell a stock and it rallies back some. More often than not they turn out to be like ITMN. If the chart is ugly, get rid of it. If you are shown a loss, get rid of it, until the market fixes itself.

Remember, everyone, CASH IS KING!!!!!! Until this market calms down and all the emotional tug and war is out of this market, cash is your best friend. The market will take shape, soon enough. If it is to the upside or downside does not matter to me. As long as the trend is clear and in place. Right now, there is no trend. It is volatile and choppy. I am still leaning with my bearish bias, due to all the UGLY UGLY charts out there. But no matter what happens, I am ready.

Aloha and I will see you in the chat room.

At the closing bell, the SP 600 rose .7%, the SP 500 rallied .6%, the Nasdaq gained .3%, and the DJIA closed higher by .25%.

Volume was lower on both the NYSE and the Nasdaq, as traders, like always, were in no mood to place large bets ahead of the FOMC decision.

Breadth was positive on the NYSE by a 12-to-5 margin and was positive on the Nasdaq by a 3-to-2 margin.

It was really a day of random, wild price action that really had no meaning. Taking too much from a day like today is only a mistake. There is really nothing to conclude about today except that the traders that had to trade traded and the big money stayed on the sideline as they awaited the decision from the Fed.

Today’s biggest winners were obviously stocks related to oil. That 5.5% jump was just stunning and unexpected. That allowed a lot of the thrashed oil stocks to rally today. However, the majority of these charts clearly show stocks that have topped and are rolling over. I can not predict the future but the chances that oil comes back here seems low to me but what do I know. These commodity bull cycles can last a long time. I just wouldn’t start buying oil stocks, based on this move. Especially with all the oil groups being in the bottom 20% of all 197 industry groups. One thing is for sure, these stocks are not leaders. There are better charts out there, despite the recent gains in oil.

The good economic news of the day was without a doubt the Conference Board consumer confidence index rising to 110.3. That was the indexes highest level since May 2002. That should be taken as great news right? Wrong. Not according to the biased as HELL liberal media. I am looking at the NYTimes and USA Today headline on it. Here is what both say: “A rise in consumer confidence MAY NOT LAST.” “Consumer confidence edges up in January, BUT FUTURE IS CLOUDY.” What the F***??? How come everything is spun so damn negatively. It is finally starting to really bother me the constant BS that comes out of the woodwork at these WORTHLESS news mediums. HORRIBLE. Just HORRIBLE!

There is one more day of the Fed meeting before they decide the future of interest rates. The decision will come down at the same time it always does and nothing is expected to change. The wording will be what everyone will be paying attention to, to see how the most recent round of data was interpreted by the Fed.

However, we really don’t need to give a crap about this meeting as we have stocks breaking out and following through with significant price gains. As long as that keeps happening and this market keeps trending up, I doubt the Fed is going to do anything in the short-term to impact that. Maybe if something drastic and unexpected happens tomorrow, the market could get a bit crazy. But somehow I think the trend will just remain. As long as stocks keep moving up, there is no reason to predict there demise. Follow the trend as the trend is your friend.

All day long, today, I saw the put/call ratio at .9 or higher. That sure seems to me that there are a lot of players still looking to call a top. The difference with the put/call and sentiment indicators is that the put/call is the actual decision the traders make. Sentiment is sentiment. The put/call ratio is where traders are placing there bets. And they are still bearish. And as history shows with this indicator. The crowd is always wrong. So it doesn’t seem smart to be playing the puts and shorts, with all of these beautiful stocks making these beautiful gains. I post the big winners on my free blog (mauitrader.blogspot) if you want to see the actual gains in stocks up 45% or more.

We shall see what fireworks are let off by the Fed, after the meeting. Aloha and I will see you in the Chat Room.

By the closing bell, the SP 600 led the way regaining its 50 dma with a .4% gain, the Nasdaq gained a point closing up .05% after falling as much as .6% intraday, and the DJIA and the SP 500 finished lower by .12%. However, they managed to finish well off their lows. The IBD 100 kept pace with the SP 600, gaining .3%. Overall, it was a good day, with the indexes putting in a positive reversal off the early selling.

Volume was lower on the NYSE and the Nasdaq, as most traders probably decided to call it an early day and start the weekend early after all the wild fireworks we had this week.

Breadth

For the week, the Nasdaq led the way down with a .65% loss, the SP 500 and the DJIA lost .6%, and diverging from the other indexes, the SP 600 gained .4%. The SP 600, if you look on a weekly chart, has put in another beautiful weekly reversal; its 5th week in a row.

For all the negativity and top calling out there, this week, the market sure didn’t collapse like most would have thought so if they were only monitoring the message boards and chat rooms I monitor. It is amazing that in a sea of so much confusion and short selling, that we are still making good money on the long side and outperforming the market.

I wonder why people don’t see what we see? Maybe, it is because, they do not have the wisdom to actually follow the price action but instead they blindly think they know more than the market and support their own bias even if the stock tells them in black and white that they are wrong. Scary, if you like to keep and make money.

Instead I like to follow what the market actually does. What it is doing right now is telling us that it does not know what it wants to do. This battle going on at the 50 dma with the Nasdaq and the SP 600 signal that big investors are not overconfident about chasing stocks up here.

At the same time, they are not looking to completely unload either. That gives us this battleground, that when taken with the AII showing bulls, bears, and sideline investors all at the 30-40% area, shows that the market just doesn’t have the clarity it once did when this rally was unfolding off the August lows.

However, back then, I was the only one I was reading who was actually semi-bullish on the market, besides IBD. I was going long stocks when others were calling for tops. Here we are up anywhere from 10-15% on the indexes from those levels and we still have top callers. I don’t think that is wise, even at this stage of the game.

I want the market to clearly start a downtrend, be below the 50 dma, and show at least four to five distribution days, before I even think about calling a top. And even then, to say that we would not be able to retake those highs in the future have to be entertained. Nothing says that the four plus year bull market has to end simply because we are up for four years.

We will need all those longs that I have in my portfolio to give clear sell signals, topping signals, and other classic “get-out-of-dodge” signals, along with all the above market conditions to come to fruition.

If stocks keep holding their support levels, I keep getting stocks breaking out, and don’t have many stocks to sell based on light volume pullbacks, then we can not say if the market is really going to top.

You need ALL of these things to line up, before you can even think of calling a real top. Until you see everything above happen, you are just a fool playing a fool’s game, if you think you know when this market is going to top.

Remember, just because the indexes go below the 50 dma does not make them bearish either. They need to fail at that line multiple times and then trade below the 200 dma, before you can actually write an index off and stop worrying about finding new longs and instead can concentrate on finding good shorts.

I am STILL not sure what compels smart individuals to think that they can outsmart the entire stock market by trying to predict what will happen tomorrow or even next week. I am not sure why people think there opinion is more important than the market but I don’t have to know. All I know is that when these people eventually fail–and fail they WILL–I will be here counting and collecting my profits that the market gave me. Did you hear what I said? What the market gave me. I have nothing to do with the actual move and decision of the market making me money. It decides the final outcome.

The market is definitely on some shaky ground. The reversal and failed breakout was not re-reversed on today’s action so caution must continued to be exercised via keeping new buys a little bit smaller than what they were before and only concentrating on the best of the best stocks in the market with good chart patterns.

The bulls are not done yet, so it seems, and the bears sure don’t get much going when they do finally get something started. So we are left with this wild sideways action.

The Fed meets again next Wednesday. Interest rates are expected to remain unchanged for the fifth straight time, at 5.25%. That should come as no surprise to anyone who can breathe and process oxygen.

Aloha, have a great week, and I will see you in the Chat Room.