Recently it has become clear that the individual charts that have been showing up in my long scans are deteriorating to the point where there are no perfect charts, only a few green charts, and those that are looking strong are all in defensive industries. When I combine what I see in the long scans to what I see in the short scans, I can see that the numbers on the short scans are growing and growing and the ugliness of the charts are getting pretty nasty. This can be seen on the forums by looking in the area where I post all of my sells. If you notice a lot of stocks are showing up on the ‘nasty’ list.

These charts combined with the downtrends in all the indexes since the November top makes it pretty clear that we are going to be in a rough spot for quite a while. Now, I know some of you do not want to believe that and think that I am crazy. But I am telling you that I have been through enough good and bad and sideways market to have seen it all in the charts. I have also studied the market indexes in TCNet going back to the early 1900′s on the DJIA. So I have learned what bull markets look like, bear markets look like, consolidating markets look like, and even what it looks like when a bottom or top is forming.

From what I see now, we have a real top forming here. If I am wrong and the market has put in a real meaningful low on 11/28… then I am wrong, I admit it and I will change my current outlook. However, if we rally here and I do not find any charts at all that look like the ‘past big winners’ that I have been posting recently, there is no way I will believe that the rally will succeed.

We could easily start to rally here and have a lot of stocks put in small (thanks to the low VIX) gains early but not see any stocks blastoff from long solid bases. If this scenario happens I just find it hard to believe that we could hold on. So many of the leaders that continue to rally (in the non-commodity related areas of the market) like RIMM GOOG BIDU and AAPL have serious problems with them and are all coming from lows from 2002-2005. The point there is that these leaders have been running for such a long time EVERYONE knows about them and all the negative divergences are hinting that these stocks are going to reverse and not succeed in this current run. So far my short in GOOG has picked up 24 points to the downside resulting in a nice little gain very quickly.

Besides having the same big cap tech leaders trying to lead now, we have the same commodity stocks running. When you go looking for brand new exciting companies that are breaking out of long well structured bases, you can not find anything. If you go back to 1996, 1997, 1998, 1999, and 2003, you can see after every bearish phase in the market (which all last at least two months minimum) there were always at least a handful of stocks setting up in solid bases with the whole base being green to max green and there were always at least two handfuls of high quality Featured stocks. This proved that the rally was ready to rock-and-roll. Right now, I can’t find anything except DAR EGN HRBN TRUE RICK and a few others. If you think these are these stocks have the ability to fly, you are wrong. They are all part of defensive sectors which historically produce less gains that Featured quality or momentum stocks. All of these have good numbers and nice charts but none of them are LOADED with green to max green BOP except somewhat TRUE and RICK. If you look at some of my past winners you can see the best stocks look much better. Until they show up, I just can not get bullish.

Earlier this year we had AFSI and TESO, which came right after HRZ, making late 2006 and early 2007 pretty good considering how long this rally has lasted. Which always makes it harder to make money. The biggest gains are made in the early stages of a bull market. Without the NYSE falling more than 10% from the 2003 rally till now, we have not had any chance what so ever to nail huge winners. There wasn’t a single 1000% winner in my port since selling TASR in 2003. Since then only a one 500% gain and a few 400% gains have been produced in some of my best looking charts. The 550% winner’s chart sucked me out of half of it within the first few weeks when it hit one of my cut loss points. All of the lack of huge gains and hot charts are completely due to the market not having a 10% pullback until July of this year. And the fact we have seen no hot charts since that 10% drop that has worked is not a good sign.

The most green charts, since then has been AGX. Of course, as soon as it gives a buy signal with its beautiful chart, it immediately fails the next day. That is a clear sign of a bad market. The other sign is the fact that all the nice charts are either defensive stocks, oil stocks, illiquid stocks with very low average daily volume, or ETF’s in closed end funds. This market looks just like the crap markets of August 2000-October 2002. Since it is just now starting to look like this, I don’t think that bodes well for the immediate future of the stock market.

Now when I take this and combine with everything I see on CNBC it becomes clear that we have some real problems. Back when the market was rising and everyone was crying about the subprime problem, I was listening but still taking the longs that showed up. While I was doing that, I guess a lot of people thought it was wiser to scare people away from stocks. Whatever, to each there own. Now that the market is falling and that stocks are moving down in force, only now do I care about the subprime issue which I can see taking its toll on the markets in the insuarnce, mortgage, REITS, homebuilder, banks, and brokerage stocks.

Then on top of that we have the worst thing possible that stock markets historically have never liked. And that is uncertainty. When the Fed lowered rates 25 basis points, wall street was pissed as everyone expected a surprise 50 basis points because the guys who are closest to all of this paper know that it is beyond ugly and is going to get extremely bad as a lot of these ARM reset. It is going to be real bad. But now you have the Fed not cooperating and instead cut 25 basis points. OK, that was foolish enough, I will give them that (at the time). But then they go and do something completely out of character that the market was just stunned.

They decided with the help of many banks around the world to inject liquidity into a stock market in a nasty downtrend full of major selling. nice gesture, but all you did was allow futures to fly allowing shorts to open positions in the market at tremendous prices. This allowed me to get excellent fills on ALL 13 shorts and as the day went on the markets sold off and closed near the lows. This was a complete slap in the face to the Fed and clearly shows that the market has no real confidence in Ben at all. Why? Because the market top ticked at the open and since then we are almost 5% off on the SP 600 which was the leading index on the way up in 2003-2006 and is now leading the way down in 2007. Not only is the SP 600 in trouble with it trending below its downtreinding 50 day moving average with the soon to be rolling over of the 200 day moving average, but Ben is in a lot of trouble with some big boys on the street that want the man out.

With all of this it just too hard for me to be bullish. Not only that, I saw that the Investors Intelligence survey came out with bulls rising to 53% and bears falling to 25%. However, on the realmoney.com poll it is the other way around. Normally, that means that on the short term we can expect a rally but in the intermediate to long term since the crowd is bullish, we should turn lower. Also the put/call is above 1.00 at 1.02 which is considered high and bullish since more puts are being bought than sold. But recently this indicator has really stunk it up and readings above 1.2 to 1.3 are needed, imo. The Investors Intelligence is the one I watch.

So even though the market is very ugly out there and ever day after the gap up I have been bearish and expecting lower prices (even with some subscribers being bullish and trying to convince me why), I do expect a bit of a low volume rally I guess back to the moving averages where then I expect the big downtrend to continue. This market is sick and I don’t believe a doctor can help it any time soon. When I see a lot of green charts with nice round bases full of accumulation in that base which is then followed by a breakout on huge volume, then and only then will I be bullish.

I hope everyone has a great weekend. Have fun and be careful out there. Newbies please stay cash heavy and watch and learn in this market. This is not the market to be going all-in on margin. There are going to be a lot of whipsaw so being safe is the best way to be right now. Aloha and I will see you in the chat room!!

top current holdings: YGE 88% FSLR 287% DECK 225% IHS 243% CNH 132% DECK 236% ICOC 93% MOS 360% EBIX 85% SXC 51% OMTR 309% MA 349% RICK 114% SXE 98% TDG 50% ZIXI 158% APPY 80% (RNT 23% FAF 26% SHOO 20% FTEK 28% CLP 27%)

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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!!!

The Fed minutes clearly signaled that more rate hikes are needed and that investors who thought the possibility of a rate-cut was coming were definitely doing a lot of wishful thinking. What I took away from the report was that the Fed is very confused by the current data, admitted to seeing lower growth in the economy, and they are worried about inflation. These ingredients, when mixed together, make a special dish that you definitely do not want to be served called stagflation. Let’s hope that isn’t the case. If it is, don’t think this Congress will do anything to help. Some parts of the world are about to get wealthy, while our dollar continues to sink. Too bad mom and pop do not understand economics.

To the reality of now, stocks closed lower across the board. The DJIA, Nasdaq, SP 500, and SP 600 all fell .7% and the NYSE fell .6%. The bad news in leading stock land was the fact that the IBD 100 fell .9%, well outpacing the broad market. The IBD 85-85 fell .7% but that isn’t very comforting since it did not outperform. This is the second day in a row the IBD 100 has lagged the broad market. That is not bullish.

Another thing that is not bullish was the leading sectors today. Oil&Gas and Steel stocks have been the best in this current rally but now look at what amazing leaders showed up today. Food-meat products, medical, and closed-end funds. These are not necessarily leaders but I have a lot of stocks in my scans showing up in these sectors. And I see via the IBD new-highs list that these are moving up there also. These signal a week market, not a bullish one. The top sectors this year are Utility, Defensive, and Medical sectors. This does not bode well for the market.

What else does not bode well? Volume. Volume was higher today, giving both indexes their second distribution day since the rally started. Volume was 18% higher on the NYSE and 8% higher on the Nassy. Today’s volume was higher than any of the up days in April. Besides being the highest volume, it was also the first time the Nasdaq has traded volume at least as heavy as the 50 day volume average since the follow-through. And now the Nasdaq is only up .14%, since the follow-through, hmmm. Does this feel like a powerful uptrend to you?

Decliners beat advancers by a 2-to-1 margin on both the Nasdaq and the NYSE, not showing the selling to be too intense. There were 309 new 52-week highs and 93 new 52-week lows. The new lows are expanding quite rapidly considering that some indexes were just at all-time high territory. This also has bearish indications. And the last bit of data for you is the put/call ratio. That ratio on equities is at .69, after today’s selling. This is bearish as it means that option players bought calls as the market fell. Traders feel every dip should be bought. I happen to differ with that assessment right now.

To me it is very funny that the notes from the Fed minutes in March caused today’s selloff. Wasn’t it just last month that after they left from this meeting that stocks gave us a follow-through day LESS THAN ONE MONTH after a major breakdown? So on that day it was ok but today it was not ok? If you are confused trust me you should be. This is why I follow charts and the Featured system. I am not confused. I am for sure of one thing: All of their rhetoric is meaningless. It is all worthless. But as traders I guess we need something to talk about.

This sell-off after the past eight days of low volume rallying is just what I expected to happen eventually. The small itty-bitty price gains on volume below the 50 day volume average is just not bullish. No long-term powerful uptrend starts with such low volume. This rally was and is still very ugly. However, with only two distribution days it is no where time to start shorting. Heck, I am still long over 200 stocks. So we are no where close yet. However, the fact that all the indexes are up less than 1% since the follow-through and that we have two distribution days already should have traders more worried about the downside than hoping for more upside.

Of course, don’t think that I don’t know that the dip buyers are insane creatures and that the big boys may want stocks bid a bit higher to dump into. This small bout of selling could possibly set us up for another low volume rally that suckers in more of the dumb money who believes every dip should be bought. Eventually though, the day of reckoning, will be here and many traders who are buying the market for this first time AFTER FOUR YEARS of a strong bull market are going to get hurt bad.

I don’t know, everybody. If you ask me, investing or trading in this market using my growth strategy of getting big juicy gains in periods of weeks to months is not the right method right now. As you can see via my returns listed on my free market analysis section I am still doing very well. However, there is a lot of unnecessary churning in my account. I could eliminate this by avoiding going long some small-cap stocks. But I love nailing those winners when I do get them. They normally take care of all the small losers. But in this environment it is hit and miss.

The best play right now is to continue to invest long-term in the steel market or to be daytrading the solar, biotech, and stem cell stocks right now. STEM ASTM ASTI FSLR DNDN and many other stocks like these are offering very experienced investors chances to daytrade and make a lot of money. How many people can daytrade successfully? Less than 1 to 2%. It is much harder than the method I use. Can I daytrade. You better believe I can. It just isn’t my style. But if I was addicted to the stock market and not Maui, I would probably be daytrading right now with the 40% or so cash I have on hand.

On that note, I am checking out. I watched an amazing hockey game tonight where the most shots on goal EVER was produced. The Dallas Stars unloaded 76 shots on Roberto Luongo in his first NHL playoff game. The Vancouver Canucks won and Roberto was the hero. It was a great game that lasted over 5 and 1/2 hours. So obviously I am tired from just watching the game. Aloha and I will see you in the chat room.

Sidenote: If you are a Gold Member, make sure you read yesterday’s chat archives. There were some great topics discussed.

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!

Stocks started the morning off higher, possibly thanks to the strong non-farm payroll numbers. As I stated on Saturday, economist saw this number come in with a 180,000 jump in March. Well above the 135,000 estimates from economist. The biggest positive from the environment was the unemployment rate dipping to 4.4%, instead of ticking up to 4.6%. This shows that this economy is still doing very well despite the bad econ numbers we have been seeing the past quarter.

However, after that gap, it was just a bunch of wild and meaningless action that did show a bit of weakness as traders sold off stocks in the final hour. That reversed some indexes to close red. By the close, the DJIA, NYSE, IBD 100, and SP 500 all ticked up slightly under .1% and the Nasdaq and SP 600 lost .1%. It was a day of meaningless action.

Volume was higher on both exchanges, with volume on the Nasdaq coming in 12% higher and 1% higher on the NYSE. Still, volume was well below the 50 day moving average, indicating that the big boys simply did not show up today. Advancers were pretty much even with decliners on the NYSE and advancers beat decliners by a 9-to-7 margin on the Nasdaq. The put/call ratio edged up to .8.

The only odd thing about today’s market, imo, is the fact that stocks did not go anywhere after oil fell 4.7% to $61.51. The last time oil tumbled, stocks exploded to the upside. However, this time, stocks did not do much and even oil stocks did well today. The best of the best today was the DJ Transport avg. That average powered higher by 1.9%. The group was helped in part by Warren Buffet disclosing via SEC documents that he has purchased a 10.9% stake in BNI and also purchased shares in two other railroad companies. This along with a private equity group reportedly interested in buying DOW shows that smart money still sees value out there in this market.

Today’s action still leaves the market where it was before even last week started: Direction-less with no conviction to the bull or bear side. The bulls simply can not get anything going, after the follow-through day in March. The bears simply can not get ANYTHING going to the downside either. Every time the market attempts to sell-off, buyers step in and support stocks. However, that is where it stops as once the support comes in there is no more buying from that point. That shows that we are probably set up for a do nothing market environment heading into the summer.

This market is still not convincing me that this rally will last either. Where is the volume to the upside (especially recently)? Where are my breakouts from bases lasting at least five weeks long with great fundamental characteristics (Featured quality stocks)? They are not showing up STILL. Yes there is GEO and NTLS today. But GEO is from a much longer uptrend. This is not a fresh breakout to new 52-week highs. GEO has been in a solid uptrend for four years! So even if this breakout works, the chances of you getting another 300% plus run is near impossible. NTLS is much better. That stock at least has a chance as it is a very new IPO and this is only its second base. Still this does not instill confidence with me that this rally is going to produce a lot of NTLS type of stocks. We need more stocks with better Featured traits to breakout or we will just have to continue to nibble on the small POS that pops up everyday.

In saying that though, obviously, without the market being in a downtrend it is still foolish to look for and/or actually short stocks. DNDN is a perfect example of why to NEVER short small-cap stocks with over 20% of the float short. In 10 days the stock is up over 400%. If you were short that stock, you would not only be broke fiscally but also emotionally destroyed and more than likely beyond the point of return.

AA officially kicks off earnings season tomorrow. DNA and GE also report this week. Let’s hope that this starts some fireworks. Aloha and I will see in the morning in the chat room.

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.

At the close, the Nasdaq led the way with a .3% gain, the NYSE and DJIA gained .2%, the SP 500 and SP 400 put rose .1%, and the SP 600 fell .04% basically closing flat. The IBD 85-85 gained .4%, leading the overall market. Unfortunately, once again, there were no fresh breakout from sound bases in this index.

Volume came in much lower today, with the NYSE 10% below and the Nasdaq 13% below yesterday’s levels. And, of course, like yesterday, volume was below the 50 day volume average showing that big institutional investors have no real interest in this market. Breadth was mixed today, with advancers beating decliners by a 6-to-5 margin on the NYSE and decliners beating advancers by an 8-to-7 margin on the Nasdaq. The negative breadth with the positive gains shows negative divergence, and with the Relative Strength line of the Nassy lagging the SP 500, you can see the weakness visually. There were 409 new highs to 46 new lows. So even with the negative divergence in breadth, the amount of new highs shows that there are plenty of stocks making good gains in this weak bull market.

The constant leadership in the Utility, Medical, and Defensive stocks, along with all these laggards moving up the industry group list, shows that even though this market is going higher. It is not the kind of market that rewards growth and momentum investors. Top groups like oil, metals, building, steel, and energy continue to lead. These are old leaders and until we get new leadership I am not going to be happy. However, it is impressive to see the Energy-Other group rally 2.3% today, moving from number 193 to number 10 in the IBD 197 industry groups, during the past six months.

Some interesting data should be brought to your attention via the Nasdaq. If you did not notice what I just wrote, you should now. Decliners beat advancers on the Nasdaq but yet the Nasdaq rallied .3%. How did that happen? Easy. MSFT accounts for 5.9% of the entire Nasdaq (STILL!!!). With MSFT up 2.3% today, even with more stocks down than up, that one stock accounted for all the gains on the index. So today was not as good as it looks by simply looking at the Nasdaq. Underneath it was sort of weak.

Today’s market was nothing special as traders are already starting their Passover weekend early. Good Friday is this Friday so volume should be light tomorrow which will probably mean more of the same as we saw today. Which was just more choppy trading. The sad thing about today’s choppy trading is that, once again, there was no follow-through to big price gains of the day before. It was more quiet consolidation after a day of big gains. That sure isn’t bad but it is not good either. It is even more surprising considering the good news out of Iran with the release of the 15 British soldiers that led to oil falling below $65 to $64.38. But, I guess, this should be expected ahead of a long weekend.

The longer we go without a distribution day the better chance we have of this rally gaining steam. But, without more volume on the upside with price gains, this bull market will not be producing many big winners and it will be setting itself up for a worse possible fall. I am still over here looking for new Featured stocks breaking out of beautiful sound bases in brand new leading industry groups that have a lot of stocks with HUGE EPS and sales growth. I still can not find them; and I can not find them because they do NOT exist. It is more of the same old boring leaders, defensive stocks, and big-caps that are moving this market. Typical of the last stages of a long cyclical bull market.

If you think I am wrong, fine. I don’t care. I am still making money; but my question to you is where were you in March 2003? I was going long TONS of Featured quality stocks breaking out of solid green bases. Those breakouts made 50% plus gains in months, from good risk/reward situations. All I have now are sub-$10 stocks that make good gains but are VERY VERY risky to take in the first place. Like I keep saying, this is a sign of a market on its last legs. Not the beginning of a fresh bull market. Where were you in March 2003? Because I was bullish then. This is the first bullish phase, since 2003, that I have not liked. And I do not like this leg up AT ALL!

This market is still bullish and I would not fight the trend, until the bulls actually give up and the bears actually start gaining some momentum. The possibility of lower prices soon has risen, as the put/call ratio took a dive today to .65. This indicates that the crowd has finally given up on their bearish bets and are starting to make bullish bets as they are now for-sure that the selling is over and stocks just have to keep going up. Hell that is all they have been doing since October 2002 so why shouldn’t they keep going up now is the conventional wisdom. I had the pleasure of speaking with some more dumb money today and this retail fool just KNOWS AAPL is a buy here. It has to go up because of the iPhone. The cycle just repeats itself, it goes on and on. The times have changed but we still have not. We are as stupid and easily manipulated as ever before. Even after the horrible crash of the bubble days of 2000, stupid foolish investors still can not see that they are buying ONCE AGAIN near a top.

The investors intelligence survey also had bulls tick up to 50.6%, today. So that now leaves the realmoney.com, II, and AAII poll with bulls all over 50%. It seems that every dip must be bought, according to the retail crowd. As always, when it appears that stocks can only go up, (as they appear now) that is just the time when they usually stop going up. Everyone I know that does not do this for a living is convinced–CONVINCED I TELL YA–that stocks can only go up, since they were able to fight back from all the selling in late February to early March. If the market can rebound from that, they think, the market can rebound from anything. Very soon, they will be proven wrong. When? I don’t know. All I know is that I have shit sub-$10 stocks to keep making me money on. I am not looking to get rich. I am just looking to pay the bills. And right now there is enough action out there in the hot momo cheap piece-of-shit issues that I can do that.

Don’t draw any conclusions from this market this week. Keep your powder dry and stay patient. Remember, this market is still in a trading range basically from the February highs and the March lows. Until we get more volume on the upside or downside, most traders will just be churning their accounts. So if you must trade make sure you know how to trade already as only the small stuff is moving. There is NO quality out there. Only pretty green charts in pure junk issues.

Please reread the last three daily market analysis post I have posted, if you have not already. The past three days of writing will give you ALL of the information you need to know to know where I stand now.

Aloha and I will see you in the chat room! Happy Easter, Happy Passover, and Happy Good Friday!

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

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

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

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

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

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

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

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

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

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

But soon the ISM manufacturing data came out showing the index falling to 50.9 from 52.3 in February. That number is barely above 50 and now puts the index in a clear downtrend over the past year. The prices paid index jumped to 65.5 from 59 in February, coming in the highest since August. New orders fell to 51.6 from 54.9 and the inventory index rose to 47.5 from 44.6. The job index fell to 48.7, the lowest in two years. Combine the job index falling, prices paid rising, inventory rising, new orders falling, and manufacturing falling and it looks to me like more inflation with no growth; possible stagflation.

But soon afterwards, just like a wild roller-coaster ride, stocks were moving higher again, and after one more dip, stocks found a solid floor and went rallying into the close. At the close, the NYSE led the way with a .47% gain, the SP 600 followed with a .45% gain, the SP 500 gained .26%, the DJIA rose .23%, and the Nasdaq, once again, lagged with a .03% uptick. The good news, on the leading stock side, came from the IBD 85-85 index. The IBD 85-85 managed a .9% gain, well outperforming the NYSE.

The top sectors today, however, leave a bit to wonder about as all of them were historically lagging/defensive groups. The top index, today, was the DJ Utility index. This index is the best index, this year, with an 11.7% gain since January 1st. Other top sectors included the Retail/Wholesale-Office Supply group rallying 4.6% and many defensive group. Food, Oil, Textile, Utility, Energy, Beverage, and Appliances were your other standouts.

Volume was much lower today, typical of a holiday-shortened week, on both exchanges. Volume came in 5% lower on the NYSE and 16% lower on the Nasdaq. Some may say it was because of the upcoming Passover weekend, but don’t forget it was opening day at Yankee Stadium. And I do not know about you, but I was watching baseball all day and I am sure many other traders were also. Especially in this boring index environment.

Market internals were strong with breadth coming in positive on both exchanges. Advancers beat decliners by a 5-t0-3 margin on the NYSE and by a 3-to-2 margin on the Nasdaq. There were 326 new highs to 84 new lows. But the clear leadership in the NYSE is obvious by seeing that there were 185 new highs to 23 new lows; six of those new lows were closed-end funds. The put/call ratio remains over 1, closing today at 1.08. These are all bullish readings on a day where the market was slightly positive.

It was another day of bullish intraday reversals, for the third session in-a-row. This pattern continues to show that the bears can not get much going to the downside. Even when they do get a bit of bearish momentum, the retail dip-buyers are right there to snap up the “bargains.” You can tell it is the retail crowd because there is no big jump in volume. Without the elephants coming in to support stocks, it remains a market with no conviction.

That is why, after four days of tight price action, we still can not get over the 50 day moving average on some of the market indexes. This line is acting as current resistance for the Nassy, SP 500 and SP 600. But the fact they are still holding these lines, are not selling off on volume, and are putting in bullish intraday reversals can be considered positive. Some may say that it is distribution; I disagree, because you normally have very heavy volume, instead of volume below the 50 day moving average. Like I said, a market without conviction.

It was just another day of the same old same old. There were no real Featured quality breakouts on strong volume. But there was one Featured quality stock that brokeout from a nice pattern today. However, it had no volume, EPS is a bit mixed, and fund ownership was falling. A good stock but not the quality that you see from the stock markets greatest winners. Those type of breakouts with strong fundamentals are just not there and don’t appear to be lining up any time soon.

IBD brought up a key point today that should be obvious by looking at your charts. Not only did I give you the hard data of how hard it is to make money right now by showing you that from the July bottom to February 27 only 180 stocks made 100% or more gains–normally there will be 200-500 in a powerful fresh bull market–but now we have clear evidence via the Relative Strength line that growth stocks via the SP 600 and technology stocks via the Nasdaq are lagging.

This shows that it is not a market for growth investors. The SP 600 is still above the highs back in May 2005, yet the Relative Strength line is below the 50% area between the May 2005 highs and the October 2005 Relative Strength lows. Not only is the Nasdaq in the same situation but then there is even a more intermediate term trend noticeable. After the Nasdaq hit a high in November, the next high was in January. That high, however, had RS below the highs of the last set of 52-week highs in November. Then in February, right before the sell-off, the Nasdaq hit new highs again. Yet, once again, RS came in lower than the January high. That was negative divergence one and two.

The last negative divergence is now. The Nasdaq RS is hitting new lows, while the Nasdaq is well above the lows of March 14. This is the third series of negative divergences in this line. Overall, this does not bode well for growth investors. Defensive, Medical, and Big-Cap stocks have the lead.

We have a week full of economic data. So strap on your economic crunching boots as we get ready for the ISM services index and the ever-famous Labor Department’s monthly non-farm payroll data. Aloha and I will see you in the chat room.