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.

When all the selling was done, the Nasdaq led the way below with a 1.3% decline falling right back below the 50 dma, the SP 500 and SP 600 followed with 1.1% declines, and the DJIA fell 119 points or .95%. The worst of the selling hit leading stocks, with the IBD 100 falling 1.7%.

Volume was slightly lower on the Nasdaq, giving a bit of comfort to the nasty decline. On the NYSE volume was much higher, giving this index another clear distribution day.

Breadth was downright horrible. Decliners beat advancers by a 2.5-to-1 margin on the Nasdaq and by a 3-to-1 margin on the NYSE.

What else is there to say about today except that today was ugly. Reversing the gains that we made yesterday, with the Nasdaq and SP 600 falling back below the 50 dma is not good. However, when I went through all my stocks tonight I found very few to completely sell. The huge losses, you would have thought, would have forced me to sell a lot of stocks that completely failed moves. But that did not happen. Most of the stocks that had to be cut were also completely speculative as the true leaders are still holding their 50 dma’s.

So while I have all my stocks holding key support, I have to take into account that the market is weakening. That is why I have been taking profits on stocks that make big one day gains and taking partial losses on stocks that immediately do not follow through. But overall I have a lot of stocks that are still holding support so there is nothing for me to panic over.

Saying that, the Nasdaq has had 3 distribution days in the past four weeks and the NYSE has had three also during that time. A couple more of these and the indexes under the 50 dma, along with more stocks breaking down on high volume and I will have something to worry about. Being prepared is the best defense against a possible correction if one is coming.

If we have to take recent earnings reports of how things are in the economy, they are clearly telling us that it is slowing. This is turning out to be the first quarter where earnings did not rise double digits since 2002. The stock market is forward looking and if it starts rolling over, we can conclude that the inverted yield curve and slowing economic numbers are finally catching up to stocks.

Overall, it is really hard to form a concrete opinion on the market right now. i am neither bullish or bearish but I am keeping a bullish bias simply because I still have many stocks in clear uptrends. However, my new buys have either done really well or have reversed and let me out very quickly. Things have definitely gotten rocky out there but not scary yet.

I wouldn’t be surprised if selling hit the market tomorrow but at the same time it sure shouldn’t shock anyone if the Nasdaq and SP 600 retake the 50 dma. The only thing certain right now is uncertainty. I saw today that the AAII bulls is at 39% with bears coming in at 33%. That clearly tells me that there are another large group of traders just on the sidelines. That indicates to me that we could be in some choppy action for a little while. With bulls and bears in a tug-of-war some sideways movement would not be surprising either. Bottom line the market is not to be messed with here.

Keep your new buys small, cut your losses fast if your stock does not work out immediately, don’t let big winners turn into losers, take profits on the way up, and do not use margin at this stage in the game. It is not time to short either. Right now, playing the market is like playing with fire–it doesn’t end well usually.

The bears are starting to gain some control but the bulls still have control of the major trend. We shall see how we end the week tomorrow. Aloha and I will see you in the chat room. Be careful out there!!

At the close, the Nasdaq led the way with a 1.4% gain as the index reclaimed its 50 dma, the SP 600 followed with a 1% gain, the SP 500 was up .85%, and the DJIA put in a very solid .7% gain. Leading stocks were the clear winners, with the IBD 100 up 1.6%. Big cap tech was the best on the day, however, as the Nasdaq 100 rallied 1.65%.

Volume was lower on the NYSE but higher on the Nasdaq. The higher volume, on the Nasdaq, along with the perfect bounce off the 50 dma is just what you want to see when an index flirts with this line. The rally on higher volume shows that big money is looking to buy stocks STILL on the dips.

Breadth was positive on the NYSE and the Nasdaq as advancers beat decliners by a 2-to-1 margin.

The good news about today’s bounce was clearly in leading stocks. Seeing so many of my holdings make such strong gains as they did today is very encouraging for further upside. All of my Featured stocks and speculative stocks that followed-through immediately after I purchased them are still rallying despite the recent selling that hit the market.

The fact that Thirty-eight stocks in the IBD 100 were up over 2%, I would say that is as positive as any that the rally still has legs and room to run.

Today’s action was much more welcomed than action before today. I have recently been unable to find high quality Featured type stocks. However, today I added to one and found a new one and a speculative issue has Featured potential. This is much better than before. This is especially good considering some longs were on the borderline of cracking. Today’s action helped fix that situation quickly.

Other great signs that this rally still has legs is the fact the SP 500 is hitting six year highs and the DJIA is hitting all-time highs. It is hard to want to short a market hitting all time highs. The bears continue to call for a top but they continue to be wrong. It has been this way the whole way off the October 2002 bottom. I doubt it is going to change while our President is in office. These bearish prognastications are normally due to the individuals hate of our current leader rather than the actual conditions of the economy. Shame on you.

If the reports and reactions to earnings from SUNW, EBAY, and YHOO are any indication, the reports from Ford, MSFT, and BMY should be taken very well. Another indication these stocks might do well is that all the chat rooms that I monitor have amateur day traders trying to short these stocks at every uptick.

The rooms I monitor are LOADED with bears. They think every rally is a chance to sell. That tells me that the crowd is SUPER WRONG and more upside is probably coming. The II survey released today shows 52% bulls and 21% bears. However, these are professionals and this survey has a HORRIBLE track record of predicting tops and the bulls can stay very high for a very long time before a top is in place. I have not had a chance to check out the AAII survey but I am sure more people are bearish now than they were a week ago.

I still believe you should be careful with new longs and try not to make any one position more than 5% of your portfolio right now. Unless, the chart is perfect, I still believe slight caution is warranted here. We are up a lot from the August lows so that needs to be kept in mind when taking new positions.

I hope everyone had a great day; have a great night. And I will see you tomorrow in the chat room. Aloha!!

At the close, the SP 600 led with a 1.06% gain retaking its 50 dma, the DJIA followed with a .45% gain, the SP 500 rallied .35%, and the Nasdaq almost completely round-tripped but managed to close higher with a .01% gain. Clearly the top index of the day was the SP 600; the SP 400 and NYSE also gained .8%. The NYSE ended at another all-time high. Leading stocks also did well, with the IBD 100 rallying 1%.

Volume was higher on both the NYSE and the Nasdaq. However, though both indexes were up, one was bad the other was good. The NYSE hitting all-time highs on higher volume is as good as it gets. But the Nasdaq at one point today was able to get over the 50 dma only to be slapped right back down below the key moving average. This nasty intraday reversal with the higher volume is a sign of churning at the 50 dma. More downside needs to confirm this but it is important to recognize that closing below this line after crossing above it does not appear to be bullish in the short term.

Breadth was positive on the Nasdaq by a 3-to-2 margin and positive on the NYSE by a 2-to-1 margin.

Gains in Energy, Oil, and Mining and losses in Airlines came due to a 4.7% spike in oil. The jump in oil was caused by news that Pres Bush wants to double the SPR. This along with the two giant fleets sent to the Persian Gulf recently clearly signify something is going to happen sooner rather than later. And that is fine with me. The last thing this world needs is Ahmednejad with a nuclear weapon. Let the bombs of Israel destroy Iran, if the Iranians do not overthrow him before it happens. This man is Hitler ALL OVER AGAIN. Once again, as the world stands by, the USA and this time Israel will have to save the world from its own folly. History repeats itself AGAIN.

Will this be bearish for the market. It could be but if the SP 600 is any indication probably not. It was impressive to see the SP 600 retake the 50 dma but for the move to have any real significance it will need to follow-through on this move. One positive sign that it might is that I had over 700 stocks in my long scans tonight. Considering that volume was not astronomical, that is a lot of individual stocks.

However, to flip it on everyone, I was not able to find one new long that I REAAAALLLLYYYY wanted. All of them were mediocre quality. Only stocks that I was already long were of any interest to me. That is really good in itself as it proves that the chart patterns are working and giving another buy signal normally is bullish. But the lack of new longs makes me scratch my head and remind everyone of what I posted last night in my commentary.

So it is good to see the small caps taking the lead from the NYSE but where are the new longs? I can not find them and I will not buy mediocre charts. This could be due to the fact that the SP 600 has been lagging recently and there is more selling than buying. That would make low volume rallies in the charts with sloppier patterns show up on my scans though they are not quality. So we shall see how this turns out.

I remain long but cautious of new buys. The charts have to be very pretty and very sound with less risk than before for me to take a new position. Until these stocks show up again, I will continue to sell laggards and keep new buys small to none at all. And until the trend actually is in a clear downtrend, I do not want to be shorting and get caught in a nasty short-squeeze. Trust me caution is the right approach here. You are supposed to be buying a ton of stocks coming off of bottoms that are followed by the classic follow-through days in the market with a resumption of an uptrend.

We are four years into a bull market and have gone almost straight up since August. It is to be expected that we need to go sideways for a while or even go down. Unless you are the NYSE; then you just keep going up.

Continue to enjoy earnings season and trust me it is smart to keep cash on hold right now. This is a tricky market to say the least right now and until there is more clarity I know I am giving the correct advice.

Have a great night and I will see you in the Chat Room. ALOHA!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Aloha and I will see you in the Chat Room!

At the close, the Nasdaq led the way on the downside, falling .75%, the SP 600 and the SP 500 fell .1%, and the DJIA fell .05%. Today, unlike yesterday, the IBD 100 and leading stocks led to the downside, falling .8%. The IBD 85-85 fell .6%.

Volume was higher on both exchanges. On the Nasdaq, volume was noticeably higher, giving the Nasdaq its second distribution day in four weeks. On the NYSE volume was marginally higher. That along with the minor price losses avoids a distribution day for the NYSE. The NYSE has still has flashed only one distro day over the last four weeks.

Breadth was positive on the NYSE with advancers slightly beating advancers. Positive breadth on a down day is a very nice thing to see in the indexes. And on the Nasdaq, decliners beat advancers by a 9-to-7 margin.

The strength in the NYSE was due to oil getting a rebound off the back of the selloff in tech land. Lot’s of beaten up oil issues were able to find a bid today. However, with all that overhead resistance, don’t plan on that party lasting too long.

The weakness in the Nassy was definitely due to earnings from INTC. CSCO sold off hard and closed below its 50 dma, AAPL’s earnings were not taken particularly well last night, and many other large caps closed lower on the day. These large caps made the selling today seem worse than what the action underneath was.

The volume and price decline did not indicate funds were falling over each other to dump shares everywhere. I had less than a handful of stocks to fully cut my losses on today. These are signs that funds are not dumping stocks.

Instead the market is finally pulling back and cooling off some of this strong momentum the indexes have had this year. Even with the less than 1% decline today by the Nassy, it was the worst day of the year so far by that index. That is pretty darn impressive if you ask me. Today’s pullback seemed fine to me. Nothing to get anxious or worried about yet.

Some traders believe we have set ourselves up for a sell-the-news situation. So far they look right but they are only right on a very very short term basis. The trend is still up on the market and the indexes could digest these gains very quickly and blast right off to new highs.

All I know is that if a .75% decline is considered a selloff, the market is in great shape. Maybe we selloff more, but until we get at least two more distribution days and the Nasdaq in a downtrend under the 50 dma on a sub-intermediate basis even thinking of shorting this market is stupid and a pursuit of an amateur trader.

Maybe we rotate into gold for a little bit but with all the damages done to those charts I am sure the pullbacks in these strong trending Nasdaq stocks will be bought. It is if these stocks do not find support at key levels that will have me worried.

Until we cross that bridge, I will be swimming upstream with the trend.

Aloha and I will see you in the chat room!

At the close, with techs and small caps leading, the SP 600 gained 1.2%, the Nasdaq rallied 1% breaking out above the December highs, and the SP 500 and DJIA gained .6%. The DJIA also hit another all-time high.

The great news today, however, comes in the form of leading stocks. The IBD 100 gained 1.3%, leading the market. The Nasdaq 100 also gained 1%.

Volume was higher on both the NYSE and the Nasdaq. This was also the third day in a row the Nasdaq made gains with volume picking up over the day before. This is clear accumulation by the big boys right off the 50 dma.

By looking at a daily candlestick chart of the Nasdaq, you can clearly see that all seven trading days for 2007 have seen buyers come in and support stocks off the lows of the session. All the tails you see on your Nasdaq chart right on the 50 dma is about as perfect support as you will EVER see at a key moving average.

Breadth was positive on both the NYSE and the Nasdaq by more than a 2-to-1 ratio. Leading stocks saw even better breadth, as did my own portfolio.

The strength of today’s rally just reinforces what I keep saying: You should never short a rising market. The major market indexes are hitting all-time and six year highs right now. There is NO reason to be shorting.

Though I was worried about the recent action in the market I still recognized that we have not turned bearish yet. Until 3 out of the 4 trends (short to long) are in downtrends, you should never short.

This market has continued to make early top callers look foolish. It doesn’t look like that is about to change any time soon, as some market analyst are calling for earnings season to be the top of the market.

I wouldn’t want to be short this market. Especially with such broad strength.

With oil down 15% to $51 a barrel, money has rotated into many sectors. Some of the best performing sectors the past three months have directly benefited from low oil. Transportation-Airlines and Auto/Truck-Tires are just two examples.

Other industry groups that have moved up the charts include Internet-Network Solutions, Media-Periodicals, Leisure-Gaming/Equip, Steel-Specialty Alloys, Finance-Brokers, Internet-ISP, Computer-Manufac, and Computer Software-Desktop. These are just some of many sectors making HUGE jumps up the industry list.

This is the kind of broad strength you see in strong bull markets. It appears we are in a sweet spot here and can expect more gains in the coming days.

Big-Cap stocks do move at the end of a bull market. However, the most powerful moves in a bull market are the last stages. I am not sure if this is one last six month push or what. All I need to know is that we are moving up and I have tons of charts breaking out. That is all I need to know to be long this market. Nothing else matters.

Earnings are next week and many players, like I said before, expect that to be the time when the market cracks. I would not bet on that. I am sure it is going to be volatile but you can thank SarbOx for that.

It is going to be a quiet today tomorrow as there is not much news set to move the market. However, if the first seven days of 2007 are indication of tomorrow action, I am sure it will be eventful even if there is no news.

We shall see what tomorrow brings. Aloha and I will see you in the chatroom.

At the close, the Nasdaq led the way with a .6% gain, the DJIA and the SP 500 followed with a .2% gain, and the SP 600 lagged with a .01% gain. The big winners were the IBD 85-85 and IBD 100 indexes which gained .7% and .9% respectively and the Nasdaq 100 which gained 1.1%. This was the sixth day in a row the Nasdaq and the Nasdaq 100 staged very strong intraday reversals. One look at the daily charts and all those tails shows that any selloff is being bought.

Volume on the Nasdaq rose, giving a strong confirmation that the big boys are buying the dips to the 50 dma. Volume was lower on the NYSE as tech and biotech stocks do not weigh as heavy on that index.

Breadth was basically even on both exchanges, with advancers beating decliners.

It was another day of leadership for the Nasdaq and tech stocks. The Nasdaq hit its highest close since the Jan 4th high and is the only index up on the year so far with a 1.8% gain.

Most of this can be thanked on AAPL. The gains in AAPL the past two days of 13% has definitely helped as the stock makes up 7% of the Nasdaq 100. So the strong move in AAPL has definitely helped the Nasdaq outperform the NYSE during this time.

So far pre-earnings season looks to be starting off well with stocks finding support at key moving averages and rallying off of them. That is bullish action in a tape that seems to have a lot of warning signals in it.

The market loves to climb a wall of worry and ORKiter today posted a fantastic post of extreme indicators. There are ZERO bullish extreme indicators and over 10 extreme bearish indicators. As a contrary indicator, this looks very bullish for stocks.

Even though I have stated many problems I see with the market, the facts remain that the tape is bullish, I am very long, and stocks are still moving up.

Until the trend actually turns down, my bearish feelings are nothing but that: feelings. They are not actionable. What is actionable is price action. That is the only important piece of information and the only piece of information you need to know to buy or sell your stock.

What the market does and not what you feel is what the truth is. Just because you think or feel the market should go lower doesn’t mean you will be proven right. Most of the time you will be proven well wrong.

The market keeps moving up and the wall-of-worry continues to build. This is the third year of a Presidential cycle and that is normally the most bullish period for stocks.

We will see if all the bearish reasons will continue to be wrong tomorrow. Aloha and I will see you here at Big Wave Trading.

At the close, the Nasdaq rose .2%, the SP 600 gained .1%, and the DJIA and SP 500 both lost .1%. By just looking at the intraday action in the indexes it is obvious, with the volume, that today was pure churning.

Volume was higher on both the NYSE and the Nasdaq. This volume surge well above the 50 dma just solidifies the churning of the market.

The good news about this flat day is that once again stocks shook off early selling, found support, and then rallied into the close. Some indexes closed near the highs of the session. The rebound also came with more volume than the selling did today, adding another positive to today’s churn action.

However, all indexes are stuck in a trading range and are either consolidating or are about ready to breakdown. I am not sure which way this is going to go but I see new highs at 1/4 of the level they were in November, new lows expanding, less nice charts in my scans, less new longs working, and selling many stocks off. I have gone from 290 to 264 in stock holdings the past two and a half weeks.

If this market was strong and ready for more gains you would think I would be adding more longs than selling off longs. However, this rotation out of losers into winners is very smart. If the markets take off again I will be in the strong stocks ready to outperform the market; not the laggards which may not even rally if the market takes off.

If the market continues to close near the highs of the sessions in the upcoming days and finds support at the 50 dma I might start re-embracing this rally. But for now I have caution flags everywhere that will make me cautious until I start getting more HOT charts up on my scans.

But with the Nasdaq only having two distribution days in the past four weeks, it is not smart to jump the gun on the short side. I am still very long and hope to remain that way.

It is time for 4th quarter earnings. This is sure to bring even more surprises and misses like always. Enjoy the volatility caused by SarbOx.

Aloha and I will see you here in the chat room tomorrow.

At the close, the DJIA rose .2%, the SP 500 also rose .2%, the SP 600 gained .1%, and the Nasdaq lagged again with a .25% loss. The IBD 100 gained .2%, keeping pace with the market.

The numbers are not that bad at all, considering that the Nasdaq was down by 1.1% at one point. The SP 500 was down .5% before coming back to close higher. The SP 600 also reversed right off the 50 dma to close with gains. Overall, very positive action, considering what could have happened.

Volume was higher on both exchanges. The decline of .25% doesn’t qualify as a distribution day for IBD. However, in my books it would HAD WE CLOSED NEAR THE LOWS OF THE DAY. The intraday reversal from a 1.1% loss to a .25% loss is BULLISH not bearish. Therefore, I now agree with IBD (for a different reason) and say this can not be called a distribution day.

Breadth was mixed, on Tuesday. Advancers beat decliners by a 9-to-8 margin on the NYSE and decliners beat advancers by a 8-to-7 margin on the Nasdaq.

The morning was pretty darn wild, if you ask me. It makes me glad I don’t pay attention to the news when I am placing trades. The Thailand 15% crash would have gotten me nervous. Take that along with the 1.1% decline in the morning on the Nasdaq and I GUARANTEE many traders made panicky sell decisions. That is not a smart way to trade.

That kind of action was much different than many people obviously thought was going to happen. The last two trading days markets opened higher and sold off. Today, the market gapped down hard then rallied all day long.

To go along with this, I read in Helene Meisler’s article today that the put/call ratio on the indexes was 2.99 and the put/call ratio was 1.13. That is very high levels and indicate extreme fear in the market. This data along with the high level of bullishness amongst investors is very confusing. This can only mean one thing, for now: choppiness. Get ready for some choppy trading. The market has some severe extremes in market postures. Bulls are very bullish; bears are very bearish. Like in politics, there seems to be no middle ground.

However, I know there is a middle ground (since realmoney.com’s poll has around 25% neutral) but they don’t know what to do or what to trust anymore. They are living from one data point to the next lost in no man’s land.

Overall, the trend is still very bullish. The big caps are the stocks that are resilient and are showing NO signs of selling hit them. The DJIA hit another all-time high, so, obviously, that trend is UP. So if you are bearish on this market it is simply based on “feelings.” Last time I checked you can not make money off of “feelings.” Maybe you can but I still have not met a professional who could.

Therefore, even though I have some red flags and disappointing results in some stocks, I am still very long and have many stocks that show NO signs of selling. The trend is still up, though there are problems in the Nasdaq and the SP 600. Until these small worries turn into a downtrend, well that is all it is. It is just a worry. Nothing that will make you profitable in the stock market.

Let’s see what happens. Here is my WORTHLESS opinion. We get a little bit choppy right about here. All the above reasons make me think that. Not that it matters. What matters are my stocks. If they remain in an uptrend, I hold them. If they start a downtrend on heavy volume, I sell them. No questions asked.

Aloha and I will see you at Investors Paradise.

New Swing Longs: VEH IMMU LYTS SMOD

Adding To Longs: WRLS BOBJ RMKR

New Swing Shorts: NONE

Longs Up On The Day (low vol. non-IBD excluded): AOB-98 IIG-26 AOI-32 TTEC-59 DA-54 ICE-44 IAAC-67 HMSY-36 IHS-94 SEIC-25 MA-96 MAMA-126 MEH-58 CVO-129 CCOI-33 GVP-50 PTT-88 OMNI RRC LCC BOT COH LFL BLUD NYX TMO AMSF HOS CELG GLDN CAM BTJ DECK PQ UAUA ASCA BMC RBN MVSN CACB INAP CMT SQM NU RKT CCO VCLK MAIL JCG OPTM KOG SNCR CTCM ULTR WRLS BOBJ ACTU BITI AZK MRB AEP AEZ PNW OEH GMRK IGT NHWK WPZ ADBE MOS NAVI TTG RMKR CRT PCC

Stocks On Radar Screen: GMKT MEDX NCTY BWP PGS SNPS BRG ALXA BTM GERN DWA TIF SBGI ACTL AZO GLH CTCI MGEE IPA GMCR BTN

Partial Sells/Profits: BMRN PLB ASML JST OMCL WGA EFUT BUF LRCX ISE ILC IONA CKSW TRBN NSTC

Complete Sells/Profits: RMR PRXI BITS UCTT OMPI TCHC SUAI–this last one makes me sad I liked it so much.