Thursday, January 31, 2008

No Follow-Through Day from IBD

IBD did not classify today's move as a follow-through. I find this interesting but not totally surprising. Here is their reasoning:

"Given the market's volatility since late December, you'd need to see bigger gains than Thursday's to signal a fundamental shift in the market's trend.

As noted in Thursday's Big Picture, it's almost a moot point even if the market did manage to assemble a follow-through session of powerful gains in heavier volume. The reason? There are virtually no stocks close to proper buying positions right now.

Instead, what we're seeing is a lot of stocks that made big moves last year, broke down, then yo-yoed back up. In many cases, those stocks look like they're forming bearish head-and-shoulders and other topping patterns. They don't resemble the types of bases that typically result in big gains."

After looking through my scans, I still saw very few stocks that I would consider as nice-looking charts. Although this volatility has me clueless as to where we will go in the short-term, it is very possible we may be just setting up a tremendous shorting opportunity over the next few weeks. I think I would actually like for the indexes to get back up toward their 50 day moving averages if possible. I think that would be a perfect time to get heavily shorts. That means we probably won't get it. Oh well.

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