Wednesday, March 10, 2010

State of the Market - 3/11/10

So much for a rest. A day after some nasty afternoon selling, the markets went right back up today, although it was a rather choppy session. Stocks rose in a fairly steady manner until lunchtime, but from there they fell sharply in a similar manner to yesterday afternoon. They were able to right themselves midway through the lunch hour and rose back up near their morning highs as the final hour began. Some gains were given back in that final hour, but stocks still closed with another day of gains. The Nasdaq significantly outperformed the other indices once again, but the S&P did have a decent day as well. I don't have final volume totals.

Technically, we certainly remain very overbought but it doesn't seem to matter. This market is acting very much like it did in July of 2008, when it just chugged higher without any rest and went further than most thought it could. I don't know if we'll see that again here, but things do look similar. It is a little bothersome that the S&P still hasn't broken to new highs - 1150 is the number to watch there. I continue to believe that rest would be very good and healthy for this market but I don't know if we'll get it. I actually worry that further moves higher here without rest will set us up for more than just a little pullback, but I as always could be wrong.

I was quickly stopped out of my QID test position from yesterday at $17.59, giving me a small loss. No big deal I guess but probably should have just stayed in cash. That's where I am at right now and probably will remain that way for the rest of this week. As I said yesterday, I see a lot of stocks that I am interested in on the long side, but they are so extended that buying them here and chasing them is just not something I am comfortable doing. So I wait. I may miss out on some gains, but I am OK with that. Actually, checking out the stocks I sold on Tuesday (CPSL, AMCF, SEED, CFSG) I am still happy I got out when I did. It is still a stock picker's market I guess.

We'll have to see if we continue higher from here (and it would not surprise me if we do) but I have to wait until I get some nice individual setups before joining in the party again on the long side. I am not shorting up here and the bulls obviously remain in total control, but a rest would be healthy and very beneficial in the long run. Hopefully we get it. Good luck Thursday.

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