Tuesday, March 23, 2010

State of the Market - 3/23/10

We saw another up session today on Wall Street, as stocks chopped around for most of the session before putting in a strong final hour and finishing with nice gains. The open was basically flat this morning, but stocks rose slightly for the first hour of trading. They then pulled back sharply, got some technical support from yesterday's trading, and they moved sideways until around 3:00. They took off nicely in that final hour and closed at their highs for the session. Volume looks like it will be close to yesterday's totals.

Technically, the market just keeps chugging along, making new highs for the year on both the S&P and Nasdaq. The top of the tight ascending channels they are both in are still a bit above the current price, so perhaps they have a little more room to the upside here. All of the negative divergences remain firmly in place, and volume was of course somewhat weak today, but I guess it doesn't matter. We could pullback at any time but I would suspect buyers come in near the 9 day moving average once again.

I'll be completely honest and say that I have absolutely no clue why this market continues moving straight up as it has the past two months, not taking a break for more than a day or two. Government involvement, short covering, computer trading - I have no idea. I am just trying to ride the trend as best I can and not really worrying about the "why's?" as much. This is hard for me to do but I am trying. They say all markets are irrational and this market is certainly proving that to be true. Being long is the only thing that makes sense right now.

I made two trades this morning - went long CISG @ $25.99 (also went long in IRA at same price) and NEP at $9.10. Both trades closed near their highs and look like they may have more upside potential. We shall see because as I've said numerous times, follow-through in individual stocks has been lacking recently. I considered CAAS as well but it reports earnings in two days and I figured I would pass until then. There were some nice movers from last night's video - BID, FTEK, CISG, FBN, CHINA, MEND, NEP, and CAAS were all up over 3% today. Hopefully you were able to catch some of them. I am still more than 50% in cash and will look to add positions if they trigger with volume.

My outlook is to continue to take longs as they become available and if I am lucky enough to get some gains, I will continue to cash them in. I still don't think this is a market where you buy a stock and hold for several months for a super-large gain. I don't know if those 30-50% gains are out there right now. Maybe the action will improve in individual stocks but until I see it, I would rather take profits at 10% and be happy. Who knows? - maybe I'll be taking some profits tomorrow. Good luck Wednesday.

1 comment:

Jason said...

Good calls yesterday Mac, wanted to jump in some FBN myself, nice price retracement. Your video yesterday confirmed my outlook for todays trading. Glad your getting past the "why's". Personally I have cleared my screens over the last 6 months and all I have is price and ignore pretty much everything else now.