Monday, September 13, 2010

State of the Stock Market - 9/13/10

So much for consolidation.  Another great day today on Wall Street, as stocks started higher from the get-go and gave little back throughout the session.   The S&P pulled back midday but still was able to climb in the final hour to close near its highs for the day.   The Nasdaq, meanwhile, led the way with gains of almost 2% after breaking to new intraday highs in the final hour of trading.   Volume was heavier across the board.

Technically, after today the major indices have now clearly broken above their declining tops lines from April and also took back their 200 day moving averages.   Both the S&P and Nasdaq are now approaching more resistance from their June and August highs around 1130 and 2310 respectively.  It is going to be interesting to see what happens here, as we are very extended.   The McClellan Oscillator closed around +242 today and is right in the area it was back in mid-June when the market pulled back and the beginning of August when the market pulled back.

 Charts from Telechart Courtesy of Worden Brothers, Inc.

There were some nice movers as you may expect from this weekend's video - SPRD (+10%), SVN (+3%), NBIX (+6%), CMED (+4%), QLIK (+9%), and HXL (+5%).   If you caught one, congrats - I hope the videos are helping.  

As for me, I am sticking by my guns here and waiting for a pullback - I could be very wrong (as I have already been wrong for the past two days in terms of waiting) but I continue to believe chasing is not smart here.  I showed in the video many of what I would consider "bearish" charts in that they are wedging up and right near the upper channel lines on their daily charts.   These charts don't look much different after today.   There is very little out there worth buying at this point in terms of proper buy points, so I am staying on the sideline for now.   If I was long, I would probably tighten my stops a bit depending on my gains. 

FFIV and Others
FOSL and Others
RES and Others
 Charts from Telechart Courtesy of Worden Brothers, Inc.

We'll see what tomorrow bring - it is possible we could be setting up for a Feb-Apr type move where we just keep grinding higher without any rest.   We've been in a range now for about four months and since we're at the top of that range, I think the chances are just as good that the range continues.   I am not bearish longer-term - actually I am hopeful we can continue to rally.   However, if this rally is to be a long-term one and we are to break out of this range, these recent gains needs digested and stocks need to pullback to setup new buy points.   That's my opinion, and for now, I'm sticking to it.   Good luck tomorrow.

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