State of the Stock Market - 9/2/10

A pretty good day today on Wall Street, as stocks saw some decent follow-through from yesterday's major gains and closed at the top of their intraday ranges.  The trade was a little choppy, but the trend was up throughout the entire session.   Volume, however, is coming in a good bit lower than yesterday's totals.

Technically, the S&P took back its 50 day moving average today which is important, but the Nasdaq closed right at that level so it will be interesting to see if we back off a bit here.   A pullback isn't a bad thing, but I will be watching to see if the S&P can now hold its 50 day as support.   If we continue to move higher tomorrow, both the S&P and Nasdaq will be testing their declining top lines from the April top (shown below) and that should be an interesting juncture.   A break above those could signal a longer-term trend change in this market.

S&P 500

Nasdaq

Charts from Telechart, Courtesy of Worden Brothers, Inc.

If you see the volume bars above for the S&P and think they look different from yesterday, you are correct.   Telechart must have had a discrepancy for volume yesterday - today's charts show the correct totals from yesterday, but I think today's are off.   For me, it does take some of the shine off of yesterday's gains - I was under the assumption they came on much, much heavier volume - but the market still did follow-through via the Nasdaq, and with my numbers almost totally bullish, I will continue to look on the long side only.

I posted some of the setups I am watching right now last night and AHD was up a quick 10%.  I did not take it however - I remain in cash.   I am working with a different schedule this year at my full-time job - I can't check on the market intraday as I did before, and I am getting home with only ten minutes of so of trading left, which makes putting on trades at the end of the day more difficult - it's harder to get a good feel for the day's action.   Therefore, I am in a state of adjustment right now - trying to learn to become more of an EOD trader.   It is not an easy adjustment, and until I feel more comfortable with things, I may not be as aggressive as I might normally.

I have started reading a new and very good (so far) book that will hopefully help me in the endeavor - Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market (Wiley Trading).   My head is spinning a bit as I soak in some new ideas and think about my current weaknesses as a trader, so that is keeping me a little hesistant as well.   I do recommend this book to any swing traders that use or know of the CANSLIM method - so far, it has provided me many valuable insights and I am less than half way through the book. 

We'll have to see if the jobs number tomorrow morning affect trading at all - right now, the past two days have been very good for the bulls and I would say they are back in control.   Let's hope they don't give it up as easily as they have before these past few months.   Good luck Friday.