Thursday, December 2, 2010

State of the Stock Market - 12/2/10 - "Finally, Some Follow-Through"

A really nice day today on Wall Street, as stocks finally saw some follow-through and tacked on more gains to yesterday's tremendous session.   Stocks started the day only slightly higher, but buyers slowly and steadily pushed stocks up throughout the day and they finished with very nice sized gains.   This action (the slow, steady gains through the session) was really what I wanted to see today, but oh well.   It looks iffy as to whether volume will be heavier than yesterday, but the action seemed more like accumulation than yesterday did if that makes any sense. 

Technically, the breadth signal I follow went bullish yesterday (I posted this on Twitter last night) and the reason I am more optimistic right now than I was a few weeks ago was that we finally saw follow-through today.  We've been waffling around here for a month with neither side taking control of things, but with the bulls now putting two very positive session in a row together, you have to assume they are back in control.

Both the S&P and Nasdaq are quickly approaching their late October highs and could slow a bit in dealing with that resistance, but I think there is just as good a chance that the market busts right through those without much resistance.   The Russell 2000 made new highs today and when small caps are leading, you have to like your chances with going long.  Hopefully you were leaning that way before yesterday as I kept discussing and were able to get into some positions at good entry points.   Now you just ride them up (hopefully) because things look good.

I posted some setups last night on Twitter and a few like FOSL, GGAL, and CALX put in nice sessions today.  HTHT was the miss, as I guess my "hunch" it would pop soon wasn't a very good one.  I was a little disappointed that I didn't see more quality setups in my scans than I did last night - normally I would take that as a warning sign - but with the overall market acting well, all you can do is go with the ones you see.   There are setups out there - they're just a bit harder to find.   Ones to consider tonight are ACTG, MIM, BIDU, BG, ZAGG, CGNX, and REE.

The November jobs number will be released tomorrow morning, and that could possibly throw a wrench in things, but overall things look very good for this market.   If you are not already long, continue to watch for low-risk entries in strong stocks.   If you are already long, just sit back and ride this (hopefully) new uptrend.   Take care and good luck Friday.

1 comment:

muckdog said...

iBD still has the market in correction.