Wednesday, January 5, 2011

State of the Stock Market - 1/5/10 - "Bulls Step Up"

A positive day today on Wall Street, as the bulls fought back against a weak futures market before the open and managed to close the day with nice-sized gains.   After yesterday's somewhat bearish session, waking up to future down big was not a good sight for bulls.   However, positive employment news gave futures a bit of a boost, and when the market did open, the lows were quickly put it at the start of trading.   There was a steady climb higher during the morning hours, and although it tapered a bit in the afternoon, stocks still closed near their highs for the session.   Volume looks like it will come in higher as well.

Technically, today could have been significant if we saw more distribution today, but we didn't and so all signals remain bullish.   Support continues to hold on the major indices and all you should be doing right now is riding your longs higher until we get evidence that things have changed.   I have no idea how much further this market can move, but I really don't care either.   It will give us clues as to when it is ready to rest, but based on today's action, it doesn't appear it is ready to do so yet.

I talked about gold as a trouble spot yesterday and on a positive note, both gold and silver put in bullish reversals today.   We'll have to see upside follow-through before getting bullish here, but at least we didn't see more selling today.   Perhaps yesterday's breakdown will be like the others we've seen since November - quick but not long.

I added one more long position today at the end of trade, and there were quite a few stocks acting well.  PCLN had a great breakout today on heavier volume.   MMYT, SCOK, ACOM, and BODY (a new IPO I didn't see until today) also put nice moves in today.   For tomorrow, if you're looking for a stock to watch, here's one I think looks good.   It's thin so be careful, but is resting very nicely. 

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Overall, the signals remain bullish - therefore, you should too.   I will let you know when things change.   Take care, and good luck Thursday.

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