Tuesday, March 29, 2011

State of the Stock Market - 3/29/11 - "Nice Day for the Bulls"

After two straight sessions where stocks closed at their lows for the day right near their 50 day moving averages, today was shaping up as a key day for the near-term direction of the stock market.   Indeed there was some key action today, and based on that intraday action, the bulls should feel good about themselves and also their control of this market. 

Stocks did see some early follow-through to yesterday's late selling, with the S&P testing its 50 day moving average and the Nasdaq coming close to a key level around 2715 where the 9 and 20 day moving averages were converging.   Those very brief tests passed, and from there stocks took off, with a sharp climb in the morning followed by a more slow and steady climb in the afternoon to finish at their highs for the session.   Volume was not super heavy and that's really the only complain a bull can have today.   Hopefully we do see it pick up soon.

Technically, it looks like mini-bull flags have been formed on both the S&P and Nasdaq, and the fact that support was tested briefly today and held was very impressive.   It's very possible we see new highs within the next few weeks, as hard as that may be to believe.  The lows of today do become key levels now in my opinion - if we get below those levels, then watch yourself on the long side, but as of now, the bulls seem to be back in charge of things.  

I did enter three long positions today and will look for others as we go forward here.   My entries were not perfect on these positions as working full-time makes tracking every little market move extremely difficult, but I am hopeful these setups can get moving.   There were a lot of nice movers today and from what I can tell by a quick look through my scans, there are no shortage of long ideas out there. 

All Charts from Telechart, Courtesy of Worden Brothers, Inc.

Listen, I really have no clue why the market is rallying here.   I am as puzzled by it as the next guy when you consider we have pricey oil, conflict in seemingly all the Middle East countries, and a massive natural disaster in play right now.   It makes no sense, but as a trader you have to follow what the market is doing, not what you think it should be doing.  As of now, the bulls look like they are back in control and because of that, you should be looking for long setups.  I said going into this week that a little rest would be good, and I guess yesterday and early today was enough for this market to re-energize itself.   Lows of today are very important, but as long as those hold, things are looking up.   Good luck Wednesday.


Anonymous said...

Hi Mac, thanks for the posts. What the chart tells you about MMR? Bullish or bearish near term? Thanks!

Anonymous said...

hi mac
this is the 1st day dow stays above 12275~12281 without decent volume

i remain the same view, by mid of next week it may continue the fall.

for short term, nice DayOpen low and give us opportunities to enter long.

i had squared longs intraday, not gonna keep overnight unless there is something big move to convince me the rally will continue.