Wednesday, March 30, 2011

State of the Stock Market - 3/30/11 - "Watch the Breakouts"

Another good session today on Wall Street, as stocks started the day slightly higher, gave very little back in the first hour, and then rallied through the morning.   The afternoon was a little slower with the S&P pulling back slightly off its highs and the Nasdaq moving basically sideways until a slight drop at the end of trading.   Overall, it was another day of gains and volume looks like it should come in heavier than yesterday, although it is still not above average, which remains a concern.  

Technically, the leading index right now is the Russell 2000, which broke to new highs for the year today, and I always do like to see small caps lead the market.   The S&P closed right below some key resistance today around 1332, and the Nasdaq could soon meet some important resistance as well around 2800.   The market is a bit extended and another up session here without some rest may have me taking some profits on positions.   However, since some major resistance has been cleared over the past week, any pullback seen should be buying opportunities as long as they are not severe with heavy volume.   Watch 1285 and 2740 as key levels for the S&P and Nasdaq respectively.

 Russell 2000
 S&P 500

I did enter two more positions today, although one was actually entered after-hours last night.   Both of these names were shared in yesterday's video along with a few other movers like ANN and SHFL.  I was also stopped out of one of my entries from yesterday (ROYL at $5.11 for a 2.6% loss).   I was hoping to catch some lightning in a bottle with that one but it just couldn't recapture that strong momentum, at least not yet.  

 Charts from Telechart, Courtesy of Worden Brothers, Inc.

I do see maybe a little fatigue in some momentum names today (REDF, MCP) as I go through my scans, and perhaps that is a bit worrisome in the short term, but I also see a lot of nice breakouts (RAX, TDSC, PTIE, FARO, HERO, PUDA).   I think I am going to judge the health of this market over the next few days in large part by how these breakouts act.   It's been somewhat of a bumpy ride up to this point for the market as a whole, with volume lagging so much and some iffy breadth numbers, but we're finally seeing nice charts move higher.   As long as they don't give these gains back, then the market remains a buy. 

Good luck Thursday - in the short-term, I may hold back a bit on entering new positions as I already have four long plays and the market could use a little rest, but things look good overall.  


Anonymous said...

Chart Swing Trader-thanks for highlighting the volume and hint of a move in TDSC before the huge breakout, helped convince me the next morning to get in. Because of that a whole group of kids are going to a camp this summer, they are excited. thx

Mac said...

Thank you - glad to hear you were listening and that chart paid off for your group of kids. Hopefully we'll get lucky and can catch a few more here in the next couple of weeks. Keep up the good work - sounds like you're trading for a worthwhile cause.