Monday, April 4, 2011

State of the Stock Market - 4/2/11 - "Thirteen and Counting - Rest is Needed"

We saw a slow day today on Wall Street, with both the Nasdaq and S&P ending the day flat and volume coming in a good bit lower overall.   It does look like breadth will be positive once again, which puts us at thirteen days and counting for the streak I have discussed for the past few posts.   I continue to believe this market will either have a sharp, one-day shakeout this week or a three to four day pullback that will be slower and more controlled in nature.   I remain in cash and will be looking to buy that pullback, hopefully into the 9 day or 50 day moving averages.  

Although I do remain hesitant to reestablish longs right here for swing trades, there were quite a few movers that were discussed in the weekend video (posted Friday night).   COOL was up 19%.  AXK was up 14%.  MCP was up 13%.  VHC was up 10%.  REDF was up 7%.  MERC was up 6%.  MPEL was up 6%.  REE was up 5%.  

To be fair, I discussed in the video that I didn't know how smart chasing a lot of these names would be and that I would much rather have them pullback a bit and then get aggressive, but if you're a day trader that can watch the market closely all day, these stocks should have made you some nice change today.   For me, they were nothing since I work full-time. 

We'll see what tomorrow brings, but for the sake of the bulls' long-term health, hopefully it brings a slow pullback.   There remain a lot of strong charts out there, but most are extended and need rest before entering, so again, be careful chasing here unless your time frame is short.   Take care and good luck Tuesday.


DrVanNostrand said...

Mac as long as we keep hearing everyone talking about a "much needed" pullback that is imminent and how the market "CAN'T" continue higher the market will do what it does best and that is fool most people most of the time. For Traders who are long I think sitting tight is the play

Mac said...

Doc - I agree with what you're saying and I am definitely not in the camp that the market "can't" keep going up. I realize that it can. Maybe it will. I just see so many extended stocks along with the breadth streak that I have to think we see a one-day shakeout or a slower pullback over several days. If you're long already - sitting tight is probably fine unless your stock is super extended.