Tuesday, May 31, 2011

Interesting Session and Interesting Position for Market

Interesting day today with lots of things going on in this market and lots of thoughts running through my head.   Where to begin?

It was obviously a strong day numbers wise and the gains came on heavier volume.  Percentage-wise, they came in just below (1.37% on Naz, 1.44% on Russell) what typically needed for a follow-through day (around 1.5%), so I don't know if we can call this a true follow-through day or not.   Maybe it's a follow-through day "lite".   Breath in terms of 4% breakouts was good at a +181 number, but that's doesn't blow me away.  Then again, that's the best number we've seen since April 20. 

The action wasn't typical of a FTD - gap up is fine, but you don't want to see the market selling off that gap hard like we saw in the morning.  Then at 1:00, it was a straight shot-up (with a brief pause from 2-3) with volume massively increasing in the final half hour of trading.   I say this because when I checked volume around 3:45 (20 minutes delayed mind you) it looked like it was going to be weak.   Then I check at 4:20 and this huge volume bar came out of nowhere.  Weird.  Maybe it was the institutions making late day buys.

On a good FTD, you want to get the feeling that stocks are just getting accumulated on an overwhelming basis, and I don't know if I can say I felt that way today.

My main signal gave a "buy" today and my secondary signals are neutral, so I have to respect that and will look to go with longs as they appear.   The problem is that I am not finding a ton of great looking setups out there, and hardly any momo names (although since I don't trade biotech I am missing some charts in that sector).   I did enter TSM long after-hours and right now have one long and two short positions (ARUN and BEXP).  That goes against my rules but both shorts look OK and the stops are tight. 

We are quite overbought via my Telechart indicator and another up day will put us into rare territory (see below).   This isn't a guarantee that we will soon sell-off, but it is something to pay attention to at the very least.  A day or two of rest would be beneficial for a longer-term run.

Overall, today was good and could be the start of something, especially with our dollar looking once again like nothing more than green toilet paper.   If today was truly a signal that we're starting a new rally, then we'll see it over the rest of this week.  Respect the action but realize that we are once again at the top of a four-month range and could stay here for a longer period of time.   Let's hope not.   Good luck Tuesday.

Stocks to watch - QPSA, REDF, KLIC, SRZ, TSM, CYOU, FTNT, ROVI, SCSS, NVMI, FN, SONC, SIFY, QTWW (long side).   

1 comment:

Anonymous said...

hi mac

tho there is no proof where came the huge volume, i agree with u that it should be fr institutes, same here in hongkong, the last 30mins with additional HK$20billion. i remember the huge volume day is always followed by a peaking week 6~10jun). we still need another gap up to confirm this, and then some up-n-down (small black candle days?) right b4 sell off the cliff.