Wednesday, September 19, 2012

Market Consolidating Perfectly - Time for Bulls to Take Charge

So far so good for the action following last week's big breakout move for the stock market.  Stocks were certainly extended after Thursday's and Friday's session, but stocks have given very little back the past three days and "perfect" is probably an applicable description of how this consolidation has played out.  Even the volume patterns have been good, with volume coming in lower on Monday and a little heavier today.   The Nasdaq as well as the other indices are all forming beautiful bull flags on their daily charts.   These patterns as of now point to much higher prices ahead.  

Nasdaq - Looking Good

Now it's time for the bulls to step up again.  Although it would not kill this rally for the market to put in a few more days of slow, listless trade, I think it would also send a signal that perhaps this rally does not have the power behind that it seemed like it might last week.  I am sure I am not the only one that was hoping for a monster rally into the end of the year following the breakout we had last week and if that's going to happen, the consoldiation periods should be very brief.  Ideally, we'll see quick consolidations like we just experienced followed by sharp moves up.   That's the "ideal" situation, however, and we all know how often that does (or doesn't) occur on Wall Street.  

I am fully long as of now and am trying to be more patient with positions here.   I will still take some profits on stocks that are extended, but am also holding a few names through pullbacks just in case they turn into something much bigger.   I continue to see quite a few nice charts out there, and although I may not be playing many new ones (unless I get stopped on current positions), I figured I would share some for the rest of this week.   Hope they help you out. 

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

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