Confirmed Rally In Effect
To put it simply: I WAS WRONG ON TUESDAY!Â
I said I’d be back on Thursday to make better sense of this market and I cannot
because we haven’t seen anything new occur. We have seen a divergence as
the NYSE and correlated indices have spent the last couple of days struggling to
hang in there while the Nasdaq has shown us solid accumulation. Now today,
the NYSE led the charge as volume came in heavier. Even though the Nasdaq finished the day with a larger gain, it would have been nice to see
heavier trade.
 
 
The Nasdaq is in a confirmed rally and that is what must be followed right now.Â
If leading stocks, with solid fundamentals are able to break out of sound
bases then this is the time to go after them. So far, the market has been
unable to lure us in. There have not been very many breakouts that have
occurred after the follow-through day. The few names that I can mention, such
as Forest Labs
(
FRX |
Quote |
Chart |
News |
PowerRating) and
Eon Labs
(
ELAB |
Quote |
Chart |
News |
PowerRating) moved through their pivot points
prior to the market producing any kind of follow-through day.
 
 
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When a stock makes
its move before the market has confirmed
an uptrend, any purchase has the odds stacked against it. Since the
confirmation, the pickings have been slim, although many stocks continue to
work through their bases each day. Symantec
(
SYMC |
Quote |
Chart |
News |
PowerRating) is one such example with a pivot point at 42.30. It is trying
to go through this point today, but does not have the volume to back it up and
has been struggling against sellers.Â
Â
Cost Plus
(
CPWM |
Quote |
Chart |
News |
PowerRating)
has also been struggling with its pivot of 31.45. Volume on this stock is
running above-average. This company lacks the group strength and ROE that I
would usually like to see, but it can still provide a good indication towards
the current environment for breakouts.
 
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Right now is a
great time to peruse for stocks. Build up that watchlist so that your eyes
have a list of names to watch each day. The overall market has been very
resilient and there is definitely a rally in effect that is being led by the
Nasdaq. Each day this continues will lead to more and more names moving
towards new highs. Eventually, institutions will support these stocks as they
hit unprecedented levels for fear of missing the move. FRX is an example of
this. As you look at the above chart, notice how the stock did not even
come back to its 50-day moving average to give institutions a chance at an
inexpensive purchase on a pull back. There is little doubt that there is
a certain anxiousness to get into this company as we see there are up to 631
funds that own this stock as of Sept. 30, 2002.
In the upcoming
days, we’ll continue to monitor the market’s daily action and see how it
reacts to catalysts such as the Dell
(
DELL |
Quote |
Chart |
News |
PowerRating) earnings due out today after the close.
 Spend this weekend pouring through stock charts and work on finding solid
names ready to complete their bases and move higher.
Have a great
weekend,