More Health, Part II
Monday’s action was
the most telling since that of Friday, June 2.
It was all there.Â
The glamours, the bells, the genomics,
our Group of Seven.
All of the segments that are really
important to the intermediate-term health of the market glistened.
Actually, it was all there, except for
one thing.
Volume.
Being a Monday in the summer, Nasdaq
activity was average, and not the sort of blowout level that you’d like to see.
But you can’t always get what you
want.
At least not in the stock market.
You have to sometimes take what’s
given you.
Monday’s action was just a further
confirmation of what’s been happening on the tape over the past two weeks.
If you’re new to this space, and don’t
care to look in the archives located at the right side of this page, here’s the
“short version” of what’s happened:
The Naz exploded for a 28% run-up in
the 9 days ended June 6, including a 19% bolt in a four-day period.
Normally, after an advance of this
magnitude, you would expect a pullback as some participants lock in profits.
However, there was very little
distribution, or selling by professionals, over the past two weeks.
This was the first tip-off that
something unusual was going on.
The objective evidence of this paucity
of distribution lies in the number of days in which the market’s leading stocks
pulled back or moved sideways on higher volume than the prior day: very few.
A look at the Comp itself underscores
this: What you see is a volume dry-up over the past two weeks.
In the meantime, the number of
successful breakouts by leading stocks has far outweighed the number of failed
breakouts.
This, in itself, is a superb leading
indicator.
To sum, this is the exact type of
behavior that accompanies a brand new bull market.
The successful intermediate-term
trader has been, and will be, buying stocks that emerge from well-formed bases
on good volume.
He or she doesn’t have to be a hero
and declare this to be a new bull market.
It simply isn’t necessary.
What is necessary
is a one-day-at-a-time approach.
As the right stocks — a number of
which have been listed here and elsewhere on our site — do the right things on
the tape, you allow yourself to be drawn back into the market from the
sidelines.
If you’re wondering what “the
right things on the tape” means, I encourage you to read the Intermediate-Term
Trading Course that I wrote with Greg Kuhn on this site.
Monday, all stocks in the Group of
Seven (see
my June 6 column for an explanation) rose, led by Keithley
(
KEI |
Quote |
Chart |
News |
PowerRating) +14%,
Techne
(
TECH |
Quote |
Chart |
News |
PowerRating) +9%, Newport
(
NEWP |
Quote |
Chart |
News |
PowerRating) +6%, and SDL
(
SDLI |
Quote |
Chart |
News |
PowerRating) +5%.
Among the bells, the one I watch the
closest, EMC
(
EMC |
Quote |
Chart |
News |
PowerRating), followed through on Thursday’s breakout of an 11-week
base.
Moreover, Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) put on 8%
on its heaviest turnover in over three weeks, eclipsing a short-term high of two
weeks ago.
And the glamours, well, they painted
tape, with roughly 84% locating the winner’s circle.
Enough said.