When the market speaks
The current stock
market reminds me of the sort of party you might have attended in
high school or college, where you’re having the time of your life as you also
nervously eye the door in case the cops should come busting in to end it
all.
Of course, the “you” I’m referring to is
the throng of traders gleefully stepping from one tech stock to another, buying
strength and selling weakness. Sure, the retail and financial sectors have also
advanced off the Oct. 18 market low. But tech’s clearly been where it’s at. And
if you haven’t been in tech, you haven’t been happening.
If this market scares you, you have
loads of company. Even the people that are up in triple-digit land year to date
are concerned — concerned that perhaps their 180% return might shrink to
something more pedestrian like, say, 120%, by millennium-end. Everything’s
relative.
But if you consider yourself a trader,
and you were too scared to buy stocks in late-October and November, it’s my hope
that over time this site will provide you with the necessary tools to strike
when the iron’s hot.
As for the present, I still don’t see
any of the telltale signs of an important intermediate-term top. Monday’s
(12/06) breakout in a number of face=”arial, helvetica” size=2>benchmark techs,face=”arial, helvetica” size=2> face=”arial, helvetica” size=2>like Applied, Motorola, Nortel, and
Texas, as well as the follow-through action in Ericsson, IBM, and
Sun, gave you more evidence that the market isn’t ready to roll over just
yet. Friday’s extremely heavy 1.52 billion shares on the Nasdaq was further
confirmation of the market’s health.
Already you’re hearing the cries of “but
the advance is so narrow!” Unfortunately, however, the market is not so
democratic. The cumulative advance-decline line, which I believe to be
tremendously overrated from a trader’s standpoint, is telling you that
participants are being selective. Nothing new there.
What it didn’t tell you is that scores
upon scores of stocks in the growth sector began breaking out of bases in
October, most on heavy volume. Quite simply, this is the most bullish thing a
market can do.
Period.
For the alert intermediate-term trader,
seeing plenty of breakouts coincide with the Oct. 28 follow-through action of
the popular averages was enough. It wasn’t necessary to consult sentiment
indicators or overbought/oversold oscillators or economic data. Or anything
else, for that matter.
When the averages and leading stocks
speak, you don’t need to listen to anything else.
Setupscolor=#000000 face=”arial, helvetica” size=2>: eBay,
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