Curb Your Enthusiasm
The
market is playing with us!Â
It’s reversing…or is it?! Today’s
action was definitely amusing to watch and it just goes to show why rules are
so important to guide us through this venture.
 
What do we make of
a day like today? If the market
closes negative and volume is higher than the previous day, we have a day of
distribution, or institutional selling. If
the market closes positive and volume is heavier, than we have a day of
accumulation. The latter is a good sign
at this point, following the three heavy-selling days over the past five
trading days.
Since I am writing this column before the close, and this is going to come
down to the wire, take a look at the S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and Nasdaq Composite
(
$COMPQ.X |
Quote |
Chart |
News |
PowerRating) and notice if volume
is higher or lower than yesterday. After
doing this, whether or not the market closed positive or negative indicates
what to make of the day.
Forest Labs
(
FRX |
Quote |
Chart |
News |
PowerRating) is the only real
leader I see in this market. The stock
has traded positive all day and gave an indication that this market may have
some underlying strength in it, despite being negative most of the day.Â
  
A few other names
I have been following have been trading up marginally since the Dow (see
above) began its comeback. Winnebago
(
WGO |
Quote |
Chart |
News |
PowerRating) and University of Phoenix
(
UOPX |
Quote |
Chart |
News |
PowerRating)
are two of these names.
If any of the
major averages close negative on the day on heavier trade than yesterday, it
is a good time to curb any new purchases unless the market can post another
confirmed rally. We will have had four
distribution days in one week and that is usually all it takes to derail a
rally.
We’ll know a lot
more about this market by Thursday, and I’ll be back with my thoughts.
Tim