Masters Of The Obvious
Yes, it’s time for the
“masters of the obvious” commentary today. Normally,
my reports go out on Thursday…but after
yesterday’s action, timing is everything.
First off, thanks for all the well wishes from everyone.
You made a very tough week much
better.
I have not watched the market for the last two days —
which is a record — but did lots
of charting into the wee hours. The Nasdaq and S&P
500 had follow-through
confirmation days on Tuesday. Volume was heavy. Please note that
the volume on the Nasdaq was skewed because of the 650-million-share day
in Worldcom
(
WCOM |
Quote |
Chart |
News |
PowerRating). The Dow was just shy of the 2% threshold…but
that doesn’t matter.
I am just going to tell you what I said that last dozen or
so times the market followed
through in the past 26 months. It’s simple:
You can’t hide institutional buying. If this is real,
expect more and more growth
names to start breaking out of sound bases. They just start lining up
like soldiers. You must understand that even
though every new “bull market” started
with a follow-through day, not every follow-through has led to a new
bull market.
Do not think about your own opinion here. Just watch and
interpret. I have already
forgotten about yesterday and any bias I might have had and now look
forward to today. Too often, one who is short
goes into denial because he or she
is used to making money. Maybe this move craps out today; maybe it
goes for a while. I certainly don’t know. Just
play it day by day and understand
to never go in front of a train when it is moving.
Lastly, a few observations.
Sentiment is too bullish for a longer-term move. Maybe
this time it’s different, but I
have never seen a big move to the upside when the masses want and
expect one…never!
The first stocks to break out can possibly be leaders. The
theory being if they held up
best during a trashing and break out first, you have just identified
the lead dogs. But you must baby-sit everything.
The Nasdaq and Nasdaq 100 are
still zillions of miles below their all-time highs.
Lots of resistance to get through, and lots of work to be done. More
fun to come.