These 3 big gainers, may go even higher

For the fourth consecutive day, the
broad market meandered through the session in a
choppy and indecisive manner, but this time the major indices finished near
their intraday highs. Stocks closed with solid gains as well. Strength in the
Semiconductor Index, which surged nearly 3% higher, helped the Nasdaq Composite
to gain 1.0%. Both the S&P 500
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also kept pace, finishing higher by 0.7% and 0.9% respectively. After a nominal
one-day correction, small and mid-cap stocks resumed their upward ascent and
relative strength to the broad market. The Russell 2000
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higher and again closed at a new record high, while the S&P 400 advanced 1.1%.

Silver stocks, which we brought to your attention yesterday
morning, were among yesterday’s biggest movers. PAAS rocketed 9% higher, SSRI
6%, and AEM 2%. Even better, all the gains resulted from intraday uptrends
instead of opening gap ups. Kudos to subscribers who made their own “synthetic
ETF” and profited from that sector. Since each of those stocks closed at
multi-year highs and on many times average volume, a continuation of the
breakout is likely in the short-term.

Not surprisingly, the price to volume relationship in the
broad market maintained its recent see-saw pattern of bullish “accumulation
days” and bearish “distribution days” yesterday. Despite higher volume losses
that followed the previous day’s higher volume gains, overall volume levels
increased once again. Total volume in the NYSE increased by 7%, while volume in
the Nasdaq was 10% higher than the previous day’s level. Interestingly,
yesterday’s Nasdaq volume marginally exceeded the January 20 level. In the NYSE,
volume came in just a tad below that day’s level.

The erratic behavior of the broad market over the past week
has caused us to shift our short-term bias to being positioned mostly in cash.
Stocks followed up the broad-based, high volume selloff of January 20 with
several days of consolidation near the lows of the range. Typically, this leads
to further downward pressure and new lows. However, support of the
closely-watched 50-day moving averages on the S&P and Nasdaq resulted in a
tug-of-war between the bulls and bears. The S&P and Nasdaq finally bounced
sharply off their 50-day MAs yesterday, but both indices are now in the middle
of their ranges from the January 20 slide. When you combine this fact with the
series of back to back “accumulation days” and “distribution days” the markets
have had over the past week, attempting to predict the broad market’s short-term
direction has become a daunting task. Guessing whether to be net long or net
short the stock market may only result in getting “chopped up” and churning your
account right now. Instead, we intend to sit on the sidelines a few days until
some of the mixed signals vanish and the technical picture becomes more clear.
It is important to realize that consistently profitable professional traders are
often out of the markets more than they are in the markets.

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