This Is A Great Time To See How Stocks Rally

  • February 26, 2004
  • Tim Truebenbach

The market handed investors
some hope today as the S&P 500
and Nasdaq rallied on slightly
higher volume.

image src=”https://tradingmarkets.com/media/2004/Tim/tt022604-01.gif” />

image src=”https://tradingmarkets.com/media/2004/Tim/tt022604-02.gif” />

One thing I noticed myself
doing lately was micro-managing the market’s day-to-day action. Admittedly,
it hasn’t looked that great as we have constantly seen down days on higher
volume and very little volume behind rallies. Then I stepped back to look at
the overall picture. The Nasdaq has only stood 7-1/2% off its high at the lowest
point during this correction. This is the entire decline after all the recent
distribution.

^next^

Many leading stocks, such
as Yahoo!
(
YHOO |
Quote |
Chart |
News |
PowerRating) and Netflix

(
NFLX |
Quote |
Chart |
News |
PowerRating) are trading slightly below their 50-day moving averages
but have not crumbled yet.

image src=”https://tradingmarkets.com/media/2004/Tim/tt022604-03.gif” />

Don’t get me wrong,
the market and stocks have some proving to do before I would say to jump back
in. I just am led to believe that this may very well be a simple correction
which may emerge to higher prices, based on what we have already seen.

Petroleum
Development
(
PETD |
Quote |
Chart |
News |
PowerRating) broke out on large volume yesterday
and continued higher today.

image src=”https://tradingmarkets.com/media/2004/Tim/tt022604-04.gif” />

This isn’t exactly
the growth leadership I would like to see, but it is better than the hoards
of failing breakouts that we have been seeing over the past month.

This is a great time to
see how stocks rally. Are they moving back higher on low volume or high volume?
Keep an eye on how they close out this week on weekly charts over the weekend.
Day-to-day damage can occur, but then a weekly chart can reveal the true strength
(or weakness) behind a stock. NFLX may be one such case.

image src=”https://tradingmarkets.com/media/2004/Tim/tt022604-05.gif” />

Now may be a time to hold
off new purchases, but it isn’t a time to head for cash and ignore the
action. This stock market may turn out good in the near future.

Tim Truebenbach

timt@tradingmarkets.com