This Is The Best Way To Learn If We Are In A Bull Market
We
may be at war as soon as tomorrow evening, but the market has
already confirmed that the path of least resistance is higher.
 
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The major averages all posted
gains of over 3.5% on Monday. The move
came on heavier volume than Friday and marked a follow-through day for the
rally that began on Wednesday. This
confirmation means that we can look to leading sectors, groups and stocks to
make purchases.
We have already seen breakouts from
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How these stocks act in the
days and weeks ahead will provide the ultimate confirmation of the market
rally that is already under way. Avocent
Corp.
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PowerRating) failed miserably on Friday.Â
If more of these breakouts act like this one, it will provide a huge
warning sign.Â
 
We would like to see a lot
more stocks break out and act like Netflix
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PowerRating). The company hails from the
Internet sector, which has also produced solid names such as Ebay
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PowerRating). NFLX broke through its pivot point of 17.30 during
Monday’s rally and has not looked back. It
closed 8% above resistance on Tuesday.
Other names, such as Abercrombie
and Fitch
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PowerRating) and Advance PCS
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PowerRating) have been marginally productive by closing slightly above
resistance.
 
Assuming a trader or investor
has the skills to sort through the vast multitudes of stocks to find solid
candidates, I am a firm believer in putting money on the line in order to get
a “feel” for the market. This
is the point we are at right now. As I
mentioned before the weekend, now is the time to be scanning through our watch
list of stocks and nibbling on them as they cross through resistance.
The market appears to be behind us and this is the best way to learn if
we are in a Bull Market, or just another bounce.
I haven’t mentioned the
“War Factor” yet because the market’s price and volume along with
individual stocks should be our guides to making investments.
There’s an excellent chance we will be at war for my next column this
Thursday, and we will then be able to interpret price and volume and see what
impact it has.
My prayers go out to all of
the men and women that will be fighting for this great country, the Iraqi
people, as well as to our leaders to make the right decisions along the way.
Until Thursday,