Tons Of Resistance Ahead
I was all set
to write about last year’s mistakes and how I was going to learn from
them when at 1pm, Alan Greenspan ruined the report. Maybe next time…
Yesterday’s action, without a doubt, stands out in both scope and volume. How
about the heaviest volume ever and the biggest percentage gain for the Nasdaq? Nice!
It is amazing how much territory can be covered in one day, both up and down.
The rally was not the
only positive I had been seeing. In my last report, I mentioned improving
advance/decline figures, expanding highs and the potential for a friendlier Fed.
You can now add the action I am seeing in the semis to the positive list.
Needless to say, the Fed
got everything it wanted by making the announcement intraday. The combination of
oversold conditions, end of tax-loss selling, serious short-covering and lots of sideline cash fueled the move.
So, no negatives to talk about on yesterday’s action.Â
But, it was only the first day of an attempted rally. (I think I have
said that several times over the past few months.) I do recall the Nasdaq
gaining 10% several weeks ago, only to fail miserably. I recall several 6%-8% Nasdaq gains
over the past few months that also failed. One day — even a monster —
may or may not lead to great things.
The Fed’s move is huge. Normally, the market acts well when it is easing, though
on occasion, there has been lag time. It also doesn’t hurt that more financials
are now coming on strong.
If this is for real, not only will the market follow through, but leading names
— along with some new names — will start breaking out. Yesterday’s action was
mostly made up of stocks that were down 50%-plus. And after charting several
thousand stocks last night, IÂ hardly found any growth-names popping out.
Tons of resistance lies
ahead. It will take time to work through it.