Two Reasons I Think This Market Is Going Higher

The
NASDAQ spent the last couple of weeks unable to make the break above 2,100. 
After a few failed attempts it was only natural for it to sell off, re-group
and now possibly make another attempt.

 

 

There are a couple of reasons
why we are going to move higher from where we currently stand.  First of all,
I am watching what I coined to be the market’s strongest stock at the onset of
this rally–Google (GOOG)–march higher on above-average volume.  This
is what you call a true leader.  Leaders do just what is in their name with
the market: pull it higher.  I do not think we are going to march higher over
the long-term, but intermediate-term prices may very well rise. 

 

 

Secondly, this pullback in
the market has added some nice pessimism to the picture.  Over the past couple
of years, the market has not done what price and volume dictate.  Each time
overwhelming distribution or accumulation has appeared, the market does the
opposite.  I think it is nice to see a little selling into a rally.  It keeps
investors doubting the validity of the move.  As soon as we see strong buying
across the board, it’s over.  If you would like to research this fact; take a
close look at early December’s overwhelming accumulation that lead to the
first quarter’s declines.  Next take a look at April’s above-average selling
i.e. 4/15 and notice when the rally began. 

This has largely been a
market that needs to be bought into pullbacks and sold into rallies.  With the
economy sputtering and very attractive real estate profits (for now) the stock
market has never been able to really get going.  Due to its current pricing
being so far from the higher (for the NASDAQ) it also remains a solid buy on
dips.

Good Trading!