What Was Wrong With Yesterday’s Move

The
market was able to rally off the Fed’s ¼-point rate hike on Tuesday,
but the move left a lot to be desired; namely volume.

 

 

 

This market has been shrouded
by uncertainty for 2004.  Now that the fed has done what most people expected,
the market may be free to breathe a little.  Unfortunately, we still face the
single largest uncertainty that will, in my opinion, weigh heavily on this
market: the future of this country’s leadership.  Once we arrive at our next
President we will have a much better idea of how other uncertainties will be
handled; such as with the economy, Iraq and the Middle East, and interest
rates.

 

Throughout this year, the
market has been plagued by light, or below-average volume in rallies and
heavy, or above-average volume into declines.  This technical aspect will
shift when we enter a prolonged rally, which in my opinion will be in the
fourth quarter of this year of the first quarter of 2005. 

 

For now, we’re faced with
choppy trading and high-risk opportunities.  Stocks like Qualcomm (QCOM)
try to make progress but in the end start acting worse than the market.  Note
this stock’s poor technical action in price and volume over the last three
days.

 

 

Yahoo! (YHOO) and
Ebay found support at their 200-day moving averages.  These stocks have
played a large part in the market’s recovery since the bottom in October of
2002 and may continue when things start to shape up.

 

 

The current market looks like
a good one to avoid for now, but later this year or early next that could
change in a BIG way.  I will continuously talk about this theme as it evolves.