We saw some profit taking in the names that have led the recent bounce and gains in markets for the inflation trade so all the commodity sectors closed on the upside. Financials were the weakest group.
The Dow Jones Industrial Average rose 92 points, its sixth gain in seven sessions. The big news for the day came out of the Fed meeting. The Fed announced that they would be buying up to $300 billion of Treasury’s over the next six months. They would buy up to an additional $750 billion of agency mortgage backed securities and an additional $100 billion of their debt. As expected the FMOC announced that they were leaving the fed funds targets unchanged. Additional rumors circulated during the day that the Obama administration is considering expanding the TALF through a joint effort by the Fed and Treasury to take the bad assets off the banks books.
In respect for the Irish and St. Patrick’s day, the markets finished in the "green" for the day. The market shook off yesterday’s reversal and rallied strong outing in a 90% up volume day. That is 90% of the volume was in stocks that were advancing. In intermediate term rallies you want to see volume in advancing stocks. Yesterday’s volume was 40% in advancing stocks, not too bad considering the reversal day we had and closing at its lows. The MA of this indicator is now approaching 55%, this has led to the rallies staling in the past. (Chart below)
Stocks fell on Monday after American Express Co said the number of people struggling to make credit card payments grew, erasing earlier optimism that banks could return to profit in the downturn.The SP500 rallied low to high, 100+ points, since the March 6th low of 666.79. The index hit a high of 774.53 right near the 780 resistance levels before backing off and closing near the lows of the day. The NH_NL continues to stall below the 0 level and the market became short term overbought. It is no big surprise we were ready for some profit taking. The market needs to back and fill while it works off the short term overbought condition. In the intermediate term we have more room to rally but the most positive thing this market could do is rest and digests these recent gains without giving the last weeks move up. A pullback into the 720-730 levels need to hold and form a higher low.
I am gradually working my way back to full strength. I have had two computers to go down within one week. The last one fully corrupting my Trade Station files. Rather than doing a quick restore, I zapped my hard drive and reformatted. Ran every hardware check on the system I knew and then some. I now have what feels like a new computer right out of the box. You don’t realize how much stuff you have until you take everything off and begin to restore from scratch.This past week saw a long awaited upside bounce in this bear market. As a matter of fact, the last time I had a system shutdown, the markets had a huge move. It appears each time I have a massive computer crash the market rallies in a big way.The group ended the week positive for the 4th consecutive week. The Spiker’s are up over 6% for the year.Susie wins Gold, Dave F takes the Silver and Nick grabs the Bronze. Once again Spiker’s demonstrated great money management as no one trade loss more than 3%. The group has been profitable 8 weeks out of 11 so far this quarter. We had a mix of long and short trades, and as Alex has mentioned before this is a market of stocks. Many times there are opportunities long and short. In a week that saw the SP-500 move 10%, the Gold and Silver medalist won with short position trades. There was some phenomenal performance in the Spike Members trades. Several had gains of 15% plus. Members David L , Hsin Y, Pat L, Sergey S, Stephen A, Tristan M all earned $20 dollar credits.Congrats to this weeks winners!!
So many people are stading on the sidelines, telling the market what it can or cannot do. "It cannot go down so badly, it cannot go up 4 days in a row, it cannot this and cannot that." Meanwhile, the market continues to do what it darn pleases. As a Russian saying goes, "A puppy barks, but a caravan moves on."
This is an old saying, which reflects the power of a trend to just keep going. If you need to ask whether this is a new bull market or merely a bear market rally, I will have an exact answer for you a year from now. If you want to trade today, the answer is – determine the trend and trade in its direction!
Every market participant watches prices. More experienced traders pay attention to time – you may be right on the general direction, but timing a trade is still pretty hard. Finally, even more savvy traders concentrate on trade size. You can make two absolutely identical trades, but of different sizes, and win in one but lose in another. Why?
Today’s violent rally was accompanied by a 75% shrinkage of New Lows and a 150% expansion of New Highs. Purists may split hairs arguing whether this was the beginning of a new bull market or merely a bear market rally. This will be an easy quesiton to answer a year from now – but today we need to hit the keyboard and trade.
I am writing this at a crack of dawn in the Austrian Alps, with a frozen lake and ski trails outside my windows. I have just checked my emails and was sad to see that Kerry had suffered a massive computer crash last night. While he is restoring his software and data, I will keep updating NH-NL from Europe.