Yesterday's "resilience" lead to today's relentless rally. The
market tried to pull back on the Fed's comments and the bears
could get no traction. If you blinked, you missed the
"correction". Certainly, the market looks to be getting tired
here and "should" pull back, but we've got all the ingredients
for a market to get out of hand to the upside. We need to be
nimble and careful on both sides even as we stay set for another
run higher.
DJIA: That Dow chart looks pretty darned compelling.
SPX: The S&P broke up out of one wedge and a bit more
will break up out of the other. The Bears aren't expecting that
and things could well get goofy on the upside.
NDX: The Nasdaq is showing little but strength.
RUT: The Russell got close to the target and pulled
back. Still, that's a good stick.
HUI: The miners hit their target but they didn't
bounce. That's a warning sign.
BKX: The Bank Index is strong,
strong. If it doesn't die here, it looks very bullish.
RTH: The Retailers are Bullish to be sure but this
stick is funky. We'll just have to see.
DJT: The Trannies were strong but gave it all back. It
may not be ready to rally, yet.
ORCL: Oracle is gone, no matter what. We heard from no
one regarding the low tick yesterday, which supports our data
that the stop wasn't actually hit (I never saw it trade there).
All in all, this was one great pick.
KAR: Adesa was nicely up today.
CLS: Celestica put in a solid (and tasty) stick today
too.
BBT: BB&T was up handily today. Nice action.
TMX: Telephonos de Mexico got us in and I like the
stick. This one could get some speculative interest.
Q: Qwest was up, but not enough. Don't give up.
CA: Computer Associates still looks vulnerable. If it
breaks down, it's probably not a bad idea to have a hedge,
despite my overall bullishness.
UPS: UPS still looks strong. They are very
likely to have a good quarter and folks know it. Fuel prices
have to be a big plus.
MWV: The Meadwestvaco exploded higher as we
thought it would. Alas, without us.
JOSB: Joe A Bank broke up, but it's showing no
weakness.
Summary:
I'm Bullish but I know an overdone market when I see one. There
are profits to take. Of course, there are a ton of folks picking
tops in here, too. One poll I'm looking at has 62% short bears.
That's a lot in a strong market. We're also flirting with
breaking two rising wedges to the up side. That is a
prescription for a potential short squeeze. Be alert for it.
Hello. My name is Mike Swanson. I’m the best-selling author of the book Strategic Stock Trading. In a former life I used to run a hedge fund from 2003 to 2006 that generated a return of over 78% during that time frame. In fact it was ranked in the top 35 out of 5,000 hedge funds in 2005.
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