DJIA, DJTA, DJUA, NYSE, And SP-400 Hit All-Time Highs; The Giant Wall-Of-Worry Proves Easy To Climb, For Stocks

February 15, 2007

Today stocks showed, ONCE AGAIN, why shorting a market that is in a long-term uptrend is an unprofitable and low reward/high risk proposition. All it took today was positive comments from Mr. Bernanke about the economy to ignite a very powerful rally that helped five key indexes hit all-time highs and another one hit six and a half year highs. In front of the Senate Banking Committee, Mr. Bernanke stated, “…the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation.” Those words right there ignited the rally that we saw today.

When the final bell rang, the Nasdaq led the way with a 1.16% gain, the SP 500 followed with a .76% gain, the DJIA rallied .69%, the SP 400 rallied .65%, and the SP 600 lagged with a .35% gain. Leading stocks did not keep up with the Nasdaq but they still led the rest of the indexes. The IBD 85-85 finished with a .8% gain. Other notable gainers included the DJTA gaining 2.1% and the DJUA rallying .4%. Overall a good day for stocks in all sectors.

Volume was higher on the NYSE and much higher on the Nasdaq, placing conviction in the price gains. The higher volume signals that institutions went to work buying stocks, since prices were higher.

Breadth was positive on both exchanges, with the NYSE showing better breadth, even though volume and prices were higher on the Nasdaq. Advancers beat decliners by a 2-to-1 margin on the NYSE and by a 3-to-2 margin on the Nasdaq.

The good news from Ben, along with oil falling to $58 a barrel was just what stocks needed, I guess. The one thing this proves to me is that this market is extremely strong and there is no reason to continue to look for a top. With all-time highs being hit in so many indexes, waiting for a top to form is going to be hard to do. It is hard buying stocks up here and I am still not finding a lot of new buys. But the stocks I am long are still going up and if they keep going up with all these indexes hitting all time highs I don’t think it matters that I am not finding any new buys as that is confirmation that I am already in the right stocks.

Alternative energy stocks were hot today. As I mentioned last week this sector is seeing some major momentum money enter it. The fact that this sector also has some excellent fundamentals makes this an explosive mix for big gains. Too bad most of these stocks have not offered a single entry point for reasonable and smart investors. This group has too much momentum and is dominated by these traders. A low volume pullback lasting at least a couple of weeks followed by some breakouts would be nice. But for now I will just enjoy the moves without me. FSLR TSL CSIQ ASTI SOLF JASO ESLR are the stocks I am looking at for bases to build.

We have a flurry of economic activity tomorrow. Before the bell, we have export prices, initial jobless claims, manufacturing data from the NY area, and industrial production and capacity utilization numbers. Then after that the Philly Fed Reserve’s data on manufacturing activity comes out. So all of this should keep traders busy. If that doesn’t inspire the talking heads on the boob tube, I am sure something else will.

Keep it simple folks. This is a bull market. Another distribution day fell off the Nasdaq. This just gives one less reason to be bearish here. My caution flags are still up but I have to admit with a move like we had today and with the put/call still up around the 1 level with it being around 1.25 at the open it is hard to really be too worried here. The bulls are clearly in control and the bears are completely foolish to fight this tape. However, I believe it is also foolish to chase stocks so if you are buying extended stocks you are being just as dumb. When a pullback does come those extended stocks are going to hurt you real bad. Don’t chase. Those that follow me know that using a from of the CANSLIM system you NEVER chase extended stocks. You let them go.

Speaking of letting them go. That is what you should do to all the negative fear-mongering stories you here about this great economy. You should just let them go. Follow the stock market. That is the truth. Something the biased left-media has lost all control of when it comes to this economy. There is simply no truth to there bashing of this amazing market.

Aloha and I will see you in the chat room!

Subscribe To Site: