Fear And Panic Driven Headlines Help Lead Indexes To Losses Across The Board; The Lower Volume And Gains In The IBD 85-85 Put A Positive Spin On Today’s Down Session

April 28, 2009

by Market Speculator

The swine flu dominated headlines as the new strain of influenza hit the world over this past weekend. Headlines read this flu outbreak would hinder the world’s ability to recover. News media did its best to strike fear into its viewers thinking this would start a pandemic. Subsequently the market opened much lower, but surprising to the bearish folk the market found support. Later on in the morning we even saw the major indexes in positive territory. The afternoon fade was met with support and the indexes finished off their lows but most importantly VOLUME was significantly lower across the board. Monday was a classic day of consolidation and a welcome sign to a healthier market.

One thing that is becoming more and more obvious to me is our down days in terms of percentage loss. Monday marked a day where the major indexes were NOT down 1% or more. I am noticing, we are getting smaller and smaller percentage losses when we pull back. Going back to September, generally speaking our pullbacks were on LARGE percentage losses and many times on heavier volume. A very good shift in market action and a positive sign for those who are long stocks.

Leading stocks acted pretty well with many finding support. The IBD 85-85 index showed its resolve by finishing higher on higher volume. On the flip side the IBD 100 slipped on higher volume. Mixed results from the IBD indexes, but the top leaders remained intact and strong. Again, we must remain focus on our leaders as they will tell the tale of the market. Without leadership this uptrend will begin to fade and our gains will slip away.

The crowd is bearish and Monday helped fuel this fire. Uptrends climb the wall of worry and we are certainly seeing the doubt this market can go any higher. I do not believe we are in a brand new bull market but we are experiencing a rather nice uptrend. Survey’s are showing the small investor AAII is bearish and the Investors Intelligence survey is showing newsletter writers are bearish. All positive signals for those who are long stocks. I’d be worried if these surveys were showing bullishness, but at the moment they remain bearish and for our sake I hope they stay rather bearish.

It is important to keep your losses small and let your winners run. I would love to see this market move sideways for the remainder of the week showing small losses on lower volume and gains on higher volume.

Stay focused and keep your eye on the ball.

Market Speculator

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