It’s A Follow-Through Day Technically!; Too Bad There Are A TON Of Problems With Today’s Gains (FTD Designation Might Be Dropped After A More In-Depth Review)
March 20, 2008
I will be back later tonight and this weekend to go over today’s market action a bit more in depth. But there is no question today was a very bullish day and this being day four of the rally attempt on the Nassy, SP, and NYSE makes it a very good FTD with it coming on the KEY day (fourth day) and on higher volume.
Too bad, once again, volume is pathetic on the Nasdaq and volume on the NYSE is still LAME! compared to January. I truly doubt this is the bottom. If it is, small banks, savings&loans, and the extremely lagging homebuilders are where the new bull is coming from. If you think that these groups are going to launch a powerful rally, you are fooling yourself. We could get a month to three month bounce here, AS I HAVE SPOKEN ABOUT REPEATEDLY, but don’t get too excited.
The biggest problem with today’s follow-through day is that we are still not above the recent March highs. LOL. How anyone can be “sure” that this is a bottom is crazy. I have never seen a powerful stock market rally start where a huge FTD day was below the old highs. IMO, this is not a “real” follow-through day. I am not sure if IBD will call it one, due to the indexes still being below the recent highs. But if they do call it one, I am sure they will find the exact same problems I do.
Once again, though, I am all over the leaders giving you a full day’s heads up before they made powerful moves. These stocks are now being mentioned by some other commentators so I know I am in the right area. There are some HOT stocks in this area. The same HOT stocks that led us higher from late 2000 to early 2002. Is this a repeat? We had a lot of follow-through days fail then. So far the trend looks the same, since November.
Besides small banks, I don’t see what is going to lead this market higher. The laggards are in charge and as long as they are in charge you want to remain HEAVILY LONG CASH.
I will see you later on tonight! Aloha!
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OK I am seeing one stock that is technology that I would like to see in a bunch of canslim quality tech stocks: GNET. If there were more of those kind of chart patterns out there I would get more bullish.
And there are chances that it could happen…
I am obviously going to go into a deeper analysis but the volume today (even thought it IS triple witching) was very impressive. So far my scans don’t have much but I am only 33% the way through.
Hi Joshua,
Do you like LNN? It looks pretty solid fundamentally but maybe too extended technically?
Dave
Scrap that. I forgot IBD’s rule of trying to buy within 5% of a breakout. It’s a long way above that.
Has anyone ever researched whether these huge triple-witching day volumes are indicative of anything? I don’t enough about options to even take a stab. But if you look at Tee Chart you can clearly see that the last 4 triple-witching days have had huge spikes in volume, especially on the NYSE, S&P 500, and Dow. I remember the one in December… I got sucked into a few longs because of that big volume spike, and they failed almost immediately along with the rest of the market.