Stock Indexes Put On A Show With An Amazing EOD Rally; This Was A VERY GOOD Week

May 31, 2009

By Market Speculator

Wrapping up the week the NASDAQ closed out the week breaking out from a consolidation period in higher trade. Friday’s close was a positive step for the market as accumulation days are beginning to pile up on the indexes. We are also beginning to see the rise of quality growth stocks; emerging from the most recent consolidation period. It will be most important for the market either to push higher or continue to build positive sideways action.

The most important aspect of the market is the price and volume action. Nothing trumps it and should be the number one indicator in your arsenal above all else. It is quite simple: price and volume is the summation of all the actions taken by market participants. Regardless of the their reasons their actions are captured in the price and volume of a stock and the entire market. Ignoring this important signal will severely impair your ability to extract gains from the market.

Investors Business Daily’s William O’Neil’s studies of the market found that no uptrend in the history of the stock market ever began without a follow through day. We have certtainly seen failures of follow through days, but the true beauty of it is that you will never miss an uptrend without it. Looking back at our March 12th follow through day on the S&P500 we can see the market fell roughly 60% from the November 2007 highs. Stocks were beatup and we had already seen 3 straight follow through failures. Once again, on balance the follow through day worked just like in the past. Now, leadership was simply junk of the bottom type stocks but noting the follow through day may have saved you from continuing to short these stocks.

Our platinum members have been enjoying these junk off the bottom stocks with some nice gains. The ability to adapt to what is working in the market is crucial. However, in order for some Monster Stock Gains we’ll need our quality growth stocks to begin to show their faces. Quality stocks are those with a fundamental reason to be bought, but with the technicals that prove it can show Monster Gains! Big Wave Trading members are already beginning to get a glimpse at potential monster stocks as we begin to find them prior to their run ups.

What we have going on here is simple economics, real world economics that have played out time and time again. It is simple, you inflate the base of your currency you automatically create inflation. Regardless of the fundamental situation of the United States economy reserve banks across the world have printed massive amounts of paper currency. This printing will have devastating effects on prices as they will certainly rise without the economy improving. I have no doubt stocks who show tremendous growth, that are the BEST in their industry will prove to be the best stocks to be holding.

This wraps in nicely with quality growth stocks, time and time again being in the best will prove to be the best strategy one will have in the market. There is always amazing opportunities to be had it is being able to capture it and ride the wave. Jesse Livermore was amazing at this, being able to plunge into a stock and ride it out for maximum gains. At Big Wave Trading, we are already on top of these and are ready for these stocks to bust out and ride them for what they’ll give us.

Remember, it is always prudent to cut your losses and not “hope” for your stock to rally back. Stick to a sound cut loss strategy and do not stray from it. The better you get, like many pros you’ll be able to spot much sooner when a stock is not acting correctly and you’ll get out of the way prior to your plan.

Stocks look bullish, the indexes are certainly showing strength and there is no need for us to fight it. Enjoy the youtube video.

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