Stocks Add to Gains as Volume Slides

July 14, 2009

Earnings from Goldman Sachs helped boost stocks higher at the open, a positive earnings report helped ease fears United States Banks were fragile. Sellers quickly took over the market and sold off stocks and a battle for surpremency wore on. Buyers quickly took over and remained in control for the remainder of the day. However, institutional support appeared to be non-exsitent with volume coming below Monday’s levels as well as below the 50dma. Many leading stocks were higher again, but volume was lagging as well. While Tuesday piled onto Monday’s gains the lack of volume on the next day gives a bit of pause to whether or not this rally is for real.

Many times traders get caught up in the analysis of the “why” rather than realizing he/she should go with the flow and get with what is moving. The individual trader will never have the capacity to research any sector, industry, stock more than the institutional players. It is best for the individual to simply follow or better yet “draft” these institutions. Worrying about the “why” will only cause you to miss out on some tremendous gains. Look for the “what is” and start hammering out better performance numbers! Big Wave Trading subscribers are able to cut out the why and move right into what is working and capturing gains.

Monday’s follow through day was quite early in the uptrend, day 4. Remember, days 4 though 10 have and can produce powerful rallies, but the key ingredient is having quality growth stocks or “leaders” rule the roost. At the moment, we have yet to see these leaders emerge as front runners. Not a terrible sign, but a question market remains to plague the market. Small caps are leading which is a nice sign, but we really need to see these leaders get ahold of the reigns. An index I am following of leading stocks is has been putting in a nice bottom since March. Although, it has yet to really lead this rally it is still bottoming very nicely. It will need to continue to build strength if this uptrend will be a lasting one.

Today’s market was filled with “loose” fundamental stocks leading the way and the vast majority were on lower volume. The big boy stocks faired well as today holding onto Monday’s gains. Leading stocks will let us know whether or not we’ll be able to get big in some positions. If not, we’ll continue to take our gains when we have them and protect our downside by cutting losses.

Enjoy your trading day!

Posted by MarketSpeculator | Filed Under Market Commentary