Wednesday, November 24, 2004
Market continues to act well. We are in for abreather at some point, and Friday may have started it. But by the way the market reversed today it looks like it just wants to continue higher. I'm not one to argue with the market as long you have strict risk and profit management rules in place. Several mergers and big dividends are about to close and get distributed. This will add alot of liquidity to drive the markethigher. On top of the economy reaccelarating, andchristmas just around the corner, it looks like itwill be a merry christmas and a happy new year for themarkets. Leading stocks, continue to lead. Even asthe market has had some bouts with distribution days,they have held up nicely, and have corrected modestly.Earlier this year, the exact opposite occured,leading stocks came crashing back into bases as themarket got sold off. Hold onto your winners as longas they are not showing sign of weakness, and look fornew buys that maybe setting up for the next leg up.Oil could still pose a short term problem, but as soonas it stabilizes the market just discounts it andmoves higher. The rally that started in late Augustis still intact. We got rally confirmation days onall the indexes, even though the DOW needed to do ittwice since it undercut it's August rally low, on theSpitzer affect. Volume has been running much heavier on up daysthan down days. Look back at MArch 2003 and you will see alot ofsimilarities between the two markets. Earlier this year, everyrally was followed by heavy selling in the indexes. The advancedecline has also been trending higher since August. The 20 and 50DMA have crossed overon both the NASDAQ and S&P, and we're just waiting onthe DOW. The S&P has been the leader so far thisyear, but that may change as the NASDAQ ramps up. Nomatter which index leads, just look for the leadingstocks. If you haven't particiapted up to now, there are stillopportunities out there, you just need to look for them.