Sunday, December 20, 2009

The Market's Holiday Gift - A Rally

The market seems to be in the mood to give investors one more gift before the year is over.  One more tradeable rally before all is said and done.  We've shuffled sideways for the past 8-9 weeks with very few stocks making progress.  But we finally have a tape that typically precedes tradeable rallies.   Here is what I see:


  •  Large cap tech stocks have held up beautifully and consolidated their gains into new bases or bounces off moving averages.
  •  Small and mid caps are leading again with some new leaders and old leaders back at the helm.
  •  Overextended small and mid cap leaders have digested their gains and allowed moving averages to catch up.
  •  Recent breakouts have held…VERY IMPORTANT FACT.
  •  A lot of tight trading action after some wild weeks.


Other secondary opinionated reasons:


  • Fund managers are not about to set off a sell off and ruin their year end bonuses.  Why not try and run it and increase them.
  • Too much of an expectation for a sell off…Market does like to fool the masses (hate clichés, but they are based on truth).
  • Many investors that are flat or underwater for the year would love to jump in on a rally resumption to try and make something of this year.
  • I can list many more, but all you need to do is listen to the news.


I don't believe the rally will last very long (2-4 weeks).  The leadership has narrowed further from previous tradeable rallies and the base foundation underneath is shaky.   My plan of attack is to take the trades as they come along, and use my market tops analysis as a trading guide.  As of now it has turned positive for the first time since it's correction call in October. 


So The market may finally give investors the climactic part of the rally they have been looking for.  Of course it's all a self fulfilling prophecy as those same investors will be the one's driving the stocks up, with no one to sell back to eventually.  Good luck, don't fall in love with your stocks(trades), and I wish everyone a HAPPY NEW YEAR!





Gennady Kupershteyn

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