Stock Market Indexes Take Off After An Early Choppy Session, Closing Near The Highs Of The Session

January 11, 2007

A day of minor volatility gave way to a nice rally after 1pm EST sending all the indexes in a nice solid uptrend into the close. The possible reason for the rally was a left-over feel good effect off the AAPL news in combination with another drop in crude oil. Today’s 3% drop now brings the yearly damage to 12% for crude.

At the close, the Nasdaq led the way with a .6% gain, the DJIA and the SP 500 followed with a .2% gain, and the SP 600 lagged with a .01% gain. The big winners were the IBD 85-85 and IBD 100 indexes which gained .7% and .9% respectively and the Nasdaq 100 which gained 1.1%. This was the sixth day in a row the Nasdaq and the Nasdaq 100 staged very strong intraday reversals. One look at the daily charts and all those tails shows that any selloff is being bought.

Volume on the Nasdaq rose, giving a strong confirmation that the big boys are buying the dips to the 50 dma. Volume was lower on the NYSE as tech and biotech stocks do not weigh as heavy on that index.

Breadth was basically even on both exchanges, with advancers beating decliners.

It was another day of leadership for the Nasdaq and tech stocks. The Nasdaq hit its highest close since the Jan 4th high and is the only index up on the year so far with a 1.8% gain.

Most of this can be thanked on AAPL. The gains in AAPL the past two days of 13% has definitely helped as the stock makes up 7% of the Nasdaq 100. So the strong move in AAPL has definitely helped the Nasdaq outperform the NYSE during this time.

So far pre-earnings season looks to be starting off well with stocks finding support at key moving averages and rallying off of them. That is bullish action in a tape that seems to have a lot of warning signals in it.

The market loves to climb a wall of worry and ORKiter today posted a fantastic post of extreme indicators. There are ZERO bullish extreme indicators and over 10 extreme bearish indicators. As a contrary indicator, this looks very bullish for stocks.

Even though I have stated many problems I see with the market, the facts remain that the tape is bullish, I am very long, and stocks are still moving up.

Until the trend actually turns down, my bearish feelings are nothing but that: feelings. They are not actionable. What is actionable is price action. That is the only important piece of information and the only piece of information you need to know to buy or sell your stock.

What the market does and not what you feel is what the truth is. Just because you think or feel the market should go lower doesn’t mean you will be proven right. Most of the time you will be proven well wrong.

The market keeps moving up and the wall-of-worry continues to build. This is the third year of a Presidential cycle and that is normally the most bullish period for stocks.

Stock Market Indexes Take Off After An Early Choppy Session, Closing Near The Highs Of The Session

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