Leading Stocks And Small Caps Lead As Stocks Rise Again; SP 600, NYSE, And DJIA All Hit All-Time Highs

February 1, 2007

Stocks continued to do what they have been doing all week and that is gain ground in the face of the ever growing loud bears. Even with GOOG and DELL trying to knock the market down, the market just keeps on rolling. Yes, I am also hearing a lot of bullish talk but trust me I monitor a lot of message boards and chat rooms–there are plenty of top callers out there. As long as they exist this market just keeps rallying in their face. All-time highs in three indexes doesn’t even seem to shut them up. But what else should I expect?

At the close, the SP 600 led the way with a 1.1% gain, the SP 500 gained .5%, the DJIA gained .4%, and the Nasdaq rallied .2%. Leading stocks did extremely well today, gaining 1.5% and leading the entire market higher. There were 37 stocks in the IBD 100 making 2% or higher gains.

Volume was lower on both the NYSE and Nasdaq, signaling that not every body and their money was willing to buy stocks up here. Breadth was positive on the NYSE by an 8-to3 margin and positive on the Nasdaq by a 5-to-3 margin.

The market did not even think about selling off hard, after the Fed annoucement yesterday. Today many traders thought that the selloff was inevitable and that in of itself probably helped the market rally even more. The good selling opportunity just never happened. However, being at the top of the trading range in the Nasdaq and with very few stocks showing up on my scans tonight it is possible that further headway here could be tough to come by in the short term.

So basically we are in the middle of the same situation we have been in since August. Stocks keep on rallying with minor pullbacks then blast off to new highs. As long as this action continues, I will continue to buy HOT stocks and avoid the short side. However, in finding new longs, I am not getting too pushy with the buy button. I would be careful with going all-in at this stage of the rally. Stocks are setup for much further gains but in the short term caution must be warranted with the lack of new buys showing up today on the scans.

I am off tonight to go have a nice night with the girlfriend and enjoy some amazing food at Sanseis’. I hope everyone is doing well in this market. Continue to ride the momentum trade higher. Just make sure you take some profits along the way.

Aloha and I will see you in the Chat Room.