Stocks End The Week With Strong Gains, After A Very Quiet And Choppy Session

February 3, 2007

Stocks were able to hold on to the post-Fed gains, as uncertainty over interest rates off the job data helped keep stocks tight. Jobs coming in below estimates, unemployment ticking up, weak gains in wages, and a lower revision to the Michigan confidence numbers were all good reasons to knock stocks down. But strong factory orders and a clearly powerful uptrend was good enough to shake off the jitters that can be seen today in your intraday charts.

When all was said and done, the Nassy led the way, for once this week, w/ a .3% gain, the SP 600 and SP 500 rallied .2%, and the DJIA lagged with a .2% loss. The good news came in the form of leading stocks as the IBD 100 posted a solid .3% gain. For the week, the SP 600 led the way, hitting all time highs, with a 3.1% surge. The NYSE and the SP 500 climbed 1.9% and 1.8% respectively for the week. The NYSE hit another all-time high, with the SP 500 hitting a six-year high. The highest close since late 2000. The DJIA also joined in on the fun, rallying 1.3% for the week, also hitting all-time highs. The IBD 100 rallied 2.9% for the week, keeping up with the top index (SP 600) and showing that leading stocks are leading this market advance.

Volume was lower on both the NYSE and the Nassy. This is a very positive development on the back of the nearly unchanged prices today. An explosion in volume would give a bit more of a worry that churning could be trying to occur here. Instead, the low volume, gives comfort that the market is resting correctly and that funds aren’t out in force to sell this powerful move.

Breadth was positive on both the NYSE and the Nasdaq. Advancers beat decliners on the NYSE by a 9-to-7 margin and advancers beat decliners on the Nassy by an 8-to-7 margin.

The big winners, by sector, came from the Technology, Medical Equipment, and Builders groups. These stocks are on a tear and continue to lead the market higher. If you are not sure what stocks are leading in these groups, you can always subscribe to my Gold package to find out.

It was, overall, a very nice quiet session, after the past two heavy volume sessions that we have had in the market. Having to deal with 700-1000 charts to scan every night is not fun–though this strong market is very rewarding. Today’s scans had much fewer charts and that is always a lot more comforting to look at when you are short for time. The odd thing with having less stocks in the scan today is the fact that I had more long candidates show up today than I had show up the past two days. Nothing but very strange, to say the least.

The cause and effect is probably due to the Nassy and leading stocks leading today while the big caps lagged way behind. Overall, it was a very great week for small caps and leading stocks as they continued to show why they outperform the general market in bull markets. This, also, then leads to the other obvious observation of mine this week. I had very few stocks in my portfolio that were complete sells this week. I had anywhere from zero to three complete sells each day this week. To go along with the very low amount of stocks I had to dump, I had very few stocks that gave me profit taking or cut loss signals. Then, to add to that, I had plenty of new longs show up in the scan (especially today). This is all very positive action and unless stocks are ready to have a major one day reversal we should expect to see this trend continue.

Why do I think this trend can continue? With oil jumping in price this week to close over $59 a barrel, stocks still rallied. Even with the Investors Intelligence at 53% bulls, the AAII at 46% bulls, and the realmoney.com poll at 55% bulls, market players still aren’t putting their money where their mouth is. The put/call ratio closed at .96 and has been around this 1 reading for about four days now. Take that, with the $4.1 billion dollars in outflows from domestic equity funds and it is clearly obvious that even with traders bullish they are not making bullish bets. You don’t have outflows and high put/call ratios at the top. Until that ratio spends a lot of time around .5 to .6 and we start seeing HUGE inflows every month, calling a top is EXTREMELY foolish and will probably having you look like an ass. Tops simply don’t happen with this kind of data. Also, sentiment indicators are great at confirming bottoms; they are HORRIBLE at calling tops.

Bears can keep talking shit all they want but the trend is clearly up and with three indexes hitting all-time highs and one hitting six-year highs it becomes more and more clear everyday that the top callers and “this isn’t a real rally” callers in July, August, September, October, and on are only talking their losing positions and only want to see you suffer with them. If you don’t like self-torture, you can simply just follow the price and volume action of the actual market. I know that may sound like a stretch but facts are facts. If the market is moving higher and many stocks are making HHUUUGGGGEEEEE gains, you should be long and strong that trend. I am not sure why I see so many bears in the chat rooms and message boards calling for yet ANOTHER top…but they are. I will never know why these idiots play this game. And I will never understand why they do.

We are entering the final leg of the first round of earnings for 2007. With no new economic data of importance hitting the market next week, the market will have to take its cues from the remaining earnings and the true intentions of the big elephants who move stocks. The truth behind last week will be known this week. Either we give up the gains or we hold on to them and build momentum off of the already greatest story not being told: The post-tax cuts GWB economy. This IS THE STRONGEST ECONOMY I HAVE EVER STUDIED. I HAVE NEVER SEEN THE GROWTH IN PERSONAL WEALTH AND STOCK MARKET GAINS LIKE I HAVE SEEN SINCE THE TAX CUTS WERE ENACTED IN MARCH 2003. This is without a doubt the greatest story NEVER told. But….I am sure there is no bias in the mainstream media. I am sure I have been brainwashed by the Fox News (that I don’t watch) and the conservative websites (that I don’t read) out there. Oh how you have to love the media that reports the greatest economy ever in the middle of one of the greatest bull market runs ever as one of the worst economies in history. Funny how facts don’t support that at all. You don’t believe me? Go read the most recent post I posted on the articles page on my Gold forum. The facts are there in black and white!

I hope everyone had a great week. God knows I did! What a great market. Aloha and I will see you in the Chat Room. Enjoy your Super Bowl Sunday!! Go Bears, Go Colts….Just give me a great game to watch. The SEA/PIT game last year was a bit disappointing.

Stocks End The Week With Strong Gains, After A Very Quiet And Choppy Session

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