Stocks Find Intraday Support, Again, With All Indexes Closing Higher On The Day; Leading Stocks Continue Outperformance

February 7, 2007

It was yet another driftless day for stocks, overall, as comments from Fed heads Bernanke, Yellen, Moskow, and the Treasury Secretary had no major effect on the stock market. There was no catalyst for stocks to move in one way or the other. It was basically about earnings action in individual stocks and nothing else, today.

At the close, the SP 400 and 600 led the way, hitting all-time highs, with .5% gains, the NYSE followed, hitting all-time highs, with a .34% gain, the SP 500 was next with a .07% gain, and the DJIA and the Nasdaq finished with a .04% gain. Leading stocks kept up with the SP 400 and 600, with the IBD 100 gaining .4% on the day. It is very positive to see the leaders continue to keep pace with the leading indexes of the day.

Volume was slightly higher on the NYSE and well higher on the Nasdaq. The higher volume, combined with the very nice intraday price reversal, gives today’s action a sense of accumulation off this dip to the 50 dma. It can only be bullish to see buyers stepping in here to support stocks at this key moving average.

Breadth was positive on both the NYSE and the Nasdaq–which is good because with such little change breadth easily could have been flat. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq.

It was another day of clear outperformance by leading and small cap stocks. Not to be left out, the NYSE, has been showing some incredible strength too. That is mainly due to the strength in the Building and Steel stocks. The IBD Steel-Specialty Alloy group has risen from 157 to 2 in the past three months, the Steel-Products group has risen from 94 to 13 the past three months, and the Building-Residential/Commercial has risen from 189 to 12. This is some extreme strength the past three months in three economically sensitive groups. These groups are old leaders but with the overall broad strength in this rally, I personally think it is a good thing to see the old leaders rise with new leaders. However, I am finding few if any stocks in these groups that I want to go long. That might be a sign something isn’t right. However, with all these groups rising, things are obviously going well.

The losers of the day were the Semiconductors, with the SOX index giving up .5% today. However, this is of no surprise to seasoned chart readers as the stock has failed to hold above the 50 and 200 dmas, broke down below the December lows in January, and continues with its steady downtrend from January 2006. There are few leading stocks doing well in this sector, and with most markets hitting new highs while this SOX index lags, there is no reason to be long stocks en masse in this sector.

The put/call is still pretty high, sitting at .85. This shows me people are still placing there bets on the short side, even though the market keeps hitting new highs. This is very bullish for further stock gains. This is probably why EVERY dip is getting bought, with no end in sight, for now.

We shall see how the market does tomorrow, off of CSCO’s earnings. I doubt it will have much of an impact but I am sure it will be the topic of the morning on CNBC and in the chat rooms and message boards. Don’t fight the tape and keep playing this trend till it ends. This is an amazing bull market and until we get clear distribution it pays to stay long and strong.

Stocks Find Intraday Support, Again, With All Indexes Closing Higher On The Day; Leading Stocks Continue Outperformance

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