Stocks Rally Again And Close Near Their HOD, On Stronger Volume; Volume Well Below The 50 Day Volume Average

April 11, 2007

Stocks performed the same way as they have been recently, with the markets gapping up, selling off, and then finding dip-buyers to help bring them off their lows and sending them near their highs by the close. All of this happened despite a very healthy amount of bad news from the housing and mortgage industry. Almost half of my links that I received today involved stories about the housing and lending markets. However, stocks digested the data and did what they have been doing recently rallying the rest of the day.

At the close, the SP 600 rose .4%, the Nasdaq and the SP 500 rose .3%, and the DJIA gained .04%. All of this sounds pretty good but the IBD 100, which is full of top rated leading stocks, only gained .2%. On a day of small gains, you still would like to see leaders outperform the broad market. A negative divergence normally shows up before prices head lower. But I am sure in a market like that, this would be impossible (sarcasm). Oil was the most powerful group today, with the Oil&Gas-Field Services group rising 1.7% and the Oil&Gas-Drilling group rising 1.6%.

Volume was higher on both exchanges and advancers beat decliners by a 5-to-3 margin on the NYSE and by a 9-to-7 margin on the Nasdaq.

Despite the gains on higher volume than the day before, we still have the same problems, with volume being below the 50 day volume average and there being very few CANSLIM stocks breaking out of sound bases for growth investors. This market is just doing the same thing it has been doing all week. The old saying goes never short a dull market. But I guess option players didn’t get that message as the put/call ratio jumped over 1 again. This shows that the price gains are probably going to continue to happen, even if volume doesn’t show up. The players who are around are not that bright, shorting a rising market.

Seriously, folks, how much more is there possibly that I can say about this market? I have gone over this same scenario we are in, over and over. My thesis remains the same. Everything that I have discussed the past eight trading sessions remains true now. Nothing has changed. We still have a dull, non-growth stock uptrend on very low volume. Not pretty, but still a trend.

Hopefully, we will get some more volume, later this week, as earnings season starts. AA came out and beat estimates but there are still many more to come so I will not jump to any conclusions on these numbers just yet. The one thing to remember is that for 18 straight quarters we have grown YOY EPS in the SP 500 at a 10% or higher clip. This is the first quarter that projections are for under 10%. In fact they were for 8% and have now been lowered to 3.7% via Thomson Financial. We will see how this turns out.

The Fed releases its minutes from last month’s FOMC policy meeting to Congress. The verbiage in this report is always market moving so I assume it will be tomorrow also. Before I leave, please read the last eight daily market analysis post-if you have not already. Aloha and I will see you in the chat room!

Stocks Rally Again And Close Near Their HOD, On Stronger Volume; Volume Well Below The 50 Day Volume Average

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