Volume Jumps as Does Stock Prices

Stocks tried to pull back but institutions were hungry for stocks pushing indexes higher on higher volume.  Volume surged on the day as institutions were certainly accumulating shares.  The morning session saw stocks initial pull back, but it wouldn’t last for very long.  As the market marked highs during the mid-day they began to lose its footing.  Sellers took over and began to plunge the market and it appeared the final hour would be ugly.  However, by the end of the session the NASDAQ and S&P 500 indexes had cleared their mid-points avoiding possible stalling.  Leaders remained strong and our uptrend continues to be intact.

There are many market pundits who have been trying to call a market turn for the past few trading sessions.  Calling the market as “overbought,” even we have said we’d like to see a pull back.  However, we don’t try and guess where the top is by putting on a hedge or selling off positions that we have no business selling.  Again, trying to outsmart the market will only have the market outsmarting you.  Do not get this confused with taking profits as that is smart, but to completely dump a position simply because the market is overbought is not smart.  Stay patient and leave the opinions behind.

There isn’t a question that the market is overbought or extended, but we continue to have stocks setting up and moving quite nicely.  Even leaders continue to move nicely and hold key support areas showing their uptrends are sound.  If the market does pull back, we’d look for these leaders to hold strong and the market to have volume come in light.  The pull back will allow these leaders to continue their path higher and net us our monster gains.

The importance here is to continue to remain disciplined as well as smart.  Taking profits is a great idea, but if a stock you take profits on sets back up do not ignore the add signal.  Often times a stock will run 15-20% from its proper pivot and it will go on and form a base.  However, if you take profits at the 20% target and the stock sets back up there isn’t a reason why you can’t add it back.  Some traders call this working a position or working around a core position.  There are times when a stock will run its 20% and will not go on to form another base.  But, you have taken some profits if not all by the time the stock reaches its peak.  Stay disciplined and stay smart.