The market continues to shake off the bearish talk on the market and continues to move higher with volume support. Many are complaining about low volume, but at the end of the day you simply need to compare the volume from the prior day. We’d have a better uptrend if we had a 15% or greater decline with volume well above the 50 day moving volume average. But, this uptrend has lacked the formula to produce massive monster gains. Simply complaining and stepping aside has cost you some great opportunities in this market. Today was just another reminder we have a decent uptrend and fighting it is futile.
Big Wave Trading has been on top of this uptrend from the beginning and we haven’t looked back. Did we get the stereotypical follow-through day, no, but we did see stocks setting up and strong price and volume action in the indexes. What we did see was VERY strong price and volume action in the Russell 2000. Small cap stocks were the first to get out of the gate and it normally signals a strong uptrend especially with strong fundamental growth stocks. You’ll find out trading isn’t an exact science, but a mix of science and art. Once you are able to see the “art” the market will become more of a second nature.
Will this uptrend end, sure it will, but at the moment we aren’t seeing the normal signs of a market that is topping. The number #1 sign will be a breakdown of the market leaders. Leaders are often the key to spotting when a market is about to turn. Sometimes happening in tandem will be signs of distribution and often times “stalling.” Stalling is when the market makes a new high on greater volume but reverses and closes lower than the previous day’s close and the day’s open. One day of stalling and even one day of distribution will not end a market uptrend. Last year we saw double digit distribution days pile up without toppling the market. However, with a move like we’ve seen we’ll see at some point a reversal with all the classic signs of a market top.
The moral of the story is we are on top of this market and to fight is a dangerous game to play.
You say “……..We’d have a better uptrend if we had a 15% or greater decline with volume well above the 50 day moving volume average. ….”.
It’s not called a decline as you coined. It’s called a BEAR MARKET then!!!!!!!!!!. So of course, after that event it would Naturally be an uptrend next!!!!. Mystifying comment you made.
Hi Don,
Thank you for the comment, but you missed the point. Regardless of what you call a market it doesn’t matter! The great thing about Big Wave Trading is we could care less about semantics we use uptrend and downtrend.
The point I was making was if we had a 15% decline to 20% (which you call a bear market) we’d have more massive stock gains compared to the current uptrend. Keep it simple but no simpler.
Glad someone is reading these!
MS
I think what MS is trying to say is that the market would be well served by a healthy correction in an overall long-term uptrend.
But at the same time, we’re dealt the hand we’re dealt, so wishing for something to change is futile, so just use the trend that exists already (i.e. up!)
He also makes the point that top-calling is pointless at this juncture, as the leading stocks are still acting well and there haven’t been any distribution days yet (knock on wood.) Again, the trend is up and fighting the trend is not profitable.