April 2

On Tuesday, for the first time in awhile, the financial issues jumped into the drivers seat on a rally. Indexes ended the day much higher across the board. The Nasdaq Composite jumped 83.65 points (a gain of 3.67%) and closed at 2362.75. The more broadly based S&P500 rose 47.48 points (3.59%), closing at 1370.18, while the Small Cap S&P600 Index rallied a strong 3.27%. Not only did we see large gains across the board, we saw some leadership names appear, which has been lacking on prior rally attempts, and we saw volume jump across the board. This should be seen as nothing but a bullish follow through day to the upside. It's important to note that no significant rally has ever taken place with out a follow through day, although a follow through day in and of itself does not always lead to a sustained rally. As we have seen over the last several weeks upside follow through days have quickly been followed by distribution on heavy volume, so, I'd say caution is still somewhat in order, but I will certainly not be sitting 70 to 90% in cash anymore. All in all, I must say it's not a bad start to the second quarter, especially after the drubbings of the first.
Today I started building positions in LNN (I wish volume had been better), ISRG which gave a great intraday entry point that I will cover in another article this evening, TUP (again I wish it had more volume behind it, but I'll also be doing an article on this trade for your educational enjoyments), OI and CSX. I've owned AMPH for some time, but it's a fairly low volume name so I have not followed it closely here. It would appear that for the time being we are “out of the woods” so to speak in terms of the downside in the market. Still play a bit cautiously though because if this is truly “the” bottom there will be plenty of opportunities to get on board the trend.