Wednesday

Just the Facts

The S&P500 gained 6.11 points, closing at 1334.43.

The Nasdaq gained 10.22 points, closing at 2286.04

The Small Cap S&P600 gained 2.86, closing at 365.53

Nasdaq Volume came in around 1.8 billion shares, substantially higher than on Monday.

NYSE Volume also increased, to around 1.14 billion shares. Most of the increase in volume on both exchanges occured later in the day after the markets had rebounded off lows, a bullish sign.

We saw 77 new Highs and 79 new Lows on the NYSE and 19 new highs alongside 174 new lows in the Nasdaq.

The Random Rants

Stocks started the day trading mostly lower until late morning/early afternoon buyers came in and bid the market up. It is worth noting that this movement to the upside occured on heavier volume then the prior moves to the downside. This tends to suggest more accumulation in a market than distribution. I know, This sucks and that sucks, and Food inflation is the worst it's been in 17 years and oil prices and gas prices are killing us and..and...and. In the big picture right now though, none of that matters. How do I know this? The market is telling me so, in fact it's telling all of us, rather loudly, that these numbers do not matter at this point. That's not to say that a bad economy with terrible fundamentals won't eventually catch up with the market and bring the entire thing down, thats for people smarter than me to figure out, but what I can see is that in the short term names are getting bid up and there seems to be more buying interest compaired to selling interest.

I've made the point very clear since earlier in the year that I do not think this is the best market to go out and try to accumulate massive profits, instead the order of the day is more along the lines of the preservation of capital. I still feel that way, have a heavy cash position and my accounts are at new high water marks. This has been done while taking very little market risk, and hiding out in the chicken coup an awful lot of the time. (If I start to strut around like a rooster you'll know why).

There are some good looking stocks out there, a couple of them we have picked up. Apache continues to produce gains since April 2nd, and Lindsay Corp broke out again from a new high level flag giving aggressive traders a buying opportunity. I'm watching CSX closely and should it move too much higher on any volume I will be picking up shares. Finally the Buckle (BKE) keeps showing good strength as it builds its flag, and any breakout is, in my opinion, a buying opportunity.

Finally I want to look at PVA, which is a stock that was mentioned in yesterdays post as a stock that might be setting up. While PVA did clear the high of its flag, the setup was negated on the gap, and I apologize to anyone who I have not made this more clear to earlier.

Gap rule is very simple. If any stock gaps up (or down) to produce a "setup" on the very first trade of the day, that is to be ignored. The stock must show additional strength in the move by breaking out above the high established in the first 30 minutes of the day. This one simple rule has saved me countless hundreds of thousands of dollars.

As mentioned yesterday Steel stocks continue to look pretty sharp. SCHN is forming a high level flag, while X looks like it has a ticket to $200. Other stocks such as MT, GGB and SUTR also are showing strength and should be watched closely and considered for buying opportunities on appopriate setups.