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Wednesday, June 23, 2004
Good evening friends,
Market Recap
The market was fired up today, running on all cylinders into the close, and closing once again near the highs of the day. This broad market move today could be the start of a nice summer rally. I mentioned last night that yesterday's close was very positive and many stocks including the indices had formed bullish hammer candle sticks. I noted that these bullish hammers almost always lead to higher prices the next trading day.
Today the Dow closed up +84 points and the NASDAQ closed up +23 points. A nice follow through on yesterday's strong close, backed by volume to confirm the move today.
The Bulls may be back in town for the run-up into the Fed meeting. We may be getting the rally early, rather than a rally after the interest rate news is released as I previously predicted. If this is the case, then it may be a “sell the news” scenario once the decision is announced. It is too early to tell how the market is playing this out. If we all expect a rally, then a rally will not materialized - the market never does what the majority expect it to do. This week and next should have been fairly quiet leading up to the fed meeting. But what does the market do? It decides to rally instead. It looks as though this may not be time to be on vacation.
Charts Shaping Up
There are many charts that have set up for nice advances. This indicates that the market could have a nice move up and take these stocks with it. If you are short on some stocks, this is a good time to start covering those positions. I do not mean panicking and covering at any price. I am talking about controlled, unemotional buying to cover orders as I started doing today when I saw the market was going to be strong. Remember: every rally has a pullback at some point. If you get stuck in a short position, you can wait for a pullback to cover. The shorts I covered today were all less than 4% losses. You can get out of trades with very minor loses if you pick your spots and keep your cool.
Big Caps
I have bought some big cap stocks recently. I normally do not buy big caps, but if the market is going to rally hard we should have at least some exposure to a few of the well known names (as long as the charts good look and has potential to be faster gainers).
I have taken positions in BRCM, YHOO, MSFT, and INTC:
- YHOO and BRCM are set up to move big in a tech rally.
- MSFT holds a lot of weight in the Dow, so if the Dow rallies hard MSFT will be a part of that advance.
- INTC is the big player in the leading SOX index. The SOX leads the NASDAQ and INTC leads the SOX so if a rally is coming INTC should be steady. This is not a fast mover, and it is still below its 200 SMA. We need to be in this leader until we at least get to 100% long in the portfolio.
If we need cash to buy a fast mover, then we can dump these slower moving big caps but for now until I find more movers, we will park our cash in these solid companies. One thing about these leaders is that you usually do not have to worry about huge losses or gap downs. They are pretty consistent when the trend starts.
As always, thank-you for your support past, present and future! Have a great night everyone; we will see you all Tomorrow evening.
OTC BB Watch List
- CCLH: nice 18% move today and it's not over. More upside tomorrow IMO
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