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I find myself asking myself a lot of questions lately. The main question is
about how long can this rally last. You see, like you, I am still remembering the 75% drop in the Nasdaq, and I am still remembering that just this past Sept. 21, the market hit bottom. It is still tough to believe that we are in a grand, fabulous new bull market. But...the more important question has to be whether this market can get cheesed again. I am not talking pullback. I am talking cheesed. After all, the technicals were shaping up in January and certainly shaping up in the March/April period before the rug was pulled.Last Tuesday's action starting at 2:30 and the subsequent action on Wednesday tells me...for this moment...the market gets the benefit of the doubt. A few things happened:
Volume was monstrous. This was not Aunt Mary and Uncle Bob purchasing shares. It was the big institutional crowd. The NEW HIGH LIST expanded to over 300 before pulling back. This simply means more names are starting to participate. More and more names came up the right side of their bases setting them up for future breakouts. All this action insures nothing. It is just my reading of the markets.Over the many years I have been doing this and over the many years I have studied, this type of action usually means that there are more and more better days to come. There has to be a caveat, though. Hey, there always is...and that is while stocks are breaking out to new yearly highs, it is not like 1999 again.
Those breakouts happened at all-time highs. Many names that have recently broken out are still 50% off the highs of 18-24 months ago...meaning longer-term resistance...meaning more volatility and an extra exercise for all of us. What exercise? I not only look at one-year charts...I am now also looking at two-year charts to see where the longer-term resistance lies.
In the meantime, do not ignore some of the things that I have said about sentiment. Sentiment usually lags. I do not like the fact that bears are at there lowest levels in months, the VIX and VXN are dropping big-time and lower priced, frothy stocks are on the move.
Like the RESTAURANTS, a bunch of HOMEBUILDERS have either moved to new highs or look poised to. All have technical work left to do.
(DHI | Quote | Chart | News | PowerRating) has come straight up. I would love it to put in a handle right here.
(MHO | Quote | Chart | News | PowerRating) on pullbacks towards $45. Another straight-up move.
How about a handle on (CTX | Quote | Chart | News | PowerRating) right here?
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