Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim's Nightly Stock Analysis
Report
click here or call
888-484-8220 ext. 1.
The market looks great right now. There isn't much to be said
about stocks to rush out and buy, but things are fine. Let me explain what I am
seeing…take a look at the index charts below and notice how little distribution
we have had.
My count has us showing 2 distribution days in the NASDAQ in the past four
weeks. Keep in mind that a distribution day is when the price closes lower than
the previous trading session on increased volume (subject to a few minor
exceptions.) Distribution days are what can kill a rally. Since the market
confirmed its rally on August 15th, we have yet to compile enough distribution,
usually 3-5 days over a week or so, to hurt the current uptrend.
Chart courtesy of
StockCharts.com
Chart courtesy of
StockCharts.com
Many leading stocks and even the NASDAQ are testing and even dipping below
50-day moving averages. Most of this is coming on light, end-of-year volume.
Stocks like Google (GOOG | news | PowerRating | PR Charts ), Apple (AAPL | news | PowerRating | PR Charts ) and Research
in Motion (RIMM | news | PowerRating | PR Charts ) seem to be drifting lower in this manner. Even the
NASDAQ itself is doing the same thing.
Chart courtesy of
StockCharts.com
Declining prices usually make market sentiment nice and negative which is
exactly what is needed for a good rally. Believe me when I say that this market
can re-gain its highs in the blink of an eye as long as distribution stays out
of the mix.
As 2007 rolls in, we may very well see many strong opportunities to take
advantage of. I have had many years where the market ran higher into year-end,
which never boded well for January. Take 2004, for example…the market had a
strong 4th quarter rally that continued through December as volume grew lighter
and lighter. As we moved into 2005, prices deteriorated rapidly. Right now,
we’re seeing exactly the opposite. Considering this is currently what we are
seeing, and there are few quality entry, or buy points for stocks; enjoy your
holidays and get ready for what may very well be a profitable and exciting stock
market in 2007!
Happy New Year!
