Interesting Market...
Since July for the Nasdaq. Since 7/21 low, the Nasdaq had been in really what could be termed a stealth rally. It never followed-through within the first 10 days from that low as one would expect, but, even with the distribution days it also never rolled over to new lows during that time. There were buyers down there quietly working. And then it finally followed-through on day 21.
The leaders and leading sectors of the August & early Sept rally have not altogether been what you would normally like in a new bull run, and some breakouts like TRMB etc. have not acted well. But there has been a slow rotation the last couple of weeks (again quietly going on).
But, now the transports are finally breaking their downtrend and the data behind the scenes for them is good for the coming months - another positive for this market.
And if you watched Larry Kudlow last Friday at the opening segment of his show "The Greatest Story Never Told", you would know all of the postive aspects of this economy that I also like right now.
So, now lets see if this rally is going to continue and cause more people pain who have been waiting for a major fall correction, or if it does correct shortly.
Don't try to predict anything, but, if you are still long like I am, try to anticipate what would cause the most participants pain at this point (to try to help protect your position profits). I have some ideas, and I'll try to share later.
Watch the new potential market leaders you should have already noted and made a list of. And watch some other big caps' action. If this rally is for real, the new leaders will start breaking out on strong volume (i.e. I'm watching ANEN and a couple of others today) and that volume is going to carry over into the indices. That has really not happened yet en masse, so another reason to remain extra cautious. But, maybe that's just more stealth action going on.
More stealth is seen when I look at some other big caps and how they have been acting lately (again buyers quietly working).
The nagging problem still for me is all of these new hedge funds - how badly were they damaged last summer? That's going to be a big factor for this market in the next month. And one that could help it turn ugly. I know I do not feel like a "strong" long holder in too many of my positions right here because of these nagging thoughts and some other indicators. These are mostly swing and/or pilot positions as I have not loaded up on anything yet because of the action this summer. I'm still waiting for proper buy points in my list of stocks I'm stalking.
The IBD Mutual Fund index is also something to follow and it is still below it's 200 dma also. More on this later also.
So for now, I'm proceeding, but with extra caution.
