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Friday, February 1, 2008

Sorry, No Follow Through Yet

No follow through, according to my eagerly anticipated IBD this morning. We are still in a correction. Even though yesterday technically qualified, IBD gave sound reasoning for not calling a confirmed rally. Here is what they said:

"As noted in Thursday's Big Picture, it's almost a moot point even if the market did manage to assemble a follow through session of powerful gains on heavier volume. The Reason? There are virtually no stocks close to proper buying positions right now."

That is what I have been seeing. Notice the poorly formed bases on the breakout stocks I have posted lately.

"Instead, what we are seeing is a lot of stocks that made big moves last year, broke down, then yo-yoed back up. In many cases, these stocks look like they're forming bearish head-and-shoulders and other topping patterns. They don't resemble the types of bases that typically result in big gains."

Today the SPX broke through the 1385 level. next target is 1406, if that falls then the 50dma is next. Notice the series of higher lows it is forming (arrows). Volume really needs to pick up, though.

I haven't looked at the Industrials in a while. Same basic picture here, but we don't have as high up to go to test the 50dma.

The Nasdaq was weak today but did stay above 2400. It's got a long way to go before hitting the 50dma, I doubt it will get there before the next pullback.

The Russell 2000 is clearly strong here, and is less than 10points away from testing it's 50dma. The momentum is still strong here, but how much of it is short covering?

XLF took out it's 50dma yesterday, and added gains today, but on lower volume. Getting above 30 will be positive, above 31.85 downright bullish.

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