Online Stock Trading | Euphoric Day sends stocks screaming higher

Euphoric Day sends stocks screaming higher


Filed Under Market Commentary |

Retail Sales figures as well as more take over news helped vault stocks to record highs on the S&P 500 as adn Dow Jones Industrial Average.  Traders loved the retail sales figures showing the consumer is not quite dead in the water.  Regardless, the action recently has been pointing to higher highs as of late.  Price action has been very bullish even without having an excellent volume picture.  Bucking the trend, today’s moved included a surge in volume.  Overall, a complete day for the bulls on Wall Street.

Once again the bears on Wall Street were the ones getting mauled.  Tuesday’s headline out of the AP was “Bears Maul Bulls on Wall Street.”  This shows the sentiment within the media, for some reason they do not like the current market situation.  Last month a gallop pole revealed over 70% of those polled thought the US was in a recession.  Those of you who watch the nightly news hear the negativity surrounding any type of economic data.  It is no wonder why people believe we are in a recession.  Today’s market will set off a chain events leading to changing the media’s perception on the economy.  The coming situation leads me to believe we are beginning of a euphoric state in the market.

Market corrections take place when the emotional state of the entire market becomes “euphoric.”  This basically means the retail investor comes in at the top buying up everything in sight.  Before this occurs, there will be two things that will take place.  Number one:  the cash sitting on the sideline will begin pouring back into the stock market.  While this happens, the stubborn permabears will press harder and short stocks at a more rapid pace.  Number two:  the new flood of cash has pushed stocks higher but the shorts who’ve been piling on during this upswing have now gotten scared and begun to unwind their short positions.  Once this situation occurs our lovely retail or dumb traders believe that stocks can do no wrong.  Everything is bought on the spot….the rest is history.  Bang!  We get a correction but, this may take a few months to work itself out.  Too difficult to predict, price and volume action will signal us to the change in “winds.”

In the meantime, I will keep searching/buying stocks that have great growth characteristics as well as sound price patterns. 

Check out my post over at the Trading Goddess’ Blog.

Enjoy your Friday’s

Market Speculator

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