Online Stock Trading | Stocks Rip on Higher Volume; Is it This Time

Stocks Rip on Higher Volume; Is it This Time


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The Dow Jones Industrial Average and S&P 500 follow-through, but significant challenges remain.

The market staged an excellent rally on Tuesday with the Major Indexes up more than 10% and volume was higher than the previous day.  Stocks rallied due to the hope that a FOMC rate cut will generate enough leverage to pull this economy out of a recession.  Sadly, rate cuts simply signal that there is more downside to the economy leading the major averages down.  Once again the most recent follow-through day does not close at the highs of the attempted rally and volume was not the highest.  In addition, there were 0 new highs signalling there isn’t any strength in this market.  If we rally a bit here it wouldn’t surprise me but it will only set up shorting opportunities for many, look for this follow through day to fail.

If I were trading, day trading I would be doing so with the S&P500 and NASDAQ100 and would be long.  I was speaking to many people yesterday letting them know we could see a few days worth of large gains.  Today would be no exception, as the FOMC cuts I expect the market to roar.  There will be much optimism in the fact that we’ve “bottomed” that it’ll give some the idea to buy hand over fist.  The only sad issue is that the largest moves higher in % terms always occur in bear markets (see 1/3/01 NASDAQ move).  If you don’t cut your losses and aren’t buying and holding you should be doing ok by taking profits lightening quick.  However, I doubt many have this ability so it is best to stand aside and let the crazed market settle down.

I know that the greats:  Livermore, O’Neil, Morales, etc would be looking for a move higher to re-enter or add to short positions.  This will not be sustained for any period and you need to be super sensitive to any position you have on out there.  With that said, I am 100% cash and will remain so until we have clearer skies ahead.

Enjoy

MS

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Comments

2 Responses to “Stocks Rip on Higher Volume; Is it This Time”

  1. John Ward on October 29th, 2008 10:42 am

    You neglected to add the name Ward to that list of “greats.” Please amend your post. Thank you.

  2. Stocks Rip on Higher Volume; Is it This Time : Monster Stock Trader on October 29th, 2008 2:00 pm

    […] Stocks Rip on Higher Volume; Is it This Time Share and Enjoy: […]

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