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Friday, October 28, 2011 1:44:58 PM
Fourth Quarter Rally Expected to Continue By Art Huprich
* Friday, October 28, 2011
“Wait, are the bulls supposed to run in Pamplona or Wall Street?” Ever since the “less pressure ridden” undercut low and bullish short-term high volume reversal on 10/4/11, I’d say “both.” While having discussed a fourth quarter rally, both here and in client seminars for weeks, I have been wrong thinking it couldn’t go this far in such a short period of time.
Actually, over the past week or three we’ve seen the underinvested and underperforming participants disguised as bulls, coupled yesterday with a temporary removal of Europe’s issues and recession concerns. This produced a 339-point gain by the DJIA, an 88-point rally by the NASDAQ, a violation of support by the U.S. Dollar Index and a sharp decline by the bond market as the “risk off” trade was unwound. Also, Silver defined by the Silver Trust (SLV/$34.10) followed through from a recent short-term, topside breakout. I think SLV can make a move towards $38 to $40.
On the NYSE, volume expanded to 1.43 billion shares, the highest since the “10/4/11 high volume reversal.” I don’t view this as favorably as others because it signifies, to me at least, a gradual acceptance of the recent rally. There were 2323 net advancing issues and 174 new 52-week highs. I like the new high reading as it tells me more stocks will start to develop high level bases.
So what type of logical conclusion(s) can I make from the following chart:
1) Some type of pullback or consolidation is due, given the DJIAs move into resistance as shown below.
2) Short-term oriented accounts, or those who “bought” in the beginning of the month, should take some trading profits and raise their stop loss points, simply as a function of discipline.
3) Buy fundamentally attractive companies with bullish chart configurations that aren’t extended in price, because I think the DJIA will eventually push into the higher resistance levels, shown below.
http://raymondjames.com/technical_commentary.asp
George.
* Friday, October 28, 2011
“Wait, are the bulls supposed to run in Pamplona or Wall Street?” Ever since the “less pressure ridden” undercut low and bullish short-term high volume reversal on 10/4/11, I’d say “both.” While having discussed a fourth quarter rally, both here and in client seminars for weeks, I have been wrong thinking it couldn’t go this far in such a short period of time.
Actually, over the past week or three we’ve seen the underinvested and underperforming participants disguised as bulls, coupled yesterday with a temporary removal of Europe’s issues and recession concerns. This produced a 339-point gain by the DJIA, an 88-point rally by the NASDAQ, a violation of support by the U.S. Dollar Index and a sharp decline by the bond market as the “risk off” trade was unwound. Also, Silver defined by the Silver Trust (SLV/$34.10) followed through from a recent short-term, topside breakout. I think SLV can make a move towards $38 to $40.
On the NYSE, volume expanded to 1.43 billion shares, the highest since the “10/4/11 high volume reversal.” I don’t view this as favorably as others because it signifies, to me at least, a gradual acceptance of the recent rally. There were 2323 net advancing issues and 174 new 52-week highs. I like the new high reading as it tells me more stocks will start to develop high level bases.
So what type of logical conclusion(s) can I make from the following chart:
1) Some type of pullback or consolidation is due, given the DJIAs move into resistance as shown below.
2) Short-term oriented accounts, or those who “bought” in the beginning of the month, should take some trading profits and raise their stop loss points, simply as a function of discipline.
3) Buy fundamentally attractive companies with bullish chart configurations that aren’t extended in price, because I think the DJIA will eventually push into the higher resistance levels, shown below.
http://raymondjames.com/technical_commentary.asp
George.
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