The major stock indexes opened 2010 with a nice rally to new highs today, and while volume was not that impressive overall, it was higher than what we’ve seen over the past week or so. Officially, the Dow Industrials advanced 1.5% on NYSE volume of 4.6 billion shares, while the NASDAQ rose 1.7% on 1.96 billion. The leadership profile remains positive, with 693 stocks making new highs versus 83 making new lows.
The short term momentum oscillators remain positive, confirming the bullish stance of the AlphaKing Trading Indicator for the NASDAQ. We have no new trades at this time.
All major stock indexes moved to new highs for the rally off the March 2009 lows today, and either the bears put up a fight in the next day or so - to force a peak and reversal - or else they will get blown out for real, and January will be on track for ending way up there along the lines of what happened in the first few months of 2000. Recent negative divergences - where certain parts of the market went down while other parts kept going up - can get fixed - where all investment ducks line up in the same direction - in one of two ways.
Either the upside leaders peak and follow the downside leaders into a bear corrective phase, or else those downside leaders follow the upside leaders into rally mode. So while many of the major stock indexes have yet to succumb to a significant correction, those stocks and sectors that have fallen hard can give the rally new life as they resume their up-trends. The trend is the bulls to lose till we see signs of heavy volume distribution selling, and the bears risk suffering a melt-up pasting while such distribution selling remains missing in action.
401K investors should have ˝ of their portfolio invested in a stock index, or aggressive growth, mutual fund, with the other ˝ remaining in a money market fund.
The Index portfolio is ˝ invested in QQQQ with the other ˝ remaining in cash.
Kevin Wilde, Chief Trading Strategist AlphaKing.com.
