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Joshua "MauiTrader" Hayes is CEO, President and founder of Big Wave Trading Inc., a Maui, Hawaii-based stock market advisory service. Hayes is a well-respected stock trader who combines fundamentals, technicals, psychology and money management to trade professionally for his personal,... More
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  • Volume Slides as Intraday Bounce Gives Stocks a Boost 0 comments
    Sep 15, 2009 2:18 AM

    News a trade war between the United States and China brewed as the United States slapped new tariffs on Chinese tires.  Global stocks did not act well as many sold off prior to the US exchanges began trading.  As the futures indicated stocks opened lower while volume was lower as well.  It appeared stocks would meander around negative territory, but buyers had something to say about that.  As the day wore on we began to see leading stocks pick up steam as well as the entire market.  Volume picked up slightly as stocks were under a bit of accumulation, but it wasn't enough to push volume above Friday's level.  Once again, we see leading stocks take hold and positive price action continues to point us in a higher direction.

    Although today's action was positive we are seeing the number of stocks over their 20dma reaching above 80% showing an extreme level.  This does not mean we are immediately going lower but it could suggest we might see stocks rest for a bit.  What this doesn't mean is that we won't see any stocks moving higher and they all have to pull back.  In addition, we are now seeing the number of stocks over 200dma it is now over 90% of stocks.  The number of stocks over their 200dma is indicative of the move off the lows we have experienced since March.  It appears the market has been able to re-price the economy ahead.  Remember, the 2008 bear market that lasted until March 2009 was pricing in a complete and utter collapse of the United States financial system.  Now, we've repriced those assets that have been beaten up the most lead us off the lows and now with the leading stock index taking charge it appears we'll see growth stocks in favor.

    Outside of leading stocks and price/volume action another key statistic I like to review is the number of stocks making new highs versus new lows.  What was interesting today was the fact the NYSE and NASDAQ only saw one new low each.  Last year at this time we were seeing many more stocks hitting new lows signalling weakness in the market.  Today, we are not seeing the new lows, but the new highs.  Both the NASDAQ and NYSE saw 352 New Highs today signalling STRENGTH.  Taking into account the percentage of stocks we have over their respective 20dma it is likely we see a bit of weakness in some names, but longer term this is bullish for stocks.

    It would have been nice for stocks to have pulled back on light volume clearing a bit of overbought conditions.  However, the market simply will not cooperate with our wishes.  One thing to keep in mind is not to allow your opinions to get in your way of trading.  If a stock setups correctly and moves you can not simply ignore the action.  Opinions mean absolutely nothing to the market and it will move according to the way it moves and not to your opinions.  Keeping to a cut-loss strategy in place will keep you focused on winning stocks.  Stay positive and focused.

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