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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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  • Stocks Rally From Oversold Conditions As Volume Ends Mixed 0 comments
    Jul 8, 2010 3:59 AM | about stocks: AAPL, GOOG, YHOO, INTC, GS, MSFT, IBM, C, CSCO, SHLD, CMG, POT, GLD, NEM, BIDU, ISRG, DELL, PG, EBAY, PCLN, MMM, QQQ, SPY, PCP, GMCR, DIA, TBT, DGP, EWY, VXX, IAG, EGO, UGL, CRYFQ, DDC, OVTI, AVGO, BP, CTRP, SBUX, CRM
    New Confirmed Uptrend

    Buyer beware, stocks rallied throughout the day as oversold conditions were erased.  Volume was mixed throughout the day and well below average suggesting institutions were mainly sitting on the sidelines.  Price gains were quite solid and there were a few stocks showing strong support, but breakouts were scarce.  Today was certainly a day where we can build upon and we’ll need to build upon the thin leadership.  There are far too little stocks sporting healthy accumulation.  We’ll take today, but the market has some serious work to sustain another confirmed rally.

     

    June saw two confirmed market rallies fail and with history not on July’s side this newly confirmed rally doesn’t have momentum on its side.  Historically speaking August, October, and March are the months where rallies are successful.  July, like June do not have high success rates.  However, July 2009 did see a successful rally, but that rally sported a second follow-through type day confirming the move.  We’ll need to see leaders continue to expand and breakout on heavy volume.

    There is a big difference from last July and this July.  Last July we had just come off of a sizable rally after a gigantic bear market.  We only have a few other instances where the market has gone through a 50%+ decline.  It is quite normal for the first 12 months after the bear market to see a big rally.  During that rally it is also normal to have corrections of 4-8%.  Last July was just a normal correction in a bear market recovery.  Fast forward to July 2010 where we are 16 months later and we have yet to have a 20% correction.  Another normal behavior of recovery rally, in 2004 the market corrected 19%.  In 1939 the recovery rally had a 22% correction.  We have only seen a 16% correction, could we have a bottom here, yes, but history says we may have another leg down.

    It would be ideal for us to reverse lower and have one more leg down in August where we bottom out and rip higher.  August would put history on our side.  August 2004 and August 1942 kicked off great market runs and in 2004 was when TZOO began its massive run to over $100.  If we have put in a bottom we’ll need to see volume like other successful rallies.

    An interesting factoid today was the equity put/call finished the day at .52.  Sellers are certainly complacent, but it shows call buyers were certainly happy to see the market rally today.  Again, today was a great step forward, the market has plenty of work ahead of it.

    For today’s newly confirmed market rally we are offering a 20% discount to our Platinum, Gold, and Silver memberships for new members.  Here is the coupon code:  A5AE5

    Any questions please email sales@bigwavetrading.com

    Remember, cash remains king and if you do choose to step in cut your losses short.




    Disclosure: No Positions
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