Monster Stock Trader's  Instablog

While it may not always be pretty, the market continues merrily on its way.  Both the Nasdaq and the S&P 500 closed at their highest levels so far this year.  While the Nasdaq did so on strong volume, the S&P 500’s volume was not quite as impressive, though it was above average.  So we continue to chant the same mantra: “Price and volume.”  Is the whole rally a function of “quantitative easing,” of the Fed’s seemingly endless printing of dollars?  Perhaps.  Is it just one big bear market rally?  Could be.  To this we would only say: “So what?”  Do we really want to leave money on the table over semantics?  We prefer to let the market dictate how we proceed and leave the arguments about economic conditions and fed policies to others.

To the charts:

The Nasdaq  is doing nothing more than closing at its highest level of the year.  It could all end tomorrow but we trade based on facts and the fact is this index keeps going higher.

The Russell 2000 may be hitting up against some resistance around 590, so we are interested in how it behaves here.  A large volume move that takes us through that 590 area and one could certainly understand either initiating or adding to his TNA position; if we get rejected here on big volume, TZA is the way you play it.  Again, nothing too complicated.

Some ideas we have for stocks:

If you are interested in a play on the H1N1 influenza virus, better known as the “swine flu,” you could do worse than Life Technologies (LIFE).  The company provides tools that assist in the identification of the virus, and while its stock has had quite the run this year the chart seems to be indicating that even more gains are ahead.  While we certainly hope that this autumn proves to be a non-event with regard to the “swine flu,” we take the facts as they are presented to us.  The stock has shown extraordinary strength already in the form of the 4/29 and 7/29 gap ups and has now formed a very tight six week flat base.  This all makes perfect sense when you consider that the number of mutual funds owning LIFE has almost doubled in the last 4 quarters.   Considering that the company’s sales are accelerating at a very rapid pace, that earnings have been stable for some time, and that other stocks in its group are doing well, we would be quite interested in any big volume move higher from here, especially one that cleared the present consolidation.

Since we mentioned Arc Sight (ARST) in passing when we highlighted Sourcefire’s (FIRE) chart recently, we figured it made sense to post it’s chart.  We consider this stock to be in a buyable range, with the idea that it should now be in the next “stage” of its run and its old highs should now be a floor.  We think ARST has the potential to be a Monster Stock, so should the market continue marching higher it should do quite well.

A stock we highlighted here last night was Hi-Tech Pharmacal.  Here’s what we wrote:   “Hi-Tech Pharmacal (HITK) is certainly thin and volatile, but it is also showing some constructive action lately and we wanted to share its chart with you.  While not what we would consider a Monster Stock candidate just yet, it exhibits some of the early characteristics we look for when trolling for potential future winners.  One of those characteristics is a sustained positive volume signature, such as HITK has enjoyed since March.”

Well, the stock made us look like we know what we’re talking about as it rocketed 24% higher today after blowing away earnings.  We will of course keep an eye on it in the hopes that it continues to outperform.

No Holdings at the time of the report