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Stocks Find Support as Volume Jumps

|Includes: DIA, Netflix, Inc. (NFLX), QQQ, SPY

Starting the day off with economic news did not sit well with the market. Durable goods suffered a wider than expected drop perhaps signaling further weakness in manufacturing seen from earlier reports. Volume started the day off much heavier than Tuesday’s action, but the run rate did fall off from the highs of the day. At the end of the day volume did eclipse Tuesday’s level showing institutions were more active today. Price gains were solid, but a weak close continues to leave a black smudge on the chance of a new uptrend. We are bumping up against heavy seasonality resistance putting the chances of a new solid uptrend in question. However, today’s action was a step in the right direction.

We still remain cautious here, there are a few leaders coming back and we could see a tradable rally over the next one to three weeks. Sentiment got overly bearish, but that does not guarantee this market turns into a rip roaring new uptrend like we saw in September of last year. Unfortunately, May and June follow-through days SELDOM work and that does not bode well for this current market. It would be better to see this market go into correction mode correcting 20-25% over 3-6 months. However, what we want and what we may get WILL be two different beasts. Therefore, we’ll take what we can get from the market.

A big institutional favorite (both on the long and short side) NFLX stock broke out on excellent volume. While it would be ideal if we had a follow-through day to go along with NFLX’s move, it is a positive sign to see a market leader breakout in this market. There was another breakout of a leading stock, but our gold and platinum subscribers have the view into what this stock was. Sign up and you’ll get access to our market leaders!

We are far from a new uptrend as today was day one of an attempted rally. We’ll need to see a follow-through day over the next few days to confirm a new uptrend. Be careful not to get sucked in too early only to have this market roll over on top of your head. Stay prudent and always in stock market trading: CUT YOUR LOSSES SHORT!