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NASDAQ Clears a Hurdle, but Volume Lags Again

|Includes: DIA, FAS, FAZ, NFLX, PowerShares QQQ Trust ETF (QQQ), SPY, TECL, TECS, TNA, TZA

Stocks climbed higher today as the attitude of “no news is good news” from Europe continues to take hold. There has yet to be a vote on the EFSF yet and that has been a positive for the stock market. Small caps lead the way higher with the Russell 2000 closing with a 3.3% gain while the NASDAQ notched a gain of 2.35% (closing above its 200 day moving average). Volume ran lower on the day and below average volume a sign institutions still are not jumping into the market with two feet. Perhaps with the release of GDP out later this week we’ll see institutions jump back in the market. Another solid price action in the markets and we’ll continue to pick our spots.

Tomorrow the market will get housing data from Case-Shiller. Homebuilders got a boost last week from home builder confidence, but will it continue? The market will answer the question tomorrow. In addition, we’ll get another reading of consumer confidence. It will be more of the same, it won’t be as bad as everyone thinks and it will be viewed as a positive. We’ll also see the Richmond Fed Manufacturing Index released at 10 am EST. It all boils down to how the market reacts to the figures. Trying to game the figure will only leave your head spinning. Go with the market and stay prudent.

The market is overbought at these levels. It doesn’t mean we are going straight down, but a few days of rest would do this market some good. We are building a few good bases and breakouts are faring well so far. While we have the NFLX of the world, there are more and more stocks beginning to emerge as real leadership. If the market cooperates leaders will yield very handsome profits. You need to stick with it.

Thursday is a big day for economic news as we get a reading on GDP. Estimates are for the economy growing at 2.5%. Many will try to position for the number, guessing the direction. We’ll simply wait patiently and attack where price indicates a high probability entry. The fireworks preceding the figure will certainly be fun to watch!

Stay on your toes!