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Rally Fizzles as Volume ends Mixed; NASDAQ gains but well off the highs of the Session

|Includes: DIA, Microsoft Corporation (MSFT), PNRA, QQQ, SPY

The morning started off great for stocks, but the day’s gains were unable to grow. Fresh off a long weekend it appeared overseas markets were brushing off S&P’s downgrade of 9 Euro nations. Little ground was covered for much of the session as the market traded within a relatively small range. A few stocks broke out including MSFT and PNRA. PNRA held onto most of its gains MSFT could not. The days action really boiled down to stalling action on the NASDAQ. In of itself, today isn’t that bad, but over the next few days looking out for distribution will be a key indication if this market can power forward over the next few weeks.

Today’s market action isn’t a glaring sell indication, but it does just raise a simple flag that the market may be acting a bit tired. We have plenty of stocks underneath setting up and looking solid. This doesn’t mean we automatically blast higher, but it does help our chances over the next few weeks/months for this market to set up for gains. For now, it appears the general market has been able to shrug off the negative news pouring out of Europe as of late. I should mention at the end of February Greece is set to default again. Don’t fret, have a game plan and execute it with precision. Big Wave Trading has a plan and we’ll continue to execute.

CNBC continues to harp on the “golden cross.” They did a piece when the Dow Jones Industrial average experienced the cross. Now it is the NASDAQ’s turn and there is a bit of history to back it up. I posted the numbers awhile back and confirmed with 80% of the time you will see gains 180 days from the actual cross. It is quite bullish and I wouldn’t be against the golden cross as history has shown it is a profitable indicator. Given the stocks we are seeing, coupling the golden cross buy signal can set up for a very bullish spring. Stay tuned.

It would not come as a surprise to use for the market to shake out weak bulls. Last week the number of AAII bulls nearly topped out at 50% for the second straight week. Normally, we tend to see shakeouts happen when the retail investor gets a bit too bullish. We are going to follow our rules as usual, will you be able to handle a market shakeout?