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Sovereign Debt Fears Subside as Stocks Head Higher in Mixed Volume

|Includes: AAPL, AMZN, ATHR, BIDU, CMG, CREE, CRUS, DECK, DIA, ECPG, GMCR, Alphabet Inc. (GOOG), ISRG, MA, NFLX, PCLN, PCP, PNRA, QQQ, SPY, V

Fears over sovereign debt issues subsided as traders ignored possible Greek default and turned their attention to stellar earnings reports.  Stocks gapped open and did not turn back as volume roared higher on the NASDAQ.  NYSE volume couldn't keep pace as volume poured into the NASDAQ.  On Tuesday the market turned lower as volume picked up steam, today the mirror image occurred with volume soaring at the end of the day.  The last 5 minutes saw volume dwarf any 5 minute bar showing institutions were will to step up to the plate.  The NASDAQ and Russell 2000 continue to be the leading indexes and today proved that the short term weakness we saw this weak was all but short.

The NASDAQ marked a big day of accumulation with the 5 minute and 1 minute intraday chart showing massive buying.  This is a clear indication institutional buyers were stepping up accumulating shares and is a very bullish sign.  It would be nice for the market to have more than just a few days worth of consolidation as we digest gains.  However, with institutions stepping up and accumulating shares at this rate we may not see more than a few days of a pullback.  Stick to following the price action of the quality growth stocks and the leading indexes as they are the indication of where the market is headed.

Liquidity driven markets can have quick pull backs of a few days before resuming higher.  During the 1997 debt crisis the market dropped as much as 7% in one day only to see the market to find its footing and roar higher.  Even the 1999 market saw sharp pullbacks shaking out even the strongest of bulls.  The market does its best to fool and second guess your thinking and is why Jesse Livermore and other great traders learned to hold onto their winners through natural reactions.

This market is healthy with the NASDAQ only sporting 3 distribution days.  If we avoid a distribution day tomorrow we'll see even more distribution drop from the indexes giving us further indication this past week was just a quick shake out.  If we saw follow through of Tuesday's selling like we saw back in January it would have confirmed this market would be going under pressure.  However, the strong price and volume action puts this uptrend back on.

Stay disciplined and always cut your losses.