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Market Analysis for January 21, 2010

<h3><span style="color: #003366;">Market Analysis</span></h3>
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We saw volume expansion across the board supporting the decline. However, the declining-advancing volume disparity that we saw yesterday was not quite as broad today. New Lows did expand for the NASDAQ causing some area for concern if it expands much more. Today is a perfect example of why we let price action dictate what to do, not predictions or calling tops and bottoms, nor over-optimism and pessimism. Lately, my stops have all gotten hit, taking me out of great stocks at meager returns. However, the market told me a few days in advance of this price action, and my rules made me listen. This is why it is important to have a trading plan and stick to it no matter what.
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With New Lows expanding, it is interesting to see that when they expand multiple days in a row to higher levels (dark bars are where the level expanded higher than the day before), it often signals the beginning of a decline. With many days of expanding New Lows from period with a "drought" of New Lows, I am expecting a slight decline. However, I still believe the trend is up and will be using the correction (as of now) to enter some stocks that have built constructive bases. There is still a target of 2900 3030 from my <a title="Daily Report January 6, 2010" href=";>earlier analysis</a>, so I only anticipate a slight correction. I am excited for this correction as it will allow us to get into some stocks from the base instead of buying extended names for 5-10%.
Keep checking back as I do some analysis on individual names to find the stock to own coming out of the correction.
<h3><span style="color: #003366;">Sector Analysis</span></h3>
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Here we see a classic "Correction Rotation" where defensive sectors are grabbing the strong spots. This is further evidence that we may be moving towards a slight correction.
Positions: TDSC