Friday, April 9, 2010

FusionIQ for 4/9/10---Tape Resilient...

Stocks were resilient on Thursday as they shook off a minor uptick in the initial jobless claims to work higher. What was impressive about the reversal was the market’s ability to shake off these numbers even though going into the release there was a preexisting overbought condition. Like we said yesterday the market is seeing two key groups, the financials and transports catch a bid of late. Typically when these two groups are moving higher this bodes well for stocks.

From a market breadth standpoint new highs continue to trounce new lows on a fairly regular basis on the NYSE, NASDAQ and AMEX.  Additionally their advance-decline lines continue to work higher.

When looking for a clue as to when things may reverse course on a more consistent basis we continue to watch sentiment and liquidity.  At present liquidity is still ok, however it is not nearly as robust as it was say just 6 months ago. Sentiment while creeping up is not a problem either just yet. We continue to stay the course and believe as we approach 1,300 on the S&P 500 that investor should start to lighten up as this level likely will coincide with an excess of bullishness and taped out buying power.

Setting a trailing stop program on open long positions makes sense give the extension of the rally off the lows and the approaching 1,300 resistance level.

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