3/24 comments

As we have said before it is not the points gained or lost that matter, but rather the conviction behind the move that is most important and Monday's internals did not disappoint with the NASDAQ and NYSE both scoring up to down volume ratios and advancer to decliner ratios that were super bullish. This rally confirms the thesis/comments that we made on March 10th and then again on March 18th.


3/10/09 excerpt from FusionIQ Comments " Market internals (i.e. the number of advancers to decliners and up volume to down volume) on today's advance were the most bullish internal readings seen since the move off the 2002 lows ... " we also added ... "That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in."

On 3/18/09 we stated, "So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos)."


That said we think the S&P 500 can still rally in the near term up to the 850 - 860 region on the heels of the unwinding of the deep oversold conditions, the large piles of sideline liquidity and additionally money managers allocating into stocks so as not fall too far behind their benchmarks. At the aforementioned S&P 500 level some more aggressive profit taking is likely to ensue and it may be a good time to take some chips off the table (i.e. lock in some profits)

We would then look to reallocate on the next aggressive pullback. Techs continue to act better than the broader market and should dominate your portfolio more than any other sector at this point.



posted by Peter Greene