Whipsaw Wednesday
The market moved higher today, and it was led by technology and transports.
It was a mixed day for the bulls. Buyers supported 1085, which is a must hold. The support followed a huge morning decline on light volume. The market rose into the afternoon as the advancers outpaced decliners by 3 to 2 for the session. The bulls can also celebrate that today's gains were made while oil declined. Although the bulls staged a fierce battle for 1085, sellers have not disappeared. Once again 1100 resistance held. Additionally, the market declined in the closing minutes and took away a large portion of the day's gains. Late day selling gives credence to the theory that the recent activity has been the result of another short squeeze.
The call is to remain long. We will either exit our holdings or aggressively go short on a break-down of 1079.
The falling dollar has been a huge reason for the rally in stocks. Strangely, and curiously, commodities have not responded to the latest dollar weakness. Crude was down again today and needs to pick up the pace. The momentum in bonds is another concern. The inverse relationship between yields and stocks is on hiatus for the time being.
The Chart of the Day
China Power (CPQQ)(CHART)
may have bottomed on Tuesday.
I like the stock for two reasons. First, the strong support above $2. Shares
broke past that level in November and went onto double by March. The stock
has come back to the $2 break-out area and it is holding. Second, the 20 day
moving average crossed above the 50 day moving average. The stock may be
entering a new bull trend and rise to $5 or higher. Volume needs to pick up
in order for this stock to be a huge winner, but it should have 15% upside
for a momentum play. In the near term we can expect action that resembles
what the stock did in April, see the moving averages. A pattern like that is
the equivalent to a quick shot to $2.59. Fundamentally, the company profits
from power generation in PRC.
Watch List
The
TradeMaster Daily Stock Alerts' watch list was higher
today, much like the market.
Leading the way higher was biotech Opexa (Nasdaq: OPXA) and a stock
highlighted last Friday Borun (Nasdaq: BORN).
Send comments anytime editor@trademasterstocks.com
