Show of Force

The Dow and S&P 500 posted strong Accumulation Wednesday in a show of force from institutional grade buyers.

Volume patterns over the past week suggested a drying up of sellers. If doesn’t go down, it goes up.

But a glance at the weekly charts shows major overhead resistance to be dealt with by the indexes. Nothing ever goes straight up.

We’re still on the hunt for top-earning companies with stocks setting up in sound technical bases.

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On The Back Of A Flu

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Despite what the media tells you, the market did not crumble on Swine Flu fears today.

Ultra-light selling on the back of a flu that hit 11 people in the U.S. (all of which are recovered or recovering) is no knee-jerk.

Bulls want to see selling dry up in here. It’s an ongoing analysis. Just one day isn’t a whole lot to change any biases.

We’re still anticipating some kind of pullback to the major moving averages for the broader indexes.

But any more heavy-selling Distribution, like we had in previous weeks, will be further evidence to remain Bearish.

Picking Up The Pace

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Buyers picked up the pace Thursday as volume ticked in above Wednesday’s total.

Tuesday’s heavy selling, or Distribution, means little with the trend of institutional buyers still intact.

But sooner or later we’ll likely see some near-term topping signals.

We’ll see it with heavy selling volume.

No matter what the newsies say, it has always boiled down to price and volume.

And we’ll back our 80% annualized returns with that!

Respecting the Dominant Trend

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Wednesday’s rally looks weak compared to Tuesday’s Distribution.

We’re respecting the dominant trend up. After a multi-weak rally we can’t be too excited about heavy selling.

But should we get more Distribution, that’s institutional grade selling, we’ll take it as a clear warning for Bulls.

Our overall market bias remains Bearish until we see more consolidation above the 50-day moving average.

Just what we want to see

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This is a script for the Bulls.

Buyer dominated volume above the 50-day moving averages for the major indexes is just what we want to see.

As seller volume dries up on down days, like it has been for for the past couple weeks, we feel less inclined to keep our Bearish bias on.

But we move slow.

Analysis of the market for our time frame of trading is best done on a weekly basis.

But as long as things continue to hold up, we expect that top-rated stocks will eventually setup as buys.

Expecting a battle

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Massive upside on heavy volume.

New charge for higher ground or sucker’s rally?

The answer will become clearer with a pullback.

Pullback’s on lighter volume suggest seller’s losing their might, which is what we’ve seen on the way up so far.

The S&P 500’s 850 area marks congestion on the charts for the past six months.

We might expect to see a battle go on in here.

But with Employment data due Friday anything can happen.