A Better Tuesday

Believe it or not we’ll take Tuesday’s action over Monday’s. Monday saw tremendous gains but on suspicious volume. Tuesday’s action suggested that rather than make a case against Monday just maybe we should consider giving it a “bye.”

The averages were lower and volume increased from Monday’s abnormally light levels. But it remained light. And trading was confined to the upper part of Monday’s expansion bars. That’s bullish.

Most importantly leading stocks continue to hold up and even post gains on volume. We consider top performing stocks to be the ultimate arbiter of market health and so far they are faring quite well with over 200 stocks on the 52 week high list.

We still believe caution is warranted as the market continues to look with a jaundiced eye at the growth story, taking poor data as a cue to correct. Having said that we are likely to continue to enjoy some ballast in the market for the next day and a half. That will take us through quarter end window dressing and the flush of fresh money into the market at the beginning of the month. It will also take us into the final hours before Friday’s jobless report when we’d suspect caution will retake the market ahead of these anxiously anticipated numbers.

Take advantage of fresh long opportunities as they arise, but in the current environment don’t forget to mind your stops.