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Breakout of Channel: Up Trend Continues May 3, 2013

Posted by Tom in Thoughts.
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All it took was a good jobs report and the Fed to say (once again & again) that interest rates would not be increasing anytime soon.  Easy money statements in Europe and continued easy money in Japan; and the markets took off.  I note on the chart below (purple circle) that Fridays breakout was a big up gap at the opening that was way above the price channel that I’ve drawn.

 NASDAQ

Volume was good but not excessive, a positive sign, as excess supply was not coming to market.  This sudden break above the channel does concern me in that we will likely see a retraction in the coming days.  Prices coming back to around the upper dashed line would not surprise me and it would actually be rather healthy.

I’ve move my “Alarm Stop” price up to 3289.  That’s the price where it will get extra attention as far as price bar spreads and volumes are concerned.  For now, I’m just going to enjoy it. 

As an aside, I’m very pleased with the signals from my market model during April.  Yes, they did get close to giving a ‘Sell’, but they did not.  As such my clients have held strong into this blip down.  A few weaker stocks have been sold and replaced with stronger ones but that type of rotation is normal.  No wholesale selling, so we did not miss out on this rally.

“Sell in May and Go Away !”, maybe, but not yet (boy, are some people going to be mad about missing this rally).  Let’s keep our eye open for changes in sector strength though, as this would be a typically time to rotate out of previous leaders (biotech, healthcare, pharma, utilities, etc).

Please note that my monthly “SRCM Client Report” newsletter is now posted under the ‘newsletter’ tab above.  I’m issuing it now in Abobe Acrobat (pdf) format so it is more compatible with the variety of computers out there.  The newsletter gives a broader outlook and adds some market health pie charts and Sector Strength tables that have done a good job of keeping us in sync with this market.

I will be taking next weekend off as I will be in New Orleans for the National Conference for the American Association of Professional Technical Analysts, so there will be no posting.  IF something major does come up I will post a short “heads up”, otherwise steady as she goes.  Back on May 18.

Take Care & Good Trading.         ………….  Tom  ……………..

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