Thursday, January 31, 2008

Market Adds To Gains, Closes At Its Highs

The market shook off that early weakness and really built up a head of steam late in the day. Also, volume was very heavy today, marking a notable accumulation day to coincide with nice price gains.

Every sector was higher, led by homebuilders (+6.1%), retail (+4.4%), banks (+3.6%), and brokers (+3.3%).

Interestingly, the ISEE Sentiment Index was low all day, and finished at the depressed level of 88. This likely means that today's rally was met with skepticism, and that traders were quick to hedge their positions/exposure as people continue to worry about more downside.

Technically, the indexes still have a lot of work ahead of them, and a ton of overhead resistance to get through. But today's high volume rally is still a positive sign. What you want to see going forward (if you're a bull) is for pullbacks to come on light volume, and rallies to come on heavy volume.

Also, financials and retail were hit the hardest last year, so those have seen the biggest bounces so far this year. But I want to see other growth sectors join the party. It is not clear to me yet where new leadership is going to come from. And that could take a while since there aren't too many stocks populating the new highs list lately.


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