The comments below were provided by Kevin Lane of Fusion IQ.

As we have said before, it is not the points gained or lost that matter, but rather the conviction behind the move. Monday’s internals did not disappoint, with the NASDAQ and NYSE both scoring up to down volume ratios and advancer to decliner ratios that were superbullish. This rally confirms the comments we made on March 10 and then again on March 18.

Excerpt from FusionIQ comments on March 10: “Market internals (i.e. the number of advancers to decliners and up volume to down volume) on today’s advance were the most bullish internal readings seen since the move off the 2002 lows … ” We also added: … “That said, we believe today’s rally is the start of a good move higher (again it may not be the ultimate low – only hindsight will tell us that); however, the surge of momentum suggests this rally will be worth participating in.”

On March 18 we stated: “So that said, we continue to view this current rally as having legs with maybe another 10–15% up from present levels. (So buying on dips with appropriate stop losses would make sense for the time being.) We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 months).”

We think the S&P 500 can still rally up to the 850 – 860 in the near term on the heels of the unwinding of the deeply oversold conditions, the large piles of sideline liquidity and additional money managers are allocating to stocks so as not fall too far behind their benchmarks. At the aforementioned S&P 500 level some more aggressive profit-taking is likely to ensue and it may be a good time to take some chips off the table (i.e. lock in some profits)

We would then look to reallocate on the next aggressive pullback. Techs continue to act better than the broader market and should dominate your portfolio more than any other sector at this point.

Source: Kevin Lane, Fusion IQ, March 24, 2009.

View original at: Investment Postcards from Cape Town

1. (S) 2 Possible Stocks to Short ImmediatelyIn the course of the last year, I have tried to keep my stock picks...
2. (SMG) Scotts Miracle Gro – recently hitting a short-term level of resistanceThe Scotts Miracle Gro Co.’s (SMG) share price continues to chug forward, recently hitting a...
3. Small-Cap Stocks: The Most Important Trend Headed into 2009Small-Cap Stocks: The Most Important Trend Headed into 2009 by Louis Basenese, Advisory Panelist, Investment...
4. Is the tide turning for stocks?I posed the following question a few days ago: “Does the stock market rally have...
5. (GEOY) Technical Analysis of GeoEyeEvery now and then I like to give guest authors a chance to share their...
6. (BGG) – Briggs & Stratton – broken out of a long-term down trendBriggs & Stratton Corp. (BGG) has just announced an earnings surprise on Oct 16. The...

Search Posts by Tag: | Featured

RSS Feeds by Tag: Featured |

Other Posts by: prieur | RSS Feed for this author