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Strategies & Market Trends : IPO and Other Stock Plays

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From: david777	5/19/2005 8:53:30 PM
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SUMMARY: - Rally continues but internals soften. - Leading indicators post fourth consecutive monthly decline. - Philly Fed expands but another region shows weakening manufacturing. - SP500 takes a run at a higher high but may have to wait a few sessions. - Weeklong rally, expiration Friday, weekend ahead spells a bit of softness. Market continues to show bullish bias even as internals back off. Stocks were running higher again Thursday but the octane level was throttled back as volume and breadth faded. SP500 made several intraday runs at its April high, and it and the other indices closed at their highs, but the action was markedly weaker. After a week of gains that was not surprising. What was somewhat surprising was how SP500 doggedly rallied back to resistance each time it failed at that level. Those repeated attempts and failures at resistance made it a volatile session, but the last hour saw yet another comeback that held into the close. Thus the market was weaker but the bullish bias still came through to the close. As if there was any doubt, that action shows the return to some bullish bias; instead of selling off when volume faded after a solid upside move, stocks repeatedly returned to the highs. With a good gain under its belt, the weekend ahead, and declining volume on this move (not to mention expiration), Friday looks as if it could be another softer day. The Thursday decline in volume and breadth shows the move is running out of steam on this leg even if it closed positive. A few days of lateral to slightly lower moves on modest volume would be the best thing for the market, allowing it to consolidate this run and get SP500 prepared for another run at a higher high and a break of the downside trend.

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