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Strategies & Market Trends : IPO and Other Stock Plays -- Ignore unavailable to you. Want to Upgrade?

To: david777 who wrote (12598)	5/18/2005 11:39:02 PM
From: david777	Read Replies (1) \| Respond to of 13331

THURSDAY: The market got the read it wanted off of the CPI and oil prices and continued the rally off of the April lows. NASDAQ overtook the April high, making a higher high. SP500, DJ30, and SP600 still have to make that break. After three days of running they may find that hard to do on this attempt. Thus there is still a question as to whether the rest of the market will follow NASDAQ's lead, but when the laggard becomes the leader that is noteworthy of definite change in the market. Again, after three strong days SP500 and DJ30 may find it difficult to clear the April high on this move. With expiration Friday approaching, that too could influence the action heading into the weekend. Bottom line is the market has put in three solid sessions and made a move Wednesday that has caught everyone's attention. The movers had started or made their next breaks higher. That leaves the next test as the best point of entry versus chasing extended stocks as SP500 and DJ30 try to clear the April highs. A good rest at this level or after another bump higher Thursday as further momentum follow through would be where we want to start looking for the next positions. Some stocks rallied Wednesday but volume was not there. A test of the lower volume break higher that holds near support and then bounces on rising volume would be where we want to move in. We will still be ready to move in on stocks that are still well positioned and deliver a strong move, but we also will need some patience for good entry points. We were taking positions on the way up as they presented themselves given that the overall market action remained positive. Those positions are rewarding us now. It is the same story: know the market's direction and look for opportunity accordingly. As for the longevity of this move, the strong breadth, volume, leadership, and higher high on NASDAQ all point to further upside near term. Will there be another test of the April low? Could still happen; for now this move simply gives the rebound off those lows more life and is further strengthening the market. The market went from showing weakness after the follow through to yet another follow through; that shows the buyers were undaunted. That resurgence in strength is the near term character as the indices take on their next challenges. We will play that strength until the market shows otherwise.