The Day Ahead: Another strong week shaping up
get this from investors alley- a great report..
Just six short weeks ago, the Dow Jones Industrial Average stood at
9211.23 and amidst considerable bearishness, we went out on a limb and
made a very strong
case that the Dow was about to embark on what we expected would be anexpress
run to Dow 10,000 and that we could be entering an era beyond that,where the
market would begin to broaden out and most all stocks would eventually
see much higher valuations in what could become the "Buying Stampede of
the Century".
Folks, today's action proves that this is now already happening and may
have legs.
We are witnessing something truly extraordinary going on in this market
and today's spectacular recovery from sharply lower openings is
absolute testament to this fact.
On Friday and again on Monday we made the case that Dow 10,200 level
was a critical fulcrum that if it were not overcome was likely to repel
the market back down some, at least in the short term, but if it were
overcome it would be very bullish.
Well, today between Friday and today, both events occurred with passion
and we did indicate that Friday closed with a positive divergent top,
thereby indicating underlying strength in the market...
That undercurrent of strength surfaced today with a vengeance and
displayed some of the strongest secondary action we have seen in months
if not years.
Why did this happen? Remember how the Dow Industrial Average spent
several weeks attempting to trade and close above 10,000 with little
success? And then suddenly it did it and began go move strongly away
from Dow 10,000? Remember also, how we went on to suggest that once the
Dow had managed to surmount the 10,000 threshold it might become a
floor instead of a ceiling in other words a level of unbelievablystrong support
Well, today was 'the' day that this support was tested for the first
time in its new break-away to the upside mode and not only did the Dow
pass this test with flying colors, it actually went nowhere near Dow
10,000, even though the Dow Jones futures contract June month was down
150 points overnight. The fact of the matter is today's low in the Dow
was 10,096.69, almost 100 points above 10,000 and its inability to get
any closer to Dow milestone indicates a supremely successful test or
retest in my view and a very strong indication of major support at this
level that could remain with us for a long time.
The test was so convincing that the Dow not only quickly recovered its
losses, but as soon as it took out the fulcrum level at 10,200, it went
into afterburners, powering on to gain a stunning 165.67 points on the
day, exploding to a new all time record close at a seemingly amazing
10,339.51 and leaving most on Wall St in a state of utter shock and
disbelief. Forecasting doesn't get any harder than of today and almost
no one saw this coming. This market is strengthening. Of that, there is
no doubt. I did have an inkling that we would see early weakness
followed by late strength, but nothing like the strength that was
actually demonstrated. Truly an awesome display. A real day for the
history books.
The broader markets were dazzling: June Russel 2000 futures uo 8.75 to
close at 418.5
MidCap up 2.30 and beginning to look like it is dynamically basing for
new highs ahead.
Value Line up 9 and starting to keep pace or outperform the S&P 500.
Very bullish.
Russel 3000: Up 5.75 to 720.33 - Soaring to new all time record high
and close. Phew!
Internet Indices DOT and IIX continue to lead the way to new records.
OEX closed again at a new record high of 685.45, breadth and internals
improving markedly everywhere.
Nasdaq, Dow and S&P, same everywhere. Whilst further advances would
almost look to be a no brainer, don't be so sure. We may get something
in reverse tomorrow amid the strength as the marked kind out did it
self today and may need a rest or another test or re-test. Any other
earnings disappointments would soon see to that. There are one or two
mild indicators of non-confirmation between the less widely followed
Dow Jones Composite Index vs the NYSE Composite Index and the majors,
in spite of the fact that both of these sometime laggard or leading
indices recently broke out to new records.
The evidence of classic outside days today also abound which could
initiate a reaction.
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Biotechnology Update
Most of the Biotech's were somewhat higher today against a background
of the AACR's annual symposium in this week in Philadelphia. The
American Association of Cancer Research, AACR is a scientific society
comprising over 13,000 laboratory and clinical cancer researchers, was
founded in 1907 to facilitate research, discussion and dissemination of
knowledge among scientists and others dedicated to the cancer problem
and to advance the understanding of cancer etiology, prevention,
diagnosis, and treatment throughout the world. The AACR publishes four
prestigious journals; convenes an annual meeting attended by more than
7,500 scientists from around the world and organizes several highly
focused scientific conferences each year, also offering a variety of
educational and training programs in support of its mission.
Surprisingly, intra-day there was an announcement from MGI Pharma that
it had made what appears to be a breakthrough in the field of cancer
prevention and inhibition of cell and tumor growth in Cancer. This news
ignited the stock price adding about 50 million in value in its run-up
over the last few days. Not much you might say, but the volume increase
was dramatic and implies higher prices most likely lie ahead.
What is interesting is that this therapy in some ways closely resembles
that of NLAB, NuOncology Labs Inc's. I will try and go into more depth
tomorrow, but in short the types
of cancers that can be treated are similar, but the modality is
different. Once again, this could be of profound importance in terms of
both company's discoveries because as I suggested some weeks back, the
huge amount of money and brainpower that has been poured into Cancer
research appears to be yielding the makings of some good results.
In the event that a similar attention is focused upon NLAB's and the
kind of volume we saw today on MOGN is transferred to NLAB, the result
could be truly stunning as the weight of investment that might pour
into this issue would be enough to send it soaring.
Financial Intranet (FNTN), edged higher today, building on last weeks
gains and adding to the constructive technical picture developing
around this stock. A breakout over the 1.40ish area will in all
likelihood be a major one opening the way for higher prices soon.
Emerging E-Commerce player Netgateway, NGWY continues to act well and
appears to be forming nice Bull Flag pennant structure, that on a
breakout to the upside could produce a substantial move higher. The
news was potentially good for NGWY today,
in that its recent joint venture with XOOM.com, one of the most heavily
trafficked sites
on the Web, could itself be the target of an acquisition, thereby
potentially extending NGWY's reach to the new partnership and all that
in may bring. A good omen perhaps?
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