Sunday, July 01, 2012

Friday 06/29 - Broad based buying lifts Markets

Friday turned out to be a huge gap up day.  Nasdaq was up 3%, S&P500 2.49% and Dow 2.2%.  Markets held on to gains from the opening and even pushed ahead for a strong close.  Markets digested all the bad news from euro zone and remained resilient in the last few weeks.  Odds of success in buying stocks becomes significantly higher after a strong upside breadth thrust like the one witnessed on Friday.  On the image above blue spikes represent buying pressure and the red spike represent selling pressure.  As you can see, Friday was a strong buying pressure for the year.  The next logical move for this market would be a pullback to digest the huge gains and set up for another move to the upside.  I need to see more of this buying binge to continue for this rally to last for sometime.  At this stage I would bet on 50% invested in stocks showing high relative strength and emerging out of bases.

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