A/D line explosion...

It was almost picture perfect.    Well, it's pretty much perfect action right till 4 p.m.    We'll get to the after hour stuff later.    For a while, what was missing in this long rally, according to many Bears was the lack of volume.  Sure, this is summer trading and volume is expected to be lower than average.   The Bear's argument is that without meaningful volume the recent rally will not hold and we are doomed to pull back hard.    Well, today the Bulls answered with some heavy volume.    The volume is also accompanied with a breakout of recent high,.  We closed up over 2% on all of the indices.   These are some pretty strong gains, coming after a 11 day rally that is.    Breadth was great and most of our plays ended with some decent gains.    According to various trading desks from major firms, there's real buying through out the day.   In fact,  transport index broke through important resistance today.   Who could be buying still, at such a "late" stage of this rally?   Geez, we wonder!    As we have been saying for a while, we still have lots of sideline cash waiting to be deployed to make up the "lack" of performance. (PA).   Today's definitely the result of late money coming in to chase the market higher.  As we posted a couple of times yesterday, we’ll be breaking over 956 soon, reason being the A/D line was has been much better this time around!.  Today, this A/ D line exploded early , see chart below ($NYAD)+413% bringing momentum and new highs all over the place, plus we felt yesterday the Consumer Discretionary sector was pointing to help a breakout.  The SP Consumer sector  was in the top 2 gainers (Bullish % Indicator) on the day.

AMC stuff,
MSFT , we are sure many Bulls just don't want to hear the name after seeing their report tonight.   However,  we have to point out that almost one quarter ago, MSFT came out with a very impressive report and the stock shot up over 10%.   How can the fortunes turn so quickly after one quarter?    Ok, one thing we have to get it straight here, is that  MSFT did NOT report a terrible quarter tonight, it's just that compare to INTC or IBM or other tech giants, it's relatively disappointing.    The “Bar”  had been set pretty high for a lot of companies as we discussed early on, especially tech companies and a lot of the gains were already in the stock on the heels of INTC IBM etc..   The thinking is that if company X can pull off such a good quarter, why can't company B or C?     Here's the thing though, companies were still dealing with a very tough economic environment last quarter.   Just because one company can capitalize and execute well does not mean others are able to do the same.     We as traders also have to differentiate a good report from bad, and good stocks from bad.    In other words, market is selective on reward/punishing stocks and so should we be.  So, is this MSFT going to derail the kind of positive momentum we've built during last two weeks?   At this point, we are thinking it's unlikely.    There's still a very high percentage of SPX components that have yet to report.   Technical’s are just too strong to stall the rally at this point and an exploding A/D line is proof of that as it was an indicator of market going higher before to this breakout.    Based on many other well received Tech reports, we have to conclude that MSFT may be too big to execute well in this kind of economic environment.    We are very much focused on the earning plays these days.  

We added TBI , a staffing company, on the back of its earning report and upgrades today.     We also added some JDAS  during the early weakness.     By playing nothing but the recent earning winners, we feel that the risk is minimum even if we get a pullback.    In fact, we'd love to get some shares cheaper if that's the case tomorrow.    The trend is still the same and our strategy is also the same after tonight.   We are continuing to look for extraordinary earning reports/reaction and play those as we see fit.    Bottom line, we'll use the weakness from this MSFT report to gather up some more positions.   Also, importantly, if you’ve been on our Bullish posture, which we said below 900 would kick in if we got back above, today was inevitable and sort of anti climatic as we hit 979.  Reason being is you’ve should have been making money while the market led up to this breakout, not Performance anxiety chasing to make a buck one day.   This is also evident in great stocks, like AAPL  that had no reason to move,  it had done enough up to today as many other EPS recent winners of the past 3 months.