So it had to happen...

We are glad that it happened this week as opposed to last week.   Of course, we are referring to the "big rally" we had today.   A big rally like today is inevitable in a correction and this is more of a relief rally than an opportunistic trading rally in our opinion.  Three ingredients to it today.  First..it was just a matter of time.  Second, world markets bounced and hardly last is the fact the big boys upstairs brought out Sec.Treas.Paulson to give a push.  Funny how the timing of such notables appearing works into the market.   The rally today definitely has been led by those big caps that were hit the hardest last few days.    Unfortunately, as much as this rally is "jawchopping" to us, it's still hard to see how it can spill to those stocks that a retail trader trades right away.      Interestingly, the DJIM stocks that stand out the past couple of days as best behaving are the ones with earning just before the meltdown......these include UEIC, HURC and HDNG and are on the top of our list. These had only a few hours to show off their goods before the corrective action started and are seemingly fresh on some minds.  You can throw NVTL into the mix which guided higher for next Q and year recently and has held up the past week to close at NCH today.   Still most of the stocks we used to follow have a pretty damaging technical picture.   We feel a lot of the stocks on our screen are being whipsawed by the index volatility rather than their own movement.   Since it's futile to predict the index movement, we feel it's still better to wait till the index volatility eases before we consider jumping back into some of the plays with good beta.    Basically, what we want to see is traders/institutions buy stocks to hold rather than to flip and buy them not b/c of the index is rallying but for individual strength of a particular stock.     Despite the big day today, the best thing we feel for this market is to go sideways and halt the slide.    Testing the lows may also be helpful as many still trade as if the market will make lower lows and market needs to prove them wrong before we can head higher.    This is unfortunately a somewhat lengthy process and it requires days and weeks to complete.  One thing to note today is despite the indexes gradual climb most of the day, many of the 4,5,6, 7% gains we saw from former DJIM plays are from the gap open.  Many small cap plays never saw higher highs after the first 10-20minutes (eg. almost all recent China plays).  So, unless you went after the big caps during the day there was not much upside to individual small caps the rest of the day.  You didn't miss much if you slept in and shouldn't think you missed something mighty as you look at those percentage gains.  Basically, the dip buyers yesterday had an opportunity to flip their shares early on to those thinking they would be missing something bigger.  Sooner or later the dip buyers had to get the day right..yesterday was finally it.

Bottom line, today is a good day and we'd like to see more stocks participate in a meaningful way.   Next few days may give us a better picture about the health of some of the individual stocks. We'd really love to see more stocks move back toward if not above 9 ema.    We will be busy updating our watch list and prioritize the plays as they start coming up.     Keep in mind, this is not the end of the correction but a step toward the right direction.     Yesterday's low will be viewed as short term support and this is how a lot of us are basing our trading strategy on the next little while until it proves otherwise.    For now,  we are gonna be going through charts of our favourite plays in the next couple of days just to see if any is worth playing.    Financials were the cream of the crop today, if this continues look to KBW as it was forgotten today.