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.

waiting for catalyst perhaps?

It seems slowly, if not surely, that people are beginning to forget about the dreadful one day decline we had a couple of weeks ago.  Others are spreading fear that we are in for a rude awakening. We just go with the flow.  We can't predict the market's direction by reading into people's mind, but we can definitely gauge people's mood by reading their action.   Market has again firmed up today without a hint of slowdown anytime soon.   Oracle's earning is apparently good tonight and the fed policy statement is also going to be released tomorrow.   However, what will be the catalyst for this market to get a volume move is still something we are wondering about.   Maybe it'll be a combination of things that'll get things going.     For now, we are simply playing one opportunity at a time and pick only the obvious plays and staying away from those rebound plays. We haven't put up many plays lately, but being selective has produced some nice days in stocks like DXPE,GLDN, HNSN.  When one runs out of gas... get filled up with the next until it's ready again or at least reduce in size to hold through.

ASTI, the reason why we are writing this one first is that we felt many readers may not be up to par on the 1234 setup mentioned on this forum.  Basically, a 1234 setup works if the stcok closes above previous day's range on its fourth day.   We had an attempt earlier but as everyone can see, the setup failed near the end.   The lesson learned here is that it's imperative not to jump into the conclusion of a potential breakout unless it's confirmed.    The confirmation either comes with volume and a break of the resistance and hold through the end of the day.   We noted earlier that we are looking for a break of $8.65 (this was our confirmation to go hard in size soon after) on volume to consider a good signal and guess what?  The day high was $8.62!   Unless flipping for 30 cents or so is your game then staying disciplined is a priority if you are new to the trading small floaters.    Trading aside though, we still think this one is a good play for a solar stock.    The overall solar sector is still in some of a funk right now that none of the other two DJIM big boys can seem to get any steam going, not yet anyway.   We'll just have to be patient and watch and wait for opportunities. 

HURC,  we have been noting this one as one to keep on top of your trading list. Today we got a good close that we've been waiting for to add to. This one in our opinion is ready to start a new leg.

HNSN, it's in play and believe us, it's not just retail traders like us that are putting this one in play.   Momentum is pretty high with this one and we like this sort of breakout that started the other day.

SIMO, this one came out with earning premarket and raised Q guidance ( a sequential declince of 3-7% instead of the previous 15-20% in revenue) and it climbed steadily higher throughout the day.   For some reason, we are actually pretty comfortable trading some selective tech stocks.   This one is also no stranger to trading community and it'd be interesting to see where it goes from here.   We bot a small position today and will watch for signs to add.  SIMO is IBD#6 (98EPS,97RS)

NVTL, this was an alert on the 13.70's and we said it was a steady bugger that survived the meltown. Seemingly nothing has changed as it creeps along. TWeisel came out with some positive comments on the momentum their business is having.

DXPE, a slight pullback is expected and hopefully you all locked in some gains today.   We'd be watching this one closely for a reversal at some point and given the small float, the reversal can come at literally anytime.   If playing conservatively, we'd be looking for the recent high as the breakout point for a chase.

Go with the flow...

The best thing about us traders is that our trading opinion is purely dictated by the market actions.    Show us what you are made of and then we can act accordingly.    Also fortunately,  that since most of us trade only for our personal account, we don't have to follow a certain trading policy, a rigorous trading doctrine or any guideline that eventually will bound our creativity and potential.   Of course, many mutual funds and hedge funds just don't have that luxury and they have to do what's right and be responsible for their clients.    For us, we just have to do what's best for us.    As we evolve from an amateur trader to a more sophisticated trader, we improve our trading along the way, until we find that working strategy that clicks in with our personality.   And then, we tweak it more and practice and trade more and get more experienced until we find ourselves extremely confident and comfortable with what we trade, how we trade and when we trade.

Hopefully, we try to bring that kind of experience to our readers and eventually help you achieve your goal to become a great trader.

Now onto the  market.    Wow is really the word to describe the action today.    One thing we know coming out of this weekend is that this market will need some sort of a dip to become stronger.    The unknown thing before the start of the day is "how market is going to react to a dip".   Now we know!  Reading the final count is kind of meaningless as most would think it's another boring day.   The intraday action showed that people are willing to buy this dip and buy this dip hard.    Why is this important?    If people think market is gonna visit the recent low again, they wouldn't rush in to buy this first dip so aggressively and early.    It definitely gives great confidence to those that are on the sideline or those that are waiting to put capital into work.   The underlying sentiment is that  it's OK to buy into this market again.   For us, we say game on and it forces us to dip right into the business with some vigor.  The market had more than one reason to be hit and stay down today, incredibly it snapped back.  This shows what we said last night and that there are forces much bigger than all of us at work on this market.

Now some stocks...

DXPE,  it was noted on our forum last week that it had the potential to setup a breakout and we added on Friday.  Last night we reminded DXPE, "looks to be building up for a move higher".  Today we got rewarded and hope you did too!. Party does not seem to be over in this one and it looks like it has more legs behind it.

NVTL, it's inevitable that there's some sort of "sell on news" reaction to its updated guidance today.   The point is that all of us have started playing this one days ago on it's strength and most of us should've been cashing in some or all of the chips.  If you wake to a 18% move on guidance, you should take it.  They didn't exactly find a cure for something to deserve such. We'll keep an eye on it going forward.

CRZ AMAG,  these two closed favourably for us. Even though they may not have the spotlight,  they could be steady "money movers" for us.

JSDA, this one breaks out today and it's definitely acting like it wants to be the other energy drink maker.    We are trading this one according to the action only and have no bias on its fundamentals whatsoever.

OEH, takeover talk..... boring!   Yes it's boring to hear those things these days but the appreciation in the stock in recent days is anything but boring.   Another $1 move and now to $61.60 after being $55 and breaking out as noted in Forum before the takeover talk even started.   We love this one and we are willing to hold onto it for some more development.

AXLA ACAD, finally we have these two to cap off the day.   Take it or leave it, biotechs are hot.   The ones in the news are given such a reward that we can not afford to ignore them.   We've had experience in this schizo market with VNDA, ACAD and so figured this had potential to run as well.  We always give these ones out in the pre-market and hopefully many readers had a chance to get in at a good price on ALXA.  $12.50 to $13 was available at Alert time and for the next 10 minutes or so.  We were probably one of the first to show our love here.  Still, there was plenty in the low $14's to get high $15's out of this news in the short term.  ACAD has held up nicely since its news, we might see the same in ALXA.