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Börsipäev 22. aprill

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  • Rev Shark:

    Nice Rally, but Where Were the Big Buyers?

    "Persistent people begin their success where others end in failure."

    -- Edward Eggleston

    After an impressive point gain yesterday the question we face today is whether the bulls have the persistence and drive to keep the move going. The jump yesterday was the biggest in years, breadth was solid, earnings news was good and there is more positive news from Google (GOOG:Nasdaq) this morning to keep the mood upbeat. Is it full steam ahead now? Should we be loading up in hopes of blue skies and apple pie?

    Maybe. The one consistent thing about the market in 2005 has been its inability to follow through to the upside. Whenever it looks like the bulls might be ready to turn the tide the market rolls over again and leaves the bulls disappointed.

    One aspect of yesterday's rally that was troublesome and should give us some pause was the mediocre volume. A lot of folks like to ignore volume and will argue that a point gain is a point gain no matter what. I disagree with that thinking. Volume is important because it indicates who is buying and their conviction levels. Big institutions can not aggressively accumulate stock without sparking a substantial rise in volume. There is no way to hide multibillion dollar accumulation; it is reflected in volume.

    The fact that Nasdaq volume on Thursday was lighter than on Wednesday is a clear sign that the move was not embraced by the big institutional and fund buyers. They still may wake up and start buying but it is clear that they were not very active yesterday.

    Yesterday's action was encouraging and I hope it marked a bottom but it is premature to conclude that the market is out of danger. Even after the big move, all of the indices are still in technical downtrends and face substantial overhead resistance.

    One of the things that is particularly troublesome is the serial bottom callers taking credit for a good call when the market isn't even back to the point where they started calling for a bottom. In my book the only call for a bottom that counts is the first one, not the third or fourth one.

    With the exception of some excitable media commentary over Google, the market is pretty sanguine following yesterday's big action. We aren't seeing much momentum carryover at all. The nature of this market in 2005 has been the inability to follow through, so keep that in mind. If the market is making the big turn the bulls are hoping for, you still have plenty of time to buy -- don't allow yourself to be sucked into the emotional excess we are seeing right now.

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