We now have a S&P confirmation, but not the DOW.

By Gene On April 4, 2009 · Leave a Comment

We now have a S&P confirmation, but not the DOW.

It is very interesting to see how this rally has come about. As it usually happens, the Tech stocks have led this rally from the start. With all of the government participation with financial stimulus and bailouts, and promises of more, the markets may be acting a bit irrationally. I have not bought into a huge rally yet because of the absence of a test of the bottom, that I will talk about later.

As you can see from the trend calendars, (that are a basic trend signal of the Wizard) we have received the first buy signal.

S&P

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Dow

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Nasdaq

Although the trend calendar has given the buy signal, the SPY, which is the index ETF, is still showing that we are in a down trend. It is very close to changing, but has not so at this time. This gives me pause as to whether this strong resistance area will hold or we will breakout to the 900 range in the S&P. The next slide shows the scans of the ETFs for the Nasdaq, (QQQQ), S&P (SPY), and the Dow (DIA). We are still in the short position on the Weekly DIA and SPY.

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Any trade that you take now, you should make sure it is on a daily chart. I would also take the conservative scan. Once you reach your first target, (disregard the moving stop once you reach the first target) and move your stop to your entry price to protect any profits. I would not normally tell you to do this, but with the uncertainty of the government manipulations, make sure you follow these instructions. We want to make money and if we protect our profits, we will.

I am anticipating that we are going to get a retracement soon to the recent lows or close to them. In the following image, we can see when the bubble burst in 2000, we got the retracement or test of the low. When we were at the highs in 2007, it happened again, we got the test of the high. The image also shows the buy and hold model that has clearly ruined many portfolios that you have held for your retirement. If you had been using the Wizard, you would have different results.

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Since I showed you the buy and hold paradigm, I will show you the alternative way to trade and manage your portfolio.

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The Nasdaq has been leading this rally. Let me show you how to get into some of these early moves. The next image shows the Browse sectors scan. The scan shows where the Computers and Technology sector started to change. Had you taken some of the double greens in this area you would have seen some great results.

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You could have taken any of these stocks.

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You could have taken the signals on any of these ETFs.

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Here are a couple of images to show how we have handled some of these major market declines in the past. Notice how long the markets traded sideways at different periods. It looks the same on any chart, whether it is a 5 minute chart or a weekly chart. There are bull markets, bear markets, and sideways markets. Take a look at what happened in 1929. It took until 1954 to get back to even.