Confirmed Rally

The Dow surged 2.2% on Thursday on higher volume, which confirmed a new market rally using IBD’s parameters. IBD has three stocks black-boxed for Monday (MA, MCRS, URBN). The major indexes all appear to be forming double bottom patterns as well, which is a very bullish sign.

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But that doesn’t mean you should rush in and buy. It could all turn very quickly.

None of the stocks from the watch list triggered on Thursday, although MOS did offer a good shorting opportunity for a day trade.

Sector Rotation

I am still putting together February’s Past Performance spreadsheet. I didn’t record the information as the stocks triggered, and there were a lot of them! Most of them were from the oil, metals and energy sectors, as have been the triggers from March. In February, these stocks offered great swing trade opportunities. This month, these same sectors have provided better day trading opportunities due to increased volatility. Now however, these stocks appear to have entered a major correction. It appears a sector rotation is in process, but it’s not clear yet which sectors will lead this new market rally. New leaders will emerge soon, if this rally is for real.

An obvious sector to consider is the tech sector, as this sector has been beaten down and disrespected. So has the financial sector, which has seen blood in the streets. But instead of guessing, it’s best to wait and let the leaders show themselves.

The current watch list has picks from various sectors.

Trade Ideas for 03/24/08

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These are trade ideas for educational purposes. Just because a stock is listed here, doesn’t mean it is necessarily a buy when it is triggered. Use your own due diligence. If you decide to trade these, watch volume and market action to determine if it is a good buy. Stops and targets are not listed. Use your own discretion.

Note: I updated the About section this weekend.

Good luck and good trading!