Stock Market Snapshot
By Jack Rothstein
Nov. 15, 2004, 9:30 am --- The market is in the midst of a post-election rally. The rally
is a relief. The market has traded in a narrow sideways pattern all year long and is
finally attempting to challenge and overcome the tight range that has held it captive. It
is positive that the DJIA, SPX, NDX, and NADSAQ Composite trade above their respective
50.150,and 200 day moving averages. The market is in a bullish condition and the rally
that is taking place is across the board. Dow transports continue to lead making new
highs. The current market is certainly overbought or extended and the extended condition
will certainly be corrected. The fact that the market has found a way to get so overbought
is actually bullish for the next quarter. The action after the election is similar to the
action that occurred in 1960. In 1960 the market traded in a tight range all year and
exploded after the close election gaining close to 10% in the 2 months following. The
current market moves in like manner and the mov
ement provides opportunity to make gains in a year where gains have been hard to
achieve. I added several stocks to the focus list on Friday because the action expressed
compels taking a position. Stocks added to the list are NITE, SCH, USB, NOK, SIMG, and
BCR. The focus list contains over 70 stocks and all of the stocks we are involved in have
a common thread and that is they are in an advancing stage in their cycle. The advance
that each is experiencing varies. Some stocks are mature in the advance while others are
at the outset of the advance. Take a close look at NITE and SCH. They are advancing now
after experiencing a dismal decline over the last 4 or 5 years. They are making a move
because volume is picking up and higher volume will add to their bottom line. The two
stocks have been in serious declines over the last 5 years and are benefiting from a
market that is expressing solid bullish tendencies. The stocks can be picked up right now.
Knight Trading Group (NITE) can be bought from current levels (11.21) and back toward
support at 10.75. Traders can place the stop at 9.79,while long term investors can give it
more room at 8.99. Charles Schwab (SCH) can be bought right now and down to support at
10.00.The stops should be placed at 9.19 for traders and 8.39 for investors. The current
market is overbought and could come in. The rally is not over at all. The pullback
provides another buying chance. The bullish trend ought to persist through the end of the
year into the first quarter of 2005.
