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A "Line" Begins to Form

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UPDATE ON THE STOCK MARKET. Tuesday, April 8^th, 2008: Yesterday was the 4^th day in a row the stock market traded essentially flat. I believe we’re now building what the old timers called “a line.” Just means compacted trading action on lower trading volume. Can run for a week to two or much longer. Many times a line forms after a big stock market drop and after the normal bounce-back rebound, leveling off, adjustment. Bounces to where sideways action develops as stocks wait for their next impulse. Sort of like water reverting back to its proper level after some disruption. Stocks then wait for the next new impulse coming from the money markets, from the news, from earnings, from geopolitics, from government intervention, from the economic data, etc. You get my point. Some new news which obviously hasn’t been, couldn’t have been, factored in. Today, Mr. Market (the consensus of institutional investors which from and drive the markets trend) has factored in the recent credit crisis disruption and has finally leveled off and is waiting to decide its next path. Schwartz View: When a new impulse does come, the move should run for some time. And beneath this pause, various individual stocks can run off, up or down, on their own. Right now, since we’ve just gotten Fed engineered relief from potential systemic risk, a.k.a as a domino effect of investment and money center bank failures, that’s allowing those individual companies and their stock prices to do well, to blossom. Like the solar stocks and the fertilizer/ag stocks. First Solar (FSLR), probably looked upon as the top solar stock just went to a new high as did Potash (POT) probably the top rated agricultural chemical stock. So far this rally is one for stock pickers.

Posted 04-08-2008 8:57 AM by Richard Schwartz

Filed under: Principles of the Stock Market, Richard Schwartz, Trading, Technical View, Charting, Keys to the Market, Day to Day Action, Update On The Stock Market, Daily Update, Historical Perspectve, Perspective, A Line

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