Weekend Review 02/10/12

NASDAQ 02/10/12

On the surface everything looks calm and the persistence of this swing that started in December is clearly visible with the up days out numbering down by 2-1.  Under the surface however, one of the breadth indicators I pay keen attention to is showing the move stalling here.

$USHL5 02/10/12

On 02/03/12 the $USHL5 peaked at 2238 and finished this week at 1399.  If we measure the move of the NASDAQ over this time the change is .06% which is in keeping with a market of stocks that are no longer making new highs.

Corrections don't always have to pull back x%; sometimes they can occur through sector rotation which will not be obvious when looking at the indexes but is clearer through the action of individual stocks, and sometimes the move unwinds sideways which may be witnessing here.

Individual stock action is showing the break outs are working in this market and 52-Week Highs are in play again.  In addition stocks are breaking out from solid set ups and new set ups are continuing to emerge on a daily basis.

Ideally I'd like to see some pause for a few more days so bases can continue to form, but every time I've been on the alert for some pullback it has failed to materialize.  I won't be holding my breath for it to occur this week either.  My focus  this week is on buying break outs and selling when they become extended with the belief that this is the safer means to navigate these waters.  Should a pullback commence extended stocks are the most vulnerable to getting tagged first so selling strength involves less risk under these conditions.