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Thursday, October 29, 2009

Did GDP sound the "All Clear"? - Thursday Swing Signals, Gaps, Trend Busters and Trend Leaders for Oct 29, 2009

This post is announcing that Thursday's Swing Signals, Trend Leaders, Trend Busters and Gap Signals are now available at Alert HQ. All are based on daily data.

Today we have the following:
  • 210 Swing Signals -- 207 BUY signals and 2 SELL Signals plus 1 Strong BUY.
  • 88 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 25 stocks that are new additions to the list and 96 that fell off the previous list.
  • 30 Trend Busters of which 7 are BUY signals and 23 are SELL signals.
  • 251 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Third quarter GDP came at a 3.5% annualized rate, exceeding almost everyone's expectations. The usually infallible Goldman Sachs had recently dialed down their GDP estimate to less than 3% so even they weren't ready for this. In any case, stocks started strong and just got stronger as the day progressed.

I often look to our Swing Signals as the early indicator of market direction. When there are a ton of BUY signals, the market often turns up. That's what we got today with 207 BUYs, a big spike up from what we have been seeing during the last few weeks. Conspicuous by their absence, however, were semiconductor stocks. Nvidia and ASML were on the list but that was about it. With semis being the leading indicator for the tech sector, it's not a good sign to see that they are not recovering as well as some of the broken financial stocks, for example.

In a contrary kind of indication, our Trend Leaders list has dwindled down to only 88 stocks. When it gets this low, it is often a signal that an intermediate term bottom has been reached. One day's rally isn't enough to turn around the Trend Leaders so we'll have to give it some time before it begins to ramp up again.

As for the Gap Signals, we look for gaps that have occurred during the last five days or that were closed during the last five days. So far, there are almost three times as many bearish gaps as bullish gaps. It will take some time to work this off, as well.

In the meantime, the good GDP number is making investors forget the lackluster durable goods report and the fact that this week's initial jobless claims were again over 500K. Major averages have probed their 50-day moving averages and handily recovered.

Still, this is only a one day recovery so far. Let's see if we can put a few more good days together.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.

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