Still Recommending Caution

• Posted by Joe Fahmy
• on December 10th, 2009

As I mentioned Tuesday night, every time the market looks weak and ready to fall apart, it seems to rebound and fool the majority. This occurred again as the market rallied Wednesday and Thursday. The one major negative: it rebounded on very low volume!

Although the NASDAQ Composite's volume was higher on Thursday, the S&P 500 and NYSE Composite volume was significantly below average. This is troublesome because it shows a lack of conviction from the big institutions. More importantly, I am finding very few quality stocks breaking out of sound technical bases. There are definitely some trading opportunties, but they seem few and far between right now.

One positive about Thursday's market was the action of the Big Cap stocks. $PCLN $AMZN $ISRG and $GOOG all performed well, but unfortunately, they rose on weak volume. My gut feeling is the action in these stocks "masked" some overall weakness in the market on Thursday.

Again, my best advice is to remain cautious and wait patiently for better opportunities. I realize that the market has been resilient lately, however, I would rather see more stocks "setting up" and better upside volume. If you decide to trade, keep positions light and always maintain a loss-cutting policy in case your positions turn against you.

Follow me on Twitter @jfahmy

Tickers: AMZN, GOOG, ISRG, PCLN

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