iwatt (< 20)

Monday Will Be Good

June 28, 2008 – Comments (0) | RELATED TICKERS: PMFG , V , CFX

I think Monday is going to be a strong day for the markets.  Barring war breaking out over the weekend, which is always a strong possibility, we should see some good gains.  Why?

Well the first piece of evidence I have is anecdotal.  I use Telechart easyscans each day after the market close to look for stocks that had strong days.  Where usually I will see 100 to 200 candidates appear in my scans on a good market day, today I saw about 275, and the market today pretty much STUNK!  I think we can agree that the market wasn't that pretty on Friday right?  It sure was for some stocks!  I saw a huge number of good quality stocks bouncing off support on big volume and closing at their daily highs.  It was open rectangular candlesticks galore.  Upon further inspection, much of the volume I saw was near the end of the day, a very bullish signal for Monday.  Buyers waited until the end of the day to buy, confident that they would see more increases come Monday.

Remember, that "evidence" is merely anecdotal.  I didn't name any specific stocks or sectors or anything....I just noticed that there was more potentially good stuff than expected.

The other thing that makes me think Monday should be decent is the % of stocks trading above their 40 day moving averages.  Right now, only 14.81% of stocks are trading above their 40 DMA's.  This number can be used as an oscillator to determine oversold or overbought conditions.  When <20% of stocks are trading above their 40's, it indicates oversold conditions.  Oversold conditions are especially indicated the smaller that number gets.

The apparent oversold conditions combined with my anecdotal evidence of a bunch of nice looking charts lead me to believe Monday should be nice.  Of course predictions are always wrong but hey, they are fun to make right?

To you Longs out there, have a nice weekend.

To you Shorts out there, have a nervous weekend. :-)