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FirstAlert[tm] 5/6: Constructive Stock Action Continues

fa_logo_sq_225px-w_bwMay 6, 2009 (FinancialWire) (By Dr. Joe Duarte) — The Nasdaq Composite (COMPQ) broke above its 200 day moving average on Monday, and the Powershares QQQ Trust (Nasdaq: QQQQ) delivered a chart breakout. More important, the overall market, especially the S&P 500 (SPX) did not give ground on Tuesday, instead delivering some very orderly consolidation, the kind of action you want to see in a healthy market.

The stock market is clearly getting interesting now, as one index is now testing the line between bull and bear territory and one popular ETF is starting to attract enough money to make a new high off the March bottom.

So the big question-as always-is where things go from here. About a week ago, in this space we suggested that the market was looking ready to make a big move. We weren’t as sure of the direction as of the fact that a move was coming.

Well, the wall of worry was so big that the market decided to push the bears hard. So, now things are at the point where a big momentum move is quite possible, and new highs could be on their way.

Still, it’s prudent to wait and see what happens. If you’ve missed this rally, stay patient and see what happens in the next few days. The big institutional money that usually comes in at the start of a new month is likely to slow down. That will likely slow down the pace of any gains. And there is the employment report on Friday, another major factor that could lead to volatility.

If you’ve been following our advice, you’ve got positions in several ETFs, as well as lots of energy stocks, where the pickings have been easy of late. This is a good opportunity to assess gains and manage your positions. If you haven’t made a move into the market, you can use any consolidation days in the near future to enter, as long as the S&P 500 holds up above the 850-900 area. Any break below this key support band should give pause and is a signal to keep your powder dry.

If this is the start of a new bull market, more stocks will start to perk up. That means that the next few days to weeks could be the ones that define the rest of the market for the year.

Staying patient, paying attention to detail, and following your trading plan are now, more than ever, the keys to success.

The Investrend Earnings Calendar features Agrium (NYSE: AGU), expected at $0.58 a year ago versus $1.23 a year ago; Embarq (NYSE: EQ), expected at $1.29 versus $1.38 a year ago; Open Text (NASDAQ: OTEX), expected at $0.58 versus $0.48 a year ago; Symantec (NASDAQ: SYMC), expected at $0.35 versus $0.36 a year ago.

The Investrend Economics Calendar lists ADP Employment Report (8:15 a.m.), EIA Petroleum Inventories (10:30 a.m.), Treasury auctions 10-year notes (1 p.m.).

The Investrend Events Calendar showcases AN Shareholders Meeting; CELG at RBC One-on-One Healthcare Symposium; FWLT Shareholders meeting; GILD Meeting of Stockholders; HOT Shareholders Meeting; PEP Shareholders Meeting; PFE at Bernstein Pharmaceutical Emerging Markets Conference.

The Investrend Money Index is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ 50 Most Actives indicate the direction in which the mass of money is flowing. Last session’s trading showed 23 advancers versus 24 decliners and three unchanged. Advancers were led by M G M Mirage (NYSE: MGM) up 35.59%, Las Vegas Sands Corp (NYSE: LVS) up 19.37%, Amer Intl Group Inc (NYSE: AIG) up 18.49%, Genworth Financial (NYSE: GNW) up 16.43%, Qwest Comm Intl Inc (NYSE: Q) up 14.62%, OceanFreight Inc. (NASDAQ: OCNF) up 7.43%, Sprint Nxtel Cp (NYSE: S) up 7.00%, Melco Crown Entertainment Limit (NASDAQ: MPEL) up 6.38%. Decliners followed Hologic, Inc. (NASDAQ: HOLX) down 20.19%, Ultra Real Estate Pr (NYSE: URE) down 6.97%, Seagate Technology (NYSE: STX) down 6.93%.

Vote in the Investrend Poll Question of the Day at Investrend Information (http://www.investrendinformation.com).

Investrend Website of the Day: http://www.ginasthma.com/

Quote of the Day: “I don’t say we all ought to misbehave, but we ought to look as if we could.” Orson Welles

Today is: No Homework Day.

Happy Birthday: Maximilien Robespierre, Sigmund Freud, Tsar Nicholas II of Russia, Rudolph Valentino, Toots Shor, Stewart Granger, Orson Welles, Willie Mays, Bob Seger, Tony Blair, Roma Downey, George Clooney.

Today in History: King Henry VIII in 1536 ordered translated Bibles be placed in every church. The American Bible Society was founded in New York City in 1816. James Gordon Bennett, Sr. published in 1835 the first issue of the New York Herald. Chief Crazy Horse of the Oglala Sioux surrendered in 1877 to United States troops in Nebraska. The Eiffel Tower was officially opened to the public at the Universal Exposition in Paris in 1889. The German zeppelin Hindenberg caught fire and was destroyed within a minute while attempting to dock at Lakehurst, New Jersey, in 1937. Roger Bannister became in 1954 the first person to run the mile in under four minutes.

[FirstAlertTM was created by Gayle Essary, founder of Investrend Communications, Inc., parent of Investrend Information (http://www.investrendinformation.com). The opinions expressed in FirstAlertTM do not necessarily reflect the opinions of Investrend.]

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Free annual reports for companies mentioned in the news are available through the Free Annual Reports Service (http://investrend.ar.wilink.com/?level=279).

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