Did the market rally on Wednesday?

Markets have been unable to move to either direction strongly since Thanksgiving. The muddled market action continued yesterday. The indexes reversed their gains. Those who aggressively bought on Wednesday were shaken and stirred. There was no bid for the entire day. Which indicates large scale liquidation of position by some large speculators. They just used the Wednesday strength to dump some supply. When a market starting from morning just keeps going down, generally the market participants know a large seller is around and buyers and bid disappear. Expect a bounce as the dip buyers and bottom fishers go to work.

While the index action looked scary, on actual stock level it is not reflected in number of stocks down 5% or more on high volume. In fact my 5% scan shows 59 up breakout to 72down breaks. When markets really have bad days these numbers would look like 20:200. Also to add intrigue, my trusty stocks up 50% or more in a month has only one stock in the list currently. PRXI, Premier Exhibitions Inc. is the only stock on that list currently, which I highlighted as the earnings breakout few days ago. Levels below 5 on the stocks up 50% or more breakout are normally seen after a sustained weakness. The low number indicates market on individual stock level has had poor momentum. So essentially market is churning. There are 53 stocks on the stocks up 25% or more list.The 65 day bull to bear ration is again deteriorating and is at 763:275. Message of the market is muddled. We are stuck in the range and high probability is that the next leg is going to be down.

Many of my short scans are showing candidates after a long time. Most of my short scans are designed to give signal only rarely, because shorts work rarely. When I see 11 stocks on the list, may be the season for shorts might be around the corner.

Stocks showing up on short scans
ACXM,Acxiom Corp (Google  Yahoo  Earnings  Chart) 
BSC,Bear Stearns Companies (Google  Yahoo  Earnings  Chart) 
CHIC,Charlotte Russe Hldg Inc (Google  Yahoo  Earnings  Chart) 
FXI,iShares FTSE/Xinhua China 25 Index Fund ETF (Google  Yahoo  Earnings  Chart) 
GOOG,Google (Google  Yahoo  Earnings  Chart) 
GS,Goldman Sachs Group Inc (Google  Yahoo  Earnings  Chart) 
IKN,Ikon Office Solutions (Google  Yahoo  Earnings  Chart) 
MEOH,Methanex Corporation (Google  Yahoo  Earnings  Chart) 
MIPS,Mips Technologies Inc (Google  Yahoo  Earnings  Chart) 
PLXS,Plexus Corp (Google  Yahoo  Earnings  Chart) 
TGIC,Triad Guaranty Inc (Google  Yahoo  Earnings  Chart) 

All the recent earnings play highlighted here PRXI, ELY, TDG,ATI have continued to act well and many of them are due for correction. ATI is the one which I was worried about most so I took off that position for a nice few points gain. On PRXI stops have been moved to protect the gain.  Like PRXI, there will be more earnings plays during this season.TRCR is another earnings play which looks to be shaping up well. There are couple of more from yesterdays earnings breakout list which look promising.HLYS, which I talked about few days back got moving again after few days breakout. It was blessed by the Trading Goddess

Coming in to this earnings season, I had low expectations for finding many plays as against last few earning season, but the earning season is not yet over and I am pretty confident of finding around 20 plays which will make 25% plus moves in the quarter, even if the market takes a dive from here, I am not very worried. If there is a strong earning catalyst nothing can stop a stock from making 25% kind of move in a quarter. There are over 6000 stocks yet to announce their earnings, so opportunities will be there if you understand how to play the earnings game. Earnings related strategies are my bread and butter. I play various variations of the earnings strategy, earnings lead breakout is just one of them. They give you the biggest bang for your bucks.  My exhaustive study of all those who had triple digits kind of returns in a year at various time in their career shows that earnings was one of the basic foundation of their strategy. Mastering earnings is one of the best ways to beat the market handily.

TC2007 scans:
Stocks up 50% or more in a month
C20 >= 5 AND (AVGC20 * AVGV20) >= 2500 AND 100 * (C - C20) / C20 >= 50
Stocks up 25% or more in a month
C20 >= 5 AND (AVGC20 * AVGV20) >= 2500 AND 100 * (C - C20) / C20 >= 25
Stocks down 5% or more on high volume
( 100 * (C - C1) / C1) <= ( - 5) AND V >= 1000 AND V > V1
Stocks up 5% or more on high volume
( 100 * (C - C1) / C1) >= 5 AND V >= 1000 AND V > V1