Another Wild Intraday Session Ends With The Big-Cap Technology Stocks Leading The Nasdaq To Small Gains
August 31, 2007 | Leave a Comment
Well, you can’t say it isn’t exciting for the intraday traders who like to trade the index futures and e-minis. However, if you have any time frame longer than a few hours this market is definitely a very crazy market to have to sit through indeed.
After yesterday’s follow-through, it appeared, early on, after the gap down, that stocks were going to build on those gains with more strong gains-which would have been a very bullish scenario. But like so many other times we have tried to rally, stocks reversed and rolled right over, with the indexes almost hitting their morning lows. But the dip-buyers showed up and did bid stocks higher to take them off the lows giving the market small losses on the big boards and small gains on the Nassy.
Now what interest me about the days gains in the Nassy is that for the second day in a row the new lows were higher than the new highs. Today it was 51 new 52-week highs to 60 new 52-week lows. And this comes after yesterday’s 36 new 52-week highs vs. 104 new 52-week lows!! Before this selloff started, new lows were beating new highs, and even now after a follow-through day where the indexes gained 2-2.5%, new lows continue to beat new highs. So this is obviously a problem and it completely shows that underneath the market is very weak. The gains today prove that big-caps are holding up this rally. Once the big-cap tech stocks go, I am sure that is when this market will go. But for now the march higher, so far, continues on.
Russell 2000 and Nasdaq Leads Stocks Higher As The Market Produces A WEAK Follow-Through Day
August 30, 2007 | Leave a Comment
Stocks started the day off on the right foot and kept climbing higher all day long as the Nasdaq closes at its HOD up an impressive 2.5% and the rest of the indexes close just ticks off the highs. There was no doubt that today was very bullish and good for stocks. The best index was the Russell 2000 with a 2.54% gain. And the best sector index was the Philadelphia Semi Index which put in a really strong 2.79% gain.
However, there was one major problem with today’s follow-through–well two really. The first and most important problem, imo, is that volume was ONLY 1% higher on the Nasdaq. This, along with the NYSE’s volume coming in 5% lower, is a clear sign that the smart money was not falling all over each other to load up on top stocks. In fact, volume continues to be well under the 50 day moving average and today’s volume was no different. For eight straight days, the big boys have been completely absent.
The second problem is that this rally attempt occurred on day 10 off the 8/16 lows. While history shows the best rallies start between day 4 and 10 after the follow-through, history also shows that rallies that start on day 4 do much better than rallies that start on day 10. Remember, we have to respect this follow through and look for longs, since no bull market has EVER started without one. However, just like in 2001, not all follow-through lead to a bull market. There were three failures that year.
Selling Hits All The Indexes On Higher Volume; Stocks In My Portfolio Outperform
August 29, 2007 | Leave a Comment
Anyone who has been reading this blog for more than one day should have seen this coming. Today’s selling was expected and the writing was on the TA wall since the rally off the 8/16 lows. However, the timing was off. I was expecting this after Labor Day. Instead it looks like we started some selling early.
I am not sure if this will lead to more selling but the land of charts are very ugly out there. Many stocks have managed to fail right at key resistance. If they do not take out these resistance levels soon and turn them into new support, chances of more selling is very high despite the put/call ratio spiking over 1.10. This is a secondary indicator anyways and there is nothing out there that says that fear can not beget more fear. That put/call could hit 1.50 before we see any kind of rebound.
The only solace I could find out there today was that the stocks in my portfolio and leading stocks overall didn’t take in much damage. Instead it was the usual batch of housing and finance related stocks that got hit. The metal stocks have also been an OLD leader that has been taking a pounding. My two favorite shorts have even setup for another round of high reward/low risk entry. So despite my stocks holding up, it sure wouldn’t take much more selling before cut losses start getting activated.
Final 20 Minutes Tell The True Story Of Today’s Action; Volume Continues To Vanish As We Head Into The Labor Day Weekend
August 27, 2007 | Leave a Comment
There really is not a whole lot to talk about when it comes to today’s action. About the most significant thing I could find underneath all the data today was that there were more new highs than lows in the market where the SP 500 and Nasdaq both closed lower. This is positive divergence in a day where the market did not appear to have anything positive going on.
The final action in the last twenty minutes seems to, however, indicate that the market is feeling a little bit overbought here and is finding no trouble working off the excesses quite quickly and swiftly. The put/call ratio also dipped under .9 today, confirming that the crowd is getting a bit complacent on this low volume rally. Which is exactly what this is; nothing more and nothing less.
The bias should continue to be to the upside for the rest of the week, as it is never wise to bet or short a dull market. And dull market is probably what we have a lot more of. I am taking that cue by the fact that I was offered only one new short and no new longs tonight. There is simply nothing going on and that will probably remain the theme as we go into the Labor Day weekend.
Very Boring But Bullish Week Comes To An End With Volume Completely Absent; Negative Divergence In Price And Volume On Indexes Developing
August 26, 2007 | Leave a Comment
Well if you wanted the opposite of last week, you definitely got it this week. The complete opposite happened as stocks rallied on extremely low volume. Even though the rally was powerful and the Nasdaq almost climbed 3%, the volume was almost 1/2 of what it was last week when the index was making new lows and the Fed was injecting money into the system to prevent a crisis.
Now, even though last week looked well and it appears stocks have bottomed, I still can not enter that camp when two things have not happened. There is no surge in volume showing accumulation by big funds; the low volume last week CLEARLY showed that the smart money was COMPLETELY absent. You simply do not have volume that low and have any real accumulation take place. The other thing that has not happened is that we still have not had a follow-through day off the 8/16 lows. Monday will be day seven of the rally attempt from those lows and all experienced investors know that the greatest follow-through that lead to real rallies happen between the fourth and seventh day. Anything earlier and especially anything later and you really lessen your chances of a successful follow-through.
The other thing that continues to also keep me out of the bottom camp is the fact that I still continue to not have that many new exciting longs breaking out and/or forming fresh bases for a strong rally. The fact is, in real uptrend, I WILL ALWAYS have a handful of stocks that are forming nice to near perfect charts. Right now I have very few stocks appearing in my scans that catch these early and the stocks making it into my long scans do not have sound bases and/or have serious flaws with their fundamentals. There are a few exceptions like FALC and ROS that have very very nice patterns. But the fact is they are not perfect. Also, there is nothing new showing up with outstanding EPS and RS ratings. That is yet another sign that this just continues to be part of the cycle that started in 2003 and not a start of an exciting new uptrend.
Volume Remains Absent As Stocks Drift Lower On Lower Volume
August 24, 2007 | Leave a Comment
The stock market has, overall, been very boring this week and has, absolutely, given us ZERO direction as to which way the market wants to go. Yesterday’s move did produce some decent longs but none of them performed well besides the clearly best chart of the bunch. However, the fact that the market and those longs had little follow through today has to have us scratching our heads wondering, “is this the best the bulls can do after finding out Ben is now on their side?”
I am still in the either/or camp and am not leaning long or short at this time and continue to believe cash is the best place to be. However, I believe it is smart to stick your toes in on the best shorts and longs that show up in our scans so that you can be physically in lockstep with the market when the trend does start. By buying more of the best looking long yesterday I have set myself up for some nice future gains, if the market does follow through. However, if it does not, I have a clear cut loss area and have my toes in a handful of shorts that are holding their resistance.
The one short I have bought more of compared to the others also had a bearish reversal today, holding the recent resistance at the moving averages. So as you can see by these two stocks, along with all the small cut losses I have been forced to take this week, the market remains very unclear and trendless. The best place, once again, during a market like this, the greatest traders will tell you, is in cash.
The Nasdaq 100, Full Of Big-Cap Tech Stocks, Leads A Mixed Market; Volume Is No Where To Be Found, After Weeks Of Huge Trade
August 22, 2007 | Leave a Comment
There really is not a lot to say about yesterday’s market. I read once again that the Fed has injected funds into this market. Sheesh, I just think this is such a bad idea. I would rather see them knock down the Fed Funds rate than do something as silly as this. They may be able to prevent a crash, but if the market is going to fall the market is going to fall. There is nothing the Fed can do to stop what the forces of millions of investors control. The Fed, I hate to tell you, is not that powerful.
The other key sign underneath the market that tells me that we are no where clear of the trouble is that there were only 34 new 52-week highs to 92 new 52-week lows. Like I said before, there were more new lows than new highs before this selloff started and there continues to be more new lows than new highs. In 2003, before we reversed for good, there were more new highs than new lows and the Nasdaq had an accumulation/distribution rating of A-. So as you can see we clearly do not have the statistics underneath the market to support a sustained rally. Take that along with me having absolutely ZERO nice beautiful green charts and you definitely do not have a market that is ready to rally.
Are we probably going to continue to go higher? As long as RIMM AAPL BIDU FWLT and the other big cap technology stocks that make up the heavy weight of the indexes keep going higher, this market is going higher. However, if no other stocks participate, like what is currently happening, eventually they will get these leaders. For now, as they move higher, there is nothing for us to do. IMO, they are well beyond the proper time to buy after such huge gains for these stocks from the 2002/2003 lows. But with them still moving higher, there is no way in hell they are ready to be shorted. RIMM finally completing that 3 for 1 split might bring us close to a top but until we get a rollover, 200 dma breach, and then a failure at the 50/200 dma, shorting is purely premature and wrong.
Nice Intraday Reversal Takes Stocks Well Off The Lows, On Much Lower Volume; Wall-Street Goes On Vacation
August 20, 2007 | Leave a Comment
Today was easily one of the most dull days my scans have ever seen. There was not a single scan of mine that had more than 32 stocks in it. That pretty much told the tale of the market today, as today’s intraday reversal came on volume 30%-40% lower on both exchanges. Therefore, I continue to believe we are in the middle of a dead cat bounce.
However, since the market doesn’t give a crap about what I think, I am going to have to support my thesis. The fact that there are still absolutely ZERO charts setting up in what I would consider beautiful bases is the top reason I don’t see us making much headways any time soon. Second, there were 27 new 52-week highs to 105 new 52-week lows. That clearly shows that the action underneath the market is much weaker than what a select few are leading the indexes to show. When stocks like RIMM and CROX continue to do well, the majority of the other stocks are simply acting horribly.
But we are not going to top until GOOG AAPL RIMM CROX BIDU etc..top because until they top the biggest weight on the market will continue to hold the indexes up. This is why it is not smart to be short here. Look at what I just posted on my “new shorts” section. This pretty much explains the situation in stock shorts right now. The fact is until these high priced leaders top, the market will not top. And without new leaders, we are not going to get a bull market, so expect more wild volatile sideways random action for now.
What A Wild Week It Has Been; Stocks End The Week On A Bright Note, Sending Chills Down The Spines Of The Johny-Come-Lately Shorts
August 18, 2007 | Leave a Comment
This was by far one of my most favorites week, since 2004, by far. The amount of emotion with fear, greed, and confusion was by far the most I have seen probably since the downturn in 2005. So, obviously, I must have been pulling my hair out. Right? Wrong.
The great thing about having discipline and game plans is that you are prepared for everything. When all of my new longs started failing and I noticed that all my short recommendations were working out better than longs, it became obvious something was starting to change.
Not only that but remember how I kept harping on the amount of 52-week lows were beating the 52-week highs BEFORE we sold off. I warned how that might be a problem. And walla it became a problem.
As the selloff started, I advised going to cash and those that did that were able to sit back and enjoy this wild action. Because, I have to be honest, neither bulls or bears made a lot of money. If you look at your charts you will clearly see how wild and choppy they are.
Powerful Reversal Catches Those That Panicked Off-Guard; Cover Part Of Your Shorts That Put In Big Reversals Today
August 17, 2007 | Leave a Comment
Today’s reversal is very significant. While it may not be “the bottom,” it definitely looks like one on the short term. However, even if this thing follows through, unless we see a lot of stocks breaking out of beautiful chart patterns with great fundamentals, it will not matter. The rally will not hold. But for now a bounce has to be expected. Intraday it got very very euphoric for the bears and a lot of bulls had enough to finally capitulate and sold into the panic selling.
Overall, I have to say I would not be in too much of a hurry to buy into this bounce, especially with NO great looking charts out there forming beautiful green bases. But this selling did get extreme. The put/call hit 1.36 at the close and was near 1.50 during the worst of the day, the VIX hit 37 before reversing to 30 by the close, and the number of new lows destroyed new highs by 1276 to 33.
The most impressive thing about this rally today was the Russell 2000 index rallying over 2% and the SP 600 rallying 1.7%. This is clearly day one of a rally attempt, with that kind of action. Let’s say that we do follow-through in the next four to seven days. Unless these stocks that are climbing up the industry list breakout of nice chart patterns, like I said before, the rally will fail. So we have to wait to see if we rollover here or if we have set the bottom with great stocks breaking out to new highs. Right now, it looks too choppy and sloppy out there for that to be the case.
