Disciplined Traders Enjoy Being On The Sidelines/Short While Wall-Street Panics; VIX Hits 31, Intraday!!
August 16, 2007 | Leave a Comment
This is no surprise to readers of this blog. If you have heeded my warnings, like all of the gold subscribers have (way to go guys; seriously!!), then this is actually quite fun to watch. Why? Because we all know that to make the big money you have to have bear markets. You need bear markets to clear the way for the next round of winners. Also bear markets create fear which creates volatility which creates the conditions necessary for stocks to make HUGE gains when the selling does end.
While it appears, via our charts, that there is more selling and a lot of damage to come to stocks, the VIX has climbed to over 30. That not only means that longs will kill it to the upside when we do bottom but short sellers that are short the right stocks right now are making bank! With the VIX at 30, we will have many stocks make 5% daily moves enabling us to make some great money.
So while wall-street, Cramer, and the rest of the bozo’s on CNBC run around like morons with Ivy League degrees about nothing, simple traders who actually use charts, good money management practices, and a cut loss method sit back and either avoid losing money or actually make money. The “geniuses” who were recommending bank stocks and stocks like TMA the past month were obviously much “smarter” than the rest of us. LOL. Blind fools, I tell ya!
Nasdaq Gaps And Traps As It Opens Near Its HOD And Closes Near Its LOD
August 14, 2007 | Leave a Comment
There wasn’t too much special about today’s action, unless you consider some horrible intraday movement by the indexes special. I guess you sort of can. You see in bullish markets, you simply do not have the indexes open near the HOD and then weaken the rest of the day to close near their LOD. This is the kind of action you get in a weak market environment.
Some will say that it is bullish because we did not selloff. Hello? Were we not green almost all day long and then finished in the red? It seems that a lot of people are trying to talk the market higher at this point. However, with 50 new fifty-two new week highs and 211 new fifty-two week lows, it sure does appear that the market is much weaker underneath than what the actual indexes are hinting too. The IBD 100 did finish up .2% but you will not find a lot of stocks with nice fresh chart patterns in that bunch.
Another thing I find somehow impossible to interpret as bullish is the fact that the ECB, Japan, and the Fed are injecting so much money into the system to save off a crisis. That in itself should be a good enough reason to avoid being fully invested on margin. The stock market never like indecision or problems. If this is another LTCM there could be a LOT more damage to come. The way the individual charts look it appears that even if we get a follow-through day not much will come from it.
Why Are People Trading/Investing In This Market Environment?; Stocks Suffer Worse Week Of Volatility On The Heaviest Volume I Have Ever Seen
August 12, 2007 | Leave a Comment
As this week went on and on, I started to wonder why I even returned from my vacation. I could have easily have dealt with all this volatility, small longs and shorts, and loss cuts while away from my main screens. However, I am very glad to be back and to finally be posting long post. Now with me back at home I can clearly get all my analysis done. And what I have found after going over everything this week is that most professionals that thousands of investors listen to have overanalyzed this market to death and would be much better off if they advised what they should be advising. Going to cash and letting the market play out.
These guys do not get paid to do that and that is why they are always recommending some stock here or there. However, as a professional that completely understands that there are only a few times every ten years to make HUGE money, I also know when it is best to keep your cash heavy. Times like now is definitely one of them. I hear a lot of investors and commentators advising traders to pick up their favorites at these discounted levels. What bothers me more than anything about this crap advise is that these stocks can stick around these discounted levels for a long time. Go back and see how some of the favorites of 1998-2000 are doing today. They have not come back and some never will. This is what is going to happen to many of the stocks that have come well off their highs during this pullback. Some stocks are broken bad enough that there is no hope for them any time soon.
The Action The Past Two Days Is Exactly Why I Am Telling You To Stay On The Sidelines And To Keep Cash Heavy; This Is An Ugly Market With Few Good Looking Charts
August 9, 2007 | Leave a Comment
I was vindicated today, after watching such a crazy rally yesterday. I was very busy with a lot of medical stuff yesterday and could not post a write-up. Therefore, after completing my analysis tonight, I will also post the chat transcript from yesterday. There are a lot of very important pieces of information that was discussed in there yesterday.
This market remains COMPLETELY insane and on a weekly chart you can see exactly how much money has been moving around by looking at the volume the past three weeks. Something tells me that all of that volume is not bullish. But what do I know. And for that matter what does anyone know? The truth is everyone out there is just guessing. The facts are that this market is a wild beast offering us no edge by being part of either a clear downtrend or a clear uptrend. Caution continues to be what I recommend. Just look at how one of my prettiest charts is acting. HUB.A is wild as can be and that is due to the very low average daily volume. But the max green BOP and great price and volume action in June and July is still no match to all of the recent volatility.
One of the most interesting things I saw today was that almost all of the high priced stocks got hit today. Today is the first time I noticed that all the big big winners from 2003 got hit by more than 4% on almost all of them. But admist all that weakness in the leading stocks, there are still a few nice looking charts out there that I am either long or are buying more of tonight like WOOF and EQIX. However, these are neither perfect charts and do not have the incredible growth in EPS and sales to truly do anything amazing in such a wild and emotional market.
Markets Finish Higher On Mixed Volume, After Another Wild Intraday Ride From The Fed
August 8, 2007 | Leave a Comment
The markets finished higher, with the Nasdaq coming in with higher volume. However, underneath, the market was much weaker with only 130 new highs to 400 new lows. That came on yesterday’s supposedly follow-through day on the DJIA where there were 1003 new lows and only 90 or so new highs.
This is obviously a much weaker market despite the rally right now. However, it never pays to fight the trend and the trend is up on the short term but down on the intermediate term yet up on the long term. So we have a clearly choppy market. Best to keep cash heavy and our trades very small, if you should even trade at all.
The wild intraday action after the Fed announced saw the DJIA fall 169 points before closing up 35 points. This kind of wild intraday action simply does not happen in strong bull markets. You also do not have such wild support violations follwed by snapback rallies in a strong bull market. So I continue to offer caution based on just the action in the indexes and most stocks.
Index Continue Their Dance Of Whipping Emotional Traders Around; Bank Stocks Put In A Bullish Reversal
August 7, 2007 | Leave a Comment
Stocks put in a very positive and short-term bullish reversal right off the 200 day moving averages today on heavier volume, convincing me that shorting stocks in the bank sector has finally worn out its welcome. I advise covering some of your bank shorts if you happened to put on those shorts. If you didn’t, it is no big deal. I even had a talk with a trader last night talking about shorting a stock called COF today. I explained to him that it was down way too much to continue down. This is the danger of shorting when it is obvious to everyone that there is a problem. The market already has priced it in.
The great thing about being on vacation is that I get an opportunity to read market books that I have not read before or I get to reread a classic. This vacation I decided to read Mark Douglas’s book “Trading in the Zone.” It was the right choice. This book is a must read and I think it is the best book I have read in describing to people how important it is to understand THAT YOU DO NOT NEED TO KNOW WHAT IS GOING TO HAPPEN IN THE FUTURE TO MAKE MONEY IN THE MARKET. In fact, it hurts you.
Cash Is King, Do Not Go Long Until A Follow-Through Day, And Do Not Take A Position On This Market (Be In The Moment)
August 4, 2007 | Leave a Comment
I will be back and ready to go on Monday from my home in Maui. I appreciate everyone for having patience with me during the vacation as it was very hard to find time to get to the computer and write a little bit AND enter orders, while still having fun.
This market is not one for longs. And the only way I see things right now is simple. KISS. Do not go long stocks UNTIL you get a confirmed follow-through day signaling that the market’s downtrend is over. Saying that, also, this is not the time to become a “hardcore” bear as the downtrend is showing some EXTREME oversold and fear-filled statistics. Do NOT short stocks more than 5-10% away from either the 50 or 200 dma. You are ONLY asking for an extreme amount of pain, IN CASE the market is finished going down. Right now, capital preservation is the name of the game. Going long or short right here is not the best move as we still do not have confirmation we are in a bear market yet. All of the high tech leaders (that I listed on my new shorts page) are still holding well.
Saying that. I want to say ALOHA from Texas. There is no doubt this is one of the greatest states out there. I have never seen goods and housing so cheap in an area with so much stuff to do. This state rocks but I am glad to be going home to where there is surf. The surfing bug is still not out of me yet. I have many more years before I get sick of surfing. Then maybe, one day, TX will be in my future. For now the only thing I am for sure of is NOTHING. When it comes to the stock market, all you hardcore bears or bottom callers better get your head out of your ass and realize ANYTHING CAN HAPPEN. There is only one way to approach this market: it isn’t a bear, it isn’t a bull, it is agnostic.
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