A Nasty Selloff In The Final Hour Of Trading Sends Stocks Lower On Above Average Volume; I Am Beginning My Short Operation On The Former Leaders
November 14, 2007 | 2 Comments
Stocks were looking pretty darn strong today, except the Nasdaq which sort of had a downtrending pattern to it. But the final hour opened up a flood-gate of sellers that sent the markets near their lows. The last few minutes saw a bounce that took the markets off their LOD’s. The fall in the last 30 minutes on the DJIA looks very bad and, as we all know, selling into the close is never a good thing. Especially when they were holding stocks up all day in the appearance that today was going to be a bullish follow-through to yesterday’s powerful rally.
I know a TON of traders who called yesterday a bottom and as far as it technically still possibly being a bottom that still holds true. Yesterday was day one of an attempted rally. As long as the markets hold above those lows that day one is still valid. However, if we eclipse yesterday’s lows, the rally attempt will be dead. The fact that we saw selling immediately following yesterday’s day one of a rally gives me some confidence that this rally is not going to hold.
And when I read one of my favorite commentators I see that he thinks today was an “overall victory for the bulls” and “today is consolidation that will set us up for further upside or just stubborn optimism that will eventual succumb to the pervasive negatives out there.” With that sort of bullish leaning along with the analyst that come on CNBC saying to buy the pullbacks, it is apparent that it is not too wise to lean to the bull side with the premise that yesterday’s oversold bounce was in fact a bottom. We don’t get bottoms this soon from tops.
The Biggest Rallies Happen In Bear Markets; Stocks Have Best Day In Years On Lower Volume
November 14, 2007 | 2 Comments
The first thing I want to say is that everyone must understand that the biggest up days occur in a bear market. Now, are we in a bear market? Technically, not yet. You are supposed to be down 20% from the top for a bear market to exist. However, we are in a correction and the fact we had such a huge up day must be questioned after such a pummeling we suffered the past four days. And I don’t care what anyone says, the fact that volume was lower than yesterday’s volume is in fact a big deal.
If institutional investors were in fact buying stocks the volume would have been much higher. The fact that volume was lower than the previous two days of selling proves that this was not the big boys going to work all at once. A 3.5% gain of this magnitude on this low volume is a clear sign of a massive short squeeze as too many people were leaning on the bear side. I just don’t find a lot of confidence in this rally knowing that volume was lower and that this rally just came after EVERY SINGLE LEADING SECTOR GOT WHACKED. This has not happened at all since the October 2002 lows.
But what I really would like to discuss is sentiment. I am stunned by the amount of bottom callers that there are out there today. If we, in fact, did bottom today, then I will quit this business. LOL. I have never seen every single show on CNBC, every single commentator on realmoney.com, and every single perma-bear be bullish at the same time. Well, I did see it once at the 2000 top. I remember it like it was yesterday. While every single person in NYC (almost) was buying the March and April lows, I was warning that every single leader had put in huge reversals and the fact that every single speculative stock indicated the bull was over. The next rally must be sold!! That is what I said then. This is what I want to say now.
Another Above Average Volume Selloff Hits The Market Hard; It Feels Great Being Right, Following The Trend Of The Market
November 12, 2007 | 2 Comments
First off, I hope everyone had a great Veterans Day on Sunday. I want to thank EVERY single reader that reads this commentary that served in the military, first off, for making this country the greatest country in the world. Thank you! Second off, isn’t it fantastic watching this market sell off, knowing that we saw this coming and acted appropriately. Some think I must be feeling pain by still being 50% long. You have to realize I was over 150% long not to long ago. So actually I have avoided a TON of pain by being out of so many of my longs. The remaining longs that I am holding are also stronger than the ones gone so it isn’t that bad. However, after today, there are a lot more sells. I will be probably down to 40-45% long and my short position will rise from 30% to 35% more than likely.
I noticed that I heard a LOT of people calling for a bottom and that many institutional scam artist are recommending investors buy this pullback. What is funny about all of this is that this is the first time I can remember hearing so many people call this particular pullback a “buying opportunity” compared with the other pullbacks. In February and August, almost everyone thought it was over (not all, but most). Now come this pullback and I hear that RIMM GRMN BIDU AAPL and GOOG are all bargains. I hate to tell people this but when every single leader!! sells off on heavy volume it is NOT a buying opportunity. If all these leaders were selling off on very low volume and then we also saw some current leaders taking off and breaking out to new highs then I would agree that a pullback is a buying opportunity. But as the famous saying goes, “they are throwing the baby out with the bath water.”
Another Selloff Helps Stocks Put In One Of Their Worst Weeks In Five Years; The Time To Be Long Has Passed
November 10, 2007 | 2 Comments
Subscribers to this site definitely were not caught by surprise when it comes to the selloff we have had the past three days. After Tuesday’s market session I ended up with a TON of strong CANSLIM quality longs that appeared to signal that the market was ready for another leg up. However, the very next day, stocks reversed hard on heavier volume and many of the new buys were left looking quite mediocre. That particular action was very bearish to me and caused me to pen this right after the closing bell on Wednesday:
Screw This Market; Nasty Selloff After Such A Strong Day Is A Clear Topping Signal
November 7, 2007
Stocks Correct Hard As All Indexes Selloff On Higher Volume; Extremely Strong Bullish Intraday Reversal Helps Prevent The Nasdaq From Going Limit Down
November 8, 2007 | 1 Comment
By the time I woke up today the Nasdaq was only off 30 or so points. But as the day went on the Nasdaq got as low as down 3.7% intraday. I believe I heard that the Nasdaq limits down when it falls 4%. If that is the case, we came very close to a very significant market event. As it turned out, the Nasdaq ended up having its worst two day decline in over five years. It was a very ugly day but at the end the Nasdaq only ended down 1.9%.
Volume did climb over 30% on both the Nasdaq and the NYSE giving both a clear distribution day. Today’s losses combined with yesterday’s on such strong volume has put the market in an official correction mode according to IBD. This confirms what I wrote on this blog last night about this market. It might not be a long bear or it might be a long bear. NO ONE knows. But we don’t need to know how long it is going to be, we just need to know that we are in one.
Other indexes did better as the SP 600 gained .75%, the SP 500 only fell .1%, and the DJIA fell .25%. Considering all the ugly intraday selling, it sure was a pretty darn good close. And truth be told, it is a little hard not to be bullish on the short term with a close like that. However, there was some very important technical developments today.
I Have More To Say And I Must Say It; Stocks Selloff On Higher Volume
November 8, 2007 | Leave a Comment
When everyone reads the last post that I posted it might look like that I am giving up being a bull forever. Please do NOT get that confused for what it really is. It is for just now. The market that I have been bullish on since August 16 is now no longer a market that I embrace. However, as for the bull market from 2003. It very well could have another leg to go after this round of selling is over. We only need 7 stocks to go up 5% everyday and the rest of the market could selloff and we will still be hitting new highs on the Nasdaq. So things must be looked at in perspective.
For now, I am definitely changing my preferred bias from bullish to bearish. It has been a very long time since I have seen so many more charts look really good on a shorting standpoint compared to a bullish standpoint. The pullback in 2004 basically offered very few shorts during that time. The one in 2005 was even less bearish as many top stocks made very green bases during the pullback. Then when the pullback was over, since I was focused on all the green charts it ended up being a good year despite the overall lame performance by the market. In 2006 there were more stocks to make money off of shorting, starting with the homebuilders. But now there is just a TON of shorts to pick from. And they are from all sectors too.
Of course the most beat up sector has been the banks, mortgage, insurance, real estate, and retail stocks. But now the technology and a TON of old leaders are getting involved. Now chemical, oil and gas, internet, and steel stocks are losing it. These were the leaders of the bull market from 2003 and now they are all starting to see some hit here and there. If history repeats itself it wont be long till the old leaders selling moves into the current leaders selling. Since the leaders of this leg in the market are the late movers in this five year market and the old “real” leaders are starting to sell it doesn’t bode well for the future of this market.
Screw This Market; Nasty Selloff After Such A Strong Day Is A Clear Topping Signal
November 7, 2007 | Leave a Comment
I am losing my bullish bias. All my hard work yesterday was rewarded with this!!! Fuck this market. Sell all laggards, cut your losses in stocks not working, take in some profits, and raise cash. This market is in for some rough times. Even if it turns around I don’t care anymore. The easy money is being made on the short side now. It is time to get rid of the bullish bias. This is the most confusing market I have EVER seen. Since 1996 I have never seen a market so fucked. Get out of your new longs and take profits. It is time to start selling. If there is nothing wrong with your longs, keep holding.
What makes all of this worse is that today I just loaded up on FNDT in my IRA. This is now the third buy in a row I have made in my IRA that has been a loser (SNDA, BLL, and now FNDT). Right now, I fucking suck, so it is best to not follow my trades unless you really like them. The easy money off the August lows has come and gone. I don’t know what the market is going to do next and with all of this volatility I do not want to be a part of it.
Another Intraday Dip Is Met With A Flurry Of Dip Buyers As Bulls Send Stocks Off Their Lows And Help All Indexes Close Near Their HOD
November 7, 2007 | 2 Comments
There is no other way to describe today except that it was a very bullish and good day for those that are long. That should include anyone that follows the general trend of the market and if that is you you probably had a very good day today. The SP 500 led the way with a 1.2% gain and leading stock continued to outperform the market as the IBD 100 rose 2.8% on the day. This continues to show, once again, that the right place to be is in leading stocks as they continue to crush the returns of the SP 500.
Another excellent confirmation of today’s strength is the volume that was seen in the Nasdaq. Volume rose over 20% on that index, giving today’s bullish intraday reversal from the red to a green HOD close all that much more importance. This was a very bullish day and I have to say that I am very happy to see today happen as I am vindicated from all the top callers that the market has recently had. once again, the trend was my friend.
Now, like I have been saying, it is a mixed market. Once again, even though we did have positive breadth, it still wasn’t that positive. On the Nassy advancers beat decliners only 4-to-3 and on the NYSE it was only 9-to-5. So it wasn’t that broad which goes to show that a few high quality leading tech stocks are leading us higher–and remember there is nothing wrong with that.
Stocks Put In Another Bullish Intraday Reversal Sending Stocks Off Their Lows, Despite Losing Ground Across The Board
November 6, 2007 | Leave a Comment
Stocks sold off today, on lower volume, but anybody that was watching the market intraday has to acknowledge that the bullish rally was very nice to see-that is if you are a bull. However, despite stocks moving to new intraday highs they could not manage to hold on to the gains and managed to pullback a bit into the close. Still, overall, it has to be considered a bullish day considering the Nasdaq’s close was higher than the open and on all the indexes you can, once again, see those nice bullish intraday reversal by looking at all the tails that litter the charting landscape.
These tails, along with most indexes still above the 50 day moving average, are clear signs that the bulls are still in control and being long is the right play. However, I am starting to notice a few things that are making me wonder exactly how much further we have to go to the upside. This could mean either short term or long term, I don’t know. The one thing I do know is that NO ONE knows the future and those that do are full of shit. So, in saying that, lets tell you what I see.
The first thing I have noticed is that the amount of new lows continue to beat new highs no matter if it is an up day or a down day. Today once again there were about 290 new lows on the Nassy to about 60 new highs. It was 250 to 60 on the NYSE in favor of new lows. This is a sign of a very weak market underneath the few big caps that are holding it up (remember 7 stocks represent 20% of the Nasdaq). When those big-caps fall, not only will these be the ones to short, but the market will be giving up and longs will need to be taken in.
Stocks Bounce Around But Rally To Close Near Their Highs Of The Session, After Thursday’s Selloff; Bears Can’t Get Much Going To The Downside
November 3, 2007 | Leave a Comment
Stocks ended slightly higher, with the Nasdaq leading the way, as stocks pretty much stayed range bound intraday. The boring trading looks rather tame and unreadable at first glance. But when you consider the selloff we had the day before, it has to be taken as a bullish sign that all indexes closed near the top of their intraday range after selling off initially during the day. So, overall, I would think that we have to consider today bullish considering that the selling had no follow-through and the indexes closed higher.
Confirming the strength in the market was the IBD 100 which rallied 1.2% which was much better than the indexes .1% to .6% gains. This also helped the IBD 100 close up for the week by .6% which well outpaced all the indexes which all fell this week between .25% and 1.7%. The weak week can be taken as bearish by most since we saw the NYSE pop up with two distribution days and new lows constantly beat new highs all week. Even on Friday when the indexes closed higher, the new lows beat the new highs on all indexes. On the Nasdaq it was 58 new highs to 251 new lows, on the NYSE it was 90 new highs to 205 new lows, and on the AMEX it was 30 to 35. So even strong days now have more selling than buying underneath the big cap large stocks.
What some don’t seem to understand at this point in the rally is how the market can be rising when so many stocks are breaking down or hitting lower lows. It is simply, really. There are seven stocks that make up 25% of the Nasdaq. MSFT, GOOG, CSCO, AAPL, INTC, ORCL, AMOV each represent 2% or more of the Nasdaq individually. So technically you could have every single stock in the Nasdaq selloff and as long as these seven stocks rallied by a very large amount the index would still close higher. This is why GOOG, RIMM, AAPL, and BIDU are holding us up. These leaders are holding the whole market up. When they go, the market will go.
