A Strong Intraday Session Turns Into A Stinker As Bids Disappear; Caution Continues To Be The Way To Play This Market

January 3, 2008 | 1 Comment

I think most people came into today expecting a further selloff off of yesterday’s weak price action. But instead we saw a rally that got some bulls excited early on. However, like most rallies recently, as soon as the buying stopped, the bids disappeared. As the market broke to the red, many saw a possible EOD selloff. But, once again, confounding most myopic short-term analyst, the market instead reversed higher into the close.

Now the action today basically left the SP 500 flat at unchanged with th DJIA also basically flat with a .1% gain. But the more speculative indexes didn’t enjoy that kind of green/flat action. Instead the SP 600 fell 1.1% and the Nasdaq fell .3%, showing that the more speculative areas of stocks did not enjoy the same action the big-caps received.

Unlike, the speculative stocks, leading stocks actually did quite well today leading all indexes with a .6% gain. Not bad at all and a possible hint that we could rally from here. Am I sure of this rally? No. But does the market do the opposite of what I want it to do recently after I make large trades? Yes. Am I bitter? Maybe.

Posted by Joshua Hayes | Filed Under Market Commentary

If You Are Not Bearish Now, You Should Be; Stock Indexes Selloff On Higher Volume, Once Again, Giving The Nasdaq Its Sixth Distribution Day

January 3, 2008 | Leave a Comment

I know everyone was excited coming into the new year that everything would be great for stocks. But the only thing I can think of is why? This thing has lasted for over five years now and it is time to come to grip with reality. The bull is more than likely dead for a very long time. All of our nice charts are gone. The few that I was long have now failed and now my long scans are full of ETF shares and low volume junk. This is NOT what you find in a bullish tape. So I recommend getting ready for a possible long protracted bear market. It is the smartest thing to do; prepare for the worst but expect the best.

If the best is being short, then heck everything is going great. On that end, you have both of my short scans expanding in the number of stocks showing up in the scan. Not only that, the shorts I am short are working well and the new ones look wonderful. When I combine what I am seeing in my individual charts and combine that to the indexes, it becomes very easy to reject being bullish here.

Posted by Joshua Hayes | Filed Under Market Commentary

Hau’Oli Makahiki Hou

January 1, 2008 | Leave a Comment

I don’t want to make it too complicated today as we all know the market fell on a heavier volume but the volume was so much below average that it really doesn’t matter.

There were some trading opportunities presented by the EOD, however only the shorts “bear” anything of quality patterns. Not sure if that is going to bearish or if the maxim of “never short a dull market” will prevail but I did see something very interesting in IBD but I do understand that it is probably due to the low volume.

The put/call ratio hit a level I am not quite sure I have seen in a couple of years. I do know that the level hit today was a new high. For those that don’t know the level is 1.61!! That is very high and shows that there is a HIGH level of fear out there by the “hardcore” traders. Listen folks, due you think Ken Heebner was buying stocks today? He returned 82% this year!! How did shorting the market treat you, how did going long the market treat you? If you are like me, not very well. But look at this man. HE DID IT AGAIN. The point of this is the hardcore retail “dumb” money were the only ones trading. They best represent the public and it hit 1.61 without the pros playing. So it appears to me the retail crowd is too bearish and is fearful.

That would then mean the high short interest ratio is probably pros. But if that is the case, then why is Ken Heebner 100% invested? You see all these questions folks? There are a lot of “what if” scenarios out there. But I believe that it is best if all of you make a NEW New Year’s Resolution to turn off CNBC, stop listening to any talk radio about the market, and stop reading “macro”" reports.

Posted by Joshua Hayes | Filed Under Market Commentary