2008 March | BigWaveTrading.net

IBD has called Day 8 of the Dow Jones Industrial average a follow-through day for the market. This ultimately confirms the most recent rally attempt. It takes only one index to follow through to confirm a market rally regardless if any other index takes out its most recent low.

I am not as bullish in the short-term has Joshua however, I do believe we could see a rally. Ultimately, I do believe that this rally will fail at some point in the near future. New Highs are not turning around, New Lows continue to dominate and the number of stocks above their 200dma continues to be lower than stocks over their 20dma and 50dma. Ideally, you want to see more stocks above their 200dma. This would suggest that a long-term uptrend is in place.

Although we are in a confirmed market rally, there still remains the high risk of this rally failing. Cash is King and longs should be kept small.

It’s A Follow-Through Day Technically!; Too Bad There Are A TON Of Problems With Today’s Gains (FTD Designation Might Be Dropped After A More In-Depth Review)

I will be back later tonight and this weekend to go over today’s market action a bit more in depth. But there is no question today was a very bullish day and this being day four of the rally attempt on the Nassy, SP, and NYSE makes it a very good FTD with it coming on the KEY day (fourth day) and on higher volume.

Too bad, once again, volume is pathetic on the Nasdaq and volume on the NYSE is still LAME! compared to January. I truly doubt this is the bottom. If it is, small banks, savings&loans, and the extremely lagging homebuilders are where the new bull is coming from. If you think that these groups are going to launch a powerful rally, you are fooling yourself. We could get a month to three month bounce here, AS I HAVE SPOKEN ABOUT REPEATEDLY, but don’t get too excited.

The biggest problem with today’s follow-through day is that we are still not above the recent March highs. LOL. How anyone can be “sure” that this is a bottom is crazy. I have never seen a powerful stock market rally start where a huge FTD day was below the old highs. IMO, this is not a “real” follow-through day. I am not sure if IBD will call it one, due to the indexes still being below the recent highs. But if they do call it one, I am sure they will find the exact same problems I do.

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Immediate Distribution Day On The NYSE And SP-500 Proves Bottom Callers Are Going To Be Wrong AGAIN; Now That They Have Hit The Current/New Leaders (Gold, Oil, and Chemicals) This Could Get Real Ugly

Wow is about all I have to say today after watching the market’s action. And the wow does not refer to the price reversal on the major market indexes. The wow has to deal with the action today in the top four leading industry groups in the IBD industry groups. They were simply rocked! Not only did they selloff hard, they did it on low volume. When the leaders are treated like this you can guarantee that there are some major problems stirring underneath.

Today quite a unique event happened today in the market that I have not seen the entire downtrend. And, imo, this is not good. The last time I saw this was in late 2000. That is when the bear market gained steamed and sent stocks much lower. Well, today, the chemical-fertilizer, metal ore-gold/silver, steel-producers, and oil&gas - US expl prod all fell between 5.9% and 6.9% which is just shocking. To see leading stocks in this really rough market get treated like this is the last thing from bullish as it can be. Only a politician could spin this as bullish.

5 out of the top 9 worst performers were in the top 10 industry groups. This is not how a market should act. Not only should the leaders be from more innovative areas of the economy, they shouldn’t be selling off when they are up there. If the weak stocks are getting CRUSHED (BSC TMA C etc..) and the strong stocks are getting crushed (GTU AUY BVN XEC EOG etc…) where is there to hide? The answer is no where. Only is cash or bonds the safe place to be. It is simply not a market any of the greatest traders today or of all-time would mess with.

Brokers and Mortgage Lenders Dominate Trading

Are you excited that the group leading Tuesday trade was the beaten down stocks? Oh yeah, the leadership we do not WANT.

Volume and VIX continue to show that we may not have seen our ultimate lows. The drop in the VIX yesterday tells me the willingness for the market participants to believe we have bottomed. This is very dangerous and toss in a lower volume massive rally. It only spells trouble for those who throw their eggs into this market’s basket.

There Sure Is A Lot Bullishness Out There After Today’s Huge Lame Bounce; Real Bottoms Come With Volume, Unlike What Cramer Tells You (How Often Is He Wrong?)

It was another incredible day in the stock market as this time major market indexes rallied higher anywhere from 3.5% on the DJIA to 4.4% on the IBD 85-85. These gains were incredibly impressive and once again had the DJIA up over 400 points at 420.41. However, after you get past the % gains in the indexes today there really isn’t a whole lot to get too excited about.

First off, before you go out calling a bottom to everyone you know, remember, we have been here before no less than nine times on the SP 600 and six times on the NYSE, and every time we have heard people come out declaring a bottom they have been wrong. So, please, I beg of you, stop calling a bottom. If anything can be said we have a good chance of a very strong bounce but, come on, perma-bulls let’s look at the facts (I will get to those later).

Second, volume was pathetic. The SP 500 came in with volume above average but sadly this was no impressive showing as volume was lower than the day before. This is a replay of every other rally attempt that has failed since November. Something tells me this will not be any different in a few months. Even worse, the Nasdaq’s volume while a tad higher than the day before (not the convincing 20% over the previous day I am looking for) but it was below the 50 day volume average.

What Has Changed? Nothing

Do I have a few nice longs in my scans? Yes. But these longs are of stocks that I am already long and even though it is really nice to be able to add to some winners that you are long, I am still wondering where the perfect charts are? Oh well. I am long 49 great stocks and they all had a great day today including two that DEFINITELY needed to be added to.

But where is the volume on this huge move? Didn’t we just go through this seven days ago. This is so silly and remember those that brag that they caught this bottom are doing so after missing the other 6 bottoms that they called. So a little bit of perspective is in order.

The biggest issue is volume. How can you be up 4% on the Nassy and have volume below the 50 day volume average? I’ll tell you how. You create a massive bear market short-covering rally. That is what we got.

Watching The Intraday Rally

As I sit and watch this about all I can think of is how the 5 400 pt. up days on the DJIA ALL!!! failed. And that the nine best days on the Nasdaq all occurred during the 2000-2002 bear market NOT!!! the 2003 bull market. So while you watch the rally today on NO VOLUME, remember, you JUST SAW THIS seven days ago! How did that turn out? Where is the volume? And why did the market gap higher and not allow anyone to get long in the morning? Ah all the signs of a bear market bounce. If it feels painful, it is a bear market bounce. The time to start buying will come when the crowd sees a big 3% gain on higher volume and tells me “it’s going to fail.”

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DJIA Leads The Way As BSC Rocks The Stock Market On Mixed Volume; How Can This Be A Bottom Without A HUGE Surge In Volume On the Nasdaq And NYSE? It Can’t Be!

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Stocks gapped lower after a horrible announcement by JPM that they bought BSC for $2 a share. Now, while I don’t want to gloat on this, I just want to say that for the 100th time in my life I have warned a bunch of traders to not buy a certain stock and yet they still do it. There was one reader from Santa Barbara from RealMoney.com that attacked me 8 days ago for telling him BSC was a POS. Well here we are from $75 to $4 and yet still no apology. No, thank you. No, I am sorry. Just a big pile of nothing. From Eugj to BHCO to Gerard to WillPS to SCO to Geoffrey from Santa Barbara: all of these characters have called me out and told me that I did not know what they were doing and EVERY SINGLE TIME THEY WERE PROVEN WRONG AND EVERY SINGLE TIME I DIDN’T RECEIVE A SINGLE I AM SORRY OR THANK YOU. Is this what our world has come to?

Oh well, there is no doubt I have become a sensitive character in my old age and things like this bugs me now. I just don’t know how yet to act when it comes to responding to jackoffs that make themselves out to be major idiots. I guess I will learn to ignore it in the future. The exact same way I ignore going long any stock below the 50 day moving average or go short stocks above the 50 DMA.

Dow Follows Through; Issues Remain