BSC Blowup Proves A Chronic Emailer Wrong And, Once Again, Proves The Power Of CANSLIM; Stock Market Indexes Selloff On Mixed Volume But Hold Recent Lows
March 15, 2008 | Leave a Comment
Today was another day in the stock market that has just gone to prove that cash is in fact king. When you try to play a stock market with a heavy hand or even on margin in an environment like this you either have a serious illness or you just have never taken the time to study history and to have learned that the smartest thing to do is NOTHING. A stock market that is this volatile that has THIS MANY BLOWUP is definitely not a stock market you want to be messing with.
I am simply STUNNED! by the number of emails I have received from RM readers that tell me I don’t know what I am doing because I am not buying the bargain of BSC the past five days in a row. First off, the fact that ANYONE in their right mind is buying ANY stock below the 50 and 200 day moving average is pure INSANITY! These foolish investors think they are buying something that is giving them “a once in a lifetime opportunity.” Folks, that once in a lifetime opportunity only comes along once for these guys because they are ignorant of history.
If they have would have taken just a few moments out of their life to have studied the greatest winners of all-time they would have seen that the same patterns show up over-and-over-and-over. I simply do not know how many times you can see a cup with handle breakout from a fundamentally sound company in a bull market in every year, no matter if it is 1880 or 2008, and see those gains that they produce AFTER they are above those lines and say “no, you know, I am going to get this bargain here.”
Volume Not Following the Rally
March 12, 2008 | Leave a Comment
Volume is running lower than yesterday’s, @ 1:07pm EST pace. Ideally, accumulation will immediately begin after the first day of an attempted rally. At the moment this market is a complete bore! It would have been nice to see volume racing higher today to begin the bottoming process.
We aren’t seeing our bottom. Why? Look at some of these numbers:
New Highs (today): 46
New Lows (today): 202
VIX: 26.02
VXN: 28.80
New Highs continue to be dominated by New Lows and VIX and VXN continue to show the lack of fear at the recent lows. During market bottoms we’d see VIX and VXN race higher with New Highs crushing New Lows. We aren’t at the point yet.
Cash is King
Incredible Fed-Induced Rally Ends With Stock Indexes Closing At The HOD On Higher Volume; Remember, The Most Powerful Rallies Always Come In Bear Markets
March 12, 2008 | Leave a Comment
There is no other way to describe today as rally other than “incredible.” But even though we can say today’s rally was incredible, is anyone surprised, after telling you that the market was extremely oversold and we could get a bounce as the put/call is at 1.41 which is extremely high? You really can’t say you are, since I have hinted that this was coming.
However, to the magnitude that the rally hit us, I had NO clue that was going to happen! Obviously, if I would have thought that was coming I would have partially covered a lot of my shorts that had huge gains. Instead, I had to do that today. And the beauty of that was that very few gave back more than 3% on the day. Considering where the majority have been shorted, that is darn good.
Too bad, the big-cap tech stocks are the ones that are not cooperating (FSLR, RIMM, BIDU) and it seems to me that many newbies are taking pot shots at these shorts. First off, I have warned you over and over and over to NOT short stocks UNTIL you MASTER the long side. Anyone who is shorting stocks that has no history of having consistent winners in their portfolio is being dangerously foolish. I thought I have made this clear but obviously I have NOT! Second, I don’t know how freaking clear I have to make it that my shorts ARE SMALLER HERE THAN THEY EVER HAVE BEEN. I was shorting in bigger size early on but when all of my big-caps either failed or got away from me, I have scaled back. And as the crowd grew more hostile and I saw the market get more volatile (relative to the recent market), I began raising cash.
BWT Launches BWT.net
March 12, 2008 | Leave a Comment
The admin team from BigWaveTrading.com is pleased to announce the launch of BigWaveTrading.net where Joshua Hayes and Market Speculator will be posting regular commentary on the market. Check in regularly to say updated on the market, post comments and get involved, subscribe to the RSS feed to get updates (http://www.bigwavetrading.net/feed/), and share your thoughts.
We love to hear from you. If you’d like to share feel free you thoughts on the site via the “Contact” forum at the top of the BigWaveTrading.com or BigWaveTrading.net pages.
Can’t wait to see you at http://www.bigwavetrading.net,
Your BWT Admin Team
FOMC Injects the Market with Cash
March 11, 2008 | Leave a Comment
Here we go, Helicopter Ben Bernanke floods the market with more liquidity. I can not fathom how you can inject a poor market with more cash. This will simply prolong the downtrend, not too mention the flow of liquidity will find its way into commodities.
This move today will not change the overall downtrend, we may be getting our oversold bounce today. Bear markets will produce snapbacks like what we are seeing this morning. It doesn’t matter if it is short covering or small buying interest. What matters is the overall downtrend and we can not disrespect the trend.
Market Speculator
Keeping Your Head Above Water
March 10, 2008 | Leave a Comment
The markets continue to suffer continued pressure to the downside. There is very little of quality stocks to go long so how does a trader/investor survive until the next bull market run?
It is quite simple, Cash is King. However, most personalities do not allow traders/investors to sit idle and miss out on the action. This is quite similar to those who can not resist the urge to play slot machines when one can hear the “ching, ching, ching….ding ding ding.” The stock market has the same effect, the action makes those who can not sit idle think they are missing something. In actuality, they will miss very little.
How does one not miss action but, preserve necessary capital to play the next bull market? The very first thing is to set aside 50-75% of your capital into a 1-mo CD or some cash equivalent away from where you can spend it on anything! This restriction will allow you to keep majority of your stake. While your money earns cash rates it isn’t being lost in the market.
Stocks Selloff On Higher Volume, Helping Send Some Indexes To New 52-Week Closing Lows
March 7, 2008 | Leave a Comment
Stocks sold off yet again but this time it did so on higher volume which is helping make my point that selling can start off slowly and pickup as it sells off. If you look at the downtrend since last February, you can see that this is the case now as it has been in the past with other market selloffs.
The good news, today, is that, like most sessions recently, the market staged a very volatile and powerful reversal. This time it was to the bull side and it was needed for the trapped longs as stocks looked like they were going to put in another very bearish day of trading.
The past two days has the feeling of a market that is ready to start its downtrend, once again. This would be the third leg down, since the top in November. And just like when the market topped, there are still way too many people that are looking to buy stocks here. If more people were not looking for a bottom, we could look at this selloff as a bullish situation as it would get us one step closer to a real bottom where we can get HOT charts again. Too bad we don’t have anything new and fresh setting up out there. Instead it is the same mess everywhere, and when that is taken with all the “dumb” money looking for a bottom, you have a market that could get very ugly.
And very ugly is not what people are looking for. Now, I know the data we are receiving out there is very bearish and I do know that we have had a 24% pullback in the Nasdaq. However, that simply is not going to cut it right now. Like I have said, too many people are looking for a bottom, and some very ignorant (who think they are very smart) people are starting to make some bold statements.
When A Market Acts Like This After Giving You A Few Nice Longs It Is Very Bearish; Stocks Selloff On Lighter Volume, Sending Some Indexes To New Closing 52-Week Lows
March 6, 2008 | 3 Comments
There is almost no other way to spin this day other than extremely bearish. From the morning to the close, the market sold off all day, with the only bit of consolation coming in the form of lower volume. However, the ferocity of the selling with absolutely no bounce, coming after quite a few recent nice charts have setup, is very bearish. If this market can selloff like that on lower volume, imagine what it is going to do once institutional investors get back to selling.
When I woke up this morning and saw the damage, my first reaction, was sort of a bit of bewilderment as we jut had two handfuls of charts setup in very nice patterns in leading sectors. So when I saw the selloff I was immediately disappointed that the few longs that setup can’t even get the market going a little bit. This disappointment, is obviously not from the market being down (you should ALL know that I am VERY bearish on this market, by now) but the fact that even when it appears that it can bounce, it can not. With that kind of action, it seems impossible to think that any “HOT” charts can setup. So throw NEU and CMP to the dogs. They can’t be perfect anymore. Nothing can be, right now. The charts, minus the metals, are in trouble.
Not only are stocks in trouble, but every piece of economic data that comes rolling in is literally rolling off the charts. Today it continued with word that the total amount of all mortgages that were in foreclosure was .83% which was a record high. Not only that, but the delinquency rate hit 5.8% which is the worst since 1985. Data like that, combined with the Fed telling us that American’s debt on their homes is higher than equity in the home for the first time since 1945. That happens to be when they started keeping records. It is quite possible that this is the lowest ever.
All Points South
March 6, 2008 | Leave a Comment
At this point there isn’t much else to harp on here. Cash is certainly king and you should either be in cash or operating in commodities. I would continue to avoid “value” plays, the likes of AAPL, GOOG, RIMM, and BIDU. It is madness that in just a short few months stocks can become value plays? No way, do not fight the overall trend which is DOWN. We’ll experience a few short bursts of strength but will be sold. Bear markets tend to get really oversold before they become attractive to the long side.
We need the FOMC NOT TO LOWER RATES any more, in fact the Target Rate should be raised and the discount rate be made an ACTUAL DISCOUNT RATE!!! Why? It is time to flush the garbage down the toilet rather than salvage it. If you were dumb enough to buy a house you couldn’t afford in the first place you deserve to lose your house. However, I am afraid the FOMC will inject more liquidity in the market than expected. Look for commodities to continue to run.
Cash is King
Another Wild Intraday Session Ends With Stocks Higher On Lower Volume; Some Very Nice Charts Are Starting To Be Created
March 5, 2008 | 6 Comments
It was another insane day for market participants as the market started off on an impressive note. But, just like the past umpteen amount of days, stocks then sold right off erasing all of the gains, and then spent the final two hours really doing nothing. But that is our market recently and the one thing that we can at least say about that is that the directionless market hasn’t changed thus not throwing us for any nasty surprises.
There was one surprise for traders today and that was the news that ABK would not be bailed out. This caused ABK to fall 18% today and despite the stock looking like it bottomed back in January, in fact, just might have been a temporary stop on the way to 0. There are many other stocks in this group that are in this position as PMI, MBI, and MTG are all, in my opinion, more-than-likely going to zero. I only wish I wasn’t focusing on longs so much when they broke down in October. I do regret not getting short these horrible stocks.
Another stock I regret not getting short is TMA back in August. This stock here shows the importance of patience. As all of you know, I do not cut my FINAL losses until a long is either below the 200 DMA or the short is above the 200 DMA. There are, of course, exceptions. But I would say 80-90% of all stocks fall under this requirement, once they have substantial gains. TMA is just one of those examples. Had you lost your patience with this short come the rally in February–which never closed above the 200 DMA–and covered it all, you are probably feeling a little silly. You should; your lack of patience just cost you a 92% gain on a short in seven months!!!!!!!!! If that is not hot, in a bear market, I do not know what else is.
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Recent Posts
- Late Day Selloff On Lower Volume Shows The Bulls Are Not Ready To Run; A Test Of The Lows Might Be Needed To Get A Real Bounce
- Nice Rally Today Too Bad It Was On Below Average Volume
- Stocks Rally On Mixed Volume As Yet Another Day Of Insane Volatility Comes To An End
- If You Do Not Give Up, You Will Create Great Financial Wealth
- Stocks Resume Selloff As Distribution Day Rattles Investors Who Bought Last Weeks LAME Rally
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