A Boring Day Ends With The Nasdaq Right Back Where It Started; Stocks Closed Mixed On Mixed Trade

September 13, 2007

A volatile intraday session ended with stocks pretty much flat on the day. The only disappointment in today’s session came when the Nasdaq gave up its gains late in the day, closing near the lows and right where it started. The problem with that action is that today’s move down by .21% is enough to technically count today as a distribution day. That makes it the third day since the rally started that the Nassy has sold off on higher volume.

The good news about the selling today was that it was very weak and volume continues to remain well below the 50 day volume average. That indicates that while the big money is not buying stocks they are not selling stocks either. So there really is not much to get your panties in an uproar about.

The other good sign is that my personal portfolio did well today and I believe the IBD 100 did well because the 85-85 index had a good day. So when you have leading stocks and stocks that you are holding that either move up or hold tight during a distribution day it is safe to say that the selling was under control. But three distribution days in six sessions is something to be concerned about, especially when your best looking stocks don’t look as great as they used to.

Still, as long as those stocks that you and I are long continue to trend up on higher volume, pullback on lower volume, and then keep moving higher, there is no reason to even think of worrying about much more selling later on. Yes, it is bad that there is not a lot of volume to the upside. And yes, it is possible that sellers will hit this market when they come back.

But the fact of the matter is that NONE of us have any clue when that is. Wouldn’t it be STUPID to not go long nice charts with strong patterns here and then find out nine months later that we were wrong on the low volume start to a big bull. I know I would feel like an ass. Just like EVERYONE did in 2005 AND 2006! I was there! I know! I didn’t fight the trend either time. And I am not going to fight it this time either.

Until there is some real selling in this market, I will continue to keep my long bias with a cash heavy emphasis. Don’t forget, despite making money on longs here, I am also making some money on shorts. Have any of you checked out SHOO recently? Or how about ATI? Or how about AZO? Or FAF?

I suggest that instead of watching CNBC and focusing on the all the “horrible calamities of the world the subprime market is creating,” your time would be better served buying breakouts in gold and leading stocks and shorting stocks breaking down. Despite this market having an overall choppy trend the past three months, there are still plenty of investment vehicles in clear uptrends or downtrends.

That is not to say that you should be just going all-in on any and all investments you think are in a tradeable trend. I am just saying that dipping your toe into some nice long positions and short positions is the wise trade, if the setup is there. Saying that you are not going long or short because it is the end of summer or because there is a Fed meeting coming up is a poor excuse.

If you ignore stocks now and wait to buy after the Fed announcement, chances are you are too late. I don’t like predicting AT ALL but if everyone is waiting to buy until after the Fed meeting, wouldn’t it make sense that by not being involved in the rally now you are setting yourself up for a sell-the-news reaction. Just something to think about.

As you can clearly see, it is a stock picker’s market. I am the stock picker and here I come….Aloha and I will see you in the chat room!!!!

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