A Very Bullish Start Ends With Most Indexes Closing At Or Near Their LOD; My Best Stocks Held Up Well During The Selling
May 15, 2008
Well, that sure is not how you like to close them. Especially with volume picking up there while we sold off right after hitting the 200 day moving average on the Nasdaq. The good news is that the market still gapped high enough in the morning that all major market indexes were able to close with gains. But there was a negative blip in regards to leading stocks as the IBD 100 fell 1.2%.
Thankfully, even though volume ticked slightly higher on the Nasdaq, the NYSE had volume come in 1% lower on the reversal. To go along with that the volume was below average on the NYSE for the 38th straight session, volume was barely above the 50 DMA on the Nasdaq. With the volume being higher and prices being higher that would still be bullish despite the reversal. The volume simply was not full of conviction in the form of huge clear distribution. I guess you could count 4/1 as average daily volume on the NYSE, by the way, but still it wasn’t above average so I guess the point still stands.
Overall, the market is in the same situation as it was last week. We are rallying on lower volume with this clearly being a stock picker’s market. The good news, for me is that is what I specialize at.
However, since there is not much changing in the market and I have talked about all the different scenarios ad naseum in my chat room, I am getting straight to the data points.
The investors intelligence survey has the bulls at 46% while bears are at 29.9% which shows a decent shift amongst newsletter writers but still nowhere near extremely bullish (which would be bearish) levels of 55% bull and 20% bear. There is still room to run in this thirdary indicator. The most interesting of all stats I follow is the NYSE short interest which is yet hitting ANOTHER all-time high of 13.38 which means it now takes almost 13 1/2 days to cover all the shorts out on the NYSE. I am not sure what % of the NYSE is short but it has to be near 5% and I don’t care if no volume ever enters the market, that numbers is simply too high and a clear indication to me I need to focus on the bull side and keep an eye out for leading stocks EVEN DURING THE UPCOMING PULLBACKS. The crowd may say they are bullish but heck they sure are betting like they are not.
The only place it has changed is the put/call ratio which is still at .69 today which is the second day in a row below .7 which has been a tough line to crack for a long time. This also indicates that the crowd is getting a bit bullish on the current uptrend. However, with all the bases being built, new breakouts, and stocks building bottoms they have plenty of reasons to want to be bullish. I am not sure how many are as good at TA as me but if they can see what I see I find it hard that they could be too bearish. I mean when I say there are a lot of round bases, bottoms, and strong stocks, I mean it. The odd part about all of this underlying strength is that there still remains ONLY ONE perfect stock chart. Hopefully, if this rally continues many more will show up which could happen if volume shows up to the bull side eventually. It has been 38 days. Eventually the NYSE will have the average so low an above average day will have to occur. The Nasdaq is starting to see a lot of days of above average volume gains. The only problem is that none are EXTREMELY convincing. They are all good but not great.
Another hint of rotation was clearly on display today as 7 of the top 20 industry groups based on six-month price performance in IBD were part of the top 10 worst performing sectors today. On top of that, on the other end, 5 of the top 10 stocks today were in the bottom 20 industry groups. When you take that along with all the retial, tech, internet, and telecom stocks that have moved from the 100-197 area to the 20-50 area, you can CLEARLY see something is going on underneath this market while the public is distracted with commodities and inflation speak.
There were SO MANY donkeys from weakmoney.com that were bottom guessers and FA-only morons that sent me emails telling me how stupid I was for not buying the same 30 stocks we have heard the past 10 years in January as the market was bottoming. Those idiots are now stuck holding crap going nowhere to up 3%, while we have stocks like GEOI, VISN, CSIQ, SOL, and DGLY in our coffers. So much for having to buy the exact bottom. These idiots will never learn and I hope they have learned their lesson to keep their retarded mouth’s shut. I have proven for the twelfth year in a row that buying stocks hitting new highs blasting out of extremely green and perfect chart patterns can equal huge profits if you learn how to hold a stock for the big gains. These people think landing a 25% gain in six months with a 2% dividend is a huge win. I am disappointed with our best stock being up 49% in a little under a month. I was expecting at least 75% by now. And if the VIX would have been at 40 instead of 17, I am sure DGLY would have been up 100% in under a month. Please go back and study all my BIG WINNERS from 1999 and 2003 to see how POWERFUL my methodology is and then take a look at the rest of the years and enjoy the BIG GAINS that still came from pretty dull markets to bear markets.
Some of you value guys might not like looking at the new 52-week highs and instead love to look at the 52-week low list for buy candidates (I saw NYC desk zombies do this all day–scanning the new lows for big buys). You are never going to find the gems in that list like you will the new highs. IBD research has proven the first time a stock makes a new high it goes on much higher and to greater gains than stocks making fresh new lows. The performance is NOT EVEN CLOSE. It is a wide margin of victory for new highs. So why you would want to focus on stocks near lows is a freaking stunner to me.
Let’s look at today’s stats where there were 218 new 52-week highs to only 87 new 52-week lows. Those who religiously follow this indicator know that clearly the past month this ratio of new highs to new lows has completely turned around with down days now seeing an equal amount of both to sometimes the new highs winning and up days now having these stocks trump.
So what are these leaders? The same leaders since 2003 almost!!! Energy had 74 new highs in its group today so obviously you need to be long some of these-SOL, PDO, GU, SM , XEC, CVX, NE, TTES, BTE, OXY, NBL, SFY, WFT, NL, BRY, DNR, PDE, ARD, STR, E, or WES. If NONE of these stocks are in any of your portfolios, all I have to ask you is why???? I only listed two stocks that I own in this group but I still have plenty of energy in my port. Why? Because they are flying! The point is to make a lot of money and that is what they are doing.
Other industries include Metals/Steel, Machinery, Transportation, Medical, Retail, Utilities, Mining, Chemical, and Business Services stocks. Leaders in these groups include GTI, SCHN, VMI, GHM, ABB, SNHY, FLS, PH , JST, GDI, ENS, AME, RBN, EGN, SBS, NFG, LL, ARO, COST, RTP, LIFC, MLNM, KSU, CSX, BNI, IBM, NCIT, DGLY, VISN, CE, ARG, and FMC. I swear to God if you can not find a way to make money in any of these (TRY BUYING A HEAVY VOLUME BOUNCE OFF THE 50 DMA IF THE STOCK PULLED BACK TO THAT LINE ON LOW VOLUME–THAT IS ALWAYS!! THE LEAST RISKIEST LONG AS THE 50 DMA IS THE CUT LOSS AREA), you have a long way to go son.
OK, I am tired, I waited way too long to get this done, but heck, like always, I got it knocked out, even when I am too tired to do it. I work my ass off for you guys. If I was doing it my way, I would scan my charts for 2 hours, do order entry for an hour, and go over my portfolio for an hour. What is that? 4 hours of work. Do that at 3pm to 7pm at night and have the whole day and night off. Sounds good to me. But how does that fulfill my life? It doesn’t helping people VOLUNTARILY is the way to go. But to get my picks, you got to be crazy if you think a guy that can pull 500% winners and 2,000% winners in raging bull markets is going to give that away for free. I might be kind hearted person trying to do the Christian thing as a VERY WICKED disgusting human being but I am not stupid. I know that my win ratio, the % gains, and the ability to possibly hold long enough for long-term capital gains taxes is something NOBODY else offers on the internet. I am STILL trying to find anyone that can find stocks like me, every time, all the time, no matter what the market is like.
It may take years sometimes to get a perfect, easy-to-make a TON of money long setup but there is always something running exponentially waiting for me to come along and snatch it just as it breaks out on very strong volume. Heck, there were two new candidates tonight and a CANSLIM gem I am adding back to a large position. There is always something to make us money out there. Every day, something sets up and moves. Maybe 10 days out of the year I will not be able to find a great setup on the long or short side. But every other day, we will have a chance to make a LOT of money together.
Aloha from a very Vog-filled Maui where the sun is being blocked by a thick blanket of volcanic ash coming from the Big Island. Hopefully, the sun will come out and the swell that is supposed to hit tomorrow actually wraps to the upper west side. I think it has been over 7 days now since the last time I surfed and I am starting to get antsy. If no surf, at least we have the beautiful waves of the Billabong Pro for me to watch. Watching that is 10000x more exciting than watching this market intraday. You daytraders keep doing that, I will be watching surfing, basketball, hockey, and baseball (thank you God for MLB.tv)!!!! ALOOOOHA!!!
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2 Comments »
Patience is a virtue. I have been waiting a year to get some good solar setups. Now I’ve gotten two from this site!
Joshua - Thanks, again, for this site. As I’ve told you before, I liked your stuff over at LostMoney.com. When you peek into the Rev’s blog & comments, I think you see how much you’re missed over there. People have been asking about SOL and DGLY since you dropped in the other day.
I’ve got some family stuff I need to do over the next couple of weeks, but when I come back I plan to try a subscription here for a couple of months and see if I can handle a few trades while still holding down my day job.
All the best to you and yours. Hope you get a chance to get out on the waves soon.
Lawrence