Another Day Of Impressive Gains Ends With A GOOG Selloff After-hours

July 20, 2007

It was another day of impressive gains for the market as leading, tech, and small cap stocks led the way higher. The IBD 100 was the top performing index today with the Nasdaq and SP 600 with a .8% gain. This outperformance continues to baffle market commentators as the battle between the bulls and the bears continues.

Even with all of these non-stop gains, there are still plenty of market pundits out there that are having no problem poo-pooing this market. The miss by GOOG last night is the perfect opportunity for the bears to try to sharpen their claws and sink some losses into this market. However, with the reaction GOOG had it completely looks like panic selling and more than likely this panic selling will find buyers rather quickly. Even if the buyers do not step in at these levels, GOOG has a strong enough uptrend that it is going to take more than one day of selling to reverse the favorable trend it is in.

Speaking of strong uptrends, my portfolio, for the second day in a row has absolutely nothing that is a complete sell. The funny thing about this is that besides about a core position of 60 stocks I am long another 190 stocks in small amounts. I am not just long any old stock. Every single stock I am long is moving up. And it keeps moving up and up and up. This gives me no chance to sell them and then put that cash into new and better buys. You need pullbacks to weed the weak stocks from the champs. When the market keeps going up like it is, there ends up being no profit taking signals and instead I keep compounding the amount of stocks I am long. The point of all of this is: I am long over 240 stocks and NONE are giving a sell signal. This is a bullish market and I am in ALL the right stocks.

Earnings season continues to be a bit of a whacky one. Despite all the earnings coming about, nothing has changed in the overall market and the proper trade is to continue to be long. When I start getting more clear climax runs or new highs on low volume then we can start raising cash. But until those signals come, keep riding your longs higher for more gains. The trend is your friend and it does not look like it does not want to be your friend any time soon.

It is pretty hard to think of anything new to say about this market that has not been said already. My biggest concern is that the number of new lows is expanding a dramatic amount despite the market continuing to hit new highs. However, this internal has a very poor record of setting tops. It does a good job at hinting to a trend change but still is usually early. But besides that, the NYSE short interest ratio keeps building along with the new highs. That, to me, is bullish. Not bearish. For me to be bearish, stocks actually have to be moving lower. I know this might seem shocking to some “geniuses” like Kass and Ritz, but whatever.

Aloha and I will see you in the chat room!!

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