Another Quiet Day Of Consolidating The Gains; Lower Volume After A Day Of Solid Gains Is What I Like To See!

April 21, 2008

It was another great day overall for those that are long the stocks we are long (well at least until AH when one got a gnarly ride) as the market took its time drifting around today before a strong close that saw the market basically end where it started. That is except for the SP 600 which fell .7% and the IBD 100, which is loaded full of leading stocks with great fundamentals and strong price action, which rose 1.2%. The 1.2% gain by leading stocks is very impressive during a day where the indexes basically closed flat to slightly lower. This is yet another clear sing that despite the lack of any volume out there, shorting a dull market is not a very smart idea.

Some of the bullish data points on today’s session includes the new highs which once again beat the new lows. This time it was 164 to 97. Not a killing but still good enough. As long as I continue to see new highs beating new lows on this list I will continue to enjoy the uptrend even if it continues on with small volume. The put/call also rose today to .81 from .77, despite the IBD 100’s 1.2% rally. This has to be taken as a slightly bullish development considering that more people bought puts (meaning they became more bearish) despite the market rallying. This is probably because those put buyers were more focused on the SP 500 and SP 600. Too bad they were, some stocks that we are long like WSCI are showing why that is such a bad idea

However, there were some trouble spots I noticed today with the biggest problem, imo, being breadth. Even though most indexes were slightly lower, it would have been a lot more encouraging to have seen positive breadth. Still, considering the overall action of today’s market, with the indexes only moving a little lower early on and then reversing to put in a strong close, I have to say that today was a positive day overall.

The key long-term technical data point that keeps me bullish, in this low volume environment, besides the new highs and nice (but NOT perfect by a long shot) charts, is the Acc/Dis ratings of the general market indexes. The Nasdaq is leading the way with an A. That tells us that those that are actually participating in buying stocks are in fact buying stocks and not selling. The A tells us that on most to all up weeks that volume is higher, price is higher which means the big boys that are here are buying stocks. Right behind the Nassy is the SP 500 and IBD 100 with a B+ to B rating. These are high Acc/Dis ratings and are the best ratings we have seen since late September/early October.

I believe today was the lowest volume of the year. If it was that sounds right as it was dead boring most of the day. Or so it seemed, underneath we have many current longs that we have just gone long acting perfectly fine. One of those is up 26% in three days and others are up anywhere from 52% to 77% the past 2 1/2 months. However, besides some of the “near-perfect” stocks that I am heavily long mixed in with some super speculative stocks that have very bullish stock chart patterns, there still is something that seems not right with this market. That is because I still am having to many “near perfect to perfect” bases turning into mediocre to pathetic charts. The latest victim has gapped down to its 50 DMA overnight.

What I want to make clear to those that are long this stock to step back and do a couple of worst and best case scenarios. I like to buy stocks or add to my position with heavy volume bounces off the 50 DMA. So if this stock bounces off the 50 DMA on heavy volume that would be very bullish. If you sell it all in the AM and it bounces back to the breakeven level, you are going to feel pretty foolish. However, if it does not bounce and instead closes below the 50 DMA, you only lose a little bit more and then WE KNOW WE ARE WRONG and then we can cut it. However, if it bounces here and keeps on rallying, I will just say “yep, that is how it normally happens.” Either way I am ready! And that is all you can be since NO ONE can predict the future. The only thing we can do is prepare for both. Luckily this stock that we are talking about already had a shakeout and we have sold 25% out. So the stock was no longer a big position. It was still larger than most, without a doubt, but still not the size that of 5 other stocks that I am very long.

Today was a good day of digesting the recent gains and the fact we did not selloff in more issues and did not selloff on higher volume in the overall market is a very healthy sign. This health is mainly due to the same leading industries, that have been leading the market since 2003. They continue to rotate from one to the other but as long as they are leading my hopes are not too high that we are going to see a new fresh and dynamic bull market here without new leadership. As long as solar, oil&gas, steel, coal, mining, and gold stocks are leading the way, I am not going to get too excited. But I never get excited about a low volume rally anyways so there is nothing new under the sun today.

For me to get excited about this market I am going to have to see new leadership. I am starting to see a lot of very bullish charts in the tech sector. In fact, there are so many that I am starting to get that warm feeling on the inside that maybe if the commodity bull market can end, that money can be transfered into the tech sector. There are a LOT of CANSLIM quality longs that are setting up in bases that have heavy accumulation, light volume on the pullbacks, and a lot of green to max green BOP in the charts. This is just what I was to see. But to complete this picture, I am going to need to see some volume well above the 50 day volume average on the Nasdaq and the NYSE if I am to get real excited and bullish on this market. There is also a stock that we went long that is up 26% in three days that has a perfect (well near because there needed to be more green and max green BOP before the recent excellent BOP activity). But if I can get that, to go with the current tech CANSLIM stocks setting up, I am going to be one happy human being.

There may be a hint that the run in commodities is almost done also. I know that they have looked like they have topped before but this time IT IS VERY CLEAR THAT THE WHOLE CHEMCIAL-FERTILIZER GROUP IS ENTERING A PARABOLIC RUN. You need to look at your arithmetic weekly/daily charts going back to 2002. What you will see is a long uptrend that steadily gets more and more exponential until recently where it has gotten downright parabolic. NOW, remember, it appears to be just starting. How far and how long it will last is a mystery to everyone. But I will no when it tops (even though I have called a top in TNH 2 times) but remember I just NAILED DBA and GLD to the day!!!!! And for a proper review of how to spot a top, study my blog entries on my MauiTrader blog back in March to April 2006. You will notice that I NAIL THE TOP IN ERS AFTER IT PRODUCES A 550% RUN IN SIX MONTHS! This was the VERY LAST “short-term MONSTER stock.” Since then, even fighting for a 300% gain has been nothing short of a miracle!

POT, MOS, AGU, SYT, and FEED all have short-term to long-term exponential charts turning parabolic. TNH and CLF are still chill but I am sure they will hit the slope that the other chemical stocks have. Whenever these stocks FINALLY! top, I am sure I am not going to miss it. I nailed the market tops in March 2000, August 2000…blah blah blah..November 2007…blah blah blah. So when these stocks top, it is going to be very obvious to me across the board, and I am sure I will not miss it. These groups look liked they were topping last time, but they broke out once again. That happens and all you can do is realize the run is not over and regroup. This time IT IS OBVIOUS the parabolic run is starting. The slope is starting to get downright rocket ship. So when the rocket explodes this is when we might see the rotation from food to technology. Let’s hope and pray as we have some nice charts stating to be built. I would sure hate to see those wasted.

Well, I believe I have given you enough to chew on for now. We need new leaders is my crying call but until I get new leaders I will ride the current crop of leaders higher for as long as I can. We also still need volume. I will continue to cry for volume as no rally can be safe for long on low volume, no matter what the “smart suit and tie douche bags say on CNBC.” How anyone can believe anything any journalist says anymore in this day and age of BIASED reporting is borderline psychotic. At least you know I am not in the cookie jar of any wall street “men’s club.” That is more than I can say for some others that I know. What a disgusting business wall street is. Trading stocks is the life for me and NOTHING else! wall street can KISS MY ASS!!!!!!! I will continue to take my fair share EVERY DAY the rest of my life. That is unless they dummycrats tax it away from me. Then I will just have to do what they do.

Let’s continue to enjoy the low volume drifting. Maybe if we are lucky we can play dead ALL week and go nowhere on lower volume each day. And then on Monday we can pop, just like a perfect day at Freight’s.

Aloha and I will see you in the chat room where every day is a parabolic move higher on the way to MONSTER stock gains!!! This is fun. Working a real job is NOT fun! God bless free markets and all who fight to defend free markets, free religion, and free speech!!

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