Extremely Quiet Day Of Trading And A Big South Swell Equals Not Much To Talk About
April 30, 2008
The market did not do much of anything today as we all bide time ahead of the release of Q1 GDP and the FOMC interest rate decision. About the only market moving news today was the talk of V and MA earnings. Both of those stocks produced excellent action today in their respective security, with MA now giving me a 450% return in a little under two years. This is a very nice long-term capital gains. Even though the position is no longer huge, at least I still have some of it and can enjoy the Monster Stock that I own.
However, since the times that this stock broke out, it has been very hard to hold onto any past big winners for huge gains as the stock market is simply not in the right mood to help produce some huge returns. A VIX at 20 will do that! As long as this VIX stays down here and the market moves on lower volume, that is just more time that you can be sure we will have to wait before making any serious gains. When volume is well above average and the VIX is above 40 then I can wake up to some potential huge gains. Until then, we are GOING TO HAVE TO take what we are given. Rather we like it or not. Thank God I have other hobbies.
I am extremely tired today as I surfed some of the biggest waves I have ever surfed on the south shore today. I almost broke my board a few times and I could not even go to the “best” spots because there were too many people and sadly I am not good enough to get in a line-up full of semi-pros to pros and then actually get waves. Instead I will have to enjoy my time on “lesser exposed” breaks and instead watch the best of the best rip it up.
However, let’s hit on some points of interest before I wrap this up. The put/call ratio rose to .90 which is higher than the recent high .87 and shows that even when the indexes slightly tick up the bears increase as they are buying more puts. Not only that they are taking more stocks in short as 4% of the NYSE is now short and it now takes 12.01 days to fully cover all the shorts on the market based on average daily volume according to the NYSE short interest ratio. These numbers show the dumb money expects stocks to crash as the recession must be right around the corner. They are probably wrong and with consumer confidence at five year lows that is probably a great contrarian indicator to follow.
But with that negativity comes confirmation that there is still more work to do before we can blast-off. There were 99 new 52-week highs to 99 new 52-week lows which is clearly telling me that the market is being led by a select few stocks while the rest of the market is selling off.
That is probably why the IBD 85-85 index fell 2.1% on a day when the A acc/dis Nasdaq rose .1%.
They killed the leading stocks today as the metal ore group fell 4.2%, the machinery-construction group fell 3.6%, the machinery-farm group fell 6.9%, the chemical-fert group fell 5.2%, the steel-producer group fell 3.2%, and the leading oilandgas-US explor/prod group fell 3.3%. Ag and metals led the way lower, with 10 mining stock leading the list of new lows and AG, DE, CLR, POT, MOS, and MON looking very poor. This is NOT bullish action after a multi-year runup that has seen the stocks gain anywhere from 500% to 5000%.
The only stocks escaping the carnage that this year has been is the DJ Transport index which is up 13% and is the only index, besides the Consumer Index up 1.8%, that is higher this year. Today, however, in the top 20 industry groups there was one winner. The metal products-distributors rose 3.3% putting a SMALL bright spot on a pretty crummy YET average and OK day.
It was great to see oil fall $3.12 to $115.63. That 2.63% drop is very nice to see when gas is almost $4.20 here on Maui. However, thank God I know how to invest and can beat this NUTTY inflation. But according to Investment Company Institute only 60% of Americans can describe and tell you what a mutual fund is. No wonder so many retire with so little to live off of. They have no clue how to buy CVX and HAL in 2002 when the gas started spiking. Instead they bitch and bitch and bitch. Oy Vea! Give it up you pessimistic curmudgeons.
I will be on the wait and see mode, like everyone else, until the closing bell occurs which will be when I can digest the CRAZY intraday action that I am SURE we are going to see. There are a lot of possible nice bases out there. It would be nice to see more powerful breakouts tomorrow to prove that this rally is for real. Aloha and I will see you for a little bit in the chat room before I decide to run out and try to get shacked on the lower west side of Maui. ALOOOOHA!!!
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3 Comments »
Hey Josh,
Just wanted to say thank-you so much for your daily commentary. I’ve been trading for about 4 years now, but have been more short term than you. I’m trying to change my style to something more in keeping with yours now, so I find your writings about how you do what you do so well very useful.
Thanks again, and I wish you good health and good surfing.
Kerry Desrochers
Aloha Kerry!
CANSLIM CANSLIM CANSLIM a proven strategy! Thanks for the nice comment.
Thank you very much, Kerry D.
I definitely appreciate it. Keep throwing me good thoughts. Some dayz are VERY difficult but it is comments like this that make me WANT TO KEEP coming here EVERY day. This helps me stay healthy and surfing just makes me so happy and complete that I think I have a perfect life here on this little island. Trading stocks and surfing when there are waves is just a dream come true and I will NEVER take it for granted.
thank you, once again. ALOHA!