Stocks Selloff On Lower Volume But The NYSE Throws Up A Baby Distribution Day; Leaders Held In Very Well For The Ugly Action Today

March 30, 2009

It was a negative session across the board on Monday and there was no problem finding a scape goat for all the selling. However, the scape goat might be true as wall-street reacts to the poor decision of the White House to ax the CEO of GM. No matter how you think GM could have done things differently, I ask you to dare challenge the UAW and see how well you could run a business. In the old days Unions were something you could be proud of to be a member. But now when I hear anyone mention they are a member of a Union, I cringe.

No matter what I think, as it is only an opinion and opinions do not matter in the stock market. However, it does look like the market voted along with me on how it feels about this decision. Some of the blame was also placed on Geithner’s feet and to be honest we will be doing a lot more of that as we watch this weasel trash the free markets with more government intervention and Fed mismanagement. For a treasury secretary I am starting to think that nothing good is EVER going to come from this man. That my friends is not a vote of confidence for the US markets.

I also ask you to consider this. I am not a smart man. I am just really good at investing/trading stocks and making money and then hiring individuals to help me run a profitable business. Now, let’s say I didn’t invest in stocks but instead, I don’t know, made toys. Do you think I would DARE think of opening a factory in the USA? If someone like me wouldn’t open a business, who has no clue how to run one yet is wise enough to know he would be under severe government regulations for supplying toys, why would a successful enterpeneur think any differently? I think it is obvious to everyone who can look at a simple stock market chart that China is clearly the “hotbed” of growth in the “new” economy (you know that thing the USA used to have).

That is why when I see down sessions now in our stock market I get a little bummed. Because, to me, this has now become the norm and no matter how much I dislike, it is something I am going to have to get used to. The only saving grace I see in a day like today is actually two fold. One, we still have a lot of very nice charts out there in my scans that I could go long if the market decides to start moving higher. Two, leading indexes have done MUCH BETTER the past two days, compared to the NYSE or Nasdaq. Today, while the SP 500 was down over 3% and the Nasdaq down almost 3%, the IBD 100 and IBD 85-85 were both down right around 1%. That along with, what I guess we could call #3 on the list of positive divergences, volume coming in lower each day on the Nasdaq and below average on all indexes is a positive in the middle of all the selling.

Another sign that the bear is not that vicious as it was earlier is that my short scans should have been a lot more active today than what they were. My biggest short scan had 6 stocks in it and I think on a day like this a MINIMUM of 20 should have been expected. So take that information along with the knowledge that we still have quite a few nice charts out there and there is hope still for the rally attempt to last longer than just three weeks (it still is the best rally ATTEMPT so far, since late-2007).

Overall, there is not much to add that is extremely important besides the fact that the two days of selling has had the OPPOSITE and USUAL response on the put/call that we have NOT seen during the downtrend so far. That is the put/call rose to 1.0 today. This is much different action than what we have seen on other down sessions in where the put/call actually FELL when the market pulled back. That indicated back then that the options traders were getting bullish thinking stocks were cheaper after the election (partisan traders, I call these). However, now when the market sells off, I guess a little bit of that obama magic just isn’t there anymore, as the put/call is now rising when the stock market falls. This is how it should have been in 2008 but that was a year unlike anything we have seen since 1987 or better yet 1929.

I will continue to take my cue from the charts. When the market decides which way it wants to move next, on volume, I will make my positions clear. Until then, keep that cash level high and remember a little bit of Gold bullion NEVER HURT anyone, if you have a 25+ year expectancy until you retire. Great luck today and I will see you in the chat room, forums, on twitter, on facebook, or here all-day long. Aloha!

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