It Could Be A Short-Term Oversold Bottom With The Heavier Volume But It Is Too Early To Tell

January 7, 2008

Despite the late day rally, the indexes still looked weak since they couldn’t hold either of the intraday runs. Overall, things still look the same as they did on Friday. So I suggest we just leave it at that. Maybe later on, tonight, I will post some important stuff if I see anything show up. If I don’t then there will not be anything posted tonight. I am simply too upset to talk about the market, right now. Especially with it not doing anything significant today.

I apologize to those that thought my first realmoney.com post would be today. I sent it to RM over the weekend and was told AFTER THE CLOSING BELL that they never received it–nice communication! That obviously has made me very upset since the article was very good and very simple. The five stocks I reviewed ALL went lower like I said they would. I was 5 for 5 and it would have made a great first contribution. But instead, once again, in my life, I got F’ed! Different story, same ending.

This shit is going to make a great book one day. That is if I live that long. Right now 2008 is starting off right where 2007 ended…and that is not good. It sucks to be me. Don’t ever think that I have it made because I can trade for a living w/ no boss and I live on Maui. I am still a prisoner to my past and current way of thinking.

++++++++Monday night 930pm HST

Okay there is something that I saw that I think I should report on. When I went into my IBD I went to the General Market page and found something very interesting. The IBD 85-85 index fell 1.15 and the New America fell 1.4% showing that leading stocks are under more pressure than the rest of the market. What makes the selling even worse is that it came on heavier volume giving the index its second distribution day in a row and all the IBD indexes now have D’s for Acc/Dis ratings. Making it worse is that the index violated the lows of November and December which now sets that index up for a retest of the August lows. That is a long way down and if that happens I believe the market will be going even lower. That second test will not lead to another powerful rally, imo, the way this market is looking right now with no new longs setting up.

Some other clear areas of weakness came in the new highs to new lows. There the new lows were beating the new highs by a total score of 757 to 71. If any of you think that we will see a “real” bottom with that much internal weakness, you are wrong. The October 2002 lows and the true low that launched the powerful bull market of 2003 saw much different numbers with new highs close to new lows in March when the market took off. More stocks will be hitting new highs ahead of a real bottom.

Do you remember when I was warning you of not calling a bottom too early and remember that I was telling you that I have heard a lot of people mention that they expect a rally in the short term. Well I disagree with them and refuse to get into this short-term movements which are really just traps for any short or long that gets too complacent. And that brings me to the put/call.

Speaking of complacency. A lot of traders must think that we have seen a low because the put/call fell to .59 which is near very high levels of bullishness. Somehow the crowd now thinks that these excellent bargains are must buys and are now betting on a rally. Too bad these poor saps will not pay $100 to change their life forever. Heck too bad they will not even read my free areas to help change their life. Instead it looks like the bargains are on sale. Folks, this is not a Christmas bargain. This is Christmas trash.

The last item of interest that I would like to discuss is the momentum areas of the stock market. After today, I believe it is safe to say there are no more. I kept saying that there was only one are left–solar–and its time was soon coming.

Sadly, a lot of people decided to not heed those words and as I saw today, most of the traders/investors that were long the solars took a nice beating. If RM would have gotten my article up a lot of these people would have seen my chart on FSLR that clearly showed the parabolic run’s trendline get clipped. The break in FSLR is probably going to result in a lot of pain for the solar sector as many stocks were already showing signs of slowing down (SPWR and JASO). Some are still holding up like a couple that I am long (ASTI SLH) but they probably wont hold for long.

Now that those leaders are being clipped what are our new leaders? Let’s take a look at the stocks making new highs: Oil&gas, Food, Insurance, Medical, Agricultural, Utility, Beverage, Finance-ETF, Auto/Truck, and Business Services.

Wow, what a strong market (major sarcasm). Aloha and I will see you in the chat room.

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