Nasdaq Suffers An Immediate Distribution Day Casting Doubts On This Rally

October 21, 2008

There really is not a whole lot to say about today’s market action other than this isn’t the most bullish thing you want to see after a market putting in around a follow-through day. Normally after a strong follow-through day, you will normally see another up day or a low volume pullback. It is not good to see an immediate distribution day. However, the good news is that stocks held up relatively well and after hours YHOO and AAPL had very good price action. These stocks are still well below their downtrending 50 and 200 day moving averages and until they can get back above those lines I doubt these stocks will be going anywhere any time soon. I will remain short in some of my positions as they are still below the 50 and 200 DMA and I still have large profits in these stocks.

Not much happened today as it was a pretty tight session that left me with ZERO longs and ZERO short. The price is still WAY below the 50 and 200 day moving average which is not bullish and should not have anyone that is a CANSLIM or intelligent investors going long this market. I did take a new long this morning and am enjoy a 3.2% gain compared to the markets 5% loss on the Nasdaq. This is what happens when you buy leading stocks. Not only will you kill the market in bull markets by buying the best stocks with top fundamentals breakout of hot chart patterns.

If this market can continue to rally on the short term, I am very happy with my newest long as volume has increased every day, the price pattern has gotten quite tight, and green BOP has turned into max green BOP. If this was a bull market, I would think that I have a potential 100% plus return in this stock. But if this market rolls over and the bear starts again I doubt I will get much from it.

Today is really a do nothing day. It was minor bearish due to the NYSE, SP, DJIA, and Nasdaq failing to follow-through on the day after the follow-through day. In the best bull markets not only do immediate games come after follow-through day but we have a LOT MORE than just one pretty chart setup. While the one stock breaking out is pretty, it is still too deep in its base to be the perfect long and calm base. But small-caps are known to do that in bear markets.

I don’t have much to say on today’s market other than all the indexes did poorly on volume that matched levels of yesterday and was slightly higher on the Nasdaq giving it a distribution day. There is one bullish US index and that is the US Dollar index. If you have not taken a look that currencies you will see the US Dollar is doing extremely well and was up ANOTHER 1.56% today. This index has been very bullish since it retook the 50 and 200 day moving average since August.

Well, I am pretty pooped and I have been talking all day long in my chat room so I am going to wrap this up here tonight. If you are a Silver – Platinum subscribe you can read my Daily Market Wrap videos to see exactly how this market is moving right now so that you are completely ready for whatever happens tomorrow. Great luck everyone and I will see you in the chat room and forums tomorrow. Our new long looks GREAT and our old shorts are still in positions to fail at the key 50/200 day moving averages. This is a rough market but when you know EXACTLY WHAT YOU ARE doing, it isn’t that difficult. Remember, if you go long or short and it doesn’t work out immediately, cut some of your loss. And when it closes above key moving averages or below it, cut your loss. If you do that and let your winners ride higher or lower with the trend you will be completely ready for a life of superior outperformance.