Nice Day For A Low Volume Bounce

September 5, 2008

Stocks tried to bounce and they did for the most part, except the Nasdaq, but one thing very important was missing: volume. Without volume to the upside the bounce is nothing but continued retail driven decisions on the big-cap indexes.

When it comes to the Nasdaq it had yet another down on ABOVE average volume. This continues to look very ugly coming back from the Labor Day weekend. Most of this decline can be contributed to the PAST leaders like MSFT which makes up a lot of the index and other leaders of the past rally we had that include FSLR, BIDU, RIMM, GOOG, ISRG, and AAPL which all fell for the day. This is the main reason why the Nasdaq couldn’t make it into positive territory. The PAST leaders brought down this index. Making it two days in a row that the index has fallen on above average volume.

Right before that, the two days before the above average volume selloff occurred, the indexes already picked up the selling by losing almost 1.5% immediately after the vacation was over. Volume was noticeably higher on the Nasdaq compared to the big-cap indexes. This could mean that soon, with SO MANY STOCK CHARTS ROLLING OVER, that this index is ready to start another big day down. I prepare myself for everything but the four days of ugly action on the Nassy tells me this is not a market I want to be heavily long.

There really is not a whole lot to talk about besides the weakness in the market since we came back from our Labor Day vacation but the FNM and FRE complex has hit “out of control” with the government taking over two companies that hold OVER HALF OF THE MORTGAGE DEBT we have right now. I really hated this and I know us as tax payers are going to pay for it. This is not good news.

So before you go calling that bottom out there make sure you review the bull market years of the past and realize that the big money in longs is not made on the way down, IT IS MADE ON THE WAY UP. These indexes are not in any kind of uptrend that you or I should want to have any part of. There are a few medical, financial-small bank, and oil related stocks that are bucking the trend but to think you should be risking all of your money in this market is nuts. I recommend for those that have not watched any of my market wrap’s on YouTube do so today so that you can see that we are perfectly in-sync with the current market. We are not bottom callers. Leave that to the amateurs and PAID ANALYST that go on TV to say we have hit a bottom to drum up the retail crowd so that they can sell on.

When the market really bottoms and my pretty charts come back, trust me, it will be impossible to miss. But for now I think too many are “hoping” that this takeover deal of FNM and FRE signals the bottom when they should fear that the stocks are worthless pieces of paper. What a crazy wild market it has been since our top in 2000. It was a good bull run from the 2002 lows to the October 31, 2007 top. But if you want to see market madness check out the bourses around the world. China is down 65% from there top in October 2007. I am almost sure when they bottom we will bottom. But picking bottoms isn’t my thing, I think my PAST BIG WINNERS and FUTURE big winners have and will continue to prove that.

The surf is HUGE on our south/lower west shores to heights that are HUGE. Maui rarely gets surf like this and I am going to take advantage of it while this market STINKS UP THE CHARTS. While the waves are small in the market, I am going to enjoy the waves of Maui.

Aloha, stop bottom calling, and remember this too shall pass. We will have another bull market where we can make some great money on the proper looking longs. I just hope most traders that started at the end of this bull market (where were you in 2003???) are properly protecting themselves while the trends are down on all time frames available. Aloha and make sure you watch that video below to know what you need to know about the market NOW!!! We don’t predict the future in here. We prepare for it.

You can watch my Friday market wrap for Monday’s market here, for free: