Oil Stocks Selling Off And A Decent Bear Market Will Lead To A Much Better And Easier Chance To Make More Money Later On; It Is Hard Now, But It Will Not Be Forever
July 23, 2008
Despite the fact that I have not been doing much the past week-plus thanks to Doctors orders to stay off my feet, there has been one event that has happened that makes me very happy, yet sad. Oil stocks coming off their highs on huge volume signals that we might have seen the top for oil stocks. I hope so personally as it would just be a lot healthier for the world markets if the stock market of the USA was doing well. The fact that there is weakness world wide will eventually lead to some great buying opportunities. As long as we have population growth, in the future, we should be moving higher as we go along our little lives.
Those that have just recently gone long in the oil arena needs to realize they are going long a sector that has been in a cyclical uptrend since 2001. We are almost eight years into a very long bull market for oil stocks. It does appear that the top has come with the recent selloffs on the huge volume across the board on stocks like XOM and NBL. Even the speculative beauties like PDO and REXX have lost that special luster. This should be bullish for equities in the future. Not any time soon but eventually. Right now, there still is more work that needs to be done.
Right now, at the most bullish of cases I can make is that the new leaders in medical is where the momo money should be placed. Stocks like NABI prove to me that the biotech group is going to get the money flow while we wait for the new bases in new stocks to setup. I still don’t see anything setting up out there. They would be in my BOP scans and the fact those scans are still very dry at this point in the downtrend from the start in November 2007 proves that we are no where near being ready for the next leg up.
If we were, like I have said before, we would have more leadership other than medical related stocks, I might get more bullish. Too bad that really isn’t the case. There are a few other defensive groups like food and insurance that are doing well in a poor market but right now everything is suffering with an oh-so-uncomfortable and under performing market.
One of the problems recently has been intraday EOD weakness that was preceded by strength. Today was no exception with the Nasdaq up at one point 2% intraday. By having itself to a 1% gain it shows that the bulls do not have control of the market at all. This makes it an environment very difficult for growth investors to actively work in. Instead of trying to fight the market, I must say that raising cash will be significantly more beneficial to the new investor who has not been in a market environment like this. Only the best and strongest survive. I am going to survive. Are you also? Please, stick with this game. Realize that this too shall pass and that a new bull will one day arrive on our doorsteps. I will not miss it. Right now though this looks nothing more than a dead cat bounce off the most recent lows. I would love to build on these gains but I need to see more leadership before I will get too excited right here.
Cash is king. I will continue to say it till the day it doesn’t need to be said anymore. My job, right now, is to protect you from losing money in this market. My job before November and even during the short uptrend from March to June was to make you money on the best possible candidates. Right now, the charts are ugly. When they are this ugly I recommend waiting for them to fix themselves. I don’t adapt my style. I know better. However, when my style is out of favor I know when NOT to press it. Now is not the time to press it on the long side.
The short side is just as dangerous as I have seen some massive short squeezes the past week in a few names. I sure would have hated to have been long those. Maybe the most interesting play is going short MOS, POT, and CLF here as those charts look to be failing on some volume around these most recent levels. It is too much of a gamble for me. I like more “for sure” odds/trades. My time is yet to come. I have time to wait. Time is on my side. Aloha and I will see you in the chat room.
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There still are chances to make money in this market and I am still finding candidates that are working like my AMX short and my MNTA long (which is still up from the buy) from last week. It is a traders market and I am a darn good trader even when I am knocked out by a NASTY and DIRTY infection of the whole body. Body snatchers INDEED!! However, I am almost back to a full 100% and the stock market is not going to go anywhere wihout me.
Remember, if you must trade, KEEP IT SMALL and do NOT press your luck. Take profits much faster and do not let your losses stack up. Take the loss immediately, if the stock does not work out right away. Every long or short should work right away. There should be no “hard start.”
I sure did save a lot of you from LOSING YOUR ASS today.
The problem with value investing– CROX, I heard people saying what a value it was at 40 last year, today after hours = OUCH. Great info on your site Joshua. I’ve learned so much from your blog and William O’Neil’s books. When the next bull comes around I will be ready. Thank you.
Not only that, but this helped me on one of your longs today (5%)
“Take profits much faster”
I love it David. You are “doing it.”
This is what you should be doing. i am glad this market does NOT have you down and you DO REALIZE
there will be another bull market and this nasty market will turn so many ammateurs off that by the time we rally with some real hot chart patterns they will be left behind
I just hope everyone has a good amount of lviing expenses or a part time job to deal with the rough tmarket. While you work, read read read and stud study study as much about IBD as you can
pull out oa few pages in a book and stick it in your pocket and read it at work. There will always be more O’neil books to buy for $7.
Aloha Dave. I am sooooooo happy you are on this market.
REMEMBER: THIS TOO SHALL PASS!!!