Selloff In Big-Cap Stocks Escapes The Leading Stocks

July 11, 2007

Even though it was a pretty bad day out there, with the SP 600 leading the way lower by 1.8%, my portfolio and leading stocks held up well.

I only had two large holdings act up (MTOX and AMSF) and both of them are still holding well above key support. And on top of that I had only two blowups out of the many small stock holding I have (RPB and TRR). And as subscribers on the gold level know, I was already out of half of my TRR position. This action clearly tells me that the pullback was more of a problem with big-caps and financial stocks and not with leading stocks.

However, volume was much higher, giving the NYSE and the Nasdaq fresh distribution days. Distribution days are normal in bull markets, so until we start getting a string of them in a row, I would not look too much into today.

Besides that, I see a lot of really bearish headlines, like “stocks take a beating.” Really? What are they going to call it when the indexes actually top and drop 3% and more on heavier volume? This kind of irrational fear mongering by the media is why we will more than likely rally off this selling. The put/call even jumped up to .99, signaling that fear was showing up in the market today as options traders bought as many puts as calls.

The selling today does not feel great but as gold subscribers know I have been selling some big winners recently. One of my favorite longs (AFSI) has been cut by 33%. Many other strong winners in the short term (TASR SMTX) have also been cut by 20%-30%. So today’s selling didn’t catch me off guard. In fact, if you read the weekend post, I was expecting it and understand the normalcy behind it. There is no fear where I sit. Only disciplined rules.

Remember, it is earnings season, so be careful of initiating big new long positions and expect some choppy action. Also, remember, I had two stocks semi-blowup (RPB TRR). That has not happened in weeks to months. This is what happens in earnings season: you get some RPB stocks and you get some CTCH stocks. But if you buy the right stocks breaking out of proper patterns, you will have a lot more CTCH stocks.

At this juncture, just continue to follow your signals from your charts. Everything still says we are going higher. The leading stocks, the speculative stocks, the big-cap stocks, the indexes, and all the constant negativity from the mainstream media form a perfect mix for a continuation of this bull. I had very few partial sales tonight and that is my cue to remain bullish.

Aloha and I will see you in the chat room!

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