SP 600/NYSE Lead Stocks Higher As Stock Indexes Post Decent Gains On Mixed Volume; The Big Trend Is Still Down
February 25, 2008
One thing that I love more than anything else is when I open up the ‘Big Picture’ by IBD and see the exact same thing that was on my mind being spoken of immediately.
This event is the NYSE breaking out above the trading range that started February 5th. When I reviewed my index charts at the EOD to see how they looked, there was only one index that stood out. The NYSE’s breakout above that range came on an uptick in volume which was taken as very bullish today by most pundits that I read. However, I am not sure if they do or do not use the 50 day volume average but if they do they would notice that volume was still below the average for the last 50 days which makes it absolutely clear that the big institutional investors were not falling all over themselves for stocks today.
But a trend is a trend and right now we have a lot of different trends in many different time frames. When you hear me speak of the “uptrend” in this post, know that I am speaking from the 1/22 and 1/23 lows and when I speak of “downtrends” I am referring trend from the November top. So now that that is clear, let’s move on.
While this market is in an intermediate-term downtrend, there is a small counter-trend uptrend going on right now being led by the NYSE. The stocks that make up the NYSE, no doubt, are obviously heavily weighted to the steel, metal-ore, energy, and oil stocks. These stocks continue to perform very well in relation to the rest of the market. These stocks are of course the stocks that I have been discussing ad-naseum the past couple of weeks as more and more beautiful charts continue to pop up.
These stocks can be seen running up the list of 197 IBD industry groups as the Metal-Ore-gold/silver has moved from #59 seven-months ago to #2 today, the Oil&Gas-US Expl Pro has moved from #54 to #3, the Steel-Producers from #21 to #7, the Agricultural Operations group from #84 to #8, and Oil&Gas-US Royalty moving the most from #135 to #9. So this should make it clear why the NYSE is leading, while the Nasdaq, DJ, and SP 600 remain in short-term downtrends.
Now while there is nothing wrong with getting long these stocks (for those of you actually using the site–I am not looking at Holden–you already know I believe you should be long these stocks), there is something wrong with loading up the boat with these stocks. In consolidating markets and bear markets you have to make sure to always keep a heavy level of cash on hand so that when the real bottom is finally put in and the trend starts higher again on higher volume, you will have a lot of money available to put to work. Instead of having 90% less to work with, from over-daytrading or from a poor buy and hold and watch it go lower mistake.
If you can not see the logic of being heavy cash during markets like this to then have a lot more money to work with when you get an “easy” market like 2003 (check out MY!!! returns on the ‘past big winners’ page and tell me if this is not what you want), there is not much I can do to help you. Because, so many people are asking me if it is safe to buy MTL, JRCC, or AUY. My question is why did you not buy them when I went long AND YES you can still buy these if you want. MTL is extended but I am not stopping any of you from doing anything. I just don’t understand how come, when I tell you I am buying something, some of you wait to go long. Or why some people after buying a breakout want to sell it immediately and take gains. Aren’t you reviewing my ‘past big winners’??????? I pray to GOD!!! that all of you are because if you can’t see a pattern of all those VERY VERY VERY GREEN CHARTS to every other chart posted in there, chances are you have NO hope of ever succeeding at this game. The patterns should be very clear.
So why so many people want to get long here, when THEY SHOULD KNOW!!! what the best charts look like, thanks to my posting of past big winners, just shocks me to the core. I simply received way too many amateur emails and one VERY FOOLISH comment on my forums to be a “happy” Maui-boy tonight. While I am ECSTATIC that so many newbies are so BRILLIANT and do the proper work, I am still receiving way too many questions/statements about items that are made clear either in the books I have listed on the site or by doing a simple search. So I am not sure my site is being used correctly bu the one thing I MUST STRESS is that you all PLEASE WITH SUGAR ON TOP read all of the books in my book list on this website, including “Monster Stocks” by Boik.
The stock market NEVER changes. The same chart patterns you see in my 1999 winners show up in my 2000, 2001, 2002, 2003!!!!!, 2004, 2005, 2006, 2007, and 2008 market. The only difference, right now, compared to the other years (besides 2001-2002), there is simply NOTHING out there with HOT HOT HOT price and volume patterns with max green BOP. the chartland is void of anything that can be considered a soon AMAZING buy.
However, thank God, there are two stocks that could be setting up right sides of what would end up being EXTREMELY HOT bases. The first stock we are already long but OBVIOUSLY not long enough: CMP. When I went long CMP on 2/7 the stock bounced off the 50 DMA on the strongest volume since 2004 with BOP being green for the past two weeks plus. Looking back, using hindsight, it is obvious I should have loaded up as the stock blasted off on its strongest volume in almost four years with the RS and moneystream line hitting new highs ahead of price. Not only that but the EPS/sales started growing faster and estimates are very strong for this and next year.
But the stock did not have max green BOP on the breakout which always halts me some when the chart’s price pattern isn’t perfect. And this price pattern was definitely not perfect as the second low in January went MUCH lower reversing on very strong volume at the 200 day moving average. That move off the 200 DMA was very V-shaped and killed my enthusiasm for the trade. Despite my initial happiness with the chart.
Since then it has been nothing but solid gains on extremely strong accumulation and max green BOP, with the RS and moneystream line leading. Now while this stock looks very parabolic on a weekly arithmetic chart, the daily is still not quite parabolic yet. What I would LOVE to see would be for CMP to move sideways for at least five weeks with volume being low in the base and BOP staying max green. If it could do that then breakout I would be insanely happy.
The other stock that I have my eye on is, in my opinion, one of the best right-side of a base that I have seen in a long time (well, at least since the November selloff started): SWC.
This stock started rising off the January lows on extremely strong volume blasting right through the 50 and 200 day moving average. After getting over the 200 day moving average, BOP went max green which really grabbed my attention. I was hoping that that would be the moment the stock would start to move sideways.
Instead, it has continued to rally higher on HUGE volume, each and every day. Now, for the third straight day the stock moved higher, with volume and BOP rising. BOP is now back to max green. There is simply no other way to describe this charts other than it is perfect.
Now what I need from this stock at this point in time is for it to start moving sideways SOON on very very quiet volume, preferably, well below the 50 day volume average. If I can get a base built that last at least five to seven weeks long with the BOP remaining max green, green, or even just above the zero line, I would love to get long on the very next breakout.
If that breakout comes with volume expanding and BOP max green, you can guarantee I will be LOADING up on the stock. Especially if it trades over $20 a share (I do not really like stocks under $20 and hate stocks under $5, unless the chart is perfect!).
However, obviously, there is one MAJOR problem: the fundamentals. The current EPS hs only now turned positive again after three quarters of losses and sales have been going the wrong way for the last two quarters. But EPS estimates for YOY gains in 09 are for a 47% increase. So the stock will start showing EPS gains again, starting the next quarter. It should be a 999% gain since it is coming from (0.01) from the December 2006 quarter.
So as you can now see there are two stocks that are VERY PRETTY and have me very interested. One I am long but would LOVE to get a lot more long and the other I still need it to make its FIRST REAL BASE. It is still coming from a very long-term downtrend.
All you have to do to make sure you do not miss these, just in case they do end up being perfect setups, is to study my ‘past big winners.’ EVERY SINGLE ONE. Every one in 1999-2003 that have been listed, so far, will show almost the exact same pattern. You will constantly notice the same themes: long quiet bases with huge accumulation on the run up prior to base and on breakout, huge accumulation and no selling, green to max green BOP, and leading RS lines. When all of this lines up, you usually have a huge winner on hand. Obviously, in markets like this they are much more rare and do fail a lot. But the two stocks we are looking at are both in very HOT industry groups which is a bullish plus for them.
On that positive note, I am going to wrap up the commentary. I am very sleepy after getting pounded by some huge surf. I guess since out of 50 platinum members only 5-10 are showing up at any one time, I can take off and go get an early surf session. If I wake up at 7am and there are at least 15 people in there, then maybe I will stay. But this market is really boring right now and I am long in the top stocks once again. I have 61 stocks that are outperforming the market and still have beautiful chart patterns. And in my heart, I honestly believe, most people can not even find two handfuls of great stocks. I am over here with quite a few stocks in the top 20 IBD industry groups. That is sure to pay off on the long side, despite this being a bear market.
To see two more stocks that have done well in this market that are ALSO in defensive groups, check out COIN and DAR. COIN’s high-tight-flag worked to a perfection and DAR has been a steady climber that gave one nasty pullback but besides that continues to crush the market’s return.
This is a very hard and rough market. Do not get upset if you are losing money. Now, if you are losing money because you are trading when I told you not to, shame on you! I CONTINUE TO SAY: CASH IS KING, CASH IS KING, CASH IS KING. So the next person that is a newbie that ask me if we should buy GOOG here, should think about if he likes being a member here, because I do not have time to answer these questions when you are only on the site one hour a week and have not even read the FAQ and Strategy portion of the websites. If you read those along with my bio, you should know what you are getting.
Long: quiet and wise newbies
Short: newbies that don’t read the FAQ or strategy page! You do more harm to this site than you realize when you ask questions that are answered there.
Aloha and I will see you in the chat room. MAYBE! None!!!! of my regulars are ever there. Don’t you guys WANT to get your money’s worth? When I subscribed to TokyoJoe back in the day, you better believe I was there EVERY day. I wouldn’t even DARE to think of missing a day in there. We may start late here but why anyone trades intraday when they know about the CANSLIM strategy JUST BLOWS MY MIND.
PS: If you are a daytrader….I don’t want to hear about it. Neither did Jesse Livermore or does William J. O’Neil
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Comments
10 Comments »
Holden42 wrote:
MauiTrader, other members:
What are your thoughts about Google? Has it finally found a bottom? How should you play it in this market? Too expensive? Too risky? Time to buy?
Today is Sun Feb 24. GOOG closed at 507.80 on Fri Feb 22
THIS GUY HAS HAD HIS SUBSCRIPTION CANCELED.
THIS IS THE KIND OF QUESTION YOU SHOULD NEVER!!!! ASK ME!!! Smile
THIS GUY CLEARLY DID NOT DO HIS RESEARCH, DID NOT REVIEW MY SITE, AND DID NOT GO OVER MY FAQ OR STRATEGY PAGE.
THIS GUY WAS PATHETIC.
PLEASE NEWBIES DON’T BE LIKE THIS GUY!!!!
ANYONE SIGNING UP TO THIS SITE SHOULD KNOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!! THAT I NEVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! BUY STOCKS IN DOWNTRENDS AND NEVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! BOTTOM FISH.
HOLDEN IS A JOKE!!! AND SUBSCRIBERS LIKE THIS IS WHY PRICES WILL RISE IN THE FUTURE. NOW I KNOW WHY REV CHARGES $500 A MONTH. LOL.
BY THE WAY….I HAVE BEEN SHORT GOOG FOR OVER A MONTH NOW AND HAVE A 25% GAIN. ANYONE THAT DOES A SIMPLE SEARCH ON ‘GOOG’ AND NOT ‘GOOGLE’ WOULD KNOW THIS.
DON’T BE “HOLDEN†(LAZY)!!!
and ONE MORE TIME FOR YOU NEWBIES
CAPS AND !!!!!!!!!!!!!!!!!!!!!!!!!!!!!! IS NOT ME MAD
GROW UP!!!
THIS IS FOR EMPHASIS. I AM TRYING TO WAKE YOU UP FROM YOUR BAD HABITS.
IF YOU NEED ME TO KISS YOU ON THE LIPS AND WIPE YOUR BUTT EVERY NIGHT, YOU ARE IN THE WRONG PLACE.
THAT WAS ALL SAID WITH A GIANT HAWAIIAN SMILE WITH A LEI AROUND MY NECK AND A MAI TAI IN MY HAND AND BIG SURF WITH BEAUTIFUL WOMEN IN THE BACKGROUND.
CAPS DOES NOT = YELLING
CAPS = PAY ATTENTION AND DONT EVER!!!!!!!!!!!!! FORGET THIS.
OY!!! ROFLMFAO
or would you like for me to tell you to buy IMA, C, ABK, PMI on every pullback?
Holden certainly got his answer this morning. GOOG bottom? What bottom? I hope he didn’t buy just to spite you, Josh. A perfect example of why bottom-fishing is hazardous to your trading health. File under: “Holden the bag”
Yes. He was “expecting” a much more professional service.
Does the MORON/FOOL know that those guys have been leaving people BROKE!!!! for years.
FUCK Wall Street! I am an insurgent!!!! You get it straight here.
You like lies? Read Kass, Cramer, Marcin, or any other douche bag FA guy on RM. I don’t get into arguments with these toads because FA guys are thick in the skull, ugly, and live sad lives. FA guys don’t surf and they definitely are NOT going to get you as many 500% winners as I will.
Sure, you want professional, sign up with Gorilla trades. They are very professional….and also NEVER give you ANY 100% winners.
surprising bulls out there;;;;this from a blog i sometimes read, he is a hedge fund manager :
“Stocks Higher into Final Hour on Short-Covering, Bargain-Hunting
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Software longs, Alternative Energy longs, Gaming longs and Biotech longs. I added to my (GOOG) long and took some profits in another long today, thus leaving the Portfolio 100% net long. The overall tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Investor anxiety is slightly above average, despite gains in the major averages. Today’s overall market action is very bullish. The VIX is falling 4.7% today, but remains relatively high at 22.0. The ISE Sentiment Index is a low 95.0 and the total put/call is an above-average 1.03 today. Finally, the NYSE Arms has been running below-average and is currently .80. Today’s broad market action is even more impressive considering today’s economic data, the rise in oil and decline in tech leader (GOOG). While the major averages are getting extended short-term, the recent parabolic rise in short interest, high cash levels at most funds, historically bearish sentiment readings and technical breakout in the S&P 500 should keep pullbacks relatively mild and short-lived. Hitwise said today that it is actually seeing an increase in traffic from Google to retail sites, which indicates GOOG’s paid search deceleration is not due to the economy. Pacific Crest said that its channel checks contradict the data from comScore and CSFB said that the January decline in paid clicks was intentional in an attempt to eliminate the zero value click. I still believe recent significant improvements to GOOG’s algorithms will result in further substantial market share gains over the intermediate-term. I suspect the shares are in the process of bottoming for the year right now and will finish the year substantially higher than current levels. Nikkei futures indicate an +206 open in Japan and DAX futures indicate an +45 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short covering, diminishing bond insurer angst and bargain hunting.”
that was from today(tuesday) market
“Long: quiet and wise newbies
Short: newbies that don’t read the FAQ or strategy page!”
that may be unforgettable…the best I’ve read! Keep kicking it bro!
LOL. YES SIR!!!
I love what I do for a living! I will ALWAYS do this. People like Holden, will never “holden” me down.
Is that funny??