Stocks Post Losses On Higher Volume, Giving The Market A Distribution Day; Leading Stocks Rock Despite Selloff

September 6, 2007

Today’s market action was just about the opposite of yesterday but still the action overall was not that bad. There were many leading stocks that performed very well today, I found four great longs (if they fail, watch out), and in my portfolio I had only one complete sell. That tells me that today was a lot stronger than what the indexes led us to believe. New highs also beat new lows, confirming the fact that underneath the market was stronger than what it looked like.

About the only troubling thing today was that volume was higher today than it has been on any trading day the past few weeks. However, volume is still well below the 50 day moving average so it is really hard to be either a hardcore bull or bear here. I firmly believe it continues to be smart to remain cash heavy with a bullish bias, due to the fact that we have a confirmed follow-through to the August 16 lows.

Even though this follow-through has been on very low volume, just like every uptrend, this market is giving us some select longs to put some money in. I see some traders sitting out on the sidelines. In my opinion, that is deadly! It is much better to follow your rules and take every long that sets up in a great buy position and then let it PROVE to you that it is wrong by hitting a cut loss area, than to just skip it and potentially missing a big winner. Right now, there a couple of clear potential big winners that some have missed out on by “taking time off.” It NEVER pays to not pay attention to the market.

All it takes is 30 minutes a day, AT MOST, if you focus ONLY on the top quality stocks. If you did that, you would not miss the few gems that are starting to show up. If they fail, so be it; we have TIGHT cut losses. But if they succeed, they are set up for potential big gains.

If this market turns out to be starting another leg of an uptrend, those that sat on the sidelines are going to be kicking themselves in the behind just like EVERYONE BUT ME (or so it seemed) did during the rally off the 2006 lows. It wasn’t a great bull market but it did give us some gems–AFSI TESO HRZ. This one might also produce a few gems before it is all over for the great bull. If this rally fails and this market rolls over, you should already know what to do as I have discussed this scenario to the point of overkill.

Aloha and I will see you in the chat room around the same time noon-1pm EST (9am-10am PST). I hope that is right or else I am an idiot. ALOHA!

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