For the haters and the jealous, keep your trash out of here; especially Joey Fontone who told us we were idiots for being short and in cash.  Joey said he was long the market, no Joey is swimming under water.  Don’t be Joey.

MS

However, today I learned the horrible ignorance of some offers. Luckily, this one is the only one like this, but my 2.99% special offer and regular 9.99% rate, due to the mail NEVER SHOWING UP IN MY MAILBOX, has been JACKED UP TO 29.99%!!! I have been a customer since 1999 and this is Bank Of Amerca’s way of saying thank you for NEVER having a late payment. It seems even if it is the mail carriers fault, if you miss a payment, your rates on EVERYTHING goes to the highest possible and it take six-months to reverse. So now instead of a nice steady payoff, I have to take the full amount out of my stock accounts and pay the whole damn balance off as I refuse to pay 30% interest rate!! This completely ruined my day only because I get great margin rates AND NOW is the time you want to be putting that money to work. So today has gone completely wrong and therefore I am going to bullet point my talking points as I have no interest in writing a full commentary tonight. I wrote too much in the longs analysis anyways. Paying subscribers can get there fill there.

-the NYSE short interest ratio has hit another all-time high of 13.63. It now almost takes 14 days to cover all the shorts. WOW!

-Stock indexes closed at the HOD across the board which is very bullish especially after yesterday’s weak close.

-NYSE and Nasdaq reclaimed their 200 day moving averages. This was the first time for Nassy and second time this year for NYSE.

-volume was higher on Nasdaq, with the 1.5% gain, giving it another day of accumulation and another day of an above average volume rally.

-for the 39th straight day NYSE volume was below average and was lower than yesterday according to IBD and slightly higher according to TCNet. when it is like that it is hard to load up on 200% to 400% margin knowing that the big boys are not bidding up the major market indexes. Only select stocks making it a stock picker’s market. Thank GOD that is what I do for a living.

-The Philly SOX index led the way with a 2.05% gain thanks to a 5% move in INTC after a LEH analyst raised his price target.

-have you noticed that a lot of people (including myself) are all looking for the market to make a short-term top. we are starting to call it overbought, thus becoming nothing more than “top callers.” that might be the ”wall of worry” this market needs to climb higher with that 13.63 short interest ration on the NYSE.

-a distribution is being removed from the Nasdaq after today’s powerful gains have sent it over 5% above the 4/20 distro day. that along with it now being above the 200 day moving average makes that day irrelevant as we are well beyond those levels of selling. occasional distribution days are ALWAYS normal during uptrends. it is the amount and how quickly the next one follows, if it follows.

-CNET up 45% after CBS buy. This is VERY bullish for stocks–that kind of reaction.

-175 of the 197 industry groups in IBD were higher with many groups having leading stocks make strong gains on strong volume. this is just more bullish numbers.

-a few impressive stocks I am not long that I am watching to get long on this impressive day are WGOV, SINA, SOHU, DR, RIG, CYBS, FLIR, and about 100 other. You don’t have this many nice charts in a bear market. But…where are all my DGLY charts?????

-where is the heavy volume accumulation in the indexes. volume is finally coming in consistently above average on the Nasdaq which is VERY GOOD. but without a few huge accumulation days I do not have faith this can last for much longer without eventually getting hit with a solid round of distro. if volume does come in I would be a LOT more bullish on the overall market and not just a few select sectors I see rotation in.

-newbies must not chase stocks that are extended–MVL SINA PDO and many others–in this market as the low volume will offer many whipsaws I am sure in the not too distant future that will really hurt the bottom line of those chasing stocks 5-10% past proper pivot points or the 50 DMA.

-the only two complacent indexes that tell me on the short term we have gotten too bullish is the put/call at. the number finally fell below .65 to .64 which is the lowest since January right before a nasty selloff. So the crowd is definitely getting complacent on the rally and I am sure it will not be too much longer till the market reacts accordingly.

-the VIX is at 16.30 and is definitely showing a reading of a crowd that has come to embrace this market. This is the first time the VIX has been down here since 10/11 and it clearly shows that the crowd has gotten used to the rally, for now.

Hopefully, it will take only a little bit of selling to get that VIX flying and the put/call back to the 1.00 level. For now, the crowd is starting to really embrace this rally and I personally can not find a lot of bears even though it is obvious via the NYSE short interest ratio they are out there. A pullback might be enough to scare us higher.

The charts look really good and there are a TON of stocks that are not only building round bases and breaking out to all-time highs. But there are also a TON of stocks building nice round bases near their 52-week lows which means that the stocks that were falling are no longer hitting new lows but building a very nice round base with strong accumulation. Stocks looking like they have bottomed include PHM ATI CAVM CVLT PWER BYI ODP NTWK OSTK CMCSA. As you can clearly see, they are everywhere in all industry groups. Take that with stocks like HUSA FSIN SOL CSIQ DGLY and you clearly have a market that is under a real rotation process away from commodity winners (see the drop in DE and FEED past couple of days?)

At this point in the commentary, I am, once again (remember I have Multiple Schlerosis and one of the MAJOR problems is fatigue–I used to never be tired like I am now), to tired to continue on. If you go back and read the last 3 to 4 entries I am sure you will COMPLETELY understand where we are at in the stock market and how I feel about our longs.

Once again, it was another great day as one of my top 15 BIGGEST holdings that make up 85% of my account, was up today in a big way giving it a 52% gain in one month (VISN) and if you take that with my other 50% winner in one month (DGLY) you can guarantee that I am having a KILLER month that has made up for the extremely rough January, February, and March period. April came in with a baby roar and so far it has morphed into a full blown tiger growling and roaring as it moves doing whatever it please.

Aloha everyone, I wish a great Aloha Friday and I will see you in the chat room anywhere from 630am to 7am HST. ALOOOOHA!

P.S.–Pray for surf this weekend as I need to get wet. It has been over 7 days and watching the Finals from Teahupoo of Bruno Santos (Brasil) vs. Manoa Drollet (his home break and backyard; Tahiti), after watching a great semi-finals where C.J. Hobgood just couldn’t get it going and I think 26!!! heats yesterday, has me wanting to get out there. Neither could Slater who won the first two events earlier this year but fell short in Billabong Pro Tahiti Teahupoo

One more time, ALOOOOHA!!

I refuse to get as bearish as the crowd and I have been expecting a pullback but seriously if volume continues this below average pace, I just don’t see how in the heck this can turn into a long-lasting bull market.

So if you want to be a raging bull, go ahead. I still remain cautious but would love to get EXTREMELY long here as the charts are starting to round out. However, selling here after these nice charts started showing up would be very bad. Maybe this is why my short scans have been active, like I have been talking about on the ‘Silver Shorts’ area.

Hopefully, the elephants will return soon, or else those mice that are keeping them away will start to scare me soon.

For those that do not understand why this is, it is not that hard to figure out. When stocks are moving up and down with no volume they become easy to manipulate by a few and when those few are manipulating stocks can move them and make them do whatever they want. I was just reminded that watching my favorite long pullback viciously on Friday. Volume was not that much above average yet the stock lost 9%. The stock is still above three supports, has green BOP still, and the reason for the trade still exist. So I will not be scared out of this long fully. But so many will be that it just goes to show how dangerous it is to be long in this low volume market.

While everyone focuses on GE..blah, blah, blah, I remind myself how stupid this stock is by looking at the returns you would have made since the start of the year in 2000. A negative 35%. Yes buy and hold is in fact THE MOST DANGEROUS way to invest. It is PURE GAMBLING AND HOPE at its best. You decide to hold something for the long hold and you are proving you are a true gambler. History has shown us over and over and over that the great stocks of the past NEVER last in this dynamic country. Yet, here we are all focused on GE. Even though it was a market mover, it is a giant distraction from what is really important and the new blood in the market.

About the only thing I guess I can judge by overall sentiment is that it appeared most were ready for the weak numbers that would then lead to buying as all the bad news would have been priced in. Well I guess it isn’t as GE broke hard right at the 200 DMA and right below the 50 DMA. Even a mid-day rally was slapped lower. Not good for this big-bellwether. However, if you focus anymore on GE, after this paragraph, you truly need to go pick up a copy of ‘Monster Stocks’ by Boik. GE IS DEAD. DON’T EVER LOOK AT GE AGAIN. IT IS OVER FOREVER as a growth stock. If you are an income investor, then fine, whatever, but that isn’t my style.

What I find more important to focus on is all the sentiment data. The University of Michigan Consumer Confidence came it at a 26 year low for April. This extreme lows shows that the crowd is very bearish right now. Is there anything else that can confirm this? Why, yes there is. The IBD/TIPP poll just the day before saw its numbers hit the lowest it has seen since the start. That number came in below 40 which was the first time ever for that index. So both of these consumer data points show the crowd is more pessimistic on their finances since right-before President Ronald Reagan made his way into the office. God bless you Ronny!

The good news about this is that the crowd is always wrong. They are. It is that simple. If you are out of high-school and run with the crowd, you have serious issues and I don’t think reading this blog will help. I am a leader, not a follower, and that goes to my investment philosophy. When everyone else is scared and selling, while I don’t necessarily want to buy I want to watch the smart money start to buy and then piggy-back off of them.

With sentiment that low I think we have a good enough reason to believe the crowd is too bearish out there. My only problem with this is that before the crowd became so BEARISH in late 2002 to early 2003 which led to the March FTD in 2003, we had a two year plus bear market. Here we are, now, less than six months since we topped in November, yet the crowd is already MORE bearish now than then. I am not sure if this extremely low reading means that the state of the market is so bad that this extremely bearish reading is just THE START of what is about to be a VERY ugly period. Or…we really have freaked out all the weak stock holders that they have finally capitulated, gone bearish, and now see their financial mess as the worst ever.

While I am not sure where we are at, as NO ONE CAN PREDICT THE FUTURE, I do know that I would rather be looking for longs here rather than shorts, as the negative sentiment has come on very fast for a five year plus bull market. Something just seems really wrong about that but if they were somewhat bearish the WHOLE WAY up and now they feel this way-I guess it does make sense.

Confirming this sentiment, are a few other key indicators. The bulls for the third week in-a-row came in lower than bears on the investors intelligence survey. The bulls come in at 37.4% while the bears continue their reign at 38.5%. It is bullish for stocks in the intermediate term when there are more bears than bulls. Now, while this is NOT a reason to start buying stocks, it is a reason to maybe start scanning the charts looking for the next group of leaders to buy. Sadly, that new “fresh” group is not showing up yet. I still have defensive, medical, commodity–soft and hard, and envrio. related issues leading the way. Throw in tobacco stocks and you have a real exciting group of leaders.

I guess this weak leadership with a lack of volume is the reason why people are getting very short. Now, while I have no problem going short a broken stock (MICC on 4/3 for example), I do have a problem going short based on the “theory” that the market is overbought and that economy is so weak that we just can’t not be short stocks. I guess this is why I see the NYSE short-interest ratio hitting a brand-new five year high of 10.50.

A short interest ratio of 10.50 indicates that it would take 10 days of average market volume to unwind all short positions. It seems to me the public is EXTREMELY short at a point when it should not be that short. Like I keep saying, shorting a dull market is not only dangerous but historically it is deadly as low-volume short-covering rallies happen often. If a short-covering rally started here and it picked up volume as it went along forcing those to cover, it could turn into a nice vicious short-covering rally.

With the low volume it could be even worse, since the big boys will be on the sidelines not selling into the gains. This could lift stocks heavily way beyond what most would assume would be “rational.” Obviously, this is just something to think about as low volume rallies happen often. Especially when the put/call is at 1.25. It seems like Friday’s selling did turn the crowd quite bearish after the weak GE numbers.

Too bad they did not study volume. If they would have they would have noticed it was 4% lower on the NYSE and 14% lower on the Nasdaq which clearly shows that the selling was not intense and institutions stayed on the sidelines. This kind of lame selling on such a bad day is just like a huge up day on no volume: meaningless. There is nothing to really delve into. It simply is what it is: a low volume big move.

While there are things out there that personally scare me like 4% inflation (somewhere around 7-10% on Maui) it is getting hard to buy all the goods that I like to buy. This is definitely having an impact on my accounts as the poor stock market gains combined with loss of earnings power has wreaked havoc on my lifestyle. But since I am a simple man I find it easy to adjust and when I step back and look at things overall I just don’t see it that bad. People are extremely bearish right now, via sentiment polls, and when the crowd is bearish I want to be bullish. Now that I see so many weak readings out there I can tell you that I would like to get very bullish.

However, the put/call, investors intelligence, VIX, and NYSE short interest ratio are not going to make me money. What is going to make me money is price and volume. I need some hot charts forming sound bases that are followed by breakouts on strong volume. If I can get more of this action, in high quality stocks, I would be very bullish on the short term. However, the lack of volume and long quiet bases has me still thinking that we have a lot more time before we can get a real rally.

Once we get some more backing and filling in the indexes, within an overall uptrend, we can then pray that some “fine” charts setup and breakout of sound patterns that can produce for us some “monster stocks” that go on to produce large gains. A VIX at 23 might inhibit that but still, at this point, I don’t care if I get a 500% return. I will be happy with a few 100% returns. It is simply impossible to get greedy in the market when there is nothing to get greedy over. There is no speculative money pushing stocks higher.

Besides no speculative big money, there is no real institutional money either, as I see a LOT of high quality funds out there carrying cash positions from 5% to 25% all over the place. These funds are going to have to put that money to work eventually and if you take a look at the yield curve you will hope that stocks is going to be where it is at as a great bullish slope of the yield curve combined with the current low returns in bonds bodes well for stocks.

LOL, In fact, I can not turn anywhere without seeing headlines like this. I blinked and saw this: The American Bankers Association recently reported that in the fourth quarter of 2007, consumer credit delinquencies reached their highest level since 1992. This is the kind of constant negative drumbeats that cause the chicken-littles to sell after they already have big losses. It is possible this is just the start of something that is going to get out of control. But the way EVERY indicator/report is bearish, I find it hard to not want to lean to be bullish. All I need now is another higher volume 3% plus gain on the indexes with more green to max green charts making bases lasting at least 5-7 weeks. If I can get that, you can see my margin being unleashed as I start to load-up on ALL the best leading stocks.

Getting to some important numbers that I see: The Nassy now has an ACC/DIS rating of A- which is NOW very bullish, to go along with all the negative headlines. Like I said all I need now is that explosive day and better charts. This is made even better knowing that the Nassy fell 2.6%, yet the IBD 100 and 85/85 fell only 2% and 2.2% respectively. This is bullish RS and divergence from the overall market.

Too bad the leading stocks that make up this index all come from the exciting (sarcasm) and dynamic (not at all as they led from 03-early 06) groups of oil&gas, steel, chemicals, energy, machinery, building, transportation, and metal ores stocks. Combine those PAST leaders with medical, pollution control, tobacco, and media groups leading the way higher and we have a market that very well could be bullish in the short to intermediate term due to EVERYTHING!!! that I have posted today in regards to the sentiment direction.

However, for the long term, if you think the stock market is going to be higher a year from now you want to be long technological and innovative companies in brand new industries that are revolutionizing the way the world runs. These current leaders will NEVER be those kind of stocks. Our current leadership of energy and medical stocks will not change the world forever or make our lives better. They may DEFINITELY in their own way via research and development. But still this is not an airplane, car, or internet.

There are things that we need to watch for, of course. If the selling starts to come back into the market we will know that the low volume rally was actually a trap for the institutions to sell into. However, we have to see that happen to believe that. For now, it appears we are ready to drift higher. If they do knock us down further it shouldn’t be that much of a surprise as the indexes are all back below the 50 DMA. But it is how they act here that will determine if the future is good or bad for the market.

I am being very patient, relaxing, watching, plotting, and waiting for that moment when to go all-in to the market. I want to be long the best patterns in the best stocks that are moving the most. When I can get some volume in this market, to the upside, I would love to get very active in my favorite longs like…..yeah right! . If we continue to selloff, I am sure we can find some past-leaders that will have setup into some perfect short positions. Either way, no matter which way the market goes, I AM READY. Make sure you are to. Up, down, or sideways. I have a plan for all and I AM READY.

Before I go I want to take a moment to tell everyone how much I hate CLR a stock I went long on 3/13 and sold on 3/17 and 3/20. As you can see the stock is now up 30%; I took a 12% loss on my final sell. This is how the market is right now. I see so many stocks I was long, that I sold out of being disciplined, that are now hitting new highs. This DOES NOT HAPPEN IN BULL MARKETS. And I guess that proves that this is still a very mixed and choppy market.

Be ready for anything. I am expecting more upside relief, but I do not know if it will come with low or heavy volume. If it comes on heavy volume, I will be happy as I can start getting long the best of the best for some “monster” gains. However, if we rollover I am sure some 25-50% short sell winners will setup for me.

Life is great (especially without having to read NASTY comments) and if I go out and can find some surf either north or south today will have been a great day. It already has been a rocking weekend. Let’s keep it up and roll this over into the work week for me, God!!! Aloha everyone. Thank you for reading my blog. I hope this can help you make money. If it doesn’t, something is wrong with you. ….or does that mean something is wrong with me? Whatever it is, it is all good, with me.

Maui No Ka Oi! Pray for surf!!

I’ll let the schmucks like Sandy/Wendy (or whoever this crazy is) believe that this is “THE BOTTOM.” I will continue to wait for proof and then get long the next bull market leaders, while the IDIOTS buy their BSC, LEH, URS, and BYI speculative-junk!!!

Cramer constantly produces 50% losses and I have NEVER!!!! in 12 years EVER owned a stock down 50%. Anyone hear of SGP? The stock I was short for a 43% gain that he was long for a 55% loss?????????????? Did you hear about that smart Cramer going long that? Or how about AUY, NYX, IMA, C, or any other blowup he has recommended?

I doubt the real leaders that I am looking at are being looked at by DONKEYS like Sandy/Wendy Wright and Jim Cramer. The truth hurts don’t it. The truth shall set us free even though it will NEVER set the fucking morons on Wall Street free. However, I have NO loyalty to wall street. My loyalty lives on Main Street.

AT THE TOP IN MAY 2006, HERE WERE MY LONGS:

Longs Outperforming Market(number is % gain since purchase): ERS-562 GIGM-254 MFLX-203 PETS-102 CBG-133 SIRF-129 NVDA-107 ATHR-112 AKAM-117 WIRE-188 LCC-133 EMKR-182 SMDI-116 CVO-104 TSCM-136 TGB-128 PEIX-108 IED-120 SPNC-92 NGPS LRCX-53 TTES-51 CYMI HEIA-45 CAMP FSTR STRL-43 KNXA-81 GEMS-41 IFO RSAS CTXS-59 ICTG-74 SPIL IHS-44 MTU WF EAGL-76 SMSI-61 IVAC-25 FRGB PNRG-52 ARS-56 RUSHA DECK ROK-27 STMP-26 NTAP KCS TYL TOMO-41 BWLD UIC-73 NCTY WST ZEUS-63 VLG KEX-51 SHFL BAS KDN-25 SPWR-44 POR TFSM-55 OMCL MERX-42 AIXD DIL SWW-41 ACTG-81 CCUR-30 SVNT MEL RNWK ILA CRUS ABI BDK SMF RAIL-73 SBAC-60 NKTR IT-40 CTCI CTEC

I know a few traders that for some ungodly reason were bullish after today’s close. This was because they said the Fed has a new way of making sure the market has bottomed. Once again, the same market call but this time from different players with a different excuse. No matter how many people try this argument with me and no matter for what reason it is, I simply will not believe it until it is true. When I see the market making strong gains on strong volume with top stocks breaking out and moving higher (heck there doesn’t even have to be heavy volume on the indexes; I just need some HOT freaking charts, for God’s sake), then I will wrap my arms around this market just like the perma-bulls have been the entire way down.

The right thing to keep on doing is raising cash with stocks that we are cutting our losses on or taking profits on and to keep the new buys or shorts small until a trend is clear. Right now, the market has no clear trend as a low volume trading environment has now entered the stock market which could help build some nice bases. However, nothing is hinting at that what-so-ever as few NEW and FRESH stocks are forming bases after a previous uptrend in innovative companies with great fundamentals.

Instead, it is the same bear-market crap showing up in my scans that always show up when the market is in trouble. Medical, finance, and energy stocks always lead the way in bearish markets and here we are with our three usual bear market leaders. For those that still think we are going to bottom, you need to get your head examined, wake up, and take a look around at all the past-leading stocks. It is not good.

If you are a value player and you take a look at the DJIA’s p/e at 61, how can you buy stocks that are this expensive? You can’t unless you are insane. If you are a growth stock investor and you take a look at the GDP growth of our country combined with wages and inflation, how can you invest? You can’t unless you hate holding on to your money. This is simply a horrible environment for bulls and bears.

That might make you think that things are bad enough but a VIX at 25.61 and a put/call at .87 IS NOT bullish. Everyone might think the market is volatile now. But you are comparing it to what? 2004, 2005, and 2006 which were had the two least volatile years of my trading life. Only 188 stocks made 100% gains in 2005!! Worse, that trend stayed the same in 2006 and 2007 with only 219 and 212 making those kind of gains the next two years. 2004 produced 269 but even that is pathetic to what bull markets produce.

Some of you are crazy. You think you are somehow missing something by being in cash. You foolish investors have no freaking clue how to handle a bear market and receiving questions like this is pathetic. To not understand that there are less stocks making big gains in down market compared to up markets is freaking foolish. If you are that stupid and do not understand that, PLEASE stop reading me and never come back. I do not have not time for that crap (I received an email today from someone wondering why I can’t find the good stocks now). You simply can not find HUGE stock market winners in bear markets. The fact that I can find any that make huge gains is a miracle in a market like that.

Some of you newbies have no clue but I have been writing on the internet since 2005!!! at my blog. If you just go back to 2005 and 2006 (April 2006 to May 2006 to see the bulk of the gains as that is where the market topped), you can clearly see some of my huge past big winners in this SHITTY low volume market since 2003. GIGM, CVO, BOOM, KNOL, AAPL, ERS, AUY, TGC, SLW, BTUI, WIRE, MFLX, ASF, CBG, RATE, MNG, MRB, NXG, VGZ, TSCM, NVDA, and ZEUS and many others all produced 100% gains. Who else did that that you know during 2005-2007? Even at the end of 2007, we had a great chart in APPY. That was a 125% to 150% gain from September 2007 to late October 2007. So the reason “I am missing them” is because THEY DO NOT! EXIST. DUH!

The fact is they do exist, they just do not exist right now. When this stupid sideways chop/bear market is over, there will be another bull market and it will unleash a ton of big winners. But instead of just getting 100% to 300% with a few 500% major winners, we can finally get our 1000% to 2500% gems that I WILL FIND BECAUSE I FOUND THEM IN 1999 and 2003. Back in 2001 there were only 357 stocks to rally 100% or more (most of that was due to the vicious oversold rally after that horrific day) but the next year in 2002 when the bear market put in the final touch to its downtrend, there were ONLY 127 and the funny thing is that about 80% of those made those gains from November to January.

What is important to remember is what happened the next year, in 2003, as the new bull market got underway. A whopping 931 stocks made at least a 100% gain. So as you can see trying to find a great stock when only 127 move that much compared to 931 is a much more difficult task. So far, in 2008, we have a whopping 13. At this rate we will only have 52 stocks up 100% this year. This is out of a universe of 7,000 to 8,000 stocks in between 2001 and 2008.

That little exercise there should help prove that it is much easier to hit the home runs in bull markets than it is during any other market. Since most of you NEVER know when we are in a bull, bear, or nothing market, it sure does help to know what you are in so you know when to go ALL-IN with your margin. I will know. Will you?

I also know that the IBD 100 has a D- for an Acc/Dis rating and that is PATHETIC with a capital P! These are our leading stocks and they are clearly being distributed. There is no reason to ever buy stocks until this index can at least hit a C. So all of you buying stocks now are making very foolish decision. The same can be said for those shorting stocks willy-nilly with no regard for a chart.

The good news about this market is that I know when it is best to take vacations. When the market is ripping higher like it was in late 1998, late 1999, and in 2003 you want to be very involved, awake, and long stocks in the bull market. But in a market where stocks are clearly out of favor and are being sold, it makes no sense to stick around and watch the damage. Instead take some time off to have fun, making sure you keep on top of your watchlist and index charts so that when the market does turn you can wake up and get back to work.

Eventually, this market will turn. However, until it actually does, trying to predict is is FOOLISH! Waiting, watching, and building your watchlist in this poor market environment is the smartest thing to do until we get a bunch of charts that look like my ‘past big winners’ showing up.

This is NOT to say that we will not see any longs if we go nowhere the next 10 years. What it does mean is that there will be very few. Only two CANSLIM quality perfect setups worked in 2007: AFSI and TESO. There was also one speculative that worked extremely well with a perfect chart: APPY. However, there were another 5 perfect to near-perfect charts that failed and those failures did not even come close to hurting the gains made by the winners. This is the power of this CANSLIM strategy. Good money is constantly poured into the best performing stocks while losses are dealt with immediately.

No matter what happens in this stock market, I am ready. If we rollover and breakdown (with or without volume) in the stock market, I will start to find stocks failing at key moving averages or breaking down below key areas on very heavy volume. If I can get these within a safe buy point (usually 5% within the pivot), then I will be more than happy to increase my short positions.

If the market bounces higher and volume starts to come-in in the form of accumulation days that then help create beautiful chart patterns in strong stocks with great fundamentals, I will have no problem going long stocks breaking out of or bouncing off of my favorite chart setups.

It was nice to see oil fall $4.04 to $101.58 today which is a LOT better than the $110 it hit not to long ago. That along with the other commodity charts looking like they are putting in significant tops is, I think, a longer-term bullish development as it helps move “safe” money into more “speculative” investments. it will not start immediately but getting money out of this sector into a more high-growth (like solar stocks) area is what will start to get me excited.

And the last thing I would like to mention before I go is SGP. I have been short SGP since 1/14, I wrote a column to RM.com readers on 2/1 telling them to avoid SGP as another possible Cramer blowup, and today I watched it collapse as a near 50% gain has been realized in less than three months. All the while, Cramer was telling you to buy. I told you to run from C, I told you to run from IMA (after I made a 100% gain), I told you to run from SGP, and I am telling you to run from NYX.

The CANSLIM strategy helped give me gains in IMA on the way up and helped keep me out of C, NYX, and IMA on the way down. My own study of past shorts from the “How To Make Money Selling Stocks Short” by O’Neil helped get me into SGP for a near 50% profit. The IBD 100 has returned 195% to the S&P 500’s 42.5% since May 2, 2003. The IBD 85-85 index has returned 133.7% to the S&P 500’s 2% since Jan. 1, 2001. How is Cramer’s Action Alert portfolio doing? I think I know.

Aloha from Maui where the surf is flat again and the whales are starting to say bye-bye to another great winter season of surf and whale watching. ALOHA!!

That right there is exactly how I see the stock market right now. This is a market that looked like it was going to deliver us something good and instead it ended up having a closed sign on it and now we can not get what we want. Many traders want to enter this store and take the merchandise out of it and play with it but the market is closed to CANSLIM investors and there is still nothing I really want in the store anyways.

If that did not make any sense, because I am too tired maybe this will. Tomorrow I am going to go driving around this island for surf. The chances are that nothing is going to be out there. But I am still going to bring a shortboard and longboard and PRAY that something exist out there. If I drive around and there is nothing out there, do you think I am going to paddle out into a lake of flatness? Or let’s say it doesn’t even hit my knees, do I then take my shortboard out? OF COURSE NOT. When there is nothing, there is nothing. Trying to surf waves that are NOT there is stupid and kooky. You want to look like a freaking schmuck? Paddle out into Waikiki waves with your shortboard. Let me know how the “vibe” is.

Now using surfing as the reference, let’s apply the stock market to surfing. OK, so we got our follow-through day. That to me is the equivalent to seeing a big pounding storm form up near Alaska with some amazing swell readings hitting the buoy. So I wait till sunrise and when I wake up I go outside and instead I don’t see pounding surf; instead I see some ankle-biters. But the forecast was for a giant swell? So what do I do? Do I paddle out with my gun and wait for the “set of the day” to come in while everyone is inside picking off the shore breaks? Or do I accept that it is what it is, the forecast was wrong, and go back in and grab my 11-footer? I go back in and grab the damn boat!

This is the market right now. We got the storm and the swell was produced but dang it somehow the swell has not shown up. If the swell was going off we would have breakouts left and right with longs just flying higher making incredible gains. A few longs I just went long that are doing nothing should already be up 5-10%!! The fact that they are not, so many leaders are failing again, and soo few are even breaking out tells me that this is just what we call an “edge pass” and that NOTHING hit us. Instead the swell completely missed us and nothing came about. If this market reverses and we fail, it will be the equivalent of the swell missing us. No big deal, cut your loss, trade quickly, keep your cash high, get wet, and paddle back in.

Eventually one of these storms is going to send a fetch so big that you make a house in your pants before paddling out. That will be when we get not only a follow-through day on the DJIA but a follow-through day on the NYSE, SP, SMLX, MIDX, Nassy, and the IBD indexes on huge volume. After that we will get CANSLIM quality stocks (of the quality of the longs I have posted the past two columns at Realmoney.com) breaking out on huge volume with green to max green BOP, left-and-right. There should be so many great charts to choose from that we have NO PROBLEM loading up. The same way as if we had huge surf you wouldn’t have a problem picking off whatever wave you want. When the surf is big enough, the best take whatever they want as the crowd (which is me by the way ) sits on shore and can only dream of getting double-overhead barreled followed by a cut-back, finished off with a floater. Yes, a true bull market.

I hope this makes a little sense and if it doesn’t maybe I will have to relate it to poker so that the other half of you that do not understand sports but understand odds can figure it out. But after sports, girls, and poker, there is nothing else I can relate the stock market to as the market, poker, sports, and girls summed up my years growing up. Well I could add one other subject but that was from SO LONG ago that it is irrelevant; and as for girls, I am basically married so that is up. Poker has been pushed to the backburner, also, since this became a paid service January 1, 2007 at Investors Paradise. So really all I know about is stocks. So when I say I am almost 70% cash and at the highest levels since early 2002 (SIX YEARS!!!), I hope, with all my heart, that everyone is listening to me.

We are very overbought, so a pullback has to be expected and it appears we are starting one. As long as volume stays low a chance of more upside on higher volume rises. If volume picks up and we continue to selloff on higher volume, you can kiss the lows goodbye. However, we have a put/call that hit 1.13 today and unless a selloff makes people more cocky it appears the crowd is making bets on the market falling.

Still, with 41 new 52-week highs to 74 new 52-week lows, you can’t say that the rally has been powerful AT ALL. Not only that, the Acc/Dis rating on the IBD 85-85 (which are our leading stocks) is a lagging D. The only index with a B is the Nasdaq. Take that with the DJIA having a 62.7 p/e and homebuilders our leader of this rally (it is not good when a laggard leads a rally) where they have gone from #197 to #3 the past six months based on price performance.

Beside the laggard homebuilders, the household, metal products, tobacco, commercial services, food-meat products, and energy stocks simply DO NOT excite me. Technology and HUGE growth in innovative stocks amongst a broad range of sectors make the best markets. All market can be traded but very few can be used to make a FORTUNE IN. This is not one of those markets. We have not seen one of those markets since March 2003 to January 2004. Which is really sad because the 1990s were FULL of them.

But that is the way it is. Take it or leave it, with the stock market. And I guarantee you if you do leave it, you will NOT be here at the exact moment when the best looking stocks breakout and go on to produce huge gains. Those that got tired of the 2000-2002 bear missed the entire move of 2003 and the later move in 2004. In fact only after the uptrend got hard did they return in 2007. Like always, the crowd shows up at the end.

On that lovely note, I hope you all have a great Friday and I hope I can get my errand finished tomorrow as I drive all over the island wondering if I should poke a few longs and pray that they are the 1 of 4 that move higher; or if I should just keep my boards on top of my truck and keep them high and dry and wait for a better swell, even though it could be a month away. I think when it comes down to it, the best wait. Only the donkeys, kooks, and newbies paddle out. Thankfully, after a little bit of time in the water I feel like I am none of those. Even though deep down I know I will always be all of those.

Aloha and I will see you in the chat room!!

But that didn’t happen. The market did fall on the day but the early morning losses found some buyers and after one more turn near the final hour stocks closed with minor losses, with the DJIA and SP 500 leading the way lower with a .9% loss. The good news, though, is that leading stocks, via the IBD 100, rallied .2% on the day and the SP 600 only lost .4%. So there was some relative strength in the leaders and the small-caps which is always what you want to see in a rally.

Too bad another thing you like to see is volume. Since normally heavy volume is good for rallies, it can’t be that great that we constantly rally on lower volume. However, when those low volume rallies are followed by lower volume pullbacks it is possible that in the future we could have a market rotate into a market where heavier volume comes from the combined low volume pullbacks and rallies. This is what happened post July 2002 to the October 2002 bottom.

So things are getting just a little bit better as we are not seeing a pickup in distribution and the hope of bulls is that this will convince the cash on the sidelines to come back into the market. And you better believe there is some cash on the sidelines. I think each day for the past two weeks I have seen at least one of the two mutual funds profiled in IBD carry at least 10% cash. I have seen quite a few 20% cash positions and simply can NOT remember a time since 2002 that I have seen this number so high. Eventually this cash has to come back in to the market but nothing says they can’t let the market selloff on lower volume one more time. And nothing says that that selloff can’t be a 10% or greater decline. That would really have the bottom callers looking stupid. That is if they still actually have any credibility after telling us anywhere from 3 to 10 times that the market had bottomed from November to the recent lows. So take their commentary for what it is.

I am hoping some of these leading stocks that are now showing up in my scans near their old highs with OK-decent (still am missing HOT HOT HOT charts; you do NOT have powerful bull markets WITHOUT these) charts can turn into HOT charts. In fact, I am praying that maybe with a few weeks to a few months of work they can maybe create and setup in one more low volume base with green BOP and then all breakout on huge volume. If this happens, I will be much more bullish on this market as I will have my green charts back in my possession.

If you have a subscription to realmoney.com, you can see 11 stocks that I profiled today with BEAUTIFUL chart patterns that with just a little more work could ALL be great longs. However, like I just said, they all still need work. And when I say work I mean tighter bases with lower volume and more max green BOP and a market with a lot more volume in it on the up days. If this doesn’t show up, there is no way I will be participating in this rally on 400% margin. No I will instead carry a few long positions higher, take those strong gains, and then will look to load up on my ex-leaders from the 2003-2007 bull market. Without a ton of accumulation in the indexes, EVERY rally is suspect.

A testament of that might be ORCL which has fallen 7% AH on either a miss or coming in-line. To be honest, I am not sure what it is, because I really don’t care about lagging stocks and there is NO DOUBT about it–ORCL is a lagging stock. Instead of paying attention to ORCL, which is important to the market, I was watching GOOG which also fell 5% AH. Depending on where they open in the morning, it could be a very weak market I am looking forward to waking up to. And trust me, waking up at 7AM HST, which is 1PM EST, is really fun to do when these days happen.

While everyone wakes up and tries to “play” the market and wonders what is going on, I get to wake up, see what excitement came about, and then come up with a game plan. This has always worked much better for me. Waking up before the bell rings and watching the market live and having to make impulsive decisions is not my idea of fun or profitable. If this methodology created the huge gains and could get me an 80,000% gain in ORCL in 10 years then I would do it. But I know better.

I know that right now CASH IS KING in this market where stocks really do have a very rough time producing any kind of gain. That is why I must recommend for everyone, ESPECIALLY NEWBIES, that if you go long a stock and it does not work out immediately, think about cutting some of it right away. Besides that make sure, no matter what, that if the stock drops 5% after you purchase it that you cut 20-25% NO MATTER WHAT. Never let a stock fall more than 10% NO MATTER WHAT. And if you go long make sure you keep it very small.

If you are a newbie and you are thinking of going short, you need to FIRST make sure you are proficient with making money on the long side during multiple time frames. If you do not have a history of making gains during bull markets that beat the market, well then, it is time to move on and give your money to someone who can handle the pressure that naturally come with this business.

Instead of focusing on ORCL or CSCO, I recommend trying to focus on stocks like WW, CLR, FST, XEC, DVN, RBN, or ODFL. Besides that, don’t forget, if you are new to this game, to always be focusing on the leaders in weak markets like the one we are in right now. As the market moves along and comes closer and closer to a bottom some of the leaders near the top will drop off but the ones that stay at the top will come out and become the next leaders. Just like how Chinese internet stocks started showing up after June 2002; that was a whole four-plus months BEFORE they would bottom and then blast off in October. So our leaders of tomorrow will show up in the bear market that we are in. But until we get more innovative groups near the top I doubt anything we have here is the next Chinese-internets of 2002-2003.

Therefore, let’s say it one more time, CASH IS KING! New lows are still beating new highs–today it was 71 to 38, the put/call fell to .91, the VIX is at26, the P/E ratio of the DJIA is 62.8, the market is getting overbought based on the oscillators on the bottom of Helene Meisler’s columns at TSCM, laggards and defensive stocks are leading, and bulls are at 36.7% and bears are at 41.1% in the investors intelligence survey. This is a very mixed market.

There is no doubt about it, unless you are focused on the exciting Household, Retail-wholesale building products, Tobacco, Building, Transportation, Metal Ore, Diversified Operations, Chemical, Machiner, Oil&Gas, Energy, Medical, and Pollution Control stocks, you are going to have an EXTREMELY difficult time making money in this market. The slightly good news is that two Semiconductor stocks made new highs today: RMBS and RBCN. EVERYONE and their brother always likes to see these stocks leading as EVERYTHING innovative, high-tech, and part of rapidly growing industries need a lot of these semiconductors.

Maybe when we can get more technology, computer, software, internet, and hardware stocks showing up in my long scans, we can put in a great bottom. Until then, ONE MORE TIME, CASH IS KING! Great luck out there and I hope you all are enjoying this market as much as I am. Can you get rich here? ABSOLUTELY NOT. Can you keep all your money while everyone else loses it? ABSOLUTELY YOU CAN! And if you do not feel as good about losing 1% compared to a market’s 20% loss as you do as gaining 100% to the markets 20%, you are not at the level you need to be. Once you have learned to enjoy saving money in bear markets as much as making them in bulls, you will be certain to ALWAYS be able to profit in EVERY market environment.

Aloha and I will see you in the chat room, where I am EXTREMELY PROUD that I do not EVER have to watch the first 2-3 hours of the market. How boring would that be for me and my scans? zzzzzzzzzzzzzzzzzzzzzzzzzzzzz. ALOHA!

I am not as bullish in the short-term has Joshua however, I do believe we could see a rally. Ultimately, I do believe that this rally will fail at some point in the near future. New Highs are not turning around, New Lows continue to dominate and the number of stocks above their 200dma continues to be lower than stocks over their 20dma and 50dma. Ideally, you want to see more stocks above their 200dma. This would suggest that a long-term uptrend is in place.

Although we are in a confirmed market rally, there still remains the high risk of this rally failing. Cash is King and longs should be kept small.

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