Market Wrap for September 25th, Repeat After Me: “Capital Preservation”
September 26, 2008 | Leave a Comment
By Thursday’s closing bell, the S&P 500, DJIA and NYSE all finished at least 1.7% or higher on heavier volume than the previous session, which technically means we had ourselves a follow-through day. The Nasdaq lagged, however, as did the Nasdaq 100; as for the Russell 2000 and S&P 600 –well, both got just a fleeting glimpse of their 200 day moving averages before being turned back. And not only did the IBD 100 and 85-85 indexes underperform, volume actually came in lighter than the day before. The fact that institutional investors weren’t even remotely interested in snatching up shares of leading stocks does not exactly inspire confidence in this fledgling rally. “But, wait,” as they say, “there’s more….”
Spoiling the FTD party was the wave of selling that hit the market during the last two hours of trading, dragging the indexes well off the highs of the day. During the session, the NYSE had been up as high as 2.7%; the S&P 500, 2.9%; the Dow, 2.8%; and the Nasdaq, 2.6%. Also, the volume of every index, while higher than the previous day’s volume, was still below its average. Another red flag: there were just 13 stocks making new annual highs compared to 191 stocks making new lows. And the top five industry groups on this follow-through day: Media-Periodicals, Leisure-Photo Equip/Rel, Leisure Movies & Related, Oil & Gas-Intl Integrated and Banks-Foreign. Only one of those groups is ranked in the top half of IBD’s 197 Industry Groups and it is ranked 97th. “But, wait, there’s more….”
Durable goods dropped more than twice the initial estimates back in August, and new home sales fell far more than expected, hitting a 17 year low. The annual rate of new home sales plummeted 11.5% to 460,000, the lowest reading since January 1991. Bad, huh? “Well, wait, there’s more….”
As of this writing, futures are pointing to a rough start to the trading on Friday morning. It seems the talks concerning Treasury’s $700 billion bailout has hit a snag and are in danger of collapsing. Henry Paulson is said to have gotten down on one knee, begging Democrats who left to caucus not to “blow up” the legislation. Truly a surreal image. To make matters worse, RIMM missed earnings and the after-hours traders mercilessly pummeled the stock about the head and shoulders. This will surely add insult to injury to what is shaping up to be another volatile session. Never a dull moment, folks.
While there seems to be nothing but bad news and negativity, remember to keep emotions in check. Don’t get caught up in the hysterics of our beloved media; while exasperating, it serves a purpose. Now more than ever let the charts be your guide. It may very well get a lot worse, my friends, I’m not going to lie to you, but this I can guarantee: eventually the charts will come back. The whole world will be worn out and flabbergasted. The last thing they will want to think about is stocks. The charts, however, will tell a different story. They will reward those who waited on them. Just make sure you have the capital to take advantage of what you hear.
Repeat after me: “Capital Protection.”
A special Market Wrap brought to you by Author_Ego.
Leading Stocks Take The Lead Once Again As Oil&Gas Stocks Produce Massive Gains; 79% Think We Are In A Recession And That Makes Me Bullish!
May 6, 2008 | 2 Comments
It was another overall lower volume session as the NYSE, for the 32nd day in-a-row, came in with volume below the 50 day volume average once again. However, underneath the bullish mini-reversal that sent the Nasdaq from a .8% loss to a .8% gain, there was a TON of bullish action in stocks in a wide range of industries.
When the day started off, it sure did not seem like the good times were going to continue as more bad news rolled in from so many areas that it seemed the market was due for a rest. June oil climbed $1.87 to close at $121.84 and hit an HOD of $122.73. This definitely sent some fear in the market, on top of the UBS negative banking report, the FNM and FRE announcement, and then going back to oil GS predicting it to hit $200. However, proving that markets climb a wall of worry, indexes were able to shake all of this nonsense off and most indexes closed near their HOD with every index but the DJIA up .8% (the DJIA was up .4%).
The best news was not the higher volume than the day before, either. No, the best news, once again, was the dramatic and dynamic leadership of the IBD leading indexes. The IBD 85-85 came in with a heavier volume 1.3% gain. Leading stocks continue a pattern that started about a month ago with them making moving lower on the down days and now rising higher on the up days. This pattern has really started to develop recently and appears to be continuing that path for a little while long, at least.
Bullish Week Ends With Mixed Trading On The Major Market Indexes; Individual Stocks Are Starting To Look Real Good
May 3, 2008 | Leave a Comment
It was another overall boring session to end the week but despite the overall boring tone to Friday’s session it was still a bullish session underneath as many stocks had solid sessions and many stocks that I was long had a very positive session. Overall, profit taking was quite mild in the AM and the strong mid-day rally into the close shows the bears are still not in control.
This kind of action on a do nothing day is just what I like to see in a market that refuses to do much. If there would have been a lot of blowups and negative action today, then I would have been a lot less enthusiastic about the non-event that Friday was.
By the close, the NYSE was up .6%, the SP 500 was up .3%, and the DJIA was flat. The Nasdaq finished lower but the intraday support and positive action by the close is something that has to be considered positive overall. I mean obviously if this market was real weak they would have sold them into the close.
A Weak Open Lingers All Boring Day Long As Stocks Close Lower On Lower Volume; ORCL Disappoints AH
March 26, 2008 | 7 Comments
It was an extremely boring day on wall street today as a pair of really negative economic reports failed to get the bears to take advantage of the macro backdrop. Considering durable goods announced by the Consumer Department fell 1.7% in February, crude oil bounced $4.68 to $105.90, and new home sales were the lowest since 1995 there was plenty of reasons for the market to take the gains and hammer them into oblivion.
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.
Where Did All The Volume Go?; Huge Rally With Weak Close And Low Volume Is Not Bullish For The Market Long-Term
March 24, 2008 | Leave a Comment
It was beyond a great day for the stock market, once again, for the second day in-a-row, as the Nasdaq led the way higher with a 3% gain that had many market participants jumping for joy. Too bad all that jumping for joy was not celebrated alongside large institutional investors who decided to stay away from the market today as I guess they did not want to be part of the short-covering rally. And with volume coming in well below the 50 day volume average you can be sure that that is exactly what we saw today. It was just your usual bull bounce in an overall bearish market environment.
That bounce was given credit due to JPM buying BSC for $10 a share instead of $2. This whole thing sounds crooked to me and I will just leave the action in BSC to that. But, this news was given credit, on top of some good existing-home sales data, for today’s gains. Well, you know what news would have been better with today’s 3% gain? NO NEWS. It is a huge rally on large volume that comes with no news and a lot of stocks breaking out that gets me more exciting than any other news headline I could possibly see. It almost gets me as excited as the bottom callers who call a constant bottom in this market, are wrong 5 times before they are right once, and then when they get a tiny bounce dance in the streets that all is well.
I forgot what it was like to be involved in a stock market where price action is so rough yet so many “traders” can’t stand still and keep trading their pants off like it was a rip-roaring bull market. But here I am in one again for the first time since 2000-2002. It is incredible how not even ten years can go by and yet we have still forgotten all the lessons we should have learned there. The bottoms callers today sound just like the bottom callers then. They are so sure this is a bottom that the put/call has fallen to .80.
DJIA Leads The Way As BSC Rocks The Stock Market On Mixed Volume; How Can This Be A Bottom Without A HUGE Surge In Volume On the Nasdaq And NYSE? It Can’t Be!
March 17, 2008 | 2 Comments
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Stocks gapped lower after a horrible announcement by JPM that they bought BSC for $2 a share. Now, while I don’t want to gloat on this, I just want to say that for the 100th time in my life I have warned a bunch of traders to not buy a certain stock and yet they still do it. There was one reader from Santa Barbara from RealMoney.com that attacked me 8 days ago for telling him BSC was a POS. Well here we are from $75 to $4 and yet still no apology. No, thank you. No, I am sorry. Just a big pile of nothing. From Eugj to BHCO to Gerard to WillPS to SCO to Geoffrey from Santa Barbara: all of these characters have called me out and told me that I did not know what they were doing and EVERY SINGLE TIME THEY WERE PROVEN WRONG AND EVERY SINGLE TIME I DIDN’T RECEIVE A SINGLE I AM SORRY OR THANK YOU. Is this what our world has come to? 
Oh well, there is no doubt I have become a sensitive character in my old age and things like this bugs me now. I just don’t know how yet to act when it comes to responding to jackoffs that make themselves out to be major idiots. I guess I will learn to ignore it in the future. The exact same way I ignore going long any stock below the 50 day moving average or go short stocks above the 50 DMA.
The Selling Continues With Stock Market Indexes Closing Near Their LOD; Charts Can Definitely Make A Difference!
December 15, 2007 | 1 Comment
Friday’s selling came on lower volume but one thing was very clear by the end of the day. The bulls have absolutely no juice and if a gigantic multi-Fed driven liquid injection in the market can’t keep the market up, I am not sure what people think will keep it up. Everyone knows that I only follow the charts to make my trades. And you better believe that is the truth. But sometimes you can look at the macro economy and combine what you see with charts to give you even more conviction than you normally would have with just the charts.
Recently it has become clear that the individual charts that have been showing up in my long scans are deteriorating to the point where there are no perfect charts, only a few green charts, and those that are looking strong are all in defensive industries. When I combine what I see in the long scans to what I see in the short scans, I can see that the numbers on the short scans are growing and growing and the ugliness of the charts are getting pretty nasty. This can be seen on the forums by looking in the area where I post all of my sells. If you notice a lot of stocks are showing up on the ‘nasty’ list.
These charts combined with the downtrends in all the indexes since the November top makes it pretty clear that we are going to be in a rough spot for quite a while. Now, I know some of you do not want to believe that and think that I am crazy. But I am telling you that I have been through enough good and bad and sideways market to have seen it all in the charts. I have also studied the market indexes in TCNet going back to the early 1900’s on the DJIA. So I have learned what bull markets look like, bear markets look like, consolidating markets look like, and even what it looks like when a bottom or top is forming.
SP 500 And Nasdaq Pullback In A Calm Fashion On Lower Volume, While The DJIA And IBD Indexes Continue To Rally; Where Is The Volume And Where Are The New Leading Stocks?
December 7, 2007 | 5 Comments
Overall, it was a pretty choppy and inconsistent day on Friday, but it was still a good day when we take it and consider that we continue to hold well in the face of all the bad news from the subprime area of the economy.
I heard many complain that we did not finish higher today on the Nasdaq. I, however, disagree with them and find it more bullish that we finished a tad lower. That shows me that we are consolidating the gains, since the November 28th follow-through day from the IBD indexes, quite well. If we would have sold off today on heavier volume, then I wouldn’t consider the days action bullish. But the fact the we sold off a little and the volume was lower is exactly how you want to see the market pullback after adding on some solid gains.
Don’t forget that the DJIA finished higher, even though volume was extremely low, and that the IBD 100 and IBD 85-85 indexes finished higher. The big caps and leading stocks seemed to hold up well on a day of profit taking. So the people that were not happy with the Nasdaq do not have to look too far to find some other positives in the market.
Possible Stagflation?; Stocks Lose Ground On Higher Volume, Giving The Market Its Second Distribution Day
April 12, 2007 | Leave a Comment
Stocks started the day weak on the back of data from the NAR announcing that they expected existing home sales to fall in 2007-the first drop in 38 yrs-and also see lower existing and new home sales in the short term. That combined with higher gas prices weighed on stocks early. But once again the dip buyers showed up and started to bid stocks higher. That was until the Fed March meeting minutes came out at 2pm. That promptly sent stocks to new lows on the day before they received a minor bid into the close. Read more
Stocks Rally Again And Close Near Their HOD, On Stronger Volume; Volume Well Below The 50 Day Volume Average
April 11, 2007 | Leave a Comment
Stocks performed the same way as they have been recently, with the markets gapping up, selling off, and then finding dip-buyers to help bring them off their lows and sending them near their highs by the close. All of this happened despite a very healthy amount of bad news from the housing and mortgage industry. Almost half of my links that I received today involved stories about the housing and lending markets. However, stocks digested the data and did what they have been doing recently rallying the rest of the day. Read more
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