Instead it looks like they are starting to return as sellers and with all the indexes reversing or failing right at the 200 day moving average it appears that the 50 and 200 DMA’s will be resistance for the market that the funds will use to sell into. I pray that I am wrong and that tomorrow we are up a lot so that we can resume the uptrend with our longs. However, I am not wishy-washy and know when it is time to pair back my positions. After today, it is time.

Some might be upset that you are not selling at the top and getting the gains you thought you were going to get. But trust me, one day, WHEN VOLUME IS HUGE ON THE indexes, these same stocks WITH EVEN BETTER AND MORE GREEN TO MAX BOP GREEN CHARTS will show up and run and produce 300% to 2000% gains. Sadly, too many of you will be used to selling too much off when the stock is up 10%, 25%, and 50% that you will miss out on most of the gains. For some of you, that are EXTREMELY new, that is OK. But for those of you who have seen this game before, you know that selling too soon is not the smart thing to do.

I would rather have a 50% gain turn into a 25% gain and then sell it all with only a 10% and THEN KNOW THAT I AM WRONG, instead of selling everything with a 60% gain only to watch it then subsequently run 300% to 500% (which is still doable as I had more than a handful do that since Aug/Oct 2006–that is when the market got a lot harder as the VIX completed fell through the floor.

Even though it remains very difficult to put together any large victories. Stocks in the oil&gas arena are still producing some solid gains. So what that 9 of the top 10 industry groups were down today, for the past few weeks they have been on fire. That is why in sectors that had the most stocks making new 52-week highs there were 9-out-of-10 that were oil&gas. Anywhere from 28% of the stocks to 100% of the Canadien Int. made new highs. This is a very huge share of one sector to control over the market when it comes to leadership. The only other group that had over 25% of the stocks in its group making new 52-week highs were the Steel stocks with 28% making it to a new high.

There were 224 new 52-week highs compared to 149 new 52-week lows. If you guys do not remember and if you newbies do not know, new lows were beating new highs immediately after the selling starting. In fact new lows started to beat new highs during the summer and even a little bit before that. New highs have been lagging for so long that I got so used to it that when the new highs started to show up and match new lows I got very happy. That was one of the reasons for my bullishness as something VERY important like new highs showing up and beating new lows on down days and new highs KILLING new lows on up days shows a VERY healthy and broad market. This is the strength I am looking for and since we did see new highs start climbing I had no choice but to lean to the bull side. Until yesterday, from the March lows, that has definitely paid off.

But now it is very hard to be a bull anywhere else but energy and steel. Out of the 224 stocks hitting a new 52-week high today, 123 were energy, with 11 in metals, 9 in medical, and 8 in utilities. These were the only groups with more than 5 stocks hitting a new high. The transports and mining each had 5 in their groups hitting a new high. But that is all that was leading us during today’s selling. Imagine what is going to happen when those 123 energy stocks decide to stop going up.

If oil is what is keeping this market up, we could be in a lot of pain in the short term, if we are blowing off a top here soon. The futures contract on a daily arithmetic sure does look exponential and there is only one word to describe MXC and DO and that word is parabolic. If anyone is actually considering purchasing these stocks you have severe mental problems. These stocks are so far away from their 200 day moving average that even if you told me it was a for sure thing they will be higher tomorrow, I would tell you to that I still am not buying them. I simply do not buy stocks that are up 975% in one month. LOL. If anything I am looking for a top which appears to have been Wednesday.

Do you notice the tail in the upper range of the stock price for MXC? Do you notice that the volume is even larger than the HUGE HUGE HUGE day yesterday that made the rest of the big up days and big volume surges look weak. PDO is still closing very strong and that is why I still own 15% after taking most of it off today and tomorrow. A 207% gain in nine days is pretty good. But sadly this was only a normal position. It was CANSLIM so it got more than most but due to where it was at on the chart, by being so far away from the 50 and 200 DMA. But after having so many up days in a row (10 out of 11 up and 6 out of 6 up) MXC and PDO are clearly closer to a top than a bottom. Watch out and DEFINITELY DO NOT BUY IT UP HERE. Even a pullback would be so extreme and would mess up these charts because they both just had CLIMATIC moves today on CLIMATIC volume. These stocks runs are done basically (I am sure there is still a little bit more they can go…but how much further can they go really?).

The stocks that are clearly lagging are the retail and banks. Banks make up 38 of the 149 new lows being the number one group in weakness. So make sure you stay out of this group as even a leading stock in a laggard industry is not a safe buy. The banks estimates for the next few quarters are so bad that you can be sure the market is not looking for anything solid any time soon.

This may be why the put/call has jumped to barely over 1.00 as traders started buying puts and took the index to .86 to over 1 on just a 1% drop. I wonder what would happen after another 1% drop. It probably will not be good for the perma-bears as it appears the crowd is quickly growing into a fearful crowd. This fear is causing them to make bets that they are “for sure” are going to work out. That has caused the NYSE short-interest ratio to hit another all-time high of 13.72. That makes it almost a full 14 days to cover all the shorts that are out there on the NYSE. This is usually a bullish indication as the market makes sure the most pain is suffered by the crowd that doest the same thing everyone else does.

Will those amateur short sellers be right? History says no. But you never know. Now that gold is hitting a one-month high, along with crude’s 3% rally to $134, you can bet a lot of people are going to start feeling a lot of pain at the pump and in their wallets. That makes for less money to invest in the stock market. Without new money to buy stocks why should a stock rise? Well, it could, obviously by funds moving a bunch of money from laggards and putting it into the few leaders.

One index that is for sure leading is the CRB index. The CRB, thanks to oil, gold, and every other commodity out there, is hitting a new high which goes to show that the bull market is still very much alive in the commodity markets. And obviously it is alive in our oil markets. That is why everything oil is hitting a new high.

Before I get out of here, I just want to remind you that the intermediate uptrend in the indexes have been broken to the downside as the indexes have failed RIGHT AT THE 200 day moving average. That means that on the short term the trend is now down which means that we must monitor our existing longs carefully for signals to completely jump ship.

Right now there are a lot of negative headlines that continue to dominate the news. As long as that happens I figure we should be able to climb the wall of worry. But today’s selling gave the NYSE based indexes 5 to 6 distro days and that is a big red flag. This means you must be market neutral here and let the market prove itself WITH VOLUME. It may come back on the downside or we may reverse higher here. I am not for sure and neither is anyone else. My charts say to hold but at the same time they are also saying “I am sorry, I don’t feel good.”

Well, charts, neither do I. Great luck everyone, be careful out there, and remember….cash is evidently still king. Don’t be in a hurry to put on a trade until we can get some more conviction. As long as I do not have any perfect charts (DGLY lost its max green BOP and has had three bad days in a row, officially killing its perfect make up–now it is just near-perfect) I refuse to go in on full margin shooting the moon. I will take it easy here and let the market tell me what my next move should be.

Stay positive on the stock market. The good times WILL COME AGAIN. They always do. Aloha and I will see you in the chat room where hopefully my wake-up greeting will be better than today. I wake up and we sell. Sorry. ALOOOOOHAAAA!

on that note, today’s selling sure did bring out a lot of people that are worried about further selling. To that, all I have to say is if you have some profits and do feel afraid you will lose some. Why don’t you sell 20%, lock in some gains, sit back and relax, and then let the stock TELL YOU what to do next. For now, I don’t see a reason for all the worrying that I saw today. How I judge how bad selling is is to see what it does to my current holdings and to see what the short scans bring up.

When it comes to the 70 plus stocks I am long (14 are of good size the rest are nothing that will change the fate of my world) there were ABSOLUTELY ZERO that gave me a FULL sell signal. Everything that pulled back did so either on low volume, barely pulled back on higher volume and had a bullish reversal before the close, and/or if it did pullback heavy it did not close below either significant support or the 50 DMA. Now I hate to be a party pooper for the HUGE short interest that is out there but facts remain that when a market is ready to top I will not only have a few partial sells I WILL HAVE A FEW FULL SELLS. Tonight, I had NO full sells.

On top of that, when I go over my short scans, another thing became clear. There is nothing I want to short and there is nothing that I can short (in size) that is either a safe short or a smart short. The truth of the matter is that this market may not be the healthiest market AT ALL but it is still alive and the uptrends that are within the current market are still alive.

If we would have sold off today on heavier volume and volume was heavier than the 50 day volume average, then obviously I would be a little more concerned. Another area of concern would have come if I had a handful of full sells which is very much possible when you have a real top. The final straw that broke the bearish camel’s back was finding NOTHING in my scans that could even be considered a safe short. Well, I guess there was one stock, that did show negative divergence but the lack of red BOP or HUGE distribution pulled me away from that one.

For now, the market still is just going nowhere on low volume. I am kind of shocked by how many “bulls” and how many “bears” I see out there. There should not be so many polarized opinions on the market out there, when the market is in the middle of a bunch of trends. The primary is down, the intermediate is up, the short is sideways. This is not a market to be a hardcore bull or bear. Especially when we don’t have any shorts working and we continue to wait for more than one “hot and perfect” chart to setup in a good stock. We have had a couple start but they have all stopped. There is nothing out there right now that is flooring me except one stock that starts with the letter X. That is the ONLY one. There are many other really really really nice ones but I am still waiting for my perfect charts. Until I see these, being a hardcore bullish is just wrong.

What else is wrong is being a bull when the NYSE has had 43 straight days below average volume. How anyone can be a raging-bull here with volume as pathetic as it has been is just silly to me. Also silly is being a bear when shorts are clearly not working here and stocks like MXC and PDO are up 1,000% and 600% the past quarter. I don’t know about you but being short stocks when you have a chance to take part in a 1,000% and 600% gain tells me that odds and reward/risk analysis is not your “forte.”

The bottom line is that some people are simply too focused on a market that intelligent and experienced traders are not “completely” focused on. That is why you don’t see any volume. THE SMART MONEY is NOT investing right now. If they are, they are doing it very slowly and are ONLY accumulating the Nasdaq stocks as the Nassy is the only index that has traded with volume above average. The good news about that is that the days when volume moves up the index moves up or has a bullish intraday reversal. if this pattern keeps up the low volume rally will continue.

Now, while that is not really good for a lot of stocks as few stocks are making big gains, there is one group that does have stocks making very big gains. That group, of course, is the oil&gas stocks. This group is simply incredible and is about the only group that anyone should be focusing on, besides the few select technology stocks that are starting to come alive. However, the few that are setting up are starting to show sings of slowing down. So it is best to continue to focus on the ONLY group (besides the metals) that is moving in exponential ways.

8 of the top 20 industry groups based on six-month price performance are in the oil&gas/energy sectors. Today 8 of the top 10 groups that had stocks hitting new 52-weeks highs today were in the oil&gas groups. Canadien Int, US Expl Pro, Int Int, Drilling, US Royalty, Canadien Expl Prod, Int Expl Prod, and Field Services all had 14% to 67% of the stocks in their groups hit new highs. That is amazingly impressive.

The final mind-boggling stat of the night comes with the new highs and new lows. That is where the dominance of the oil&gas/energy stocks become extremely apparent. Out of 153 new highs (which beat new lows today 153-107–this is bullish divergence), 87 were from the energy sector. That means that 60% of the new highs are coming from just one group and this is the last but most firm confirmation that we have one group leading and one group only. As long as we have leadership, the market should hold up.

Another bullish divergence came with leading stocks, as the IBD 85-85 was up .7% and the IBD 100 was up 1.1%. This shows that leading stocks, via the oil&gas/energy arena, are still leading this market, even when we pullback. I don’t know about you, but all of this bullish action UNDERNEATH today’s losses, combined with the NYSE short-interest hitting another all-time high at 13.68 and the put/call jumping from .82 to .96, makes me want to remain “A LITTLE” bullish on the market right now. And that means I will continue to hold my longs that rally until they are no longer rallying. When they show weakness, I will take profits as low volume shows no conviction in the rally. If this was a heavy volume rally, I would not look to sell 10% or 20% on a 25-50% gain. Normally, I would hold for even bigger gains. But this market is too unpredictable.

I want to thank Regulation FD, Sarbanes Oxley, all those lazy ETF’s (that take in SO MUCH money that could have been invested in real stocks), a low VIX, and a psychotically biased extreme-left leaning liberal media for making this a very difficult period since the April 2006 top. I have been able to still beat the market but the more I see these perfect charts just turn into mush, like a great pumping swell being destroyed by wind, the more I get disappointed with this market. Sometimes, I just wish it would break wide open by 50% and then reset all the bases to give us a brand new fresh start with solid steady accumulators of stocks. Then maybe I could get another DGLY to setup. DGLY today is not the same DGLY it was just two days ago. What a difference max green BOP can make in some of my longs.

The fundamentals will always drive 80% of all my buys. But the chart is always where the FINAL decision is made. I WOULD NEVER go long a stock without knowing what the stock was doing on a daily, weekly, and possibly longer time frame. Along with that I always want to know if the market is moving up or down. I am sorry, those who do not go with the trend are forever to have mediocre results compared to my methodology.

I hope everyone had a decent Tuesday and hopefully Wednesday will be a better day for everyone. PWRD and GA sure did stink but did you see the action today? By not cutting our losses and admitting we were wrong we might have suffered an extra 5.6% and 6.4% loss. I am sure those losses will expand. One lesson to take away from this, those who loaded up on either of these (I had a large position in PWRD but my winners have cleared, by a wide margin, the 11% loss taken overall) is to make sure a stock is under heavy accumulation before you go long.

PWRD showed mutual fund ownership falling 26 to 17 to 16 the past three quarters, despite some VERY impressive growth in the EPS and sales. That is your first red flag! Why is this stock’s fundamentals so strong yet mutual funds do not want this stock? This is very odd. When you see big EPS and sales growth, yet fund ownership falls AND THE STOCK HAS EARNINGS THE NEXT DAY, you might NOT want to get long. The same thing was up with GA. Not only did it have earnings the next day but mutual fund ownership fell from 14 funds to 10 funds the past two quarters. So two great stocks with huge growth but funds were fleeing. Instead of going long, based on the extremely solid and beautiful chart and the strong fundamentals, next time make sure EVERY SINGLE acronym of the CANSLIM system is followed. Not just the ones you like. By doing this you increase your chance of success by 100%.

That is all I can think of that I need to go over with you. Remember, stay agnostic when it comes to this market. Don’t be a bull. Don’t be a bear. Be a trend follower. That trend is mixed which means it is a stock pickers market and there is only one group leading. This makes this easy. Now the hard part is having a great setup with a perfect buy point to go long. That will not be easy with so many of these leading stocks trying to go into a parabolic exponential rocket ship mode.

Aloha and I will see you in the chat room where everyday we live green because our portfolios always are chock-full of winning stocks.

I know I am very bullish on this market, even without volume, due to all the setups and charts that are already breaking out out there. But don’t question if I would turn, if we got like three major distribution days in-a-row. If that was the case and there was no bounce here, then you have plenty of reasons to get bearish and top calling. But as long as we have stocks like EXM DRYS, and even CNQR showing up, I think I will hold off on top calling. For all I know it will take the put/call to hit .40 and the VIX to hit sub-10 before stocks finally top off this current run.

People that have already sold all of their holdings that they started buying in March, just like the people that told me to bottom fish in March, are just not at the level they need to be at. Nobody, should be out of any DGLY, GFA, or any of the other recent longs like PWRD ISYS and OTEX which have not acting perfectly since going long (that is unless you are a newbie then you should lock in anywhere from 10% to 20% on DGLY, VISN, or anything else up 50% since we went long the past few months). However, they are not acting like GENC and it is a great thing. FEED, even before the recent selling, gave us plenty of time to take some off the table; I took 50% off before the move down. Did you?

Why did I do that? Because look at the chemical stocks. They all look like they are near a major top and the fact that they have not topped yet is SHOCKING to me as the chart patterns have set themselves up more than once in becoming perfect tops and thus good shorts later on. But when I look at MOS, POT, CF, and TNH, I know that not only have I take a 300% and 500% gain in TNH and MOS respectively but that I am in the right place by being on the sidelines as the current chart patterns are LOADED with flaws and the EASY money has CLEARLY already been made in these chemical stocks. If you are focused on them now, I ask you, where in the heck were you in 2003, 2004, 2005, 2006, or 2007?? You are a little late buying up here for a big position play. I am looking for a top.

And hopefully when that group tops, the market will shrug it off and actually take off, as a rotation from commodities to technology could almost be done and waiting for that group to top before blasting off. We will see. At the same time this rotation is occurring it is obvious that money is not coming out of the energy/oil&gas sectors of the stock market. Those two groups continue to show extremely bullish action and there is no reason to think they are done when solar stocks are only now starting to blast-off. I also do not see any oil&gas stocks making clear climax tops. That means that the run is not over and the way they are dominating the top of the IBD industry groups, only a fool would bet against these stocks here. But I take it a lot of people are or else there would not be a near-fourteen day NYSE short interest. Amazing.

If you look at the top 20 industry groups based on six-month price performance, eight of them are energy related, three are transportation related, and three are metals related. What is even more bullish for these stocks is that the transportation-shipping group has gone from #133 to #15 the past three weeks. Stocks like TBSI DSX EXM and DRYS are all setting up in BEAUTIFUL bases. I want them all, when they breakout or bounce off key support, now that the charts are right.

If I was undisciplined I would just buy them now. However, I know my game and my game makes me a lot of money. I know either buying too early or doing the worst investing mistake and chasing a breakout too far past the appropriate pivot point is not the right thing to do. So I simply do not do it. It is that simple. Don’t break rules that have been PROVEN to work. How so many people can have the CANSLIM system handed to them and they simply do not take the time to learn how it works properly is STUNNING to me. It is stunning those few seconds of the month when I waste my time and watch CNBC and see so many that subscribe to IBD NEVER talk about anything the paper preaches. Especially Cramer.

How can you know that history has been mapped and chartered to show us how the best stocks work and yet you tell us to double down on NXY, IMA, or SHLD back in the day POST-top? Horrible. Patience pays off. If you daytraders would look at how much easier your life would be by making one buy and a few partial sells before a big final sell and without paying constant commissions would really improve your returns and open up your day to more free-time. There are always a few who do better being more active but I doubt those people were long my LMLP, TASR, IST, FMDAY, AFSI, or HRZ for some nice easy-to-handle big gains.

I don’t like being active as I know the big money is made in the holding. If you like being active, GREAT! However, if you are active and are not happy with your results, I must recommend that you read and study my Past Big Winners. If those, and the list and list of stocks in all of the O’Neil, Weinstein, Boik, Loeb, and Livermore books, don’t convince you, I have no idea how you are going to last in this game. Especially as returns vanish with a low VIX and a market FULL OF THOSE HORRIBLE ETFs which now receive money that used to go into REAL stocks. The money in ETFs could be added fuel to the fire of DGLY. But instead a QQQQ or SPY will do. Oy.

Getting back to the market’s performance the past week, I have to say while I am looking for a short-term top that could lead to a shallow pullback, I am not going to convince myself that it is a given that it will happen. If this market wants to continue to run that is fine with me. The stocks I am long are going to have to show me blowoff topping signals, reversal signals, or straight up fail before I will sell a market that has this many high-quality stocks moving higher. Even with volume below average on the NYSE and only a few days of above average volume on the market. At least those days are either up or have bullish reversals.

What clearly makes me bullish here (but remember I am ALWAYS ready to sell, if I have to) is that leading stocks and the exciting tech stocks are taking a clear lead. Last week, the SOX led everything with an incredibly impressive 5.8% gain and the IBD 100 was right behind the SOX with a 4.2% gain for the week. Both indexes did much better than even the strongest mainstream index. The SP 400 gained 3.5%, the Nassy/SP 600 3.4%, and the worst of them all was the DJIA with a 1.9% gain.

This to me clearly tells me that this is a market I want to be interested in. I am interested in all markets but when I see technology stocks AND leading stocks taking the reigns as we move higher, I have to support that. Low volume or not. Do I want to see volume return soon to the upside? You better believe it. Will I be OK with a low volume rally? FOR SURE!

Right now there are too many stocks extended or they have come off the lows too fast and need to base out. Stocks like FSYS, FSIN, HMA, and MVL would all make GREAT longs in my portfolio. But there is no way I will buy these until they calm down, setup, and breakout again. Just like my CLR long. Everyone seems to want to buy it now. I am NOT touching it again until it touches that 50 DMA. Better safe, than risky and sorry.

Other stocks I would like to get long at some point with a good entry would be SNHY, BUCY, WBD, HRS, ESV, EXM, DRYS, DSX, DO, UPL, and about another 100 oil&gas stocks. Chasing just isn’t my game. Patience is.

I don’t have much else to say other than without options expiration volume probably would have been lower on the Nasdaq. So I guess volume was kind of lame on even Friday’s move. Not that it is important or anything. I just thought I would throw that in there to illustrate that a low volume rally is what this is.

That means that sentiment dominates. Since the big boys are not putting a ton of new money to work and the volume is real low, you would think the market would be going nowhere. But the old maxim is to “never short a dull market.” Yet with all this low volume that is what knuckleheads are doing. The negative news that I have discussed earlier, the negative polls with another one being released Tuesday, and the SP 500 having the worst earnings, dropping 25.9%, slump since 2001, going three q’s in-a-row down are all the perfect backdrop to continue to have that NYSE short interest ratio rise and to see the put/call climb higher. Right now, the media is a growth investor’s best friend. Their lies and BLATANT exaggerations make this possible.

Every message board or blog comments section I read has at least a handful of doom-and-gloomers and if you guys did not have the pleasure to listen to the comments coming from the yahoo message boards posters the day BSC collapsed then you have no clue how negative it is out there. People are simply disconnected from reality and the poor continue to get more poor due to policies they THINK is helping them but is in fact making it worse. Ignorance and being uneducated is a horrible mixture. Along with being easily manipulated. Combine those three traits and you have the politicians favorite targets.

I am going to do a post later on tonight that will focus on the strong stocks in strong sectors. I recommend, while this market is moving up, that you focus on these areas of the market in the upcoming weeks. It will be beneficial to your bank account.

Aloha from a beautiful and gorgeous Maui “where every little thing is going to be alright.” I hope you all got to watch the Penguins win and watch the Celtics win. If you did not, you seriously need to get a Tivo. And if you do not like sports…you are a nerd and are probably the donkey that decides to come to Maui and “learn to surf” then you paddle out to our breaks and get in our ways and almost kill someone. What a great year for playoffs in the NHL and NBA, we have the Yankees and Mets tonight, and this year’s ASP has been incredible so far. Get off your butts and get to the gym!!!!!!! ALOOOOOOOOHAAAAA!!!!!!

However, there is nothing wrong with being prepared, but until the market actually cracks, I will have to go with the short-term to intermediate term uptrend and ride the wave for however long it wants to last. The sad thing is that the way some of my stocks that looked great just a couple of weeks ago now look only average to somewhat above average. This is OK but in a brand new bull market, we would normally have 5-6 near-perfect to perfect charts right now. Instead I have one. One chart STILL looks “hot” out of about 4 or 5 that were starting to. Basically this has been the theme ever since April 2006 but thank God some gems here and there have still been able to shine through the rough.

It has been a long time since a WHOLE BUNCH of stocks setup in proper to perfect bases and then broke out and ran away. The truth is, I am only finding a few gems here and there and usually when I find a gem it fails. However, for every 3 or 4 that fail and that we can cut quickly thus saving ourselves a LOT of pain, we will always have one that can run. They might not be of high quality like AFSI but as long as 1 or 2 are around I guess that is good enough. But the further we go along without these near-perfect to perfect charts setting up or even holding on the more problems we will run into in the future.

It was good to not see the market follow-through on the selling that hit the market yesterday, after we were down midday, as the market reversed early losses. But the lack of gains and some poor action in some of my better stocks after earnings were taken poorly just shows me that this market is probably not out of the woods yet. I guess it was sort of foolish to think that everything was clear considering there were a lot of people that I know that NEVER sold their stocks–normally there is always panic selling as John Q. public finally gets the crap scared out of them via the heavily-biased left media. If these morons that report the news actually understood how economics work maybe we wouldn’t see this at every bottom. The fact that some in my family that are known for doing the wrong thing at the wrong times have not done what they normally do is my clue that a “for sure” bottom has not been fully enforced.

The investors intelligence cam out yesterday and that showed that newsletter writers have already returned and embraced the new bull with 44.4% coming in bullish and only 32.3% bearish. That tells me they are already hoping that the worst has passed. The VIX is below 20 which is yet just another low level that tells us that the crowd has become complacent with the current market and needs a good scare. A VIX this low makes it REAL HARD to find, buy, and hold Monster Stocks for significant gains as you simply can NOT get the huge returns with a low VIX. The crowd is also bullish on the RM.com, marketvane, and AAII surveys showing that the crowd is bullish on equity prices at least in the short-term. I hope they are all right as I love making money as much as the next guy but something tells me that betting with the crowd is not the wisest of plays. But if that crowd is right I’ll take whatever gains we can get.

What I do find positive still about this market is that oil went up .16 to 123.69 hitting an intraday high of 124.57. Since oilandgas stocks make up 6 of the top 20 industry groups based on six-month price performance, the IBD 85-85 index managed to rally 1.2% which outpaced all the other stock market indexes. It is always nice when leading stock lead but I don’t think it is that bullish when the whole market’s leadership is based on oilandgas. Well it is not all oil&gas, in the top 20 industry groups, 3 are in the transportation group, 3 are in the machinery group, 3 are in the metals group, 2 are in the building group, and the medical and chemical sector have one each. So really, the market is being made up of four leadership groups: energy, metals, machinery, and transportation. This is where it is at and this is where I want you to focus. Why?

Because there were 108 new 52-week highs to 162 new 52-week lows and 42 of those new highs were in the energy sector. That clearly tells me that if you want to make big money in this market, you have to be long oil stocks. How much longer can the run last? I don’t know and nobody else knows. But they continue to breakout and run. With oil stocks being so extended on some daily charts, it is wise to watch for pullbacks and bounces off the 50 DMA on strong volume. If you can get a low vol. pullback followed by a higher volume bounce it might be worth getting long some of these high-flying strong fundamental growing oil stocks. Besides these stocks, 7 new highs were in the metals, 6 in the medical, and 5 in the metals. So in these past two paragraphs, along with the last four post, I have made it more than clear where the leadership has been.

If you are still having problems finding winning stocks, you might want to take a trip to the energy sector. Solar stocks are just starting to get hot too. This is definitely the only game in town that has some juice with some follow through, besides metal stocks. Some of the oil stocks to keep an eye on for low vol. pullbacks include WLL, PVA, PDE, CNQ, WFT, SPN, CRZO, FTI, SU, APC, SD, NXY, NBL, and PXP. That is just a few of the TOP QUALITY longs based on fundamentals and price performance. Other high quality stocks in the other groups include MT SID NUE MEA CHD BHP CLF.

Even though I am nervous about this rally lasting, like I said yesterday, I hope that I am a contrarian indicator of myself and that we blast off and continue higher. It is possible that if we continue to rotate into some of the tech, retail, and other financials that have been catching a few bids that this market could take off. Especially with the NYSE short-interest ratio HITTING ANOTHER ALL-TIME HIGH of 12.94!! This means it now takes a full 13 days to cover all the shorts in the NYSE. Now, when you take that data and combine it with all those high quality growth mutual funds that I keep listing in my mutual fund list in the forums, you possibly have a very bullish mixture that could unleash a powerful rally. I hate to think that all these amateur short-sellers are going to be rewarded with a falling market. But if they are, that can only set us up for better chances in the future to make a ton of money. Or if they are wrong and they are all squeezed by the big elephants buying that will occur when they return, I will take what we are given and just pray more stocks setup in chart patterns.

The put/call barely fell to .81 but is still above the .80 which confirms that the options amateurs are still a “little” busy with the puts. When this put/call gets to under .70 for a few days then I will be real nervous that we have gotten too relaxed. But until then, when I take the persistently higher put/call with the constant all-time high hitting NYSE short-interest ratio something tells me that the public is a bit too pessimistic.

However, all of this depends on your time frame and I still believe that you want to be a little long here, not short, and even though I thought getting more long than cash heavy was the right decision, I now believe it might be right for the best to go 50% long/50% cash. But if we get a few more distribution days and the leaders continue to crack and my last “perfect” chart breaks, I will be turn from a cautious bull to a cash heavy wave hunter as surfing will be my priority over messing with this choppy and insane market. Hopefully, the market will trend on us soon. Aloha and I will see you in the chat room, where we are always in an uptrend!! ALOOOOHA!!! Maui No Ka Oi!!! 808 4-LIFE!!!!!!

Today’s distribution day did come with most indexes losing 1.8% which was a nice chunk lower but the NYSE’s volume was below the 50 day volume average for the 33rd consecutive day. The Nasdaq’s volume was higher than the day before and above the 50 DVA but the volume on the index was still lower than 4/24 and 5/1’s rally on higher volume. The selling was heavy but nothing that smells of SERIOUS distribution. I will need to see further confirmation before I sell stocks that are still holding support. Especially when the majority show either intraday tails or low volume on the selling.

The selling seems to be the result of the weak financials and it is disappointing to see that CSCO just doesn’t have the influence it once used to on the overall market. Nope, what effects the market is oil and oil up another $1.69 to $123.53 is not what the doctor ordered and it is the virus that got this market sick. Even though oil stocks are leading this market higher, especially in the US Expl/Prod which were slightly lower but still had 32% of the stocks in the group hitting new highs and a total of 61 energy stocks hit a new 52-week high intraday. The other oilandgas stocks held firm also, with International integrators and drilling stocks having 22% and 20% of their group hit new 52-week highs. 28% of steel-producers also hit new 52-week highs so let’s not forget about that group either as it held up well in the middle of the selling.

If my math is right we have a few bullish developments during this pullback that make me feel a bit safer that not too much more downside pressure is in the cards. The put/call ratio rallied back to .93 which gets it ever closer to the 1.0 level which shows the crowd has gotten too bearish. The number of stocks hitting NEW 52-week highs beat the number of new lows by 142 to 130, which is an excellent development during a down day and not something I have see in a while. The last but-not-least item is the NYSE short-interest ratio which is just hitting another all-time high of 12.86. It almost takes 13 days to cover the 4% of the NYSE that is short and this kind of fuel that can be added to the fire, IF THE MUTUAL FUNDS WOULD JUST RETURN to buying stocks. That would be beyond nice.

However, until they show up, I will just be biding time taking the best trades I can in a market that is offering me very few to zero perfect charts that are loaded with huge accumulation and max green BOP with great fundamentals. A lot of leaders had a bad day–SOHU GFA GNK PRGO CTRP KWK CBD–but they all are holding there above very key support which makes me, for now, confident that we still have more room to run.

I am starting to nod off on my computer so I will see everyone in the chat room around the same time that I always show up. Aloha and great luck in this low volume to average volume market. ALOOOOHA!!

There were 185 new highs to 114 new lows which is the first clear victory I have seen since the downtrend started. That is very good. However, the top eight groups today were chemical-fertilizer, steel-producer, agricultural operations, building-residential, oil&gas-US expl/prod, building-heavy construction, food-dairy, and steel-specialty alloy. These are all OLD leaders from the previous big rally and just proves that this is just another leg and part of the long-term commodity rally.

This must have been helped by MOS, POT, AGU selling potash to China for $576 per metric ton which is up from $176 last year. This is putting those charts in the start of what appears to be a parabolic run. It is just starting and this is not the top but you need to watch these stocks. They are probably going to go on one final fantastic “blow out” run before it is all over. This appears to be the start, by looking at the mass amount of volume this year.

Other stocks rocking today in these areas that might see further gains that I am not long (thus can tell everyone here about) is SID, POT, MOS, AGU, DE, SOHU, BUCY. CLR is another example of a possible SHORT-TERM blow-off top. Some of the best stocks will also be found in these leading industries: energy (79 new highs), metals/steel (10 new highs), ag (9 new highs), chemicals (8 new highs), banks (7 new highs), and transportation (5 new highs). If you can’t find any winners in here, you are simply not looking.

The most impressive action came from the Semiconductor stocks as the SOX was up an incredible 5.5% today. That gain, along with the IBD 100 and IBD 85-85 being up 4%, show that leading and technology stocks are also going along for the rally and are leading it this time. That should be bullish, YOU WOULD THINK!, for at least a few months. This rally is very broad as the NYSE, SP 500 have B ACC/DIS ratings and were up 3%, the Nassy has an A-, and the IBD leading indexes have B’s. This shows everything is being bought and nothing is lagging. Especially with oil and gold stocks still rising. This is a very broad and healthy rally with a lot of stocks breaking out and going to new highs. This was the tell of late 98, late 99, and 2003. Very broad gains, lots of nice charts setting up, but….there was one more thing those rallies had that this one does not….VOLUME!!!!

It is completely missing as volume is still below the 50 day volume average. And even though it was higher than the day before by 11% giving us an accumulation day, the fact it was below average completely tells us that the big boys who have billions of dollars to work with are simply not interesting in putting their hard-earned cash to work in this environment.

The top industry group right now based on six-month price performance is the oil&gas-US Expl/Prod stocks as they have moved up from #42 seven months ago to #1 today. This will be the group to watch for leadership. As long as this group continues to rally, even if the big boys don’t show up on the indexes, the overall market should still do well.

This was all started off the back of good earnings news from JP Morgan and Intel. This continued tonight with eBay and IBM as they both impressed lowered expectations. If the company has high expectations, you can guarantee it is going to get whacked. If it has reasonable to below estimates expectations, you can almost bank that things will be good. So if your company is low-balling the numbers, chances are things will be OK. If they are hot shots, I would keep a close eye on them.

Aloha and have a great Thursday. There is a huge south swell that has started hitting Maui today and tomorrow it should be well over head high I am praying on the sets. If that is the case expect another chillaxed market commentary. Aloha and pray for big surf (it is my backyard; that is why I like south shore surf better than north–I don’t have to drive and pay $4.08 per gallon of gas). ALOOOOHA!!!

Anyways, luckily for me it was just more of the same junk that we have seen the past 17 sessions as volume is still well below average and the charts still look junky. What makes it worse, is that the few good charts we had building have gone away. Not all but still it is not good.

That is unless you are focused in one area and one area only. Oil. Oil hit $114 yesterday and closed at $113.79 which is a new all-time high. I have a feeling we are going to be saying that a lot. Especially when I look at oil stocks and see that they account for almost ALL of the stock market’s strength.

There were only 90 new 52-week highs yesterday to a very large 222 new lows but what stuck out to me is that out of the 90 new highs 58!! of them were in the energy sector. That is a whopping total, especially considering that the next most came from agriculture stocks as they had 6 new highs in the group. Obviously, the oil&gas and energy sectors are the only two places to be in this market, unless you are in soft commodities/ag. There simply is no where else to go.

However, what makes this harder for me is I am watching one stock that was a VERY LARGE buy FLY without me as it shook me out hard. CLR was a buy of mine in all of my accounts including family/friends on 3/13. It immediately did something wrong on 3/17 selling off almost 6%. Immediately, 50% was cut due to it not moving higher. But the VERY NEXT DAY it completely righted itself on higher volume moving up almost 7% on the way to a new closing high. However, two days later it closes below the 50 DMA officially forcing me to stay disciplined and cut my loss. That was the bottom and since then has rallied 63% in 17 days. This is a HUGE disappointment, to say the least.

This is not the only one. I am sitting here nervous, knowing that I have just taken preventive measures to not lose profits in a solid long that was starting to look really weak, watching DAR build a nice shapely round base. If DAR breaks out and runs I will once again be watching a once solid long, turned rocky to toppy, now reversing right back higher. Not ONLY THAT, but I am sitting here looking at FFH and feel the exact same thing is going to happen.

Now, I have never in my investing life since 2002 felt so lost and confused about why this is happening. I have never seen so many stocks play the EXACT same game. They are breaking out or bouncing off my near-perfect patterns like they normally do. However, instead of moving higher, pulling back on low volume, and maybe having a big selloff BUT STILL HOLDING the 50 DMA, the stock now rallies, pulls back for one day, then swoons below the 50 DMA on heavy volume, and then moves higher then tightening up and creating nice round bases as I sit there scratching my head.

Soon to be examples of DAR, CLR, and FFH are SVR, GEF, GEF.b and soon to be a couple more B stocks. I have to be honest, I feel like in 1999 I had this method down. THIS IS THE FIRST TIME SINCE 1999 I HAVE FELT SO HELPLESS TO THE MARKET. I am finally humbled by this market as I have no clue why what has worked for me for 12 years all of a sudden since January 22nd has just gone wrong. It is the market, I know this, that is why I will not panic (plus I don’t ever panic over anything market related) but still I have never been shaken out of so many fine stocks so often. I feel like the market is targeting me personally. I have NEVER felt paranoid but for the first time in my market life I feel like I am being watched (I AM NOT, trust me). This is very odd because this is not rational behavior. Thankfully CANSLIM doesn’t involve feelings so I do not have to worry about it effecting my trading even 0%.

For example, you are not going to wake up tomorrow and hear me say “OK, bottom fishing the solar stocks” or hear me say “I am going to buy this at support and sell this at resistance.” No, I will continue to use my methodology until the day come when the market wants to work right again. I made a good amount of money during the last rally that topped out in November. From late-July to November many stocks performed beyond what most investors could have imagined as APPY DRYS MTL all made 130%, 100%, and 90% respectively in two to three months. These were all large holdings so it wasn’t too long ago things were “OK.” They were not great and have not been great since the top in April-May 2006 but after this bad market is over you better believe that we are going to have a lot of stocks that act like those and CLR DAR now WITHOUT THE WILD DAILY action.

Some signs that thing could be much better if more sideways consolidation happens is that the IBD 100 was up 1.2% and the IBD 85/85 was up 1%. This relative strength amongst leading stocks (oil leading) is very good to see even in the low volume because the bases that can be created right now could be the low volume round bases with green to max green BOP that we will need when this market is ready to run.

Obviously, I don’t think the market is going to make its move any time soon as I expect more sideways to driftless action the next few days to few weeks. It just seems that wall street has checked out. If you decide to do the same thing for the rest of the week, I can not say I blame you. The excitement will come back in and you will know that has returned if you continue to monitor the price and volume action. Once you start seeing big up days on strong volume, RUN don’t walk into the leading stocks that are blasting off.

Some stocks that are moving now that I am not long but know will make good longs on pullbacks or new breakouts are CAM, NOV, ARD, KWK, SOL, RDC, RIG, AND RRC. RRC…ugh (sigh). There it is a stock I went long A LOT OF (ask author_ego, he will confirm that I loved it) in January that I was once again FORCED to cut my loss on a couple of weeks letter. DAMN!!! If only I knew how to be less of an “active” investor. Nah, it isn’t worth it. You know why? I might still be long TASR or TZOO or Enron if I fell into the buy and hold lies.

This methodology will come back into style. It always does as history ALWAYS repeats itself. Those beautiful max green BOP charts all over ‘my past big winners’ in my longs section will return. There is one stock out there looking like it could be a future candidate that starts with the letter H. That is all I need: excellent price action, huge accumulation w/ low volume pullbacks, and a lot of green to max green BOP with no yellow or red in it. I get those three things combined in a stock with excellent EPS, sales, ROE, SMR growth and all is usually not only great but FANTASTIC.

Right now, I feel like Linus? in the Charlie Brown episode waiting for the great pumpkin. LOL. But, when you do this for a living, that comes with the territory. Things are not always easy and sometimes you get 1999 and 2003 but most of the time you get early 2002 and now 2008. It still is not easy and while it is not easy I will not be going all-in with my margin. I still believe cash is king and getting heavily long here is not right. Worse getting short! Don’t even think of doing that right now.

Aloha and I will see you in the chat room where we are always hitting new all-time highs!! Oh yeah…the put/call is at .94 so people are still buying a lot of puts. I want to be on the opposite side of that trade. ALOHA!