It Looks Like Friday Was Not The Capitulation Bottom; Stock Indexes Sell Off On Lower Volume
March 10, 2009 | Comments Off
On Friday I went over many FACTS that detailed why Friday was NOT a capitulation bottom. I was proven correct on my analysis by today’s fall in the stock market of around 1.5% to 2%. However, to me, the most amazing thing isn’t that stocks fell around 2% today. Obviously, I knew that could happen as I have 53 short positions (the MOST EVER in 13 years of investing) and only 5 (now 4) long positions. What I did not know would happen was that investors would actually find today’s pullback POSITIVE AND BUY STOCKS INTO THE DOWNTREND!!
While this may seem stupid and risky to me, to the call buyers it must make perfect sense. The put/call ratio fell from .91 to .73!! This is the umpteenth time in the previous three months that the market has been down yet instead of the put/call rising-which normally happens in most markets-the put/call falls almost as often as it does rise on a down session. Folks, that just seems odd to me. I don’t personally keep stats on the number of days down to days up or down on the put/call. But I have to be honest, I can not ever remember so many big down days met with more call buyers than put buyers.
Normally, when the market falls, traders get skittish and buy puts expecting more downside which gives us a high put/call ratio and thus helps us no when the crowd is too bearish and thus near a bottom. However, traders/investors that are actually involved in this market are being cute and buying stocks on the way down. A historic losing strategy. Don’t believe me? Go look at Cramer’s (NO)action (red)alert portfolio. It is enough to scare you from ever buying stocks in a downtrend ever again.
Two Very Nice New Longs On Today’s Down Day May Hint To An Oversold Bounce; The Trend Is Still Down, Down, Down, Down
February 26, 2009 | Comments Off
Overall it was a negative day, of course, with the markets down around a little over 1%. However, the SP 600 lost almost 2.5% and the IBD 100 full of leading stocks fell 1.4% showing that the leading stocks and small-cap stocks that usually lead new bull markets. So the fact that they weaken worse than the overall market when people are talking about a supposed bottom really leaves me scratching my head.
There is some good news for bulls however in that, for the first time since this downtrend got started, I actually had a significant down day with zero new possible shorts and two new longs. Not only that one long is a CANSLIM quality champ and the other is in the leading mining-gold/silver stocks industry. So these two championship longs showing up in a day where the market loses over 1% is pretty impressive. However, honestly, without a ton of volume in the market, the gains are not “really” that impressive. It is what it is.
If this was a raging bull market like 1995, 1998, 1999, and 2003 that I have witnessed or participated in, I would have no problem jumping up and down saying GET LONG THIS STOCK IN BULK as the odds would be well in our favor. Right now, it should be very obvious to all of those out there, besides the few crazy daytraders that can actually trade this market and make money ON A CONSISTENT BASIS–this one day lucky stuff doesn’t cut it with me and I will never take you one day wonders seriously. It is the long term that will ALWAYS count–most investors should be fully in cash or have only small long gold or small short the market positions.
