I had a completely different approach in mind when I first wanted to write this but I figure I will stick with the facts. The facts are as quickly as this market looked like good times could be returning it in fact was possibly throwing us false “all clear” signal. Now while I never fully bought into this rally due to the volume, I still held hope that the rotation that I started to see into technology stocks would continue. Now I am beginning to wonder if that is what is happening or if they are making it appear that this was the case just to shut the door in our face.

At the end of last week things were looking very strong for the stock market, despite the low volume, as a lot of stocks that were in our portfolios were producing some large gains. But without ANY warning or clear reversal signal, the stocks started pulling back slowly getting rid of all the gains. The lucky part is that we did sell SOME as they pulled back since volume was higher. But the stocks pulling back on low volume and green BOP gave us no reason to sell. Since stocks that move up 20% in two weeks should always be held for at least eight-weeks it seemed stupid to sell anything pulling back. However, now it appears we should have taken more gains. This is the one time not taking profits quickly hurt us. The low volume was the tell and I should understand that next time as this is nto the first time I have witnessed this action.

If volume would have been much higher on the Nasdaq and NYSE then I am almost for sure some of the stocks we lost a lot of our profits on would be flying. But low volume rallies are always dangerous if for no other reason that what happened the past four days in the market. The nasty action is most noticeable in the DJIA as you can see it trying to breakout through the 200 day moving average, failing, and then breaking down through the 50 day moving average. This gave it a 3.9% decline on the week which was by far the worst of the indexes.

However, the Nassy fell 3.3%, the 500 fell 3.5%, the NYSE fell 3%, and the IBD 100 did not show any positive divergence with a 3.4% loss. There is no way to spin ANY of this. Last week was a very bad week, considering the week before the market appeared to be ready to give us a bullish rotation into leading tech, retail, and some homebuilding stocks. Too bad that was was killed this week.

The big news of the day was the BUD takeover bid that bid the stock up 8% but overall the biggest economic news came from the fact that the backlog of unsold homes hit a 23 year high! This is just shocking and if you think about how much equity exist due to the housing bubble it should come as no surprise that money is not moving anywhere. Things definitely are not good out there. Especially with oil up 1.38 to 132.19. Ridiculous. Over here on the island of Lana’i, gash is already $5.03 a gallon for unleaded. NICE!

This cost of gas has to be the reason the market is trying to fall apart. It makes complete sense as oil takes off the stock market dips. But oddly enough, unlike most oil rallies, oil stocks for the first time did not come along and in fact started showing signs of wanting to pullback. Combine that with everyone talking about $150 and $200 oil and hopefully this speculative fervor has reached its boiling point. However, as long as this ONCE great nation wakes up and starts drilling in ANWR and the OCS, I doubt we will see oil below $100 EVER!!! again.

Getting back to the market, I am sure some of this is the reason we are seeing so many distribution days in the market. Since I like to think the opposite of everyone on wall and broad it appears to me that some had hoped oil was going to top along with the ags and were ready for a tech rally. The fact that has not happened is a big reason we are all giving up. Now, I sincerely hope I am wrong about all of this. In fact, for my accounts sake, I pray I am wrong. But 6 distribution days in the IBD 100, NYSE, and the DJIA is a major warning. You do not get this many distro days WITHOUT ANY accumulation days in a healthy market. When was our last accumulation day? How about March 20th since the NYSE actually had a higher day with above average volume. Isn’t that unbelievable? I have to be honest. I have been around a long time (considering that THIS IS ALL I DO besides surfing) and I can not remember the last time I have ever seen this.

In hindsight, it just seems impossible to actually think this will turn into an uptrend. If this was going to be a real rally, based on history, we would have already had 3 to 5 days of higher days with higher volume within the first FEW WEEKS! Here we are a few MONTHS into this LAME rally and we have NOTHING. This is not good folks and this is the reason my potentially bullish stance is going back to a negative nanny.

It is very hard for me to be either bullish or bearish in a market that trades on low volume and goes nowhere and therefore I will stick by that bias about not making a bullish or bearish commitment here as I will need to see volume enter this market above or below the 50 day volume average on a more consistent basis. Some have asked me about the volume above average in the Nassy. Now while I must say this was very good at first, it has now turned into distribution above the 200 DMA toward the 50 DMA this week. Therefore, you have the same situation we have when we just take a look at the index.A muddled picture.

From the March lows, both indexes are technically in uptrends. But last week everything broke those uptrends. So it is going to be real important to see how the market reacts around this are to determine if more selling or some buying is going to come in.

Considering that I am a contrarian and believe we should be buying when everyone is selling, I am not sure everyone is selling right now and therefore it seems that this is just a mixed picture. There is simply no other way to play it. I have proven in these commentaries that I know when to be bullish in bull markets and bearish in bear markets. But this market is about as mixed as it gets. As soon as a stock sells off it starts moving higher, as soon as it rallies it starts selling off. Do you know what that tells me? DO NOTHING!

It is time to once again go back to raising cash. If your stock is falling on higher volume, and you have some gains in the stock, make sure you do take some. If your stock if falling on lower volume and you have big gains already I would hold on to it and wait for a support area to take a stand. If that does not hold up, you then may want to take some off.

But I want to warn you about taking profits quickly in stocks that move up 50% in one month. Sometimes, like now, with the low volume, that will be all you will get. But if any of you will just take the freaking time to spend a few hours on ALL OF MY PAST BIG WINNERS THAT I HAVE POSTED FOR YOU you will eventually understand that to make the big money you have to hold the stocks on the way up in a bullish market. All of you LAZY people that are NOT taking the time to study ALL OF MY PAST BIG WINNERS and current longs that are doing very well, you will never learn how to find the best stocks that make the biggest money in the shortest amount of time.

I hate daytrading, I can NOT stand wasting my day watching flashing quotes all day. Maybe some of you would be 100000x better off by STOP watching the longs that I go long intraday. If you want to daytrade, go for it. Just make sure it isn’t the stocks that I am going long. There is NOT ONE SINGLE stock that I enter that I plan on selling before the day is over. What am I? 12 years old. This is a game for the lame that have NO CLUE how the biggest winning stocks are created. If you want to daytrade the index futures go for it, if you want to trade stocks don’t be a donkey and don’t touch my positions.

The biggest problem I have with the rally is that the worst groups of the last leg down are the best groups in the current rally. Not only are the same commodity stocks and past weak stocks leading they are doing so (most of them) on lower volume than on the selloff. That is negative.

Still it is hard to judge anything without volume. Which is why when I write all of this I just wonder why am I even doing it. The low volume market is a market that most players should be out of without a doubt. But somehow us traders have some problem and think that everyday there is a money making opportunity or a reason to do something. The truth is that is pure BS. About 3 or 4 times a year you get a perfect setup and even then I am learning 1/2 fail. This low volume market is making a lot of us overanalyze the whole thing when we should just take a step back and wait for volume.

Sometimes I am not even sure what the heck I am writing about because I feel like I have talked and written about it too much. Now I know how people go crazy. So from here on out I am going to lay it out point blank how this market is and what we should do.

Back when we started selling off, I was on top of it, we went short, and scored some gains. However, not a lot of the big gains came from the best setups which caused me (but not my subscribers who beat me–WTG [I am not the jealous type-in fact i WANT you to beat me]) to underperform my normal downturn periods. This led to the January lows that with the heavy volume sent the market into neutral territory. During that time I expected another rollover but insted in March we got a tiny rally with plenty of good stocks moving. But the problem became clear quickly. The gains in the best patterns kept failing or not holding. THIS IS NOT how real bull markets start and was our first clue this was probably not going to last.

But I am a natural optomist and did believe this could turn bullish as long as the pent up money on the sidelines came back on the bull side to chase that RIDICULOUS 13.86 NYSE short-interest ratio. However, I was wrong and instead many of my best setups (which none were great but they were good) have ALL failed. So what do I do now? The same thing I always do.

Now, that I realize this stupid market is not going to cooperate as it has now destroyed every single last one of my potentially hot charts is to lock in some profits on ANY stock that took more than 5 weeks to gain 25%. If it took the stock that long get rid of half of it and put that money into a potential mover. Now if your stock is up 25% in two weeks, make sure you hold on to some but still the way this market is acting you better take 20% off. Also if any recent buys have lost the beauty of green BOP, are in a downtrend, or have broken below a recent base you need to sell some or all of it if it has completely broken the cut loss rule. If I buy a stock it is because it looks like it is going to blast off. If it don’t, then it has failed miserably and needs to be dumped.

I am one of these guys that KNOW it is STUPID to buy falling stocks as I lived through 2000-2002 and was involved in LTCM when I first started so I know as soon as I lose gains or rack up losses to get out so that I have more money to put to work when times are good. Right now, times are not good but you can GUARANTEE that they will be again. There will be more max green BOP stock, they will setup and they will be buyable. Some stocks to keep an eye on for potential entries at the 50 DMA include FLS, SD, SOL, CSIQ, MR, and TMRB. That is just a VERY tiny selection of some potential fundamentally sound stocks that are setting up.

Some that you should stay away from depstie the strong fundies include CHL DRYS DSX GNK OXY DIB GHM SNHY STD which are all starting to show some very negative short term action. This can not be good for now.

But still, how bad really is it with all this low volume? It isn’t. And this is my point, until really powerful BIG institutional money returns to this market it is basically a stock pickers market and since that is what I do best I will continue to try to do that. BUt I want everyone to remember, when the market is trending up 70-80% of what I go long will go up a lot and be very rewarding. However 20-30% will be crap and must be cut short. At the same time, in a sideways to bear market less than 50% of the stocks I take will work as a TON of false breakouts/bounces happen as market makers artificial create these points to trick people like us. However, if you remember to cut losses faster and take profits quicker in markets like this, you can still do very well.

For now, I advice everyone to stay low for now. Do not go long stocks unless the setup is perfect, the stock is in a group FLYING up the industry group charts, and is a top performing stock in its groups. Right now, the market is a little rocky and has taken care of our longs that were once showing us super solid gains not so nicely. So I suggest caution and once again, guess what? CASH IS KING. I suggest raising cash on anything that doesn’t work and unless it is perfect leave it alone. That is all I can leave you with.

My last words is I hope you all had a better Memorial Day than me. I came down with a severe MS attack that knocked me on my ass. In over…gosh I don’t know…I have never felt so tired. I could only surf (still surfed strong) for an hour but besides that slept for three days in a row including 15 hours on Saturday. I am not sure if that is normal but if anyone is a doctor and has some sugestions please send an email to the administrators at BigWaveTrading.net and they will get it to me. Thank you. ALOHA and hopefully this weekend is not as boring as last week. At least we have the basketball, hockey playoffs and MLB. Thank GOD for that!

Have a great week and great luck. Remember, be careful out there this week and DO NOT come out of the gates with a “get rich quick” mentality in this market.

Without anything happening today that changes anything in the markets, I think it would be a waste of my time and yours if I put a bunch of junk up here that was just words to fill up a page. Kind of like most of the stock market commentary I read out there. There sure are a lot of long-winded people like me out there. Anyways, if you are at least a silver subscriber you have plenty to read on the new silver longs/shorts sections as I have typed out a few important notes over there.

For those that will still be here on Friday (a lot of our chat members have already checked out), I hope you enjoy trying to stay awake. Because that will more than likely be the call of duty for us tomorrow. I would not be surprised if volume is near the lowest or actually is the lowest day of the year and if we can move more than .5% up or down I will be floored.

I will be in the chat room during my usual 630am to 700am HST arrival and we will still go over the charts like always, even if there are only a few to look at. But if we have more than a baby bump on our south shores with a new weak south swell arriving, I might just pick up my boards and run out to my favorite breaks/beaches and hope for the best. If there is anything I dislike doing more than watching a dull tape intraday, I can’t think of it now. Not only would I NEVER!!!! watch CNBC EVER again (because I like to make money; not get a “good” [shitty] story).

There will definitely be a weekend post for Thursday, Friday, Saturday, Sunday, and Monday. I plan on having it done by Saturday morning. But Sunday morning will be the latest.

Thank you Veterans for everything you did to make this country the greatest country in the world. I am sorry the liberals and some rogue republicans have decided to hijack freedom and turn us into a socialist state. I still will never forget the battles that you fought and won that allowed me to have a GREAT childhood, teenage years, and early adulthood. I am obviously very worried about my future with these tax and spend PIGS that are running for the highest office of the land. But I am VERY THANKFUL for the opportunity to live in a country where a black man, a white woman, and a war veteran can all have a chance to become the next President after taking a question from a gay heavily tatted-and-pierced shemale on Youtube that cares more about the rights to have sex with animals than the rights that we have to defend ourselves against islamic fascism that is VERY REAL.

NEVER FORGET!:

“A people that values its privileges above its principles soon loses both.” — Dwight Eisenhower

Aloha! I will see you this weekend with a nice market commentary will hopefully help you understand that some markets are made to make a TON OF MONEY and some are made to MAKE YOU QUIT!!! Which one do you think we are in now? I know the answer! Do you? I hope so. By some of the horror stories I have heard the past few months, something tells me some of you don’t. See you in the chat room!

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.

Also, don’t forget the NYSE short-interest has hit ANOTHER all-time high at 13.66 meaning that it would take 14 days to cover all the shorts on the NYSE right now, on average volume. Even without volume, the market has an upward bias and I do not want to short a low-volume market especially when the short-interest are at astronomical levels in so many stocks. That is how you end up with MXC and PDO.

At the same end that I don’t want to be short or not long this strong market, I suggest that those that CONTINUE to buy stocks the day before earnings STOP. I always take my signals on my charts, almost NO MATTER WHAT. This takes all emotions out. But when I saw that PWRD had earnings my total buy that I had planned for Monday morning was chopped by 90%. Those that were in the chat room KNEW I did this. However, those here couldn’t have but I made it clear that this stock was not safe to go long for newbies. Thankfully, I did not see any horror stories about PWRD. But I am still disappointed as I thought I had myself a possible monster stock. But since it has failed, the last thing you will see me do is justify a WRONG position and hold on to it “hoping” that it comes back. Nope, that stock, along with GA, must be taken out. BOTH of those stocks show why buying a move the day of the earnings is a bad idea. Both charts setup up a buy signal the day before earnings and had I FOLLOWED MY OWN RULES I would have a little bit more money in my pockets.

The good news is, every other large holding, besides PWRD, acted fine by pulling back on lower volume or if it had lower volume on the pullback found solid intraday support. Even with a lot of stocks looking great, I still decided that I wanted to take some profits in some stocks that have made big moves in a short period of time. The last and only perfect chart had an event happen to its setup that no longer makes it perfect. Oh well. That is a low volume, low VIX, and ETF filled market for you (sigh).

Oh well, like I said this weekend, I am prepared for anything. No matter what happens, I am ready. That means either I continue to buy great setups and ride my winners higher or I start cutting losses, taking profits, running to the sidelines and looking to get short. When you are prepared for any outcome, nothing can surprise you.

Despite the reversal, stocks are still in an uptrend but like I said some cracks are starting to appear. Did you see DRYS, DSX, and EXM today? That is not bullish. That should NOT be happening as they go to retest their old highs. If they don’t fix that and get back to rising on strong accumulation with green BOP, then I will not be interested in going long these leading stocks. Great fundamentals or not. No matter how great the fundies are, if the chart is not there, I will not be there.

Please, if you did not read my three weekend post, please read them carefully. That should put you on top of this market and when you are on top it sure feels nice. Although, it sure becomes real hard to stay up there. But that is what makes it so fun. Never give up the fight to become the best. To be the best you will always have to stay vigilant to stay on top.

By the way, if you did not know, I had my first Seeking Alpha article posted on Monday. It was also posted at iStockAnalyst.com which is publishing me too. Though they are both the same columns, soon Seeking Alpha might be FA only and iStockAnalyst would be FA with TA. We will see. I am going to start slowly. But the goal is to get 3 up a week in SA and 3 up a week in iStockAnalyst and StraightStocks. At least I now have a place to submit columns. However, I am not sure SeekingAlpha will continue to let me use the charts. Check out the column and feel free to rate it. At one point yesterday it was the fourth most popular column and being a new guy I would assume that is pretty good. I hope SA hears you all and gives you what you want. If they don’t we still have the other two.

Aloha and I will see you in the Chat Room where EVERY day is a bull market!

After the March lows and a small market rally, the new high list started to slowly build. And now we are at a point where even on down days, the past two weeks, the amount of new highs either match, are breakeven, or barely losing to new lows.

On Friday there were 244 new 52-week highs to 95 new 52-week lows. This was the best reading I have seen yet, since God knows when. I know in the August to October there were a lot of stocks hitting new highs but I am not sure it looked THIS GOOD then.

The leadership is clearly focused in one area too. The energy stocks had 96 of the 224 stocks hitting new highs come from their list. These stocks that you should be watching for future bounces off the 50 DMA or breakout are PDO, FPP, ATN, PHII, RAME, HUSA, RDC, APWR, TELOZ, WLL, ESV, APC, WMB, OXY, GMXR, COP, NE, CVX, GTE, SFY, CNQ, GU, HOS, BTU, NXY, ECA, BTE, HK, CAM, HES, PDE, FTI, UNT, WFT, MCF, STR, PXD, HP, CPX, PXP, SPN, PBR, HAL, MMR, E, SSL, SWN, WTI, WHQ, PBRA, SM, EAC, GLF, PVA, FST, TTES, CXG, and WES. All of these stocks have GREAT fundamentals and are all leaders based on price performance.

Other leading groups are the Metals/Steel with 14 stocks hitting new highs. The all-stars of this group are SUTR, MTL, MEA, GTI, GGB, TS, SID, X, NUE, RS, SCHN, VMI, and MT. Behind that was the Machinery stocks with 12 new highs and WGOV, ENS, AME, BUCY, JOYG, GHM, ABB, ATU, PDE, FTI, NDSN, FLS, and CFX.

One of the hottest groups with three of the top 20 industry spots are the Transports with EGLE, UNP, GNK, BNI, KEX, NSC, WAB, and CSX. Mining had 8 hit new highs with FCX, RIO, BHP, RTP, and CLF leading the way with strong fundamentals. The Medicals are still hanging on with 7 new highs and ZOLL, ICLR, STE, and LSR are the top guys in that group.

Utility, Retail, Computer Software all rounded out the top groups with five stocks hitting new highs each. EGN, NFG, SBS, BKC, CVS, GYMB, LL, BKE, BMC, ATVI, ANSS, SY, and ANST are leading the way in those groups on Friday.

Everything you see here are hitting new highs when the market is still a good distance away from its old highs. These are our current leaders and as long as this market rallies, I want to be long these stocks.

I know some of you believe we are going to top soon. But I am telling you RIGHT NOW that stock charts look great all over the place. You name a lagging sector three months ago and it has moved up the list with a lot of high-growth technology and consumer speculative sectors. Along with the old commodity leaders just slowly selling off, which gives them a weaker RS performance to the big winners, but still keeps them rallying is taking place.

Overall, volume or no volume, as long as we trend up and I have a couple of really nice stocks and that one perfect chart–I do however need a few more perfect stock charts to have me completely fall in love, however–continues to move higher, I am going to be very happy with what I can get in a market that has a low VIX (around 17) and is full of ETF’s that now suck up money that used to find its way into “hot” stocks. This is just less money that can be put to work in the momo monsters like MXC and PDO.

Aloha and I will see everyone in the chat room at 630AM HST/1230PM EST.

current longs/(shorts) and their total returns: GEOI 118% CMP 65% SOL 36% ICO 49% VISN 52% DGLY 49% HA 42% PDO 78% CPE 46% CSIQ 56% HIL 50% MTL 67% MCF 172% JST 40% IHS 258% EBIX 169% MA 477% (EEFT 33%)

By the end of the day, it was an impressive turnaround on all the indexes, as everything closed near their HOD. The leading index was the NYSE which scored a .5% gain. The SP 500 also was up today, gaining .1%. On the other end, the Nassy lost .2% and the DJIA lost .1% but both still closed near their HOD. Considering the losses that all the indexes had going after the first two hours there is no other way to call today anything but a victory for the bulls.

That bullish action was the second day in-a-row and the fifth day out of six that the market has started the day off weak and finished strong. I hate to think of everyone out there that is watching their stocks too closely and therefore have been shaken out of some good longs by watching the market during the day. I suggest when you are using this superior methodology that you best use it the correct way. That means not watching your stocks intraday. If you want to daytrade, fine, do whatever you got to do. But if you went long DGLY, you should still pretty much be long 75% to 100% of it for possible MONSTER stock gains. Those that have sold more than 50% of it have traded poorly and this is due to you watching the stock too closely.

The best daytraders that I have ever met only daytrade index futures. And I will tell you this. I know this methodology. I know how to make the MONSTER gains. And I know daytrading stocks will never get me what CANSLIM can. I have seen it all by now. But if you want to daytrade futures, you have my complete blessing. If I was forced to be a daytrader, I would be trading ALL of the index futures with huge margin (preferably at least 25 to 1). I know that game. But guess what? I would rather go looking for surf and then paddle out into a lineup with a lot of pretty girls and bombing sets. You can watch the market intraday, I would rather attempt to get barreled. After a good session, then I will check out the stocks. This is my lifestyle and I LOVE IT. However, if I did like sitting on my fat butt all day watching 8 to 12 monitors of flashing quotes then I would be daytrading index futures and using CANSLIM after-hours. There is not one stock I would daytrade intraday. NEVER. I know the BIG GAINS are in the HOLDING.

Speaking of big gains, since the lows on March 17 when the Nassy hit a new 18-month low the index has recovered 17% with many of my best stocks returning 30% plus gains. A lot of JERKS tried to get me to bottom fish some horrible stocks, a few days after they made 200% moves off the bottom. Those stocks all of those people told me to buy, since those initial runs, have basically returned NOTHING. But I told you then that you DID NOT have to buy the EXACT BOTTOM to make a KILLING in the stock market. And I still believe if you are 100% cash right now, if you buy the right stock you can beat ANYONE reading this who bought SPY on March 17. They bought the exact bottom and NAILED the bottom!!! WOOPPIEEE! But you didn’t and instead you bought MXC and PDO two weeks ago. Now you have a 115% and 95% gain!!! Oh, but wait!!!! You did not buy the bottom. How stupid of you! Do you NOW see how foolish those people were then?? Do you see how arrogant and IGNORANT of history those FOOLS were. They blasted me for not buying the exact bottom on full margin. Since then, the returns we are seeing at BigWaveTrading is crushing the returns I am seeing in some of the “more popular” guys that I follow that were laughing at me for not going 100% long on March 17.

Those same brilliant geniuses are also now calling for a top. They believe the market has come too far too fast. Don’t they understand momentum and short squeezing. We don’t need volume and we don’t need to rest, if the market doesn’t want it. It does whatever it wants to do. And right now all you need to know is that all news is good news and that is why people keep shorting the market (NYSE short interest ratio is at another all-time high at 13.40–it takes almost 14 days to cover all shorts on NYSE based on average volume. WOW.) as they keep hearing nothing bad but news from our EXTREMELY biased news media. These blatant political lies, along with a heavy dose of global (w)fear(m)ing, keeps the public scared of the market. This is the wall of worry the market is climbing now and it is proving that it doesn’t need a lot of volume.

But have you noticed that volume is starting to come in above average on the Nasdaq more consistently now. The days when it shows up the Nasdaq is either up or it has a bullish intraday reversal. That is a very key tell folks. That tells me the marketis healthier on the short-term than most give it credit. Heck even oil hitting $127 and closing at $126.02 doesn’t phase this market. That is why all of our indexes carry acc/dis ratings of A and B and why we see so many technology, retail, and other growth sensitive areas of the economy starting to climb up the list of top industry groups. It is great to see so many technology, software, hardware, computer, electronics, biotech, transportation, metals, oil, and internet stocks rallying all at once. Included in that are a lot of HOT HOT stock charts. Sadly, there still is only one perfect chart out there that is working perfectly and it is up 56% from my lowest hit limit in a little under a month. That is how they should all act. There are a few cheap stocks setting up like that but nothing of CANSLIM quality has me excited of a future MONSTER stock like TASR.

Still overall it was a great week and the bears can’t keep me down even though the media sure is trying. Stocks like WBD HRS ESV EXM DO DSX MTL and UPL are not listening. URBN and CSH are the exceptions and with recent longs of top quality that I have sold watch these two come back. TITN was a recent example of a top stock sold that is now back immediately. This is one strong market. Even gold looks to be bouncing again. But the stocks that are clearly dominating are the Energy stocks, especially oil&gas. However, energy stocks are coming on strong and I got my eye on CSUN and SOLF to add to my SOL, CSIQ, and FSLR collection.

The only thing I need to watch out for is getting too excited about this rally. Getting cocky about my gains is the LAST thing I want to do as I have to remember I only have one perfect chart that is out there working. Are there a few setting up that could be perfect b/o’s? Absolutely. However, there have been others that have started and failed. Remember, NEU and CMP. They both produced some nice gains but the perfection ended quickly there. BRKR and ADEP are two that completely failed. Both had OBVIOUS flaws that kept them from being huge holdings. But BRKR had a great company and good growth but things don’t always work out. And that is why I always cut my losses. But just like TITN, BRKR appears to be firming back up again. It isn’t nearly as strong as TITN but a theme of strong stocks having trouble going down is becoming a very large and growing theme in this market. That has to be bullish, heavy volume or not.

Yes it is true low volume rallies are not healthy overall, but nobody knows how long Mr. Momentum can last. Usually when I see people calling tops long-term or short-term I get happy when I am long stocks like I am now. It is not like I am loaded up with longs but I only have 20% in cash now because SO MANY CANSLIM quality longs have been breaking out or bouncing off of great patterns. They are all working. How can I sell stocks when NONE of them are giving me topping, take profit, or cut loss signals.

On top of that the index have taken their key 200 DMA lines which is a very important technical line in the sand. A lot of funds do NOT buy the market until these key indexes are above the lines. Now that they are, it would be nice to see some big fund buying come in. But before that happens, watch for a possible pullback as the put/call buyers are starting to take an interest in the call side again. The put/call fell to its lowest levels since January on Thursday when it hit .64. But oddly enough, just a little bit of selling (or in the case of the NYSE and SP 500, a rise) is enough to raise the put/call back to .79. It isn’t 1.00 but it is funny to see a bit of fear enter the market on just a morning two-hour dip that has an EOD close near the HOD.

………..it is getting late on Maui as I had a nice (but small ) surf session that lasted 1 1/2 hours. But it was enough to tucker me out early. When I wake up I will have part two finished by the time the NHL game is over. Go Penguins. You gotta have Sidney Crosbey in the finals!!!………

Even though we still have zero institutional support on the indexes, it is clear that in this stock picking market there are a lot of stocks they are accumulating. The majority are in the energy industries, obviously. It might not be easy to buy stocks correct but it sure has not been difficult knowing where to put a lot of money. The gains in two solar stocks today that I am heavily long is more proof that as long as you know how to pick the best stocks, you can destroy the stock market. Remember, all those people from weakmoney.com that were telling me to go long stocks like GS, LEH, MS. I don’t know about you but I told you then that you did NOT have to buy the exact low to make a CRAPLOAD of money in the stock market. My recent longs are proving that.

For those that still think that you have to buy the exact low, this should now prove to you that those talking heads on CNBC are just that. Talking heads.

The market was even better by my book as leading, small, and tech stocks all did well today. Not only that but I have bases setting up EVERYWHERE in technology and leading stocks. Take that situation with all these solar and oil stocks running and you have a market that has somewhere to rotate when the oil stocks do climax and top. If that happens, these tech stocks are setting up to be PERFECT candidates for money to move into you. One thing is definitely for sure, I see a LOT of stocks that were in nasty downtrends trying to bottom on a TON of volume with green BOP on a lot of these charts. Take that with all our leading stocks and stocks that we are long that are KILLING IT (remember, if this bull last a few months, THIS IS JUST THE START!!!! all you DGLY sellers) and you have a very fun low volume market rally. I don’t like it and don’t think it will hold, unless we get more volume. But, heck, I will take ANYTHING I can get.

The lack of perfect charts and volume however will be what keeps me from getting bullish on the market. Just looking at stocks like AAPL or BIDU shows that the selloff on huge distribution has been followed by absolutely ZERO accumulation, just like the indexes. The big stocks are moving higher on no volume, the market is moving higher on no volume, but the true leaders (the 15 that I am VERY LONG and the 60 longs that are flying high but are small positions) are moving higher on huge volume. These 75 stocks that we have in our portfolios all look wonderful. A few might be close to cut losses but nothing is really hurting when it fails. ADEP and BRKR are the only two that hurt a little and stocks like GFA OTEX DGLY SOL and CSIQ more than make up for that.

The key here is to just go with the trend, until it ends. I see so many anticipating a top. I suggest you do do that. But also, prepare for a possibility that a low volume rally continues and when volume does return it could possibly be mutual, hedge, and pension funds JUMPING back in the market so they do not lose performance. This big money chasing gains so they can try to show outperformance to the general market, along with the NYSE short interest at 13 days to cover, could lead to some HUGE!!!! gains unlike anything I have seen since 2003. With that bullish possibility made possible THANKS TO THE GLOBAL economy, it is hard to be too bearish here. Also watching your new longs where you got GREAT fills rocket 20% to 25% doesn’t hurt either. I am still riding the trend higher but I am losing some bullish luster. However, I do not know what the future holds and can only listen to my charts. My charts say we are going higher. But without volume I am not sure how that is going to happen.

Not only do we not have volume but NOW the crowd is starting to get quite bullish. Oh, how quickly we can turn on a dime in this great country. One day we are extremely bearish, the next day everything thinks EVERYTHING is going to be PERFECT once a radical left gets into the office. The truth is it is better to be neutral and go with the trend. The short-term trends are up, the longer-term are down. That is it. That is all you got to know to make HUGE money. The reasons why or how is NEVER IMPORTANT. It is a freaking waste of good ocean or surf time. The ocean and surfing is priority 2-9 on my list of things. Stocks is #10 with my gf and remaining family at #1. Never forget that. I think I will be 50 years old before I fully embrace this lifestyle. I just don’t want to look like Cramer, Rev, or Kass by the time I hit that age.

For all the wasted time researching the reasons why something happened, your time would be better off spent updating your CANSLIM watchlist and other leading stock scans. Besides that, studying EVERY SINGLE ONE OF MY PAST BIG WINNERS IS A MUST!! You MUST study every one!!!! You need to see that the exact same patterns show up over-and-over-and-over. There might be 20 one year and only 2 the next but there will always be one. We had 3-4 last year and already have had 4 start and only 1 stick. You all know what that one is. If you don’t, you really should try stepping up and trying at least a month of my silver service. I guarantee you SOMETHING will make you a LOT of money and NOTHING will EVER break your bank.

My biggest problem with going long heavily on this day and any day forward, if we keep rising without a pullback, is that the sentiment gauges are starting to show complacency. I warned you that if I saw the put/call fall below .70 that I would get a bit nervous about buying stocks and being bullish. That happened today as it came in at .69. The next sentiment indicator is the VIX. This stupid index has fallen to a 2008 low yesterday, which means that the crowd is more complacent now (err…bullish) than at any point in 2008. There are a lot of believers now and that is reflected in the VIX being around the 17 area. These are two clear indexes that indicate to me the crowd is starting to embrace this rally. So, for now, I will enjoy it too, but I wouldn’t be surprised if we saw a pullback sometime soon.

The key with this is how volume will be on the pullback. Will it still be low? If it is that will be bullish as smart money investors will probably then realize the lows might have been seen and that could spur a ton of sidelined money into the market. Or if we pullback on heavy volume, we could breakdown and set new lows. EITHER WAY, I AM READY!! Bring it on Mr. Market. Nothing it can throw my way will ever surprise me.

I am about ready to passout as I am still very tired after my HORRIBLE endoscopy procedure (I woke up in the middle of it and it was horrible!!!!!!!!!!!!!!!!). I don’t know if it is normal to wake up in the middle of these things but if I knew that was going to happen, there is NO WAY IN HELL I WOULD HAVE DONE THAT. The pain, closterphobia, and gagging was SO HORRIBLE that it took 5 nurses to hold me down so I would not pull the tube out. It was a HELLISH moment of my life and when I woke up a second time I was crying. VERY ODD and scary. I am not sure if that is normal or what the hell happened but at least we do have good news. Nothing showed up. They did take some biopsies. So we will see what that shows. But I still wonder if that was normal??? Oh well. Who cares, it is over, THANK GOD!

Aloha and I will see you in the chat room, where I am NEVER under sedation and always alive and kicking. Not even 10 police officers could keep me down. Now a taser……sure. I have seen enough episodes of cops. LOL, I know that NO ONE escapes the taser. LOLOLOLOL. ALOOOOOHA!!!

Also another lesson of NEVER chasing is today in GENC. I have been taking profits on the way up and if you have been following all my sells in the forums you will see that I was already out of 40% of it before today’s decline. Even after the swoon today, we still have a gain in it. Also, do not sell it intraday. The chances are much higher with it being down this much that it will have a strong rally before the EOD. Even if it doesn’t, it doesn’t matter, the stock is a full sell and we still walk away with a profit on the full 100% with me already being out of nearly-half when the stock was between a30% and 60% gain.

Our leaders are doing well and remember if you own a stock up 20% or more in less than two weeks (which we have had a few quick monsters), you need to hold them at LEAST eight weeks.

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!!!!!!