DJIA Hits A New Six-Year Closing Low; Why Do More People Try To Be Cute And GUESS Bottoms Than Follow The Trend To Make More Money With A Smart Cut Loss Strategy?
February 19, 2009 | Comments Off
Stocks were slightly down across the board, besides the DJIA which was up a tiny 0.04%, and the move lower came with higher volume on the NYSE and lower volume on the Nasdaq. The higher volume and near 1% drop for the NYSE and SP 500 were distribution days that only add to the pressure this market has recently come under in the short-term.
The losses while not huge was still enough to tell me that the market is not looking at the recent selloff as a capitulation move and is instead looking at it as a regular move in a steady long-term downtrend. If we would have had a major rally I would say that the market might be trying to hammer out a low. But with the DJIA closing at a new six-year low with the other indexes close to new lows it appears that the safe side is the short side as very few stocks are moving higher.
More proof of that comes with my own long holdings. While my two Gold longs are doing well (biggest long positions in my portfolios), the rest of my tiny longs are not, unless it is a pasta company or an education company. Five of my eight longs could be full cuts if they have just one more down day over 1%. That shows you have hard to impossible it is to be long this market. Unless it is gold or VERY SELECT medical or pasta company, your chances of making money on the long side are still very small.
Market Wrap for September 25th, Repeat After Me: “Capital Preservation”
September 26, 2008 | Leave a Comment
By Thursday’s closing bell, the S&P 500, DJIA and NYSE all finished at least 1.7% or higher on heavier volume than the previous session, which technically means we had ourselves a follow-through day. The Nasdaq lagged, however, as did the Nasdaq 100; as for the Russell 2000 and S&P 600 –well, both got just a fleeting glimpse of their 200 day moving averages before being turned back. And not only did the IBD 100 and 85-85 indexes underperform, volume actually came in lighter than the day before. The fact that institutional investors weren’t even remotely interested in snatching up shares of leading stocks does not exactly inspire confidence in this fledgling rally. “But, wait,” as they say, “there’s more….”
Spoiling the FTD party was the wave of selling that hit the market during the last two hours of trading, dragging the indexes well off the highs of the day. During the session, the NYSE had been up as high as 2.7%; the S&P 500, 2.9%; the Dow, 2.8%; and the Nasdaq, 2.6%. Also, the volume of every index, while higher than the previous day’s volume, was still below its average. Another red flag: there were just 13 stocks making new annual highs compared to 191 stocks making new lows. And the top five industry groups on this follow-through day: Media-Periodicals, Leisure-Photo Equip/Rel, Leisure Movies & Related, Oil & Gas-Intl Integrated and Banks-Foreign. Only one of those groups is ranked in the top half of IBD’s 197 Industry Groups and it is ranked 97th. “But, wait, there’s more….”
Durable goods dropped more than twice the initial estimates back in August, and new home sales fell far more than expected, hitting a 17 year low. The annual rate of new home sales plummeted 11.5% to 460,000, the lowest reading since January 1991. Bad, huh? “Well, wait, there’s more….”
As of this writing, futures are pointing to a rough start to the trading on Friday morning. It seems the talks concerning Treasury’s $700 billion bailout has hit a snag and are in danger of collapsing. Henry Paulson is said to have gotten down on one knee, begging Democrats who left to caucus not to “blow up” the legislation. Truly a surreal image. To make matters worse, RIMM missed earnings and the after-hours traders mercilessly pummeled the stock about the head and shoulders. This will surely add insult to injury to what is shaping up to be another volatile session. Never a dull moment, folks.
While there seems to be nothing but bad news and negativity, remember to keep emotions in check. Don’t get caught up in the hysterics of our beloved media; while exasperating, it serves a purpose. Now more than ever let the charts be your guide. It may very well get a lot worse, my friends, I’m not going to lie to you, but this I can guarantee: eventually the charts will come back. The whole world will be worn out and flabbergasted. The last thing they will want to think about is stocks. The charts, however, will tell a different story. They will reward those who waited on them. Just make sure you have the capital to take advantage of what you hear.
Repeat after me: “Capital Protection.”
A special Market Wrap brought to you by Author_Ego.
Lower Volume Selloff Hits Stocks As NYSE Volume Is Still Below Average; DRYS, EXM, and DSX All Put In Nasty Intraday Reversals Near Old Highs
May 19, 2008 | 1 Comment
I am not going to write a long commentary tonight as I really don’t see anything too important out there that I need to spend too much time focusing on. The biggest event was the late day selloff in the stock market. However, some are forgetting that the DJIA and SP 500 still closed higher and that volume was lower on both exchanges, with volume being below the 50 day volume average on the NYSE for the 41st straight day in-a-row.
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.
Bullish Week Ends With Leading Stocks And The SOX Taking The Lead (Part Two)
May 18, 2008 | Leave a Comment
Randomly continuing where we left off yesterday, besides the put/call showing a little of fear coming back into it even with some indexes higher. One index continues to print what should be considered bearish numbers. That is the VIX. The VIX closed at 16.47 Friday and intraday on Wednesday hit 16.10. That was the lowest reading since October right before the November top.
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?
A Very Bullish Start Ends With Most Indexes Closing At Or Near Their LOD; My Best Stocks Held Up Well During The Selling
May 15, 2008 | 2 Comments
Well, that sure is not how you like to close them. Especially with volume picking up there while we sold off right after hitting the 200 day moving average on the Nasdaq. The good news is that the market still gapped high enough in the morning that all major market indexes were able to close with gains. But there was a negative blip in regards to leading stocks as the IBD 100 fell 1.2%.
Thankfully, even though volume ticked slightly higher on the Nasdaq, the NYSE had volume come in 1% lower on the reversal. To go along with that the volume was below average on the NYSE for the 38th straight session, volume was barely above the 50 DMA on the Nasdaq. With the volume being higher and prices being higher that would still be bullish despite the reversal. The volume simply was not full of conviction in the form of huge clear distribution. I guess you could count 4/1 as average daily volume on the NYSE, by the way, but still it wasn’t above average so I guess the point still stands.
Overall, the market is in the same situation as it was last week. We are rallying on lower volume with this clearly being a stock picker’s market. The good news, for me is that is what I specialize at.
Distribution Day Hits The Indexes As Stocks Selloff Erasing Some Of The Hard Fought Gains Made The Past Four Days
May 8, 2008 | Leave a Comment
There is no other way to spin today’s action other than it was downright ugly. However, after going over my personal holdings and seeing how few stocks needed to be sold and how few actually fell on higher volume, it became clear to me that I am going to have to see more selling to confirm that this short uptrend is dead. The way my leading stocks acted today and seeing how some of the stocks that I purchased large positions in actually made gains today, it just seems smart that it would be wise to not panic here and lose our positions in our leading stocks. This kind of selling is not good but it is normal to see this during uptrends. You can review any uptrend you want and you will see they all have one, two, or three distro days along the way.
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.
Leading Stocks Outperform On A Dull Trading Day; NYSE Pulls Back On Lowest Volume Of The Year
May 5, 2008 | Leave a Comment
It was yet another very low volume market session that really proved nothing today that we did not already know about this market. The one bright spot that occurred today that was noticeable to me by the action in the stocks that were showing up on my price/volume scans. The IBD 100 gained a very impressive 1.5% compared to the overall market which was slightly lower across the board. The IBD 100 also joined the rest of the market with A and B acc/dis ratings as it now sports a B- after today’s action.
However, the losses from the NYSE to the Nasdaq were all fine in my book as all the selling came with volume lower than the day before. What is even more bullish for stocks, for now, is that the low volume selloff was the lowest volume for the year on the NYSE. This low volume, with stocks pulling back, is just how you want to see stocks move. If you look at the Nasdaq, where it is most obvious, you can clearly see that the market is rising on higher volume and selling off on lower volume. This has been the case since March 4th and is starting to become visually quite obvious to me. That along with the actual ACC/DIS being an A- shows that this index and the stocks that make up this index are being accumulated.
Even though the accumulation is not on HUGE volume it is taking place none-the-less and as long as that is the case there is not reason to fight this trend. There are so many things that have turned in the favor of this market that I just don’t see it wise to be very bearish here. Even the ISM service, new orders, and employment indexes all moved over 50 which signals expansion. The price paid index is back up to 72.1. Take that along with the data that we are NOT in a recession and the positive slope to the yield curve and I find it hard to be as bearish as some are on this market.
Bullish Week Ends With Mixed Trading On The Major Market Indexes; Individual Stocks Are Starting To Look Real Good
May 3, 2008 | Leave a Comment
It was another overall boring session to end the week but despite the overall boring tone to Friday’s session it was still a bullish session underneath as many stocks had solid sessions and many stocks that I was long had a very positive session. Overall, profit taking was quite mild in the AM and the strong mid-day rally into the close shows the bears are still not in control.
This kind of action on a do nothing day is just what I like to see in a market that refuses to do much. If there would have been a lot of blowups and negative action today, then I would have been a lot less enthusiastic about the non-event that Friday was.
By the close, the NYSE was up .6%, the SP 500 was up .3%, and the DJIA was flat. The Nasdaq finished lower but the intraday support and positive action by the close is something that has to be considered positive overall. I mean obviously if this market was real weak they would have sold them into the close.
Nasdaq 100 And PHLX Semiconductor Index Lead The Way Higher On Higher Volume; Leading Stocks Are Setting Up And/Or Breaking Out Everywhere
May 2, 2008 | 1 Comment
COMMENTARY WILL BE SHORT AS MY SURF SESSION WAS EXTREMELY LONG AND TIRING.
I was impressed by today’s stock market session, especially when it came to leading stocks, tech stocks, and even more specifically semiconductor stocks. It was amazing to get a rally in such high-tech group of stocks. What made today’s rally even better was that volume increased on the Nasdaq and was above the 50 day volume average for the fifth time in the past few weeks. This was the fourth time it was a big up day with volume above average. And even though the NYSE has only had twenty-nine straight days without volume being above average, it is at least in an uptrend and that with low volume is OK with more, for now.
A lot of people are worried about the market being right at resistance and being oversold since our lows. You know what, that is fair, I will agree with that. We do need to be aware that we are running into resistance, we are overbought, and the volume has been close to pathetic during the rally so it is possible we could run into some heavy volume selling.
Extremely Quiet Day Of Trading And A Big South Swell Equals Not Much To Talk About
April 30, 2008 | 3 Comments
The market did not do much of anything today as we all bide time ahead of the release of Q1 GDP and the FOMC interest rate decision. About the only market moving news today was the talk of V and MA earnings. Both of those stocks produced excellent action today in their respective security, with MA now giving me a 450% return in a little under two years. This is a very nice long-term capital gains. Even though the position is no longer huge, at least I still have some of it and can enjoy the Monster Stock that I own.
However, since the times that this stock broke out, it has been very hard to hold onto any past big winners for huge gains as the stock market is simply not in the right mood to help produce some huge returns. A VIX at 20 will do that! As long as this VIX stays down here and the market moves on lower volume, that is just more time that you can be sure we will have to wait before making any serious gains. When volume is well above average and the VIX is above 40 then I can wake up to some potential huge gains. Until then, we are GOING TO HAVE TO take what we are given. Rather we like it or not. Thank God I have other hobbies.
I am extremely tired today as I surfed some of the biggest waves I have ever surfed on the south shore today. I almost broke my board a few times and I could not even go to the “best” spots because there were too many people and sadly I am not good enough to get in a line-up full of semi-pros to pros and then actually get waves. Instead I will have to enjoy my time on “lesser exposed” breaks and instead watch the best of the best rip it up.
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