Nasty Day Ends With All Indexes Suffering A Distribution Day; Day Six For DJIA And SP 500 Officially Puts The Rally Under Pressure
May 22, 2008 | Leave a Comment
For those that do not know what that means, it means that it is time to raise cash by selling down some of our longs. We recently have gone long quite a few stocks that have performed very well. Some of you made the right decision and took a lot of profits when some were up 20% to 50%. That was very smart. I did take some profits but with my larger holdings I was trying to hold for some powerful gains, thinking that volume still might enter the market to the upside as funds went back to work so they would not show underperformance.
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.
Bullish Week Ends With Leading Stocks And The SOX Taking The Lead; The IBD 100 Finishes Up 4.2% And The SOX Finishes Up 5.8% This Week, Clearly Showing Us Where The New Leadership Is
May 17, 2008 | 1 Comment
There is really only one word to describe Friday’s intraday action: bullish. Right off the bat, thanks to a report showing the University of Michigan consumer confidence number fell below 60 to a 28-year low, the Nasdaq fell 1.2% within the first two hours. This selling was pretty nasty but still the report should not have shocked the informed investors who saw the IBD/TIPP poll hit an all-time low last month. I am sure we can expect more of the same come Tuesday when the new data is released. Thankfully, for the bulls, cooler heads prevailed and quickly the consumer confidence news was taken as old news and shaken off.
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.
How Much Longer Will The Good Time (The Rally Has Not Been Long Enough, To Be “Times”) Last?
May 9, 2008 | 1 Comment
I am not for sure about that answer but I have to admit the charts overall still look like they are trying to make a bottom. But like I have continuously warned about: if volume does not come back into this market on the upside, we are in danger of reversing some decent base building and that will probably discourage a lot of market participants which could open the door to more selling.
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.
Bullish Intraday Reversal For Second Day In-A-Row Has Stock Indexes Closing Near The HOD (And Is The Reason Why You Should Not Panic Sell And Watch Stocks Intraday); Leading Stocks And Semiconductor Stocks Take Charge Which Is Just What You Want To See During A Rally
April 26, 2008 | Leave a Comment
I am not sure how strong and long this commentary is going to be as I have been surfing some giant waves and have been spending the past two days at the beach most of the day watching the surfing contest at Ho’okipa amongst the HS ripping groms. These kids paddle out into 10 foot face POWERFUL HEAVY waves and charge like it is nobody’s business. All of these kids surfing today were experienced but if any of them would have been newbies THEY WOULD HAVE BEEN KILLED as the waves were way too much for most mortals. These amazing kids not only surfed these waves but a lot of them now need to go spend an extra $300 to $800 for new boards as I saw at least seven surfboards break in-half! Yes the waves were that big.
What is the point of that. The point is that the windy, rough, and scary conditions were almost too much to hold a contest and the fact they did today was pretty dangerous. I take the conditions to at Ho’okipa and see a correlation to this recent market. The only exception is that the big waves do not relate to big gains and big trends but are like the volatility and lack of follow-through in this market. This market is not a market for newbies. Newbies paddling out into 10 ft. waves that are wind blown and AS ROUGH AS CAN BE is a disaster waiting to happen.
Nasdaq Leads The Way Higher On Slightly Higher Volume As Semiconductor Stocks Account For Much Of The Gains; AAPL Disappoints
April 24, 2008 | Leave a Comment
It was another typical day that we have seen recently where not a lot gets accomplished and we pretty much just give back whatever happened the day before in the opposite direction. Still, I do believe, that today’s gains coming with higher volume is a positive overall. And if you look at your Nasdaq daily chart, you will see that pattern show up a lot the past month (lower volume selling, higher volume rally). That is the reason the Nasdaq carries an ACC/DIS rating of A- which makes it the most heavily accumulated index out there.
Today, however, that was minor compared to the SOX’s 4% powerful rally that saw shares of BRCM leap today on huge volume. I am starting to believe that what I COULD be seeing is a rotation from commodity stocks (which don’t appear to be done yet at all) into technology stocks. That can best be viewed by taking a look at your daily SOX chart for 2008. As you can see we have a ton of excellent price action to go along with all that support right in the 340 to 350 zone. The move in the SOX today gets it ever closer to being able to take back and claim its 200 DMA. Tech stocks led in 9900 and big-cap tech did well in 2003 also. However, since then it has been all commodities but if the parabolic runs I am seeing in POT MOS AGU FEED etc…I will continue to monitor those stocks for a blowoff top and watch Semi/Tech stocks for more breakouts or possible bottoms.
I HATE calling bottoms while a stock market is falling and I hate saying a stock has bottomed until after the fact it looks bottomed. When I look at the stocks in the Semi index, I can honestly say, that I am starting to get that “feel-good” feeling in my body where I think that we are just moments away from launching a big rally. However, anything can happen in this market and I promise you that INDEED ANYTHING CAN HAPPEN. EVEN THOUGH IT LOOKS LIKE this market is going to resolve itself to the upside via some tech stocks trying to regain a strong uptrend. But once again, though I feel good and it appears eventually the SOX can take off and run, anything can happen and that is why I am prepared for anything and everything. Up, down, sideways, or a halt. I have my game plan ready to go!!
Do You Have That Feeling That We Might Not Have Put In The Ultimate Bottom?
April 22, 2008 | 1 Comment
Today was not that bad, overall, minus a few stocks that were completely earnings related. However, the fact that volume did in fact pick up is still none-the-less technically a distribution day. Still with volume well below the 50 day volume average, it sure is hard to get too bearish over a day like this. But at the exact same time, it sure is hard to get really bullish here when I see so many potential nice charts start to setup only to not make it.
The higher volume selling that hit the market today was the second below-average volume distribution day in a couple of weeks. While long-term this is nothing serious, on the short-term a few more days of this could put a monkey-wrench into this rally. Right now, as it stands, though, I would not be too worried about these two days since the put/call raises to such high levels on these kind of days. If the crowd was getting more complacent, I might be a little worried that the selling might pick up.
But the fact volume remains low and the fact that almost zero stocks have shown up the past two weeks as strong short candidates is a clear tell that this isn’t a market you necessarily want to be short…or long really.
Another Wild Intraday Session Ends With Stocks Higher On Lower Volume; Some Very Nice Charts Are Starting To Be Created
March 5, 2008 | 6 Comments
It was another insane day for market participants as the market started off on an impressive note. But, just like the past umpteen amount of days, stocks then sold right off erasing all of the gains, and then spent the final two hours really doing nothing. But that is our market recently and the one thing that we can at least say about that is that the directionless market hasn’t changed thus not throwing us for any nasty surprises.
There was one surprise for traders today and that was the news that ABK would not be bailed out. This caused ABK to fall 18% today and despite the stock looking like it bottomed back in January, in fact, just might have been a temporary stop on the way to 0. There are many other stocks in this group that are in this position as PMI, MBI, and MTG are all, in my opinion, more-than-likely going to zero. I only wish I wasn’t focusing on longs so much when they broke down in October. I do regret not getting short these horrible stocks.
Another stock I regret not getting short is TMA back in August. This stock here shows the importance of patience. As all of you know, I do not cut my FINAL losses until a long is either below the 200 DMA or the short is above the 200 DMA. There are, of course, exceptions. But I would say 80-90% of all stocks fall under this requirement, once they have substantial gains. TMA is just one of those examples. Had you lost your patience with this short come the rally in February–which never closed above the 200 DMA–and covered it all, you are probably feeling a little silly. You should; your lack of patience just cost you a 92% gain on a short in seven months!!!!!!!!! If that is not hot, in a bear market, I do not know what else is.
