Market Quietly Consolidates Yesterday’s Gains
April 2, 2008 | Leave a Comment
There was nothing great or horrible about today. The only thing I can say is that the retards who told me to buy stocks at the open sure were wrong. I do not daytrade and anyone that was trading like this today has a lot of work to do to become a great trader/investor.
The pullback in the spoos (up on IBD) and small gains (on tcnet; on IBD and RM I show small losses) by the nyse and nassy were very solid overall as volume did dip. However, a lot of strong CANSLIM stocks that I went long yesterday went from looking great with strong gains to looking OK with good gains by the close. This is not how leading stocks act at the start of a brand new nine-month “time to get filthy rich” bull market. This is instead how bear market rallies develop. Could it turn into a bull market? Sure. But it is still going to have to prove itself by making strong gains on heavy to huge volume. Volume under the 50 day volume average is your clear tell that only amateurs are trading (you and me). The professional money has only come off the sidelines four times last month in the Nassy.
Until these guys start moving the market one way or the other, you would be FOOLISH to load up on anything long or short. Nothing has changed today from yesterday. I still have NO HOT CANSLIM or speculative long charts. I only have about 50 really good looking charts. And even the best looking ones are losing technical strength. So this is still not a market I have ANY interest in being heavily long. I remain around 70% cash with ONLY 5% short (how does this make me a perma-bear, Wendy/Sandy Wright?) with the rest of the port in longs.
Another Boring Day Ends With Stocks Pulling Back On Lower Volume; God Help Us All If Tomorrow Is As Slow
March 28, 2008 | 2 Comments
I had a lot of errands that I had to run tonight and the funny thing is that the most important one still is unfinished. And you know what, sometimes that is just the way it goes. I could have been upset that I did not get it done but instead I decided I would cash in my chips and wait for another day.
That right there is exactly how I see the stock market right now. This is a market that looked like it was going to deliver us something good and instead it ended up having a closed sign on it and now we can not get what we want. Many traders want to enter this store and take the merchandise out of it and play with it but the market is closed to CANSLIM investors and there is still nothing I really want in the store anyways.
If that did not make any sense, because I am too tired maybe this will. Tomorrow I am going to go driving around this island for surf. The chances are that nothing is going to be out there. But I am still going to bring a shortboard and longboard and PRAY that something exist out there. If I drive around and there is nothing out there, do you think I am going to paddle out into a lake of flatness? Or let’s say it doesn’t even hit my knees, do I then take my shortboard out? OF COURSE NOT. When there is nothing, there is nothing. Trying to surf waves that are NOT there is stupid and kooky. You want to look like a freaking schmuck? Paddle out into Waikiki waves with your shortboard. Let me know how the “vibe” is.
A Weak Open Lingers All Boring Day Long As Stocks Close Lower On Lower Volume; ORCL Disappoints AH
March 26, 2008 | 7 Comments
It was an extremely boring day on wall street today as a pair of really negative economic reports failed to get the bears to take advantage of the macro backdrop. Considering durable goods announced by the Consumer Department fell 1.7% in February, crude oil bounced $4.68 to $105.90, and new home sales were the lowest since 1995 there was plenty of reasons for the market to take the gains and hammer them into oblivion.
But that didn’t happen. The market did fall on the day but the early morning losses found some buyers and after one more turn near the final hour stocks closed with minor losses, with the DJIA and SP 500 leading the way lower with a .9% loss. The good news, though, is that leading stocks, via the IBD 100, rallied .2% on the day and the SP 600 only lost .4%. So there was some relative strength in the leaders and the small-caps which is always what you want to see in a rally.
Too bad another thing you like to see is volume. Since normally heavy volume is good for rallies, it can’t be that great that we constantly rally on lower volume. However, when those low volume rallies are followed by lower volume pullbacks it is possible that in the future we could have a market rotate into a market where heavier volume comes from the combined low volume pullbacks and rallies. This is what happened post July 2002 to the October 2002 bottom.
Will This Oversold Bounce Hold? Depends On Your Time Frame; Day One Of Rally Attempt
November 28, 2007 | 1 Comment
Stocks put in quite an impressive oversold rally today that had many people talking of a bottom. However, is this a real bottom or just an oversold rally that will lead to another selloff? First, it pays to look at the sentiment indicators to see if we had any fear out there. If we did, then we probably put in a bottom. However, if we did not see any fear in the market the past two days then we probably have not made a bottom and instead have made just a short-term oversold bounce.
I know we keep going over these points, but when it comes to trying to find a “REAL” market bottom, it is very important to follow these as they almost always coincide with a bottom. But the put/call ratio is the first one I look at and when I look at it I see an index that fell yesterday during the selloff from .89 on Friday to .88 on Monday. So after making new lows for the month, the crowd was less bearish and making less bearish bets on the market. So there is no fear that. And confirming that, the put/call ratio fell to .83 on today’s rally.
Then there is the VIX. Every single index made a lower low in November compared to their first low, however the VIX did not make a higher high. The VIX did not even break 30 on this most recent decline in the stock market. On top of that, the VIX has already fallen 10% today back to 26.28. The VIX is an excellent index when it comes to judging fear and it is obvious that despite the market hitting lower lows, the index confirms traders were not fearful this time down. I hate to tell you all this, but that is not bullish. Bottoms form when there is either complete apathy or a lot of fear. We do not have that and everywhere I turn on CNBC and everything I read at realmoney.com says to buy this “bottom.”
Selloff Continues As Bottom Callers Continue To Look Foolish; Adding/Establishing Short Positions In The Stock Markets Former Leaders
November 26, 2007 | Leave a Comment
The selling we saw on Wednesday continued today, after a slight one day oversold bounce. The bounce we had on Friday was on a half day and was on no volume so obviously the selling today can’t be too surprising to trend followers as it was very clear the low volume rally would probably not hold. And it definitely did not as some indexes hit new 52-week lows like the Russell 2000. The index that led us up from 2002 is now leading us down as we continue to selloff. This index is now almost 15% off its highs for the year and the major indexes are off between 10% and 11% officially putting us back in a correction mode.
While the trend is down and I went over everything I could think of about the current market during the long weekend, I still have found some very important key technical data that says that we are not done yet. First of all did anyone see the equity put/call ratio in IBD? The market fell between 1.8% and 2.6% yet fear fell as the put/call ratio went from .89 to .88 today. This clearly shows that there is no fear in this market.
