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.

Even though some crazy bottom “pickers, guessers, wishers” believe it is smart to buy on the way low, everyone that held or bought ENE, FNM, FRE, WCOM, BAC, C, BSC, MER, AIG, or LEH on the way down can tell you it is the most ignorant thing you can do. Why? You have absolutely NO REFERENCE POINT FOR A CUT LOSS…until you go broke! Nice job. Waiting for a bullish trend to develop with beautiful and CANSLIM chart patterns and stocks setting up is the only smart way to go about handling any kind of market environment.

As long as the trend is lower on the long term, the intermediate term, the sub-intermediate term, and the short term, it is foolish to fight the trend by buying stocks. The only smart thing to do when the trends are down on all four time frames is to be short.

Now if there were industry groups with leading stocks moving higher in a bear market, you are OK going long those. However, since the October 2007 top, there was only one period (March to May 2008) where the leading industry group with leading stocks actually gave great returns that could make you wealthy. The rest of the way down, the few groups that have rotated to the top have been so late in their runs that soon they are breaking down too.

When you see new leaders breaking down instead of taking a market higher, over-and-over, you know there is something wrong with the market. When the Medical stocks took leadership, the market should have based out some before breaking down if those stocks were going to have a prayer. The same came with Security stocks and Education stocks. As soon as they took the top of the list another selloff in the market was soon knocking them off the list.

Finally, this time, a group has made the top of the list and the stocks in that group continue to setup in what are actually good (NOT “great”) patterns with a few stocks showing very nice patterns that have made me some good money. All it took were two good longs and a couple of strong weeks in that sector to turn my account from having a mediocre month into a great month. This is what is supposed to happen in normal bear markets. You are supposed to still have a few groups that can produce winning stocks that hold up when the market falls. However, this market, is NOT normal. NOT EVEN CLOSE. This is one ugly market.

The great news about that though is that if you are a trend follower and realize that there are ZERO “hot, max green BOP, huge accumulation, excellent price action filled” charts right now, that it would be smart to instead focus on the short side. Well, that is exactly what we have been doing since the March to May rally attempt failed. Since then it has been nothing but ugly, besides some gold stocks, a pasta stock, a medical stock, and an education stock. As you will see below the clear winners are the shorts.

top shorts with their total returns since my first purchase MAKING ME MONEY THIS WEEK: AAPL 43% CETV 92% CEDC 81% SDA 78% CYT 66% AMX 49% GGB 60% OKE 42% POT 51% MOS 54% TITN 52% RIMM 57% IPHS 43% AMSG 21% RDK 29% PRGO 23% MCY 27% BOH 21% SPG 58% ARB 72% PLCE 27% CASY 28% CEO 33% PG 21% K 19% LLL 19% APD 44% CPRT 21%(this is just 28 of our 43 shorts–the rest are new and WILL return what these have returned)

FREE YOUTUBE VIDEO:

That bounce was given credit due to JPM buying BSC for $10 a share instead of $2. This whole thing sounds crooked to me and I will just leave the action in BSC to that. But, this news was given credit, on top of some good existing-home sales data, for today’s gains. Well, you know what news would have been better with today’s 3% gain? NO NEWS. It is a huge rally on large volume that comes with no news and a lot of stocks breaking out that gets me more exciting than any other news headline I could possibly see. It almost gets me as excited as the bottom callers who call a constant bottom in this market, are wrong 5 times before they are right once, and then when they get a tiny bounce dance in the streets that all is well.

I forgot what it was like to be involved in a stock market where price action is so rough yet so many “traders” can’t stand still and keep trading their pants off like it was a rip-roaring bull market. But here I am in one again for the first time since 2000-2002. It is incredible how not even ten years can go by and yet we have still forgotten all the lessons we should have learned there. The bottoms callers today sound just like the bottom callers then. They are so sure this is a bottom that the put/call has fallen to .80.

I don’t know how many times I have to tell everyone this but I think I am going to do it till my face turns blue. The best bottoms historically have ALWAYS come when there is a light volume selloff that precedes the low and the low is formed with a ton of accumulation which confirms that the big boys are moving their money back in the market. This is yet to be seen. And don’t think counting Thursday as a day of accumulation is as black-and-white is as it appears. It isn’t; don’t forget that it was triple witching and on triple witching days volume explodes to levels that we would normally never see if it wasn’t an options expiration day.

So, to everyone that thinks Thursday and today was a great day: it wasn’t. In fact it is probably now more bearish than it is bullish, after today’s trading action. However, are we still good for a bounce? Duh. Obviously, that is the case. This is why you do not see me going short stocks recently and have seen my long positions increase as some very pretty patterns have shown up.

This continues after today but if these nice starter patterns are to get any better they are going to have to round out and have more accumulation and green BOP enter the stock. Because right now, most candidates are just too sloppy to have me interested in them. The few that are not are iffy at best when it comes to the sector and industry group they are a part of.

The sectors that are taking the lead in this current turn upwards are not what I am used to seeing when a market is ready to go on to make some big price gains. However, the current leadership is very strong right now and could very easily go on to produce some huge gains. With that kind of good/bad mix it is what it is. Active-investors know that for now things are OK but tomorrow they could turn on a dime. As long as you are in that mindset you can play some of these sectors that include household-housewares, building-wood products, transportation-railroads, transportation-trucks, machinery-farm, food-meat products, auto/trucks-replaceable parts, finance-small regional banks, and savings&loan.

I don’t know about you but when I see that list and compare it to the normal technology, innovative medical/biotech, internet, and other exciting new industries that launch exciting powerful stocks, I definitely put my guard up. Now if this is just the start and all of these sectors that are climbing their way and making it into the top 20 of IBD 197 industry groups then rotate into new exciting leaders in stocks and sectors that are starting to setup then that would be perfect. But until this rotation happens and I start getting 5-10 HOT HOT HOT green BOP, heavy accumulation filled charts showing up that could be new longs showing up daily in my scans, right after a follow-through day, there is no way I am going to get nuts and go all-in here.

Heck, there are so few nice charts that I mention just one really HOT one in my column on Wednesday at Realmoney.com and the next thing I know two other key technicians on the site are long. Not how I wanted that one to exist. I was hoping everyone but us would miss it. Too bad they found it too. And that is the point. When there are only 2-5 HOT HOT HOT stock chart patterns out there, it isn’t hard to see why everyone notices it and flocks to it.

But when we go back to 2003, you can see that so many stocks were moving that if you decided to load up on something, the chances of someone piggy-backing you with their huge position was slim. In this market, with the best active-investors all looking for the same thing (I remember this happening with GROW back in 2005 after a bearish period), many traders are going to be going after the same stock. With everyone seeing the same thing as everyone else, obviously, we are all going to get long the same thing.

So with that in mind, let’s remember that in real bottoms that turn into great bull markets (instead of a bear fakeout that usually breaks investors who don’t cut their losses) you get a lot of great longs. That is why it is taking me FOREVER to go over all of my past big winners in 2003. I had a TON of them. But as you saw leading up in 2001 and 2002, there was nothing. After 2004, the same thing happened, they started to diminish and they became harder and harder to find. But I still found them then and I will find them again when this market changes. I already have my eye and my money on the best patterns right now. Therefore, nobody and I mean nobody should be worried that I am going to pass-up my next AFSI (my last big winner that I loaded up on from April to July 2007). I’ll find it and jump in margined out to the hilt when it is the right time.

Remember, the greatest stocks of all-time have all come after the stock market had bottomed from a nasty downtrend. The bottom’s FTD then leads to hot stocks breaking out of hot bases for up to THIRTEEN WEEKS LATER. That is right folks, the greatest stocks of the 1900’s…1940’s….1980’s…and 2008 when they are ready to go will keep showing up and up and up and up for weeks and months at a time. And don’t forget just by going over some of my personal past big winners it should be apparent to EVERYONE that it doesn’t matter when you go long stocks in an uptrend as long as the trend is strong and the chart pattern is as close to perfect as possible. EGHT and FMDAY both showed up in October-November 2003 which was A FULLY YEAR AFTER THE BOTTOM. They both still produced a 300% gain in one month and 500% gain in four months respectively. Then there was my best long, WHICH I POSTED TODAY SO EVERYONE COULD FINALLY SEE WHAT I SAW. TASR came four months after the perfect FTD in March and came NINE MONTHS AFTER THE MARKET BOTTOM. So why are so many amateur and professional donkeys STILL TELLING ME that I have to get long here.

First off, fools, I am already long 37 stocks that make up 23% of my portfolios. Second, while your cash will be fully invested in shit that goes nowhere (btw, I am speaking months not DAYS, here–you daytraders may like 5% gains but i want 500%) over a long period of time. Like I reminded you last month, when people were buying MSFT, DELL, CSCO, and ORCL back in 2003 because “they had to come back,” I was buying TASR SINA SOHU NTES SSYS GRMN EVOL EPIC and other’s that I knew were buying leaders like GPRO ERES OVTI YHOO and EBAY. Guess who got rich and who churned their account?

We are seeing the EXACT same thing right now. Let’s say that we start getting a bunch of accumulation days in the market and stocks start setting up and breaking out everywhere. How many people do you think are going to be buying BIDU GOOG FSLR LVS MA RIMM WYNN AAPL GES and AMZN? I say 99%. They don’t know how to find the next leaders. They only know how to find the old leaders turned laggards. Stocks like MCRS, PCLN, NKE, LNN, WDC, TNS, GEF-B, ISYS, MATK, PRGO, MANT, XIDE, and VLNC will always elude the “smart” money and the retail crowd. Less than 1% know how to make money year in and year out. I am one. Are you? Do you want to be? If you are and you are serious about learning how to do this the correct way from someone who is as far away from wall street as possible YET DESTROYS the returns produced from these crooks, you have come to the right place.

I keep it real! Real honest!!!!! No candy-coating here. I am here to make you the best. The only real question is if you are ready to SHUT-UP, forget about EVERYTHING you have ever learned NOT CANSLIM related, and get down to doing some very hard work for a short amount of time (two to three years) to then be able to do a little bit of NOW-easy work, consistently, for a lot of money later on. I can not hold your hand but if you watch me closely and study my past big winners and learn to keep your powder dry in markets like this, you will end up kicking my ass one day. And trust me there are those who can do it. A few subscribe to my site! I am a very lucky individual to be surrounded by such professionals….they help balance the very hard to answer newbie questions that have already been answered numerous times on my two sites. It is called a search engine, newbies!!!!!!

One more time: Just as James “RevShark” DePorre (the man who asked me to partner with him that SEALED the decision to create this/my own website) said on his website:

I don’t want to be too quick to dismiss the strength of the last couple of days. We have had a good move, and we have some technical support, and that bodes well for more upside. But we are a bit overbought in the short term and may need a rest, though I suspect that too many folks are unprepared for strength, and that may support further upside in the near term. Enjoy it while you can, because this is classic bear market rally action.

I KNOW I could NOT have said it any better. Aloha from the island of Maui. Pray for surf!

Stocks gapped lower after a horrible announcement by JPM that they bought BSC for $2 a share. Now, while I don’t want to gloat on this, I just want to say that for the 100th time in my life I have warned a bunch of traders to not buy a certain stock and yet they still do it. There was one reader from Santa Barbara from RealMoney.com that attacked me 8 days ago for telling him BSC was a POS. Well here we are from $75 to $4 and yet still no apology. No, thank you. No, I am sorry. Just a big pile of nothing. From Eugj to BHCO to Gerard to WillPS to SCO to Geoffrey from Santa Barbara: all of these characters have called me out and told me that I did not know what they were doing and EVERY SINGLE TIME THEY WERE PROVEN WRONG AND EVERY SINGLE TIME I DIDN’T RECEIVE A SINGLE I AM SORRY OR THANK YOU. Is this what our world has come to?

Oh well, there is no doubt I have become a sensitive character in my old age and things like this bugs me now. I just don’t know how yet to act when it comes to responding to jackoffs that make themselves out to be major idiots. I guess I will learn to ignore it in the future. The exact same way I ignore going long any stock below the 50 day moving average or go short stocks above the 50 DMA.

What is very odd about today that sticks out like a soar thumb is that volume was very lame. Overall, the panic that I witnessed last night in the yahoo message boards about BSC, was completely uncalled for. After hearing of horror margin call, divorce, and other stories, I started to think we could have a crash. When I looked at the sentiment indicators already being so bearish (which is bullish) but yet there were no stocks confirming that this was going to lead to a move higher, I knew that it was possible this could be our 1987. But just like every extreme situation, the damage was contained just to the banks and at the closing bell the DJIA proved why panic selling never works.

I guess I am going to attack today’s post differently considering the nature of the BSC announcement and the reaction by the market. On the DJIA chart I see the average is still abvove the January and March highs and that we have three strong accumulation days out of the past five sessions. This is a pretty bullish development by this index. However, this index always holds up better than the rest so it is pretty much just a flight to quality. You can see back in the bear of 2000-2002 that this index rarely led to the downside. So this relative strength, imo, is just confirmation of the weakness in the market.

The SP 500 has cut the lows of January but still rallied back to hold support. This is a bit of a bullish development on the short term but when I look at the daily chart and see the slope of the 50 day moving average and the angle of the decent I am very discouraged that a rally from here can carry any real power. The 200 day moving average is in a downtrend right behind the 50 DMA and there is no way I can see this index righting itself anytime soon. As for a bottom, you can forget it. Look at the volume compared to the January lows. No way, bottom callers.

The Nasdaq is very interesting as such a horrible gap lower, you would have thought, would have led to a massive volume surge. However, volume came in below the 50 day volume average which absolutely blew me away. The fact something like this happened and volume was lower can only mean one thing: we have more lows to go. There is no way we are going to bottom without a major surge in fear. And lower volume on the Nasdaq is not my idea of a surge in fear.

Another thing that is not my idea of extreme fear is what happened with the VIX and put/call. The VIX, despite all the insanity I saw last night, only hit 35.60 and closed at 32.24. This is not the level that we historically see at bottoms. We are very close but if you know anyone who thinks “THIS TIME” it is the bottom, slap them in the face with a chart of the VIX going back to at least 1987. However, 32 is the highest close in almost a full five years and that has me very happy. However, happy does not equal buying stocks.

The put/call ratio spiked today to a very high reading of 1.41. However, I am not sure what it hit intraday, but really, it doesn’t matter. What matters is the close and when we look at the put/call today compared to the 1.59 and 1.65 readings back in January it is clear to see that the crowd was making more bearish bets then than on today. So, once again, we have another indicator, that though it seems bad, is really not that extreme. So this, with the VIX, the lame bullish reversal, and weak volume all point to a market not washed out yet.

Now all of you know, by now, that I have been advocating cash for months. As the month of February and March went along and finding good short setups and having them work became harder it was clear to see that the smartest thing to do was to raise cash. So after nibbling on some nice shorts, I started to raise my cash position. I raise those cash positions for moments like this.

These big selloffs if they happen correctly usually lead to a very powerful oversold rally that helps produce some nice stocks in a short period of time. However, when those selloffs happen with volume being lame lame lame and no charts showing up, you know it is time to just keep that cash heavy.

Now, two things can happen. One is obviously that we can continue to selloff and look to short stocks. But if that was to happen right now, we simply are not going to find many that can be put out short. The market has fallen too far too fast sending too many stocks past their reasonable areas of getting short. Most of the past big winners to become great shorts would need MONTHS!!! of a low volume rally to set them up. The fact stocks like GOOG and AAPL imploded without giving anyone a chance to enter a large position is just some of the reasons it was hard to short an make a lot of money. But if this market gets ugly, trust me there will be plenty of low volume rallies that will lead to chances to get more short if the trend is down.

The second possibility I am looking for the market to put in for me to get bullish again is to hold these levels the next three days and then to have the market put in a follow-through day where the market is up at least 2% on much higher volume. But for me to want to get long I then need to see a lot of charts that look like either NEU or GTU showing up everywhere. If I get this I would love to get long and start hammering out some big gains that we are now closer to getting with a VIX at 35.

However, the chances of me getting this is very thing I feel as the technical damage is amazingly disgusting and it is going to take a very long time to fix the mess that is now out there. I don’t think that will be anytime soon but God willing let it happen tomorrow. I love to make a lot of money in the market and I miss my max green BOP charts like my last one AFSI in April 2007 to July 2007. So if I can get this I am more than willing to get very long and be very happy about it. But I am an honest man and I don’t see that happening any time soon.

I see the macro data, I saw the Fed, YET AGAIN, place an emergency cut on the lending rate to financial institutions to 3.25% from 3.5%, I saw BSC, LEH, NCC, MF, UBS, and FCSX, and after seeing all of this I have come to the conclusion that we are in some serious trouble but that means only one thing. We need to be looking for a rally.

But looking for a rally, I repeat, is not the same thing as going long. Remember, we are waiting for a follow-through day, the very nice charts, and the sentiment indicators to all line up. Until all of this happens, there is not going to be anything we can do but hold ourselves in a lot of cash and/or let the professionals continue to operate on the short side. This is just the way it is. Forcing trades here is the last thing you want to do. Pushing for anything that the market is not giving you is the way of the amateur.

I saw a new reader place a comment that they went long FCSX as it fell today and learned a very big lesson today. My only problem with this is why did you not listen to my commentary? If that wasn’t going to do it, my bigger problem is why are you buying anything that does NOT look like my past big winners? This is the thing that drives me crazy.

Now, I know that we do not have a lot of near-perfect charts out there (NEU and GTU) and that usually even when we do they fail fast. But the thing to know is that the last one that worked was APPY back in September. Go take a look at that chart NOW! In one month APPY rallied 130%, despite the VIX being below 20. This shows you the power of this pattern. The last one we loaded up on was AFSI in April 2007. That was when the VIX was below 15! and it still produced a 75% to 83% gain in a little under three months. These are great returns and are typical of perfect charts in bad markets (minus the 5 that we cut our losses on this year; INXI BYI BLL SNDA ESEA). Two right and five wrong in THE WORST YEAR FOR NEAR-PERFECT TO PERFECT CHARTS and they still produced for you a 100% gain. Do you see why it is so important to be very right and be a little wrong when you are wrong?

Then why do you buy FCSX? Oh well, I know this trader has a great attitude and I know this will be a lesson worth learning. The great news, hopefully, is that you kept it smart, since I have been emphasizing that and therefore you will be ready for the next long that is the opposite of FCSX.

Another market related item you might want to ignore is the opinions of the dumb asses on wall street. There were five of 15 donkeys that rated BSC a buy. How many do you think rated it as a sell? That is right! NONE! This is just another example of making sure that you never listen to wall street. You can be sure they did not have your best interest in mind.

And since we are speaking of best interest in our mind. We might at well talk about the interest rates that Ben is going to butcher at the next meeting by slashing the 3% rate to 2%. Even though oil fell quite a bit today, I still have no confidence that today is a top in commodity prices and am very nervous about this move. Of course the argument is that higher inflation is better for us than a weaker economy but I think both are pretty bad and since the last time we had this was in the late 60s to early 80s, I recommend every investor go back in time and study that Fed and the market they reigned over.

I am extremely happy today after seeing so many new people subscribe today and so many of my current subscribers thank me for saving/making them a lot of money, while we watched a lot of people go broke today. Anyone that read some of the stuff in the yahoo message board on BSC and doesn’t feel bad, shame on you. My initial pleasure in being right was replaced by a severe disappointment that so many people f’ed up once again. The lure of buying a cheap stock or getting a bargain has ruined them again. I have no clue when these people will learn but hopefully they will soon.

And if you are one of those donkeys (if you bought stocks as this market sold off you need to stand up, and just like an AA meeting, you need to stand up and admit you are a donkey and immdieately head over to my ‘past big winners’ area on my website. If you do not go there and buy stocks tomorrow that are in a downtrend and then lose all or you money I will be happy because in the USA those who are rewarded do their homework, research, and know what they are getting involved with. Those that think getting rich quick in the stock market is the only way to play it deserve to lose it all. For those that went from 100k to -33k by being on margin, all I have to say is you deserve it, if you bought the stock recently.

If you were a shareholder in the company and had no clue about the market like the Enron investors, then God bless you. I am so sorry for what has happened. This is why I hate wall street and believe the fools that feed you advice have only one thing in their interest and that is making a lot of money off of your constant commissions for their brokers. That money then sloshes its way all around wall street and everyone can line everyones pockets.

For those that have just joined up with this team, get ready to start making and keeping your money and do know this if you are here and after a long period of time you see no progress…..this game SERIOUSLY isn’t for you. NO ONE, who learns the CANSLIM system should EVER burn out or go broke. The only people that go broke are the idiots that bottom fish. Don’t be a donkey and don’t be an idiot. Geoffrey from Santa Barbera, BHCO an ex blogger, Eugj from Investors Paradise, Gerard from Brooklyn, SCO a coward who made a comment on my site, and Frank a subscriber who is in love with a pathetic stock called HNSN have all learned expensive lessons and all could have cost you a lot of money. Would any of them ever take responsibility or apologize for their actions? Of course not! Frank is already sending out an email to my partner in crime telling him “THIS TIME THIS IS THE BOTTOM.”

ROFLMFAO. These wall street donkeys never learn!!! Aloha and I will see you in the chat room where there is only one donkey in the room: ME!!! That is unless Frank shows up.

The Fed minutes clearly signaled that more rate hikes are needed and that investors who thought the possibility of a rate-cut was coming were definitely doing a lot of wishful thinking. What I took away from the report was that the Fed is very confused by the current data, admitted to seeing lower growth in the economy, and they are worried about inflation. These ingredients, when mixed together, make a special dish that you definitely do not want to be served called stagflation. Let’s hope that isn’t the case. If it is, don’t think this Congress will do anything to help. Some parts of the world are about to get wealthy, while our dollar continues to sink. Too bad mom and pop do not understand economics.

To the reality of now, stocks closed lower across the board. The DJIA, Nasdaq, SP 500, and SP 600 all fell .7% and the NYSE fell .6%. The bad news in leading stock land was the fact that the IBD 100 fell .9%, well outpacing the broad market. The IBD 85-85 fell .7% but that isn’t very comforting since it did not outperform. This is the second day in a row the IBD 100 has lagged the broad market. That is not bullish.

Another thing that is not bullish was the leading sectors today. Oil&Gas and Steel stocks have been the best in this current rally but now look at what amazing leaders showed up today. Food-meat products, medical, and closed-end funds. These are not necessarily leaders but I have a lot of stocks in my scans showing up in these sectors. And I see via the IBD new-highs list that these are moving up there also. These signal a week market, not a bullish one. The top sectors this year are Utility, Defensive, and Medical sectors. This does not bode well for the market.

What else does not bode well? Volume. Volume was higher today, giving both indexes their second distribution day since the rally started. Volume was 18% higher on the NYSE and 8% higher on the Nassy. Today’s volume was higher than any of the up days in April. Besides being the highest volume, it was also the first time the Nasdaq has traded volume at least as heavy as the 50 day volume average since the follow-through. And now the Nasdaq is only up .14%, since the follow-through, hmmm. Does this feel like a powerful uptrend to you?

Decliners beat advancers by a 2-to-1 margin on both the Nasdaq and the NYSE, not showing the selling to be too intense. There were 309 new 52-week highs and 93 new 52-week lows. The new lows are expanding quite rapidly considering that some indexes were just at all-time high territory. This also has bearish indications. And the last bit of data for you is the put/call ratio. That ratio on equities is at .69, after today’s selling. This is bearish as it means that option players bought calls as the market fell. Traders feel every dip should be bought. I happen to differ with that assessment right now.

To me it is very funny that the notes from the Fed minutes in March caused today’s selloff. Wasn’t it just last month that after they left from this meeting that stocks gave us a follow-through day LESS THAN ONE MONTH after a major breakdown? So on that day it was ok but today it was not ok? If you are confused trust me you should be. This is why I follow charts and the CANSLIM system. I am not confused. I am for sure of one thing: All of their rhetoric is meaningless. It is all worthless. But as traders I guess we need something to talk about.

This sell-off after the past eight days of low volume rallying is just what I expected to happen eventually. The small itty-bitty price gains on volume below the 50 day volume average is just not bullish. No long-term powerful uptrend starts with such low volume. This rally was and is still very ugly. However, with only two distribution days it is no where time to start shorting. Heck, I am still long over 200 stocks. So we are no where close yet. However, the fact that all the indexes are up less than 1% since the follow-through and that we have two distribution days already should have traders more worried about the downside than hoping for more upside.

Of course, don’t think that I don’t know that the dip buyers are insane creatures and that the big boys may want stocks bid a bit higher to dump into. This small bout of selling could possibly set us up for another low volume rally that suckers in more of the dumb money who believes every dip should be bought. Eventually though, the day of reckoning, will be here and many traders who are buying the market for this first time AFTER FOUR YEARS of a strong bull market are going to get hurt bad.

I don’t know, everybody. If you ask me, investing or trading in this market using my growth strategy of getting big juicy gains in periods of weeks to months is not the right method right now. As you can see via my returns listed on my free market analysis section I am still doing very well. However, there is a lot of unnecessary churning in my account. I could eliminate this by avoiding going long some small-cap stocks. But I love nailing those winners when I do get them. They normally take care of all the small losers. But in this environment it is hit and miss.

The best play right now is to continue to invest long-term in the steel market or to be daytrading the solar, biotech, and stem cell stocks right now. STEM ASTM ASTI FSLR DNDN and many other stocks like these are offering very experienced investors chances to daytrade and make a lot of money. How many people can daytrade successfully? Less than 1 to 2%. It is much harder than the method I use. Can I daytrade. You better believe I can. It just isn’t my style. But if I was addicted to the stock market and not Maui, I would probably be daytrading right now with the 40% or so cash I have on hand.

On that note, I am checking out. I watched an amazing hockey game tonight where the most shots on goal EVER was produced. The Dallas Stars unloaded 76 shots on Roberto Luongo in his first NHL playoff game. The Vancouver Canucks won and Roberto was the hero. It was a great game that lasted over 5 and 1/2 hours. So obviously I am tired from just watching the game. Aloha and I will see you in the chat room.

Sidenote: If you are a Gold Member, make sure you read yesterday’s chat archives. There were some great topics discussed.

At the close, the SP 600 rose .4%, the Nasdaq and the SP 500 rose .3%, and the DJIA gained .04%. All of this sounds pretty good but the IBD 100, which is full of top rated leading stocks, only gained .2%. On a day of small gains, you still would like to see leaders outperform the broad market. A negative divergence normally shows up before prices head lower. But I am sure in a market like that, this would be impossible (sarcasm). Oil was the most powerful group today, with the Oil&Gas-Field Services group rising 1.7% and the Oil&Gas-Drilling group rising 1.6%.

Volume was higher on both exchanges and advancers beat decliners by a 5-to-3 margin on the NYSE and by a 9-to-7 margin on the Nasdaq.

Despite the gains on higher volume than the day before, we still have the same problems, with volume being below the 50 day volume average and there being very few CANSLIM stocks breaking out of sound bases for growth investors. This market is just doing the same thing it has been doing all week. The old saying goes never short a dull market. But I guess option players didn’t get that message as the put/call ratio jumped over 1 again. This shows that the price gains are probably going to continue to happen, even if volume doesn’t show up. The players who are around are not that bright, shorting a rising market.

Seriously, folks, how much more is there possibly that I can say about this market? I have gone over this same scenario we are in, over and over. My thesis remains the same. Everything that I have discussed the past eight trading sessions remains true now. Nothing has changed. We still have a dull, non-growth stock uptrend on very low volume. Not pretty, but still a trend.

Hopefully, we will get some more volume, later this week, as earnings season starts. AA came out and beat estimates but there are still many more to come so I will not jump to any conclusions on these numbers just yet. The one thing to remember is that for 18 straight quarters we have grown YOY EPS in the SP 500 at a 10% or higher clip. This is the first quarter that projections are for under 10%. In fact they were for 8% and have now been lowered to 3.7% via Thomson Financial. We will see how this turns out.

The Fed releases its minutes from last month’s FOMC policy meeting to Congress. The verbiage in this report is always market moving so I assume it will be tomorrow also. Before I leave, please read the last eight daily market analysis post-if you have not already. Aloha and I will see you in the chat room!

Stocks started the morning off higher, possibly thanks to the strong non-farm payroll numbers. As I stated on Saturday, economist saw this number come in with a 180,000 jump in March. Well above the 135,000 estimates from economist. The biggest positive from the environment was the unemployment rate dipping to 4.4%, instead of ticking up to 4.6%. This shows that this economy is still doing very well despite the bad econ numbers we have been seeing the past quarter.

However, after that gap, it was just a bunch of wild and meaningless action that did show a bit of weakness as traders sold off stocks in the final hour. That reversed some indexes to close red. By the close, the DJIA, NYSE, IBD 100, and SP 500 all ticked up slightly under .1% and the Nasdaq and SP 600 lost .1%. It was a day of meaningless action.

Volume was higher on both exchanges, with volume on the Nasdaq coming in 12% higher and 1% higher on the NYSE. Still, volume was well below the 50 day moving average, indicating that the big boys simply did not show up today. Advancers were pretty much even with decliners on the NYSE and advancers beat decliners by a 9-to-7 margin on the Nasdaq. The put/call ratio edged up to .8.

The only odd thing about today’s market, imo, is the fact that stocks did not go anywhere after oil fell 4.7% to $61.51. The last time oil tumbled, stocks exploded to the upside. However, this time, stocks did not do much and even oil stocks did well today. The best of the best today was the DJ Transport avg. That average powered higher by 1.9%. The group was helped in part by Warren Buffet disclosing via SEC documents that he has purchased a 10.9% stake in BNI and also purchased shares in two other railroad companies. This along with a private equity group reportedly interested in buying DOW shows that smart money still sees value out there in this market.

Today’s action still leaves the market where it was before even last week started: Direction-less with no conviction to the bull or bear side. The bulls simply can not get anything going, after the follow-through day in March. The bears simply can not get ANYTHING going to the downside either. Every time the market attempts to sell-off, buyers step in and support stocks. However, that is where it stops as once the support comes in there is no more buying from that point. That shows that we are probably set up for a do nothing market environment heading into the summer.

This market is still not convincing me that this rally will last either. Where is the volume to the upside (especially recently)? Where are my breakouts from bases lasting at least five weeks long with great fundamental characteristics (CANSLIM quality stocks)? They are not showing up STILL. Yes there is GEO and NTLS today. But GEO is from a much longer uptrend. This is not a fresh breakout to new 52-week highs. GEO has been in a solid uptrend for four years! So even if this breakout works, the chances of you getting another 300% plus run is near impossible. NTLS is much better. That stock at least has a chance as it is a very new IPO and this is only its second base. Still this does not instill confidence with me that this rally is going to produce a lot of NTLS type of stocks. We need more stocks with better CANSLIM traits to breakout or we will just have to continue to nibble on the small POS that pops up everyday.

In saying that though, obviously, without the market being in a downtrend it is still foolish to look for and/or actually short stocks. DNDN is a perfect example of why to NEVER short small-cap stocks with over 20% of the float short. In 10 days the stock is up over 400%. If you were short that stock, you would not only be broke fiscally but also emotionally destroyed and more than likely beyond the point of return.

AA officially kicks off earnings season tomorrow. DNA and GE also report this week. Let’s hope that this starts some fireworks. Aloha and I will see in the morning in the chat room.

Also helping to lift stocks was a couple of merger and acquisition related announcements. Kirk Kerkorian has made a $4.5 billion bid for DCX and WEBM agreed to be acquired by Software AG. WEBM rose 27% on the announcement. This now puts the 1Q M&A deals up 27% over this time last year. $1.1 trillion worth of M&A deals this year has us on pace to beat last years record. More amazing is private equity deals. Those have risen 47%, year-over-year in 2007 so far.

Combine the positive jobless claims with the M&A deals, and with most traders taking Thursday off to have a very long weekend, and you had a recipe perfect for higher stock prices, despite oil climbing back over $64 on the news that the EIA saying that oil inventories declined for the eight-week in a row.

At the closing bell, the Nasdaq led the way with a .5% gain, the NYSE and the SP 500 followed with .3% gains, and the SP 600 and the DJIA lagged with .2% gains. A tad more troublesome is the IBD 100. That index only managed a .2% gain, well lagging the Nasdaq on the session.

Volume was lower on both the NYSE and the Nasdaq by about 10%. The lower volume was well below the 50 day volume average and was the lowest total of the year. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. There were 413 new highs to 53 new lows–and on the NYSE there were 234 new highs to only 13 new lows.

Today was another day of a low volume rally that saw the indexes barely move higher but once again shake off early weakness to do so. This is not a great trend we have developing, since the follow-through day on March 21st. Since that follow through day the market was been higher in seven sessions. All seven sessions have failed to have volume over the 50 day volume average and only two of the up sessions have come with volume heavier than the day before. This is a low volume rally that will not last much longer unless we get some clear accumulation days in here by big institutional traders. Until we have volume come in over the 50 day volume average on the upside, we are open to a severe sell-off still. Bottom line is that I would not take much away from this week’s holiday shortened trading.

For the week it was very positive with all indexes closing higher. The Nasdaq led the way with a 2.1% gain, the NYSE followed with a 1.8% gain, the DJIA was right behind with a 1.7% gain, the SP 500 rose 1.6%, and the SP 600 gained 1.5%. I could go into more detail about this weeks action but it would be silly to do so. All you need to know is that it was a holiday short week. The bulls almost always have control of these weeks. This week was no exception.

There is no doubt that we are still in rally mode but everything in my gut tells me we are not going far from here. Now I will change my stance in seconds, if I start to see CANSLIM stocks with consistent great EPS and sales growth breakout from fresh bases and the markets start moving higher on HUGE volume. However, all I keep seeing is the old leaders breakout from choppy bases, defensive and utility issues climbing, and little small sub-$10 momo stocks moving. This does not make a safe big bull market. If we start seeing some more buying here on a lot of volume I will be much happier. However, unless we see it soon, we are increasing our chances of failure each day that passes that volume on the up days remain under the 50 day volume average.

Can we make money here? Of course! If you are a subscriber at least on the silver level you can see for yourself that almost EVERYTHING that I have touched since the February 27th sell-off is either higher or has not violated a complete cut loss area. However, there is nothing over $10 breaking out from bases seven weeks long that have perfect accumulation/distribution and max green BOP. In March 2003, October 2004, and November 2005 there were plenty of beautiful charts. Even after the move in August 2006 there were a few SWEET gems. However, since March 21st there has been very few. The stocks that do have perfect charts are just not CANSLIM quality. If this market takes a turn for the worse, these stocks will not fall 8%–they will fall 20% or more before violating a key cut loss level. So I can not recommend them for newbies.

Give me a sell-off of 20% or more and a VIX near 20-30 and the next follow-through we get you will see the power of this strategy. Right now, very few people are making a killing. Remember back in March 2003 when the VIX was at 33? I had many stocks make 300-500% gains. So what can we compare it to now. How about KNOL. KNOL is up 301% for me since I purchased it. If the VIX was three times higher than now and around 36, KNOL would be up 900%. So basically you can take a look at my returns below this commentary and then double or triple them and then you will see the potential gains in a “REAL” bull market. Not a low volume snooze-fest higher.

Speaking of the VIX: The VIX fell 10.2% this week. LOL. With the VIX that low, you can forget about many MFW or TRCR type of stocks showing up. Normally I can find 10-20 MFW and TRCR type of stocks. Not in this market. However, the drop in VIX puts complacency in the market and that is bearish for stock prices. Another bearish item is the put/call ratio. That ratio after falling below .7 yesterday is still low at .74. Also, early on in the realmoney.com polls, bulls are beating bears 60% to 19%. The crowd appears to bullish again….for now. And we all know how quick this can change. More choppiness? Probably.

So remember, until we get more quality CANSLIM type stocks, keep your buys small in this speculative crap that is getting action. Also if you are brand new and are still inexperienced (you know who you are) and you buy a stock and it goes against you the next day, think about selling 25% to 33%. Also in these speculative stocks, don’t be afraid to take some gains at 25% or so. These things like to reverse in the kind of market environment we are in so you need to stay on your toes. Breakouts should work right away! Especially in rough markets. If they don’t move up right away, newbies, think of selling some down.

Before I move on to wishing everyone a Happy Easter, I want to talk about the March employment numbers. Expectations for 135,000 was well taken care of when headlines produced a gain of 180,000. Along with that nice gain, the previous two months employment figures were revised up. But more amazing, despite this “horrible-evil-economy-that-GWB-has-created,” unemployment came in at five-year lows at 4.4%, beating expectations of a tick up to 4.6% from 4.5% . That is simply incredible. This also comes with average hourly earnings rising .3%. That is a 4% gain year-over-year. Even though the economy is showing signs of slowing, these numbers show just how great this economy still is despite the slowdown.

Wall-street took the news quite well with the SP futures rising 5.75 and the NQ futures rising 10.75. Stocks were closed today, obviously, but futures still traded for a little while.

Earnings season officially starts next week when AA reports on Tuesday. Analyst are expecting gains of 3.7% in YOY earnings this quarter. That is down from 8.7% estimates, earlier this year (not a good sign). Don’t you find that a bit scary how far they have come down?? Also, the expected 3.7% YOY gain will be the first gain in 14 quarters of non-double digit growth. As earnings go, so goes the market. Historically you can watch the trend of the GDP growth and earnings growth of an economy and see that they are the best predictor of what direction the stock market will take. GDP and earnings lead the market.

With that I wish everyone a Happy Easter and Passover. Enjoy the time with loved ones. Aloha and I will see you in the chat room.

Market Commentary At Big Wave Trading Bronze Level One.

Top Holdings Up This Week – Signal Date

KNOL 301% – 1/12/06
AKAM 220% – 9/30/05
TRCR 188% – 1/12
TTEC 172% – 8/25
JSDA 139% – 12/20
TNH 132% – 10/26
OMTR 125% – 9/15
CCOI 107% – 9/27
MEH 105% – 8/30
HRZ 104% – 9/27
CLRT 98% – 11/30
PRGX 97% – 1/12
AOI 94% – 11/19
EVEP 93% – 11/16
MFW 91% – 1/29
BONT 87% – 10/3
NEXC 81% – 10/25
CPA 79% – 9/15
CHINA 78% – 8/16
IMKTA 74% – 8/28
SLP 73% – 2/5
BAM 73% – 11/17/05
DA 67% – 1/25/06
MOS 65% – 10/12
EPHC 64% – 12/20
ULTR 64% – 10/27
HURN 63% – 9/13
IIVI 63% – 8/30
PERY 61% – 10/4
ANO 58% – 2/14
CXW 58% – 5/19
XIDE 56% – 1/29
KHDH 55% – 5/30
APLX 53% – 9/28
BMTI 52% – 10/25
IMMU 52% – 12/19
ONT 52% – 12/21
BMA 52% – 10/24
DECK 51% – 9/13
OEH 48% – 11/20
VDSI 48% – 1/4

New Swing Longs: Silver Level Two

New Swing Shorts: Silver Level Two

Stocks On My Watchlist: Gold Level Three

Complete Profits/Losses: Gold Level Three

Partial Profits/Losses: Gold Level Three

MauiTrader Forums: Gold Level Three

MauiTrader Chat Room: Gold Level Three

Longs Up On The Day: Gold Level Three

Shorts Up On The Day: Gold Level Three

Also helping to lift stocks was a couple of merger and acquisition related announcements. Kirk Kerkorian has made a $4.5 billion bid for DCX and WEBM agreed to be acquired by Software AG. WEBM rose 27% on the announcement. This now puts the 1Q M&A deals up 27% over this time last year. $1.1 trillion worth of M&A deals this year has us on pace to beat last years record. More amazing is private equity deals. Those have risen 47%, year-over-year in 2007 so far.

Combine the positive jobless claims with the M&A deals, and with most traders taking Thursday off to have a very long weekend, and you had a recipe perfect for higher stock prices, despite oil climbing back over $64 on the news that the EIA saying that oil inventories declined for the eight-week in a row.

At the closing bell, the Nasdaq led the way with a .5% gain, the NYSE and the SP 500 followed with .3% gains, and the SP 600 and the DJIA lagged with .2% gains. A tad more troublesome is the IBD 100. That index only managed a .2% gain, well lagging the Nasdaq on the session.

Volume was lower on both the NYSE and the Nasdaq by about 10%. The lower volume was well below the 50 day volume average and was the lowest total of the year. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. There were 413 new highs to 53 new lows–and on the NYSE there were 234 new highs to only 13 new lows.

Today was another day of a low volume rally that saw the indexes barely move higher but once again shake off early weakness to do so. This is not a great trend we have developing, since the follow-through day on March 21st. Since that follow through day the market was been higher in seven sessions. All seven sessions have failed to have volume over the 50 day volume average and only two of the up sessions have come with volume heavier than the day before. This is a low volume rally that will not last much longer unless we get some clear accumulation days in here by big institutional traders. Until we have volume come in over the 50 day volume average on the upside, we are open to a severe sell-off still. Bottom line is that I would not take much away from this week’s holiday shortened trading.

For the week it was very positive with all indexes closing higher. The Nasdaq led the way with a 2.1% gain, the NYSE followed with a 1.8% gain, the DJIA was right behind with a 1.7% gain, the SP 500 rose 1.6%, and the SP 600 gained 1.5%. I could go into more detail about this weeks action but it would be silly to do so. All you need to know is that it was a holiday short week. The bulls almost always have control of these weeks. This week was no exception.

There is no doubt that we are still in rally mode but everything in my gut tells me we are not going far from here. Now I will change my stance in seconds, if I start to see CANSLIM stocks with consistent great EPS and sales growth breakout from fresh bases and the markets start moving higher on HUGE volume. However, all I keep seeing is the old leaders breakout from choppy bases, defensive and utility issues climbing, and little small sub-$10 momo stocks moving. This does not make a safe big bull market. If we start seeing some more buying here on a lot of volume I will be much happier. However, unless we see it soon, we are increasing our chances of failure each day that passes that volume on the up days remain under the 50 day volume average.

Can we make money here? Of course! If you are a subscriber at least on the silver level you can see for yourself that almost EVERYTHING that I have touched since the February 27th sell-off is either higher or has not violated a complete cut loss area. However, there is nothing over $10 breaking out from bases seven weeks long that have perfect accumulation/distribution and max green BOP. In March 2003, October 2004, and November 2005 there were plenty of beautiful charts. Even after the move in August 2006 there were a few SWEET gems. However, since March 21st there has been very few. The stocks that do have perfect charts are just not CANSLIM quality. If this market takes a turn for the worse, these stocks will not fall 8%–they will fall 20% or more before violating a key cut loss level. So I can not recommend them for newbies.

Give me a sell-off of 20% or more and a VIX near 20-30 and the next follow-through we get you will see the power of this strategy. Right now, very few people are making a killing. Remember back in March 2003 when the VIX was at 33? I had many stocks make 300-500% gains. So what can we compare it to now. How about KNOL. KNOL is up 301% for me since I purchased it. If the VIX was three times higher than now and around 36, KNOL would be up 900%. So basically you can take a look at my returns below this commentary and then double or triple them and then you will see the potential gains in a “REAL” bull market. Not a low volume snooze-fest higher.

Speaking of the VIX: The VIX fell 10.2% this week. LOL. With the VIX that low, you can forget about many MFW or TRCR type of stocks showing up. Normally I can find 10-20 MFW and TRCR type of stocks. Not in this market. However, the drop in VIX puts complacency in the market and that is bearish for stock prices. Another bearish item is the put/call ratio. That ratio after falling below .7 yesterday is still low at .74. Also, early on in the realmoney.com polls, bulls are beating bears 60% to 19%. The crowd appears to bullish again….for now. And we all know how quick this can change. More choppiness? Probably.

So remember, until we get more quality CANSLIM type stocks, keep your buys small in this speculative crap that is getting action. Also if you are brand new and are still inexperienced (you know who you are) and you buy a stock and it goes against you the next day, think about selling 25% to 33%. Also in these speculative stocks, don’t be afraid to take some gains at 25% or so. These things like to reverse in the kind of market environment we are in so you need to stay on your toes. Breakouts should work right away! Especially in rough markets. If they don’t move up right away, newbies, think of selling some down.

Before I move on to wishing everyone a Happy Easter, I want to talk about the March employment numbers. Expectations for 135,000 was well taken care of when headlines produced a gain of 180,000. Along with that nice gain, the previous two months employment figures were revised up. But more amazing, despite this “horrible-evil-economy-that-GWB-has-created,” unemployment came in at five-year lows at 4.4%, beating expectations of a tick up to 4.6% from 4.5% . That is simply incredible. This also comes with average hourly earnings rising .3%. That is a 4% gain year-over-year. Even though the economy is showing signs of slowing, these numbers show just how great this economy still is despite the slowdown.

Wall-street took the news quite well with the SP futures rising 5.75 and the NQ futures rising 10.75. Stocks were closed today, obviously, but futures still traded for a little while.

Earnings season officially starts next week when AA reports on Tuesday. Analyst are expecting gains of 3.7% in YOY earnings this quarter. That is down from 8.7% estimates, earlier this year (not a good sign). Don’t you find that a bit scary how far they have come down?? Also, the expected 3.7% YOY gain will be the first gain in 14 quarters of non-double digit growth. As earnings go, so goes the market. Historically you can watch the trend of the GDP growth and earnings growth of an economy and see that they are the best predictor of what direction the stock market will take. GDP and earnings lead the market.

With that I wish everyone a Happy Easter and Passover. Enjoy the time with loved ones. Aloha and I will see you in the chat room.

At the close, the Nasdaq led the way with a .3% gain, the NYSE and DJIA gained .2%, the SP 500 and SP 400 put rose .1%, and the SP 600 fell .04% basically closing flat. The IBD 85-85 gained .4%, leading the overall market. Unfortunately, once again, there were no fresh breakout from sound bases in this index.

Volume came in much lower today, with the NYSE 10% below and the Nasdaq 13% below yesterday’s levels. And, of course, like yesterday, volume was below the 50 day volume average showing that big institutional investors have no real interest in this market. Breadth was mixed today, with advancers beating decliners by a 6-to-5 margin on the NYSE and decliners beating advancers by an 8-to-7 margin on the Nasdaq. The negative breadth with the positive gains shows negative divergence, and with the Relative Strength line of the Nassy lagging the SP 500, you can see the weakness visually. There were 409 new highs to 46 new lows. So even with the negative divergence in breadth, the amount of new highs shows that there are plenty of stocks making good gains in this weak bull market.

The constant leadership in the Utility, Medical, and Defensive stocks, along with all these laggards moving up the industry group list, shows that even though this market is going higher. It is not the kind of market that rewards growth and momentum investors. Top groups like oil, metals, building, steel, and energy continue to lead. These are old leaders and until we get new leadership I am not going to be happy. However, it is impressive to see the Energy-Other group rally 2.3% today, moving from number 193 to number 10 in the IBD 197 industry groups, during the past six months.

Some interesting data should be brought to your attention via the Nasdaq. If you did not notice what I just wrote, you should now. Decliners beat advancers on the Nasdaq but yet the Nasdaq rallied .3%. How did that happen? Easy. MSFT accounts for 5.9% of the entire Nasdaq (STILL!!!). With MSFT up 2.3% today, even with more stocks down than up, that one stock accounted for all the gains on the index. So today was not as good as it looks by simply looking at the Nasdaq. Underneath it was sort of weak.

Today’s market was nothing special as traders are already starting their Passover weekend early. Good Friday is this Friday so volume should be light tomorrow which will probably mean more of the same as we saw today. Which was just more choppy trading. The sad thing about today’s choppy trading is that, once again, there was no follow-through to big price gains of the day before. It was more quiet consolidation after a day of big gains. That sure isn’t bad but it is not good either. It is even more surprising considering the good news out of Iran with the release of the 15 British soldiers that led to oil falling below $65 to $64.38. But, I guess, this should be expected ahead of a long weekend.

The longer we go without a distribution day the better chance we have of this rally gaining steam. But, without more volume on the upside with price gains, this bull market will not be producing many big winners and it will be setting itself up for a worse possible fall. I am still over here looking for new CANSLIM stocks breaking out of beautiful sound bases in brand new leading industry groups that have a lot of stocks with HUGE EPS and sales growth. I still can not find them; and I can not find them because they do NOT exist. It is more of the same old boring leaders, defensive stocks, and big-caps that are moving this market. Typical of the last stages of a long cyclical bull market.

If you think I am wrong, fine. I don’t care. I am still making money; but my question to you is where were you in March 2003? I was going long TONS of CANSLIM quality stocks breaking out of solid green bases. Those breakouts made 50% plus gains in months, from good risk/reward situations. All I have now are sub-$10 stocks that make good gains but are VERY VERY risky to take in the first place. Like I keep saying, this is a sign of a market on its last legs. Not the beginning of a fresh bull market. Where were you in March 2003? Because I was bullish then. This is the first bullish phase, since 2003, that I have not liked. And I do not like this leg up AT ALL!

This market is still bullish and I would not fight the trend, until the bulls actually give up and the bears actually start gaining some momentum. The possibility of lower prices soon has risen, as the put/call ratio took a dive today to .65. This indicates that the crowd has finally given up on their bearish bets and are starting to make bullish bets as they are now for-sure that the selling is over and stocks just have to keep going up. Hell that is all they have been doing since October 2002 so why shouldn’t they keep going up now is the conventional wisdom. I had the pleasure of speaking with some more dumb money today and this retail fool just KNOWS AAPL is a buy here. It has to go up because of the iPhone. The cycle just repeats itself, it goes on and on. The times have changed but we still have not. We are as stupid and easily manipulated as ever before. Even after the horrible crash of the bubble days of 2000, stupid foolish investors still can not see that they are buying ONCE AGAIN near a top.

The investors intelligence survey also had bulls tick up to 50.6%, today. So that now leaves the realmoney.com, II, and AAII poll with bulls all over 50%. It seems that every dip must be bought, according to the retail crowd. As always, when it appears that stocks can only go up, (as they appear now) that is just the time when they usually stop going up. Everyone I know that does not do this for a living is convinced–CONVINCED I TELL YA–that stocks can only go up, since they were able to fight back from all the selling in late February to early March. If the market can rebound from that, they think, the market can rebound from anything. Very soon, they will be proven wrong. When? I don’t know. All I know is that I have shit sub-$10 stocks to keep making me money on. I am not looking to get rich. I am just looking to pay the bills. And right now there is enough action out there in the hot momo cheap piece-of-shit issues that I can do that.

Don’t draw any conclusions from this market this week. Keep your powder dry and stay patient. Remember, this market is still in a trading range basically from the February highs and the March lows. Until we get more volume on the upside or downside, most traders will just be churning their accounts. So if you must trade make sure you know how to trade already as only the small stuff is moving. There is NO quality out there. Only pretty green charts in pure junk issues.

Please reread the last three daily market analysis post I have posted, if you have not already. The past three days of writing will give you ALL of the information you need to know to know where I stand now.

Aloha and I will see you in the chat room! Happy Easter, Happy Passover, and Happy Good Friday!

When it was all over, the Nasdaq led the way with a 1.2% gain, the DJIA rallied 1%, the SP 500 and SP 600 gained .9%, and the NYSE rallied .8%. The Nasdaq, DJIA, and SP 500 all regained their 50 day moving averages, adding more positive news to the gains. The one questionable index was the IBD 100. Leading stocks came in with only a 1% gain, underperforming the Nasdq. Like I keep telling you, in the most powerful “real” bull market rallies, this index outperformes the whole market to the upside and underperforms the market to the downside. We still are not seeing a huge bullish divergence in this index, leaving questions about this rally.

Volume was higher on both exchanges, with volume rising 15% on the Nasdaq and 4% on the NYSE. However, the higher volume may be an accumulation day but it is not a “real” accumulation day. Why? There was no real volume. Volume was still below the 50 day volume average, showing that the big funds still have no interest in accumulating stock here. This is the retail crowd, mixed with a bit of dip buying and short squeezing. Though the gains are good, we should not be confused that this is a great market. It is not.

It is also important to compare the retail crowd buying in comparison to the real institutional buying. If we look at the accumulation/distribution of the indexes you can get a more clear picture of the overall volume structure. The SP 500 still has a D+, clearly showing sellers are showing up on the down days and buyers are absent on the up days. The NYSE carries a C+, the DJIA carries a D+, and the Nasdaq is the best with a B-. Yet, with the better rating on the Nasdaq, the big-caps are still outperforming this index since November. This shows you that the big-caps are seeing distribution as they rise and the Nasdaq is not seeing distribution as it falls. This might be confusing to some but, trust me, this isn’t that difficult to understand.

Breadth was positive, today, on both exchanges. Advancers beat decliners by a 3-to-1 margin on the NYSE and by a 2-to-1 margin on the Nasdaq. The most impressive number came via the 52-week new highs. There were 495 new highs to 61 new lows. But on the NYSE, there were 290 new highs and only 10 new lows (five were closed-end funds). So this breadth clearly shows that even though this market may not have a ton of quality leading it, there is still a lot of leadership out there. The put/call ratio finally fell below 1 again, closing at .95. However, this index still clearly shows the crowd too bearish. That is why we keep going up. Too many people are for sure we are going down and the market does the opposite of what everyone thinks.

Overall, today, was a very positive day. However, without volume over the 50 day volume average on the index and with no CANSLIM quality longs showing up again, it is hard to get excited over today’s action. To me, it appears, to just be a typical bullish low-volume push-the-momentum-stocks-around kind of market. With only two trading days left this weekend, I am sure there is more gunning the bulls could do to give the shorts a typical short squeeze beating. This tape reinforces the old saying that you should never short a dull tape. Unless you have volume on the sell-offs, you are always in a position to have a short squeeze attempt to destroy you.

Overall, since February 27th, we are still in a trading range. Therefore, anything that happens between the Feb 27 highs and the March 14 lows is just noise. This market is still range bound and since we have a short week I want to remind everyone that you should not take too much away from today’s action–much less the rest of the week’s action. However, within this trading range, we are sitting on a follow-through attempt that has now seen a bit of a follow-through. So we have to keep a neutral to bullish bias. The bearish bias can remain but the facts say that we have to respect the trend. That trend is sideways to up and nothing else, right now. Just don’t fall in love with this market. It very well could rollover, if we keep getting these low volume rallies. Remember, all it would take is a few days of heavy distribution to completely wreck this rally. So stay on your toes and try to stay unbiased.

If you have kept your bearish bias the entire time (which is fine) but you did not leave your emotions at home and have decided to not go long any of the great stocks I have given you since February 27th, you have to be feeling a bit humbled. This shows why panicking NEVER works. Many stocks that did not sell-off on lower volume during the pullback should NEVER have been sold by traders. Yet after a little bit of selling, almost everyone threw the baby out with the bathwater. Not me. That is why I am long a lot of small cap stocks that are making big gains and even with 60% of the account invested my account is hitting new highs AGAIN.

There has been plenty of action in small-cap stocks since February 27th and stocks like CLRT CIMT JSDA SLP LMRA TTG VDSI FALC SNCI JAX show why you should always play what the market gives you, no matter what your opinion on the market is. If the market gives you a perfect smooth chart setup, with max green BOP, TONS of accumulation, low volume pullbacks, and good fundamentals, you take it, no matter what!! I never pass on a green chart, no matter what. The only question is how much do I take? That depends on the market. Bullish markets constitute you buy more. Downtrending markets mean you buy less.

Enjoy the rest of this relaxing week. After the long weekend we will be coming back to the start of earnings season–which officially kicks off April 10 with AA reporting. Keep in mind, expectations for EPS YOY results is for a 3.7% gain. That is down from 8.7%, earlier this year. Don’t you find that a bit scary how far they have come down???? Also, the expected 3.7% YOY gain will be the first gain in 14 quarters of non-double digit growth. As earnings go, so goes the market. Also positive pre-announcements are running 20-40% lower compared to any quarter the past four quarters. This along with GDP growth slowing, as I keep saying, is the best leading indicator for the stock market. The GDP and EPS growth is slowing. Is the stock market next? According to history, it is supposed to be.

We will see what the next two days bring us. Aloha and I will see you in the chat room!