What A Difference One Week Makes; Leading Stocks Signal That There May Be More Work To Do Before A Real Strong Rally Can Ever Take Hold
May 24, 2008 | 4 Comments
There is no doubt that I am suffering my WORST Multiple Sclerosis attack to date. Since Saturday I have basically been bed ridden and RIGHT OFF THE BAT I want to apologies if any of this is a little hard to follow because I feel like trash. I am not sure if this will effect what I am about to write but do me a favor and do NOT bust my balls if I misplace a word or misspell a word. My life is too short to deal with this.
I had a completely different approach in mind when I first wanted to write this but I figure I will stick with the facts. The facts are as quickly as this market looked like good times could be returning it in fact was possibly throwing us false “all clear” signal. Now while I never fully bought into this rally due to the volume, I still held hope that the rotation that I started to see into technology stocks would continue. Now I am beginning to wonder if that is what is happening or if they are making it appear that this was the case just to shut the door in our face.
At the end of last week things were looking very strong for the stock market, despite the low volume, as a lot of stocks that were in our portfolios were producing some large gains. But without ANY warning or clear reversal signal, the stocks started pulling back slowly getting rid of all the gains. The lucky part is that we did sell SOME as they pulled back since volume was higher. But the stocks pulling back on low volume and green BOP gave us no reason to sell. Since stocks that move up 20% in two weeks should always be held for at least eight-weeks it seemed stupid to sell anything pulling back. However, now it appears we should have taken more gains. This is the one time not taking profits quickly hurt us. The low volume was the tell and I should understand that next time as this is nto the first time I have witnessed this action.
I Guess It Really Was That Bad
May 21, 2008 | Leave a Comment
I am not panic selling ANYTHING! But there is no doubt today’s action is negative and does hint that the uptrend very well could be over already. However, like always I wait to make my decision after all the data from the close is in. That will not be for another few hours.
No matter what, though, I will be locking in gains in a lot of stocks that initially have made big moves but have given so much back in a few short days that we must protect some gains just in case they become losses. So there will be a lot of selling tonight but if I am long a stock and it is still in an uptrend above the 50 day moving average there is no way I am going to sell it all.
Is this action disappointing? You better believe it is. Am I surprised? No. I have been telling you that there are no more perfect charts, have warned you about all the perfect charts turning into mediocre charts, and have been complaining about the low volume rally.
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.
Trading Scared and with Emotions Burns Through your Capital
April 25, 2008 | Leave a Comment
In the past few days we’ve seen some nice runs in stocks and some stocks that have pulled back after gains. An example would be MTL, which we are long for those who are Big Wave Traders. Yesterday the stock was being hammered in the AM. A few members were a big frightened and had no clue what to do. Since we are not day traders it makes no sense for us to be emotional about moves intra-day. By the end of the day, MTL was down 8% but volume wasn’t overwhelming and BOP actually increased. The stock is maintaining its uptrend and has not broken down on large volume through its 50dma or 200dma. We do not panic, Jesse Livermore stated “More money is made waiting on stocks.”
This market is setting up for a big upside run. We do not want to be cutting the stocks that are making moves and rotating into laggards. Stick with your winners!
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!!
Stocks Reverse Hard Selling Off All Session Into The Close, Closing Near The LOD; Lower Volume Eases Selling Pressure But Some Leaders Selloff On Higher Volume
March 29, 2008 | 2 Comments
The morning got off to a good start as the indexes gapped higher and started off strong right out of the gate, with the Nasdaq leading the way higher with a 1% gain. After that, sadly for the bulls, it was nothing but a slightly choppy ride lower with the market selling off the entire way lower with the 1% gain in the Nassy turning into a .9% loss by the EOD. The DJIA closed near the session lows for the second straight session. This was not a bullish session, to say the least.
Despite the losses, there was one bit of good news that can be taken away from this session and that is that volume was lower across the board. In fact, Friday’s volume was the lowest turnover of 2008 and shows that institutional investors who make up over 75% of the volume in the stock market were not active at all. Still, you can’t get too excited about low volume pullbacks when they come after low volume rallies.
We did have one heavy volume rally on 3/20 when the DJIA had its follow-through day. However, since then we have been left with nothing but low volume volatile-intraday sessions that have left us at the same point we were at right before the two bullish days on 1/22 and 1/23. This is not good as it is not normal to see a market have a FTD and then not put out any big winners that are working right away or have any follow-through days to the follow-through day.
Problematic Follow-Through Day Is Not All It Appears To Be; We Have Gone NOWHERE In Two Months, Proving Cash Is King!
March 21, 2008 | 13 Comments
A lot of people have recently just gotten used to being in cash as the bear market has finally convinced some that the best side is the sidelines. But as soon as a lot of these people realize it is best to park their cash, all of a sudden we have the market following-through on its rally that started eight days ago on 3/11. That is when the DJIA made its lows, reversing off of them and closing higher at the HOD by the EOD. While every index undercut those lows on 3/17, the DJIA did not and instead held. This has now led to today’s 2.16% rally on very strong volume. A weekly chart of the DJIA since 3/11 is very bullish. However, when we take a step back and look at where the index is coming from, it isn’t that impressive yet.
But it is important to pay attention to the market right now as things are lining up for at least a powerful short-term rally. When we look at the put/call ratio we can see that on a huge up day that it jumped to 1.12 which is a very high level of fear on such a bullish day. That tells me that market players expect this market to move lower on the short-term. Too bad these guys are almost always wrong. Therefore, the extremely bearish bets on such a strong day is a bullish item short-term.
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.
