The stock market started off strong and looked to be going higher until around 1PM or so. After that, it was straight down. Volume increased sharply across the board. Marking a nasty distribution day for the Nasdaq and terrible reversals for the other indexes. Even though the NYSE and SP600 were up for the day, the intraday reversal on a big increase in volume might as well mark these as distribution days also.
These kind of intraday reversals can cause major psychological damage in the short term. Therefore, I would sit this market out if you are a new investor or cut your long exposure a lot if still very long. The best thing to do when the market gets like this is to just keep a heavy level of cash or be one heck of a stock picker.
Nothing says that we can not all of a sudden reverse upwards and start this uptrend all over again. But for two weeks now I have commenting on all the bad charts, blowups, lower New Highs on the 52-week high list, bad breadth, and how there is just way too much bullishness out there. Well, it finally hit the whole market today. Now is the time for those perma-bears to now step out of the closet and say I told you so. Yeah, you did... in April and missed out on over 50 stocks that made 100%+ moves since then. Way to go, perma-bears!! :-)
Why did the market reverse? I am sure you think it was oil. No? How about earnings season being almost over. Dont like that? Uhm....summer vacations?? Well, whatever you think the reason was, sadly it was not. The market looks ahead three to six months in advance. The oil, earnings, vacations, or whatever it the reason is not the real reason. We sold off today because some BIG funds do not see value in holding stocks at this juncture. There were more sellers than buyers; bottom line. We can blame oil all we want but on a GDP level we do not consume as much as we used to. Oil is simple the effect not the cause of this market. If oil was $50 today, CNBC would have given you something else to believe. Thanks CNBC!
With the markets up 100%+ since the October 2002 bottom some short term profit taking makes sense. We shall see if we will be up 125%, 100%, or 75% from Oct 2002 bottom, by the end of the year.
Sub-Intermediate trends in all indexes is now down, along with the short-term trends.
Short Term: Down
Sub-Int: Down
Inter: Up
Long Term: Up
New Swing Longs: LMIA RCCC CKH ARS
Longs Outperforming Market: GMXR ASR ELTK TEC USLM
New Swing Shorts (by as close to pivot as possible; NO CHASING): HDL RGS USMO DSL HANS CSCO LGF SNDA CYD. Take a starter position. Then monitor for additional entry or a cut loss.
Shorts Outperforming Market: SNHY
Tiny Longs Worth Watching: MDII MANA GEAC MSON
ALOHA FROM MAUI
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