The markets mixed their closes for the day, with the markets up .1% to down .3%. Volume also rose across the board, indicating churning and indecisivness on investors part.
The SP600 had its 5th distribution day since the ugly rally started on 9/6. This is nothing like the action I saw after the April/May bottom when virtually zero distribution days popped up after it started its move. The market then continued to go higher and higher, pulling back on low volume.
With Oil/Energy and Gold sectors outperforming and some Food stocks getting involved, it is starting to look like the market is ready to give up the rally. Add to that the continuing weakening thesis of the "tech rally" and you come to a conclusion market doesnt feel so good.
But right now, we just dont know, because the market is flat-lining. Some could call this base building but a lot of stocks are really extended and building late stage bases for this to be a base building stage leading to new highs.
Bottom Line: The market doesnt look or feel good right now. I guess we continue to wait and see what will happen, since we are getting no help from the indexes. But remember all the "poker tells" indicate a weak market about to get weaker.
I wish you all GREAT luck.
New Swing Longs: WITS TGC SONS ROYL QVDX FTEK PKE EWST
Longs Outperforming Market: OMNI ABP GMXR ARD KNDL ASF THE ENY PFWD HEC PMU MUSE NSC SPNC SNG ZIGO JCDA
New Swing Shorts: AMHC VCG SVR LHCG
Shorts Outperforming Market: JVA CNTF CWTR
2 comments:
Hello Joshua
I'm watching your shorts everyday and cannot find a common thread among them. So I'm wondering if you use any specific list to scan from using any of the IBD online services to restrict the number of stocks to scan for potential short signals. If you don't use any specific list then it must be a lot of scanning, updating and scrolling during the day as the list of shorts produces a huge number of candidates. Today only I found 93 stocks under the 200d MA, 133 stocks under the 50d MA and 186 stocks in total without any MA restrictions. The PCFs I use are the ones you suggested me some time ago that are plain and simple: stocks trading down on high volume, over $5 and more than 100k shares traded. Any further comment or suggestion on how to narrow down the list and pick the most significant ones? Thanks as usual for your online lessons.
I find that too many people concentrate on the short side.
The big money is made going long. 99.9% is the most you can make on a short. 100000000% you could make on a long. So it is wiser to stick to longs over shorts, unless you are a professional investor.
Look at all the oil and gas stocks! So forget shorts if you find them too tough.
As for the scan, my good friend, there is only one way to scan shorts and that is by looking at a lot of charts.
I could narrow the number down on my scan by manipulating the volume criteria and requiring it trade more shares but a big list gives you more candidates.
Longs work better with certain characteristics. Shorts are harder to screen for based on how they build.
Shorting isnt easy. When stocks gap too far outside my 2% opening range criteria--FOR SHORTS--I move on and ignore them. So that in itself narrows the list even further, in the morning.
The common thread: They all break key support lines or moving averages on high volume. That is it. NO common chart patterns. It normally rises, trends lower, makes a lower high, and then breaks the recent support on higher volume.
Sometimes they look like "head and shoulders" and other patterns. Whatever. But they still all look similar.
Notice how not a whole lot that make it on my new-short list make it then to my shorts outperforming market list.
That is because by nature shorting is not very profitable in uptrend or sideways markets. Like we have had since Oct 2002.
Just you wait till we have another 2000-2002. Then shorting is real easy. Right now it is extremely hard and in NO WAY makes more money than the long side can right now.
GREAT QUESTION LUCA! ! ! ! ! ! ! !
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