Monday, February 13, 2006

Markets Selloff On Lower Volume; Old Man Winter Keeps Wall Street Quiet

The Markets fell across the board, with the Nasdaq and SP 600 down 1%, SP 400 down .8%, and the SP 500 down .3%. Volume was lower, probably due to the snow storm that hit NYC. However, breadth was really poor around 2 to 1 negative so the low volume is of little comfort to all the stocks that got a decent shelling.

The put/call ratio spiked up to .9 today, indicating a decent amount of pessimism. That spike indicates the selling may be nearing a crescendo. Along with the put/call ratio the 10 day moving average of the McClellan Oscillator index is nearing oversold conditions on both the NYSE and Nasdaq. However, we are not quite there yet so there may be more downside to come.

I still don't think the market is going to crash. Overall, earnings are pretty darn good. It is just that expectations were way to high. But consistent earnings and sales growth from industry leaders looks on pace to continue their uptrends.

But for now there are few good new stocks breaking out and acting well. This is not a sign of short term strength. At the same time, though, I still have a good amount of longs that are acting really well. Maybe they will join the downside party. But until they do I have no reason to sell all of the position.

So now we go back to worrying about Hamas, Hezbollah, Iran, Syria, Iraq, and any other country that scares people. By the way people, these terrorist were around in the 1990's. Just because Bill Clinton and the left wing media did not pay attention to the middle east does not mean this same crap that is happening today was not happening then. You just did not see it.

And if that doesn't cause enough people to think the world is ending, I can offer Ben Bernanke. Bernanke will be giving his first speech on Wednesday. I am sure that will give the media enough of a reason for explaining the markets subsequent selloff or rally.

Deal with the facts, ignore the noise. Great luck out there.

New Swing Longs: TRCI

New Swing Shorts: USTR TIE REP

Longs Outperforming Market: SURG WIRE-102% ORA-82% LCC-52% TRAD-57% STX XRTX MFLX-146% MDCC-28% COGO KEYS-29% IHS-27% PETS-136% ATHR-62% SCHK CRDN-48% NVDA-47% CBG-75% VIMC PEC WBMD MORN BLD ZVXI HEIA GNBT PEIX STXN-43% BTUI-115% RBAK-173% RDCM-33% CERS-176% RAIL-55% AXE-25% NKTR LJPC MERX BGC-44% BWNG-40%

Shorts Outperforming Market: BYD

Stocks On Radar Screen: ITRI ARII AXO IOTN

12 comments:

Anonymous said...

great blog. hey, do you think TIE looks like a short closing below 50day today on large volume ?

Anonymous said...

What do you think about the chart of TAYD? Volume drying up big time after move - descending triangle pattern? How's it look?
Thanks.

Anonymous said...

Hi, Josh, even though the oil sector seems to be getting hit, what do you think about the cup with handle that OMNI is forming.
Is it too deep to be succesful?
Thanks in advance. I enjoy your blog.

Joshua "MauiTrader" Hayes said...

TIE: You know what? It came up on my scan tonight for a short. I might take it with you. I still have to think about it as I do with all shorts. But this is a classic breakdown. The only problem is that a clear downtrend has not shown up. Usually I like a smaller more pronounced downtrend to be visible. This ensures the trend is on my side. However, lol, TIE took a HUGE hit in December and is just now rolling over the 50dma so I think it is safe. This is a good short that might not work out this time but after another failed rally it will be really ripe.

This is a good short on a former leader in its industry group. TIE's days appear to be done.

Joshua "MauiTrader" Hayes said...

I think I love the chart of TAYD!

I think it looks great for a swing long soon. The breakout looks and feels like it is right around the corner.

However, will it breakout and keep moving higher this time. I am looking at a very long term daily chart going back to 2002. I notice that everytime it pops it is thrown right back down into a consolidation pattern. But this time does appear to be different as there is already a base underneath it to help support an upside move.

I love the green BOP on my charts and do think TAYD would make a good long with a break above the 5.50 to 5.75 level. If it crosses that on good volume and you can grab some before it runs too far, you will be in good position.

One thing I hate about this chart is its wild price swings. The volume is good but when that big buyer steps in he moves it a lot. I hope he or they never decide to sell en masse.

Very pretty chart. I like TAYD. Good find.

Joshua "MauiTrader" Hayes said...

OMNI: The cup with handle is sound. The cup is not too shallow considering this is a cheap stock. This is just a more volatile issue so the chart is going to look too deep. When you look at a daily chart going back to the October 2004 high you will see the pattern is pretty sound. If you look at the shorter term cup with handle from Sept to now, the handle is very good and that pattern is very sound. Price and volume action is in sync and the stock is still above the 50 dma so all still looks good.

Let's see if it works out.

Great luck out there!

Anonymous said...

Thoughts on this volume...??Price action looks great.

How are you longs acting?

Anonymous said...

what do you think of prop trading firms.

Joshua "MauiTrader" Hayes said...

pop trading firms?

Unless the name is Ameritrade, Interactive Brokers, ETrade, Tradestation, or Scottrade, I would walk away.

Use the best and you will get the best.

Joshua "MauiTrader" Hayes said...

How are my longs acting?

Please read my blog, lol.

Anonymous said...

Am I misreading IBD tonight or did they say that the Dow followthrough resets the count of distribution days for all major indexes? This just doesn't make sense to me. The Dow is likely the worst representation of what the market is really like out of the big three indexes, with only 30 stocks. How can a followthrough there reflect onto the Nasdaq, SP 500 and SP 600? I thought I had a decent handle on O'neill's system but this has me confused. Thanks for your thoughts.

Joshua "MauiTrader" Hayes said...

If I have time, tonight, I will explain why they have done this.

I have to admit, though, I do understand where they are coming from.

I am as shocked as you that this is how this rule works but after looking at the indexes I think I may understand.

After my Valentines Day dinner I will explain.

If I did not have IBD I dont think I would have written what I am going to write later.

This shows me after 11 years there is still new tricks to teach this old dog (not that old).