Tuesday, February 28, 2006

Markets Suffer Nasty Distribution Day; Still Holding Above Their 50 Day Moving Averages

Stocks sold off pretty hard today as GOOG and a spate of bad economic data was the blame of the day. The SP 600 fell 1.9%, Nasdaq 1.1%, SP 400 fell 1.1%, SP 500 1%, and the Dow Jones .9%. The selloff came on heavy volume and very poor breadth. The volume was well above the 50 day volume average, adding to the losses.

This was the worst day for the markets since January 20th and the first distribution day since the Dow Jones followed through on Valentines day. The selloff today helped turn most trends in the indexes down to sideways for the sub-intermediate and short term time frames I trade on.

The stock market could be going under a rotation from the oil group into the technology group, as I still have plenty of stocks in the technology and bio groups that are holding up well after today. I did take some small hits here and there but overall the pullbacks were quiet and normal looking.

We have to see if this is a one day event that will have buyers snap up shares tomorrow or if we are setting up for the rollover from all the churning this year. If you look at the Nasdaq you will see that we have had plenty of trading days with volume well above average and yet we are going nowhere. This is either a high volume consolodation or churning. My guess is it is churning.

But market traders are looking for anything that remotely looks like bad news to sell stocks and they seem quite nervous and bearish. This amount of pessimism would actually be contrarian and would set us up for even more highs. And that is not out of the question at all, with the way the bears and liberal media are acting. With the bears pouncing on the day so hard it could lead to a bounce.

So even though the indexes look like churning to me (I have said this before; search the blog), I simply hear to much bearishness and see too many good charts still to switch sides.

We shall see what the markets do tomorrow. Be ready for a rally and be ready for a selloff. That is the only way to be happy and positioned correctly no matter what the outcome is.

Great luck out there!

New Swing Longs: STAA MONE

New Swing Shorts: NONE

Longs Outperforming Market: BOOM-362% CRDN-72% MORN ERS-142% SLW-77% STX-26% SIRF-135% KEX MFLX-184% PAY-26% WIRE-112% MTU SCHK KEYS-38% MEK-31% RATE-107% ATHR-70% RAIL-74% QCC MMK SPWR-59% SEED SXC KNXA-37% DRH EVST-36% ANX-43% CLG-70% AGT DMX-30% SNG ESLR-121% LRCX-27% RNAI-30% TWTC-79% NVAX-28% MNG-98% LEND SPSX-27% ADLR-84% BEAS CTXS TNOX VTS AMKR DSGX-39%

Shorts Outperforming Market: NONE

Stocks On Radar Screen: CREE CEGE BRKS DXCM

Blowup Of The Day: HSP -- I am going to leave with a 12% profit on the remaining position. Original buy date was in mid May.


Anonymous said...

Thank you for your insight on TSTA.

Joshua_NControl said...

When this list on the NYSE or Nasdaq I will look at it.

I am a student of IBD and IBD preaches that these stocks are crap. I dont mess with crap and anything that trades on the OTCBB and Pink Sheets is crap.

The past 130 years, the top 10 stocks, every year come from the NYSE and Nasdaq. That is history.

Anonymous said...

Josh my man..

How your bud? Love when GOOG came out today, I live on the east coast so I was watching the market realtime...ppl got scared real quick.

Love the commentary and even signed up w/investorparadise.com


Anonymous said...

your = you

Anonymous said...

stumped on NOIZ...

Right now, I am thinking its too far extended...thoughts?

Joshua_NControl said...

NOIZ is way beyond extended.

Nothing to be stumped about at all.

great luck!


Hey, market spec. Everything is good except I missed an excellent north swell yesterday/today thanks to me messing up my back. This is some of the worst pain I have had in years.

Besides that, all is well.

The markets look iffy here but there is so much bearishness along with some bullishness that I am not sure what is going to happen. A major inflection point for the indexes, without a doubt.

Thank you for all your very nice comments. I wish u the best and thank you for the answer to CKCM earlier.

Take care.

Anonymous said...


No worries, I've been following CKCM for a bit. Its a bit broken but fundamentals are there...

Can't believe you missed a north swell...there were two swells when I was in Kona last...and the waves were amazing...we don't get that back here.

The negative news is as thick as butter...quite amusing to be honest. I am not in the business of listening to worry-warts and elitest who think they can "will" their thoughts on everyone.

TO ALL: Sign up for www.investorparadise.com great site!


Anonymous said...

Hi, Josh, thoughts on MRVL, CYMI, MCHP, and CRM. Are they buyable as a pullback here, even with questionable volume? Thanks.

Joshua_NControl said...

Yes. All are, except CRM. But remember some of these stocks are late in their run from their first breakout. Therefore, the gains might not be as great as before and you are opening yourself up to a little added risk but with the 50 dma lines close not too much.