Tuesday, March 07, 2006

Stocks Sell Off Again, As Volume Decreases From Yesterdays Levels; Top Stocks Take Some Big Hits

Major markets fell (except the Dow) as the bond market was, again, the blame of the day. The Nasdaq fell .8%, SP 500 fell .2%, SP 400 fell 1.2%, SP 600 fell 1.2%, Nasdaq 100 fell .5%, and the Dow gained .2% on Tuesday's trading session.

Volume was lower on the Nasdaq and about unchanged on the NYSE. The lower volume, however, gives no comfort to the Adv/Dec line as the ratio of down stocks to up stocks was 3 to 1. A very negative reading for the indexes being down so little.

The big hit was to the leaders. The IBD 100 took a 2.3% hit and the Semiconductor Index took a bigger 2.9% rocking. The SOX also broke down through its 50 dma. This isn't the healthiest action, since the leaders from October have been the chips.

To go along with the stocks in the Semi group, every other leader it seemed got hit today in all of my IBD stock list. If you have IBD or have anything that can look at top stocks with fundamentals and technicals you can see they performed very poorly today. This might be a red flag for further weakness as leading stocks lead both bull markets and bear markets in their respective direction.

But all of this is just just-in-case stuff. We have to be prepared for further weakness if it shows up. But I don't think there would be too much further to go if we do start selling off. The fact that the bears have been rising and the bulls decreasing in surveys for the past seven weeks should offer some comfort to the bulls. However, no one says that the number of newsletter writers bearish can get higher than the number that are bullish. If the indexes drop 10% from these levels you can be sure the numbers bullish and bearish will criss cross.

How are my stocks doing? Fine. There were some vicious pullbacks in some stocks but I have been lucky and selling into extreme strength on most of my long term winners and stocks that shot up huge in a short amount of time (RBAK VRTX MEK) that the selling I did was pretty normal today. I have raised some cash from these sells and will raise more tomorrow on stocks that don't pass the 50 dma test, as there are not a lot of good new stocks showing up on my scans.

I am long a lot of stocks right now that are at the moment of truth at support or their 50 dmas. The next few days will be pretty important for these. If they bounce, the rally is good. If they crack, then we may have a problem.

All short term trends are now down on all indexes. The indexes are still in long term and intermediate term uptrends. And the sub-intermediate trends are up to sideways on all indexes.

Stay positive and don't let the bears get to you. You will live a longer, happier, and healthier life if you stay positive during this rough patch. Trust me; do you know any really HAPPY bears? Honestly, do you?

New Swing Longs: CTEC

New Swing Shorts: NONE

Longs Outperforming Market: LSI ATHR-95% VIMC KEYS-42% LTM HEIA-33% KNXA-41% SCHK PKE MFLX-199% RUTH SWW CVO-74% CONR LCRD-82% STEL AKN TWTC-107% RCNI RDCM-51% HSKA-28%

Shorts Outperforming Market: NONE

Stocks On Radar Screen: NHWK PENN EONC NXXI

Disasters Of The Day: LIFC--one day reversal for a 7% loss, ugly base. ZVXI--50dma breach, 17% loss, ZVXI had a 200% profit potential measured move so I gave myself a 20% cut loss on it. So to me the only real disaster was LIFC.


Anonymous said...

Quiet here tonight.. This market will definitely wear out traders watching every tick.

Decent action in BVX, let's see if that one works itself out up and to the right in the coming weeks.

Alan Farley had a nice little article on Amex favorites on realmoney today.

I think that if we see some rallying tomorrow and for the rest of the week perhaps that we will be in for some sideways action for a while yet. If we can get a few more down days in the QQQQs then they will be set up to rally, and perhaps gain enough momentum to break out past 42 and start a tradable move up.

Check out this stat: We are at 2268 on the nasdaq now and the subsequent high for the nasdaq after 9/11 is 2328 from spring of 02. We broke through around new years of this year to 2332.9. Does it matter? Maybe not, but I thought it was sort of interesting.

Sorry for taking up all the real estate on the blog, Josh!

Thanks for the TRX thoughts.


cozza said...

Hi I have been reading you blog for some time now and I appreciate you thoughts and comments. I have also signed up for an account on IBD. Which so far is very informative. I agree the market surely is in a testing time and I have nno where near enough experience to really guess where it is going to go. My only experience in these times is to cross my fingers.

Yet I have a question for you. I have been looking at charts and from a charting point of view what do you think of Toyota (TM). From my early charting research that I have been doing would you say that a teacup COULD be forming

Anonymous said...

Hey Josh, I am thinking about getting TCNET after seeing your entry on "How I scan stocks." Is the gold version also good?

Anonymous said...

j, what u think about FLIR move today

Joshua_NControl said...

TM is a great looking stock! This is the top stock in its group and has HUGE eps and sales growth.

I am not sure about a teacup pattern. It is basically just making an ascending base. An ascending base is very bullish.


The Gold version is great. That is the one I use. I do not, at this time, need to use the platinum.

When I create my "war room" I will probably upgrade. I just think it is too expensive for now. Later on, after they run another special, I might do it.


FLIR is now starting to make the right side of its base. I like the left side, so far. Now we have to wait to see how it forms its right side.

You dont want to buy this stock now because there is a ton of resistance.