Tuesday, May 23, 2006

Oversold Bounce Gets Sold Hard In The Final Hour Of Trading.

A very nice oversold bounce rally was shaping up, until the final hour approached. When that now-dreaded final hour came, big funds came in and punished stocks HARD.

The drubbing left the Nasdaq with a .65% loss, the SP 500 with a .43% loss, and the Dow Jones Industrial Average with a .24% loss. The wildest drubbing came to the SOX index. Its wild swing went from a rally of 1.4% on the day to a 1.6% loss at the end of the day. Nasty reversal.

Volume came in lower than the day before on both the NYSE and the Nasdaq. However, volume was still above average on the Nasdaq and with the whole market selling off in the final hour, I doubt the lower volume consoles anyone. Breadth was horrible with decliners over advancers by a 9-to-7 margin on both exchanges.

The type of action we saw today shows just how weak this market is. On any rally, the sellers are coming out. This time is indeed different. We just did not see this kind of pickup in selling right after an oversold rally at anytime during the past year. This higher open followed by a last hour swoon fest is another sign of a very weak market that should not be bottom fished.

If you look at a weekly chart of the NYSE and the Nasdaq and count how many distribution weeks there are to accumulation weeks, you can see that as we rallied all year long big boys were selling on the upticks. They dumped on the retail who only recently decided to embrace the three year old bull market. Greedy traders, tricks are for Wall Street analyst.

All of these distribution weeks should just be ONE MORE sign that this market should be avoided. If the rally we saw this year was being systematically sold into and now we are breaking below key support and moving averages on the indexes, just tell me why you should go looking for bargains here? Where does it say that we are going to rally now. Can't we go sideways for months? Yes, we can. And we just might. This could be a long summer.

The only thing positive out there is that sentiment is getting pretty negative again and we are extremely oversold. But how many times have I told you, you can get more oversold in a selloff and more overbought in a rally the entire way down or up. Nobody and nothing says we have to rally tomorrow. So make sure you keep cash high and new buys extremely small, if you must plunge.

I shall see you tomorrow. Aloha!

New Swing Longs: NONE

New Swing Shorts: STX LLL HDB EFD PFS BJS TRAK KOMG

Longs Outperforming Market: HSR TTES-47 PNRG-51 WIRE-164 STRL-48 RATE-152 BGC-73 ATHR-76 KEX-48 IVAC EAGL-65 TGE CXW TFR-95 TZOO FSTR BAM-27 HOM-124 CTXS-49 GIGM-174 JOBS-25 VIMC-75 LYV ISV-55 PRVT HNZ TVIA SMSI-56 PAY-51 SYKE CVO-99 SMF SNTO ABI IT-29 SPSX-51 DSGX-56 CTEC

Shorts Outperforming Market: AMAT SIVB ELY NVT AMH DIA WSM PNY BPFH SFD CBSH EWZ ILF

Stocks On Radar Screen: MGPI LPMA KVHI

5 comments:

Y.Y. said...

wow
i found some words of wisdom from jim cramer can you believe it?

http://www.thestreet.com/_yahoo/video/cramermarketupdates/10287758.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

he is correct

Y.Y. said...

ok looking scary but im sticking to the level of 1248 support buying now will sell at 1265 or close below 1242

Market Speculator said...
This comment has been removed by a blog administrator.
Market Speculator said...

why can't we get you to come over to investors paradise?

Y.Y. said...

i dont like the way its set up as there is no single forum to post comments have to scatter around