Another gap in one direction--this time to the downside--was immediately followed by a reversal and march in the other direction. The market sure doesn't follow-through from the morning futures. The reason today's gap down was bought was surely part-in-due to the "we aren't going to be afraid and sell stocks" attitude. No matter what the reason, the four day losing streak has been snapped.
The SP 600 and Nasdaq led the way with .6% gains, the SP 500 rose .5%, and the Dow Jones Industrial Average rose .4% All indexes closed near their highs of the day.
Volume was lower on both the NYSE and the Nasdaq. This is not good because it is the opposite of what is supposed to happen after a selloff. Especially a selloff on higher volume. When the market goes up, you want the gains to be on higher volume. When the market falls, you want the market to fall on lower volume. So far since the attempted rally 18 days ago we are seeing the opposite. Stocks fall on heavier volume and rise on lower volume. Not bullish at all.
Breadth was positive on the NYSE by a 10-to-7 margin and by a 3-to-2 margin on the Nasdaq.
The news of the day, of course, was the failed terrorist attack by 21 crazy terrorist. The UK and Pakistani authorities, thank God, uncovered the operation to blow up multiple planes with liquid explosives. The threat level was raised in the US. along with all liquids being banned from being on an airplane. This translated into Wall Street the same way it always does; with the markets closing with gains. It is obvious, after every one of these attacks, that Wall Street has priced in any attack these nut jobs can pull off.
How long will this terrorist relief bounce last? I don't know that answer and nobody else does. But I do know that the trend is down in all the indexes in all the time frames except the longer term trend of the Dow and SP 500. The trend is down and unless you are going long Medical stocks I simply don't see why anyone in their right-mind would buy equities here.
Semiconductor stocks might have had a nice bounce today but has anyone gone over the charts in that sector? It is a minefield of ugly patterns. Yes, there are the IIVI LSCC NVEC IDTI but besides another handful the sector is full of stocks that have TONS of resistance ahead. The stocks have come off the highs so quick that it is going to take more time to fix some of these. So I repeat, unless you are going long Medical stocks it is simply ten times smarter to stay in cash instead of "bottom fishing." A game that has been PROVEN to not be able to perform to the CANSLIM standards. If you learn and can apply the CANSLIM system, you will know why I make fun of bottom fishers all the time and constantly tell investors/traders to avoid it. Their returns NEVER beat mine or any other CANSLIM professional. I still have not met ONE SINGLE "bottom fisher" that can outperform the CANSLIM disciplined trader. Prove me wrong and a weeks worth of dinners is on me!
There is time to wait this out. Trust me the biggest winners on Wall Street almost ALWAYS breakout AFTER a follow-through day on the indexes. Until we have that I don't see how any stock is going to make headways. Taking gains at 25-50% is still my game plan on most longs and shorts in this market environment. That is unless the chart is perfect and has no sign of support or resistance against your play.
Stay calm in the eye of the storm. It really isn't that bad out there. Especially if you took my CONSTANT advice during the early part of May when this all started to go down. Stay positive, keep those watchlist updated, and I will see you at Investors Paradise.
New Swing Longs: DIGE MDRX
New Swing Shorts: SKT CSE CEN KMP CBD NGS
Longs Outperforming: AKAM-144 CTCI-58 VLG-46 AVNC-31 HSR GES BOT LMT DGX HWAY CTCM RNST SEIC IGT MA GISX IDEV
Shorts Outperforming: JOYG-36 SWC-35 NTE-30 BPFH RES CXG RCNI SUPX PDCO WTI RS CNI STLD CPF DDE KNOT IART SBL ATPG GSF LAMR CCO STNR HAWK CAT CPE CFC
Stocks On Radar Screen: IDTI EMS TWLL BW CGR LSCC LWAY
4 comments:
Josh,
You do such great work consistently.
Way to go.
Elliot
Corvallis, OR
Thank you, Elliot.
Hey are you on Investors Paradise in my forums? If you are what is your handle? If you are not...why? You would make a great contributor of your ideas.
You post here. We would love you to post there. :)
Once again, thank you very much, my good man.
Thanks, Josh- it's e811
I noticed your sis lives in StL- my hometown. My family still lives in Creve Coeur.
be well,
Elliot
OR
Yeah born and raised in Union, MO right outside of St Louis. I spent most of my teen years around the downtown area. I was not a good kid. An athlete but a bad kid.
Do you ever go back?
I don't think I am ever going to return.
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