Positive news from the ISM service index, a lower than expected unemployment rate, and positive revisions to payroll numbers in August and September were not enough to stop the DJIA from falling for its sixth straight session; the Nasdaq and SP 500 also made it three in a row.
At the close the SP 600 led the way with a .3% gain, the Nasdaq fell .1%, the SP 500 fell .2%, and the DJIA fell .3%. Leading stocks joined the SP 600 on the upside, with the IBD 100 gaining .3%.
Volume was lower on the NYSE and the Nasdaq, indicating sellers weren't eager to unload stocks, today. Breadth was negative on the NYSE by a 6-to-5 margin and by a 3-to-2 margin on the Nasdaq.
For the week the DJIA lost .9%, the SP 500 fell .9%, and the Nasdaq fell .8%. These are not horrible losses but it is a change in the short term trend of the indexes. The real short term crack-in-the-armor came from the SP 600 and the IBD 100. They fell 1.8% and 2.7% respectively. I do not like seeing these indexes lead to the downside. Yet, here we go again.
Overall it was another positive pullback for the indexes. It was not a distribution day, the indexes did not fall .25%, and I didn't have any stocks blow-up. I can't ask for much more than that on a day that didn't show gains for the indexes. Well, maybe, I could ask for positive breadth. That wouldn't hurt.
I have to be honest, the past two days have not been that bad considering the selloff we had on Wednesday. A lot of market pundits swore that we would start selling off straight down. The fact that those predictions have not come to fruition should show you that the market is stronger than even I think it is right now.
The other obvious is the fact that even though I took in a lot of stock and had to selloff 20 or so longs, I am still getting some longs setting up and having other longs I am holding making some sharp gains. I even have another candidate for a possible short term 100% winner. However, it will probably end up like the other recent one.
Still we have to respect the obvious fact that stocks are still getting taken to the woodshed left and right. Mostly it is in stocks already in downtrends but I have been long enough of these to realize that the market is not in the best shape.
Seeing the new lows tick up and new highs tick down a lot with just the one day selloff also indicates to me that the rally is not pent up with a lot of momentum. This all goes with the obvious patterns I have talked about in the Retail, Bank, and Semi indexes.
The poor action of these indexes, the weakness in highly rated stocks, and some recent market distribution should be enough of a reason right now to convince you to keep some powder dry, don't invest on margin, and with the longs you do take to keep them small. The most important thing right now, in this whippy weird market, is to make sure you buy stocks at the correct buy point and DO NOT CHASE. Most stocks that have blown up have not caused me severe damage do to me following this rule.
Many stocks that are bought past the correct buy points can leave you thrashed. If you buy at the right time and a stock blows up and finds support on that day you can wait around and see what happens. Further selling means leave but sometimes they find support and start marching higher. If you chase a stock, you more than likely will not be able to experience this scenario as you are hit with an initial HUGE loss.
What do I see that is bullish? I love seeing the Computer-Networking group jump from number #147 to #2 in the Industry Group list. I also love seeing these Internet groups jump up the list from #148 to #38 Internet-Software, #108 to #39 Internet-Content, and #105 to #24 Computer Software-Enterprise. If these stocks can start showing more leadership, it is possible the market will start picking back up again as speculative money comes off the sidelines into the "hot" stocks.
If you don't think tech is still hot, you are nuts. Speaking of nuts, if you want to participate in the conversation, you can always find me at Investors Paradise. I am logged on all day. Aloha and have a great weekend!!
New Swing Longs: TSG PSMT MTOX
Adding To Holdings: GLBC
Longs Up On The Day (low vol non-IBD excluded): CTCM-31 HRZ-47 CXW-35 IHS-78 TTEC-33 TYL-44 BMTI-29 OMTR-26 MA-80 BRLC-69 REGN-26 HRT CAB ININ QDEL IGLD JST DJO MVSN NSTC CHINA CPA PCCC SMSC HEI SVNT ACGL EVR BITS IMKTA RSTI TSRA XING CELG HCSG INAP ETE TSTC SEIC TNH ROG PSPT FORR FTEK ISE LTM FSH DKS ICFI TRBN CVLT SAI BMA ULTR AWH AZK TRAK RWT ATCO GLBC MRB ELOY
Stocks On Radar Screen: BTJ NYX LNUX SYNA ANSW
Take ALL Profits/Cut ALL Losses: KFT HURN
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