Saturday, July 28, 2007

Nasty Last Hour Leaves Indexes Soaked In The Red, In A Week That Saw The Market Make A Major Character Change

Even though I am vacation, if I did not have work to do on this site, I can literally scan my charts and place all my orders within an hour and a half. So remember, even though I am on vacation, I am ON TOP OF THIS MARKET. This market right now should NOT be bought until AFTER we get a follow through day after an attempt at a bottom. Seriously, with the put/call ratio so high for so long, it is possible that there is too much fear in this market and that the lows have been set. However, we very well could be topping, because that is what it looks like out there in the Financial stocks and the general market. However, with the NYSE short interest and put/call so high, it just seems hard to think we could really breakaway and crash from here. So one thing I doubt is going to happen will be a black Monday.

However, I would not buy ANY market EVER that looked the way it does right now. This next week will be the key. Further selling and we definitely have some problems. If we bounce, there is not much to do other than wait for the proper breakouts from top stocks. If we do not see this happen, then we will have probably topped and I will begin my raids on the short side. As for right now, the crack in the market is too new and the bearishness according to the actual money is too extreme. So, keep that cash heavy, get off margin, sell ALL your laggards, do not buy new longs unless the chart is perfect (NAK is not what I would call a perfect chart), and if you do decide to short, please keep it small.

You definitely should be doing what I am doing, which is raising cash. I took a big hit last week. But let's say I didn't cut my laggards and did not keep my new buys small, THEN what could have happened. A 68% YTD gain falling to 54% could have been as bad as 40% had I not sold what is and did not work. The market may not always be easy, but when those bright perfect moments come, we will be there to take advantage. Unlike, all the dip buyers that tried to buy this market last week. BIG MISTAKE.

I am off to San Antonio for the next three days and will have very limited connection time. Make sure to check the forums as everything will be updated there. ALOHA FROM TEXAS!!!

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