Saturday, October 13, 2007

Stocks Recover Some Of Thursday’s Losses On Lower Volume; The Week Ends With Leading Stocks Enjoying Big Gains

Friday was not the greatest rebound you could have asked for as volume was lower than the day before and the big cap indexes did not even close up 1% each. But the Nasdaq did rise 1.2%, closing near its HOD, and the IBD 100 almost regained all of its Thursday’s losses with a 1.9% gain. Coming off the losses yesterday, we do have to admit that the action today sure is a lot better than the market to have continued to selloff–like a TON of “smart” people were expecting it to.

The fact that the market did not selloff more was really not a surprise. Even though NONE of us knew that the market was going to rally today, it was a bullish note that few of our top stocks pulled back violently on large volume. Another obvious indication that the selling was not that bad was that the only complete cut losses I had to take were in very low priced stocks with poor fundamentals. There was nothing of quality that got hurt. However, knocking on wood did not help as BLL and NILE took it on the chin today giving us two possible top stocks that have now basically failed.

Technically, both BLL and NILE are still strong longs from the correct buy points. However, in this market, I find it wise to fully concentrate your money on leading stocks that are rising. Since there are so many top stocks making great gains, even though they lack perfectly beautiful green charts, it is wise to move money into stocks moving higher out of stocks that are moving nowhere to down after a long purchase.

In strong markets, like the one we are in now, it just pays to stick with top stocks. One thing I saw a lot of after Thursday’s losses was how sure everyone was that BIDU was done. I am just not going to ever go into that camp as long as this stock remains above the 50 and 200 day moving average. There is no reason and I have no business trying to call a top in this market based on one day of selling in only one top stock. Yes, they did hit the leaders on Thursday. But the fact is that those leaders are all still well above the 50 day moving average that most big boys that have missed the stock are still probably in the bargain hunting mode looking to snatch up these stocks at discounts.

Though I never recommend doing that, it would make sense that dips are still buys here, considering how far this market has run without a real pullback following the August lows. It is amazing how strong and persistent this market is. The bad news about is that the low VIX is really cramping up my style of nailing some huge winners. The other bad part is that no nice consolidation in the indexes leads to no nice pretty max green BOP filled consolidation patterns in stocks. You can’t get a stock to go sideways long enough in this bull market without it becoming a laggard to the market making it prone to reversals and fake-out breakouts. Real long nice bases can only be created during market consolidation periods. That enables the stock to show RS to the market and then on the breakout show the RS line breaking out ahead of price showing the strength of the stock to the market.

Until we get one of these rest, it is going to be tough for me to find a lot of OMTR type of home runs. They simply aren’t there in this five year bull market. From October 2002 to January 2004 it was a lot of fun. Since then, all of my gains has been real work. It sure will be nice when the market actually puts in a top and I can operate on the bear side setting me up for some huge 1999 and 2003 gains from the next bull market. However, as long as we have all the usual top leading stocks cracking the 100, 150, 200, 300, and 500 levels we are not going lower any time soon.

Which is all the more reason it is funny that so many are trying to top call. Yes ZNH appears to have topped and, yes, JRJC appears it MIGHT have topped. But until GOOG, BIDU, FWLT, CME, RIMM, AAPL, and all the other favorites of mine show the same pattern as ERS last year and ZNH now on an arithmetic daily chart, there is no way I am going bearish on this market any time soon. Especially with this wall-of-worry that the newspaper and cable tv news media is providing. Oh yeah, and the nightly news. Sheesh, if I didn’t actually make a living off the stock market and dealt with facts ALL DAY LONG, I might actually believe the pile of shit the moron journalist on these network shows spew. However, God blessed with me with wisdom so I ignore their crap and go on with what my charts tell me. THANK GOD FOR MY CHARTS!!

Aloha and I will see you in the chat room! By the way, what a great day of college football! And how about that Indians vs Redsox game?!!! Amazing. I can’t wait to see what the NFL has for us. I hope I go 6-0-0 after tomorrow in my Fantasy Football league. That would cap off a great end to a great week…..minus BLL. I always hate to see a nice chart fail like that. ALOHA!!!

winners: OMTR 323% ZNH 289% APPY 101% ICOC 111% BCSI 118% DRYS 92% IHS 224% VDSI 224% FSLR 106% HURN 100% CNH 128% MOS 243% TTG 73% KOP 52% GTLS 68% APFC 67% RVBD 52% SFLY 84% PSMT 56% IMA 80% SXE 55% NTLS 59% MA 226% LFL 62% GMCR 59% KHD 173% DECK 134% EBIX 51% SXC 50% YGE 72% VMW 50% WRLS 117%

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