There is no doubt that I am suffering my WORST Multiple Sclerosis attack to date. Since Saturday I have basically been bed ridden and RIGHT OFF THE BAT I want to apologies if any of this is a little hard to follow because I feel like trash. I am not sure if this will effect what I am about to write but do me a favor and do NOT bust my balls if I misplace a word or misspell a word. My life is too short to deal with this.
I had a completely different approach in mind when I first wanted to write this but I figure I will stick with the facts. The facts are as quickly as this market looked like good times could be returning it in fact was possibly throwing us false "all clear" signal. Now while I never fully bought into this rally due to the volume, I still held hope that the rotation that I started to see into technology stocks would continue. Now I am beginning to wonder if that is what is happening or if they are making it appear that this was the case just to shut the door in our face.
At the end of last week things were looking very strong for the stock market, despite the low volume, as a lot of stocks that were in our portfolios were producing some large gains. But without ANY warning or clear reversal signal, the stocks started pulling back slowly getting rid of all the gains. The lucky part is that we did sell SOME as they pulled back since volume was higher. But the stocks pulling back on low volume and green BOP gave us no reason to sell. Since stocks that move up 20% in two weeks should always be held for at least eight-weeks it seemed stupid to sell anything pulling back. However, now it appears we should have taken more gains. This is the one time not taking profits quickly hurt us. The low volume was the tell and I should understand that next time as this is nto the first time I have witnessed this action.
If volume would have been much higher on the Nasdaq and NYSE then I am almost for sure some of the stocks we lost a lot of our profits on would be flying. But low volume rallies are always dangerous if for no other reason that what happened the past four days in the market. The nasty action is most noticeable in the DJIA as you can see it trying to breakout through the 200 day moving average, failing, and then breaking down through the 50 day moving average. This gave it a 3.9% decline on the week which was by far the worst of the indexes.
However, the Nassy fell 3.3%, the 500 fell 3.5%, the NYSE fell 3%, and the IBD 100 did not show any positive divergence with a 3.4% loss. There is no way to spin ANY of this. Last week was a very bad week, considering the week before the market appeared to be ready to give us a bullish rotation into leading tech, retail, and some homebuilding stocks. Too bad that was was killed this week.
The big news of the day was the BUD takeover bid that bid the stock up 8% but overall the biggest economic news came from the fact that the backlog of unsold homes hit a 23 year high! This is just shocking and if you think about how much equity exist due to the housing bubble it should come as no surprise that money is not moving anywhere. Things definitely are not good out there. Especially with oil up 1.38 to 132.19. Ridiculous. Over here on the island of Lana'i, gash is already $5.03 a gallon for unleaded. NICE! :(
This cost of gas has to be the reason the market is trying to fall apart. It makes complete sense as oil takes off the stock market dips. But oddly enough, unlike most oil rallies, oil stocks for the first time did not come along and in fact started showing signs of wanting to pullback. Combine that with everyone talking about $150 and $200 oil and hopefully this speculative fervor has reached its boiling point. However, as long as this ONCE great nation wakes up and starts drilling in ANWR and the OCS, I doubt we will see oil below $100 EVER!!! again.
Getting back to the market, I am sure some of this is the reason we are seeing so many distribution days in the market. Since I like to think the opposite of everyone on wall and broad it appears to me that some had hoped oil was going to top along with the ags and were ready for a tech rally. The fact that has not happened is a big reason we are all giving up. Now, I sincerely hope I am wrong about all of this. In fact, for my accounts sake, I pray I am wrong. But 6 distribution days in the IBD 100, NYSE, and the DJIA is a major warning. You do not get this many distro days WITHOUT ANY accumulation days in a healthy market. When was our last accumulation day? How about March 20th since the NYSE actually had a higher day with above average volume. Isn't that unbelievable? I have to be honest. I have been around a long time (considering that THIS IS ALL I DO besides surfing) and I can not remember the last time I have ever seen this.
In hindsight, it just seems impossible to actually think this will turn into an uptrend. If this was going to be a real rally, based on history, we would have already had 3 to 5 days of higher days with higher volume within the first FEW WEEKS! Here we are a few MONTHS into this LAME rally and we have NOTHING. This is not good folks and this is the reason my potentially bullish stance is going back to a negative nanny.
It is very hard for me to be either bullish or bearish in a market that trades on low volume and goes nowhere and therefore I will stick by that bias about not making a bullish or bearish commitment here as I will need to see volume enter this market above or below the 50 day volume average on a more consistent basis. Some have asked me about the volume above average in the Nassy. Now while I must say this was very good at first, it has now turned into distribution above the 200 DMA toward the 50 DMA this week. Therefore, you have the same situation we have when we just take a look at the index.A muddled picture.
From the March lows, both indexes are technically in uptrends. But last week everything broke those uptrends. So it is going to be real important to see how the market reacts around this are to determine if more selling or some buying is going to come in.
Considering that I am a contrarian and believe we should be buying when everyone is selling, I am not sure everyone is selling right now and therefore it seems that this is just a mixed picture. There is simply no other way to play it. I have proven in these commentaries that I know when to be bullish in bull markets and bearish in bear markets. But this market is about as mixed as it gets. As soon as a stock sells off it starts moving higher, as soon as it rallies it starts selling off. Do you know what that tells me? DO NOTHING!
It is time to once again go back to raising cash. If your stock is falling on higher volume, and you have some gains in the stock, make sure you do take some. If your stock if falling on lower volume and you have big gains already I would hold on to it and wait for a support area to take a stand. If that does not hold up, you then may want to take some off.
But I want to warn you about taking profits quickly in stocks that move up 50% in one month. Sometimes, like now, with the low volume, that will be all you will get. But if any of you will just take the freaking time to spend a few hours on ALL OF MY PAST BIG WINNERS THAT I HAVE POSTED FOR YOU you will eventually understand that to make the big money you have to hold the stocks on the way up in a bullish market. All of you LAZY people that are NOT taking the time to study ALL OF MY PAST BIG WINNERS and current longs that are doing very well, you will never learn how to find the best stocks that make the biggest money in the shortest amount of time.
I hate daytrading, I can NOT stand wasting my day watching flashing quotes all day. Maybe some of you would be 100000x better off by STOP watching the longs that I go long intraday. If you want to daytrade, go for it. Just make sure it isn't the stocks that I am going long. There is NOT ONE SINGLE stock that I enter that I plan on selling before the day is over. What am I? 12 years old. This is a game for the lame that have NO CLUE how the biggest winning stocks are created. If you want to daytrade the index futures go for it, if you want to trade stocks don't be a donkey and don't touch my positions.
The biggest problem I have with the rally is that the worst groups of the last leg down are the best groups in the current rally. Not only are the same commodity stocks and past weak stocks leading they are doing so (most of them) on lower volume than on the selloff. That is negative.
Still it is hard to judge anything without volume. Which is why when I write all of this I just wonder why am I even doing it. The low volume market is a market that most players should be out of without a doubt. But somehow us traders have some problem and think that everyday there is a money making opportunity or a reason to do something. The truth is that is pure BS. About 3 or 4 times a year you get a perfect setup and even then I am learning 1/2 fail. This low volume market is making a lot of us overanalyze the whole thing when we should just take a step back and wait for volume.
Sometimes I am not even sure what the heck I am writing about because I feel like I have talked and written about it too much. Now I know how people go crazy. So from here on out I am going to lay it out point blank how this market is and what we should do.
Back when we started selling off, I was on top of it, we went short, and scored some gains. However, not a lot of the big gains came from the best setups which caused me (but not my subscribers who beat me--WTG [I am not the jealous type-in fact i WANT you to beat me]) to underperform my normal downturn periods. This led to the January lows that with the heavy volume sent the market into neutral territory. During that time I expected another rollover but insted in March we got a tiny rally with plenty of good stocks moving. But the problem became clear quickly. The gains in the best patterns kept failing or not holding. THIS IS NOT how real bull markets start and was our first clue this was probably not going to last.
But I am a natural optomist and did believe this could turn bullish as long as the pent up money on the sidelines came back on the bull side to chase that RIDICULOUS 13.86 NYSE short-interest ratio. However, I was wrong and instead many of my best setups (which none were great but they were good) have ALL failed. So what do I do now? The same thing I always do.
Now, that I realize this stupid market is not going to cooperate as it has now destroyed every single last one of my potentially hot charts is to lock in some profits on ANY stock that took more than 5 weeks to gain 25%. If it took the stock that long get rid of half of it and put that money into a potential mover. Now if your stock is up 25% in two weeks, make sure you hold on to some but still the way this market is acting you better take 20% off. Also if any recent buys have lost the beauty of green BOP, are in a downtrend, or have broken below a recent base you need to sell some or all of it if it has completely broken the cut loss rule. If I buy a stock it is because it looks like it is going to blast off. If it don't, then it has failed miserably and needs to be dumped.
I am one of these guys that KNOW it is STUPID to buy falling stocks as I lived through 2000-2002 and was involved in LTCM when I first started so I know as soon as I lose gains or rack up losses to get out so that I have more money to put to work when times are good. Right now, times are not good but you can GUARANTEE that they will be again. There will be more max green BOP stock, they will setup and they will be buyable. Some stocks to keep an eye on for potential entries at the 50 DMA include FLS, SD, SOL, CSIQ, MR, and TMRB. That is just a VERY tiny selection of some potential fundamentally sound stocks that are setting up.
Some that you should stay away from depstie the strong fundies include CHL DRYS DSX GNK OXY DIB GHM SNHY STD which are all starting to show some very negative short term action. This can not be good for now.
But still, how bad really is it with all this low volume? It isn't. And this is my point, until really powerful BIG institutional money returns to this market it is basically a stock pickers market and since that is what I do best I will continue to try to do that. BUt I want everyone to remember, when the market is trending up 70-80% of what I go long will go up a lot and be very rewarding. However 20-30% will be crap and must be cut short. At the same time, in a sideways to bear market less than 50% of the stocks I take will work as a TON of false breakouts/bounces happen as market makers artificial create these points to trick people like us. However, if you remember to cut losses faster and take profits quicker in markets like this, you can still do very well.
For now, I advice everyone to stay low for now. Do not go long stocks unless the setup is perfect, the stock is in a group FLYING up the industry group charts, and is a top performing stock in its groups. Right now, the market is a little rocky and has taken care of our longs that were once showing us super solid gains not so nicely. So I suggest caution and once again, guess what? CASH IS KING. I suggest raising cash on anything that doesn't work and unless it is perfect leave it alone. That is all I can leave you with.
My last words is I hope you all had a better Memorial Day than me. I came down with a severe MS attack that knocked me on my ass. In over...gosh I don't know...I have never felt so tired. I could only surf (still surfed strong) for an hour but besides that slept for three days in a row including 15 hours on Saturday. I am not sure if that is normal but if anyone is a doctor and has some sugestions please send an email to the administrators at BigWaveTrading.net and they will get it to me. Thank you. ALOHA and hopefully this weekend is not as boring as last week. At least we have the basketball, hockey playoffs and MLB. Thank GOD for that!
Have a great week and great luck. Remember, be careful out there this week and DO NOT come out of the gates with a "get rich quick" mentality in this market.
Tuesday, May 27, 2008
HAPPY MEMORIAL DAY WEEKEND!!!!!!!!!!!
Happy Memorial Day Weekend. The new commentary will be fully updated by Tuesday morning. I also expect to write a few columns for Seeking Alpha, iStockAnalyst, and StraightStocks for the upcoming week. So make sure you check those sites throughout the week for updated columns.
And for everyone that reads this that is either active-duty or fought for us before, know that I APPRECIATE EVERYTHING you did to make this a great country. The war on terror will be won and it will be won via the United States Military and not by the United States Congress. What the heck is wrong with the liberals/republican-liberals in Congress? Anyways, from the bottom of my heart, THANK YOU. I KNOW places like San FranFREAKO and Berkley exist because of great men and women in our military.
LONG: THE UNITED STATES MILITARY, FREEDOM OF SPEECH AND RELIGION, AND CAPITALISM
SHORT: TAXES, LIBERALS, AND SOCIALISM
If you are a "vote for Obama" kind of whacko, don't bother posting any comments. They will NOT see the light of day!! According to my liberal friend "the new free speech is censorship of the right." Spoken like a true marxist. How do you like being censored? SUCKS, don't it? Kind of like the extreme left-biased media that isn't telling you that WE ARE WINNING AND THAT AL-QUAIDA IN IRAQ IS NEAR DEFEAT!!!!!
BAGHDAD - The U.S. ambassador to Iraq said Saturday that al-Qaida's network in the country has never been closer to defeat, and he praised Prime Minister Nouri al-Maliki for his moves to rein in Shiite and Sunni militant groups.
HAPPY MEMORIAL DAY AND HUGE!!! THANK YOU FROM ME TO THE ARMY, NAVY, AIR FORCE, MARINES, RESERVES, AND COAST GUARD!!!!!!!!!!!!!!!!!
ps: GO PENGUINS!!!!! GO LAKERS!!!! GO CELTICS!!!!! and congrats to Manchester United for being the "illest" club ever!!
And for everyone that reads this that is either active-duty or fought for us before, know that I APPRECIATE EVERYTHING you did to make this a great country. The war on terror will be won and it will be won via the United States Military and not by the United States Congress. What the heck is wrong with the liberals/republican-liberals in Congress? Anyways, from the bottom of my heart, THANK YOU. I KNOW places like San FranFREAKO and Berkley exist because of great men and women in our military.
LONG: THE UNITED STATES MILITARY, FREEDOM OF SPEECH AND RELIGION, AND CAPITALISM
SHORT: TAXES, LIBERALS, AND SOCIALISM
If you are a "vote for Obama" kind of whacko, don't bother posting any comments. They will NOT see the light of day!! According to my liberal friend "the new free speech is censorship of the right." Spoken like a true marxist. How do you like being censored? SUCKS, don't it? Kind of like the extreme left-biased media that isn't telling you that WE ARE WINNING AND THAT AL-QUAIDA IN IRAQ IS NEAR DEFEAT!!!!!
BAGHDAD - The U.S. ambassador to Iraq said Saturday that al-Qaida's network in the country has never been closer to defeat, and he praised Prime Minister Nouri al-Maliki for his moves to rein in Shiite and Sunni militant groups.
HAPPY MEMORIAL DAY AND HUGE!!! THANK YOU FROM ME TO THE ARMY, NAVY, AIR FORCE, MARINES, RESERVES, AND COAST GUARD!!!!!!!!!!!!!!!!!
ps: GO PENGUINS!!!!! GO LAKERS!!!! GO CELTICS!!!!! and congrats to Manchester United for being the "illest" club ever!!
Monday, May 19, 2008
Looking For Leading Stocks
One thing that I do not hear a lot about but that is very clear to me is that stocks that are leading ARE REALLY leading. That can be seen especially when it comes to the amount of stocks that are hitting new 52-week highs. About a couple months ago things started to slowly change when new 52-week lows stopped expanding at the pace they were.
After the March lows and a small market rally, the new high list started to slowly build. And now we are at a point where even on down days, the past two weeks, the amount of new highs either match, are breakeven, or barely losing to new lows.
On Friday there were 244 new 52-week highs to 95 new 52-week lows. This was the best reading I have seen yet, since God knows when. I know in the August to October there were a lot of stocks hitting new highs but I am not sure it looked THIS GOOD then.
The leadership is clearly focused in one area too. The energy stocks had 96 of the 224 stocks hitting new highs come from their list. These stocks that you should be watching for future bounces off the 50 DMA or breakout are PDO, FPP, ATN, PHII, RAME, HUSA, RDC, APWR, TELOZ, WLL, ESV, APC, WMB, OXY, GMXR, COP, NE, CVX, GTE, SFY, CNQ, GU, HOS, BTU, NXY, ECA, BTE, HK, CAM, HES, PDE, FTI, UNT, WFT, MCF, STR, PXD, HP, CPX, PXP, SPN, PBR, HAL, MMR, E, SSL, SWN, WTI, WHQ, PBRA, SM, EAC, GLF, PVA, FST, TTES, CXG, and WES. All of these stocks have GREAT fundamentals and are all leaders based on price performance.
Other leading groups are the Metals/Steel with 14 stocks hitting new highs. The all-stars of this group are SUTR, MTL, MEA, GTI, GGB, TS, SID, X, NUE, RS, SCHN, VMI, and MT. Behind that was the Machinery stocks with 12 new highs and WGOV, ENS, AME, BUCY, JOYG, GHM, ABB, ATU, PDE, FTI, NDSN, FLS, and CFX.
One of the hottest groups with three of the top 20 industry spots are the Transports with EGLE, UNP, GNK, BNI, KEX, NSC, WAB, and CSX. Mining had 8 hit new highs with FCX, RIO, BHP, RTP, and CLF leading the way with strong fundamentals. The Medicals are still hanging on with 7 new highs and ZOLL, ICLR, STE, and LSR are the top guys in that group.
Utility, Retail, Computer Software all rounded out the top groups with five stocks hitting new highs each. EGN, NFG, SBS, BKC, CVS, GYMB, LL, BKE, BMC, ATVI, ANSS, SY, and ANST are leading the way in those groups on Friday.
Everything you see here are hitting new highs when the market is still a good distance away from its old highs. These are our current leaders and as long as this market rallies, I want to be long these stocks.
I know some of you believe we are going to top soon. But I am telling you RIGHT NOW that stock charts look great all over the place. You name a lagging sector three months ago and it has moved up the list with a lot of high-growth technology and consumer speculative sectors. Along with the old commodity leaders just slowly selling off, which gives them a weaker RS performance to the big winners, but still keeps them rallying is taking place.
Overall, volume or no volume, as long as we trend up and I have a couple of really nice stocks and that one perfect chart--I do however need a few more perfect stock charts to have me completely fall in love, however--continues to move higher, I am going to be very happy with what I can get in a market that has a low VIX (around 17) and is full of ETF's that now suck up money that used to find its way into "hot" stocks. This is just less money that can be put to work in the momo monsters like MXC and PDO.
Aloha and I will see everyone in the chat room at 630AM HST/1230PM EST.
current longs/(shorts) and their total returns: GEOI 118% CMP 65% SOL 36% ICO 49% VISN 52% DGLY 49% HA 42% PDO 78% CPE 46% CSIQ 56% HIL 50% MTL 67% MCF 172% JST 40% IHS 258% EBIX 169% MA 477% (EEFT 33%)
After the March lows and a small market rally, the new high list started to slowly build. And now we are at a point where even on down days, the past two weeks, the amount of new highs either match, are breakeven, or barely losing to new lows.
On Friday there were 244 new 52-week highs to 95 new 52-week lows. This was the best reading I have seen yet, since God knows when. I know in the August to October there were a lot of stocks hitting new highs but I am not sure it looked THIS GOOD then.
The leadership is clearly focused in one area too. The energy stocks had 96 of the 224 stocks hitting new highs come from their list. These stocks that you should be watching for future bounces off the 50 DMA or breakout are PDO, FPP, ATN, PHII, RAME, HUSA, RDC, APWR, TELOZ, WLL, ESV, APC, WMB, OXY, GMXR, COP, NE, CVX, GTE, SFY, CNQ, GU, HOS, BTU, NXY, ECA, BTE, HK, CAM, HES, PDE, FTI, UNT, WFT, MCF, STR, PXD, HP, CPX, PXP, SPN, PBR, HAL, MMR, E, SSL, SWN, WTI, WHQ, PBRA, SM, EAC, GLF, PVA, FST, TTES, CXG, and WES. All of these stocks have GREAT fundamentals and are all leaders based on price performance.
Other leading groups are the Metals/Steel with 14 stocks hitting new highs. The all-stars of this group are SUTR, MTL, MEA, GTI, GGB, TS, SID, X, NUE, RS, SCHN, VMI, and MT. Behind that was the Machinery stocks with 12 new highs and WGOV, ENS, AME, BUCY, JOYG, GHM, ABB, ATU, PDE, FTI, NDSN, FLS, and CFX.
One of the hottest groups with three of the top 20 industry spots are the Transports with EGLE, UNP, GNK, BNI, KEX, NSC, WAB, and CSX. Mining had 8 hit new highs with FCX, RIO, BHP, RTP, and CLF leading the way with strong fundamentals. The Medicals are still hanging on with 7 new highs and ZOLL, ICLR, STE, and LSR are the top guys in that group.
Utility, Retail, Computer Software all rounded out the top groups with five stocks hitting new highs each. EGN, NFG, SBS, BKC, CVS, GYMB, LL, BKE, BMC, ATVI, ANSS, SY, and ANST are leading the way in those groups on Friday.
Everything you see here are hitting new highs when the market is still a good distance away from its old highs. These are our current leaders and as long as this market rallies, I want to be long these stocks.
I know some of you believe we are going to top soon. But I am telling you RIGHT NOW that stock charts look great all over the place. You name a lagging sector three months ago and it has moved up the list with a lot of high-growth technology and consumer speculative sectors. Along with the old commodity leaders just slowly selling off, which gives them a weaker RS performance to the big winners, but still keeps them rallying is taking place.
Overall, volume or no volume, as long as we trend up and I have a couple of really nice stocks and that one perfect chart--I do however need a few more perfect stock charts to have me completely fall in love, however--continues to move higher, I am going to be very happy with what I can get in a market that has a low VIX (around 17) and is full of ETF's that now suck up money that used to find its way into "hot" stocks. This is just less money that can be put to work in the momo monsters like MXC and PDO.
Aloha and I will see everyone in the chat room at 630AM HST/1230PM EST.
current longs/(shorts) and their total returns: GEOI 118% CMP 65% SOL 36% ICO 49% VISN 52% DGLY 49% HA 42% PDO 78% CPE 46% CSIQ 56% HIL 50% MTL 67% MCF 172% JST 40% IHS 258% EBIX 169% MA 477% (EEFT 33%)
Bullish Week Ends With Leading Stocks And The SOX Taking The Lead (Part Two)
Randomly continuing where we left off yesterday, besides the put/call showing a little of fear coming back into it even with some indexes higher. One index continues to print what should be considered bearish numbers. That is the VIX. The VIX closed at 16.47 Friday and intraday on Wednesday hit 16.10. That was the lowest reading since October right before the November top.
I know I am very bullish on this market, even without volume, due to all the setups and charts that are already breaking out out there. But don't question if I would turn, if we got like three major distribution days in-a-row. If that was the case and there was no bounce here, then you have plenty of reasons to get bearish and top calling. But as long as we have stocks like EXM DRYS, and even CNQR showing up, I think I will hold off on top calling. For all I know it will take the put/call to hit .40 and the VIX to hit sub-10 before stocks finally top off this current run.
People that have already sold all of their holdings that they started buying in March, just like the people that told me to bottom fish in March, are just not at the level they need to be at. Nobody, should be out of any DGLY, GFA, or any of the other recent longs like PWRD ISYS and OTEX which have not acting perfectly since going long (that is unless you are a newbie then you should lock in anywhere from 10% to 20% on DGLY, VISN, or anything else up 50% since we went long the past few months). However, they are not acting like GENC and it is a great thing. FEED, even before the recent selling, gave us plenty of time to take some off the table; I took 50% off before the move down. Did you?
Why did I do that? Because look at the chemical stocks. They all look like they are near a major top and the fact that they have not topped yet is SHOCKING to me as the chart patterns have set themselves up more than once in becoming perfect tops and thus good shorts later on. But when I look at MOS, POT, CF, and TNH, I know that not only have I take a 300% and 500% gain in TNH and MOS respectively but that I am in the right place by being on the sidelines as the current chart patterns are LOADED with flaws and the EASY money has CLEARLY already been made in these chemical stocks. If you are focused on them now, I ask you, where in the heck were you in 2003, 2004, 2005, 2006, or 2007?? You are a little late buying up here for a big position play. I am looking for a top.
And hopefully when that group tops, the market will shrug it off and actually take off, as a rotation from commodities to technology could almost be done and waiting for that group to top before blasting off. We will see. At the same time this rotation is occurring it is obvious that money is not coming out of the energy/oil&gas sectors of the stock market. Those two groups continue to show extremely bullish action and there is no reason to think they are done when solar stocks are only now starting to blast-off. I also do not see any oil&gas stocks making clear climax tops. That means that the run is not over and the way they are dominating the top of the IBD industry groups, only a fool would bet against these stocks here. But I take it a lot of people are or else there would not be a near-fourteen day NYSE short interest. Amazing.
If you look at the top 20 industry groups based on six-month price performance, eight of them are energy related, three are transportation related, and three are metals related. What is even more bullish for these stocks is that the transportation-shipping group has gone from #133 to #15 the past three weeks. Stocks like TBSI DSX EXM and DRYS are all setting up in BEAUTIFUL bases. I want them all, when they breakout or bounce off key support, now that the charts are right.
If I was undisciplined I would just buy them now. However, I know my game and my game makes me a lot of money. I know either buying too early or doing the worst investing mistake and chasing a breakout too far past the appropriate pivot point is not the right thing to do. So I simply do not do it. It is that simple. Don't break rules that have been PROVEN to work. How so many people can have the CANSLIM system handed to them and they simply do not take the time to learn how it works properly is STUNNING to me. It is stunning those few seconds of the month when I waste my time and watch CNBC and see so many that subscribe to IBD NEVER talk about anything the paper preaches. Especially Cramer.
How can you know that history has been mapped and chartered to show us how the best stocks work and yet you tell us to double down on NXY, IMA, or SHLD back in the day POST-top? Horrible. Patience pays off. If you daytraders would look at how much easier your life would be by making one buy and a few partial sells before a big final sell and without paying constant commissions would really improve your returns and open up your day to more free-time. There are always a few who do better being more active but I doubt those people were long my LMLP, TASR, IST, FMDAY, AFSI, or HRZ for some nice easy-to-handle big gains.
I don't like being active as I know the big money is made in the holding. If you like being active, GREAT! However, if you are active and are not happy with your results, I must recommend that you read and study my Past Big Winners. If those, and the list and list of stocks in all of the O'Neil, Weinstein, Boik, Loeb, and Livermore books, don't convince you, I have no idea how you are going to last in this game. Especially as returns vanish with a low VIX and a market FULL OF THOSE HORRIBLE ETFs which now receive money that used to go into REAL stocks. The money in ETFs could be added fuel to the fire of DGLY. But instead a QQQQ or SPY will do. Oy.
Getting back to the market's performance the past week, I have to say while I am looking for a short-term top that could lead to a shallow pullback, I am not going to convince myself that it is a given that it will happen. If this market wants to continue to run that is fine with me. The stocks I am long are going to have to show me blowoff topping signals, reversal signals, or straight up fail before I will sell a market that has this many high-quality stocks moving higher. Even with volume below average on the NYSE and only a few days of above average volume on the market. At least those days are either up or have bullish reversals.
What clearly makes me bullish here (but remember I am ALWAYS ready to sell, if I have to) is that leading stocks and the exciting tech stocks are taking a clear lead. Last week, the SOX led everything with an incredibly impressive 5.8% gain and the IBD 100 was right behind the SOX with a 4.2% gain for the week. Both indexes did much better than even the strongest mainstream index. The SP 400 gained 3.5%, the Nassy/SP 600 3.4%, and the worst of them all was the DJIA with a 1.9% gain.
This to me clearly tells me that this is a market I want to be interested in. I am interested in all markets but when I see technology stocks AND leading stocks taking the reigns as we move higher, I have to support that. Low volume or not. Do I want to see volume return soon to the upside? You better believe it. Will I be OK with a low volume rally? FOR SURE!
Right now there are too many stocks extended or they have come off the lows too fast and need to base out. Stocks like FSYS, FSIN, HMA, and MVL would all make GREAT longs in my portfolio. But there is no way I will buy these until they calm down, setup, and breakout again. Just like my CLR long. Everyone seems to want to buy it now. I am NOT touching it again until it touches that 50 DMA. Better safe, than risky and sorry.
Other stocks I would like to get long at some point with a good entry would be SNHY, BUCY, WBD, HRS, ESV, EXM, DRYS, DSX, DO, UPL, and about another 100 oil&gas stocks. Chasing just isn't my game. Patience is.
I don't have much else to say other than without options expiration volume probably would have been lower on the Nasdaq. So I guess volume was kind of lame on even Friday's move. Not that it is important or anything. I just thought I would throw that in there to illustrate that a low volume rally is what this is.
That means that sentiment dominates. Since the big boys are not putting a ton of new money to work and the volume is real low, you would think the market would be going nowhere. But the old maxim is to "never short a dull market." Yet with all this low volume that is what knuckleheads are doing. The negative news that I have discussed earlier, the negative polls with another one being released Tuesday, and the SP 500 having the worst earnings, dropping 25.9%, slump since 2001, going three q's in-a-row down are all the perfect backdrop to continue to have that NYSE short interest ratio rise and to see the put/call climb higher. Right now, the media is a growth investor's best friend. Their lies and BLATANT exaggerations make this possible.
Every message board or blog comments section I read has at least a handful of doom-and-gloomers and if you guys did not have the pleasure to listen to the comments coming from the yahoo message boards posters the day BSC collapsed then you have no clue how negative it is out there. People are simply disconnected from reality and the poor continue to get more poor due to policies they THINK is helping them but is in fact making it worse. Ignorance and being uneducated is a horrible mixture. Along with being easily manipulated. Combine those three traits and you have the politicians favorite targets.
I am going to do a post later on tonight that will focus on the strong stocks in strong sectors. I recommend, while this market is moving up, that you focus on these areas of the market in the upcoming weeks. It will be beneficial to your bank account.
Aloha from a beautiful and gorgeous Maui "where every little thing is going to be alright." I hope you all got to watch the Penguins win and watch the Celtics win. If you did not, you seriously need to get a Tivo. And if you do not like sports...you are a nerd and are probably the donkey that decides to come to Maui and "learn to surf" then you paddle out to our breaks and get in our ways and almost kill someone. What a great year for playoffs in the NHL and NBA, we have the Yankees and Mets tonight, and this year's ASP has been incredible so far. Get off your butts and get to the gym!!!!!!! :) ALOOOOOOOOHAAAAA!!!!!!
I know I am very bullish on this market, even without volume, due to all the setups and charts that are already breaking out out there. But don't question if I would turn, if we got like three major distribution days in-a-row. If that was the case and there was no bounce here, then you have plenty of reasons to get bearish and top calling. But as long as we have stocks like EXM DRYS, and even CNQR showing up, I think I will hold off on top calling. For all I know it will take the put/call to hit .40 and the VIX to hit sub-10 before stocks finally top off this current run.
People that have already sold all of their holdings that they started buying in March, just like the people that told me to bottom fish in March, are just not at the level they need to be at. Nobody, should be out of any DGLY, GFA, or any of the other recent longs like PWRD ISYS and OTEX which have not acting perfectly since going long (that is unless you are a newbie then you should lock in anywhere from 10% to 20% on DGLY, VISN, or anything else up 50% since we went long the past few months). However, they are not acting like GENC and it is a great thing. FEED, even before the recent selling, gave us plenty of time to take some off the table; I took 50% off before the move down. Did you?
Why did I do that? Because look at the chemical stocks. They all look like they are near a major top and the fact that they have not topped yet is SHOCKING to me as the chart patterns have set themselves up more than once in becoming perfect tops and thus good shorts later on. But when I look at MOS, POT, CF, and TNH, I know that not only have I take a 300% and 500% gain in TNH and MOS respectively but that I am in the right place by being on the sidelines as the current chart patterns are LOADED with flaws and the EASY money has CLEARLY already been made in these chemical stocks. If you are focused on them now, I ask you, where in the heck were you in 2003, 2004, 2005, 2006, or 2007?? You are a little late buying up here for a big position play. I am looking for a top.
And hopefully when that group tops, the market will shrug it off and actually take off, as a rotation from commodities to technology could almost be done and waiting for that group to top before blasting off. We will see. At the same time this rotation is occurring it is obvious that money is not coming out of the energy/oil&gas sectors of the stock market. Those two groups continue to show extremely bullish action and there is no reason to think they are done when solar stocks are only now starting to blast-off. I also do not see any oil&gas stocks making clear climax tops. That means that the run is not over and the way they are dominating the top of the IBD industry groups, only a fool would bet against these stocks here. But I take it a lot of people are or else there would not be a near-fourteen day NYSE short interest. Amazing.
If you look at the top 20 industry groups based on six-month price performance, eight of them are energy related, three are transportation related, and three are metals related. What is even more bullish for these stocks is that the transportation-shipping group has gone from #133 to #15 the past three weeks. Stocks like TBSI DSX EXM and DRYS are all setting up in BEAUTIFUL bases. I want them all, when they breakout or bounce off key support, now that the charts are right.
If I was undisciplined I would just buy them now. However, I know my game and my game makes me a lot of money. I know either buying too early or doing the worst investing mistake and chasing a breakout too far past the appropriate pivot point is not the right thing to do. So I simply do not do it. It is that simple. Don't break rules that have been PROVEN to work. How so many people can have the CANSLIM system handed to them and they simply do not take the time to learn how it works properly is STUNNING to me. It is stunning those few seconds of the month when I waste my time and watch CNBC and see so many that subscribe to IBD NEVER talk about anything the paper preaches. Especially Cramer.
How can you know that history has been mapped and chartered to show us how the best stocks work and yet you tell us to double down on NXY, IMA, or SHLD back in the day POST-top? Horrible. Patience pays off. If you daytraders would look at how much easier your life would be by making one buy and a few partial sells before a big final sell and without paying constant commissions would really improve your returns and open up your day to more free-time. There are always a few who do better being more active but I doubt those people were long my LMLP, TASR, IST, FMDAY, AFSI, or HRZ for some nice easy-to-handle big gains.
I don't like being active as I know the big money is made in the holding. If you like being active, GREAT! However, if you are active and are not happy with your results, I must recommend that you read and study my Past Big Winners. If those, and the list and list of stocks in all of the O'Neil, Weinstein, Boik, Loeb, and Livermore books, don't convince you, I have no idea how you are going to last in this game. Especially as returns vanish with a low VIX and a market FULL OF THOSE HORRIBLE ETFs which now receive money that used to go into REAL stocks. The money in ETFs could be added fuel to the fire of DGLY. But instead a QQQQ or SPY will do. Oy.
Getting back to the market's performance the past week, I have to say while I am looking for a short-term top that could lead to a shallow pullback, I am not going to convince myself that it is a given that it will happen. If this market wants to continue to run that is fine with me. The stocks I am long are going to have to show me blowoff topping signals, reversal signals, or straight up fail before I will sell a market that has this many high-quality stocks moving higher. Even with volume below average on the NYSE and only a few days of above average volume on the market. At least those days are either up or have bullish reversals.
What clearly makes me bullish here (but remember I am ALWAYS ready to sell, if I have to) is that leading stocks and the exciting tech stocks are taking a clear lead. Last week, the SOX led everything with an incredibly impressive 5.8% gain and the IBD 100 was right behind the SOX with a 4.2% gain for the week. Both indexes did much better than even the strongest mainstream index. The SP 400 gained 3.5%, the Nassy/SP 600 3.4%, and the worst of them all was the DJIA with a 1.9% gain.
This to me clearly tells me that this is a market I want to be interested in. I am interested in all markets but when I see technology stocks AND leading stocks taking the reigns as we move higher, I have to support that. Low volume or not. Do I want to see volume return soon to the upside? You better believe it. Will I be OK with a low volume rally? FOR SURE!
Right now there are too many stocks extended or they have come off the lows too fast and need to base out. Stocks like FSYS, FSIN, HMA, and MVL would all make GREAT longs in my portfolio. But there is no way I will buy these until they calm down, setup, and breakout again. Just like my CLR long. Everyone seems to want to buy it now. I am NOT touching it again until it touches that 50 DMA. Better safe, than risky and sorry.
Other stocks I would like to get long at some point with a good entry would be SNHY, BUCY, WBD, HRS, ESV, EXM, DRYS, DSX, DO, UPL, and about another 100 oil&gas stocks. Chasing just isn't my game. Patience is.
I don't have much else to say other than without options expiration volume probably would have been lower on the Nasdaq. So I guess volume was kind of lame on even Friday's move. Not that it is important or anything. I just thought I would throw that in there to illustrate that a low volume rally is what this is.
That means that sentiment dominates. Since the big boys are not putting a ton of new money to work and the volume is real low, you would think the market would be going nowhere. But the old maxim is to "never short a dull market." Yet with all this low volume that is what knuckleheads are doing. The negative news that I have discussed earlier, the negative polls with another one being released Tuesday, and the SP 500 having the worst earnings, dropping 25.9%, slump since 2001, going three q's in-a-row down are all the perfect backdrop to continue to have that NYSE short interest ratio rise and to see the put/call climb higher. Right now, the media is a growth investor's best friend. Their lies and BLATANT exaggerations make this possible.
Every message board or blog comments section I read has at least a handful of doom-and-gloomers and if you guys did not have the pleasure to listen to the comments coming from the yahoo message boards posters the day BSC collapsed then you have no clue how negative it is out there. People are simply disconnected from reality and the poor continue to get more poor due to policies they THINK is helping them but is in fact making it worse. Ignorance and being uneducated is a horrible mixture. Along with being easily manipulated. Combine those three traits and you have the politicians favorite targets.
I am going to do a post later on tonight that will focus on the strong stocks in strong sectors. I recommend, while this market is moving up, that you focus on these areas of the market in the upcoming weeks. It will be beneficial to your bank account.
Aloha from a beautiful and gorgeous Maui "where every little thing is going to be alright." I hope you all got to watch the Penguins win and watch the Celtics win. If you did not, you seriously need to get a Tivo. And if you do not like sports...you are a nerd and are probably the donkey that decides to come to Maui and "learn to surf" then you paddle out to our breaks and get in our ways and almost kill someone. What a great year for playoffs in the NHL and NBA, we have the Yankees and Mets tonight, and this year's ASP has been incredible so far. Get off your butts and get to the gym!!!!!!! :) ALOOOOOOOOHAAAAA!!!!!!
Sunday, May 18, 2008
Bullish Week Ends With Leading Stocks And The SOX Taking The Lead; The IBD 100 Finishes Up 4.2% And The SOX Finishes Up 5.8% This Week, Clearly Showin
There is really only one word to describe Friday's intraday action: bullish. Right off the bat, thanks to a report showing the University of Michigan consumer confidence number fell below 60 to a 28-year low, the Nasdaq fell 1.2% within the first two hours. This selling was pretty nasty but still the report should not have shocked the informed investors who saw the IBD/TIPP poll hit an all-time low last month. I am sure we can expect more of the same come Tuesday when the new data is released. Thankfully, for the bulls, cooler heads prevailed and quickly the consumer confidence news was taken as old news and shaken off.
By the end of the day, it was an impressive turnaround on all the indexes, as everything closed near their HOD. The leading index was the NYSE which scored a .5% gain. The SP 500 also was up today, gaining .1%. On the other end, the Nassy lost .2% and the DJIA lost .1% but both still closed near their HOD. Considering the losses that all the indexes had going after the first two hours there is no other way to call today anything but a victory for the bulls.
That bullish action was the second day in-a-row and the fifth day out of six that the market has started the day off weak and finished strong. I hate to think of everyone out there that is watching their stocks too closely and therefore have been shaken out of some good longs by watching the market during the day. I suggest when you are using this superior methodology that you best use it the correct way. That means not watching your stocks intraday. If you want to daytrade, fine, do whatever you got to do. But if you went long DGLY, you should still pretty much be long 75% to 100% of it for possible MONSTER stock gains. Those that have sold more than 50% of it have traded poorly and this is due to you watching the stock too closely.
The best daytraders that I have ever met only daytrade index futures. And I will tell you this. I know this methodology. I know how to make the MONSTER gains. And I know daytrading stocks will never get me what CANSLIM can. I have seen it all by now. But if you want to daytrade futures, you have my complete blessing. If I was forced to be a daytrader, I would be trading ALL of the index futures with huge margin (preferably at least 25 to 1). I know that game. But guess what? I would rather go looking for surf and then paddle out into a lineup with a lot of pretty girls and bombing sets. You can watch the market intraday, I would rather attempt to get barreled. After a good session, then I will check out the stocks. This is my lifestyle and I LOVE IT. However, if I did like sitting on my fat butt all day watching 8 to 12 monitors of flashing quotes then I would be daytrading index futures and using CANSLIM after-hours. There is not one stock I would daytrade intraday. NEVER. I know the BIG GAINS are in the HOLDING.
Speaking of big gains, since the lows on March 17 when the Nassy hit a new 18-month low the index has recovered 17% with many of my best stocks returning 30% plus gains. A lot of JERKS tried to get me to bottom fish some horrible stocks, a few days after they made 200% moves off the bottom. Those stocks all of those people told me to buy, since those initial runs, have basically returned NOTHING. But I told you then that you DID NOT have to buy the EXACT BOTTOM to make a KILLING in the stock market. And I still believe if you are 100% cash right now, if you buy the right stock you can beat ANYONE reading this who bought SPY on March 17. They bought the exact bottom and NAILED the bottom!!! WOOPPIEEE! But you didn't and instead you bought MXC and PDO two weeks ago. Now you have a 115% and 95% gain!!! Oh, but wait!!!! You did not buy the bottom. How stupid of you! Do you NOW see how foolish those people were then?? Do you see how arrogant and IGNORANT of history those FOOLS were. They blasted me for not buying the exact bottom on full margin. Since then, the returns we are seeing at BigWaveTrading is crushing the returns I am seeing in some of the "more popular" guys that I follow that were laughing at me for not going 100% long on March 17.
Those same brilliant geniuses are also now calling for a top. They believe the market has come too far too fast. Don't they understand momentum and short squeezing. We don't need volume and we don't need to rest, if the market doesn't want it. It does whatever it wants to do. And right now all you need to know is that all news is good news and that is why people keep shorting the market (NYSE short interest ratio is at another all-time high at 13.40--it takes almost 14 days to cover all shorts on NYSE based on average volume. WOW.) as they keep hearing nothing bad but news from our EXTREMELY biased news media. These blatant political lies, along with a heavy dose of global (w)fear(m)ing, keeps the public scared of the market. This is the wall of worry the market is climbing now and it is proving that it doesn't need a lot of volume.
But have you noticed that volume is starting to come in above average on the Nasdaq more consistently now. The days when it shows up the Nasdaq is either up or it has a bullish intraday reversal. That is a very key tell folks. That tells me the marketis healthier on the short-term than most give it credit. Heck even oil hitting $127 and closing at $126.02 doesn't phase this market. That is why all of our indexes carry acc/dis ratings of A and B and why we see so many technology, retail, and other growth sensitive areas of the economy starting to climb up the list of top industry groups. It is great to see so many technology, software, hardware, computer, electronics, biotech, transportation, metals, oil, and internet stocks rallying all at once. Included in that are a lot of HOT HOT stock charts. Sadly, there still is only one perfect chart out there that is working perfectly and it is up 56% from my lowest hit limit in a little under a month. That is how they should all act. There are a few cheap stocks setting up like that but nothing of CANSLIM quality has me excited of a future MONSTER stock like TASR.
Still overall it was a great week and the bears can't keep me down even though the media sure is trying. Stocks like WBD HRS ESV EXM DO DSX MTL and UPL are not listening. URBN and CSH are the exceptions and with recent longs of top quality that I have sold watch these two come back. TITN was a recent example of a top stock sold that is now back immediately. This is one strong market. Even gold looks to be bouncing again. But the stocks that are clearly dominating are the Energy stocks, especially oil&gas. However, energy stocks are coming on strong and I got my eye on CSUN and SOLF to add to my SOL, CSIQ, and FSLR collection.
The only thing I need to watch out for is getting too excited about this rally. Getting cocky about my gains is the LAST thing I want to do as I have to remember I only have one perfect chart that is out there working. Are there a few setting up that could be perfect b/o's? Absolutely. However, there have been others that have started and failed. Remember, NEU and CMP. They both produced some nice gains but the perfection ended quickly there. BRKR and ADEP are two that completely failed. Both had OBVIOUS flaws that kept them from being huge holdings. But BRKR had a great company and good growth but things don't always work out. And that is why I always cut my losses. But just like TITN, BRKR appears to be firming back up again. It isn't nearly as strong as TITN but a theme of strong stocks having trouble going down is becoming a very large and growing theme in this market. That has to be bullish, heavy volume or not.
Yes it is true low volume rallies are not healthy overall, but nobody knows how long Mr. Momentum can last. Usually when I see people calling tops long-term or short-term I get happy when I am long stocks like I am now. It is not like I am loaded up with longs but I only have 20% in cash now because SO MANY CANSLIM quality longs have been breaking out or bouncing off of great patterns. They are all working. How can I sell stocks when NONE of them are giving me topping, take profit, or cut loss signals.
On top of that the index have taken their key 200 DMA lines which is a very important technical line in the sand. A lot of funds do NOT buy the market until these key indexes are above the lines. Now that they are, it would be nice to see some big fund buying come in. But before that happens, watch for a possible pullback as the put/call buyers are starting to take an interest in the call side again. The put/call fell to its lowest levels since January on Thursday when it hit .64. But oddly enough, just a little bit of selling (or in the case of the NYSE and SP 500, a rise) is enough to raise the put/call back to .79. It isn't 1.00 but it is funny to see a bit of fear enter the market on just a morning two-hour dip that has an EOD close near the HOD.
...........it is getting late on Maui as I had a nice (but small :() surf session that lasted 1 1/2 hours. But it was enough to tucker me out early. When I wake up I will have part two finished by the time the NHL game is over. Go Penguins. You gotta have Sidney Crosbey in the finals!!!.........
By the end of the day, it was an impressive turnaround on all the indexes, as everything closed near their HOD. The leading index was the NYSE which scored a .5% gain. The SP 500 also was up today, gaining .1%. On the other end, the Nassy lost .2% and the DJIA lost .1% but both still closed near their HOD. Considering the losses that all the indexes had going after the first two hours there is no other way to call today anything but a victory for the bulls.
That bullish action was the second day in-a-row and the fifth day out of six that the market has started the day off weak and finished strong. I hate to think of everyone out there that is watching their stocks too closely and therefore have been shaken out of some good longs by watching the market during the day. I suggest when you are using this superior methodology that you best use it the correct way. That means not watching your stocks intraday. If you want to daytrade, fine, do whatever you got to do. But if you went long DGLY, you should still pretty much be long 75% to 100% of it for possible MONSTER stock gains. Those that have sold more than 50% of it have traded poorly and this is due to you watching the stock too closely.
The best daytraders that I have ever met only daytrade index futures. And I will tell you this. I know this methodology. I know how to make the MONSTER gains. And I know daytrading stocks will never get me what CANSLIM can. I have seen it all by now. But if you want to daytrade futures, you have my complete blessing. If I was forced to be a daytrader, I would be trading ALL of the index futures with huge margin (preferably at least 25 to 1). I know that game. But guess what? I would rather go looking for surf and then paddle out into a lineup with a lot of pretty girls and bombing sets. You can watch the market intraday, I would rather attempt to get barreled. After a good session, then I will check out the stocks. This is my lifestyle and I LOVE IT. However, if I did like sitting on my fat butt all day watching 8 to 12 monitors of flashing quotes then I would be daytrading index futures and using CANSLIM after-hours. There is not one stock I would daytrade intraday. NEVER. I know the BIG GAINS are in the HOLDING.
Speaking of big gains, since the lows on March 17 when the Nassy hit a new 18-month low the index has recovered 17% with many of my best stocks returning 30% plus gains. A lot of JERKS tried to get me to bottom fish some horrible stocks, a few days after they made 200% moves off the bottom. Those stocks all of those people told me to buy, since those initial runs, have basically returned NOTHING. But I told you then that you DID NOT have to buy the EXACT BOTTOM to make a KILLING in the stock market. And I still believe if you are 100% cash right now, if you buy the right stock you can beat ANYONE reading this who bought SPY on March 17. They bought the exact bottom and NAILED the bottom!!! WOOPPIEEE! But you didn't and instead you bought MXC and PDO two weeks ago. Now you have a 115% and 95% gain!!! Oh, but wait!!!! You did not buy the bottom. How stupid of you! Do you NOW see how foolish those people were then?? Do you see how arrogant and IGNORANT of history those FOOLS were. They blasted me for not buying the exact bottom on full margin. Since then, the returns we are seeing at BigWaveTrading is crushing the returns I am seeing in some of the "more popular" guys that I follow that were laughing at me for not going 100% long on March 17.
Those same brilliant geniuses are also now calling for a top. They believe the market has come too far too fast. Don't they understand momentum and short squeezing. We don't need volume and we don't need to rest, if the market doesn't want it. It does whatever it wants to do. And right now all you need to know is that all news is good news and that is why people keep shorting the market (NYSE short interest ratio is at another all-time high at 13.40--it takes almost 14 days to cover all shorts on NYSE based on average volume. WOW.) as they keep hearing nothing bad but news from our EXTREMELY biased news media. These blatant political lies, along with a heavy dose of global (w)fear(m)ing, keeps the public scared of the market. This is the wall of worry the market is climbing now and it is proving that it doesn't need a lot of volume.
But have you noticed that volume is starting to come in above average on the Nasdaq more consistently now. The days when it shows up the Nasdaq is either up or it has a bullish intraday reversal. That is a very key tell folks. That tells me the marketis healthier on the short-term than most give it credit. Heck even oil hitting $127 and closing at $126.02 doesn't phase this market. That is why all of our indexes carry acc/dis ratings of A and B and why we see so many technology, retail, and other growth sensitive areas of the economy starting to climb up the list of top industry groups. It is great to see so many technology, software, hardware, computer, electronics, biotech, transportation, metals, oil, and internet stocks rallying all at once. Included in that are a lot of HOT HOT stock charts. Sadly, there still is only one perfect chart out there that is working perfectly and it is up 56% from my lowest hit limit in a little under a month. That is how they should all act. There are a few cheap stocks setting up like that but nothing of CANSLIM quality has me excited of a future MONSTER stock like TASR.
Still overall it was a great week and the bears can't keep me down even though the media sure is trying. Stocks like WBD HRS ESV EXM DO DSX MTL and UPL are not listening. URBN and CSH are the exceptions and with recent longs of top quality that I have sold watch these two come back. TITN was a recent example of a top stock sold that is now back immediately. This is one strong market. Even gold looks to be bouncing again. But the stocks that are clearly dominating are the Energy stocks, especially oil&gas. However, energy stocks are coming on strong and I got my eye on CSUN and SOLF to add to my SOL, CSIQ, and FSLR collection.
The only thing I need to watch out for is getting too excited about this rally. Getting cocky about my gains is the LAST thing I want to do as I have to remember I only have one perfect chart that is out there working. Are there a few setting up that could be perfect b/o's? Absolutely. However, there have been others that have started and failed. Remember, NEU and CMP. They both produced some nice gains but the perfection ended quickly there. BRKR and ADEP are two that completely failed. Both had OBVIOUS flaws that kept them from being huge holdings. But BRKR had a great company and good growth but things don't always work out. And that is why I always cut my losses. But just like TITN, BRKR appears to be firming back up again. It isn't nearly as strong as TITN but a theme of strong stocks having trouble going down is becoming a very large and growing theme in this market. That has to be bullish, heavy volume or not.
Yes it is true low volume rallies are not healthy overall, but nobody knows how long Mr. Momentum can last. Usually when I see people calling tops long-term or short-term I get happy when I am long stocks like I am now. It is not like I am loaded up with longs but I only have 20% in cash now because SO MANY CANSLIM quality longs have been breaking out or bouncing off of great patterns. They are all working. How can I sell stocks when NONE of them are giving me topping, take profit, or cut loss signals.
On top of that the index have taken their key 200 DMA lines which is a very important technical line in the sand. A lot of funds do NOT buy the market until these key indexes are above the lines. Now that they are, it would be nice to see some big fund buying come in. But before that happens, watch for a possible pullback as the put/call buyers are starting to take an interest in the call side again. The put/call fell to its lowest levels since January on Thursday when it hit .64. But oddly enough, just a little bit of selling (or in the case of the NYSE and SP 500, a rise) is enough to raise the put/call back to .79. It isn't 1.00 but it is funny to see a bit of fear enter the market on just a morning two-hour dip that has an EOD close near the HOD.
...........it is getting late on Maui as I had a nice (but small :() surf session that lasted 1 1/2 hours. But it was enough to tucker me out early. When I wake up I will have part two finished by the time the NHL game is over. Go Penguins. You gotta have Sidney Crosbey in the finals!!!.........
Wednesday, May 14, 2008
Another Bullish Day Equals Another Great Day For Our Longs
Today was yet another day where the market did not do much but our longs crushed it. This time it was our recent solar stock purchases. This continues a very bullish pattern of where everything I buy continues to move higher. Once again, tonight there are four new longs and zero full sells. This has been a recurring theme and is a theme of any bullish market. Higher volume or not.
Even though we still have zero institutional support on the indexes, it is clear that in this stock picking market there are a lot of stocks they are accumulating. The majority are in the energy industries, obviously. It might not be easy to buy stocks correct but it sure has not been difficult knowing where to put a lot of money. The gains in two solar stocks today that I am heavily long is more proof that as long as you know how to pick the best stocks, you can destroy the stock market. Remember, all those people from weakmoney.com that were telling me to go long stocks like GS, LEH, MS. I don't know about you but I told you then that you did NOT have to buy the exact low to make a CRAPLOAD of money in the stock market. My recent longs are proving that.
For those that still think that you have to buy the exact low, this should now prove to you that those talking heads on CNBC are just that. Talking heads.
The market was even better by my book as leading, small, and tech stocks all did well today. Not only that but I have bases setting up EVERYWHERE in technology and leading stocks. Take that situation with all these solar and oil stocks running and you have a market that has somewhere to rotate when the oil stocks do climax and top. If that happens, these tech stocks are setting up to be PERFECT candidates for money to move into you. One thing is definitely for sure, I see a LOT of stocks that were in nasty downtrends trying to bottom on a TON of volume with green BOP on a lot of these charts. Take that with all our leading stocks and stocks that we are long that are KILLING IT (remember, if this bull last a few months, THIS IS JUST THE START!!!! all you DGLY sellers) and you have a very fun low volume market rally. I don't like it and don't think it will hold, unless we get more volume. But, heck, I will take ANYTHING I can get.
The lack of perfect charts and volume however will be what keeps me from getting bullish on the market. Just looking at stocks like AAPL or BIDU shows that the selloff on huge distribution has been followed by absolutely ZERO accumulation, just like the indexes. The big stocks are moving higher on no volume, the market is moving higher on no volume, but the true leaders (the 15 that I am VERY LONG and the 60 longs that are flying high but are small positions) are moving higher on huge volume. These 75 stocks that we have in our portfolios all look wonderful. A few might be close to cut losses but nothing is really hurting when it fails. ADEP and BRKR are the only two that hurt a little and stocks like GFA OTEX DGLY SOL and CSIQ more than make up for that.
The key here is to just go with the trend, until it ends. I see so many anticipating a top. I suggest you do do that. But also, prepare for a possibility that a low volume rally continues and when volume does return it could possibly be mutual, hedge, and pension funds JUMPING back in the market so they do not lose performance. This big money chasing gains so they can try to show outperformance to the general market, along with the NYSE short interest at 13 days to cover, could lead to some HUGE!!!! gains unlike anything I have seen since 2003. With that bullish possibility made possible THANKS TO THE GLOBAL economy, it is hard to be too bearish here. Also watching your new longs where you got GREAT fills rocket 20% to 25% doesn't hurt either. I am still riding the trend higher but I am losing some bullish luster. However, I do not know what the future holds and can only listen to my charts. My charts say we are going higher. But without volume I am not sure how that is going to happen.
Not only do we not have volume but NOW the crowd is starting to get quite bullish. Oh, how quickly we can turn on a dime in this great country. One day we are extremely bearish, the next day everything thinks EVERYTHING is going to be PERFECT once a radical left gets into the office. The truth is it is better to be neutral and go with the trend. The short-term trends are up, the longer-term are down. That is it. That is all you got to know to make HUGE money. The reasons why or how is NEVER IMPORTANT. It is a freaking waste of good ocean or surf time. The ocean and surfing is priority 2-9 on my list of things. Stocks is #10 with my gf and remaining family at #1. Never forget that. I think I will be 50 years old before I fully embrace this lifestyle. I just don't want to look like Cramer, Rev, or Kass by the time I hit that age.
For all the wasted time researching the reasons why something happened, your time would be better off spent updating your CANSLIM watchlist and other leading stock scans. Besides that, studying EVERY SINGLE ONE OF MY PAST BIG WINNERS IS A MUST!! You MUST study every one!!!! You need to see that the exact same patterns show up over-and-over-and-over. There might be 20 one year and only 2 the next but there will always be one. We had 3-4 last year and already have had 4 start and only 1 stick. You all know what that one is. If you don't, you really should try stepping up and trying at least a month of my silver service. I guarantee you SOMETHING will make you a LOT of money and NOTHING will EVER break your bank.
My biggest problem with going long heavily on this day and any day forward, if we keep rising without a pullback, is that the sentiment gauges are starting to show complacency. I warned you that if I saw the put/call fall below .70 that I would get a bit nervous about buying stocks and being bullish. That happened today as it came in at .69. The next sentiment indicator is the VIX. This stupid index has fallen to a 2008 low yesterday, which means that the crowd is more complacent now (err...bullish) than at any point in 2008. There are a lot of believers now and that is reflected in the VIX being around the 17 area. These are two clear indexes that indicate to me the crowd is starting to embrace this rally. So, for now, I will enjoy it too, but I wouldn't be surprised if we saw a pullback sometime soon.
The key with this is how volume will be on the pullback. Will it still be low? If it is that will be bullish as smart money investors will probably then realize the lows might have been seen and that could spur a ton of sidelined money into the market. Or if we pullback on heavy volume, we could breakdown and set new lows. EITHER WAY, I AM READY!! Bring it on Mr. Market. Nothing it can throw my way will ever surprise me.
I am about ready to passout as I am still very tired after my HORRIBLE endoscopy procedure (I woke up in the middle of it and it was horrible!!!!!!!!!!!!!!!!). I don't know if it is normal to wake up in the middle of these things but if I knew that was going to happen, there is NO WAY IN HELL I WOULD HAVE DONE THAT. The pain, closterphobia, and gagging was SO HORRIBLE that it took 5 nurses to hold me down so I would not pull the tube out. It was a HELLISH moment of my life and when I woke up a second time I was crying. VERY ODD and scary. I am not sure if that is normal or what the hell happened but at least we do have good news. Nothing showed up. They did take some biopsies. So we will see what that shows. But I still wonder if that was normal??? Oh well. Who cares, it is over, THANK GOD!
Aloha and I will see you in the chat room, where I am NEVER under sedation and always alive and kicking. Not even 10 police officers could keep me down. Now a taser......sure. I have seen enough episodes of cops. LOL, I know that NO ONE escapes the taser. LOLOLOLOL. ALOOOOOHA!!!
Even though we still have zero institutional support on the indexes, it is clear that in this stock picking market there are a lot of stocks they are accumulating. The majority are in the energy industries, obviously. It might not be easy to buy stocks correct but it sure has not been difficult knowing where to put a lot of money. The gains in two solar stocks today that I am heavily long is more proof that as long as you know how to pick the best stocks, you can destroy the stock market. Remember, all those people from weakmoney.com that were telling me to go long stocks like GS, LEH, MS. I don't know about you but I told you then that you did NOT have to buy the exact low to make a CRAPLOAD of money in the stock market. My recent longs are proving that.
For those that still think that you have to buy the exact low, this should now prove to you that those talking heads on CNBC are just that. Talking heads.
The market was even better by my book as leading, small, and tech stocks all did well today. Not only that but I have bases setting up EVERYWHERE in technology and leading stocks. Take that situation with all these solar and oil stocks running and you have a market that has somewhere to rotate when the oil stocks do climax and top. If that happens, these tech stocks are setting up to be PERFECT candidates for money to move into you. One thing is definitely for sure, I see a LOT of stocks that were in nasty downtrends trying to bottom on a TON of volume with green BOP on a lot of these charts. Take that with all our leading stocks and stocks that we are long that are KILLING IT (remember, if this bull last a few months, THIS IS JUST THE START!!!! all you DGLY sellers) and you have a very fun low volume market rally. I don't like it and don't think it will hold, unless we get more volume. But, heck, I will take ANYTHING I can get.
The lack of perfect charts and volume however will be what keeps me from getting bullish on the market. Just looking at stocks like AAPL or BIDU shows that the selloff on huge distribution has been followed by absolutely ZERO accumulation, just like the indexes. The big stocks are moving higher on no volume, the market is moving higher on no volume, but the true leaders (the 15 that I am VERY LONG and the 60 longs that are flying high but are small positions) are moving higher on huge volume. These 75 stocks that we have in our portfolios all look wonderful. A few might be close to cut losses but nothing is really hurting when it fails. ADEP and BRKR are the only two that hurt a little and stocks like GFA OTEX DGLY SOL and CSIQ more than make up for that.
The key here is to just go with the trend, until it ends. I see so many anticipating a top. I suggest you do do that. But also, prepare for a possibility that a low volume rally continues and when volume does return it could possibly be mutual, hedge, and pension funds JUMPING back in the market so they do not lose performance. This big money chasing gains so they can try to show outperformance to the general market, along with the NYSE short interest at 13 days to cover, could lead to some HUGE!!!! gains unlike anything I have seen since 2003. With that bullish possibility made possible THANKS TO THE GLOBAL economy, it is hard to be too bearish here. Also watching your new longs where you got GREAT fills rocket 20% to 25% doesn't hurt either. I am still riding the trend higher but I am losing some bullish luster. However, I do not know what the future holds and can only listen to my charts. My charts say we are going higher. But without volume I am not sure how that is going to happen.
Not only do we not have volume but NOW the crowd is starting to get quite bullish. Oh, how quickly we can turn on a dime in this great country. One day we are extremely bearish, the next day everything thinks EVERYTHING is going to be PERFECT once a radical left gets into the office. The truth is it is better to be neutral and go with the trend. The short-term trends are up, the longer-term are down. That is it. That is all you got to know to make HUGE money. The reasons why or how is NEVER IMPORTANT. It is a freaking waste of good ocean or surf time. The ocean and surfing is priority 2-9 on my list of things. Stocks is #10 with my gf and remaining family at #1. Never forget that. I think I will be 50 years old before I fully embrace this lifestyle. I just don't want to look like Cramer, Rev, or Kass by the time I hit that age.
For all the wasted time researching the reasons why something happened, your time would be better off spent updating your CANSLIM watchlist and other leading stock scans. Besides that, studying EVERY SINGLE ONE OF MY PAST BIG WINNERS IS A MUST!! You MUST study every one!!!! You need to see that the exact same patterns show up over-and-over-and-over. There might be 20 one year and only 2 the next but there will always be one. We had 3-4 last year and already have had 4 start and only 1 stick. You all know what that one is. If you don't, you really should try stepping up and trying at least a month of my silver service. I guarantee you SOMETHING will make you a LOT of money and NOTHING will EVER break your bank.
My biggest problem with going long heavily on this day and any day forward, if we keep rising without a pullback, is that the sentiment gauges are starting to show complacency. I warned you that if I saw the put/call fall below .70 that I would get a bit nervous about buying stocks and being bullish. That happened today as it came in at .69. The next sentiment indicator is the VIX. This stupid index has fallen to a 2008 low yesterday, which means that the crowd is more complacent now (err...bullish) than at any point in 2008. There are a lot of believers now and that is reflected in the VIX being around the 17 area. These are two clear indexes that indicate to me the crowd is starting to embrace this rally. So, for now, I will enjoy it too, but I wouldn't be surprised if we saw a pullback sometime soon.
The key with this is how volume will be on the pullback. Will it still be low? If it is that will be bullish as smart money investors will probably then realize the lows might have been seen and that could spur a ton of sidelined money into the market. Or if we pullback on heavy volume, we could breakdown and set new lows. EITHER WAY, I AM READY!! Bring it on Mr. Market. Nothing it can throw my way will ever surprise me.
I am about ready to passout as I am still very tired after my HORRIBLE endoscopy procedure (I woke up in the middle of it and it was horrible!!!!!!!!!!!!!!!!). I don't know if it is normal to wake up in the middle of these things but if I knew that was going to happen, there is NO WAY IN HELL I WOULD HAVE DONE THAT. The pain, closterphobia, and gagging was SO HORRIBLE that it took 5 nurses to hold me down so I would not pull the tube out. It was a HELLISH moment of my life and when I woke up a second time I was crying. VERY ODD and scary. I am not sure if that is normal or what the hell happened but at least we do have good news. Nothing showed up. They did take some biopsies. So we will see what that shows. But I still wonder if that was normal??? Oh well. Who cares, it is over, THANK GOD!
Aloha and I will see you in the chat room, where I am NEVER under sedation and always alive and kicking. Not even 10 police officers could keep me down. Now a taser......sure. I have seen enough episodes of cops. LOL, I know that NO ONE escapes the taser. LOLOLOLOL. ALOOOOOHA!!!
Sunday, May 04, 2008
Bullish Week Ends With Mixed Trading On The Major Market Indexes; Individual Stocks Are Starting To Look Real Good
It was another overall boring session to end the week but despite the overall boring tone to Friday's session it was still a bullish session underneath as many stocks had solid sessions and many stocks that I was long had a very positive session. Overall, profit taking was quite mild in the AM and the strong mid-day rally into the close shows the bears are still not in control.
This kind of action on a do nothing day is just what I like to see in a market that refuses to do much. If there would have been a lot of blowups and negative action today, then I would have been a lot less enthusiastic about the non-event that Friday was.
By the close, the NYSE was up .6%, the SP 500 was up .3%, and the DJIA was flat. The Nasdaq finished lower but the intraday support and positive action by the close is something that has to be considered positive overall. I mean obviously if this market was real weak they would have sold them into the close.
One of the bright spots on Friday's trading came via the IBD indexes. The IBD 85-85 index added 1.1% on Friday which was much better than the NYSE's .60% gain which shows that leading stocks are still slowly making a rotation into stronger leaders.
The odd thing though is it does not show up in the accumulation/distribution ratings of the indexes in Investors Business Daily. The Nasdaq is the best index with an A rating for acc/dis, the SP 500 has a B+, the NYSE sports a strong B rating for acc/dis, and the IBD 85-85 has that C+ rating that I have already mentioned.
This C+ rating is probably going to go away soon as the rotation from past leading ag, oil, steel, and metal stocks moves into retail, technology, and financial stocks. When this rotation is over and the new leaders are ready to run the acc/dis rating will rise and that will confirm that it is a powerful new bull market.
Remember, we are rallying on lower volume on both indexes. It is only recently that the Nasdaq has seen volume start to come in above average on that index. For the NYSE, however, I believe it is now 30 days (a full month) in a row that the NYSE has closed on below average volume.
Now, while there is nothing wrong with making a good amount of money in a low volume general market rally, as long as the stocks we are going long are moving up on higher volume, we still have to be careful about marrying the market's bias here until we start to see some heavy volume return.
It is very obvious that the crowd has turned bullish recently, via the 55% bullish reading on the AAII survey, but that amount of bullishness has not translated into the crowd acting upon that. In the other survey, which I find MUCH MORE IMPORTANT, bulls are beating bears 40.9% to 31.8% but the bears were beating bulls for almost a full month. That was the first time since late 2005 that bears crossed bulls and was the first time that I can remember since 2002/2003 where the bears beat the bulls for more than a week. So the crowd is turning a little bullish by what they say but how are they acting?
Mutual funds are still hoarding cash as the levels rise in a lot of funds (like I have said before, I have not seen this much cash since 2001-2002 in leading growth funds). Along with mutual funds still yet to get back to work, we have the retail crowd still buying puts and shorting stocks. That can be seen by watching our put/call ratio. This ratio barely EVER goes under .80 anymore. This is a byproduct of the dumb money constantly seeing every rally as a chance to short. That can be seen in the most recent data as the put/call ratio jumped from .81 to .88 after a huge Thursday rally in the Nassy. It fell slightly this weekend to .84 but it is still above that .80 level. While a reading of 1 or higher is a reading of a crowd that is bearish, being at .80 is no bullish matter either. A reading around .80 to 1.6 can be considered bullish for stocks as a contrarian.
On top of this investment vehicle showing that the crowd still has a slight "let's short this market" bias is the recently important NYSE short-interest ratio. This key indicator of how the dumb money is investing is showing that the crowd continue to believe shorting this market is the right play as we must be in a recession. Considering a recession is back to back quarters of negative GDP growth, it is clearly obvious to me that a reading of positive .6% is not a negative number. So for all of those for sure we are in a recession I have a bit of a newsflash. You are going to be waiting a long time. There is not a recession out there. There is simply a slowdown. Yet here people are shorting stocks like it is the right play. This has caused the ratio to hit YET ANOTHER ALL-TIME high after Friday's session of 12.58. It now takes almost a full 13 days of average NYSE volume to clean out the shorts.
This might be why we are seeing the market rally for such a long time on low volume. As long as the dumb money is out there buying puts (that they have no business buying), selling stocks shorts, or selling stocks rising higher, then you can be sure this low volume rally, along with the way momentum works, will lead us to a market that should continue to see solid gains. A market, who's rally is not believed, can be a market that rises on low volume for a very long time. As long as the crowd wants to short stocks into a rising market, you can be sure there will be shorts from lower levels that will be squeezed and forced to cover their shorts as they sell them at higher and higher prices. As these past shorts are then forced to cover stock that can't be found the stock will be forced to rise until more sellers come out to sell the stock. If those sellers are short-sellers, then later on they will be squeezed and this game can continue on and on, until volume to the downside finally returns. But most of the time the heavy volume selling does not follow a low volume rally that has lasted this long.
Normally, a low volume rally that has lasted at least a month, historically, turns into a rally that rises on heavy volume. But once most players realize their shorting of a low volume rally has turned into a runaway bull market and they now see that THEY MUST BUY and get long, that is usually when the rally is dead and the heavy volume selling returns. Right now, in this market, the way charts are setting up in sound bases all over the place, it appears that a further continuation of this rally would be what the good doctor ordered.
There are multiple other signs that indicate that the worst may be behind us in the market via the way the sector leadership and rotation seems to be playing out. The CRB index, to me, appears to be making a very short term almost tweezer like double top. The first week's selloff was a nasty 10% hit and this weeks hit was almost 5% until Friday's rise. That, after the slow rise, seemed to be very bearish. Watching an index slowly take its time hitting new highs and then seeing it reverse HARD right afterwards always makes me nervous as historically it has signaled tops.
On my weekly CRB index chart, I have negative divergence in the TSV, moneystream, and RS line, as they are all making lower highs, while price makes higher highs. The new high was barely a new high but considering all these indicators could not keep up with price is a huge hint that momentum is waining. The strength in these stocks was obviously the reason why the best stocks of the rally were ag, oil, steel, cyclicals, and gold stocks. However, with the selloff in these stocks , along with the CRB looking like it is, it is possible there could be a rotation of these stocks into the stocks that are showing VERY bullish chart action by either setting up bases, putting in what does look like REAL HEAVY volume bottoms, or breaking out of well formed patterns. Those charts are all over the place but are MOST obvious to me in the financials, retail, and technology stocks.
These stocks are setting up everywhere with green to max green BOP charts. Even though I still do not have anything perfect out there setting up in a perfect base with a perfect price, volume, and BOP setup, I still see stocks all over the place that are in early stages of a base building period or are racing up the right side of the charts that with one more base building area would in fact possibly be great charts. I have my eye on quite a few but every day more and more pop up which is a clearly healthy development for this market. This action was NOT seen during any other period since the November top where the big-cap tech stocks all started their journey lower.
I guess you can say oil, gas, and steel stocks are still the leaders. But in the past week we have seen six new industry groups enter the top 20 of all industry groups in IBD. I focus on this list the most when I am looking for future potential longs in bull markets as 37% of a stocks move is completely correlated to its industry group. You may find one or two gems in a weak industry group but normally, unless the stock is extremely powerful and strong, you are simply not going to find stocks that can move with such certainty and ease as a leading issue. The groups that are starting to climb higher that are not in the top 20 yet are also key areas of interest and I see a lot of technology related groups climbing which makes me excited.
However, remember, just because a group makes the list does not mean it is for certain to be a leader. Good thing for us, because if you remember, at the start of the year, medical stocks made up 10 of top 20 industry groups. How many are there now? One. Medical-Hospitals. And while there is not a lot of high tech in this group YET the new groups in this list still are loaded with leaders. Especially the transportation groups which make up three of top 12 industry groups after Friday's close. This should be no surprise for those of us that follow the leaders. These stocks have been showing up in my dynamic price/volume scans for about three months now, which proves they were starting to show leadership even before the whole group was. Leaders like CHRW, AAWW, and GWR clearly stand out in my scans. Also the DJ Transportation average is the leading index since January 1, 2008 is up 16% which is only one of two industry indexes higher since 1/1/2008. The other is the Consumer Index which is up 1.7%. Clearly it is all about Transportation stocks.
That is why 45% of the Transportation-Railroad stocks hit brand new 52-week highs on Friday. The Transportation-Trucking index has risen from #183 six months ago to #12 which can only be outdone by the Building-Res/Comm group which has moved from the worst spot at #197 five months ago to #5.
Sticking with the theme of strength, some of the other great industry groups on Friday came from groups already near the top. The top Oil&Gas-US Expl/Prod remains on top and gained 1.8% but within the top 20 Steel-Producers rose 2.4%, Energy-Other rose 2.8%, Chemical-Fertilizers rose 2.2%, Machinery-Construction/Man. rose 2.4%, the Metal Ore group rose 3.1%, and the Oil&Gas-Drilling stocks powered ahead an impressive 3.8% gain. This was a good showing amongst top stocks even though SOME of these groups (like chem-fert) appear to be topping and rotating into new tech related stocks. On the other end of the spectrum more good news can be said about the bottom 20 groups as six of the 10 worst groups on Friday were in the bottom 20. This is a good market that is rewarding leaders and punishing laggards. This is how it is supposed to be. It has been about a LONG TIME since the market has acted appropriately.
Even though we did make good money in 2006 and 2007, the low VIX along with the lame action of the overall market made it very hard to rack up huge gains. The constant choppiness of the overall uptrend and lack of any big moves made it tough. There is and was no doubt about that. Before this month, the past six months were the hardest period for yours truly to make big money. I simply had never gone through such an odd period where EVERY LARGE purchase/short made by me either failed or barely worked and EVERY!!!! marginal long/short would end up being GREAT trades. That helped lead me to a 2% gain to an 8% loss (which STILL kept me within the top 5% of all mutual funds which is ALWAYS my goal in bear markets; in bull markets I want to be within the top 2% of all funds!!!!!!!!!!!!!!!!!!!!!!!!!!!!!--I have been around too long now to want to just be in the top 5%) on 5 different accounts that I run during that time. The overall return was a gain of 2%. But April came in and went out with a bang And so far May is starting itself out on the right foot as Thursday and Friday were very good to my portfolio.
The biggest problem I had with my portfolio from November to January was the fact EVERY short I loaded up on did not do that well while EVERY short I took small positions on DID WONDERFUL! That along with longs that did show not doing well, made it a rough period. Remember, in January 10 NEW industry groups entered the top 20 groups. THEY WERE ALL MEDICAL. To me that means that medical stocks are about to become your NEXT BIG WINNERS during the market downtrend. Since medical stocks lead in bear markets, I naturally assumed the way things were going that the downtrend would stay.
But come 1/22 and 1/23 the downtrend ran into Fed liquidity pressure and the selling was done. Not only that but the defensive stocks then reversed and the leading medical stocks started breaking down. However, while waiting for more shorts to setup, it became clear cash was king and cash remained king for a few months. So the right play turned out to be cash. Thankfully I did that, instead of forcing shorts, as that allowed me to take that cash and IMMEDIATELY convert it into new long positions once hot charts like HA started showing up. Obviously, staying nimble in this market is a must.
For now the leaders look great and on Friday for the first time during any market session where the action was mixed, new highs still comfortably beat new lows. There were 137 new 52-week highs to 83 new 52-week lows. This clearly tells me that the overall action UNDERNEATH the market has FINALLY turned bullish. Like I just said, this is the first mixed session, that STARTED weak, and ended up with a mixed close that saw new highs kill new lows. This is a very good thing and continues a SLOW rotation from a weak market to a strong market.
Some of our new leadership is now becoming more clear and if some of you do not know where that is I am going to list some groups that could continue to outshine in this market and some stocks that could be monster stocks with more accumulation and mutual fund support. The new batch of leaders are coming out of the Banks (18 new highs on Friday)-ITU, BBD, UBB, CIB, BAP, UMBF, and RBCAA. The Medical group (14)-LSR, ICLR, AMED, BABY, PRGO, and GILD. The Energy group (14)-SPN SM PQ. The Transportation group-TGH, BNI, GWR, CHRW, AAWW, CSX, and KSU. The Electronics (7)-TTMI, DRS, CLS, GLW, APH, and AXYS. Utility (6)-NFG, CPL, and LG. Business Services (6)-WW, UNF, WWIN, and VISN. Savings&loans (5)-LABC, OCFC, and HCBK. Machinery (5)-GHM, JST, BMI, and CIR. Food/Beverage (5)-SDA, FLO, and OME. Retail (5)-CBD ARO. Internet-SOHU, NTES, and ELNK.
If this trend of stocks continue to show up in our new high list, I am sure it will not be too much longer until EVER day higher on the Nasdaq and NYSE is on above average daily volume. The YHOO and MSFT deal has fallen apart and if that ends up helping MSFT which makes up almost 7% of the Nasdaq, I have a feeling tomorrow could be a great confirmation day follow-through for the current rally. However, if it just ends up being a low volume rally on Monday, and I still get plenty of GENC and HA type of action, I will be more than happy to take that. We will see where tomorrow brings us but so far it is a possible trip to "MONSTER STOCK RETURN" land. I hope that is the case! I have been waiting a VERY LONG TIME for a chance to make some VERY BIG MONEY. Since the November top, it has been like pulling teeth. Hopefully, we are through with that low follow-through stage.
Aloha and I will see you in the chat room where stock picks turn into stock winners as long as you buy the best, cut your losses on your worst, and learn when to sell near the top when you get it really right. We have a lot of chat room member but a LOT OF YOU OLD TIMERS WITH EXPERIENCE WHO ARE STILL WITH US HAVE NOT BEEN SHOWING UP NEARLY AS MUCH AS YOU USED TO. IF THIS MARKET IS TURNING, I SURE WOULD APPRECIATE IT IF YOU GOT YOUR MONEYS WORTH AND MADE AN APPEARANCE IN THE CHAT ROOM SOMETIME BEFORE THE CLOSING BELL. There are a LOT of new guys that need more wisdom, guidance, and experience from regular members. So hopefully more than 20 of you can show up at once. The herd has been small and I hope the experienced guys that are showing up less and less (YOU KNOW WHO YOU ARE AND YES! I AM TALKING ABOUT YOU) are still watching the market as close as they were when the time wasn't right. Now that the time is right to make money, I recommend you get yourself into the game before I start hearing statements like "dang, I missed that one. I should have been paying closer attention but I thought it was OK to go away." Missing the next HRZ (the most recent 'Past Big Winner' posted) is inexcusable.
Great luck and stay disciplined! ALOOOOOOHA!!
This kind of action on a do nothing day is just what I like to see in a market that refuses to do much. If there would have been a lot of blowups and negative action today, then I would have been a lot less enthusiastic about the non-event that Friday was.
By the close, the NYSE was up .6%, the SP 500 was up .3%, and the DJIA was flat. The Nasdaq finished lower but the intraday support and positive action by the close is something that has to be considered positive overall. I mean obviously if this market was real weak they would have sold them into the close.
One of the bright spots on Friday's trading came via the IBD indexes. The IBD 85-85 index added 1.1% on Friday which was much better than the NYSE's .60% gain which shows that leading stocks are still slowly making a rotation into stronger leaders.
The odd thing though is it does not show up in the accumulation/distribution ratings of the indexes in Investors Business Daily. The Nasdaq is the best index with an A rating for acc/dis, the SP 500 has a B+, the NYSE sports a strong B rating for acc/dis, and the IBD 85-85 has that C+ rating that I have already mentioned.
This C+ rating is probably going to go away soon as the rotation from past leading ag, oil, steel, and metal stocks moves into retail, technology, and financial stocks. When this rotation is over and the new leaders are ready to run the acc/dis rating will rise and that will confirm that it is a powerful new bull market.
Remember, we are rallying on lower volume on both indexes. It is only recently that the Nasdaq has seen volume start to come in above average on that index. For the NYSE, however, I believe it is now 30 days (a full month) in a row that the NYSE has closed on below average volume.
Now, while there is nothing wrong with making a good amount of money in a low volume general market rally, as long as the stocks we are going long are moving up on higher volume, we still have to be careful about marrying the market's bias here until we start to see some heavy volume return.
It is very obvious that the crowd has turned bullish recently, via the 55% bullish reading on the AAII survey, but that amount of bullishness has not translated into the crowd acting upon that. In the other survey, which I find MUCH MORE IMPORTANT, bulls are beating bears 40.9% to 31.8% but the bears were beating bulls for almost a full month. That was the first time since late 2005 that bears crossed bulls and was the first time that I can remember since 2002/2003 where the bears beat the bulls for more than a week. So the crowd is turning a little bullish by what they say but how are they acting?
Mutual funds are still hoarding cash as the levels rise in a lot of funds (like I have said before, I have not seen this much cash since 2001-2002 in leading growth funds). Along with mutual funds still yet to get back to work, we have the retail crowd still buying puts and shorting stocks. That can be seen by watching our put/call ratio. This ratio barely EVER goes under .80 anymore. This is a byproduct of the dumb money constantly seeing every rally as a chance to short. That can be seen in the most recent data as the put/call ratio jumped from .81 to .88 after a huge Thursday rally in the Nassy. It fell slightly this weekend to .84 but it is still above that .80 level. While a reading of 1 or higher is a reading of a crowd that is bearish, being at .80 is no bullish matter either. A reading around .80 to 1.6 can be considered bullish for stocks as a contrarian.
On top of this investment vehicle showing that the crowd still has a slight "let's short this market" bias is the recently important NYSE short-interest ratio. This key indicator of how the dumb money is investing is showing that the crowd continue to believe shorting this market is the right play as we must be in a recession. Considering a recession is back to back quarters of negative GDP growth, it is clearly obvious to me that a reading of positive .6% is not a negative number. So for all of those for sure we are in a recession I have a bit of a newsflash. You are going to be waiting a long time. There is not a recession out there. There is simply a slowdown. Yet here people are shorting stocks like it is the right play. This has caused the ratio to hit YET ANOTHER ALL-TIME high after Friday's session of 12.58. It now takes almost a full 13 days of average NYSE volume to clean out the shorts.
This might be why we are seeing the market rally for such a long time on low volume. As long as the dumb money is out there buying puts (that they have no business buying), selling stocks shorts, or selling stocks rising higher, then you can be sure this low volume rally, along with the way momentum works, will lead us to a market that should continue to see solid gains. A market, who's rally is not believed, can be a market that rises on low volume for a very long time. As long as the crowd wants to short stocks into a rising market, you can be sure there will be shorts from lower levels that will be squeezed and forced to cover their shorts as they sell them at higher and higher prices. As these past shorts are then forced to cover stock that can't be found the stock will be forced to rise until more sellers come out to sell the stock. If those sellers are short-sellers, then later on they will be squeezed and this game can continue on and on, until volume to the downside finally returns. But most of the time the heavy volume selling does not follow a low volume rally that has lasted this long.
Normally, a low volume rally that has lasted at least a month, historically, turns into a rally that rises on heavy volume. But once most players realize their shorting of a low volume rally has turned into a runaway bull market and they now see that THEY MUST BUY and get long, that is usually when the rally is dead and the heavy volume selling returns. Right now, in this market, the way charts are setting up in sound bases all over the place, it appears that a further continuation of this rally would be what the good doctor ordered.
There are multiple other signs that indicate that the worst may be behind us in the market via the way the sector leadership and rotation seems to be playing out. The CRB index, to me, appears to be making a very short term almost tweezer like double top. The first week's selloff was a nasty 10% hit and this weeks hit was almost 5% until Friday's rise. That, after the slow rise, seemed to be very bearish. Watching an index slowly take its time hitting new highs and then seeing it reverse HARD right afterwards always makes me nervous as historically it has signaled tops.
On my weekly CRB index chart, I have negative divergence in the TSV, moneystream, and RS line, as they are all making lower highs, while price makes higher highs. The new high was barely a new high but considering all these indicators could not keep up with price is a huge hint that momentum is waining. The strength in these stocks was obviously the reason why the best stocks of the rally were ag, oil, steel, cyclicals, and gold stocks. However, with the selloff in these stocks , along with the CRB looking like it is, it is possible there could be a rotation of these stocks into the stocks that are showing VERY bullish chart action by either setting up bases, putting in what does look like REAL HEAVY volume bottoms, or breaking out of well formed patterns. Those charts are all over the place but are MOST obvious to me in the financials, retail, and technology stocks.
These stocks are setting up everywhere with green to max green BOP charts. Even though I still do not have anything perfect out there setting up in a perfect base with a perfect price, volume, and BOP setup, I still see stocks all over the place that are in early stages of a base building period or are racing up the right side of the charts that with one more base building area would in fact possibly be great charts. I have my eye on quite a few but every day more and more pop up which is a clearly healthy development for this market. This action was NOT seen during any other period since the November top where the big-cap tech stocks all started their journey lower.
I guess you can say oil, gas, and steel stocks are still the leaders. But in the past week we have seen six new industry groups enter the top 20 of all industry groups in IBD. I focus on this list the most when I am looking for future potential longs in bull markets as 37% of a stocks move is completely correlated to its industry group. You may find one or two gems in a weak industry group but normally, unless the stock is extremely powerful and strong, you are simply not going to find stocks that can move with such certainty and ease as a leading issue. The groups that are starting to climb higher that are not in the top 20 yet are also key areas of interest and I see a lot of technology related groups climbing which makes me excited.
However, remember, just because a group makes the list does not mean it is for certain to be a leader. Good thing for us, because if you remember, at the start of the year, medical stocks made up 10 of top 20 industry groups. How many are there now? One. Medical-Hospitals. And while there is not a lot of high tech in this group YET the new groups in this list still are loaded with leaders. Especially the transportation groups which make up three of top 12 industry groups after Friday's close. This should be no surprise for those of us that follow the leaders. These stocks have been showing up in my dynamic price/volume scans for about three months now, which proves they were starting to show leadership even before the whole group was. Leaders like CHRW, AAWW, and GWR clearly stand out in my scans. Also the DJ Transportation average is the leading index since January 1, 2008 is up 16% which is only one of two industry indexes higher since 1/1/2008. The other is the Consumer Index which is up 1.7%. Clearly it is all about Transportation stocks.
That is why 45% of the Transportation-Railroad stocks hit brand new 52-week highs on Friday. The Transportation-Trucking index has risen from #183 six months ago to #12 which can only be outdone by the Building-Res/Comm group which has moved from the worst spot at #197 five months ago to #5.
Sticking with the theme of strength, some of the other great industry groups on Friday came from groups already near the top. The top Oil&Gas-US Expl/Prod remains on top and gained 1.8% but within the top 20 Steel-Producers rose 2.4%, Energy-Other rose 2.8%, Chemical-Fertilizers rose 2.2%, Machinery-Construction/Man. rose 2.4%, the Metal Ore group rose 3.1%, and the Oil&Gas-Drilling stocks powered ahead an impressive 3.8% gain. This was a good showing amongst top stocks even though SOME of these groups (like chem-fert) appear to be topping and rotating into new tech related stocks. On the other end of the spectrum more good news can be said about the bottom 20 groups as six of the 10 worst groups on Friday were in the bottom 20. This is a good market that is rewarding leaders and punishing laggards. This is how it is supposed to be. It has been about a LONG TIME since the market has acted appropriately.
Even though we did make good money in 2006 and 2007, the low VIX along with the lame action of the overall market made it very hard to rack up huge gains. The constant choppiness of the overall uptrend and lack of any big moves made it tough. There is and was no doubt about that. Before this month, the past six months were the hardest period for yours truly to make big money. I simply had never gone through such an odd period where EVERY LARGE purchase/short made by me either failed or barely worked and EVERY!!!! marginal long/short would end up being GREAT trades. That helped lead me to a 2% gain to an 8% loss (which STILL kept me within the top 5% of all mutual funds which is ALWAYS my goal in bear markets; in bull markets I want to be within the top 2% of all funds!!!!!!!!!!!!!!!!!!!!!!!!!!!!!--I have been around too long now to want to just be in the top 5%) on 5 different accounts that I run during that time. The overall return was a gain of 2%. But April came in and went out with a bang And so far May is starting itself out on the right foot as Thursday and Friday were very good to my portfolio.
The biggest problem I had with my portfolio from November to January was the fact EVERY short I loaded up on did not do that well while EVERY short I took small positions on DID WONDERFUL! That along with longs that did show not doing well, made it a rough period. Remember, in January 10 NEW industry groups entered the top 20 groups. THEY WERE ALL MEDICAL. To me that means that medical stocks are about to become your NEXT BIG WINNERS during the market downtrend. Since medical stocks lead in bear markets, I naturally assumed the way things were going that the downtrend would stay.
But come 1/22 and 1/23 the downtrend ran into Fed liquidity pressure and the selling was done. Not only that but the defensive stocks then reversed and the leading medical stocks started breaking down. However, while waiting for more shorts to setup, it became clear cash was king and cash remained king for a few months. So the right play turned out to be cash. Thankfully I did that, instead of forcing shorts, as that allowed me to take that cash and IMMEDIATELY convert it into new long positions once hot charts like HA started showing up. Obviously, staying nimble in this market is a must.
For now the leaders look great and on Friday for the first time during any market session where the action was mixed, new highs still comfortably beat new lows. There were 137 new 52-week highs to 83 new 52-week lows. This clearly tells me that the overall action UNDERNEATH the market has FINALLY turned bullish. Like I just said, this is the first mixed session, that STARTED weak, and ended up with a mixed close that saw new highs kill new lows. This is a very good thing and continues a SLOW rotation from a weak market to a strong market.
Some of our new leadership is now becoming more clear and if some of you do not know where that is I am going to list some groups that could continue to outshine in this market and some stocks that could be monster stocks with more accumulation and mutual fund support. The new batch of leaders are coming out of the Banks (18 new highs on Friday)-ITU, BBD, UBB, CIB, BAP, UMBF, and RBCAA. The Medical group (14)-LSR, ICLR, AMED, BABY, PRGO, and GILD. The Energy group (14)-SPN SM PQ. The Transportation group-TGH, BNI, GWR, CHRW, AAWW, CSX, and KSU. The Electronics (7)-TTMI, DRS, CLS, GLW, APH, and AXYS. Utility (6)-NFG, CPL, and LG. Business Services (6)-WW, UNF, WWIN, and VISN. Savings&loans (5)-LABC, OCFC, and HCBK. Machinery (5)-GHM, JST, BMI, and CIR. Food/Beverage (5)-SDA, FLO, and OME. Retail (5)-CBD ARO. Internet-SOHU, NTES, and ELNK.
If this trend of stocks continue to show up in our new high list, I am sure it will not be too much longer until EVER day higher on the Nasdaq and NYSE is on above average daily volume. The YHOO and MSFT deal has fallen apart and if that ends up helping MSFT which makes up almost 7% of the Nasdaq, I have a feeling tomorrow could be a great confirmation day follow-through for the current rally. However, if it just ends up being a low volume rally on Monday, and I still get plenty of GENC and HA type of action, I will be more than happy to take that. We will see where tomorrow brings us but so far it is a possible trip to "MONSTER STOCK RETURN" land. I hope that is the case! I have been waiting a VERY LONG TIME for a chance to make some VERY BIG MONEY. Since the November top, it has been like pulling teeth. Hopefully, we are through with that low follow-through stage.
Aloha and I will see you in the chat room where stock picks turn into stock winners as long as you buy the best, cut your losses on your worst, and learn when to sell near the top when you get it really right. We have a lot of chat room member but a LOT OF YOU OLD TIMERS WITH EXPERIENCE WHO ARE STILL WITH US HAVE NOT BEEN SHOWING UP NEARLY AS MUCH AS YOU USED TO. IF THIS MARKET IS TURNING, I SURE WOULD APPRECIATE IT IF YOU GOT YOUR MONEYS WORTH AND MADE AN APPEARANCE IN THE CHAT ROOM SOMETIME BEFORE THE CLOSING BELL. There are a LOT of new guys that need more wisdom, guidance, and experience from regular members. So hopefully more than 20 of you can show up at once. The herd has been small and I hope the experienced guys that are showing up less and less (YOU KNOW WHO YOU ARE AND YES! I AM TALKING ABOUT YOU) are still watching the market as close as they were when the time wasn't right. Now that the time is right to make money, I recommend you get yourself into the game before I start hearing statements like "dang, I missed that one. I should have been paying closer attention but I thought it was OK to go away." Missing the next HRZ (the most recent 'Past Big Winner' posted) is inexcusable.
Great luck and stay disciplined! ALOOOOOOHA!!
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