August 6, 2008
Tech and bank stocks continue to receive no love, while the commodity stocks continue to top. The rotation, to me, is clearly going into medical and food stocks. I have listed a ton of stocks to be looking to get long and have gone long enough medical stocks that we have enough candidates to watch for possible buy points.
However, this doesn’t mean you have to trade. If some of you have not learned from “How to Make Money in Stock” or “Reminiscences of a Stock Operator” that there are times to be long, times to be short, and times to stay away, like now, then I don’t know what to tell you. I am still getting too many questions about stocks from people that are clueless that they are fighting a major freaking battle. No FTD has ever succeeded for a real bull market rally that sent stocks up 1000% of points that did not see the FTD bust through the 50 DMA and the best take both the 50 and 200 DMA out. So the fact that our FTD was so weak and that we took the 50 DMA today on the Nassy is still extremely weak. It is almost like watching an identical rally of January 2001 or the late September 2001 rally. No matter what I am not buying what I see.
I have taken some nice medical longs. But even in this market, the medical stocks, are not setting up in perfect patterns. I am not used to seeing so few and so lame max green chart stocks. This is turning out to be one severe bear market. Despite the few stocks that are moving higher, so many seem to ignore the NCR, NICE, ENS, and PCLN’s out there. Investing in this kind of market is silly and not my cup of tea.
I am trying to save so many of you by keeping you in cash and getting you long medical leaders (like MR and VAR) so that we can make a little bit of money. But with the market in a downtrend from the November highs, the odds are still against me. I don’t like anything 50% or lower. Right now, you have about a 33% of your stock working. Even ex-great looking longs have failed this year and great looking CANSLIM longs have failed. While this medical rally gets going I will enjoy the gains I can grab in there, while forgetting the short side until it becomes easier. Neither longs nor shorts are making money and that is what you get in a market that has gone NOWHERE from 4/4/08 to 8/6/08 (I am sorry the Nassy is up .31% during that time). If this doesn’t make it clear that the past three months have been impossible for longs or shorts to make EASY money NOTHING will convince how to trade right.
The best investment, like Rev said today, confirming what I said yesterday, is to wait for an explosion where a well known financial, bank, or mortgage company dives 50% or more and playing the bounce. Reversing the breakout in gold, oil, and agriculture was also a great countertrend play. However, with these selloffs I would stick to a 60-minute chart to get the longs at the exact moment when the bears are washed out and the bulls can take control. Overall, this market is too difficult for trend trading. And trend trading is what I do best and what I have made a career out of. So for now, I wait. I know a lot don’t like it but I am sure many of you reading this have lost money trying to play this market recently. So I hope I can convince you to stop and slow down and maybe only using 25% of your money to go long for now. Eventually a trend up or down will develop again but for now as you can see via the four months of the market going NOWHERE. Wait for a trend, if you are trend follower, it will come again. Aloha and I will see you in the chat room where the madness is made clear.
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