Thursday, September 04, 2008

Stocks Continue To Drift Around On Low Volume With A Slight Downtrending Bias

There isn't much I have to say this Labor Day except God bless everyone on the Gulf Coast. I am very happy it was downgraded along the way. ONCE AGAIN, the media hypes it like everything else. I am very happy the damage did not occur like Katrina and think it was a CLASS ACT of the RNC to turn its convention into a fund raiser. That is the way to do it!

Back to business, in this low volume market I have made all the key comments I can make the whole week long. The main thing to remember is that the trend is down folks. This is not a market coming from a long-term uptrend or an intermediate uptrend. There has been clear heavier selling compared to accumulation but at least we do have medical stocks looking good. It is hard to go long or short a low volume market and it is pointless as your chances of being whipsawed.

There are very few CLEAN and CLEAR uptrends or downtrends where the stock breaks down at key resistance or stocks bounce at key support. It remains a very random trading arena and unless you are daytrading and even if you are daytrading you need to remember you can be wiped out on one big block order in this market. You can see how quickly stocks fall apart by looking at any insurance or bank stock and you saw how DELL acted Friday. If GOOG, MSFT, BIDU, or any other high-priced stocks start breaking down this market could get ugly. I don't like how some of these stocks have come back up to old highs on EXTREMELY low volume. This gives them up to the perfect opportunity for real sellers to come out and sell on the retail mark-up.

I really am trying to find positives in this market. A few are that that big MER bounce day on HUGE VOLUME is holding and the stock is acting like it wants to retake the 50 DMA. Also RDN, MBI, and ABK all looked like they were going to go under but HUGE ACCUMULATION has entered those stocks with max green BOP helping possibly stick in strong bottoms. There is no guarantee but before this market can even show us its new round of leaders (trust me it isnt just going to be all medical), you have to have the most beaten up stocks with real earnings to show bottoming patterns. And the banks and insurance companies are showing some support. Maybe if tech continues to selloff they can be the next to find the bargain funds that will pick them up that will help us find our next batch of leaders. As you can see by just going through the 197 industry groups in IBD, you can see ONLY medical stocks and a few Service sectors are even in uptrends on the intermediate and sub-intermediate term.

So there is not a whole lot of places to make money outside of medical but medical normally leads in a bear and since they are doing well and we see some stocks possibly bottom it could be not too much longer before we could be closer to the end of this bear. Too bad there will more-than-likely be another leg down (just look at the RS line of the NYSE) since all the former ag, gold, manufacturing, and other agriculture related stocks are starting to rollover. Don't forget oil stocks are also starting to rollover. We could soon be seeing another big move down as NYSE stocks rotate into the Nasdaq. That could be why the Nassy has seen some recent RS gains compared to price recently. Either way, with all the low volume, there is not much to do and I think Jesse Livermore made it VERY CLEAR that the BEST traders DO NOT trade ALL THE TIME and that they only trade when the trend is their friend (we are flat since January--we have no friends) and Gerald Loeb I think says it best below:

“Profits can be made safely ONLY when the opportunity is available and NOT just because they happen to be desired or needed …Willingness and ability to hold funds UNINVESTED while WAITING for real opportunities is a key to success in the battle for invesment survival.”–Gerald Loeb

Enjoy your Labor Day and do not forget I am posting quite a few new PAST BIG WINNERS and other videos this weekend for Gold and Platinum members and pretty soon this weekends PART ONE market wrap should be up on YouTube pretty soon. It is already up for Gold/Plat members in the forums. Enjoy your Labor Day and I will see you tomorrow (Tuesday)!

No comments: