Tuesday, December 02, 2008

Stocks Rally On Mixed Volume As Yet Another Day Of Insane Volatility Comes To An End

Stocks had a very interesting day of wild volatility today as stock rose on mixed volume. However, IBD reports that volume was higher on both exchanges and thus the SP 500 is in an official FTD rally.

I however have a problem with this as I do not have to be completely scientific about calling a move a FTD. Just like in October 2005 when everyone was refusing to believe in the rally that I was going long and making money in, I will be refusing to believe that this is a bottom simply because a FTD has been announced by IBD.

The problem with this FTD is that the volume is not an extreme example of heavy accumulation. Without this huge accumulation in the indexes, it is impossible to say that funds are heavily accumulating shares. Instead it looks like more continued short-covering rally that is trying to squeeze the excesses out of the shorts.

The other clear problem with today's FTD is that, once again, on another FTD in 2008 we have no leaders. Unless you are happy with one industry group (education) filled with nothing but sloppy stocks, then there is no way that this rally can be good for the market long term. Not only is there only one group leading with stocks in an uptrend but there are not even stocks setting up ready to take the lead from or with the education stocks.

So the lack of leadership, the inability to find ANYTHING to go long that is leading (even in the education sector) the market higher in a leading sector, and the fact that I STILL do not have any shorts with long-term gains giving me full cover signals is my clue that there is no way I should get excited about calling a bottom.

The other thing that must come with a bottom, besides new groups of leading stocks setting up and breaking out of bases, is that old laggards with dividends that have been around a long time will build bottoms. When I look at GE, YHOO, MSFT, AAPL, or any other stock that people call a leader all I see is a big consolidating mess or a stock in a severe downtrend. I don't see ANYTHING that appears to be putting in a bottom besides GM. F doesn't even look like it wants to bottom. And remember I am not saying GM bottomed, I am just saying that it has the huge volume off the lows after a long downtrend that indicates a possible bottom.

Until I see more of that, have to cover 1/2 my short positions due to final cover signals, start to find tons of hot stock chart patterns showing up with leading stocks in leading industries setting up and breaking out, and see a market rally on STRONG volume WELL ABOVE the 50 day volume average and see a market rallying over the 50 and 200 day moving average, there is no way I am calling ANOTHER BOTTOM with all the wrong talking heads.

Let's see...they were wrong in November 2007, January 2008, March 2008, July 2008, September 2008, October 2008, and now they are supposed to be right in November 2008? These are the people some of you are getting your information from and it is time to STOP and STEP UP to the Big Wave Trading way of investing. YOU SERIOUSLY DESERVE BETTER! Stop listening to the liars, cheats, scam artist, and momo monkeys on CNBC. They do not have your best interest in mind, they have theirs. That is why they are all down 30% to 70% this year.

The era of buy and hold is OVER and has been OVER since 2000. Active investing is the only way to make big money on the up and down side and KEEP IT! Buy and hold is the biggest gamble and daytrading only works in volatile markets. To make the big money you need to learn to hold the best stocks in the right environments. Now is the perfect time to learn because this is not the right environment.

Stock market wrap up part one and part two full version are available to Gold and Platinum subscribers on the Gold forums. Free youtube version small will be available after it is uploaded:

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