Sunday, February 15, 2009

Major Stock Indexes End The Week On A Weak Note; Stocks Selloff For The Week But Volume Was Lower Than The Week Before Giving Bulls A Reason To Be Hap

A very volatile week comes to an end with the markets losing anywhere from .5% to 1% on the day. The good news about this pullback was that it did come on lower volume. But it is possible that could have been a function of a long-weekend. The bottom line is that the week ends on a weak note and stocks finished lower on the week anywhere from 3.6% to 5.2%.

Overall the theme of this week was volatility and uncertainty. Even though there were two quiet day this week, there were three very loud days that showed the market is still not a rational animal right now and is instead a wild scared beast that reacts on a whim to any and all news deemed relevant to short-term traders at the time.

Sadly, almost all form of momentum investing (besides staying short) is working on the long side. Every time we seem to have some leaders start to show up that could lead the market in a new direction they get hit. The most recent example is the Education stocks that got whacked on Thursday after STRA came out and disappointed.

The good news for us is that we can get short these stocks as they fail at resistance on higher volume and begin to rollover. The bad news for us is that it means that the market is still not going to be moving higher for any of us to get rich or wealthy from capital gains anytime soon. About the only good news out of that is that after enough failures people will come to expect it and then the leaders will work.

That might be the case now as Mining-Gold/Silver stocks are not only #1 but have hit #1 BEFORE most of the stocks in this sector has setup and broken out with their price above the 50 day moving average with the 50 DMA above the 200 DMA. This is one of the first groups in a while that I can remember setting up in bullish charts before ALREADY having a major previous run-up. This is why this group feels stronger than past leading sectors.

Now while that may not be good for the market it could very well be very good for us that are long Gold in our IRA and have gold stocks that we have locked on our radar screens ready to go heavily long if those magical beautiful setups occur.

Basically what I have been seeing in leaders are that PAST leaders breakdown that are currently at the top of the list for past six-month and twelve-month performances thus leaving a group that has already been going up for a while and still moving up as the #1 group. This isn't by strength but by default of being the strongest WEAKEST. That is why after these groups are becoming #1 we have been seeing them crack and break not too much long after.

I mean if we just look at the recent top sectors we had security stocks, medical stocks, and recently education stocks that have all failed after becoming the new leaders because they were already in LONG-TERM (going back to 2000 or 2003) major uptrends. They were not anything new.

Now at the same end everyone can say well Gold isn't new either, Einstein! However, a lot of the charts that are setting up in proper bases are longs that have not had a major run yet that are still very fresh and could still have a long way to go especially with the conditions of the world economy the way it is. The old gold stock leaders are not really "leading" this time around (gold stocks helped lead in 2005 and Gold has been moving higher since 9/11). Instead there are plenty of "fresh and nice" charts.

I am still praying that the IYW is hinting at technology turning because time-after-time big bull markets are started and led by the technology sector because this is OBVIOUSLY where innovative and exciting companies are coming from. That is unless they make an amazing energy drink like HANS! Then they can grow 9,250% in four years. But the real money is made in technology stocks that are major innovators like CSCO which grew 60,000% in a little over 9 years. TASR also moved 2,390% for me in nine months. So as you can see, no matter if it is an electricity gun, a router, or an energy drink, if it is can make you a LOT OF MONEY if the company is being run correctly! This is why CANSLIM rocks!! You can always find these stocks by researching and using Investor's Business Daily products (and no I am NOT paid by IBD; the tools are just that great!).

I want to wish everyone a very happy Valentine's Day and have a great 3-day weekend/President's Day! ALOOOOOHA!!

top longs/(shorts) with their total returns since my first purchase MAKING ME MONEY TODAY: ANCI 57% (OKE 36% POT 46% AAPL 38% PG 19% AMX 46% MOS 50% AMSG 17% PRGO 19% APD 41% CYT 64% CASY 27% ARB 70% RDK 29% IPHS 31% RIMM 51% MCY 22% CETV 89% SPG 53%)


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