Wednesday, April 01, 2009

Stocks Put In Another Bullish Session With The Nasdaq Having Higher Volume; Leading Stocks Are Still Lagging But Some Stocks Are Looking Real Bullish

Let me first start off by saying that the session in Asia was just amazing with the Nikkei up 4.4% and the Hang Seng index up 7% last night. To go along with that, futures are just popping right now as we go into the morning's opening bell. This is excellent action right now, I have to say.

But what makes this action more exciting to me is that for the first time in a full year (last time was 2001) we have more than just a handful of nice charts out there. To go along with that many of these nice charts are either in leading industry groups or are the leader in their respective group in terms of either price performance or both price performance and fundamentals. The fact that so many charts have green and max green BOP, with the market in an uptrend and China leading, is the most bullish setup we have seen since August 2007 when the Nasdaq made its last run into the October 31st high.

Since then it has been far and wide in looking for winning stocks on the long side. In 2008 we had ONLY PDO and DGLY early on. Then we got XSI (which is now ANCI) and got a quick near 100% gain in a few months with it also setting up in a near-perfect setup in the middle of August giving us a quick 50% gain. That second buy was real nice but even I could not load up due to the fact that so many stocks were acting so poorly. I was too scared and still had the thoughts of the FALC and INXI charts that failed in 2007. So obviously I couldn't load up, even with the near-perfect setup, simply because there was no other leadership to support much less any other stocks with green BOP, strong accumulation, and tight price action.

The best setup, however, came from a stock we are long now for a 40% gain. That stock is AIPC and didn't give just one near-perfect signal but TWO near-perfect signals (6/18/08 8/7/08) that gained buyers a 220% gain and a 185% gain. Just one problem for us at BigWaveTrading; Telechart does not have OTCBB stocks (even if they have great fundamentals and are about to list like AIPC), pink sheets, Canadian, or Chinese stocks. The problem with this is that my price, volume, and BOP that I have used to make a living in the market since 1996 work best on small and mid cap companies. Obviously, that is all that exist in OTCBB markets. So I am sure RIGHT NOW there are a lot of heavily accumulated, max green BOP filled stocks with nice tight price patterns breaking out to new highs just mocking us as we miss them.

Thankfully, AIPC did give another less-than-near-perfect setup/breakout that we were able to take advantage of and now has us a 40% gain. The other thing we can be thankful for is that right now there are a lot of stocks that are trying to setup in mid-summer 2008 patterns like AIPC and XSI (ANCI). If you study my 1999, 2003, and 2004-2007 (heck even 01, 02, and 08 can help) past big winners, you will see that a lot of stocks are beginning to setup in patterns that we have seen before. Nothing EVER changes on wall street. Well one thing does. The players. Besides that, human emotion never changes.

Speaking of human emotions, the Investors Intelligence survey came out and found bulls rose a little to 31% and the bears dropped a little to 38%. The current trend isn't anything to be happy about but the fact that EVEN AFTER this 22% off the March lows newsletter writers are still very bearish as they know "this market is going to top soon." They may be right but if they are wrong there is going to be lot of missed opportunities on their end. Even if they are right, we operate so well that we will be able to take our profits, cut our losses, and get short the proper setups that come along. So we don't have anything to worry about.

But worry is just what the put/call players are doing even after today's rise in the stock market. This is good news because there has been a recent pattern of markets rallying and yet the put/call rises. Normally, options traders get more and more bullish as indexes rally. So when you see divergence, like we saw in 2008, you know it is worthy to pay attention to. Today the put/call rose from .76 to .86. That's great as that says as the market rallies people "just know it is going to fail." Since our longs are growing this is very great news. Also another important number is the AAII bull/bear survey. Despite everyone seeing the rally and the breakouts, people are still hesitant. As we know the AAII number is the "very dumb money" so it pays to watch how they think. How are they thinking? They are mixed. But the good news for those that keep watching their amount of long position in their portfolio rise the public is only bullish by 43% to bearish of 37%. To go along with that 20% don't know what the heck is going on as they are undecided.

So we have the charts starting to show up in multiple industries (only missing the max green BOP charts that last for 50 or more :)), we have sentiment working correctly for us, option players keep getting bearish as the market rises, and we have a lot of people out of the market meaning that the best serious players are left. Fewer of the "REALLY dumb money" players exist after the 50%+ losses a lot of newcomers took and that means a more orderly market. There is really only one thing missing (well two if you are asking for that stocks be perfect with huge accumulation, max green BOP, and a flat base breakout lasting five weeks). Where are the IPOs?

Well the pipeline isn't anything to get excited about but we do have a new IPO pricing today I do believe. CYOU is scheduled to price at the opening range of the $14-$16 area. The best news about this IPO is it is a spinoff from which helped earn me a 2,000% gain from my first small purchase and a 798% return on the MUCH bigger second buy from a MUCH better chart setup. From the first and second purchase to the top of this stock, the ride was only nine months and eight months long respectively. Hopefully, if we are REAL LUCKY (don't count on it) CYOU can setup and breakout and be the next SOHU of 2002-2003.

Right now, it is all about Gold and Silver as 7 of my 20 longs are Gold related. It has been the #1 industry for 6 straight months in Investors Business Daily. What is more amazing that 7 months ago it was DEAD LAST at #197. And the stocks are JUST NOW breaking out. That is pretty rare to see stocks not run for six months yet have their sector lead the whole way. Now those leaders are breaking out and if history and the stock market (which is THE MOST IMPORTANT "if") repeats itself some of those 7 longs should be making us a lot of money in a short time frame.

Don't forget, besides the positions I am long, I also encourage anyone 50 or younger to please go out and to start slowly accumulating Gold or Silver bullion. Just a little bit can go a LONG WAY if something horrible ever would happen, God forbid. Great luck, hopefully our markets can repeat Asia ON HIGHER VOLUME, and I will see you in the Chat Room or Forums. ALOHA!


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