Wednesday, July 29, 2009

It Sure Is Nice To See The Market Take A Breather On Mixed Volume; Pullbacks Create Proper And Beautiful Bases

The SP-500 and the Nasdaq both pulled back today but volume was heavier on the SP-500. While that might seem bearish, and technically it is a distro day again, to the trained eye is actually another bullish intraday session.

Once again, the SP500 pulled back intraday only to reverse off the lows putting in a very respectable bullish close. This happened yesterday and it happened again today and before today and yesterday it has happened almost EVERY single day of the rally since this most recent move higher began on 7/8. Every day you can see a bullish intraday reversal.

While this is very bullish to see in a market, it is only really bullish if you are already fully long. It also matters what you are long. Right now, we still do not have ANY "PERFECT" charts to which I can put anywhere from 10% to 25% in one position. Right now, I continue to deal with speculative stocks that are either coming from short bases or bases far away from the 50 DMA. I don't mind buying bases off the 50 DMA but I sure do want to see nice big long bases.

One of my best stocks so far in this uptrend in terms of "perfection" was RINO. On 7/13 and on 7/16 I bought RINO and the second buy came with max-green BOP the whole way in the previous uptrend, in the base, and on the breakout, along with huge volume and excellent price action--plus it was from China and not the USA; a big positive when investing (isn't that sad to say, Americans). Anyways, the stock only put in an 11-day base before breaking out on 7/16. That is only two weeks and one day, everyone. The best stocks, if you go back and study my best-of-the-best past-big-winners almost all come from bases over three weeks long (most are around four-five) and/or come with price coming right off the 50 DMA. So before we see any HUGE 500% gains in 3 to 6 months kind of returns, we are going to have to see some longer/nicer bases.

Still, overall, am I going to complain about this market, after the 2008 we just had? Absolutely not. What I am doing is telling the truth. For me to "load-up" on stocks to my full margin and OPM accounts I am going to need to see better charts. Now, I hear people say (including me) that the 2008 market was so much worse than the 2002 market (obviously, since it was really only the Nassy that got trashed) market that bases are going to be uglier. That is fine but that just means that I will be risking my "I can invest this without worry" money in them. Until they make another round of bases (and if they don't that is just tough luck on my part), I can not risk OPM or my IRA money into the two-week bases or two-day bases that are making stocks move 40% in 8 days. Sorry, I can't do it.

I can play with my safe, fun money in stocks right now. Especially charts that have corporations in CHINA. If they breakout and are from China I am all over them. One of my recent large longs was CGA. 7/15 I loaded up on it. Then on 7/21 it breaks down on strong volume hitting me with a 6% loss. Three days later it was moving up 17% in one day and now is up 32% in the past four days. That is my luck everyone. However, had it not broken down, I would have done very very well based on one fact alone. It was from China. If a stock breaks out from a great base and has a wonderful chart pattern with strong fundamentals, I might or might not buy a lot of it. One way to guarantee I will: if it says it is from China. Sadly, fakeouts and breakdown re-breakouts are a part of the game and I will have to live with them. Sometimes you get faked out: CGA. Sometimes you hit it just right: RINO. Sometimes you don't have any "perfect" charts and must stay patient: now.

I have a feeling as long as the NYSE, SP500, Nasdaq, and IBD indexes act the way they do as they pullback, we can have quite a few very beautiful chart patterns to pick from and possibly finally find our "perfect" patterns that has helped me invest in some very nice winners that allowed me a very nice life in NYC and Maui from 1999-early 2007. Since then, it has been a fight. I had one subscriber make 100% shorting the same stocks I was shorting in 2008. However, I didn't return 100%. Everyone is different. Don't beat yourself up too much if you are not making money or even losing money in this market. I still am not killing it. Will I eventually? You bet your buns I will. However, I can't predict that will be. I can tell you when it will happen. When the charts start making you drool. There aren't too many that are doing that right now. So for now, I will try to make as much money as I can, while I wait for the perfect moment to setup so that I can "get rich again."

I tell you what it sure isn't cheap living on Maui, in today's economic times. It makes a whole lot of sense to move and that is what I will be doing soon. So if any of you refer to me as MauiTrader or whatever moniker I was given, start getting used to saying TexasTrader because that is where hopefully I will be at this time next year. Any of you Texas residents want to start an investing club or would like me to give seminars, I am 100% committed to being a member of the community. This is my final year on Maui. Sorry Hawaii. You are taxing me out. Aloha! I will make sure when I move that I have internet connectivity available immediately so I will not miss a beat. It is a year away but I think it is appropriate to let everyone know now. I am leaving Maui. This is my final year away from the Mainland. I put in a great 10 years here and maybe I will be back but for now I sure would like to settle, start my fund, and get a serious work environment setup so that I can help even more people become financially independent or more secure.

I'll see you tomorrow. Aloha and let's pray this market continues to stair-step higher. This Nasdaq pattern is beautiful. Now all we need is one base longer than 10 days or so. At least two FULL weeks would be nice right about now. Viva la uptrend! :)

FREE YouTube Video to teach you how to read the market CORRECTLY:


No comments: