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 new...it 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%)
FREE YOUTUBE VIDEO:
Showing posts with label leading stocks. Show all posts
Showing posts with label leading stocks. Show all posts
Sunday, February 15, 2009
Monday, October 22, 2007
Anniversary Of The 1987 Crash Sets The Stage For A Mini Stock Market Crash As Stocks Selloff On Higher Volume
Boy oh boy was it ever ugly on Friday, with the whole market selling off leaving no room to hide. When it was all over, every index lost 2% with the Russell 200 leading the way lower with a 3.2% whack. The IBD 100 loaded of leading stocks also fell 3.4%, showing that there was no where to hide. My portfolio took a 5.3% hit but overall when I look at everything I have to admit that most longs continue to look good, 75% pulled back on lower volume, and the stocks I did sell were either cheap POS stocks or were recent longs that were not large buys which saved me from major carnage. So before I go any further into my analysis I have to apologize for not getting irrational and losing my mind by panicking over a one day selloff. I simply can’t lose my cool, when everyone else is.
What made the selling worse and that has to raise our yellow flags is that volume expanded by quite a large margin on the NYSE. But volume was only slightly higher than the volume on Wednesday on the Nasdaq. So the volume was not unbelievable. Also the NYSE volume was still well below all the volume in August. So when we honestly look at the volume situation we have to admit that it was bad in the fact that volume was over the 50 day volume average on the NYSE and the Nasdaq. But with volume on the NYSE lower than the highest levels on the September rally and well below the heavy volume in August, can we really say it was that bad? And just by looking at the Nasdaq, it becomes clear that the volume was not that bad at all. Now, on top of that, remember that is was also monthly options expiration and that added to the volume. If you take out the option volume, the volume would have been either slightly below or above the 50 day volume average. It simply wouldn’t have been real distribution.
About the only commentator I see holding there own right now on CNBC that is not completely bearish is Jim Cramer. I decided to spend a lot of time watching CNBC and I swear to God the mention of 1987 occurred every 30 seconds. The other thing that quickly became apparent on all the programs was that everyone expected stocks to continue to selloff. When I combine that with the sentiment in my chat room and the other rooms I follow, it feel like we are more close to bottom than a top.
I can’t help but think back to those days in NYC in 1999-March 2000 when everything was rosy and everything seemed so perfect (which was obviously not the case-Al Quaida). Nothing was bad and stocks raced higher every day with not a bear in site except the usual perma-bears who missed the whole uptrend. Besides these few everyone wanted to be long stocks and buy them up with no regard to price. Nowadays, it seems everyone is afraid of stocks and I have a ton of subscribers that want to be short here and/or want to sell their longs. It is like they have decided to stop listening to their charts and have instead entered back into a world of amateur “gut feelings.”
Could we selloff more next week? You better believe we can. No doubt about that. But how much more selling can there be in this short amount of time when everyone is saying the market is going lower and that we should sell stocks. Did anyone see the put/call ratio on Friday? It jumped to over the fear level of 1 and closed at 1.08. I prefer to see a 1.25 to 1.5 reading to show extreme panic but the fact that the ratio is back above the 1 level shows that fear is back in the market. The VIX has also rallied from 16 to 22 in a very short period of time indicating that fear has risen very quickly. It is not like 22 is a high number and bullish for the market-it isn’t. But the fact that the VIX moved so much in a short amount of time and the put/call is up here makes it hard to get extremely bearish here.
What I would see to get more bearish would be to see more complacency, not fear. To get me really worried, the put/call would have had to have dropped to the .7 level and the VIX wouldn’t have moved. If that would have happened and the market fell 2-3%, then I would be very worried for stocks. But for now the fear has risen very quickly and just a little bit more selling could put a floor in.
For those that think I am being biased on the bullish side, all I have to say is “you have to be kidding me?” Those that have been reading me for a long time, know that I turn bearish when the trend turns bearish but I will not be a hardcore bear until the real leaders top. Then and only then will I be a “hardcore” bear that looks to short the rallies and cover off the low extremes. This bull market has existed since October 2002 making this a five year bull market. According to history, we don’t have much further to go. But everyone that understands and knows the market knows that the biggest and most powerful gains come at the very end when stocks “blowoff” in one final glory rally before it all ends. Most people are long gone as the pullbacks in February, July, and now October shake them out. Just like at the end of 1999 when the October selloff scared most longs out and had EVERYONE convinced that was the top, they were wrong then and more than likely they are wrong now.
After missing that top call, stocks took off on an amazing rally that sent stocks on their most powerful and quickest advance that rewarded those that listened to their stock charts and not the BIASED opinions of journalist. When stocks took off like that and everyone that top called in October missed out, they came in around February and bought stocks near the top. When the market pulled back THEY REFUSED to cut their loss so they wouldn’t miss out on another rally by being scared out like they were in October. Instead the pullback never bounced and neither did their stocks. I believe this must happen in this market, before we top. Right now, we are not there.
When BIDU, GOOG, and RIMM must be owned. When you are a fool to not be long anything China, solar, or a dry-bulk shipper then it will be a top. Are we there yet? I seriously don’t think so. I just don’t believe you can top when I have this many longs that are holding key support and have beautiful setups and with the public so pessimistic after one hard day of selling.
Something else everyone needs to remember is that the biggest down days for the stock market happen during bull markets. The vise versa is true in bear markets. The stock market has some of its biggest and baddest rallies in bear markets. If people do not understand this, they need to study the year 2001 and see how strong some of the one day gains were in that very bearish year. In 2003, I remember one day in June of 2003 when the markets fell 2% and everyone was sure we topped. I took a look at all my longs and noticed that so many were green and had low volume pullbacks that it was just hard to believe it. The volume was low that day but before that there was a HUGE intraday bearish reversal on HUGE volume a couple of weeks before. That made the 2% selloff look like the final nail on the head.
The other market where everyone was sure we had topped was in October of 2005. That is when I was offered a job in Chicago to run a large amount of money (I turned the job done; Maui no ka oi!!) and the fund manager was giving it up because the market DEFINITELY had topped. It was time to give up, according to him. However, my charts completely disagreed with him as many stocks were setting up in strong bases and there were a lot of charts with a lot of green BOP showing up. This does not happen in a market about ready to “give up.” Now, just like then, seems just like this. My best longs with the best chart patterns look completely fine. Even one of my longs that was a very large position (I have taken 60% of profits already) does not look like it is putting in a “for sure” top. This stock is setting up to be like TNH. TNH appeared to have definitely topped on climax runs in February and May. Yet, there it is, still chugging along but starting to look weaker and weaker. By the way, TNH is one of those stocks I am looking to short in-bulk. It is a former high-flying leader.
All of this is necessary to go over with all of you to remind you to not panic out of good charts. Trust me, if there is nothing wrong with your stock, please, you must follow the rules. You don’t want to lose a position in a stock that has the potential to be another OMTR or any of the other stocks that are listed below. Trust me, missing out on those gains, just because the stock market fell one day, is not the smart thing to do. You don’t want to be the guys in 1999, January 2004, October 2005, August 2006, or August 2007. It isn’t worth missing these kind of gains, just because you are scared of the market.
History, has proven OVER AND OVER that the best time to short stocks is five to seven months AFTER the stock has topped on its chart. The other thing that will happen is that the earnings and sales will look better than they ever have before. At the top everything looks perfect. Right now, everything doesn’t look perfect. Despite the investors intelligence survey, I truly believe by the NYSE short-interest ratio being near an all-time high and the put/call over 1 that the crowd is betting on a fall. The crowd is usually wrong and my charts are usually right. So with the odds in the favor of higher prices, I must remain long.
But, darn it, if you are sitting on any of the gains that I have listed below and have not made any sells, shame on you. That is greedy trading. Like my DRYS example, I have sold off 60%. The rest can ride. But the easy quick money has come and gone. 90% gains in two months is pretty damn good. Same with speculation stocks like ASTI and APPY. If you haven’t taken any profits, you better believe you need to take some. Just in case this is a top, you don’t want to have all your gains slip away.
However, I continue to think the crowd is too bearish and I refuse to join the camp that every other professional non-professional is in. I make my living off my charts. They don’t say it is time to be fearing lower prices. They say it is time to prepare for a possibility of lower prices. But the charts STILL tell me to fear missing more upside. These charts are still setup for more gains. Until they rollover and say “look out below,” there is no way I am jumping the gun and dumping some of these beauties. The stocks that fail quickly, dump them. GET RID OF THEM. The stocks that hold up well and pulled back on low volume with BOP still very max green. YOU HOLD THEM.
Aloha, and I will see you in the chat room, where facts trump opinions in the stock market.
top current holdings up this week: TRCR 327% DRYS 99% GMCR 66% EXM 59% KOP 54% LFL 62% MOS 252% DECK 136% KHD 208% IMA 86% CCC 83% TTG 87% OMTR 346% CRNT 100% FSLR 116% ICOC 104% IHS 224% PRGN 56% HURN 101% SFLY 90% YGE 75% ASTI 109% ANO 264% OIIM 62% BIIB 51% APPY 125%
What made the selling worse and that has to raise our yellow flags is that volume expanded by quite a large margin on the NYSE. But volume was only slightly higher than the volume on Wednesday on the Nasdaq. So the volume was not unbelievable. Also the NYSE volume was still well below all the volume in August. So when we honestly look at the volume situation we have to admit that it was bad in the fact that volume was over the 50 day volume average on the NYSE and the Nasdaq. But with volume on the NYSE lower than the highest levels on the September rally and well below the heavy volume in August, can we really say it was that bad? And just by looking at the Nasdaq, it becomes clear that the volume was not that bad at all. Now, on top of that, remember that is was also monthly options expiration and that added to the volume. If you take out the option volume, the volume would have been either slightly below or above the 50 day volume average. It simply wouldn’t have been real distribution.
About the only commentator I see holding there own right now on CNBC that is not completely bearish is Jim Cramer. I decided to spend a lot of time watching CNBC and I swear to God the mention of 1987 occurred every 30 seconds. The other thing that quickly became apparent on all the programs was that everyone expected stocks to continue to selloff. When I combine that with the sentiment in my chat room and the other rooms I follow, it feel like we are more close to bottom than a top.
I can’t help but think back to those days in NYC in 1999-March 2000 when everything was rosy and everything seemed so perfect (which was obviously not the case-Al Quaida). Nothing was bad and stocks raced higher every day with not a bear in site except the usual perma-bears who missed the whole uptrend. Besides these few everyone wanted to be long stocks and buy them up with no regard to price. Nowadays, it seems everyone is afraid of stocks and I have a ton of subscribers that want to be short here and/or want to sell their longs. It is like they have decided to stop listening to their charts and have instead entered back into a world of amateur “gut feelings.”
Could we selloff more next week? You better believe we can. No doubt about that. But how much more selling can there be in this short amount of time when everyone is saying the market is going lower and that we should sell stocks. Did anyone see the put/call ratio on Friday? It jumped to over the fear level of 1 and closed at 1.08. I prefer to see a 1.25 to 1.5 reading to show extreme panic but the fact that the ratio is back above the 1 level shows that fear is back in the market. The VIX has also rallied from 16 to 22 in a very short period of time indicating that fear has risen very quickly. It is not like 22 is a high number and bullish for the market-it isn’t. But the fact that the VIX moved so much in a short amount of time and the put/call is up here makes it hard to get extremely bearish here.
What I would see to get more bearish would be to see more complacency, not fear. To get me really worried, the put/call would have had to have dropped to the .7 level and the VIX wouldn’t have moved. If that would have happened and the market fell 2-3%, then I would be very worried for stocks. But for now the fear has risen very quickly and just a little bit more selling could put a floor in.
For those that think I am being biased on the bullish side, all I have to say is “you have to be kidding me?” Those that have been reading me for a long time, know that I turn bearish when the trend turns bearish but I will not be a hardcore bear until the real leaders top. Then and only then will I be a “hardcore” bear that looks to short the rallies and cover off the low extremes. This bull market has existed since October 2002 making this a five year bull market. According to history, we don’t have much further to go. But everyone that understands and knows the market knows that the biggest and most powerful gains come at the very end when stocks “blowoff” in one final glory rally before it all ends. Most people are long gone as the pullbacks in February, July, and now October shake them out. Just like at the end of 1999 when the October selloff scared most longs out and had EVERYONE convinced that was the top, they were wrong then and more than likely they are wrong now.
After missing that top call, stocks took off on an amazing rally that sent stocks on their most powerful and quickest advance that rewarded those that listened to their stock charts and not the BIASED opinions of journalist. When stocks took off like that and everyone that top called in October missed out, they came in around February and bought stocks near the top. When the market pulled back THEY REFUSED to cut their loss so they wouldn’t miss out on another rally by being scared out like they were in October. Instead the pullback never bounced and neither did their stocks. I believe this must happen in this market, before we top. Right now, we are not there.
When BIDU, GOOG, and RIMM must be owned. When you are a fool to not be long anything China, solar, or a dry-bulk shipper then it will be a top. Are we there yet? I seriously don’t think so. I just don’t believe you can top when I have this many longs that are holding key support and have beautiful setups and with the public so pessimistic after one hard day of selling.
Something else everyone needs to remember is that the biggest down days for the stock market happen during bull markets. The vise versa is true in bear markets. The stock market has some of its biggest and baddest rallies in bear markets. If people do not understand this, they need to study the year 2001 and see how strong some of the one day gains were in that very bearish year. In 2003, I remember one day in June of 2003 when the markets fell 2% and everyone was sure we topped. I took a look at all my longs and noticed that so many were green and had low volume pullbacks that it was just hard to believe it. The volume was low that day but before that there was a HUGE intraday bearish reversal on HUGE volume a couple of weeks before. That made the 2% selloff look like the final nail on the head.
The other market where everyone was sure we had topped was in October of 2005. That is when I was offered a job in Chicago to run a large amount of money (I turned the job done; Maui no ka oi!!) and the fund manager was giving it up because the market DEFINITELY had topped. It was time to give up, according to him. However, my charts completely disagreed with him as many stocks were setting up in strong bases and there were a lot of charts with a lot of green BOP showing up. This does not happen in a market about ready to “give up.” Now, just like then, seems just like this. My best longs with the best chart patterns look completely fine. Even one of my longs that was a very large position (I have taken 60% of profits already) does not look like it is putting in a “for sure” top. This stock is setting up to be like TNH. TNH appeared to have definitely topped on climax runs in February and May. Yet, there it is, still chugging along but starting to look weaker and weaker. By the way, TNH is one of those stocks I am looking to short in-bulk. It is a former high-flying leader.
All of this is necessary to go over with all of you to remind you to not panic out of good charts. Trust me, if there is nothing wrong with your stock, please, you must follow the rules. You don’t want to lose a position in a stock that has the potential to be another OMTR or any of the other stocks that are listed below. Trust me, missing out on those gains, just because the stock market fell one day, is not the smart thing to do. You don’t want to be the guys in 1999, January 2004, October 2005, August 2006, or August 2007. It isn’t worth missing these kind of gains, just because you are scared of the market.
History, has proven OVER AND OVER that the best time to short stocks is five to seven months AFTER the stock has topped on its chart. The other thing that will happen is that the earnings and sales will look better than they ever have before. At the top everything looks perfect. Right now, everything doesn’t look perfect. Despite the investors intelligence survey, I truly believe by the NYSE short-interest ratio being near an all-time high and the put/call over 1 that the crowd is betting on a fall. The crowd is usually wrong and my charts are usually right. So with the odds in the favor of higher prices, I must remain long.
But, darn it, if you are sitting on any of the gains that I have listed below and have not made any sells, shame on you. That is greedy trading. Like my DRYS example, I have sold off 60%. The rest can ride. But the easy quick money has come and gone. 90% gains in two months is pretty damn good. Same with speculation stocks like ASTI and APPY. If you haven’t taken any profits, you better believe you need to take some. Just in case this is a top, you don’t want to have all your gains slip away.
However, I continue to think the crowd is too bearish and I refuse to join the camp that every other professional non-professional is in. I make my living off my charts. They don’t say it is time to be fearing lower prices. They say it is time to prepare for a possibility of lower prices. But the charts STILL tell me to fear missing more upside. These charts are still setup for more gains. Until they rollover and say “look out below,” there is no way I am jumping the gun and dumping some of these beauties. The stocks that fail quickly, dump them. GET RID OF THEM. The stocks that hold up well and pulled back on low volume with BOP still very max green. YOU HOLD THEM.
Aloha, and I will see you in the chat room, where facts trump opinions in the stock market.
top current holdings up this week: TRCR 327% DRYS 99% GMCR 66% EXM 59% KOP 54% LFL 62% MOS 252% DECK 136% KHD 208% IMA 86% CCC 83% TTG 87% OMTR 346% CRNT 100% FSLR 116% ICOC 104% IHS 224% PRGN 56% HURN 101% SFLY 90% YGE 75% ASTI 109% ANO 264% OIIM 62% BIIB 51% APPY 125%
Sunday, September 30, 2007
Stocks End A Powerful Quarter With Small Losses On Higher Volume, Giving The Market Its First Distribution Day Since September 12th
Stocks started off strong but entered a choppy trading pattern for most of the day until 2pm EST when some real selling hit the market officially ending the EOQ rally. The selling led to all indexes finishing in the red with the SP 600 suffering the worst of it with a .9% loss. Despite the small losses, the selling seemed a bit worse underneath because all of the momentum stocks seemed to do poorly on Friday with very few pockets of strength to speak of. Still, overall, the losses were not that bad but they do qualify as a bad day with the higher volume due to the .3% loss on the SP 500 and Nassy.
Adding to the weakness of Friday was volume. Volume was higher on both the Nassy and the SP 500. That gave both indexes their first day of distribution since September 12 and in the total count of distro days we can eliminate that September 12 day since the market has moved up so much from that selloff. The move on September 18 officially killed the old distribution days. So, for now, we stand at only one distro day for the indexes.
It was a very great third quarter for stocks as stocks wrapped up a very strong month with some strong gains. The NYSE gained 4.6%, the Nasdaq gained 4.1%, the DJIA rallied 4%, and the SP 500 gained 3.6%. Obviously, it was a great month for stocks and even though Friday went out cold we still have to admire how strong the month was and we can't really blame traders for wanting to take profits and start the fourth quarter off fresh.
The strong gains this quarter and this month came on the back of some heavy bearish sentiment and media. The subprime worries, the Patraeus report to Congress, and your usual bashing of the economy by the heavily slanted left-media was the perfect wall-of-worry for stocks to climb. Combine that with all the calls for the US Dollar to collapse to zero and all the overly-insane calls of gold to go to 1000 or higher and you had the perfect combination for equities to take advantage of the gullible and ever-so-growing ignorant general public. Stupidity and plain hysterical ignorance seems to be the norm nowadays. This is bullish for stocks right now.
To confirm that it is still very bearish out there we only have to look at two key indicators. The put/call ratio has jumped back up to near the 1 are, closing at .96 on Friday. Then the most shocking of the two, the NYSE short-interest ratio finished the week at yet another all-time high at 8.66. This is the highest this ratio has ever been and it is telling you that more stocks are short as total shares floating than at any other time in history. With the market so near old highs, I find this simply stunning and can not see how it can be anything but bullish long-term for equities.
But with the month of September behind us, some are worried that the scary month of October might be a lot worse. While it is true that October is the month where the most fast crashes have occurred, the market in its current condition is in no way ready to crash. If the market is ready to crash, trust me, the classic signs of rapid distribution and big price drops will proceed any crash. As we are setup right now I don't think we have anything to worry about.
However, if you want or need reasons to be bearish, you can find them right now. We are overbought on a ton of different oscillators. The McClellan oscillator is overbought, the ARMS index is overbought, the 10-day MA of adv/dec line is overbought on the Nasdaq and NYSE, the 30-day ma of adv/dec line is overbought, but the SP 500 oscillator is not overbought. So there is at least one oscillator that is not saying we are too far along in this rally.
Besides the overbought condition, there are also a problem with the amount of new highs in the indexes. More importantly, the Nasdaq has seen new highs contract everyday as we went along this week--125 on Wed, 119 on Thur, and 112 on Friday. So momentum does appear to be slowing.
With the momentum slowing there is also a lack of quality new longs the past three days. So I am running out of HOT charts that I was starting to find earlier. And the great stocks that I have been long since the August 16 lows have not been as amazing as I foresaw them becoming. The best looking long that I have found in a long time has already put in a significant enough of a reversal that some has been trimmed. This particular long is still well above the final cut loss area but the fact that this particular stock did not explode right after the long signal of near-perfection was given is a big problem. Most stocks that create the chart pattern that this stock did perform very well in bullish tapes. The fact that this one did not was a red flag, without a doubt, and makes me a little cautious on new longs until we get another very bullish day like September 18.
I guess I have a reason to be cautious here as many stocks that I have been long for a while or leading stocks that I have been following are already up way too much and are well extended from correct buy points from very nice pattern. I see a lot of iffy cup with handles being called out there by IBD but my definition of a cup with handle is a little more hardcore than theirs. I simply will not call anything and everything that looks to be shaping a cup with handle one. They will. On top of that, earnings season is right around the corner and we could be setting ourselves up for some sell the news if earnings end up coming out and clobbering the estimates.
Some things that I do not like about this market is that the VIX has once again come down to very bearish levels hitting below 17 intraday on the VIX before closing at 18. That this index has come down so much from where we were at the August 16 is very bearish, even though we are not near the 10 level that we were at before June. Even though we are still very far from those levels, the fact that we have come down so much shows that a major dose of complacency has set in to this market.
If you don't believe me, just look at the sentiment indicators. As I noted yesterday, the Investors Intelligence shows 55% of newsletter writers are bullish again after they almost crossed bulls/bears a month ago. Also the AAII shows that 50% of market participants are bullish. And this weekend, so far, the realmoney.com poll shows 41% are bulls and 31% are bears--the rest are neutral--which clearly shows that everybody is somewhat bullish everywhere. As a natural contrarian, I have a problem with these high bullish readings with the market up over 10% off the August lows.
So for now I am going to continue to play what the market gives me but will keep new buys small here as I believe we need to do some backing and filling as there are too many gaps on the intraday charts in the indexes that need to be filled. Those gaps have been coming on some tight trading days with some low volatility so I don't expect the trend of the past eight days to continue. Some volatility is bound to return to this market. Unless you have been only playing the Chinese stocks. Then volatility has NEVER left and you can continue to ride the BIDU and LFC train higher. Or hopefully you have jumped off the ZNH, CPSL, and JRJC momentum mamma train and are on the sidelines watching the coming destruction to over-leveraged late bulls.
Things still look good out there overall, despite the overbought market. The wall-of-worry to climb is alive and its slope is as bullish as the slope of the yield curve. And if you haven't checked out the yield curve in a while, you might want to do so. The slope is of one that you see in bullish markets. Things still look very good out there for the long-term. In the short-term, don't be surprised if we get some backing and filling. Aloha and I will see you in the chat room and the new chatroom at BigWaveTrading.
PS WE ARE GOING TO BE MOVING TO A NEW WEBSITE SOON. INVESTORS PARADISE HAS BEEN SOLD BY SETH RICHARDSON AND I AM MOVING TO MY OWN WEBSITE. THE START DATE IS SUPPOSED TO BE OCTOBER 1ST. PLEASE CONTACT JUSTIN DEMERCHANT OR MARKET SPECULATOR (marketspeculator@bigwavetrading.com) IF YOU HAVE ANY QUESTIONS. I WILL NOT BE ABLE TO ANSWER QUESTIONS AS I DO NOT PARTICIPATE IN ANY BACK OFFICE WORK. THE NEW WEBSITE IS GOING TO BE MUCH BETTER AND MUCH EASIER TO NAVIGATE AROUND NOW THAT WE WILL HAVE OUR OWN SITE. IT IS LIKE REVSHARK MOVING FROM SUPERTRADERS.COM TO SHARKINVESTING.COM.
winners: OMTR 296% VDSI 178% MA 197% DECK 132% IHS 186% BCSI 89% CNH 123% YGE 50% WRLS 97% ZNH 336% ASTI 92% EVEP 89% EBIX 54% FSLR 78% CRNT 132% LFL 59% ICOC 84% SXE 54% TTG 73% NVT 78% NTLS 60% IMA 71% HURN 87% MOS 198% APPY 61% ALVR 59% KHD 123%
Adding to the weakness of Friday was volume. Volume was higher on both the Nassy and the SP 500. That gave both indexes their first day of distribution since September 12 and in the total count of distro days we can eliminate that September 12 day since the market has moved up so much from that selloff. The move on September 18 officially killed the old distribution days. So, for now, we stand at only one distro day for the indexes.
It was a very great third quarter for stocks as stocks wrapped up a very strong month with some strong gains. The NYSE gained 4.6%, the Nasdaq gained 4.1%, the DJIA rallied 4%, and the SP 500 gained 3.6%. Obviously, it was a great month for stocks and even though Friday went out cold we still have to admire how strong the month was and we can't really blame traders for wanting to take profits and start the fourth quarter off fresh.
The strong gains this quarter and this month came on the back of some heavy bearish sentiment and media. The subprime worries, the Patraeus report to Congress, and your usual bashing of the economy by the heavily slanted left-media was the perfect wall-of-worry for stocks to climb. Combine that with all the calls for the US Dollar to collapse to zero and all the overly-insane calls of gold to go to 1000 or higher and you had the perfect combination for equities to take advantage of the gullible and ever-so-growing ignorant general public. Stupidity and plain hysterical ignorance seems to be the norm nowadays. This is bullish for stocks right now.
To confirm that it is still very bearish out there we only have to look at two key indicators. The put/call ratio has jumped back up to near the 1 are, closing at .96 on Friday. Then the most shocking of the two, the NYSE short-interest ratio finished the week at yet another all-time high at 8.66. This is the highest this ratio has ever been and it is telling you that more stocks are short as total shares floating than at any other time in history. With the market so near old highs, I find this simply stunning and can not see how it can be anything but bullish long-term for equities.
But with the month of September behind us, some are worried that the scary month of October might be a lot worse. While it is true that October is the month where the most fast crashes have occurred, the market in its current condition is in no way ready to crash. If the market is ready to crash, trust me, the classic signs of rapid distribution and big price drops will proceed any crash. As we are setup right now I don't think we have anything to worry about.
However, if you want or need reasons to be bearish, you can find them right now. We are overbought on a ton of different oscillators. The McClellan oscillator is overbought, the ARMS index is overbought, the 10-day MA of adv/dec line is overbought on the Nasdaq and NYSE, the 30-day ma of adv/dec line is overbought, but the SP 500 oscillator is not overbought. So there is at least one oscillator that is not saying we are too far along in this rally.
Besides the overbought condition, there are also a problem with the amount of new highs in the indexes. More importantly, the Nasdaq has seen new highs contract everyday as we went along this week--125 on Wed, 119 on Thur, and 112 on Friday. So momentum does appear to be slowing.
With the momentum slowing there is also a lack of quality new longs the past three days. So I am running out of HOT charts that I was starting to find earlier. And the great stocks that I have been long since the August 16 lows have not been as amazing as I foresaw them becoming. The best looking long that I have found in a long time has already put in a significant enough of a reversal that some has been trimmed. This particular long is still well above the final cut loss area but the fact that this particular stock did not explode right after the long signal of near-perfection was given is a big problem. Most stocks that create the chart pattern that this stock did perform very well in bullish tapes. The fact that this one did not was a red flag, without a doubt, and makes me a little cautious on new longs until we get another very bullish day like September 18.
I guess I have a reason to be cautious here as many stocks that I have been long for a while or leading stocks that I have been following are already up way too much and are well extended from correct buy points from very nice pattern. I see a lot of iffy cup with handles being called out there by IBD but my definition of a cup with handle is a little more hardcore than theirs. I simply will not call anything and everything that looks to be shaping a cup with handle one. They will. On top of that, earnings season is right around the corner and we could be setting ourselves up for some sell the news if earnings end up coming out and clobbering the estimates.
Some things that I do not like about this market is that the VIX has once again come down to very bearish levels hitting below 17 intraday on the VIX before closing at 18. That this index has come down so much from where we were at the August 16 is very bearish, even though we are not near the 10 level that we were at before June. Even though we are still very far from those levels, the fact that we have come down so much shows that a major dose of complacency has set in to this market.
If you don't believe me, just look at the sentiment indicators. As I noted yesterday, the Investors Intelligence shows 55% of newsletter writers are bullish again after they almost crossed bulls/bears a month ago. Also the AAII shows that 50% of market participants are bullish. And this weekend, so far, the realmoney.com poll shows 41% are bulls and 31% are bears--the rest are neutral--which clearly shows that everybody is somewhat bullish everywhere. As a natural contrarian, I have a problem with these high bullish readings with the market up over 10% off the August lows.
So for now I am going to continue to play what the market gives me but will keep new buys small here as I believe we need to do some backing and filling as there are too many gaps on the intraday charts in the indexes that need to be filled. Those gaps have been coming on some tight trading days with some low volatility so I don't expect the trend of the past eight days to continue. Some volatility is bound to return to this market. Unless you have been only playing the Chinese stocks. Then volatility has NEVER left and you can continue to ride the BIDU and LFC train higher. Or hopefully you have jumped off the ZNH, CPSL, and JRJC momentum mamma train and are on the sidelines watching the coming destruction to over-leveraged late bulls.
Things still look good out there overall, despite the overbought market. The wall-of-worry to climb is alive and its slope is as bullish as the slope of the yield curve. And if you haven't checked out the yield curve in a while, you might want to do so. The slope is of one that you see in bullish markets. Things still look very good out there for the long-term. In the short-term, don't be surprised if we get some backing and filling. Aloha and I will see you in the chat room and the new chatroom at BigWaveTrading.
PS WE ARE GOING TO BE MOVING TO A NEW WEBSITE SOON. INVESTORS PARADISE HAS BEEN SOLD BY SETH RICHARDSON AND I AM MOVING TO MY OWN WEBSITE. THE START DATE IS SUPPOSED TO BE OCTOBER 1ST. PLEASE CONTACT JUSTIN DEMERCHANT OR MARKET SPECULATOR (marketspeculator@bigwavetrading.com) IF YOU HAVE ANY QUESTIONS. I WILL NOT BE ABLE TO ANSWER QUESTIONS AS I DO NOT PARTICIPATE IN ANY BACK OFFICE WORK. THE NEW WEBSITE IS GOING TO BE MUCH BETTER AND MUCH EASIER TO NAVIGATE AROUND NOW THAT WE WILL HAVE OUR OWN SITE. IT IS LIKE REVSHARK MOVING FROM SUPERTRADERS.COM TO SHARKINVESTING.COM.
winners: OMTR 296% VDSI 178% MA 197% DECK 132% IHS 186% BCSI 89% CNH 123% YGE 50% WRLS 97% ZNH 336% ASTI 92% EVEP 89% EBIX 54% FSLR 78% CRNT 132% LFL 59% ICOC 84% SXE 54% TTG 73% NVT 78% NTLS 60% IMA 71% HURN 87% MOS 198% APPY 61% ALVR 59% KHD 123%
Saturday, September 22, 2007
The Best Week of 2007 For My Portfolio Positions Me Well For Some Big Gains If This Market Continues To Rally
There is no doubt that this has been one of the best weeks of 2007. But what has made this week so much better compared to other good weeks this year is that the stock market is finally acting, in what I would call, a correction fashion according to TA 101. Stocks that are bouncing off the 50 day moving average or breaking out of sound basing patterns are working and continue to rack up gains, instead of just acting hit or miss with the few winners giving us only slightly impressive gains. The stocks that are moving now are moving with very strong momentum and that momentum is helping me make gains that I have been accustomed to. There is no denying that the market from May 2006-July was an odd one with many hits and misses for my style. But now things are back to acting normally. This just goes to prove that you should never give up on a proven sound strategy. I am sure many people got frustrated by this market, despite some stocks making big gains.
Typically, in bull markets, I can find many top performing stocks that race up 100-500% before they finally put in a top. However, recently, with the low VIX, it has become very difficult to find strong stocks that not only perform well but do so without cutting key support levels. It really has been a good market. However, the gains simply were not there like they used to be. That, thankfully, appears to be changing as once again I am finding many new longs and am ALREADY nearly fully invested again. Some would say that could be contrarian. But the problem with that is that I am long a ton of new longs that appear to have a lot of room to run. To go along with that the current longs that I was long before the rally got back underway on August 16 have setup all new big bases for more continued big gains to come. Just go to the end of my weekly post to see how many BIG WINNERS I continue to hold from the previous bullish uptrend. Though the holdings are much smaller than they were, the fact is is that I am still long some nice winners while many are completely back on the sidelines wondering how they have missed another rally.
And that leads me to my next point. There is no way that anyone should still be on the sidelines right here. It is quite clear after the August 29 follow-through that a lot of stocks were setting up in nice bases. Since that follow-through day a ton of stocks have completed and broken out of their bases and/or are still creating some great looking charts. You do not see this many leading stocks in so many different leading sectors along with all these new longs breaking out of solid patterns in a weak market. History shows that if you pass on all these nice chart patterns now after a follow-through and instead wait for confirmation that the follow-through was real, you will miss out on all the big gains. Not all follow-through days lead to a bull market but no bull market has started without one and this market is acting like it is going to work. The best stocks breakout within the first three months of a new rally and many of the biggest winners show up within the first month. So the longer you wait the less chance you have of HUGE success. The best long I have had in the past five years was TASR. And even though it took four months before breaking out of its perfect flat base on 7/22, the stock still rallied over 200% from the 3/17 follow-through day for the Nasdaq. So the best stocks move early and they move a lot.
Granted, anything can happen, and you better believe that that is very true. But at the same time, history has shown over and over than when you have this many well-formed green charts in so many different areas of the stock market right after a follow-through day that usually more upside gains are going to come.
Now, like I said, nothing is written in stone but before we put in a bottom on August 16 the fear levels were rising to a borderline psychotic frenzy on the subprime mortgage issues. The fear that it was spreading everywhere helped set the bottom with the put/call ratio zooming above 1.3. Even though complacency from the recent rally is starting to slowly creep in again. The fact remains that a lot of people have already entered the “camp of calling a correction.” They believe the market has already come too far too fast off the lows. That very well may be true but in the last three days we have had three accumulation days and one low volume short pullback. This is very bullish on the short-term and is not the action of a stock ready to put in a short term top already.
One of the most impressive things I like about this rally right now is that the leadership is strong in many sectors and volume has been very powerful the last three days higher. Even on Friday, volume was higher by 62% on the NYSE and 31% on the Nasdaq. With volume now coming in over the 50 day volume average, it is clear that institutional investors have come back into the market as buyers–not sellers. Some will say that the quadruple witching had the most effect on the volume. However, it is hard to explain that about the other two high volume sessions. That volume was in no way related to the quadruple witching. Instead it was the bullish response by investors to the Fed chairmans decision to slash the fed funds rate by 50 basis points. That event is what ultimately has led stocks to one of their best weeks this year with the NYSE clearly leading with a 3.2% gain.
But if your only focus was with the overall indexes, then you missed out on a lot of money as many leading stocks made extremely impressive moves. The IBD 100’s 6.2% gain for the week confirms the enormous strength we saw in leading stocks this week. For the year the IBD 100 is up 32.5% compared to 7.6% for the SP 500. This goes to show everyone, once again, that if you want to make the big money in the stock market, you want to focus on the top stocks with top fundamentals breaking out of solid and sound chart patterns. This is the only way to consistently beat the market every year and make a comfortable living in the process WITHOUT stressing yourself out to all the intraday price action. Sure it is great to get 50 to 1 margin on a futures account. However, you still have to spend your WHOLE DAY watching ticks and bar charts. Seriously, during the day, I have much better things to do. Like surfing or going to the gym.
There are some internals that I would like to go over, before I head out of here for the weekend. Some market pundits are worried that the cumulative a/d line is not keeping up with the prices of the SP 500. I then also heard that besides the a/d cumulative line not keeping up that the cumulative volume is nowhere near all-time highs also. Yes that is bad but last time I checked the fact that the cumulative a/d line and the cumulative volume was not hitting new highs with price did not prevent the indexes from continuing to rally. As rallies get long in the tooth–we have been in a NONSTOP bull market since October 2002, mind you–the overall participation of stocks declines as bigger large cap stocks make up the biggest portion of the market are the favorites. Most people end up investing in the big “known names” of the most recent bull. GOOG, GRMN, AAPL, BIDU, RIMM, etc…comes to mind.
Some people are also complaining about the Transportation index lagging and not being anywhere near all time highs. Well, while everyone worries about that and focuses on the index, I will be in my little corner going long and staying long the leaders in the group like DRYS, GNK, GLNG, DSX, and EXM. Something tells me that I will do much better by focusing on these leading stocks instead of worrying about the Transportation average.
The other focus is on some oscillators that are also showing the market overbought. Well, to me that is fine and bullish as if the stocks pullback we are going to get oversold very quickly and will probably form higher lows on the McClellan and 10-week MA of the a/d line. So it is probably best that we do not race to new all-time highs in the indexes right now as it would probably create a lot of negative divergences everywhere in the technicals. But a nice slow uptrend will surely place positive divergences in many if not all of these overbought/oversold indicators.
Overall, however, it pays to really on pay attention to price and volume on the index and leading stocks. If you are long the stocks that I have been going long the past three weeks, you are definitely sitting on some nice gains and should be doing very well and/or be nearing new account highs or building back a lot of those losses you might have suffered after the July to August slide. I took a big hit during that time due to me holding on to some longs. But now all those losses have turned to gains and my account is near another all-time highs DESPITE me not being fully invested. If I was on full margin right now, I would be at all-time highs already. However, if this market has more legs to it, which I believe it does, I need to have a lot of cash available in case I get another chart that sets up like F***, R**, D***, B**, Y**, V**, J***, or C***. Like I said, I still have only found a few near-perfect charts and only one of them can be considered close to perfect. If this market is going to move higher, there should be one or two more perfect patterns waiting in the wings to be found out there. If not, I will continue to pick up all the stocks that look like the ones I have listed. I would name them here but until it is up 25% for paid subscribers, I feel like it would be very wrong for me to tell you guys the stocks we like that are making us very wealthy.
It still isn’t the time to get filthy rich. Those ONLY happen after severe long bear markets. The last time we had to get rich was March 2003 (October 2002 was when stock like SOHU, SINA, and NTES first appeared so you could use that date) to January 2004. Since then, we have not had a big enough downtrend–20% or more selloff–to give us one of those perfect moments.
For now, enjoy what this market is giving us. The odds of higher prices well outweigh the possibility of lower prices and that is the way we should be playing this market. But, don’t think I am a foolish over-the-top bull here. I could turn on a dime and go 100% cash and start pushing my short bets if I had to. If we start getting a ton of distribution days on large price declines in the indexes, trust me I would have no problem selling off my once nice charts to save my ass from big losses. A beautiful chart is no longer a beautiful chart to me once selling hits so I have NO problems selling off a stock that at one time was either a big winner for me and/or was a beauty but now a beast. Aloha and I will see you in the chat room!
winners: FSLR 73% IHS 185% DECK 129% MOS 179% BCSI 93% HURN 83% TTG 66% IMA 58% VDSI 166% CNH 108% ASTI 73% INNO 56% ALVR 52% ZNH 389% EBIX 53% ICOC 96% NVT 62% MA 199% SFLY 64% OMTR 279% CRNT 97% LFL 70%
Typically, in bull markets, I can find many top performing stocks that race up 100-500% before they finally put in a top. However, recently, with the low VIX, it has become very difficult to find strong stocks that not only perform well but do so without cutting key support levels. It really has been a good market. However, the gains simply were not there like they used to be. That, thankfully, appears to be changing as once again I am finding many new longs and am ALREADY nearly fully invested again. Some would say that could be contrarian. But the problem with that is that I am long a ton of new longs that appear to have a lot of room to run. To go along with that the current longs that I was long before the rally got back underway on August 16 have setup all new big bases for more continued big gains to come. Just go to the end of my weekly post to see how many BIG WINNERS I continue to hold from the previous bullish uptrend. Though the holdings are much smaller than they were, the fact is is that I am still long some nice winners while many are completely back on the sidelines wondering how they have missed another rally.
And that leads me to my next point. There is no way that anyone should still be on the sidelines right here. It is quite clear after the August 29 follow-through that a lot of stocks were setting up in nice bases. Since that follow-through day a ton of stocks have completed and broken out of their bases and/or are still creating some great looking charts. You do not see this many leading stocks in so many different leading sectors along with all these new longs breaking out of solid patterns in a weak market. History shows that if you pass on all these nice chart patterns now after a follow-through and instead wait for confirmation that the follow-through was real, you will miss out on all the big gains. Not all follow-through days lead to a bull market but no bull market has started without one and this market is acting like it is going to work. The best stocks breakout within the first three months of a new rally and many of the biggest winners show up within the first month. So the longer you wait the less chance you have of HUGE success. The best long I have had in the past five years was TASR. And even though it took four months before breaking out of its perfect flat base on 7/22, the stock still rallied over 200% from the 3/17 follow-through day for the Nasdaq. So the best stocks move early and they move a lot.
Granted, anything can happen, and you better believe that that is very true. But at the same time, history has shown over and over than when you have this many well-formed green charts in so many different areas of the stock market right after a follow-through day that usually more upside gains are going to come.
Now, like I said, nothing is written in stone but before we put in a bottom on August 16 the fear levels were rising to a borderline psychotic frenzy on the subprime mortgage issues. The fear that it was spreading everywhere helped set the bottom with the put/call ratio zooming above 1.3. Even though complacency from the recent rally is starting to slowly creep in again. The fact remains that a lot of people have already entered the “camp of calling a correction.” They believe the market has already come too far too fast off the lows. That very well may be true but in the last three days we have had three accumulation days and one low volume short pullback. This is very bullish on the short-term and is not the action of a stock ready to put in a short term top already.
One of the most impressive things I like about this rally right now is that the leadership is strong in many sectors and volume has been very powerful the last three days higher. Even on Friday, volume was higher by 62% on the NYSE and 31% on the Nasdaq. With volume now coming in over the 50 day volume average, it is clear that institutional investors have come back into the market as buyers–not sellers. Some will say that the quadruple witching had the most effect on the volume. However, it is hard to explain that about the other two high volume sessions. That volume was in no way related to the quadruple witching. Instead it was the bullish response by investors to the Fed chairmans decision to slash the fed funds rate by 50 basis points. That event is what ultimately has led stocks to one of their best weeks this year with the NYSE clearly leading with a 3.2% gain.
But if your only focus was with the overall indexes, then you missed out on a lot of money as many leading stocks made extremely impressive moves. The IBD 100’s 6.2% gain for the week confirms the enormous strength we saw in leading stocks this week. For the year the IBD 100 is up 32.5% compared to 7.6% for the SP 500. This goes to show everyone, once again, that if you want to make the big money in the stock market, you want to focus on the top stocks with top fundamentals breaking out of solid and sound chart patterns. This is the only way to consistently beat the market every year and make a comfortable living in the process WITHOUT stressing yourself out to all the intraday price action. Sure it is great to get 50 to 1 margin on a futures account. However, you still have to spend your WHOLE DAY watching ticks and bar charts. Seriously, during the day, I have much better things to do. Like surfing or going to the gym.
There are some internals that I would like to go over, before I head out of here for the weekend. Some market pundits are worried that the cumulative a/d line is not keeping up with the prices of the SP 500. I then also heard that besides the a/d cumulative line not keeping up that the cumulative volume is nowhere near all-time highs also. Yes that is bad but last time I checked the fact that the cumulative a/d line and the cumulative volume was not hitting new highs with price did not prevent the indexes from continuing to rally. As rallies get long in the tooth–we have been in a NONSTOP bull market since October 2002, mind you–the overall participation of stocks declines as bigger large cap stocks make up the biggest portion of the market are the favorites. Most people end up investing in the big “known names” of the most recent bull. GOOG, GRMN, AAPL, BIDU, RIMM, etc…comes to mind.
Some people are also complaining about the Transportation index lagging and not being anywhere near all time highs. Well, while everyone worries about that and focuses on the index, I will be in my little corner going long and staying long the leaders in the group like DRYS, GNK, GLNG, DSX, and EXM. Something tells me that I will do much better by focusing on these leading stocks instead of worrying about the Transportation average.
The other focus is on some oscillators that are also showing the market overbought. Well, to me that is fine and bullish as if the stocks pullback we are going to get oversold very quickly and will probably form higher lows on the McClellan and 10-week MA of the a/d line. So it is probably best that we do not race to new all-time highs in the indexes right now as it would probably create a lot of negative divergences everywhere in the technicals. But a nice slow uptrend will surely place positive divergences in many if not all of these overbought/oversold indicators.
Overall, however, it pays to really on pay attention to price and volume on the index and leading stocks. If you are long the stocks that I have been going long the past three weeks, you are definitely sitting on some nice gains and should be doing very well and/or be nearing new account highs or building back a lot of those losses you might have suffered after the July to August slide. I took a big hit during that time due to me holding on to some longs. But now all those losses have turned to gains and my account is near another all-time highs DESPITE me not being fully invested. If I was on full margin right now, I would be at all-time highs already. However, if this market has more legs to it, which I believe it does, I need to have a lot of cash available in case I get another chart that sets up like F***, R**, D***, B**, Y**, V**, J***, or C***. Like I said, I still have only found a few near-perfect charts and only one of them can be considered close to perfect. If this market is going to move higher, there should be one or two more perfect patterns waiting in the wings to be found out there. If not, I will continue to pick up all the stocks that look like the ones I have listed. I would name them here but until it is up 25% for paid subscribers, I feel like it would be very wrong for me to tell you guys the stocks we like that are making us very wealthy.
It still isn’t the time to get filthy rich. Those ONLY happen after severe long bear markets. The last time we had to get rich was March 2003 (October 2002 was when stock like SOHU, SINA, and NTES first appeared so you could use that date) to January 2004. Since then, we have not had a big enough downtrend–20% or more selloff–to give us one of those perfect moments.
For now, enjoy what this market is giving us. The odds of higher prices well outweigh the possibility of lower prices and that is the way we should be playing this market. But, don’t think I am a foolish over-the-top bull here. I could turn on a dime and go 100% cash and start pushing my short bets if I had to. If we start getting a ton of distribution days on large price declines in the indexes, trust me I would have no problem selling off my once nice charts to save my ass from big losses. A beautiful chart is no longer a beautiful chart to me once selling hits so I have NO problems selling off a stock that at one time was either a big winner for me and/or was a beauty but now a beast. Aloha and I will see you in the chat room!
winners: FSLR 73% IHS 185% DECK 129% MOS 179% BCSI 93% HURN 83% TTG 66% IMA 58% VDSI 166% CNH 108% ASTI 73% INNO 56% ALVR 52% ZNH 389% EBIX 53% ICOC 96% NVT 62% MA 199% SFLY 64% OMTR 279% CRNT 97% LFL 70%
Sunday, September 16, 2007
Stocks Ticked Higher Ending A Very Quiet Yet Bullish Week For Stocks; Here Comes The Fed
Another excellent and bullish intraday reversal followed what was a very weak opening. This continues a pattern in the stock market since the August 16 lows, where a lower gap before the opening bell is bought by investors and bid higher almost all day long. Ugly beginnings of the trading day that end like this are a sign of a healthy market, not a bearish market. Even though volume remains completely absent, the price action speaks for itself as it is the final TRUTH in the stock market–not your opinions.
The light volume this week was blamed on Rosh Hashana but somehow I doubt Rosh Hash had anything to do with the low volume this week as that has been all that we have seen the past month. Despite the low volume, the Dow led the way, jumping 2.5% for the week. The NYSE composite ramped up 2%. The S&P 500 climbed 2.1% and the Nasdaq 1.4%.
This low volume rally has left MANY people on the sidelines scratching their head as they watch new breakout move higher and higher and watch leading stocks continue to hit all-time highs. This goes back to the same argument I have been making since I can remember. The trend is your friend. Rather on low volume or high volume, if you get stocks breaking out of sound bases on high volume, you need to just ignore the low volume overall in the market and take your signals. By passing on your signals, I AM SURE, a lot of you have missed out on some big gains.
Now, at the same time of saying this, it is true that low volume rallies are bad and usually are met by heavy volume selling. But, how do you know it is going to happen this time, fortune tellers?? You don’t. So stop trying to predict where in the hell the top is. That is all I keep hearing about–the top. Therefore, wouldn’t you feel quite stupid that instead of heavy volume selling hitting the market, instead heavy volume accumulation comes in due to the fact that the big boys are feeling pain by underperforming the market? Well, to the addicted top callers, I am sure you don’t care. Your memories are about as solid as water. So you will not remember this top call or the other 100 you made.
So, while some decide to play that game-and it appears almost all are as the Fed meeting is right around the corner-I will continue to just listen to the only thing that I ever listen to. Price and volume. That is it. If a stock breaks out or bounces off the 50 or 200 day moving average, on strong volume, I want to be long. If the stock breaks down or bouncing off the 50 and 200 day moving average to the downside, I want to be short. All the predicting BS will never make you money like just playing the trend will do. If you do what I just typed in this paragraph, you will do a lot better than your “smart” friends who are telling you when this rally will fail.
There continues to also be a ton of subprime and mortgage talk out there. That is the PERFECT wall-of-worry for us to continue to climb. The more we continue to worry about the fallout from the subprime business, the further this rally has to go. We have to wait for all the talking morons on CNBC to finally stop freaking out and tell us the worst is behind us before ANY top can happen. Our wall-of-worry is strong and continues to be there to ride higher.
Reports that the Bank of England provided emergency funding to the U.K.’s third largest mortgage lender, only confirms that the trouble in this sector will continue to be magnified and blown out of proportion.
What if everyone is right and we do go into a recession? Are you kidding me? If they are, then we will act accordingly. We do NOT marry our positions. When our leading longs give us clear sell signals, we do not argue with them, we simply obey them and get out. Then if the market does tumble, we can move our now free cash to shorts. It is simply that simple. Too simple for most to believe it works. And that is fine with me. Continue to quant your way to the poorhouse or the house of mediocre returns, fundamentalist.
Everyone, right now, seems focused on the upcoming FOMC meeting this Tuesday where the Fed is expected to lower rates from the current 5.25% that they have been at since June 2006. A lot expect .5 and some expect .25. Either way, you shouldn’t pay too much attention to all of this NOISE and instead should be focusing your time on the longs and shorts that show up on your scan. Make money here; don’t become a Fed watcher. Do you really want your life to be like that? Isn’t it more fun finding stocks like VMW, instead of watching Ben bitch about the economy?
Stocks like SXE, GME, CMED, TBSI, YHOO, and OMTR are ALL much more exciting than anything you will ever get out of watching Ben. Trading off of Ben will also NEVER get you the returns a strong investment in a top stock like OMTR will.
The good news is that there are still many stocks out there that are setting up and breaking out of bases with the kind of possible potential gains that OMTR has had. What makes it even better is that most people seem to be completely unaware or uninterested in it. I saw more than one or two times this week where professionals made comments somewhere along the lines that this market is not fun and they are burned out. Burned out from what? All the strong chart patterns showing up? Their pain is my gain!
All of this could change at any time and the Fed may in fact mark a top in the market. However, like I said before, by being involved in the longs at the right time we would still be able to get out with SOME gains and then have enough time to turn around and go short. Bear markets don’t only last for a few days. Real bear markets last years and years.
Speaking of bear markets, I want everyone to do me a favor and look at the Russell 2000 index. On a daily chart, since late July, I want you to count how many days on the chart where you either see a bullish intraday reversal (they look like tails and are called “hammer” patterns) or days where the price opens at or near the lows and then closes either near or at the HOD. You will notice that there are a lot. Then check out the weekly chart of the Russell 2000. After the week of July 26, you will notice that EVERY week has seen a selloff and every week has then seen price come back from the lows and close either near the highs of the week or actually come back and close above the open of the week. This week was just another example of a strong opening week, turn into some selling, and then turn into a well supported market that closes near the highs of the week. That is bullish, until it ends. And as long as patterns in this index exist, there are going to be plenty of longs out there to make some money on.
Before I get out here I want to let everyone know that I have suffered yet another disturbing medical experience. I was supposed to run the marathon this Sunday, but, instead, sadly, I became VIOLENTLY ill the night before and for the first time in over ten years was forced to call an ambulance. During the ride to the hospital I suffered a twenty second “tonic” seizure. They do not know what the cause was or even why I got violently ill. It could have been food poisoning, the medication from my MS drug (I have Mutliple Sclerosis for those that don’t know), or dehydration. They simply don’t know. I just want to thank everyone for reading me and let you know that your readership is what helps keep me strong. Thank you very much, God bless, and Aloha. I will see you in the chatroom!!!!
WINNERS: OMTR 246% BCSI 92% ZNH 247% NVT 53% EDO 70% ICOC 80% WRLS 88% DECK 101% IMA 50% TTG 75%
The light volume this week was blamed on Rosh Hashana but somehow I doubt Rosh Hash had anything to do with the low volume this week as that has been all that we have seen the past month. Despite the low volume, the Dow led the way, jumping 2.5% for the week. The NYSE composite ramped up 2%. The S&P 500 climbed 2.1% and the Nasdaq 1.4%.
This low volume rally has left MANY people on the sidelines scratching their head as they watch new breakout move higher and higher and watch leading stocks continue to hit all-time highs. This goes back to the same argument I have been making since I can remember. The trend is your friend. Rather on low volume or high volume, if you get stocks breaking out of sound bases on high volume, you need to just ignore the low volume overall in the market and take your signals. By passing on your signals, I AM SURE, a lot of you have missed out on some big gains.
Now, at the same time of saying this, it is true that low volume rallies are bad and usually are met by heavy volume selling. But, how do you know it is going to happen this time, fortune tellers?? You don’t. So stop trying to predict where in the hell the top is. That is all I keep hearing about–the top. Therefore, wouldn’t you feel quite stupid that instead of heavy volume selling hitting the market, instead heavy volume accumulation comes in due to the fact that the big boys are feeling pain by underperforming the market? Well, to the addicted top callers, I am sure you don’t care. Your memories are about as solid as water. So you will not remember this top call or the other 100 you made.
So, while some decide to play that game-and it appears almost all are as the Fed meeting is right around the corner-I will continue to just listen to the only thing that I ever listen to. Price and volume. That is it. If a stock breaks out or bounces off the 50 or 200 day moving average, on strong volume, I want to be long. If the stock breaks down or bouncing off the 50 and 200 day moving average to the downside, I want to be short. All the predicting BS will never make you money like just playing the trend will do. If you do what I just typed in this paragraph, you will do a lot better than your “smart” friends who are telling you when this rally will fail.
There continues to also be a ton of subprime and mortgage talk out there. That is the PERFECT wall-of-worry for us to continue to climb. The more we continue to worry about the fallout from the subprime business, the further this rally has to go. We have to wait for all the talking morons on CNBC to finally stop freaking out and tell us the worst is behind us before ANY top can happen. Our wall-of-worry is strong and continues to be there to ride higher.
Reports that the Bank of England provided emergency funding to the U.K.’s third largest mortgage lender, only confirms that the trouble in this sector will continue to be magnified and blown out of proportion.
What if everyone is right and we do go into a recession? Are you kidding me? If they are, then we will act accordingly. We do NOT marry our positions. When our leading longs give us clear sell signals, we do not argue with them, we simply obey them and get out. Then if the market does tumble, we can move our now free cash to shorts. It is simply that simple. Too simple for most to believe it works. And that is fine with me. Continue to quant your way to the poorhouse or the house of mediocre returns, fundamentalist.
Everyone, right now, seems focused on the upcoming FOMC meeting this Tuesday where the Fed is expected to lower rates from the current 5.25% that they have been at since June 2006. A lot expect .5 and some expect .25. Either way, you shouldn’t pay too much attention to all of this NOISE and instead should be focusing your time on the longs and shorts that show up on your scan. Make money here; don’t become a Fed watcher. Do you really want your life to be like that? Isn’t it more fun finding stocks like VMW, instead of watching Ben bitch about the economy?
Stocks like SXE, GME, CMED, TBSI, YHOO, and OMTR are ALL much more exciting than anything you will ever get out of watching Ben. Trading off of Ben will also NEVER get you the returns a strong investment in a top stock like OMTR will.
The good news is that there are still many stocks out there that are setting up and breaking out of bases with the kind of possible potential gains that OMTR has had. What makes it even better is that most people seem to be completely unaware or uninterested in it. I saw more than one or two times this week where professionals made comments somewhere along the lines that this market is not fun and they are burned out. Burned out from what? All the strong chart patterns showing up? Their pain is my gain!
All of this could change at any time and the Fed may in fact mark a top in the market. However, like I said before, by being involved in the longs at the right time we would still be able to get out with SOME gains and then have enough time to turn around and go short. Bear markets don’t only last for a few days. Real bear markets last years and years.
Speaking of bear markets, I want everyone to do me a favor and look at the Russell 2000 index. On a daily chart, since late July, I want you to count how many days on the chart where you either see a bullish intraday reversal (they look like tails and are called “hammer” patterns) or days where the price opens at or near the lows and then closes either near or at the HOD. You will notice that there are a lot. Then check out the weekly chart of the Russell 2000. After the week of July 26, you will notice that EVERY week has seen a selloff and every week has then seen price come back from the lows and close either near the highs of the week or actually come back and close above the open of the week. This week was just another example of a strong opening week, turn into some selling, and then turn into a well supported market that closes near the highs of the week. That is bullish, until it ends. And as long as patterns in this index exist, there are going to be plenty of longs out there to make some money on.
Before I get out here I want to let everyone know that I have suffered yet another disturbing medical experience. I was supposed to run the marathon this Sunday, but, instead, sadly, I became VIOLENTLY ill the night before and for the first time in over ten years was forced to call an ambulance. During the ride to the hospital I suffered a twenty second “tonic” seizure. They do not know what the cause was or even why I got violently ill. It could have been food poisoning, the medication from my MS drug (I have Mutliple Sclerosis for those that don’t know), or dehydration. They simply don’t know. I just want to thank everyone for reading me and let you know that your readership is what helps keep me strong. Thank you very much, God bless, and Aloha. I will see you in the chatroom!!!!
WINNERS: OMTR 246% BCSI 92% ZNH 247% NVT 53% EDO 70% ICOC 80% WRLS 88% DECK 101% IMA 50% TTG 75%
Saturday, July 21, 2007
Nasty Selloff Hits Stocks Thanks To Misses By GOOG And CAT; Overall, There Is Not That Much Damage
Some big misses by two heavyweights weighed heavily on the indexes as the stock market suffered its second distribution day in as many days. GOOG and CAT were both nailed with 8% losses before the opening bell, after both issued poor earnings that missed estimates. However, as the day wore on neither of these issues saw much more selling and both found solid support at their 50 day moving averages, giving some comfort to the bulls. But, for the day, the damage was done.
The DJIA fell 1.1%, the SP 500, Nassy, and NYSE fell 1.2%, and the SP 600 led the way down with a 1.7% loss. The great news was that leading stocks, in the form of the IBD 100 only lost 1.3%, outperforming the SP 600. However, the losses were a bit worse during the day, so the fact that the indexes closed off the lows is a slight positive. Combine that with Wednesday’s action where the Nassy actually closed higher than the open and you can see we have two distro days that aren’t very powerful.
The higher volume in the market combined with breadth 3-to-1 negative on the NYSE, 11-to-4 negative on the Nassy, and 27-to-3 negative on the DJIA gave the impression that things were really bad out there. However, despite there being 326 new lows there were also 216 new highs which shows that there were some decent pockets of strength out there. If today was really as bad as the indexes looked, trust me, there would have been a lot less new highs. So that gives some indication that the selling was not that bad.
And to go along with the data, two things occurred that really stick out after Friday’s losses. The put/call ratio jumped and closed over 1 at 1.02. That high reading shows that as stocks fell, traders decided to buy puts betting that prices are going to continue to go lower. That in of itself is not that impressive. But when you combine that the options crowd is bearish with the fact that the NYSE short interest ratio is at ANOTHER all-time high you have some real interesting developments. The NYSE short interest ratio is now at 8.25% which is an all-time high!!! That means 8% of trading on the NYSE is done in shorts. This DESPITE THE MARKET BEING ONLY 1% TO 2% BELOW ALL-TIME AND SIX-AND-A-HALF YEAR HIGHS.
When you take all of this combined with some leading stocks like AAPL and ISRG still making new highs and it becomes clear that Friday produced some panic. Markets do NOT top with panic. They top with euphoria. Even though BIDU and GOOG dropped and some are calling for a top via those two stocks, you have to remember that BIDU is still in a solid uptrend and GOOG had a very bullish intraday reversal off its 50 dma. So you are really grabbing at straws if you are calling a top here. Unless you only look at bank stocks and GOOG, there is no way you can agree with that argument.
The rest of the market seems OK. I had only a handful of complete sells and almost all of those were in very poor issues. The partial sales I had were made based on pure discipline. But when looking at their weekly and long term daily charts it is obvious there is nothing wrong with these stocks. Hell, look at one of the best sectors out there Transport-Shipping. ESEA, TBSI, DRYS, and DSX show NO signs of topping and all are still on fire and look ready for plenty of gains. Then you have the clear leader during this current bull market: Chemicals. CF, TRA, TNH, and the other stocks in this sector show no signs of topping. Until you see those two sectors top, along with stocks like MA RIMM AAPL FWLT CME ICE and CROX, you can be sure the market top is not here. You will need to see ALL of these leaders suffer some major distribution and fail there rallies before we can even THINK of a top forming.
For the week, it seems obvious that it was not that bad, with the Nassy losing only .7% and the DJIA losing only .4%. But the SP 500 lost 1.2%, the NYSE lost 1.4%, and the SP 600 lost 1.6%. However, none of these losses were severe considering the run that they have been on this year. It was a wild week with a good Tuesday, bad Wednesday (but great close), great Thursday, and a terrible Friday. But that is what makes this market fun.
The one topic dejour this week was subprime loans. And if you don’t think it is going to get worse, I would love to bring your attention to the bank stocks. If you are an experienced chartist and you know what stocks look like when they top after multi-year runs then you are certainly taking notice at the banks. SINCE ALL OF THEM HAVE THE EXACT SAME CHART!! They are topping. Rather it is MER, C, BAC, USB, JPM, UBS, BBT, GS, LEG, LEH, BSC, WB, or SBNY it doesn’t matter. These stocks are rolling over on MASSIVE distribution that has been playing itself out ALL YEAR LONG. That is why you see ALL of those big tall red bars where volume is during 2007 in ALL of these stocks. That is why ALL of them are rolling over. Unless these stocks get a HUGE bid right here, these charts are setup for some shorts to make a lot of money. These daily or weekly charts going back to late 2002 is just what ALL classic tops look like. This is some massive distribution in the whole sector.
The best thing about this that confirms my charts is that earnings that are being reported are great. Last quarters and the few banks that have released this quarter are releasing some great fantastic learning earnings. However, as all of us experienced investors know, the fundamentals ALWAYS!!! look the best at the top. The current charts are telling us that the subprime and housing market is about ready to start to show up in the books of the financials. What even makes this better is that all of you who read me and do not subscribe to me can watch me RIGHT NOW either help you not lose money or make you money by shorting the financials.
While this is happening, all of your brilliant MBA analyst and big money traders like Joe Capone and Scott Rothbort are telling you that they are bargains on this selloff and that you must buy. Until the “smart” fundamentalist and analyst start issuing sells in this sector, you can guarantee these stock aren’t going to stop falling. When they start issuing sells, that is when you should cover. These dummies just don’t get it and they never will. Yet, you will probably give them your money since they sound oh so smart and have one of those fancy degrees on their walls. These “higher educated” fundamental morons are going to lose their clients some money on the short term. While this “dumb surfer” either helps mine make money or not lose money. If you are long ANY stock in the bank sector and it is below the 50 and 200 day moving average, get the hell out!!!! While you are losing money, you are missing out on stocks like PRGX which make 7% gains on days where the market is down 1.5%. Which stocks are you in? If you are a subscriber to my service I know which stocks you are in.
Back to the market: Despite the ugliness in the financials, I have to say that my leading stocks continue to look great. Even though the DJIA did the 14k breakout and trap (which I eluded that it was going to do that last week) it still remains a strong market in an uptrend with all indexes still above their 50 day moving averages. Earnings season is always a rough one and many stocks are either punished HARD or rewarded handsomely. But with the trend still up, even bad earnings can turn into good so it is not smart to panic if your stock sells off a little after a miss. However, if the indexes cut their 50 day moving averages, leading stock falter, all your new buys start sucking up the joint, and good earnings are treated like bad earnings, then you will have a reason to get defensive.
The possibility out there is for anything right now as it always is in earnings season. This upcoming week we have AXP KLAC MRK X MMM NFLX T DD PEP AMZN GLW and XOM set to report. As it is now we have a lot more disappointments than we are used to seeing but like I have said now 100 times, unless we start to actually selloff and fail rally attempts there is no reason to worry about anything.
Two more points I want to hit before I am finished: The amount of new lows that kept expanding while stock prices kept hitting new highs did hint that Friday was coming. On Wednesday we had a TON of new lows which clearly showed that their was weakness in the market building up to the losses on Friday. So, honestly, this selling should have caught NO ONE off guard. Especially my subscribers. And the last thing is BX. How about that scam stock. What is it now? Down 30%. Can anyone say Refco. This is why you must ALWAYS wait for a stock to trade long enough to create a base. Buying stocks before a proper breakout put you into things like Refco, BX, and IBKR. I use IBKR as my broker. I LOVE THEIR SOFTWARE!!!!! Did you see me buy the stock because of that? Did I buy it because my emotions told me to since I love the company so much? No. Do you know why? Because I am a professional.
If you buy ANY stock for ANY other reason than due to historical analysis and fundamental and technical actions, you are nothing but a gambler. And my suggestion to you is to get your act together or go find a new hobby. People like me are going to take ALL of your money. Why gamble when their is one book out there that can teach you how to fish for yourself? How To Make Money In Stocks by William J ONeil. I know one thing, I sure would not want to feel like the loser down the street that can only invest off of tips. How powerless are you when you make investment decisions off of tips? I know one thing: I LOVE BEING IN COMPLETE CONTROL. And the first step in becoming completely in control is admitting you control nothing. Especially the market. The stock market does not care about YOU or your opinions. Which is, sadly, about all I hear out there in the free chat rooms and on this island.
Aloha and I will see you in the chat room.
PS: This is the last weekend post for the free blog for two weeks. I will be on vacation. For paid subscribers you will still see plenty of me, don’t worry.
top current holdings up this week - purchase date
TRCR 536% - 1/12
MA 241% - 8/2
OMTR 192% - 9/15
IHS 155% - 12/21/05
CKSW 148% - 10/11
ULTR 147% - 10/27
KHD 140% - 5/30/06
DECK 124% - 9/13
PRGX 123% - 1/12
TTEC 120% - 8/25
HRZ 117% - 9/27
CNH 114% - 11/2
EVEP 114% - 11/16
CPA 105% - 9/15
FTEK 99% - 10/6
HURN 99% - 9/13
VDSI 98% - 1/14
IGLD 93% - 10/26
VSR 87% - 6/15
CXW 86% - 5/19/06
NAVI 79% - 12/18
APLX 77% - 9/28
INNO 74% - 6/4
HURC 73% - 12/18
FSLR 72% - 5/22
TESO 70% - 2/16
LFL 66% - 12/13
AFSI 65% - 4/12
TASR 64% - 6/6
CRNT 63% - 5/21
SNDA 55% - 12/26
NTLS 55% - 1/30
IMA 55% - 8/2
XRA 50% - 5/24
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
The DJIA fell 1.1%, the SP 500, Nassy, and NYSE fell 1.2%, and the SP 600 led the way down with a 1.7% loss. The great news was that leading stocks, in the form of the IBD 100 only lost 1.3%, outperforming the SP 600. However, the losses were a bit worse during the day, so the fact that the indexes closed off the lows is a slight positive. Combine that with Wednesday’s action where the Nassy actually closed higher than the open and you can see we have two distro days that aren’t very powerful.
The higher volume in the market combined with breadth 3-to-1 negative on the NYSE, 11-to-4 negative on the Nassy, and 27-to-3 negative on the DJIA gave the impression that things were really bad out there. However, despite there being 326 new lows there were also 216 new highs which shows that there were some decent pockets of strength out there. If today was really as bad as the indexes looked, trust me, there would have been a lot less new highs. So that gives some indication that the selling was not that bad.
And to go along with the data, two things occurred that really stick out after Friday’s losses. The put/call ratio jumped and closed over 1 at 1.02. That high reading shows that as stocks fell, traders decided to buy puts betting that prices are going to continue to go lower. That in of itself is not that impressive. But when you combine that the options crowd is bearish with the fact that the NYSE short interest ratio is at ANOTHER all-time high you have some real interesting developments. The NYSE short interest ratio is now at 8.25% which is an all-time high!!! That means 8% of trading on the NYSE is done in shorts. This DESPITE THE MARKET BEING ONLY 1% TO 2% BELOW ALL-TIME AND SIX-AND-A-HALF YEAR HIGHS.
When you take all of this combined with some leading stocks like AAPL and ISRG still making new highs and it becomes clear that Friday produced some panic. Markets do NOT top with panic. They top with euphoria. Even though BIDU and GOOG dropped and some are calling for a top via those two stocks, you have to remember that BIDU is still in a solid uptrend and GOOG had a very bullish intraday reversal off its 50 dma. So you are really grabbing at straws if you are calling a top here. Unless you only look at bank stocks and GOOG, there is no way you can agree with that argument.
The rest of the market seems OK. I had only a handful of complete sells and almost all of those were in very poor issues. The partial sales I had were made based on pure discipline. But when looking at their weekly and long term daily charts it is obvious there is nothing wrong with these stocks. Hell, look at one of the best sectors out there Transport-Shipping. ESEA, TBSI, DRYS, and DSX show NO signs of topping and all are still on fire and look ready for plenty of gains. Then you have the clear leader during this current bull market: Chemicals. CF, TRA, TNH, and the other stocks in this sector show no signs of topping. Until you see those two sectors top, along with stocks like MA RIMM AAPL FWLT CME ICE and CROX, you can be sure the market top is not here. You will need to see ALL of these leaders suffer some major distribution and fail there rallies before we can even THINK of a top forming.
For the week, it seems obvious that it was not that bad, with the Nassy losing only .7% and the DJIA losing only .4%. But the SP 500 lost 1.2%, the NYSE lost 1.4%, and the SP 600 lost 1.6%. However, none of these losses were severe considering the run that they have been on this year. It was a wild week with a good Tuesday, bad Wednesday (but great close), great Thursday, and a terrible Friday. But that is what makes this market fun.
The one topic dejour this week was subprime loans. And if you don’t think it is going to get worse, I would love to bring your attention to the bank stocks. If you are an experienced chartist and you know what stocks look like when they top after multi-year runs then you are certainly taking notice at the banks. SINCE ALL OF THEM HAVE THE EXACT SAME CHART!! They are topping. Rather it is MER, C, BAC, USB, JPM, UBS, BBT, GS, LEG, LEH, BSC, WB, or SBNY it doesn’t matter. These stocks are rolling over on MASSIVE distribution that has been playing itself out ALL YEAR LONG. That is why you see ALL of those big tall red bars where volume is during 2007 in ALL of these stocks. That is why ALL of them are rolling over. Unless these stocks get a HUGE bid right here, these charts are setup for some shorts to make a lot of money. These daily or weekly charts going back to late 2002 is just what ALL classic tops look like. This is some massive distribution in the whole sector.
The best thing about this that confirms my charts is that earnings that are being reported are great. Last quarters and the few banks that have released this quarter are releasing some great fantastic learning earnings. However, as all of us experienced investors know, the fundamentals ALWAYS!!! look the best at the top. The current charts are telling us that the subprime and housing market is about ready to start to show up in the books of the financials. What even makes this better is that all of you who read me and do not subscribe to me can watch me RIGHT NOW either help you not lose money or make you money by shorting the financials.
While this is happening, all of your brilliant MBA analyst and big money traders like Joe Capone and Scott Rothbort are telling you that they are bargains on this selloff and that you must buy. Until the “smart” fundamentalist and analyst start issuing sells in this sector, you can guarantee these stock aren’t going to stop falling. When they start issuing sells, that is when you should cover. These dummies just don’t get it and they never will. Yet, you will probably give them your money since they sound oh so smart and have one of those fancy degrees on their walls. These “higher educated” fundamental morons are going to lose their clients some money on the short term. While this “dumb surfer” either helps mine make money or not lose money. If you are long ANY stock in the bank sector and it is below the 50 and 200 day moving average, get the hell out!!!! While you are losing money, you are missing out on stocks like PRGX which make 7% gains on days where the market is down 1.5%. Which stocks are you in? If you are a subscriber to my service I know which stocks you are in.
Back to the market: Despite the ugliness in the financials, I have to say that my leading stocks continue to look great. Even though the DJIA did the 14k breakout and trap (which I eluded that it was going to do that last week) it still remains a strong market in an uptrend with all indexes still above their 50 day moving averages. Earnings season is always a rough one and many stocks are either punished HARD or rewarded handsomely. But with the trend still up, even bad earnings can turn into good so it is not smart to panic if your stock sells off a little after a miss. However, if the indexes cut their 50 day moving averages, leading stock falter, all your new buys start sucking up the joint, and good earnings are treated like bad earnings, then you will have a reason to get defensive.
The possibility out there is for anything right now as it always is in earnings season. This upcoming week we have AXP KLAC MRK X MMM NFLX T DD PEP AMZN GLW and XOM set to report. As it is now we have a lot more disappointments than we are used to seeing but like I have said now 100 times, unless we start to actually selloff and fail rally attempts there is no reason to worry about anything.
Two more points I want to hit before I am finished: The amount of new lows that kept expanding while stock prices kept hitting new highs did hint that Friday was coming. On Wednesday we had a TON of new lows which clearly showed that their was weakness in the market building up to the losses on Friday. So, honestly, this selling should have caught NO ONE off guard. Especially my subscribers. And the last thing is BX. How about that scam stock. What is it now? Down 30%. Can anyone say Refco. This is why you must ALWAYS wait for a stock to trade long enough to create a base. Buying stocks before a proper breakout put you into things like Refco, BX, and IBKR. I use IBKR as my broker. I LOVE THEIR SOFTWARE!!!!! Did you see me buy the stock because of that? Did I buy it because my emotions told me to since I love the company so much? No. Do you know why? Because I am a professional.
If you buy ANY stock for ANY other reason than due to historical analysis and fundamental and technical actions, you are nothing but a gambler. And my suggestion to you is to get your act together or go find a new hobby. People like me are going to take ALL of your money. Why gamble when their is one book out there that can teach you how to fish for yourself? How To Make Money In Stocks by William J ONeil. I know one thing, I sure would not want to feel like the loser down the street that can only invest off of tips. How powerless are you when you make investment decisions off of tips? I know one thing: I LOVE BEING IN COMPLETE CONTROL. And the first step in becoming completely in control is admitting you control nothing. Especially the market. The stock market does not care about YOU or your opinions. Which is, sadly, about all I hear out there in the free chat rooms and on this island.
Aloha and I will see you in the chat room.
PS: This is the last weekend post for the free blog for two weeks. I will be on vacation. For paid subscribers you will still see plenty of me, don’t worry.
top current holdings up this week - purchase date
TRCR 536% - 1/12
MA 241% - 8/2
OMTR 192% - 9/15
IHS 155% - 12/21/05
CKSW 148% - 10/11
ULTR 147% - 10/27
KHD 140% - 5/30/06
DECK 124% - 9/13
PRGX 123% - 1/12
TTEC 120% - 8/25
HRZ 117% - 9/27
CNH 114% - 11/2
EVEP 114% - 11/16
CPA 105% - 9/15
FTEK 99% - 10/6
HURN 99% - 9/13
VDSI 98% - 1/14
IGLD 93% - 10/26
VSR 87% - 6/15
CXW 86% - 5/19/06
NAVI 79% - 12/18
APLX 77% - 9/28
INNO 74% - 6/4
HURC 73% - 12/18
FSLR 72% - 5/22
TESO 70% - 2/16
LFL 66% - 12/13
AFSI 65% - 4/12
TASR 64% - 6/6
CRNT 63% - 5/21
SNDA 55% - 12/26
NTLS 55% - 1/30
IMA 55% - 8/2
XRA 50% - 5/24
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
Friday, July 13, 2007
Leading Stocks Help Take Indexes To All-Time And Six Year Highs; The Bears Who Continue To Fight This Trend Get What They Deserve
For the second week in a row, stocks put in one impressive week of gains, with today’s gains coming in some small part to the University of Michigan consumer confidence index coming in at 92.4 above estimates of 86. However, that simply was not the reason for today’s gains, as another round after afternoon short squeezing hit the indexes sending them near the highs of the session with the Nasdaq closing just short of its HOD. The gains also came in the face of oil rising $1.43 to $73.93.
At the close, the DJIA, SP 500, and SP 600 all hit new all-time highs rallying .3% and the NYSE and Nasdaq gained .2%. The NYSE hit another all-time high and the Nasdaq hit a new 6 1/2 year high. The best part about today’s gains, of course, comes in the fact that leading stocks led the way, once again. The IBD 100 gained .7%, doing much better than the broad market.
Volume was lower today, compared to yesterday’s volume. But considering that we produced some really big gains (biggest on the DJIA since 2003) and were right before the weekend, today’s action has to be considered very bullish and constructive. We could have sold off on lower volume or even higher volume.
There were some weak points with the internals. Despite the gain in the Nasdaq, decliners beat advancers by a 7-to-6 ratio and advancers barely beat decliners on the NYSE. There were also 150 new 52-week lows, despite the markets hitting new highs. But with 683 new 52-week highs, it is not anything to worry about.
For the week, it really doesn’t get much better than what we saw. The DJIA led the way with a 2.2% gain, the Nasdaq followed with a 1.5% gain, and the NYSE and SP 500 gained 1.4%. The best new, obviously, was that leading stocks, once again, beat the broad market for the week. The IBD 100 produced a 2.5% gain, after last weeks 5.2% gain. The best news, however, comes from my own personal IB portfolio. After having a poor weak last week, I managed to return a 10.3% gain for the week. This is what happens when you are in the right stocks. The outperformance has been there every week, except for one, since the March lows. This is what proper disciplined growth momentum investing is all about. There is no doubt, this is a great short-squeezing July, full of breakout in many leading stocks.
I remember, last year, constantly referring to our market as having a potential to repeat a 1995 scenario. Not long after, I heard Kudlow and IBD also bring this up. Now recently Cramer has brought it up, refreshing my memory on that scenario. The only thing that is different is that rates are not being cut yet. If the market keeps rallying and inflation does come into a more moderate pricing zone that would be great. However, no matter what happens, it looks like the 1995 scenario has and is playing itself out. This continues to be the most amazing market that gets absolutely no credit on major media outlets. And if Cramer and history is right and this is a replay of 1995 we have a lot more room to run, especially with tech just now joining the party.
This, however, creates the perfect wall of worry that the stock market needs to climb higher. If you think there is not any fear out there and that everybody is just giddy and happy with this market, let me remind you that the put/call ratio spiked to .99 on Tuesday after the market “swooned,” according to the media. The fear and blatant top calling is, ONCE AGAIN, something you do NOT see at market tops. EVERYBODY and I mean EVERYBODY is in love with the market and everybody will be talking about these good times.
Now, if you are a subscriber to my gold service, I know it seemed like Christmas this week as a LOT of gains were made in many favorite stocks. We did have one suck it up (MTOX) but one out of every other one is not that bad. However, I am not losing my mind over the gains and understand that this is what is supposed to happen in bull markets. It is when my neighbors start celebrating their gains that I will get nervous.
As of right now, to go along with the put/call still being at .76, the NYSE short-interest ratio is still near all-time highs at 7.52. LOL, this is not the number you will see at a market top. The other thing with this bearishness and start of parabolic runs in the charts is the fact that stocks are not doing crazy splits yet. Well, I take that back. I did see RIMM announce a 3-for-1. PEOPLE THAT IS A WARNING. PARABOLIC RUNS AND EXCESSIVE STOCK SPLITS ALWAYS LEAD TO A TOP. So keep your eyes out, even though I don’t expect one for months and months. It pays to be prudent.
And when we do top I have my list of stocks to short: GOOG, AAPL, RIMM, AMZN, ICE, BIDU, FWLT, FSLR, TNH, MA, and CME. I’ll give them to you for free, knowing that most of traders will NOT be able to short these at the right moment and history shows that most will be squeezed out of their shorts many times before the real fall comes. And by that time traders are so dejected that they miss the right moment. I won’t. :)
To prove my point that most will not be able to short the market when they are supposed to, I am finding out many traders are not very good at going long stocks either. In the free chat rooms I monitor I see a lot of traders selling prematurely all the time. Many have bought stocks to sell them on the smallest uptick and now want back in. By watching this action, I can understand why more gains at this juncture will not need a lot of volume. This retail crowd buying on top of the shorts being forced to cover due to them not being able to take the squeeze anymore ensures we will keep going higher. Even thought the crowd is bullish, yet betting bearishly, it doesn’t take much to take a market up with low supply and high demand.
If you did not notice this week, GE, COP, JNJ, HD, SHLD, and AMGN all announced stock buyback. FOLKS! These are no small-fries. These are real big giant companies. This along with all the M&A’s and leaders going into exponential to parabolic moves is the reason why you have to be long here. ABN is selling its LaSalle bank to BAC, ENR is buying PYX, and RTP outbid AA for AL with a $38 billion bid, and you want to be short stocks and long puts? Yeah right! Not me! You want to be short stocks only in a bear market and this is not a bear market. This market is not yet ready to top.
The reasons I see for a top are weak. They involve us being overbought and it involves the high bullishness in the surveys. The overbought can be attributed to the McClellan, 10-DMA of Adv/Dec line, and Arms index. The McClellan is moving overbought but it is nowhere near the 80s at only 68.6. The 10-dma index is overbought but nowhere near extreme levels, and the Arms index is overbought ALL THE TIME. It is almost useless. As for the surveys: the realmoney.com poll shows 69% bulls, 11% bears, and 20% netural. The Investors Intelligence is at 69.5% bulls and 21.8% bears. The AAII is at 44% bulls and 30% bears. However, relying on these for tops is useless. It is better using the UBS euphoria index and that is NOWHERE near euphoric levels seen in 2000.
Also, with the Gold, Steel, Metal, Mining, and all the old leaders moving along with the SOX index and all the technology stocks moving up the IBD 197 industry list it is very hard for me to be worried about a top. Look at AA. It is moving like a tech stock. That is a bull market if I have ever seen a bull market. Seeing the SOX and electronic stocks help leading the market to new highs is just a beautiful thing to see. Especially, when they are joined by so many other groups.
My suggestion is to continue to stay long and strong. Don’t go out trying to chase performance and do not chase stocks way beyond logical pivot points. If you are long, continue to enjoy the gains, but make sure you take some profits along the way when the stock’s price and/or volume acts odd. When the market tops and leading stocks are rolling over, trust me, I will let you know. You will see me selling off many of my top stocks and cutting my new buys short very quickly by them failing immediately. Also the amount of longs will dry up. As they are starting to do on my scans. Most stocks are well beyond proper buy points. Right now, it is all about holding the stocks you are long and riding the gains. Going long a lot of stock here is just a little too risky.
So let the overseas money with a strong Euro continue to find a safe home in the US equity market. As long as they are buying this market, you have to stay long.
Second quarter earnings really start rolling out this week. Expect a rise in volatility, as always happens during earnings season. Remember, going long a stock before earnings is a dangerous play. But selling a long ahead of earnings is an immature amateur play that only newbie emotional inexperienced traders do. Normally, if the stock is in an uptrend, the earnings don’t matter, as the stock will rise. Vise versa, in a bad market. VSCN is a perfect example. They miss, yet their stock rises. Such is a bull market. And that is what we are in.
Aloha and I will see you in the chat room!
Sidenote: Since May 2, 2003 the IBD 100 is up 216% compared to the SP 500’s 66% gain. The greatest traders are the greatest traders for a reason: history.
top holdings up this week - purchase date
TRCR 531% - 1/12
MA 240% - 8/2
OMTR 192% - 9/15
KHD 150% - 5/30/06
IHS 146% - 12/21/05
ULTR 141% - 10/27
TTEC 129% - 8/25
CPA 128% - 9/15
DECK 117% - 9/13
IGLD 103% - 10/26
CNH 103% - 11/2
CKSW 103% - 10/11
HURN 96% - 9/13
APLX 95% - 9/28
EVEP 94% - 11/16
AFSI 89% - 4/12
CXW 89% - 5/19/06
VDSI 85% - 1/14
CTCH 83% - 1/24
INNO 83% - 6/4
FSLR 76% - 5/23
HURC 71% - 12/18
LFL 66% - 12/13
ATX 65% - 12/12
VSR 63% - 6/15
CRNT 62% - 5/21
TESO 60% - 2/16
NAVI 58% - 12/18
IMA 57% - 8/2
SNDA 55% - 12/26
SMTX 55% - 6/15
NTLS 55% - 1/30
TASR 54% - 6/6
ICOC 52% - 5/18
IMMR 50% - 6/21
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
At the close, the DJIA, SP 500, and SP 600 all hit new all-time highs rallying .3% and the NYSE and Nasdaq gained .2%. The NYSE hit another all-time high and the Nasdaq hit a new 6 1/2 year high. The best part about today’s gains, of course, comes in the fact that leading stocks led the way, once again. The IBD 100 gained .7%, doing much better than the broad market.
Volume was lower today, compared to yesterday’s volume. But considering that we produced some really big gains (biggest on the DJIA since 2003) and were right before the weekend, today’s action has to be considered very bullish and constructive. We could have sold off on lower volume or even higher volume.
There were some weak points with the internals. Despite the gain in the Nasdaq, decliners beat advancers by a 7-to-6 ratio and advancers barely beat decliners on the NYSE. There were also 150 new 52-week lows, despite the markets hitting new highs. But with 683 new 52-week highs, it is not anything to worry about.
For the week, it really doesn’t get much better than what we saw. The DJIA led the way with a 2.2% gain, the Nasdaq followed with a 1.5% gain, and the NYSE and SP 500 gained 1.4%. The best new, obviously, was that leading stocks, once again, beat the broad market for the week. The IBD 100 produced a 2.5% gain, after last weeks 5.2% gain. The best news, however, comes from my own personal IB portfolio. After having a poor weak last week, I managed to return a 10.3% gain for the week. This is what happens when you are in the right stocks. The outperformance has been there every week, except for one, since the March lows. This is what proper disciplined growth momentum investing is all about. There is no doubt, this is a great short-squeezing July, full of breakout in many leading stocks.
I remember, last year, constantly referring to our market as having a potential to repeat a 1995 scenario. Not long after, I heard Kudlow and IBD also bring this up. Now recently Cramer has brought it up, refreshing my memory on that scenario. The only thing that is different is that rates are not being cut yet. If the market keeps rallying and inflation does come into a more moderate pricing zone that would be great. However, no matter what happens, it looks like the 1995 scenario has and is playing itself out. This continues to be the most amazing market that gets absolutely no credit on major media outlets. And if Cramer and history is right and this is a replay of 1995 we have a lot more room to run, especially with tech just now joining the party.
This, however, creates the perfect wall of worry that the stock market needs to climb higher. If you think there is not any fear out there and that everybody is just giddy and happy with this market, let me remind you that the put/call ratio spiked to .99 on Tuesday after the market “swooned,” according to the media. The fear and blatant top calling is, ONCE AGAIN, something you do NOT see at market tops. EVERYBODY and I mean EVERYBODY is in love with the market and everybody will be talking about these good times.
Now, if you are a subscriber to my gold service, I know it seemed like Christmas this week as a LOT of gains were made in many favorite stocks. We did have one suck it up (MTOX) but one out of every other one is not that bad. However, I am not losing my mind over the gains and understand that this is what is supposed to happen in bull markets. It is when my neighbors start celebrating their gains that I will get nervous.
As of right now, to go along with the put/call still being at .76, the NYSE short-interest ratio is still near all-time highs at 7.52. LOL, this is not the number you will see at a market top. The other thing with this bearishness and start of parabolic runs in the charts is the fact that stocks are not doing crazy splits yet. Well, I take that back. I did see RIMM announce a 3-for-1. PEOPLE THAT IS A WARNING. PARABOLIC RUNS AND EXCESSIVE STOCK SPLITS ALWAYS LEAD TO A TOP. So keep your eyes out, even though I don’t expect one for months and months. It pays to be prudent.
And when we do top I have my list of stocks to short: GOOG, AAPL, RIMM, AMZN, ICE, BIDU, FWLT, FSLR, TNH, MA, and CME. I’ll give them to you for free, knowing that most of traders will NOT be able to short these at the right moment and history shows that most will be squeezed out of their shorts many times before the real fall comes. And by that time traders are so dejected that they miss the right moment. I won’t. :)
To prove my point that most will not be able to short the market when they are supposed to, I am finding out many traders are not very good at going long stocks either. In the free chat rooms I monitor I see a lot of traders selling prematurely all the time. Many have bought stocks to sell them on the smallest uptick and now want back in. By watching this action, I can understand why more gains at this juncture will not need a lot of volume. This retail crowd buying on top of the shorts being forced to cover due to them not being able to take the squeeze anymore ensures we will keep going higher. Even thought the crowd is bullish, yet betting bearishly, it doesn’t take much to take a market up with low supply and high demand.
If you did not notice this week, GE, COP, JNJ, HD, SHLD, and AMGN all announced stock buyback. FOLKS! These are no small-fries. These are real big giant companies. This along with all the M&A’s and leaders going into exponential to parabolic moves is the reason why you have to be long here. ABN is selling its LaSalle bank to BAC, ENR is buying PYX, and RTP outbid AA for AL with a $38 billion bid, and you want to be short stocks and long puts? Yeah right! Not me! You want to be short stocks only in a bear market and this is not a bear market. This market is not yet ready to top.
The reasons I see for a top are weak. They involve us being overbought and it involves the high bullishness in the surveys. The overbought can be attributed to the McClellan, 10-DMA of Adv/Dec line, and Arms index. The McClellan is moving overbought but it is nowhere near the 80s at only 68.6. The 10-dma index is overbought but nowhere near extreme levels, and the Arms index is overbought ALL THE TIME. It is almost useless. As for the surveys: the realmoney.com poll shows 69% bulls, 11% bears, and 20% netural. The Investors Intelligence is at 69.5% bulls and 21.8% bears. The AAII is at 44% bulls and 30% bears. However, relying on these for tops is useless. It is better using the UBS euphoria index and that is NOWHERE near euphoric levels seen in 2000.
Also, with the Gold, Steel, Metal, Mining, and all the old leaders moving along with the SOX index and all the technology stocks moving up the IBD 197 industry list it is very hard for me to be worried about a top. Look at AA. It is moving like a tech stock. That is a bull market if I have ever seen a bull market. Seeing the SOX and electronic stocks help leading the market to new highs is just a beautiful thing to see. Especially, when they are joined by so many other groups.
My suggestion is to continue to stay long and strong. Don’t go out trying to chase performance and do not chase stocks way beyond logical pivot points. If you are long, continue to enjoy the gains, but make sure you take some profits along the way when the stock’s price and/or volume acts odd. When the market tops and leading stocks are rolling over, trust me, I will let you know. You will see me selling off many of my top stocks and cutting my new buys short very quickly by them failing immediately. Also the amount of longs will dry up. As they are starting to do on my scans. Most stocks are well beyond proper buy points. Right now, it is all about holding the stocks you are long and riding the gains. Going long a lot of stock here is just a little too risky.
So let the overseas money with a strong Euro continue to find a safe home in the US equity market. As long as they are buying this market, you have to stay long.
Second quarter earnings really start rolling out this week. Expect a rise in volatility, as always happens during earnings season. Remember, going long a stock before earnings is a dangerous play. But selling a long ahead of earnings is an immature amateur play that only newbie emotional inexperienced traders do. Normally, if the stock is in an uptrend, the earnings don’t matter, as the stock will rise. Vise versa, in a bad market. VSCN is a perfect example. They miss, yet their stock rises. Such is a bull market. And that is what we are in.
Aloha and I will see you in the chat room!
Sidenote: Since May 2, 2003 the IBD 100 is up 216% compared to the SP 500’s 66% gain. The greatest traders are the greatest traders for a reason: history.
top holdings up this week - purchase date
TRCR 531% - 1/12
MA 240% - 8/2
OMTR 192% - 9/15
KHD 150% - 5/30/06
IHS 146% - 12/21/05
ULTR 141% - 10/27
TTEC 129% - 8/25
CPA 128% - 9/15
DECK 117% - 9/13
IGLD 103% - 10/26
CNH 103% - 11/2
CKSW 103% - 10/11
HURN 96% - 9/13
APLX 95% - 9/28
EVEP 94% - 11/16
AFSI 89% - 4/12
CXW 89% - 5/19/06
VDSI 85% - 1/14
CTCH 83% - 1/24
INNO 83% - 6/4
FSLR 76% - 5/23
HURC 71% - 12/18
LFL 66% - 12/13
ATX 65% - 12/12
VSR 63% - 6/15
CRNT 62% - 5/21
TESO 60% - 2/16
NAVI 58% - 12/18
IMA 57% - 8/2
SNDA 55% - 12/26
SMTX 55% - 6/15
NTLS 55% - 1/30
TASR 54% - 6/6
ICOC 52% - 5/18
IMMR 50% - 6/21
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
Saturday, July 07, 2007
Fourth Of July Holiday-Shortened Week Goes Out With A Bang; Shorts Continue To Feel The Squeezing Pain Of The Bulls
A positive employment report, positive revisions to past reports along with the unemployment rate holding steady at 4.5%, and acquisition news that EYE raised the offer from a previous company to buy BOL for $75 a share helped stock indexes rise steadily higher all day long in a nice stair step fashion. By the closing bell, all indexes ended in the green, with big-cap tech leading. All of this came despite another increase in oil to $72.81 a barrel-highest close since September. This market continues to move higher despite the highs in oil, confirming that this is the greatest market story never told. (this refers to the severely biased media that REFUSES to acknowledge how INCREDIBLE this rally from October 2002 is).
The NYSE led the way, closing at an all-time high, with a .5% gain and the Nasdaq and Nasdaq 100 gained .4%, hitting 6 1/2 year highs. The DJIA and SP 500 closed slightly higher with a .3% gain and the SP 600 gain was even smaller with a .1% gain. The great news, once again, was that leading stocks trumped the general market indexes, with a 1.2% gain. This is the picture perfect action that you want to see in a bull market. When leading stocks are leading the general indexes, there are much larger gains being made in top growth stocks than value stocks.
Volume was lower than the day before, as it appeared traders started the weekend and/or their vacations early. The lower volume does help alleviate fears that if volume on the downside shows up soon that it will not be that heavy. As it stands now, the NYSE has five distribution days (many weak distro days) and the Nasdaq only has one, signaling that the market is still very healthy up here hitting new highs despite the lower volume.
With the lower volume, however, we did get good breadth confirming the gains today. The other positive is that the breadth improved as the rally continued throughout the day. Advancers beat decliners by a 5-to-3 margin on the NYSE and by a 3-to-2 margin on the Nasdaq. New 52-week highs beat new 52-week lows by 527 to 83, clearly showing the strength of this market after four days of strong price action.
For the week, the Nasdaq led the way with a 2.4% gain, the NYSE followed with an impressive 2%, the SP 500 and SP 600 rallied 1.8%, and the DJIA gained a solid 1.5%. The clear obvious winner this week was the IBD 100 index and my account. The IBD 100 rallied 5.2% and my account rallied 7.3%. This week reversed my poor showing from last week and continued the trend of my account well outperforming the market for the past sixteen weeks (the length of this rally from the March lows).
It has been a powerful four days of low volume gains for the market but I would not be surprised if we get a pullback here as it seems we have worked off the oversold condition and turned some bears into bulls the past week. Some of the key numbers comes from the realmoney.com poll this weekend. It shows that those surveyed lean bullish with 70% expecting price gains for the upcoming week. There are only 13% registering as bears. This also comes with the McClellan and other overbought/oversold indicators get overbought after the past week of price gains. The VIX has also worked off its bullish higher volatility from late June, signaling that the easy money has been made.
However, despite this, the NYSE short interest ratio rose again to near all-time highs closing at 7.66 on Friday. That and the put/call ratio is still around the level it was at the beginning of the week with it closing at .76. This clearly states that despite what people say, traders did not make bullish bets and in fact continued to take the opposite side of the clear trend. The other slightly bullish sentiment news is that bullishness from the Investors Intelligence survey fell to 49.4%. But, bearishness fell also to very low levels of 18%.
The other sentiment index that I noticed giving a signal that the market might be tired here is the ISEE Options put/call index. This index hit 186% on Thursday which is a level where the market normally does not do very well in the short-term following this reading. Combine this with some of the events above, the fact that new buys are starting to get a little difficult to find in top stocks, and the new buys that do show up are in low-float small cap stocks with mixed/poor fundamentals and we just shouldn’t be surprised if we get a pullback. Now a severe pullback–that is something I just don’t see in the cards with this much negativity pouring out of our nightly news.
Another clear reason why I don’t see a top happening anytime soon is that leading stocks with top fundamentals are simply not topping. And history shows that the leaders top BEFORE the market tops. So as long as AAPL, RIMM, BIDU, GOOG, and Chemical stocks are making new highs and are not churning, putting in heavy volume selloffs, or cutting their 50 day moving averages, there is absolutely NO reason to even think of trying to call a top. Once you see these four horseman top and reverse and then can look at the major indexes and see a clear downtrend, on heavy distribution, with lower highs and closes below the 50 day moving average then, and only then, will I listen to the bears.
Until then, the bears are just filled with nothing but pure crap and lies. And their opinions are worth the equivalent of the returns you have received as a bear this year: NOTHING! Pure worthless opinions that do NOT agree with the facts on the ground. This is why trend followers will ALWAYS outperform the top and bottom callers. They will NEVER return what the greatest traders of all-time returned by simply following and listening to top stocks and the general direction of the market.
Now, like I have said before, and like I keep listing on my forums, there are a lot of charts starting parabolic runs. But that is just it: they are starting them or in the middle of them. Very few appear to be in the late stages of runs seen in other parabolic runs in stocks like ERS in 2006 and tech stocks in the 2000 market. Even RevShark sees this, confirming what I have been seeing for weeks and weeks now. Still, until they top, there is no reason to predict when the run will end.
There is even evidence, in the Semiconductor index, that many large big-cap tech stocks are ready to run there. Many are at new 52-week highs and a lot of the sub-components of the Semiconductor/Electronics group have made big moves in the IBD 197 industry group list. It is very good to see the Semi’s join the market as this appears to be very bullish and should help turn some of those bears into the bulls camp, since they always say that it isn’t a real bull market unless the Semi’s are moving. Maybe I am stuck in years gone by, with this statement, but I still have heard plenty of people tell me that this rally (FOR THE PAST FOUR YEARS MIND YOU) is not that great of a rally because Semi stocks never led. Uhm, who said they had to lead? It is much better just seeing stocks like INTC, NVEC, NVDA, ADM, etc. making solid consistent gains. And that is what they are doing. The whole sector looks great. Of course, the best looking one recently has been SMTX. Those who subscribe at the gold level are well familiar with that very very pretty chart.
With a lot of the bullish leanings you are reading in this weekends post, you must also realize that I am no idiot. I have been partial selling many stocks that are in climax/parabolic type runs. Many, not all, of the stocks you see listed below have recently had 10-25% sold via the basic trading necessity of locking in profits. Holding your whole load as the stock continues to race up the charts in an exponential matter is not smart as sudden reversals become more and more likely. Small and smart selling based on either new highs with low volume, new highs with little price change and huge volume, or major reversals where the stock is up a lot on the day but then reverses to close lower are clear places to selloff 10%-20% of your big winners. Locking in some gains and then holding on for a possible climax run is just what the smart traders of yesteryear did and the smart traders of today do. One thing we definitely don’t do (not saying I am great, btw. Trust me I am FAR from it) is call tops. And that is one thing you will not see me do as long as we are moving higher and hitting new all-time and six-and-a-half year highs.
We have earnings season officially kicking off on Monday, with AA releasing earnings after the close. During the week we have numbers from stocks like INFY, PBG, DNA, MAR, YUM, and CTAS, and to close the week off we have GE. After that the fireworks really get going when the earnings really start pounding the table. Isn’t it funny how fast this time of the year can sneak up on you? Besides that there are, like always, economic numbers to digest. But nothing this week should impact the market like earnings will.
Aloha and I will see you in the chat room where you can guarantee we are ALWAYS on the right side of the market.
top holdings up this week - purchase date
TRCR 463% - 1/12
MA 223% - 8/2
OMTR 185% - 9/15
IHS 146% - 12/21/05
CPA 133% - 9/15
KHD 130% - 5/30/06
TTEC 128% - 8/25
ULTR 125% - 10/27
DECK 120% - 9/13
CXW 96% - 5/19/06
HURN 95% - 9/13
CNH 94% - 11/2
CRY 90% - 1/10
VDSI 89% - 1/14
EVEP 89% - 11/16
ZNH 84% - 12/26
APLX 84% - 9/28
AFSI 83% - 4/12
CKSW 69% - 10/11
LFL 68% - 12/13
HURC 66% - 12/18
VSNT 64% - 2/5
ATX 62% - 12/12
IMA 61% - 8/2
NAVI 59% - 12/19
TESO 58% - 2/16
XRA 58% - 5/24
KMGB 57% - 6/1
CRNT 54% - 5/21
TTG 54% - 11/30
CCC 53% - 3/26
FSLR 50% - 5/22
NTLS 50% - 1/30
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
The NYSE led the way, closing at an all-time high, with a .5% gain and the Nasdaq and Nasdaq 100 gained .4%, hitting 6 1/2 year highs. The DJIA and SP 500 closed slightly higher with a .3% gain and the SP 600 gain was even smaller with a .1% gain. The great news, once again, was that leading stocks trumped the general market indexes, with a 1.2% gain. This is the picture perfect action that you want to see in a bull market. When leading stocks are leading the general indexes, there are much larger gains being made in top growth stocks than value stocks.
Volume was lower than the day before, as it appeared traders started the weekend and/or their vacations early. The lower volume does help alleviate fears that if volume on the downside shows up soon that it will not be that heavy. As it stands now, the NYSE has five distribution days (many weak distro days) and the Nasdaq only has one, signaling that the market is still very healthy up here hitting new highs despite the lower volume.
With the lower volume, however, we did get good breadth confirming the gains today. The other positive is that the breadth improved as the rally continued throughout the day. Advancers beat decliners by a 5-to-3 margin on the NYSE and by a 3-to-2 margin on the Nasdaq. New 52-week highs beat new 52-week lows by 527 to 83, clearly showing the strength of this market after four days of strong price action.
For the week, the Nasdaq led the way with a 2.4% gain, the NYSE followed with an impressive 2%, the SP 500 and SP 600 rallied 1.8%, and the DJIA gained a solid 1.5%. The clear obvious winner this week was the IBD 100 index and my account. The IBD 100 rallied 5.2% and my account rallied 7.3%. This week reversed my poor showing from last week and continued the trend of my account well outperforming the market for the past sixteen weeks (the length of this rally from the March lows).
It has been a powerful four days of low volume gains for the market but I would not be surprised if we get a pullback here as it seems we have worked off the oversold condition and turned some bears into bulls the past week. Some of the key numbers comes from the realmoney.com poll this weekend. It shows that those surveyed lean bullish with 70% expecting price gains for the upcoming week. There are only 13% registering as bears. This also comes with the McClellan and other overbought/oversold indicators get overbought after the past week of price gains. The VIX has also worked off its bullish higher volatility from late June, signaling that the easy money has been made.
However, despite this, the NYSE short interest ratio rose again to near all-time highs closing at 7.66 on Friday. That and the put/call ratio is still around the level it was at the beginning of the week with it closing at .76. This clearly states that despite what people say, traders did not make bullish bets and in fact continued to take the opposite side of the clear trend. The other slightly bullish sentiment news is that bullishness from the Investors Intelligence survey fell to 49.4%. But, bearishness fell also to very low levels of 18%.
The other sentiment index that I noticed giving a signal that the market might be tired here is the ISEE Options put/call index. This index hit 186% on Thursday which is a level where the market normally does not do very well in the short-term following this reading. Combine this with some of the events above, the fact that new buys are starting to get a little difficult to find in top stocks, and the new buys that do show up are in low-float small cap stocks with mixed/poor fundamentals and we just shouldn’t be surprised if we get a pullback. Now a severe pullback–that is something I just don’t see in the cards with this much negativity pouring out of our nightly news.
Another clear reason why I don’t see a top happening anytime soon is that leading stocks with top fundamentals are simply not topping. And history shows that the leaders top BEFORE the market tops. So as long as AAPL, RIMM, BIDU, GOOG, and Chemical stocks are making new highs and are not churning, putting in heavy volume selloffs, or cutting their 50 day moving averages, there is absolutely NO reason to even think of trying to call a top. Once you see these four horseman top and reverse and then can look at the major indexes and see a clear downtrend, on heavy distribution, with lower highs and closes below the 50 day moving average then, and only then, will I listen to the bears.
Until then, the bears are just filled with nothing but pure crap and lies. And their opinions are worth the equivalent of the returns you have received as a bear this year: NOTHING! Pure worthless opinions that do NOT agree with the facts on the ground. This is why trend followers will ALWAYS outperform the top and bottom callers. They will NEVER return what the greatest traders of all-time returned by simply following and listening to top stocks and the general direction of the market.
Now, like I have said before, and like I keep listing on my forums, there are a lot of charts starting parabolic runs. But that is just it: they are starting them or in the middle of them. Very few appear to be in the late stages of runs seen in other parabolic runs in stocks like ERS in 2006 and tech stocks in the 2000 market. Even RevShark sees this, confirming what I have been seeing for weeks and weeks now. Still, until they top, there is no reason to predict when the run will end.
There is even evidence, in the Semiconductor index, that many large big-cap tech stocks are ready to run there. Many are at new 52-week highs and a lot of the sub-components of the Semiconductor/Electronics group have made big moves in the IBD 197 industry group list. It is very good to see the Semi’s join the market as this appears to be very bullish and should help turn some of those bears into the bulls camp, since they always say that it isn’t a real bull market unless the Semi’s are moving. Maybe I am stuck in years gone by, with this statement, but I still have heard plenty of people tell me that this rally (FOR THE PAST FOUR YEARS MIND YOU) is not that great of a rally because Semi stocks never led. Uhm, who said they had to lead? It is much better just seeing stocks like INTC, NVEC, NVDA, ADM, etc. making solid consistent gains. And that is what they are doing. The whole sector looks great. Of course, the best looking one recently has been SMTX. Those who subscribe at the gold level are well familiar with that very very pretty chart.
With a lot of the bullish leanings you are reading in this weekends post, you must also realize that I am no idiot. I have been partial selling many stocks that are in climax/parabolic type runs. Many, not all, of the stocks you see listed below have recently had 10-25% sold via the basic trading necessity of locking in profits. Holding your whole load as the stock continues to race up the charts in an exponential matter is not smart as sudden reversals become more and more likely. Small and smart selling based on either new highs with low volume, new highs with little price change and huge volume, or major reversals where the stock is up a lot on the day but then reverses to close lower are clear places to selloff 10%-20% of your big winners. Locking in some gains and then holding on for a possible climax run is just what the smart traders of yesteryear did and the smart traders of today do. One thing we definitely don’t do (not saying I am great, btw. Trust me I am FAR from it) is call tops. And that is one thing you will not see me do as long as we are moving higher and hitting new all-time and six-and-a-half year highs.
We have earnings season officially kicking off on Monday, with AA releasing earnings after the close. During the week we have numbers from stocks like INFY, PBG, DNA, MAR, YUM, and CTAS, and to close the week off we have GE. After that the fireworks really get going when the earnings really start pounding the table. Isn’t it funny how fast this time of the year can sneak up on you? Besides that there are, like always, economic numbers to digest. But nothing this week should impact the market like earnings will.
Aloha and I will see you in the chat room where you can guarantee we are ALWAYS on the right side of the market.
top holdings up this week - purchase date
TRCR 463% - 1/12
MA 223% - 8/2
OMTR 185% - 9/15
IHS 146% - 12/21/05
CPA 133% - 9/15
KHD 130% - 5/30/06
TTEC 128% - 8/25
ULTR 125% - 10/27
DECK 120% - 9/13
CXW 96% - 5/19/06
HURN 95% - 9/13
CNH 94% - 11/2
CRY 90% - 1/10
VDSI 89% - 1/14
EVEP 89% - 11/16
ZNH 84% - 12/26
APLX 84% - 9/28
AFSI 83% - 4/12
CKSW 69% - 10/11
LFL 68% - 12/13
HURC 66% - 12/18
VSNT 64% - 2/5
ATX 62% - 12/12
IMA 61% - 8/2
NAVI 59% - 12/19
TESO 58% - 2/16
XRA 58% - 5/24
KMGB 57% - 6/1
CRNT 54% - 5/21
TTG 54% - 11/30
CCC 53% - 3/26
FSLR 50% - 5/22
NTLS 50% - 1/30
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
Saturday, June 23, 2007
Stocks End The Week Full Of Red; NYSE And SP 500 Barely Close Below Their 50 Day Moving Averages
A slow but constant selloff hit stocks on a rebalancing day for the Russell indexes, as stocks closed near their session lows, closing lower for the first Friday in sixteen sessions. The losses came despite the debut of private-equity firm Blackstone Group. At the close the DJIA led the way lower with a 1.4% loss, the SP 500 took a 1.3% haircut, the NYSE and Nasdaq lost 1.1%, and the SP 600 held up the best only losing .9%. The blame on the losses were contributed to the subprime problems announced by BSC.
Holding up, along with the small caps, leading stocks in the form of the IBD 100 also lost only .9%. This continues a trend of this index outperforming to the upside and holding up better on the selloffs over the broad market. If this index was leading to the downside on these selloffs, I would be more worried. Instead it looks like normal choppy summer action.
Volume finished over 30% higher on the NYSE and the Nasdaq, due to the Russell rebalance. The key to today’s trading was knowing the facts of the intraday volume action. Volume was trending lower all day long, signaling that institutions were not dumping stocks, until the last hour of the day. That is when volume exploded. But it wasn’t due to selling by big funds. It was due to mutual funds having to reposition their index funds for the stocks that are entering and exiting the Russell index. Therefore, the higher volume with the losses do not signal a distribution day. Investors Business Daily confirms my thinking on this subject.
Breadth was decisively negative with decliners beating advancers on the NYSE by a 3-to-1 ratio and on the Nasdaq by a 2-to-1 ratio. Another nasty number, along with breadth, is that the new lows are trying to expand again, despite the indexes only being 2% or so off of their highs. New 52-week highs only came in with 171, compared to the new 52-week lows registering 144. That is a lot of new lows for a market near new highs. I am not sure how to interpret this.
For the week, the SP 500 and the DJIA led the way lower losing 2%, the NYSE and SP 600 lost 1.7%, and the Nasdaq was lower by 1.4%. Showing investors how leading stocks are supposed to act, even in a poor market, the IBD 100 managed a .1% gain for the week. This is why leading stocks outperform in the long run. The IBD 100 is now up 19% for the year, while most indexes are up around 10%. This goes to prove, ONCE AGAIN, that the big money is made by buying leading stocks, breaking out of sound bases with top fundamentals, in a bull market.
And that brings me to my own portfolio. Most of my longs are all holding key support and are still showing excellent price and volume action. Some stocks, obviously, have been cut this past week with the week market. But that is a good thing. Rough markets give you the chance to weed out the poor performing stocks and move more money into better performing stocks. This is why downtrends are good in a bull market. Constant uptrends make it hard for me to cut stocks that are holding support but not going very far. If I cut them too early, they end up taking off. Then the new stock I buy gives me a quick cut loss. But with markets that have normal pullbacks, I am allowed to separate the weak from the strong.
The only bad part is when one of those weak end up being a large position. Usually it does not happen, but it has happened a couple times recently which indicates to me I need to be more selective and careful with which stocks I pick to load up on. Besides stocks like MTRX and TTG, everything, pretty much, is acting just like it should be acting. Stocks moving higher, holding key support, and moving higher again. As long as top stocks, my stocks, and leading sector stocks keep acting like this it is silly to be calling market tops here. Especially with the NYSE short-interest ratio hitting ANOTHER all-time high at 7.82. Wow! They keep shorting this market despite the near new highs. Brave, I must say. Stupid, I must say.
I hear some people mention that there are too many bulls in the investors intelligence survey at 53% and too few bulls at 19% so we have to be near a top. What these people must not understand is that this survey is HORRIBLE at calling tops. It is ONLY useful at bottoms where normally bulls and bears cross around the 40-45% area. This happens to be good at correlating bottom with price in the indexes. As for tops? Are you kidding me. I guess anything to help there argument.
It doesn’t matter because I can come right back and say, “have you seen the realmoney.com poll this weekend?” So far, bears have 44% of the vote and bulls have only 31%. Last time I checked that doesn’t mean the crowd is bullish. Also have you seen the UBS sentiment index? It is NO WHERE NEAR euphoria levels. That index has a good track of indicating possible tops when the line hits the euphoria zone. It is not even close. The AAII is even close with 43% bullish and 33% bearish.
I hate to tell you this, bears. This is NOT what you see at tops. You do not see pessimism in the media and polls showing 70% of the public thinking we are in a recession, with NYSE short-interest at all-time highs and euphoria levels so absent from this market. Do you know what else is not out there, besides stocks in the Chemical-Fert group? Stocks in CLEAR end stages of climax runs. I can see some stocks in the middle of runs all over the place and I can clearly see that TNH and CF have gone nuts. But calling a top in these is not smart. These stocks still do not look like they are near a top, much less ready to rollover.
The action of GOOG, AAPL, CROX, RIMM, and other leading stocks are still rocking and are not in major climax runs. So it just seems hard for me to want to call a top when the leaders are still leading and some of them are almost closing near their highs on a day like today. If anything, JDSU in 2000 should be the case study for everyone. After that stock topped, it took SIX MONTHS before the big fall. Trust me, calling tops is a game of ignorance and pure idiocy. The right play is going with the trend. Something a TON of people reading this blog probably are NOT doing. You will see a MAJOR difference if you just learn how to do what the best traders of all-time did.
Are there reasons to pullback? Yes. We are getting overbought on all the oscillators I follow: ARMS index, 10-day moving average of the advance/decline line, and the McClellan. But at the same time I see that only 62% of all stocks in the market are above their 200 day moving average. I am not sure if that is bullish and means there is a lot of stocks waiting to join the run or if this index is confirming the overbought market. But I thought I would still give that fact, considering that in February 86% of all stocks were above the 200 dma. That market was overbought. This market might be overbought short-term but the 62% may signal that there is a lot of energy waiting to join the run.
If that is the case, that would be fine with me, only because I see the VIX ticking up a little. It would be nice to back and fill here, if it causes the VIX to rally over 20. That would help me make a lot more money on my longs that decide to follow-through. A 10% drop would even be better as a chance of VIX hitting 25 would definitely give me more volatility to make more money on stocks that are moving. Remember, a higher VIX gives you more potential for gains in stocks. This persistent low VIX does not allow for many stocks to make 200%-1000% runs in six to twelve months. A low VIX like we have now makes 100% winners spectacular. This is why a choppy market or an uptrend with some more 5% pullbacks would be nice. But with all the bearishness I have mentioned, LOL, along with another number I have left out–put/call is at .94–I doubt I am ever going to get my pullback.
Chances are when this market ends, it is going to unleash a horrible bear market. That would be OK also. That would allow me to short all the old leaders like TNH that have made 1000% plus gains since the rally started. Then after making some nice cash on shorts in the bear market, we will eventually get another bull market WITH A MUCH HIGHER VIX that will then give us a real great bull market to work with. The best time to make money is in markets like March 2003-January 2004. Those bull markets, after severe bear markets are what makes some traders careers.
Before I rap this up, I want to go over one more key component of this rally: the Semiconductor Index (SOX). Everyone always says that they don’t think bull markets are real bull markets unless the Semis are moving. The theory goes is that this is where the “hot” and “speculative” money goes for big returns in a bull market; when the semis are moving, the market is moving. Well now we have the Semis hitting new highs and the only question I have to ask is that: does it mean that the market is bullish now?
This scenario, after giving more thought to it, could run a two-way street. At first all I could think about is how bullish this is and now the perma-bears will have to figure out a crafty excuse to pooh-pooh this move in the Semis. Well they gave me a great argument on Friday. I took notice of the Relative Strength line of the Semiconductor index (SOX) and notice a very negative divergence developing. As price has continued to make a stairstep pattern of higher highs and lower lows, the RS line has actually failed to make new highs during any of the important moves in the SOX this year. Since the high in November, the index hit a series of highs in Jan, Feb, April, May, and Thursday. The problem if you look at your chart is that every RS high is lower.
So we can take this in, in two ways. One is that the market will continue to rally here, and now that the lagging SOX has caught up, the market will make a real more exponential move into new high ground. Or the SOX could be the sector that convinces the bears that this market is going to move higher and we suffer a fakeout-breakout. This would turn enough bears bullish to actually put in a possible top. Somehow, I think scenario one is correct, by simply looking at all my charts and the current situation of the market and leading stocks. But scenario two could happen also. We must NEVER rule ANY scenario out. That is smart trading.
On that note, enjoy your weekend and I will see you in the chat room. ALOHA!
top holdings up this week - purchase date
TRCR 432% - 1/12
MA 239% - 8/2
OMTR 162% - 9/15
IHS 136% - 12/21/05
TTEC 125% - 8/25
FTEK 123% - 10/6
MOS 121% - 10/12
MEH 114% - 8/30
CPA 114% - 9/15
MFW 111% - 1/29
HRZ 107% - 9/27
MCZ 106% - 3/27
DECK 101% - 9/13
CXW 93% - 5/19/06
PRGX 91% - 1/12
HURN 90% - 9/13
CNH 89% - 11/2
EVEP 85% - 11/16
ZNH 84% - 12/26
NTL 83% - 4/13
APLX 82% - 9/28
MVIS 80% - 12/21
VDSI 71% - 1/4
AFSI 69% - 4/12
LFL 66% - 12/13
VSNT 63% - 2/5
LTS 61% - 1/11
TESO 59% - 2/16
BMA 52% - 10/24
ETE 50% - 10/6
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
Holding up, along with the small caps, leading stocks in the form of the IBD 100 also lost only .9%. This continues a trend of this index outperforming to the upside and holding up better on the selloffs over the broad market. If this index was leading to the downside on these selloffs, I would be more worried. Instead it looks like normal choppy summer action.
Volume finished over 30% higher on the NYSE and the Nasdaq, due to the Russell rebalance. The key to today’s trading was knowing the facts of the intraday volume action. Volume was trending lower all day long, signaling that institutions were not dumping stocks, until the last hour of the day. That is when volume exploded. But it wasn’t due to selling by big funds. It was due to mutual funds having to reposition their index funds for the stocks that are entering and exiting the Russell index. Therefore, the higher volume with the losses do not signal a distribution day. Investors Business Daily confirms my thinking on this subject.
Breadth was decisively negative with decliners beating advancers on the NYSE by a 3-to-1 ratio and on the Nasdaq by a 2-to-1 ratio. Another nasty number, along with breadth, is that the new lows are trying to expand again, despite the indexes only being 2% or so off of their highs. New 52-week highs only came in with 171, compared to the new 52-week lows registering 144. That is a lot of new lows for a market near new highs. I am not sure how to interpret this.
For the week, the SP 500 and the DJIA led the way lower losing 2%, the NYSE and SP 600 lost 1.7%, and the Nasdaq was lower by 1.4%. Showing investors how leading stocks are supposed to act, even in a poor market, the IBD 100 managed a .1% gain for the week. This is why leading stocks outperform in the long run. The IBD 100 is now up 19% for the year, while most indexes are up around 10%. This goes to prove, ONCE AGAIN, that the big money is made by buying leading stocks, breaking out of sound bases with top fundamentals, in a bull market.
And that brings me to my own portfolio. Most of my longs are all holding key support and are still showing excellent price and volume action. Some stocks, obviously, have been cut this past week with the week market. But that is a good thing. Rough markets give you the chance to weed out the poor performing stocks and move more money into better performing stocks. This is why downtrends are good in a bull market. Constant uptrends make it hard for me to cut stocks that are holding support but not going very far. If I cut them too early, they end up taking off. Then the new stock I buy gives me a quick cut loss. But with markets that have normal pullbacks, I am allowed to separate the weak from the strong.
The only bad part is when one of those weak end up being a large position. Usually it does not happen, but it has happened a couple times recently which indicates to me I need to be more selective and careful with which stocks I pick to load up on. Besides stocks like MTRX and TTG, everything, pretty much, is acting just like it should be acting. Stocks moving higher, holding key support, and moving higher again. As long as top stocks, my stocks, and leading sector stocks keep acting like this it is silly to be calling market tops here. Especially with the NYSE short-interest ratio hitting ANOTHER all-time high at 7.82. Wow! They keep shorting this market despite the near new highs. Brave, I must say. Stupid, I must say.
I hear some people mention that there are too many bulls in the investors intelligence survey at 53% and too few bulls at 19% so we have to be near a top. What these people must not understand is that this survey is HORRIBLE at calling tops. It is ONLY useful at bottoms where normally bulls and bears cross around the 40-45% area. This happens to be good at correlating bottom with price in the indexes. As for tops? Are you kidding me. I guess anything to help there argument.
It doesn’t matter because I can come right back and say, “have you seen the realmoney.com poll this weekend?” So far, bears have 44% of the vote and bulls have only 31%. Last time I checked that doesn’t mean the crowd is bullish. Also have you seen the UBS sentiment index? It is NO WHERE NEAR euphoria levels. That index has a good track of indicating possible tops when the line hits the euphoria zone. It is not even close. The AAII is even close with 43% bullish and 33% bearish.
I hate to tell you this, bears. This is NOT what you see at tops. You do not see pessimism in the media and polls showing 70% of the public thinking we are in a recession, with NYSE short-interest at all-time highs and euphoria levels so absent from this market. Do you know what else is not out there, besides stocks in the Chemical-Fert group? Stocks in CLEAR end stages of climax runs. I can see some stocks in the middle of runs all over the place and I can clearly see that TNH and CF have gone nuts. But calling a top in these is not smart. These stocks still do not look like they are near a top, much less ready to rollover.
The action of GOOG, AAPL, CROX, RIMM, and other leading stocks are still rocking and are not in major climax runs. So it just seems hard for me to want to call a top when the leaders are still leading and some of them are almost closing near their highs on a day like today. If anything, JDSU in 2000 should be the case study for everyone. After that stock topped, it took SIX MONTHS before the big fall. Trust me, calling tops is a game of ignorance and pure idiocy. The right play is going with the trend. Something a TON of people reading this blog probably are NOT doing. You will see a MAJOR difference if you just learn how to do what the best traders of all-time did.
Are there reasons to pullback? Yes. We are getting overbought on all the oscillators I follow: ARMS index, 10-day moving average of the advance/decline line, and the McClellan. But at the same time I see that only 62% of all stocks in the market are above their 200 day moving average. I am not sure if that is bullish and means there is a lot of stocks waiting to join the run or if this index is confirming the overbought market. But I thought I would still give that fact, considering that in February 86% of all stocks were above the 200 dma. That market was overbought. This market might be overbought short-term but the 62% may signal that there is a lot of energy waiting to join the run.
If that is the case, that would be fine with me, only because I see the VIX ticking up a little. It would be nice to back and fill here, if it causes the VIX to rally over 20. That would help me make a lot more money on my longs that decide to follow-through. A 10% drop would even be better as a chance of VIX hitting 25 would definitely give me more volatility to make more money on stocks that are moving. Remember, a higher VIX gives you more potential for gains in stocks. This persistent low VIX does not allow for many stocks to make 200%-1000% runs in six to twelve months. A low VIX like we have now makes 100% winners spectacular. This is why a choppy market or an uptrend with some more 5% pullbacks would be nice. But with all the bearishness I have mentioned, LOL, along with another number I have left out–put/call is at .94–I doubt I am ever going to get my pullback.
Chances are when this market ends, it is going to unleash a horrible bear market. That would be OK also. That would allow me to short all the old leaders like TNH that have made 1000% plus gains since the rally started. Then after making some nice cash on shorts in the bear market, we will eventually get another bull market WITH A MUCH HIGHER VIX that will then give us a real great bull market to work with. The best time to make money is in markets like March 2003-January 2004. Those bull markets, after severe bear markets are what makes some traders careers.
Before I rap this up, I want to go over one more key component of this rally: the Semiconductor Index (SOX). Everyone always says that they don’t think bull markets are real bull markets unless the Semis are moving. The theory goes is that this is where the “hot” and “speculative” money goes for big returns in a bull market; when the semis are moving, the market is moving. Well now we have the Semis hitting new highs and the only question I have to ask is that: does it mean that the market is bullish now?
This scenario, after giving more thought to it, could run a two-way street. At first all I could think about is how bullish this is and now the perma-bears will have to figure out a crafty excuse to pooh-pooh this move in the Semis. Well they gave me a great argument on Friday. I took notice of the Relative Strength line of the Semiconductor index (SOX) and notice a very negative divergence developing. As price has continued to make a stairstep pattern of higher highs and lower lows, the RS line has actually failed to make new highs during any of the important moves in the SOX this year. Since the high in November, the index hit a series of highs in Jan, Feb, April, May, and Thursday. The problem if you look at your chart is that every RS high is lower.
So we can take this in, in two ways. One is that the market will continue to rally here, and now that the lagging SOX has caught up, the market will make a real more exponential move into new high ground. Or the SOX could be the sector that convinces the bears that this market is going to move higher and we suffer a fakeout-breakout. This would turn enough bears bullish to actually put in a possible top. Somehow, I think scenario one is correct, by simply looking at all my charts and the current situation of the market and leading stocks. But scenario two could happen also. We must NEVER rule ANY scenario out. That is smart trading.
On that note, enjoy your weekend and I will see you in the chat room. ALOHA!
top holdings up this week - purchase date
TRCR 432% - 1/12
MA 239% - 8/2
OMTR 162% - 9/15
IHS 136% - 12/21/05
TTEC 125% - 8/25
FTEK 123% - 10/6
MOS 121% - 10/12
MEH 114% - 8/30
CPA 114% - 9/15
MFW 111% - 1/29
HRZ 107% - 9/27
MCZ 106% - 3/27
DECK 101% - 9/13
CXW 93% - 5/19/06
PRGX 91% - 1/12
HURN 90% - 9/13
CNH 89% - 11/2
EVEP 85% - 11/16
ZNH 84% - 12/26
NTL 83% - 4/13
APLX 82% - 9/28
MVIS 80% - 12/21
VDSI 71% - 1/4
AFSI 69% - 4/12
LFL 66% - 12/13
VSNT 63% - 2/5
LTS 61% - 1/11
TESO 59% - 2/16
BMA 52% - 10/24
ETE 50% - 10/6
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
Saturday, June 02, 2007
Leading Stocks Lead The Way As A Very Bullish Week Comes To A Close; NYSE Short Interest At Five-Year Highs
A lot of strong economic data helped stocks finish higher, on Friday, but they were off from their early morning highs. However, the closes were still impressive and the DJIA even had a very strong final hour, even with the Shanghai market falling another 2.7% (still up 50% this year). At the close the SP 600 hit an all-time high rallying .8%, the NYSE hit an all time high rallying .6%, the SP 500 hit an all-time closing high rallying .4%, the Nasdaq hit 6 1/2 year highs rallying .4%, and the DJIA rallied .3% hitting another all-time high.
The most important action, came in the form of leading stocks. The IBD 100 gained 1%, marking the fifth session in a row that the IBD 100 has outperformed the broad market. Leading stocks leading the market tells you that this rally is strong and should have some real legs behind it. It has taken a long time for these stocks to establish a dominate role in this market, since the March 2003 - May 2006 period, but now they are taking the lead from the DJIA. Let’s hope this continues.
Volume was 19% lower on the Nasdaq and 11% lower on the NYSE, which kind of puts a damper on the gains. But the figures for the week confirm the markets strength. The SP 600 was the strongest performer with a 2.8% gain, the Nasdaq followed with a 2.2% gain, the NYSE gained 1.7%, the SP 500 rallied 1.4%, and the DJIA gained 1.2%. The IBD 100 blew away the competition, with a 3.9% gain. This is what you want to see. This is something we really have not seen since the bottom last July/August. Welcome back leading stocks!
There were two advancers for every stock that declined on the NYSE and there were three winners for every two losers on the Nasdaq. New highs finally picked up, with an impressive 799 new 52-week highs. This kind of expansion should give the doubters of this rally some reason to turn a bit more bullish. If that doesn’t work, they have the put/call ratio still up there around the .75 area. That is not high but it is not low either. The most important and telling internal is the amount of short sellers out there.
The NYSE short interest ratio is at its highest level in more than five years at 7.74. This shows major pessimism amongst short sellers and this should keep the market bullish. It is not a given but the high short interest ratio with a higher put/call ratio shows that the crowd is still on the wrong side, despite some surveys.
The AAII survey has come out with 45% bears and only 33% bulls, confirming that the retail crowd is shorting the upticks. One of the most dangerous, arrogant, and ego-driven trade you can possibly make in such a strong tape. Most of these traders are trying to “outsmart” the market. A play that has a very low success rate.
Other surveys, however, show the opposite. The Investors Intelligence survey still shows a very high amount of bulls and the realmoney.com most recent weekend poll is showing 57% of the readers bullish. However, by looking at the post on Rev Shark’s blog, it doesn’t seem that many are bullish on this tape. A lot of the realmoney.com readers leave much to the imagination, anyways. I don’t see too much talent around there.
The other clear fact that the actual trading is not bullish for the retail crowd is the fact that equity ETF’s saw outflows this week. You don’t see that at tops. You see extreme inflows into mutual funds and ETF’s. This shows that the crowd is skeptical on the current rise. Being emotional in the market and betting against the trend is an even worse double whammy that is sure to keep you from beating the market in the long run. If I wasn’t on margin I wouldn’t be beating the market this year. That tells me exactly how rough the current uptrend really is. It is not as easy as it looks–unless you are a daytrader, then I assume it is safe to say “it is easy.” Let’s see how long that last.
What does seem to not be lasting is the weak economy. On one of the busiest weeks I can remember this year, economic data came rolling in confirming what I have been saying all year long–this economy is on FIRE!!! Yes, GDP did come in at its lowest level in five years but it appears to be a short-term thing as the numbers this week confirmed that everything appears to be fine with the economy. That is confirmed by the banks finally getting a bid this week.
The strong economic data on Friday came from the payroll figures as jobs grew 157,000 in May above expectations. The core inflation reading came in at only .1% which was below expectations also. Overall a good report. Then the ISM manufacturing index climbed to 55 in May, showing expansion from April. A reading over 50 is bullish. These kind of economic numbers is why this market never goes down. The DJIA and SP 500 are now up 8 out of the last 9 weeks. An unbelievable run, to say the least.
This unbelievable run is allowing for a TON TON TON of breakouts. Everywhere I scan, I can find breakouts. So that confirms in my mind that this bull still has room to run. If we do reverse now, I can tell you it would be very significant because this many stocks breaking out of fresh bases should mean that the market is going to run. A reversal would be a fakeout breakout and would trap many longs. If I could, and if I was a billionaire or even a millionaire (I am still young and live on Maui, don’t forget that), I would be long 500 stocks right now. There are just that many nice charts. They are not all green and pretty but they are still there. Stocks like TLVT are easily passed with all the nice charts out there. However, a gain of 15% in three days shows that every breakout seems to be working here.
This market does require a lot of work to keep up with the gains in the NYSE, compared to other bull markets. This is in direct correlation with the VIX. Remember, a low VIX, means lower volatility and when stocks rise they will not go up as much when the VIX is at 12 than if the VIX was at 32. All the stocks you see up 100% would be up 300%, if this rally came right after a horrible bear market like the March 2003 was. Even though the gains aren’t as much, the duration is a lot longer. This makes it hard work and can really put a drain on you. I know it is me. I really want a pullback, I really need a pullback, and I just want some time to relax. I doubt I am going to get that.
What also confirms that I doubt I am going to get that? Well after eight out of nine weeks of gains, why should I expect anything else. And the 10-year yield is now confirming what I have been saying all year. The 10-year is now at its highest level in nine months, at 4.94%. The odds of a Fed cut this year fell to 16% from 100% a month ago. Remember, in the world of stocks it is the opposite of what you would think would work. A Fed raising rates tells us that the economy is on fire and they need to slow it down. A Fed cutting rates tells us the economy is in trouble and they need to fill it with cash. With the odds increasing of no rate cut, you can rest assure that this economy is doing just fine. This should be bullish for stocks.
To finish this weekends analysis off I want to state that I don’t think the USA is in a bubble AT ALL. China may be in a bubble but if anyone has IBD and can remember the chart comparing the seven year run-up to the DJIA 29 and Nassy 00 top, you can clearly see China could have a long way to run. Especially since the Nasdaq had a P/E over 200. I believe China is around 45-50.
I did see some bubble action in a lot of stocks last month. But they have either fallen and that money moved into other leaders or they are still holding up. Two personal longs that I saw go into OBVIOUS climax runs (TNH and ONT) were both sold and since then the move has looked like the correct one. TNH is still holding but ONT looks done. Either way those charts had climax runs. There aren’t too many out there like that. Heck, I can’t even find stocks to sell. I only had two partial sales and zero complete sells out of 240 longs (70 are major holdings, the rest are for rent money and fun). The day before there were also no complete sales. Stunning. Normally, even in bull markets, there is always one or two that needs to be cut. Not in this market.
Enjoy the rest of your weekend. Go Anaheim!!! Go Cleveland!!! Aloha and I will see you in the chat room.
http://mauitrader.blogspot.com
top holdings up this week - purchase date
KNOL 365% - 1/12/06
TRCR 350% - 1/12
PTT 240% - 11/16
MA 202% - 8/2
CCOI 152% - 9/27
TTEC 146% - 8/25
ULTR 122% - 10/27
HRZ 115% - 9/27
MFW 115% - 1/29
MEH 113% - 8/30
KHDH 108% - 5/30/06
IHS 106% - 12/21/05
CPA 104% - 9/15
MOS 104% - 10/12
CRY 103% - 1/10
NEXC 101% - 10/25
PRGX 96% - 1/12
CXW 92% - 5/19/06
IGLD 91% - 10/26
DECK 86% - 9/13
EVEP 83% - 11/16
JSDA 80% - 12/20
CNH 79% - 11/2
VDSI 78% - 1/4
APLX 77% - 9/28
HURN 77% - 9/13
MVIS 76% - 12/21
MCZ 74% - 3/27
IMMU 73% - 12/19
FTEK 67% - 10/6
TTG 64% - 11/30
NSH 61% - 12/19
LFL 61% - 12/13
BMA 56% - 10/24
TESO 54% - 2/16
NTL 50% - 4/13
SCI 50% - 10/10
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
The most important action, came in the form of leading stocks. The IBD 100 gained 1%, marking the fifth session in a row that the IBD 100 has outperformed the broad market. Leading stocks leading the market tells you that this rally is strong and should have some real legs behind it. It has taken a long time for these stocks to establish a dominate role in this market, since the March 2003 - May 2006 period, but now they are taking the lead from the DJIA. Let’s hope this continues.
Volume was 19% lower on the Nasdaq and 11% lower on the NYSE, which kind of puts a damper on the gains. But the figures for the week confirm the markets strength. The SP 600 was the strongest performer with a 2.8% gain, the Nasdaq followed with a 2.2% gain, the NYSE gained 1.7%, the SP 500 rallied 1.4%, and the DJIA gained 1.2%. The IBD 100 blew away the competition, with a 3.9% gain. This is what you want to see. This is something we really have not seen since the bottom last July/August. Welcome back leading stocks!
There were two advancers for every stock that declined on the NYSE and there were three winners for every two losers on the Nasdaq. New highs finally picked up, with an impressive 799 new 52-week highs. This kind of expansion should give the doubters of this rally some reason to turn a bit more bullish. If that doesn’t work, they have the put/call ratio still up there around the .75 area. That is not high but it is not low either. The most important and telling internal is the amount of short sellers out there.
The NYSE short interest ratio is at its highest level in more than five years at 7.74. This shows major pessimism amongst short sellers and this should keep the market bullish. It is not a given but the high short interest ratio with a higher put/call ratio shows that the crowd is still on the wrong side, despite some surveys.
The AAII survey has come out with 45% bears and only 33% bulls, confirming that the retail crowd is shorting the upticks. One of the most dangerous, arrogant, and ego-driven trade you can possibly make in such a strong tape. Most of these traders are trying to “outsmart” the market. A play that has a very low success rate.
Other surveys, however, show the opposite. The Investors Intelligence survey still shows a very high amount of bulls and the realmoney.com most recent weekend poll is showing 57% of the readers bullish. However, by looking at the post on Rev Shark’s blog, it doesn’t seem that many are bullish on this tape. A lot of the realmoney.com readers leave much to the imagination, anyways. I don’t see too much talent around there.
The other clear fact that the actual trading is not bullish for the retail crowd is the fact that equity ETF’s saw outflows this week. You don’t see that at tops. You see extreme inflows into mutual funds and ETF’s. This shows that the crowd is skeptical on the current rise. Being emotional in the market and betting against the trend is an even worse double whammy that is sure to keep you from beating the market in the long run. If I wasn’t on margin I wouldn’t be beating the market this year. That tells me exactly how rough the current uptrend really is. It is not as easy as it looks–unless you are a daytrader, then I assume it is safe to say “it is easy.” Let’s see how long that last.
What does seem to not be lasting is the weak economy. On one of the busiest weeks I can remember this year, economic data came rolling in confirming what I have been saying all year long–this economy is on FIRE!!! Yes, GDP did come in at its lowest level in five years but it appears to be a short-term thing as the numbers this week confirmed that everything appears to be fine with the economy. That is confirmed by the banks finally getting a bid this week.
The strong economic data on Friday came from the payroll figures as jobs grew 157,000 in May above expectations. The core inflation reading came in at only .1% which was below expectations also. Overall a good report. Then the ISM manufacturing index climbed to 55 in May, showing expansion from April. A reading over 50 is bullish. These kind of economic numbers is why this market never goes down. The DJIA and SP 500 are now up 8 out of the last 9 weeks. An unbelievable run, to say the least.
This unbelievable run is allowing for a TON TON TON of breakouts. Everywhere I scan, I can find breakouts. So that confirms in my mind that this bull still has room to run. If we do reverse now, I can tell you it would be very significant because this many stocks breaking out of fresh bases should mean that the market is going to run. A reversal would be a fakeout breakout and would trap many longs. If I could, and if I was a billionaire or even a millionaire (I am still young and live on Maui, don’t forget that), I would be long 500 stocks right now. There are just that many nice charts. They are not all green and pretty but they are still there. Stocks like TLVT are easily passed with all the nice charts out there. However, a gain of 15% in three days shows that every breakout seems to be working here.
This market does require a lot of work to keep up with the gains in the NYSE, compared to other bull markets. This is in direct correlation with the VIX. Remember, a low VIX, means lower volatility and when stocks rise they will not go up as much when the VIX is at 12 than if the VIX was at 32. All the stocks you see up 100% would be up 300%, if this rally came right after a horrible bear market like the March 2003 was. Even though the gains aren’t as much, the duration is a lot longer. This makes it hard work and can really put a drain on you. I know it is me. I really want a pullback, I really need a pullback, and I just want some time to relax. I doubt I am going to get that.
What also confirms that I doubt I am going to get that? Well after eight out of nine weeks of gains, why should I expect anything else. And the 10-year yield is now confirming what I have been saying all year. The 10-year is now at its highest level in nine months, at 4.94%. The odds of a Fed cut this year fell to 16% from 100% a month ago. Remember, in the world of stocks it is the opposite of what you would think would work. A Fed raising rates tells us that the economy is on fire and they need to slow it down. A Fed cutting rates tells us the economy is in trouble and they need to fill it with cash. With the odds increasing of no rate cut, you can rest assure that this economy is doing just fine. This should be bullish for stocks.
To finish this weekends analysis off I want to state that I don’t think the USA is in a bubble AT ALL. China may be in a bubble but if anyone has IBD and can remember the chart comparing the seven year run-up to the DJIA 29 and Nassy 00 top, you can clearly see China could have a long way to run. Especially since the Nasdaq had a P/E over 200. I believe China is around 45-50.
I did see some bubble action in a lot of stocks last month. But they have either fallen and that money moved into other leaders or they are still holding up. Two personal longs that I saw go into OBVIOUS climax runs (TNH and ONT) were both sold and since then the move has looked like the correct one. TNH is still holding but ONT looks done. Either way those charts had climax runs. There aren’t too many out there like that. Heck, I can’t even find stocks to sell. I only had two partial sales and zero complete sells out of 240 longs (70 are major holdings, the rest are for rent money and fun). The day before there were also no complete sales. Stunning. Normally, even in bull markets, there is always one or two that needs to be cut. Not in this market.
Enjoy the rest of your weekend. Go Anaheim!!! Go Cleveland!!! Aloha and I will see you in the chat room.
http://mauitrader.blogspot.com
top holdings up this week - purchase date
KNOL 365% - 1/12/06
TRCR 350% - 1/12
PTT 240% - 11/16
MA 202% - 8/2
CCOI 152% - 9/27
TTEC 146% - 8/25
ULTR 122% - 10/27
HRZ 115% - 9/27
MFW 115% - 1/29
MEH 113% - 8/30
KHDH 108% - 5/30/06
IHS 106% - 12/21/05
CPA 104% - 9/15
MOS 104% - 10/12
CRY 103% - 1/10
NEXC 101% - 10/25
PRGX 96% - 1/12
CXW 92% - 5/19/06
IGLD 91% - 10/26
DECK 86% - 9/13
EVEP 83% - 11/16
JSDA 80% - 12/20
CNH 79% - 11/2
VDSI 78% - 1/4
APLX 77% - 9/28
HURN 77% - 9/13
MVIS 76% - 12/21
MCZ 74% - 3/27
IMMU 73% - 12/19
FTEK 67% - 10/6
TTG 64% - 11/30
NSH 61% - 12/19
LFL 61% - 12/13
BMA 56% - 10/24
TESO 54% - 2/16
NTL 50% - 4/13
SCI 50% - 10/10
Market Commentary At Big Wave Trading Bronze Level One
New Swing Longs: Silver Level Two
New Swing Shorts: Silver Level Two
Stocks On My Watchlist: Gold Level Three
Complete Profits/Losses: Gold Level Three
Partial Profits/Losses: Gold Level Three
MauiTrader Forums: Gold Level Three
MauiTrader Chat Room: Gold Level Three
Longs Up On The Day: Gold Level Three
Shorts Up On The Day: Gold Level Three
Subscribe to:
Posts (Atom)