Today was basically a day of slow steady selling until the final hour hit. That is when a major rally pushed the indexes higher to close near the HOD with volume higher than the session before. It was quite obvious the Nasdaq led with the volume compared to the NYSE. However, sadly, leading stocks did not participate like you would like to see as the IBD 85-85 finished off 2%.
As a natural bull by heart and forced bear due to the ugly market action, I still must admit it has been nice to see the market stabilize the last two days instead of crack wide open like it acted like it was going to do. It seemed like this market was ready to break wide open as less and less stocks looked good. The good news comes via the past two days as some stocks avoided the major selloff three days ago and still have decent charts. I have posted these in the new longs area. Let's hope soon we can go long some of these charts off of nice chart patterns.
However, if they don't setup and instead the market breaks down, I am sure that Gold and Silver stocks and the commodities will continue to do well. We are already long one nice gold stock and have many other on our watchlist but that can only be gained by going on the Silver or Gold areas.
If the market does rally and the volume continues to come below average of the last 50 days I would be more inclined to look to short the rally than get long. If the rally comes with volume and max green BOP charts and CANSLIM quality stocks setup then BOOM we go long. However, if these charts and stocks do not show up and instead low volume rallies throw stocks right to their key resistance levels I will have no problem going short.
Today was very bullish but volume was not huge enough and leading stocks did not participate. So really it wasn't as wonderful as it seemed. Still it is nice to see the market acting well here. But the fact I have 39 shorts and only 10 longs does not give me confidence a new bull market is around the corner. Either way those shorts have made us a lot of money already and I would have no problem getting rid of them, turning around, and getting more long. At the same time I have no problem going more short, if the market turns down. And what if the market continues to go sideways? Well, I am a very patient man and that is why I did NOT miss 2003 while SO MANY walked away from 2000-2002.
Leaders are made during hard times; not good. Aloha everyone and I will see you in our busier and busier chat room. Aloha!! Make sure you watch the video below to know everything you need to know about the market. My commentaries are going to be shorter because my subscribers believe I give out too much for free. I am going to respect their wishes. You still have enough information here to safely navigate the market to safe profits. Remember, cash is STILL KING with gold being the queen. Aloha!
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Showing posts with label stocks. Show all posts
Showing posts with label stocks. Show all posts
Thursday, February 12, 2009
Monday, September 03, 2007
Stocks Close The Week On A Bullish Note As Volume Is Below Average For The Ninth Day In-A-Row; Enjoy Your Labor Day Monday!!
Once again, it looks like the Fed, this time with GWB, has come to save the day for the stock market, as stocks rallied on the good news that the Fed and GWB are on the path to help distressed home owners with rising mortgage payments that they can not make. While I am okay with helping out the poor homeowners, as long as he does not help out the stupid lenders that practiced this predatory lending, I will happy.
As it was, the markets ended the low-volume holiday spirited week with gains across the board, with the NYSE leading the way with a 1.5% gain. However, that gain came on lower volume, unlike the Nasdaq which saw volume rise, but breadth was 6-to-1 in favor of advancers over decliners. The best index for the week was the IBD 100, gaining 1.4%. So the appetite of the buyers was very healthy, even though NONE of those buyers were “the smart” money. If they were, you would have seen volume over the 50 day volume average. As it was it was just another retail driven pre-holiday rally.
It was, however, despite the low volume, a very important week, with Wednesday signaling a follow-through day to the attempted rally that started on August 16. Even though the rally attempt came on day 10, the volume was well below the 50 day volume average, and there were almost zero stocks with top fundamentals and great chart patterns breaking out of fresh and well formed bases. Overall, we can confidently say that this follow-through was very weak and was very uneventful. That is what normally happens when you get one of these low volume follow-through days before a long holiday weekend in the summer.
The thing you have to remember is that despite the follow-through happening on low volume, thus increasing its chances for failure down the road, we still had a follow-through and it has to be respected. Being disciplined and respecting the rules is the only way to prevent yourself from missing a possible uptrend that could come from this. Looking for longs and not convincing yourself that “this rally will fail” (how many times did I hear that on Thursday and Friday??) is your only concern right now. If we can’t find any new longs breaking out of green, tight, accumulation filled bases and the market rolls over, then you cut your losses. It is that easy.
But, if you try to outsmart the market and show it how smart you are, you are going to look as ridiculous as EVERYONE (AND I MEAN EVERYONE) did during the July/August lows in 2006. While I was not bullish on those lows because of the low volume and lack of strong longs, I still respected the trend and went long many stocks that made 50%-100% gains. Finding these three gems (HRZ, AFSI, and TESO–all produced 50% gains quickly) that I loaded up on enabled me to make some very nice gains while many people struggled with the last rally. This is why WE follow rules and not sheeple.
Now, how will we know if this rally is going to fail? We will know if this rally is going to fail if all of a sudden we start getting hit with distribution days. It only takes one distribution day to throw the rally into trouble. But if we get four to five distribution days before breaking the August 16 lows, you can guarantee it will not be long before those lows are breached. The also other OBVIOUS signal that this rally has failed will be if we pierce those August 16 lows. That is your failure line.
Right now, sentiment seems to be a bit bearish and that, in turn, is bullish for equities. The put/call ratio hovered around .8 to 1.10 all week long and closed Friday at a still pretty high .90. That clearly is showing us that the retail crowd is placing nearly as many bearish bets as long bets. When the crowd thinks they are smart enough to make money on the downside, it is probably safe to assume the downside is not the side to be on. This also lines up with the Investors Intelligence survey. This survey shows only 41% bulls to 37% bears. While this number did NOT cross, normally confirming a market bottom, the fact that these numbers have touched definitely shows that there are enough bears out there to produce a rally as their money comes in off the sidelines. However, it would have been a lot better if the bulls and bears would have crossed. That definitely would have me thinking we bottomed. But, there is still more possible work to do. If the bears were at 45% and the bulls were at 35%, and I had some nice green charts, you better believe I would be in the “bottom calling” camp.
Some things that make it hard for me to believe all the selling is over is that we have absolutely no new leaders with nice charts stepping up currently. Now, that could change, with the Computer and Internet-E Commerce groups moving up the ranks, along with the Telecom stocks showing their muscle leading stocks with the amount of new 52-week highs on Friday. If these stocks can find me some fresh leaders, then I will be much happier. But as it is most of these groups don’t have much working for them just yet.
Instead, we have the Food-Dairy Products group leading this current rally. THAT IS NOT BULLISH. The other problem I see is that we are being led up by a select and very small group of big-cap growth (most being tech) stocks. GRMN, GOOG, BIDU, AAPL, RIMM, DRYS, CELG, ZNH, LFC, TNH, CHL, EXM, and FWLT continue to just breakout, build a sloppy base, breakout, build another sloppy base, breakout, and do this over and over. So far so good, with these stocks. However, IF their uptrends ever stop, you can bet that the markets selloff will just be beginning. Many inexperienced investors already see these stocks as a buy on every dip. Soon they will be convinced that EVERY dip is a buy, no matter how many dips they have. When that happens, you better believe I will be short and maxed out on margin in these once loved former leaders.
One other key thing about this rally attempt is that only the SP-500 has a B rating. When the stock market bottomed in March 2003 (after putting in the real bottom in October 2002) the Nasdaq carried an ACC/DIS rating of an A-. So even if we have in fact made a short-term bottom, it is almost guaranteed to not be ready for a real rally for at least a very long time, as there is plenty of distribution still lingering in this market. When you have the IBD 100 with a D- for an ACC/DIS rating, it seriously can’t be all that great out there. Take this along with the fact that the only index above the 50 day moving average is the Nasdaq and you have a market that still has plenty of headwinds facing it, despite that follow-through.
In honesty, it still appears, the best play is to continue to stay long your strong stocks in an uptrend, to keep new buys and new shorts small unless the charts are perfect (not many like that at all), cut your losses fast on those stocks that do not work out, and to try to stay off too much margin and remain cash heavy until a clear trend establishes itself. I hate to tell you, but, right now, there is no solid uptrend or downtrend; just a big wild low-volume mess that is sure to only continue.
WINNERS: KHD 131% ZNH 238% MOS 140% EBIX 60% VDSI 141% CRNT 105% OMTR 215% BCSI 91% ANO 167% FSLR 59%
As it was, the markets ended the low-volume holiday spirited week with gains across the board, with the NYSE leading the way with a 1.5% gain. However, that gain came on lower volume, unlike the Nasdaq which saw volume rise, but breadth was 6-to-1 in favor of advancers over decliners. The best index for the week was the IBD 100, gaining 1.4%. So the appetite of the buyers was very healthy, even though NONE of those buyers were “the smart” money. If they were, you would have seen volume over the 50 day volume average. As it was it was just another retail driven pre-holiday rally.
It was, however, despite the low volume, a very important week, with Wednesday signaling a follow-through day to the attempted rally that started on August 16. Even though the rally attempt came on day 10, the volume was well below the 50 day volume average, and there were almost zero stocks with top fundamentals and great chart patterns breaking out of fresh and well formed bases. Overall, we can confidently say that this follow-through was very weak and was very uneventful. That is what normally happens when you get one of these low volume follow-through days before a long holiday weekend in the summer.
The thing you have to remember is that despite the follow-through happening on low volume, thus increasing its chances for failure down the road, we still had a follow-through and it has to be respected. Being disciplined and respecting the rules is the only way to prevent yourself from missing a possible uptrend that could come from this. Looking for longs and not convincing yourself that “this rally will fail” (how many times did I hear that on Thursday and Friday??) is your only concern right now. If we can’t find any new longs breaking out of green, tight, accumulation filled bases and the market rolls over, then you cut your losses. It is that easy.
But, if you try to outsmart the market and show it how smart you are, you are going to look as ridiculous as EVERYONE (AND I MEAN EVERYONE) did during the July/August lows in 2006. While I was not bullish on those lows because of the low volume and lack of strong longs, I still respected the trend and went long many stocks that made 50%-100% gains. Finding these three gems (HRZ, AFSI, and TESO–all produced 50% gains quickly) that I loaded up on enabled me to make some very nice gains while many people struggled with the last rally. This is why WE follow rules and not sheeple.
Now, how will we know if this rally is going to fail? We will know if this rally is going to fail if all of a sudden we start getting hit with distribution days. It only takes one distribution day to throw the rally into trouble. But if we get four to five distribution days before breaking the August 16 lows, you can guarantee it will not be long before those lows are breached. The also other OBVIOUS signal that this rally has failed will be if we pierce those August 16 lows. That is your failure line.
Right now, sentiment seems to be a bit bearish and that, in turn, is bullish for equities. The put/call ratio hovered around .8 to 1.10 all week long and closed Friday at a still pretty high .90. That clearly is showing us that the retail crowd is placing nearly as many bearish bets as long bets. When the crowd thinks they are smart enough to make money on the downside, it is probably safe to assume the downside is not the side to be on. This also lines up with the Investors Intelligence survey. This survey shows only 41% bulls to 37% bears. While this number did NOT cross, normally confirming a market bottom, the fact that these numbers have touched definitely shows that there are enough bears out there to produce a rally as their money comes in off the sidelines. However, it would have been a lot better if the bulls and bears would have crossed. That definitely would have me thinking we bottomed. But, there is still more possible work to do. If the bears were at 45% and the bulls were at 35%, and I had some nice green charts, you better believe I would be in the “bottom calling” camp.
Some things that make it hard for me to believe all the selling is over is that we have absolutely no new leaders with nice charts stepping up currently. Now, that could change, with the Computer and Internet-E Commerce groups moving up the ranks, along with the Telecom stocks showing their muscle leading stocks with the amount of new 52-week highs on Friday. If these stocks can find me some fresh leaders, then I will be much happier. But as it is most of these groups don’t have much working for them just yet.
Instead, we have the Food-Dairy Products group leading this current rally. THAT IS NOT BULLISH. The other problem I see is that we are being led up by a select and very small group of big-cap growth (most being tech) stocks. GRMN, GOOG, BIDU, AAPL, RIMM, DRYS, CELG, ZNH, LFC, TNH, CHL, EXM, and FWLT continue to just breakout, build a sloppy base, breakout, build another sloppy base, breakout, and do this over and over. So far so good, with these stocks. However, IF their uptrends ever stop, you can bet that the markets selloff will just be beginning. Many inexperienced investors already see these stocks as a buy on every dip. Soon they will be convinced that EVERY dip is a buy, no matter how many dips they have. When that happens, you better believe I will be short and maxed out on margin in these once loved former leaders.
One other key thing about this rally attempt is that only the SP-500 has a B rating. When the stock market bottomed in March 2003 (after putting in the real bottom in October 2002) the Nasdaq carried an ACC/DIS rating of an A-. So even if we have in fact made a short-term bottom, it is almost guaranteed to not be ready for a real rally for at least a very long time, as there is plenty of distribution still lingering in this market. When you have the IBD 100 with a D- for an ACC/DIS rating, it seriously can’t be all that great out there. Take this along with the fact that the only index above the 50 day moving average is the Nasdaq and you have a market that still has plenty of headwinds facing it, despite that follow-through.
In honesty, it still appears, the best play is to continue to stay long your strong stocks in an uptrend, to keep new buys and new shorts small unless the charts are perfect (not many like that at all), cut your losses fast on those stocks that do not work out, and to try to stay off too much margin and remain cash heavy until a clear trend establishes itself. I hate to tell you, but, right now, there is no solid uptrend or downtrend; just a big wild low-volume mess that is sure to only continue.
WINNERS: KHD 131% ZNH 238% MOS 140% EBIX 60% VDSI 141% CRNT 105% OMTR 215% BCSI 91% ANO 167% FSLR 59%
Saturday, April 07, 2007
HAPPY EASTER!!!, HAPPY GOOD FRIDAY!!!, AND HAPPY PESACH!!!; Stocks End Short Week With More Gains On Light Trade
HAPPY EASTER!!!, HAPPY GOOD FRIDAY!!!, AND HAPPY PESACH (PASSOVER)!!!; Stocks End Short Week With More Gains On Light Trade
By MauiTrader
Stocks started the morning off with a gap lower on the back of a currency tightening measures in China. But after the gap lower, stocks steadily climbed higher on very quiet trade for the rest of the day. That reversal off the gap lower was caused by the Labor Department announcing that jobless claims this week fell within forecast. Those jobless claims this week rose by 11,000 to 321,000.
Also helping to lift stocks was a couple of merger and acquisition related announcements. Kirk Kerkorian has made a $4.5 billion bid for DCX and WEBM agreed to be acquired by Software AG. WEBM rose 27% on the announcement. This now puts the 1Q M&A deals up 27% over this time last year. $1.1 trillion worth of M&A deals this year has us on pace to beat last years record. More amazing is private equity deals. Those have risen 47%, year-over-year in 2007 so far.
Combine the positive jobless claims with the M&A deals, and with most traders taking Thursday off to have a very long weekend, and you had a recipe perfect for higher stock prices, despite oil climbing back over $64 on the news that the EIA saying that oil inventories declined for the eight-week in a row.
At the closing bell, the Nasdaq led the way with a .5% gain, the NYSE and the SP 500 followed with .3% gains, and the SP 600 and the DJIA lagged with .2% gains. A tad more troublesome is the IBD 100. That index only managed a .2% gain, well lagging the Nasdaq on the session.
Volume was lower on both the NYSE and the Nasdaq by about 10%. The lower volume was well below the 50 day volume average and was the lowest total of the year. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. There were 413 new highs to 53 new lows–and on the NYSE there were 234 new highs to only 13 new lows.
Today was another day of a low volume rally that saw the indexes barely move higher but once again shake off early weakness to do so. This is not a great trend we have developing, since the follow-through day on March 21st. Since that follow through day the market was been higher in seven sessions. All seven sessions have failed to have volume over the 50 day volume average and only two of the up sessions have come with volume heavier than the day before. This is a low volume rally that will not last much longer unless we get some clear accumulation days in here by big institutional traders. Until we have volume come in over the 50 day volume average on the upside, we are open to a severe sell-off still. Bottom line is that I would not take much away from this week’s holiday shortened trading.
For the week it was very positive with all indexes closing higher. The Nasdaq led the way with a 2.1% gain, the NYSE followed with a 1.8% gain, the DJIA was right behind with a 1.7% gain, the SP 500 rose 1.6%, and the SP 600 gained 1.5%. I could go into more detail about this weeks action but it would be silly to do so. All you need to know is that it was a holiday short week. The bulls almost always have control of these weeks. This week was no exception.
There is no doubt that we are still in rally mode but everything in my gut tells me we are not going far from here. Now I will change my stance in seconds, if I start to see CANSLIM stocks with consistent great EPS and sales growth breakout from fresh bases and the markets start moving higher on HUGE volume. However, all I keep seeing is the old leaders breakout from choppy bases, defensive and utility issues climbing, and little small sub-$10 momo stocks moving. This does not make a safe big bull market. If we start seeing some more buying here on a lot of volume I will be much happier. However, unless we see it soon, we are increasing our chances of failure each day that passes that volume on the up days remain under the 50 day volume average.
Can we make money here? Of course! If you are a subscriber at least on the silver level you can see for yourself that almost EVERYTHING that I have touched since the February 27th sell-off is either higher or has not violated a complete cut loss area. However, there is nothing over $10 breaking out from bases seven weeks long that have perfect accumulation/distribution and max green BOP. In March 2003, October 2004, and November 2005 there were plenty of beautiful charts. Even after the move in August 2006 there were a few SWEET gems. However, since March 21st there has been very few. The stocks that do have perfect charts are just not CANSLIM quality. If this market takes a turn for the worse, these stocks will not fall 8%–they will fall 20% or more before violating a key cut loss level. So I can not recommend them for newbies.
Give me a sell-off of 20% or more and a VIX near 20-30 and the next follow-through we get you will see the power of this strategy. Right now, very few people are making a killing. Remember back in March 2003 when the VIX was at 33? I had many stocks make 300-500% gains. So what can we compare it to now. How about KNOL. KNOL is up 301% for me since I purchased it. If the VIX was three times higher than now and around 36, KNOL would be up 900%. So basically you can take a look at my returns below this commentary and then double or triple them and then you will see the potential gains in a “REAL” bull market. Not a low volume snooze-fest higher.
Speaking of the VIX: The VIX fell 10.2% this week. LOL. With the VIX that low, you can forget about many MFW or TRCR type of stocks showing up. Normally I can find 10-20 MFW and TRCR type of stocks. Not in this market. However, the drop in VIX puts complacency in the market and that is bearish for stock prices. Another bearish item is the put/call ratio. That ratio after falling below .7 yesterday is still low at .74. Also, early on in the realmoney.com polls, bulls are beating bears 60% to 19%. The crowd appears to bullish again….for now. And we all know how quick this can change. More choppiness? Probably.
So remember, until we get more quality CANSLIM type stocks, keep your buys small in this speculative crap that is getting action. Also if you are brand new and are still inexperienced (you know who you are) and you buy a stock and it goes against you the next day, think about selling 25% to 33%. Also in these speculative stocks, don’t be afraid to take some gains at 25% or so. These things like to reverse in the kind of market environment we are in so you need to stay on your toes. Breakouts should work right away! Especially in rough markets. If they don’t move up right away, newbies, think of selling some down.
Before I move on to wishing everyone a Happy Easter, I want to talk about the March employment numbers. Expectations for 135,000 was well taken care of when headlines produced a gain of 180,000. Along with that nice gain, the previous two months employment figures were revised up. But more amazing, despite this “horrible-evil-economy-that-GWB-has-created,” unemployment came in at five-year lows at 4.4%, beating expectations of a tick up to 4.6% from 4.5% . That is simply incredible. This also comes with average hourly earnings rising .3%. That is a 4% gain year-over-year. Even though the economy is showing signs of slowing, these numbers show just how great this economy still is despite the slowdown.
Wall-street took the news quite well with the SP futures rising 5.75 and the NQ futures rising 10.75. Stocks were closed today, obviously, but futures still traded for a little while.
Earnings season officially starts next week when AA reports on Tuesday. Analyst are expecting gains of 3.7% in YOY earnings this quarter. That is down from 8.7% estimates, earlier this year (not a good sign). Don’t you find that a bit scary how far they have come down?? Also, the expected 3.7% YOY gain will be the first gain in 14 quarters of non-double digit growth. As earnings go, so goes the market. Historically you can watch the trend of the GDP growth and earnings growth of an economy and see that they are the best predictor of what direction the stock market will take. GDP and earnings lead the market.
With that I wish everyone a Happy Easter and Passover. Enjoy the time with loved ones. Aloha and I will see you in the chat room.
Market Commentary At Big Wave Trading Bronze Level One.
Top Holdings Up This Week - Signal Date
KNOL 301% - 1/12/06
AKAM 220% - 9/30/05
TRCR 188% - 1/12
TTEC 172% - 8/25
JSDA 139% - 12/20
TNH 132% - 10/26
OMTR 125% - 9/15
CCOI 107% - 9/27
MEH 105% - 8/30
HRZ 104% - 9/27
CLRT 98% - 11/30
PRGX 97% - 1/12
AOI 94% - 11/19
EVEP 93% - 11/16
MFW 91% - 1/29
BONT 87% - 10/3
NEXC 81% - 10/25
CPA 79% - 9/15
CHINA 78% - 8/16
IMKTA 74% - 8/28
SLP 73% - 2/5
BAM 73% - 11/17/05
DA 67% - 1/25/06
MOS 65% - 10/12
EPHC 64% - 12/20
ULTR 64% - 10/27
HURN 63% - 9/13
IIVI 63% - 8/30
PERY 61% - 10/4
ANO 58% - 2/14
CXW 58% - 5/19
XIDE 56% - 1/29
KHDH 55% - 5/30
APLX 53% - 9/28
BMTI 52% - 10/25
IMMU 52% - 12/19
ONT 52% - 12/21
BMA 52% - 10/24
DECK 51% - 9/13
OEH 48% - 11/20
VDSI 48% - 1/4
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
By MauiTrader
Stocks started the morning off with a gap lower on the back of a currency tightening measures in China. But after the gap lower, stocks steadily climbed higher on very quiet trade for the rest of the day. That reversal off the gap lower was caused by the Labor Department announcing that jobless claims this week fell within forecast. Those jobless claims this week rose by 11,000 to 321,000.
Also helping to lift stocks was a couple of merger and acquisition related announcements. Kirk Kerkorian has made a $4.5 billion bid for DCX and WEBM agreed to be acquired by Software AG. WEBM rose 27% on the announcement. This now puts the 1Q M&A deals up 27% over this time last year. $1.1 trillion worth of M&A deals this year has us on pace to beat last years record. More amazing is private equity deals. Those have risen 47%, year-over-year in 2007 so far.
Combine the positive jobless claims with the M&A deals, and with most traders taking Thursday off to have a very long weekend, and you had a recipe perfect for higher stock prices, despite oil climbing back over $64 on the news that the EIA saying that oil inventories declined for the eight-week in a row.
At the closing bell, the Nasdaq led the way with a .5% gain, the NYSE and the SP 500 followed with .3% gains, and the SP 600 and the DJIA lagged with .2% gains. A tad more troublesome is the IBD 100. That index only managed a .2% gain, well lagging the Nasdaq on the session.
Volume was lower on both the NYSE and the Nasdaq by about 10%. The lower volume was well below the 50 day volume average and was the lowest total of the year. Advancers beat decliners by a 5-to-3 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. There were 413 new highs to 53 new lows–and on the NYSE there were 234 new highs to only 13 new lows.
Today was another day of a low volume rally that saw the indexes barely move higher but once again shake off early weakness to do so. This is not a great trend we have developing, since the follow-through day on March 21st. Since that follow through day the market was been higher in seven sessions. All seven sessions have failed to have volume over the 50 day volume average and only two of the up sessions have come with volume heavier than the day before. This is a low volume rally that will not last much longer unless we get some clear accumulation days in here by big institutional traders. Until we have volume come in over the 50 day volume average on the upside, we are open to a severe sell-off still. Bottom line is that I would not take much away from this week’s holiday shortened trading.
For the week it was very positive with all indexes closing higher. The Nasdaq led the way with a 2.1% gain, the NYSE followed with a 1.8% gain, the DJIA was right behind with a 1.7% gain, the SP 500 rose 1.6%, and the SP 600 gained 1.5%. I could go into more detail about this weeks action but it would be silly to do so. All you need to know is that it was a holiday short week. The bulls almost always have control of these weeks. This week was no exception.
There is no doubt that we are still in rally mode but everything in my gut tells me we are not going far from here. Now I will change my stance in seconds, if I start to see CANSLIM stocks with consistent great EPS and sales growth breakout from fresh bases and the markets start moving higher on HUGE volume. However, all I keep seeing is the old leaders breakout from choppy bases, defensive and utility issues climbing, and little small sub-$10 momo stocks moving. This does not make a safe big bull market. If we start seeing some more buying here on a lot of volume I will be much happier. However, unless we see it soon, we are increasing our chances of failure each day that passes that volume on the up days remain under the 50 day volume average.
Can we make money here? Of course! If you are a subscriber at least on the silver level you can see for yourself that almost EVERYTHING that I have touched since the February 27th sell-off is either higher or has not violated a complete cut loss area. However, there is nothing over $10 breaking out from bases seven weeks long that have perfect accumulation/distribution and max green BOP. In March 2003, October 2004, and November 2005 there were plenty of beautiful charts. Even after the move in August 2006 there were a few SWEET gems. However, since March 21st there has been very few. The stocks that do have perfect charts are just not CANSLIM quality. If this market takes a turn for the worse, these stocks will not fall 8%–they will fall 20% or more before violating a key cut loss level. So I can not recommend them for newbies.
Give me a sell-off of 20% or more and a VIX near 20-30 and the next follow-through we get you will see the power of this strategy. Right now, very few people are making a killing. Remember back in March 2003 when the VIX was at 33? I had many stocks make 300-500% gains. So what can we compare it to now. How about KNOL. KNOL is up 301% for me since I purchased it. If the VIX was three times higher than now and around 36, KNOL would be up 900%. So basically you can take a look at my returns below this commentary and then double or triple them and then you will see the potential gains in a “REAL” bull market. Not a low volume snooze-fest higher.
Speaking of the VIX: The VIX fell 10.2% this week. LOL. With the VIX that low, you can forget about many MFW or TRCR type of stocks showing up. Normally I can find 10-20 MFW and TRCR type of stocks. Not in this market. However, the drop in VIX puts complacency in the market and that is bearish for stock prices. Another bearish item is the put/call ratio. That ratio after falling below .7 yesterday is still low at .74. Also, early on in the realmoney.com polls, bulls are beating bears 60% to 19%. The crowd appears to bullish again….for now. And we all know how quick this can change. More choppiness? Probably.
So remember, until we get more quality CANSLIM type stocks, keep your buys small in this speculative crap that is getting action. Also if you are brand new and are still inexperienced (you know who you are) and you buy a stock and it goes against you the next day, think about selling 25% to 33%. Also in these speculative stocks, don’t be afraid to take some gains at 25% or so. These things like to reverse in the kind of market environment we are in so you need to stay on your toes. Breakouts should work right away! Especially in rough markets. If they don’t move up right away, newbies, think of selling some down.
Before I move on to wishing everyone a Happy Easter, I want to talk about the March employment numbers. Expectations for 135,000 was well taken care of when headlines produced a gain of 180,000. Along with that nice gain, the previous two months employment figures were revised up. But more amazing, despite this “horrible-evil-economy-that-GWB-has-created,” unemployment came in at five-year lows at 4.4%, beating expectations of a tick up to 4.6% from 4.5% . That is simply incredible. This also comes with average hourly earnings rising .3%. That is a 4% gain year-over-year. Even though the economy is showing signs of slowing, these numbers show just how great this economy still is despite the slowdown.
Wall-street took the news quite well with the SP futures rising 5.75 and the NQ futures rising 10.75. Stocks were closed today, obviously, but futures still traded for a little while.
Earnings season officially starts next week when AA reports on Tuesday. Analyst are expecting gains of 3.7% in YOY earnings this quarter. That is down from 8.7% estimates, earlier this year (not a good sign). Don’t you find that a bit scary how far they have come down?? Also, the expected 3.7% YOY gain will be the first gain in 14 quarters of non-double digit growth. As earnings go, so goes the market. Historically you can watch the trend of the GDP growth and earnings growth of an economy and see that they are the best predictor of what direction the stock market will take. GDP and earnings lead the market.
With that I wish everyone a Happy Easter and Passover. Enjoy the time with loved ones. Aloha and I will see you in the chat room.
Market Commentary At Big Wave Trading Bronze Level One.
Top Holdings Up This Week - Signal Date
KNOL 301% - 1/12/06
AKAM 220% - 9/30/05
TRCR 188% - 1/12
TTEC 172% - 8/25
JSDA 139% - 12/20
TNH 132% - 10/26
OMTR 125% - 9/15
CCOI 107% - 9/27
MEH 105% - 8/30
HRZ 104% - 9/27
CLRT 98% - 11/30
PRGX 97% - 1/12
AOI 94% - 11/19
EVEP 93% - 11/16
MFW 91% - 1/29
BONT 87% - 10/3
NEXC 81% - 10/25
CPA 79% - 9/15
CHINA 78% - 8/16
IMKTA 74% - 8/28
SLP 73% - 2/5
BAM 73% - 11/17/05
DA 67% - 1/25/06
MOS 65% - 10/12
EPHC 64% - 12/20
ULTR 64% - 10/27
HURN 63% - 9/13
IIVI 63% - 8/30
PERY 61% - 10/4
ANO 58% - 2/14
CXW 58% - 5/19
XIDE 56% - 1/29
KHDH 55% - 5/30
APLX 53% - 9/28
BMTI 52% - 10/25
IMMU 52% - 12/19
ONT 52% - 12/21
BMA 52% - 10/24
DECK 51% - 9/13
OEH 48% - 11/20
VDSI 48% - 1/4
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, March 31, 2007
Stressed Out And Tired; Stocks End The Week With A Boring Session, Leaving The Indexes Mixed And Flat
Stressed Out And Tired; Stocks End The Week With A Boring Session, Leaving The Indexes Mixed And Flat
By MauiTrader
Another wild-yet-boring intraday session came to an end, with stocks going nowhere. The lack of action today is a bit of a surprise, considering all the news items we had to digest. First, we got off to a positive start and continued higher early on, on the back of a bunch of macro news. The core personal consumption index rose .3% in Feb (biggest jump since August) and personal income and spending rose .6%, contributing to the fact that core inflation is now at 2.4% which is outside the Fed comfort zone of 1%-2%. This data should make it clear that the Fed will not be cutting interest rates anytime soon.
There were two more headlines of interest: The University of Michigan consumer confidence survey was revised down to 88.4 from 88.8 and the Chicago Purchasing Managers index rose to 61.7 in March from 47.9 in February. Anything over 50 on the CPMI indicates expansion.
However, news that the Bush administration via the Commerce Department are going to put economic sanctions/tariffs on China to protect the US paper producers from unfair subsidies. That sent stocks and the dollar lower. I hate ANY kind of economic sanction but we will see how this turns out.
It turned out, for the day, stocks weren’t that worried over it and they managed to recoup almost all of the losses that were sustained from the intraday highs. This was the second day in a row stocks have reversed after selling off hard in early hours of trading.
When the closing bell rang, stocks ended up mixed all over the board. The Nasdaq led the way with a .2% gain, the SP 400 gained .1%, and the DJIA ticked higher by .05%. On the downside, the NYSE led the way with a .2% loss, the SP 500 followed with a .1% loss, and the SP 600 ticked slightly lower by .03% basically closing flat. Leading stocks, via the IBD 100, closed flat with a 0.0% move. Like I said, boring. If you fell asleep before the market opened and woke up after the bell, you might question if it really opened.
The Nasdaq, SP 500, and DJIA are all below their 50 day moving averages and the NYSE, SP 400, and SP 600 are above their 50 day moving averages, showing you exactly how mixed this market really is, not only today but the past week.
Volume ticked higher today on both the NYSE and the Nasdaq. However, volume does not really matter today. What does matter is knowing this was not churning because volume was below the 50 day volume average; signaling the big boys were not interested in pushing the market around today.
Advancers beat decliners by a 6-to-5 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. The fact that the NYSE was down today but breadth was up is very positive and shows you which index is leading. Speaking of leading, just look at the 52-week new highs. There were 132 NH on the NYSE and only 11 NL. On the Nasdaq it was 85 NH to 45 NL. Obviously, the strength, is clearly in the NYSE. Metals, Steel, Oil, and Food stocks; the NYSE is their home.
If you still don’t believe me that this market is boring and trendless, check out these numbers. For the week, the Nasdaq and the SP 500 lost 1.1%, the DJIA and SP 600 lost 1%, and the NYSE lost .8%. For the quarter (A FULL THREE MONTHS), the SP 600 showed some action with a 3% gain (that is very impressive). But the rest of the indexes spent the last three months going nowhere. The NYSE gained 1.3%, the DJIA rose .9%, the Nasdaq gained .3%, and the SP 500 gained .2%. You have to give the SP-600 some credit, because a 12% annual gain is very nice, but the rest of the indexes show you why Jesse Livermore and many of the greatest traders only traded when the indexes were in clear trends. I hope you made money but if you did not make any money…how much did you trade this year? Was it worth it? Or was “sitting” the right play?
There was one pocket of action, on Friday. The Homebuilder-Residential/Commercial group tanked another 3% today. This sector continues to show you why you should NEVER buy stocks that are a “bargain,” are “cheap,” are “values,” and that you think have “bottomed.” How many dip buyers keep getting killed here? I know quite a few people buying these stocks thinking they are picking up bargains. Good luck fighting through all that resistance.
Oh my, so after a week and a half, since the follow-through day, here we are still waiting for another day of substantial gains on a surge in volume that will help produce many stocks breaking out of sound bases. Well, you may be waiting, but I really don’t care anymore. LOL. Bu the fact that we have not had an accumulation day since the follow-through is troublesome. Remember just because we are holding above the lows and have had only one distribution day–that, yes, can be taken as bullish–we still need more gains on higher volume if this is going to hold.
This market has some real problems. If we are going to be going higher, trust me, I will play it. Hell, I am already playing it with 200 stocks. But the fact that the CANSLIM select group of stocks is still only 58% invested a week and a half since the follow-through day is very very very troublesome. You want another troublesome fact? The Nasdaq is below the close of the follow-through day and since then has seen no accumulation days and one distribution day.
I am 100% sure that by now, if this market was really ready to blast-off, we would have the CANSLIM select at 100% invested, I would not be long 200 stocks with 130 of them being pure speculative to half-way-speculative issues (stocks not of CANSLIM quality), I would not continue to find only speculative stocks to go long, there would be more CANSLIM quality stocks breaking out of bases, and there would be more CANSLIM quality stocks setting up in bases. We do NOT have this happening. This is not a market for growth/momentum investors. If you are looking to hit a home run, you probably need to adjust your stance and swing. Because this market has a powerful pitching rotation that is on fire right now. Single, double, and MAYBE a triple, if you are lucky is all that growth investors can expect, with the VIX still below 20.
I guess with so many people expecting the worse and the put/call still over 1 at 1.05 shows that there is a lot of bearishness out there. However the AAII poll this week showed bears come way down and bulls go over 50%. Also, this weekend, the realmoney.com poll shows 54% bulls, only 19% bearish, and 26% neutral (or confused, whatever you want to call it). So to me it seems the crowd is now bullish. How confusing can it get????? But really the smart trader knows not to really care or give a damn. Until you get pretty green charts in stocks with excellent fundamentals we know it is just noise.
The dip buyers can continue to step in here and believe nothing is wrong and can continue to buy stocks thinking they will go to the moon. But the fact that we have the government stepping in with sanctions, poor economic numbers, lower GDP growth, inflation, and a new Congress that is about to raise taxes by not extending the Bush tax cuts and you have a disaster waiting to happen. What is wrong here? You retail money that is NOW just buying stocks (I can see this data via mutual fund inflows–January and February inflows were HUGE) are buying at the top AGAIN. These inflows always happen right at the end or near the end of a trend. What is wrong? You are four years too late! Where were you in October 2002? Where were you in March 2003? If you are just now buying stocks, you should look in the mirror and ask yourself who is really buying your stocks; you or the media that convinced you the evil George W. Bush’s economy was doomed to fail? Since the tax cuts the Nasdaq is up 90% and the SP 600 is up 137%. Yeah, tax cuts don’t work, do they?
Next week is a short week, with Good Friday occurring on…Friday. And we are also coming upon earnings season. We start to get numbers this week but the real action officially kicks off on the 10th when AA reports. There might be one minor problem this time, which you can add to the list of problems I have already mentioned, as wall street is looking for earnings to come in 4% to 6% higher YOY. Not bad you say? Yes, you are right. But the problem lies in the fact that earnings have come in over double digits for the past 14 quarters.
If earnings do not come in at double digits, this will be the first time since 2003 that we have not seen this. If you don’t think that is potential bearish, you really don’t understand the stock market. GDP growth and EPS growth is the two clear leading indicators for stock markets. Not just the US stock market, ALL MARKETS ALL OVER THE WORLD GOING BACK YEARS AND YEARS AND YEARS. Find a country check out the GDP growth and then watch the stock market follow. How is the USA GDP growth looking? I am a question asking fool tonight!!!
Expect more choppy and meaningless trading this week. I am only predicting this so that we actually get a follow-through to the downside or upside here. Normally, whatever I think will happen does not happen. So I predict the market will flatline and be choppy intraday every day next week.
This market is still in a very weak bullish phase. But it is still in a bullish trend so there is no reason to bet against it. I am sure the safe time to short will be soon; but with all these beautiful green charts in these tiny small cheap crap stocks I have to take them. They are working (80% of them) and some are producing some nice gains and have chart patterns for potential big gains. However, if the market weakens expect them to go with it. But that is why I am only 56% invested. Which is AMAZINGLY (not really, just showing you how discipline works) similar to the CANSLIM select only being 58% invested. CASH IS STILL KING!!! KING, I TELL YOU!!
Aloha and I will see you in the chat room. I am tired and stressed out (not from the market; from socialized medicine…the only medicine on Maui).
Market Commentary At Big Wave Trading Bronze Level One.
Top Holdings Up This Week - Signal Date
KNOL 295% - 1/12/06
AKAM 230% - 9/30/05
TRCR 161% - 1/12
TTEC 157% - 8/25
OMTR 131% - 9/15
JSDA 108% - 12/20
TNH 107% - 10/26
CCOI 107% - 9/27
HRZ 103% - 9/27
PRGX 97% - 1/12
BONT 87% - 10/3
MEH 83% - 8/30
EVEP 80% - 11/16
AOI 76% - 11/19
CLRT 75% - 11/30
CHINA 74% - 8/16
IMKTA 72% - 8/28
CPA 66% - 9/15
EPHC 66% - 12/20
DA 65% - 1/25/06
IIVI 61% - 8/30
PERY 59% - 10/4
ULTR 58% - 10/27
CXW 57% - 5/19
HURN 57% - 9/13
XIDE 56% - 1/29
APLX 54% - 9/28
BMTI 52% - 10/25
MFW 50% - 1/29
DECK 50% - 9/13
KHDH 49% - 5/30
OEH 48% - 11/20
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
By MauiTrader
Another wild-yet-boring intraday session came to an end, with stocks going nowhere. The lack of action today is a bit of a surprise, considering all the news items we had to digest. First, we got off to a positive start and continued higher early on, on the back of a bunch of macro news. The core personal consumption index rose .3% in Feb (biggest jump since August) and personal income and spending rose .6%, contributing to the fact that core inflation is now at 2.4% which is outside the Fed comfort zone of 1%-2%. This data should make it clear that the Fed will not be cutting interest rates anytime soon.
There were two more headlines of interest: The University of Michigan consumer confidence survey was revised down to 88.4 from 88.8 and the Chicago Purchasing Managers index rose to 61.7 in March from 47.9 in February. Anything over 50 on the CPMI indicates expansion.
However, news that the Bush administration via the Commerce Department are going to put economic sanctions/tariffs on China to protect the US paper producers from unfair subsidies. That sent stocks and the dollar lower. I hate ANY kind of economic sanction but we will see how this turns out.
It turned out, for the day, stocks weren’t that worried over it and they managed to recoup almost all of the losses that were sustained from the intraday highs. This was the second day in a row stocks have reversed after selling off hard in early hours of trading.
When the closing bell rang, stocks ended up mixed all over the board. The Nasdaq led the way with a .2% gain, the SP 400 gained .1%, and the DJIA ticked higher by .05%. On the downside, the NYSE led the way with a .2% loss, the SP 500 followed with a .1% loss, and the SP 600 ticked slightly lower by .03% basically closing flat. Leading stocks, via the IBD 100, closed flat with a 0.0% move. Like I said, boring. If you fell asleep before the market opened and woke up after the bell, you might question if it really opened.
The Nasdaq, SP 500, and DJIA are all below their 50 day moving averages and the NYSE, SP 400, and SP 600 are above their 50 day moving averages, showing you exactly how mixed this market really is, not only today but the past week.
Volume ticked higher today on both the NYSE and the Nasdaq. However, volume does not really matter today. What does matter is knowing this was not churning because volume was below the 50 day volume average; signaling the big boys were not interested in pushing the market around today.
Advancers beat decliners by a 6-to-5 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. The fact that the NYSE was down today but breadth was up is very positive and shows you which index is leading. Speaking of leading, just look at the 52-week new highs. There were 132 NH on the NYSE and only 11 NL. On the Nasdaq it was 85 NH to 45 NL. Obviously, the strength, is clearly in the NYSE. Metals, Steel, Oil, and Food stocks; the NYSE is their home.
If you still don’t believe me that this market is boring and trendless, check out these numbers. For the week, the Nasdaq and the SP 500 lost 1.1%, the DJIA and SP 600 lost 1%, and the NYSE lost .8%. For the quarter (A FULL THREE MONTHS), the SP 600 showed some action with a 3% gain (that is very impressive). But the rest of the indexes spent the last three months going nowhere. The NYSE gained 1.3%, the DJIA rose .9%, the Nasdaq gained .3%, and the SP 500 gained .2%. You have to give the SP-600 some credit, because a 12% annual gain is very nice, but the rest of the indexes show you why Jesse Livermore and many of the greatest traders only traded when the indexes were in clear trends. I hope you made money but if you did not make any money…how much did you trade this year? Was it worth it? Or was “sitting” the right play?
There was one pocket of action, on Friday. The Homebuilder-Residential/Commercial group tanked another 3% today. This sector continues to show you why you should NEVER buy stocks that are a “bargain,” are “cheap,” are “values,” and that you think have “bottomed.” How many dip buyers keep getting killed here? I know quite a few people buying these stocks thinking they are picking up bargains. Good luck fighting through all that resistance.
Oh my, so after a week and a half, since the follow-through day, here we are still waiting for another day of substantial gains on a surge in volume that will help produce many stocks breaking out of sound bases. Well, you may be waiting, but I really don’t care anymore. LOL. Bu the fact that we have not had an accumulation day since the follow-through is troublesome. Remember just because we are holding above the lows and have had only one distribution day–that, yes, can be taken as bullish–we still need more gains on higher volume if this is going to hold.
This market has some real problems. If we are going to be going higher, trust me, I will play it. Hell, I am already playing it with 200 stocks. But the fact that the CANSLIM select group of stocks is still only 58% invested a week and a half since the follow-through day is very very very troublesome. You want another troublesome fact? The Nasdaq is below the close of the follow-through day and since then has seen no accumulation days and one distribution day.
I am 100% sure that by now, if this market was really ready to blast-off, we would have the CANSLIM select at 100% invested, I would not be long 200 stocks with 130 of them being pure speculative to half-way-speculative issues (stocks not of CANSLIM quality), I would not continue to find only speculative stocks to go long, there would be more CANSLIM quality stocks breaking out of bases, and there would be more CANSLIM quality stocks setting up in bases. We do NOT have this happening. This is not a market for growth/momentum investors. If you are looking to hit a home run, you probably need to adjust your stance and swing. Because this market has a powerful pitching rotation that is on fire right now. Single, double, and MAYBE a triple, if you are lucky is all that growth investors can expect, with the VIX still below 20.
I guess with so many people expecting the worse and the put/call still over 1 at 1.05 shows that there is a lot of bearishness out there. However the AAII poll this week showed bears come way down and bulls go over 50%. Also, this weekend, the realmoney.com poll shows 54% bulls, only 19% bearish, and 26% neutral (or confused, whatever you want to call it). So to me it seems the crowd is now bullish. How confusing can it get????? But really the smart trader knows not to really care or give a damn. Until you get pretty green charts in stocks with excellent fundamentals we know it is just noise.
The dip buyers can continue to step in here and believe nothing is wrong and can continue to buy stocks thinking they will go to the moon. But the fact that we have the government stepping in with sanctions, poor economic numbers, lower GDP growth, inflation, and a new Congress that is about to raise taxes by not extending the Bush tax cuts and you have a disaster waiting to happen. What is wrong here? You retail money that is NOW just buying stocks (I can see this data via mutual fund inflows–January and February inflows were HUGE) are buying at the top AGAIN. These inflows always happen right at the end or near the end of a trend. What is wrong? You are four years too late! Where were you in October 2002? Where were you in March 2003? If you are just now buying stocks, you should look in the mirror and ask yourself who is really buying your stocks; you or the media that convinced you the evil George W. Bush’s economy was doomed to fail? Since the tax cuts the Nasdaq is up 90% and the SP 600 is up 137%. Yeah, tax cuts don’t work, do they?
Next week is a short week, with Good Friday occurring on…Friday. And we are also coming upon earnings season. We start to get numbers this week but the real action officially kicks off on the 10th when AA reports. There might be one minor problem this time, which you can add to the list of problems I have already mentioned, as wall street is looking for earnings to come in 4% to 6% higher YOY. Not bad you say? Yes, you are right. But the problem lies in the fact that earnings have come in over double digits for the past 14 quarters.
If earnings do not come in at double digits, this will be the first time since 2003 that we have not seen this. If you don’t think that is potential bearish, you really don’t understand the stock market. GDP growth and EPS growth is the two clear leading indicators for stock markets. Not just the US stock market, ALL MARKETS ALL OVER THE WORLD GOING BACK YEARS AND YEARS AND YEARS. Find a country check out the GDP growth and then watch the stock market follow. How is the USA GDP growth looking? I am a question asking fool tonight!!!
Expect more choppy and meaningless trading this week. I am only predicting this so that we actually get a follow-through to the downside or upside here. Normally, whatever I think will happen does not happen. So I predict the market will flatline and be choppy intraday every day next week.
This market is still in a very weak bullish phase. But it is still in a bullish trend so there is no reason to bet against it. I am sure the safe time to short will be soon; but with all these beautiful green charts in these tiny small cheap crap stocks I have to take them. They are working (80% of them) and some are producing some nice gains and have chart patterns for potential big gains. However, if the market weakens expect them to go with it. But that is why I am only 56% invested. Which is AMAZINGLY (not really, just showing you how discipline works) similar to the CANSLIM select only being 58% invested. CASH IS STILL KING!!! KING, I TELL YOU!!
Aloha and I will see you in the chat room. I am tired and stressed out (not from the market; from socialized medicine…the only medicine on Maui).
Market Commentary At Big Wave Trading Bronze Level One.
Top Holdings Up This Week - Signal Date
KNOL 295% - 1/12/06
AKAM 230% - 9/30/05
TRCR 161% - 1/12
TTEC 157% - 8/25
OMTR 131% - 9/15
JSDA 108% - 12/20
TNH 107% - 10/26
CCOI 107% - 9/27
HRZ 103% - 9/27
PRGX 97% - 1/12
BONT 87% - 10/3
MEH 83% - 8/30
EVEP 80% - 11/16
AOI 76% - 11/19
CLRT 75% - 11/30
CHINA 74% - 8/16
IMKTA 72% - 8/28
CPA 66% - 9/15
EPHC 66% - 12/20
DA 65% - 1/25/06
IIVI 61% - 8/30
PERY 59% - 10/4
ULTR 58% - 10/27
CXW 57% - 5/19
HURN 57% - 9/13
XIDE 56% - 1/29
APLX 54% - 9/28
BMTI 52% - 10/25
MFW 50% - 1/29
DECK 50% - 9/13
KHDH 49% - 5/30
OEH 48% - 11/20
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, March 24, 2007
A Boring Day Of Trading Ends With Stocks Mixed On Lower Volume; Best Week For Stocks In Six Months
Market Commentary At Big Wave Trading Bronze Level One.
TOP CURRENT HOLDINGS UP THIS WEEK LISTED AFTER MARKET COMMENTARY BELOW
Preview of current "Daily Market Analysis" Posting:
A Boring Day Of Trading Ends With Stocks Mixed On Lower Volume; Best Week For Stocks In Six Months
By MauiTrader
A boring, erratic, and overall lame session came to end Friday, after a week of surprises on many fronts. The only thing not boring today was the post-1pm EST action in the Nasdaq; up, wedge up, down, wedge down, and up. Still, that only led to a flat close. Today’s headlines were much more subdued than the previous four days, but we still had some important numbers to digest. Existing-home sales were up 3.9% in February to an annualized 6.69 million. That was the fastest growth since April and above economist estimates. This was a welcome report, after all the thrashing we received last month. The other news item making its way around was the 15 British sailors and marines that were captured by Iranian kidnappers. However, as expected, this was not market moving news.
At the close, the SP 600 was the daily winner with a .4% gain, the NYSE followed with a .3% gain, the DJIA gained .2% finishing higher for the fifth straight day, the SP 500 finished .1% higher, and the Nasdaq bucked the trend falling .1%. Leading stocks did not do anything special today, with the IBD 100 gaining only .1%. The lack of ability to keep up with the top performing indexes is a subtle sign of weakness and may indicate that the rally is running out of steam, already, in the short-term. It is still too early to conclude for a fact that is what we have happening here.
Volume was much lower on both the NYSE and the Nasdaq. Volume was running about even with yesterday’s total. But around 1pm EST, traders took off early, starting the weekend early. The lower volume is just what you see after such strong gains on Wednesday. The volume on the NYSE was the lowest total since late February, showing that big funds were not interested in buying or selling stocks here. Breadth was positive on both exchanges, with advancers beating decliners by a 9-to-7 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. New highs continue to trounce new lows, by 301-31. This action shows that despite the big boys being absent, breadth is still strong and there are many stocks still making gains, despite the low volume rally after the Feb 27 selling.
The biggest gains are mainly coming from the old leaders in the Oil & Gas industry. These stocks continue to dominate the new highs list and continue to work there way back to the top of the industry group tables in IBD. Part of this is due to the fact that oil has stopped moving down. Today, oil rallied to over $62 a barrel, closing at $62.28. The gains in crude oil were given credit to the Iranians capturing the 15 British soldiers.
Overall, it was a great week, for the major market indexes. All of them produced significant gains, helping traders quickly forget about the pain from February 27. For the week, the SP 600 led the way with a 4.1% gain, the NYSE followed with a 4% gain, the SP 400 came in with a 3.9% gain, the SP 500 rallied 3.5%, the Nasdaq gained 3.2%, and the DJIA came in with a 3.1% gain. It was a very good week, for investors who wanted the market to recapture the losses. In fact it was the best week for stocks in six months.
I do have to admit that this market is holding up very well, considering the amount of quick damage off the February highs. My new buys are doing very well, since then. Most are going up and there have been very few that have not gone up and have reversed. In fact, I can not think of any complete sells out of any new buys the past month. Every long I have taken is up. The only problem is none of these longs are breaking out of sound long-term bases. And the ones that are breaking out of long bases are not CANSLIM quality stocks. The CANSLIM quality stocks are breaking out of shorter bases and/or are bouncing off key moving average lines indicating that it is only a resumption of an advance and not part of a fresh new bull market.
The volume on the way up is also well below the volume figures on the sell-off last month. This rally still looks like an oversold bounce off a very pessimistic tape. That bounce has simply come too soon. We have not done enough damage on the downside and we have not based long enough to get a real correction that could set us up for a powerful new bull market. Without this long correction, you do not have enough time go by for a change in leadership to develop. The new leadership usually comes out of longer drawn-out corrections. Not from quick collapses followed by a lower volume bounce. You simply can not create enough momentum to the upside without creating nice long green bases. And you can’t create those bases without the market taking a breather for more than a couple of weeks.
Instead this uptrend appears to just be a continuation of the longer bull market that started in October 2002. However, like I have been saying, this pullback is and was much different than the rest, with many charts breaking down on heavy volume. However, not all charts did break down. By not panicking and using sound discipline, I was still long 170 stocks in clear uptrends. The fact that so many stocks remained in uptrends, after the sell-off, was the tip-off that this breakdown was not necessarily going to lead to a crash. By doing that, I am still long many stocks that have now made strong gains while the market recovers. And by having cash ready for the new buys, I was able to move dead money into stocks that have turned out very well. Therefore, my account, is much higher than where it was the day after the sell-off.
So, there are some signs that this rally might work out for a while. However, the rally off the April 2000 lows lasted until August 2000, after a significant sell-off. How did that work out for the perma-bulls? But before I start getting all bullish again I am going to have to see more hot stocks with hot fundamentals break out of round, sound, and green bases. I don’t know how I am going to get these this far into a bull market with VIX this ridiculously low. But that is what I am looking for. However, without a big sell-off that causes a jump in the VIX, it sure is going to be hard to find these beautiful long bases.
So, without this pullback, the gains that we will get will not be the variety that produces many 100%-500% winners in six months. Instead you are going to have to be happy with all the 20%-150% gainers that I find. With the VIX and fear this low, it is impossible to get any real movement in stocks; impossible! This market is best for paying the bills and maybe putting a little bit of money away. This market is not for those of us who are looking to become wealthy and make a killing. Markets like 1999 and 2003 had so much fear in them when they launched there bull markets that making a killing and getting rich was not a problem. Right now, if you are looking to get rich, you have a problem: it is called the stock market.
Since this is not the market to be making a mint in, it must also be said that the most important play right now is to keep cash on hand. Without massive gains in the indexes on huge volume with tons of CANSLIM stocks breaking out, you can be sure that the odds are high for this rally to fail. So since the indexes are not perfect, there is no reason to go all-in on margin here (200% long). And there will not be a time to go all-in, until you start seeing this action. Normally, like I keep saying, to burn the point in, you need a long drawn-out correction. That creates the proper environment that launch great bull markets.
The one important thing to remember here, also, is to not chase stocks. If you sold all of your longs, when you panicked after the Feb 27th selloff, you should step back and think about the situation. How often and how many times do you have to hear that it is never smart to panic? Then why do you still do it? I know many traders who did the right thing and sold stocks breaking down, after the Feb sell-off. However, those same traders I know dumped stocks that were still going up or consolidating. Why? Why would you sell a stock if it is going up? Especially if it was going up before the sell-off and DURING THE sell-off. If your stock rose before the sell-off and after the sell-off, yet you sold, you must recognize that you are still trading very scared and NO great investor or trader has ever become a great investor or trader by trading scared. That is a sign of personal weakness. Something I am not familiar with at all.
If you are still sitting in cash, that is great! Stay patient and wait for those HOT charts with HOT fundamentals. Then, if everything is perfect and the market is right, go all-in. You can make everything back and more that you might have lost if you tried to buy stocks now based on the fact that you messed up and sold them when you were not supposed to sell them. There is always a bull market somewhere, and even if there is not, there will be one soon somewhere.
We can even take a personal lesson by me during the recent selloff: ROCM. I sold that stock after a nasty breakdown below key support on 3/5. This breakdown came after what appeared to be, in hindsight, an early February top. Thankfully, I took 20% off there. But after the Feb selling, the stock held up well so I remained long. Then, however, going with the trend of the market, ROCM fell. And fell hard on heavier volume. After 3/5, it clearly looked like ROCM had topped with the market. But that turned out to be the low. Since then the stock has gone straight up and my 9% gain that I took on 3/5 is now a 75% gain. Do I feel stupid? Yes. But did I follow my rules? Yes. So, therefore, I do not feel like I made a severe mistake.
What if ROCM did not break the February lows and would have held the 50 dma? Would I still be long? OF COURSE! YES! If that is the case no profit taking rules would have been hit and I would be sitting pretty in ROCM with a 75% gain on my remaining position. Instead I stand alone. No big deal.
Folks, we are very late in this rally. There is clear economic slowing out there in the subprime, home, jobs, and manufacturing markets. There are more breakdowns on heavy volume with low volume rallies in individual stocks than I have seen since 2002. And everywhere I turn people are asking me about stocks because they have just recently purchased stocks, after selling their real estate holdings or getting out of real estate. They believe every dip should be bought and who is to blame them? CNBC keeps telling them that they should buy this dip as this is just a normal correction. If it is so normal, why are so many charts ugly this time. If it is so normal, why are all the talking heads on CNBC telling everyone to buy. They don’t do that at market bottoms. They only do that at or near market tops. After four years of gains without a 10% correction in the DJIA, I would err on the side of caution and still conclude that there is more risk to the downside here than the upside. If we were down for four straight years, do you think I would be saying the same thing? Of course not. This is history. And history tells us there shouldn’t be much more to go.
We shall see how correct history is. Aloha and I will see you in the chat room. Have a great weekend!!!
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
Top performing holdings - date of signal (entry next morning)
CVO 180% - 8/17/05
TTEC 144% - 8/25
OMTR 134% - 9/15
MA 124% - 8/2
IHS 122% - 12/21/05
CCOI 111% - 9/27
HRZ 108% - 9/27
TNH 102% - 10/26
ACP 96% - 11/13
PRGX 94% - 1/12
CPA 89% - 9/15
BONT 87% - 10/3
CHINA 83% - 8/16
JSDA 88% - 12/20
SOFO 79% - 9/29
LTS 75% - 1/11
HURN 74% - 9/13
AOI 73% - 11/19
EVEP 71% - 11/16
BAM 71% - 11/17/05
IMKTA 73% - 8/28
DA 62% - 1/25/06
CLRT 61% - 11/30
PERY 61% - 10/4
EPHC 60% - 12/20
ULTR 58% - 10/27
IIVI 57% - 8/30
DECK 55% - 9/13
CXW 54% - 5/19
IMMU 52% - 12/19
TRBN 51% - 10/31
APLX 49% - 9/28
CNH 48% - 11/2
LFL 47% - 12/13
XIDE 47% - 1/29
OEH 45% - 11/20
TATTF 45% - 12/13
TOP CURRENT HOLDINGS UP THIS WEEK LISTED AFTER MARKET COMMENTARY BELOW
Preview of current "Daily Market Analysis" Posting:
A Boring Day Of Trading Ends With Stocks Mixed On Lower Volume; Best Week For Stocks In Six Months
By MauiTrader
A boring, erratic, and overall lame session came to end Friday, after a week of surprises on many fronts. The only thing not boring today was the post-1pm EST action in the Nasdaq; up, wedge up, down, wedge down, and up. Still, that only led to a flat close. Today’s headlines were much more subdued than the previous four days, but we still had some important numbers to digest. Existing-home sales were up 3.9% in February to an annualized 6.69 million. That was the fastest growth since April and above economist estimates. This was a welcome report, after all the thrashing we received last month. The other news item making its way around was the 15 British sailors and marines that were captured by Iranian kidnappers. However, as expected, this was not market moving news.
At the close, the SP 600 was the daily winner with a .4% gain, the NYSE followed with a .3% gain, the DJIA gained .2% finishing higher for the fifth straight day, the SP 500 finished .1% higher, and the Nasdaq bucked the trend falling .1%. Leading stocks did not do anything special today, with the IBD 100 gaining only .1%. The lack of ability to keep up with the top performing indexes is a subtle sign of weakness and may indicate that the rally is running out of steam, already, in the short-term. It is still too early to conclude for a fact that is what we have happening here.
Volume was much lower on both the NYSE and the Nasdaq. Volume was running about even with yesterday’s total. But around 1pm EST, traders took off early, starting the weekend early. The lower volume is just what you see after such strong gains on Wednesday. The volume on the NYSE was the lowest total since late February, showing that big funds were not interested in buying or selling stocks here. Breadth was positive on both exchanges, with advancers beating decliners by a 9-to-7 margin on the NYSE and by an 8-to-7 margin on the Nasdaq. New highs continue to trounce new lows, by 301-31. This action shows that despite the big boys being absent, breadth is still strong and there are many stocks still making gains, despite the low volume rally after the Feb 27 selling.
The biggest gains are mainly coming from the old leaders in the Oil & Gas industry. These stocks continue to dominate the new highs list and continue to work there way back to the top of the industry group tables in IBD. Part of this is due to the fact that oil has stopped moving down. Today, oil rallied to over $62 a barrel, closing at $62.28. The gains in crude oil were given credit to the Iranians capturing the 15 British soldiers.
Overall, it was a great week, for the major market indexes. All of them produced significant gains, helping traders quickly forget about the pain from February 27. For the week, the SP 600 led the way with a 4.1% gain, the NYSE followed with a 4% gain, the SP 400 came in with a 3.9% gain, the SP 500 rallied 3.5%, the Nasdaq gained 3.2%, and the DJIA came in with a 3.1% gain. It was a very good week, for investors who wanted the market to recapture the losses. In fact it was the best week for stocks in six months.
I do have to admit that this market is holding up very well, considering the amount of quick damage off the February highs. My new buys are doing very well, since then. Most are going up and there have been very few that have not gone up and have reversed. In fact, I can not think of any complete sells out of any new buys the past month. Every long I have taken is up. The only problem is none of these longs are breaking out of sound long-term bases. And the ones that are breaking out of long bases are not CANSLIM quality stocks. The CANSLIM quality stocks are breaking out of shorter bases and/or are bouncing off key moving average lines indicating that it is only a resumption of an advance and not part of a fresh new bull market.
The volume on the way up is also well below the volume figures on the sell-off last month. This rally still looks like an oversold bounce off a very pessimistic tape. That bounce has simply come too soon. We have not done enough damage on the downside and we have not based long enough to get a real correction that could set us up for a powerful new bull market. Without this long correction, you do not have enough time go by for a change in leadership to develop. The new leadership usually comes out of longer drawn-out corrections. Not from quick collapses followed by a lower volume bounce. You simply can not create enough momentum to the upside without creating nice long green bases. And you can’t create those bases without the market taking a breather for more than a couple of weeks.
Instead this uptrend appears to just be a continuation of the longer bull market that started in October 2002. However, like I have been saying, this pullback is and was much different than the rest, with many charts breaking down on heavy volume. However, not all charts did break down. By not panicking and using sound discipline, I was still long 170 stocks in clear uptrends. The fact that so many stocks remained in uptrends, after the sell-off, was the tip-off that this breakdown was not necessarily going to lead to a crash. By doing that, I am still long many stocks that have now made strong gains while the market recovers. And by having cash ready for the new buys, I was able to move dead money into stocks that have turned out very well. Therefore, my account, is much higher than where it was the day after the sell-off.
So, there are some signs that this rally might work out for a while. However, the rally off the April 2000 lows lasted until August 2000, after a significant sell-off. How did that work out for the perma-bulls? But before I start getting all bullish again I am going to have to see more hot stocks with hot fundamentals break out of round, sound, and green bases. I don’t know how I am going to get these this far into a bull market with VIX this ridiculously low. But that is what I am looking for. However, without a big sell-off that causes a jump in the VIX, it sure is going to be hard to find these beautiful long bases.
So, without this pullback, the gains that we will get will not be the variety that produces many 100%-500% winners in six months. Instead you are going to have to be happy with all the 20%-150% gainers that I find. With the VIX and fear this low, it is impossible to get any real movement in stocks; impossible! This market is best for paying the bills and maybe putting a little bit of money away. This market is not for those of us who are looking to become wealthy and make a killing. Markets like 1999 and 2003 had so much fear in them when they launched there bull markets that making a killing and getting rich was not a problem. Right now, if you are looking to get rich, you have a problem: it is called the stock market.
Since this is not the market to be making a mint in, it must also be said that the most important play right now is to keep cash on hand. Without massive gains in the indexes on huge volume with tons of CANSLIM stocks breaking out, you can be sure that the odds are high for this rally to fail. So since the indexes are not perfect, there is no reason to go all-in on margin here (200% long). And there will not be a time to go all-in, until you start seeing this action. Normally, like I keep saying, to burn the point in, you need a long drawn-out correction. That creates the proper environment that launch great bull markets.
The one important thing to remember here, also, is to not chase stocks. If you sold all of your longs, when you panicked after the Feb 27th selloff, you should step back and think about the situation. How often and how many times do you have to hear that it is never smart to panic? Then why do you still do it? I know many traders who did the right thing and sold stocks breaking down, after the Feb sell-off. However, those same traders I know dumped stocks that were still going up or consolidating. Why? Why would you sell a stock if it is going up? Especially if it was going up before the sell-off and DURING THE sell-off. If your stock rose before the sell-off and after the sell-off, yet you sold, you must recognize that you are still trading very scared and NO great investor or trader has ever become a great investor or trader by trading scared. That is a sign of personal weakness. Something I am not familiar with at all.
If you are still sitting in cash, that is great! Stay patient and wait for those HOT charts with HOT fundamentals. Then, if everything is perfect and the market is right, go all-in. You can make everything back and more that you might have lost if you tried to buy stocks now based on the fact that you messed up and sold them when you were not supposed to sell them. There is always a bull market somewhere, and even if there is not, there will be one soon somewhere.
We can even take a personal lesson by me during the recent selloff: ROCM. I sold that stock after a nasty breakdown below key support on 3/5. This breakdown came after what appeared to be, in hindsight, an early February top. Thankfully, I took 20% off there. But after the Feb selling, the stock held up well so I remained long. Then, however, going with the trend of the market, ROCM fell. And fell hard on heavier volume. After 3/5, it clearly looked like ROCM had topped with the market. But that turned out to be the low. Since then the stock has gone straight up and my 9% gain that I took on 3/5 is now a 75% gain. Do I feel stupid? Yes. But did I follow my rules? Yes. So, therefore, I do not feel like I made a severe mistake.
What if ROCM did not break the February lows and would have held the 50 dma? Would I still be long? OF COURSE! YES! If that is the case no profit taking rules would have been hit and I would be sitting pretty in ROCM with a 75% gain on my remaining position. Instead I stand alone. No big deal.
Folks, we are very late in this rally. There is clear economic slowing out there in the subprime, home, jobs, and manufacturing markets. There are more breakdowns on heavy volume with low volume rallies in individual stocks than I have seen since 2002. And everywhere I turn people are asking me about stocks because they have just recently purchased stocks, after selling their real estate holdings or getting out of real estate. They believe every dip should be bought and who is to blame them? CNBC keeps telling them that they should buy this dip as this is just a normal correction. If it is so normal, why are so many charts ugly this time. If it is so normal, why are all the talking heads on CNBC telling everyone to buy. They don’t do that at market bottoms. They only do that at or near market tops. After four years of gains without a 10% correction in the DJIA, I would err on the side of caution and still conclude that there is more risk to the downside here than the upside. If we were down for four straight years, do you think I would be saying the same thing? Of course not. This is history. And history tells us there shouldn’t be much more to go.
We shall see how correct history is. Aloha and I will see you in the chat room. Have a great weekend!!!
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
Top performing holdings - date of signal (entry next morning)
CVO 180% - 8/17/05
TTEC 144% - 8/25
OMTR 134% - 9/15
MA 124% - 8/2
IHS 122% - 12/21/05
CCOI 111% - 9/27
HRZ 108% - 9/27
TNH 102% - 10/26
ACP 96% - 11/13
PRGX 94% - 1/12
CPA 89% - 9/15
BONT 87% - 10/3
CHINA 83% - 8/16
JSDA 88% - 12/20
SOFO 79% - 9/29
LTS 75% - 1/11
HURN 74% - 9/13
AOI 73% - 11/19
EVEP 71% - 11/16
BAM 71% - 11/17/05
IMKTA 73% - 8/28
DA 62% - 1/25/06
CLRT 61% - 11/30
PERY 61% - 10/4
EPHC 60% - 12/20
ULTR 58% - 10/27
IIVI 57% - 8/30
DECK 55% - 9/13
CXW 54% - 5/19
IMMU 52% - 12/19
TRBN 51% - 10/31
APLX 49% - 9/28
CNH 48% - 11/2
LFL 47% - 12/13
XIDE 47% - 1/29
OEH 45% - 11/20
TATTF 45% - 12/13
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