“Talk Story” about the Market

I have to admit, those that think it is wise to be either a bull or a bear here are doing themselves a major disservice by not studying the past. This market is clearly a range bound market and taking a bullish or bearish side on the overall market is a terrible thing to do.

The correct stance to have is to be bullish in some sectors. Right now, to me, it is clearly obvious that the money is being made in energy stocks or even a couple select medical stocks. The one place you definitely do not want to be right now if you are looking to make money on the long side are the bank stocks which have 80 stocks hitting new 52-week lows. Besides the carnage in the Banks, Insurance, Leisure, Metals, and Real Estate stocks are seeing anywhere from 20 to 30 new lows daily. Now, if you are a bottom fisher trying to get the exact bottom of these stocks then you have suffered some serious damage.

Back in March, I was called names and was viciously attacked by the “buy the banks now” crowd for not buying the banks. Instead I bought stocks that were leading the market at the time as their industry groups were flying to the top of the list. A lot of these stocks included oil stocks and some technology stocks that were finally coming along. But the same old chemicals-fertilizer, steel stocks, and metals , along with the oil stocks kept leading the way up. This was kind of a clear indication that the same old leaders since 2003 were still leading the way higher. This is what prevented me from getting too bullish but at the same time the fact that I was seeing some fresh breakouts combined with old leaders like MTL had me excited that a tradeable rally was on us from March to May. However, now that June has arrived, it is apparant that that was all indeed it was: a short-term tradable rally that did allow CANSLIM investors a short time to make some good money. Stocks like PDO, QTWW, GEOI, XCO, CLR, EBIX, MA, TGC, IPI, NOG, CPST, CSIQ, ROYL, NOG, XIDE, CMP, and MCF all helped make all of my readers plenty of money and helped keep my portfolio up around 20% the past six-months while MANY colleuges of mine had a near impossible task of staying above the water. In fact I know a pretty famous wall street baffoon who has an action alert portfolio down 9.81% YTD. Yet so many still subscribe and listen to this fool that it is shocking.

I know I am not the most politically correct guy in the wall street community but that is what I like about me. I tell you the truth. I tell you like it is and the truth is that this market is pretty crummy. I see a lot of jerks on the WSJ, CNBC, and at TSCM telling peopel that they need to buy this stock on this pullback or to load the boat on this stock that has run up 5000% in three years. This is the kind of advice that leaves people broke. Folks you should never buy a stock that has had more than two splits in a span of three years while running up over 1000%. These splits are caused to get the price of the stock cheap enough so that the dumb public things they are getting a bargain when in fact they are now getting a diluted piece of trash of something that was once very valuable. The first two splits are OK normally. But it is when they make the 3rd split a 3 for 1 deal in the 3rd year of a run that has seen the stock go from a split adjusted 2 to a curent share price of 200. Folks you must stay away from stocks like that.

Also, take a look at HP or ZEUS on a weekly artihmetic chart going back to 2001. You are going to tell me you think those stocks are safe to buy up here ? I don’t think so. Now that we have a lesson on what not to buy in and a lesson on how to recognize stocks that are too far extended due to the arithmetic weekly chart clearly showing you that things have gone too far and too fast. Now that that lesson is done let’s get directly to our current market. You know the piece of junk that we are all trying to learn how to love and live through.

This market, to be honest, is not that difficult if you are only focusing on the top sectors. Those are , of course, the oil&gas stocks that have been doing a great job at making investors money. Especially the exploration and production stocks. Sure there are some in ag, metals, and miners that are doing an OK job with stocks like NCOC but the fact remains that small-cap and mid-cap oil stock are about the only place you want to be if you want to make a lot of money in this market.

However, something in my gut wonders how much longer this can go. I have so many newbies asking me about stocks like PBR and OXY if they are good buys UP HERE. Well, if these subscribers were asking me in2001 to 2003 if they should be buying these stocks I would say go for it. But like I have been saying if your stock is up 5000% in 5 years MOVE ON!

I like to go long stocks that are at least eight years or younger. Those are the stocks that go on to make big gaiin in shor amount of time as their new products start producing huge EPS and sales growth. This is what gets the smart mutual fund managers interested in the stock and has them buying them hand over foot. All of you that are out there wanting to go long oil, corn, and all the other commodities that have been moving since 2000 you need to reevaluate your investment methods. I am sure many of these stocks have much more room to run but the fact that they are way up there compared to where they were when they started tells me looking for shorts is the right play. It isn’t time yet by far but the move in these stocks are near the end and when they top, rollover on huge volume, and break through the 50 and 200 DMA’s there is no doubt stocks like POT, MOS, and a few others will be in my short portfolios

But shorting stocks is a tricky game and too many think just because something looks expensive that it should top. The fact is you need the market to be rolling over on huge volume with some nasty patterns existing out there to short. The sad news, for the bulls, is that a lot of stocks are starting to show those ugly topping patterns. The good news though, for those that love real bull markets, is that most of the topping appears to be in metals, mining, oil, gold, and steel related issues. All of the oil stocks have gone parabolic and all the chemical fert stocks have gone under a nasty churning situation. This should eventually help rotate that ag money into tech money.

This can start to be seen by the nice charts that are showing up on the IBD 85-85 and IBD 100 indexes that are technology and semiconductor related. I have to admit that we were starting to see a bunch of nice charts setup but after the week we just had that was partially destroyed. For the week the Nassy lost a nasty 3.8%, the DJIA swooned 4.2%, and the other indexes faired just as well which was not well at all. But for those of you who are long the strong stocks in the strongest sectors with the prettiest chart there is no way you had a bad week. In fact, coming into this week my portfolios were up only 10% YTD. Now I am leaving the week with an 18% YTD return. Not only that, I am managing one small portfolio that came in the week down almost 2%. It is now leaving this week with a 5% return. Can you say ACM, PDO, XCO, NCOC, TGC, QTWW, and FLIR. This is definitely a stock pickers market and there is no doubt that if you have been going with the trend either up or down you are finally probably doing very well.

To bad most of the jokesters that I read try to tell me about “value” investing all day long. I am not sure why in the heck so many unsuccessful people preach value investing with their personal pathetic records but when I take a look at LEH, GS, ABK, and MBI which were ALL stocks that people YELLED at me to buy and all I can think of is how sick those people that look at PDO and think it is too expensive are. The truth is the majority of the people involved in the stock market have no business here and the fact that half the people on Wall Street can even dress themselves in the AM shocks me. The only thing that doesn’t shock me is the constant lies from the mouths of those on CNBC.

The DJIA is now down 20% from the highs which officially puts it in bear market territory but the entire way lower I was told to buy. The ENTIRE WAY. Why do so many “smart” people tell me to do something that clearly makes you lose a lot of money. Ask those that are still long TASR how buying on the way down worked out?

The truth of it all is that riding the trend higher when stocks are moving higher, riding the trend lower when stocks are moving lower, and staying on the sidelines when stocks are doing nothing is the only way to make the big money. Those that buy stocks on the way down or sell stocks that are moving up and that daytrade very actively when the market is in a trading range will quickly be placed on a hospital gurney as they are whisked away to the “losing money” hospital. The truth is the only way to make the huge money in the stock market is by going extremely long on heavy margin when the market is rallying on HUGE volume and by going very short on huge margin when the market is moving down on HUGE VOLUME. When the market is moving in a choppy fashion like now, you still must not sell out of all of your PDO just because it is up 250% in a month. You can sell out of 50% but by not holding the rest you will possibly watch your perfect looking H-T-F pattern go and run 500% to 1000% without you. You newbies need to stop selling out of all of your biggest winners. You guys are still trading wrong. if you go long a stock and it moves lower immediately, sell 25%. Then watch for my final CUT LOSS level to be hit to get rid of the rest, if the stock does not work out immediately.

As for you newbies who have no clue as to when to sell a stock, make sure that when you have a 20-25% gain that you get rid of 20%, when you have a 50% gain, take another 25% off the table, and then the same thing applies when you get the 100%, 200%, and 500% gains. Make sure you are taking 20-25% off. And don’t give me the excuse I “only have 5 shares.” So what! Sell one, the sell two, then sell two more. At $.005 per share and $1 per 100 shares, trust me, you can afford to partial out. I do not want to hear anymore excuses that you don’t have enough to partial out. One day instead of taking 20% off with a 500% gain, you are going to wake up and instead of taking that 20% off your stock will gap down hard and might let you only walk away with a 300% gain. You want to always be taking profits on the way up and taking big chunks off on big down days. But you never want to just sit back and watch a stock like XCO and PDO make such big moves so fast and not take 10% to 20% off on the way up. You simply must lock in some profits while the market is choppy.

Now, if this market takes off on HUGE volume with stocks rising on volume 20-25% higher than the day before then it is definitely OK to hold your stocks as they race higher. That is how we end up with SINA, SOHU, NTES, SSYS, and USNA from 2002. Our early HOT and pretty green BOP leaders will be our huge winnersl You do NOt want to lose your positions in those. As for stocks like QTWW and MCF, I have to say it is OK to take profits early and to be happy with a 100%, 200%, and even possible 300% winner. The bottom line is with the VIX AT 23 and with the market making it hard to hold onto gains you do want to take your big winners in slowly as they move up. But heck, if this rally started with a 35, 40, or God willing a 50 VIX, trust me I would still have 90% of my PDO and not 50% of it. The 250% gain is locked!! However, if the VIX was at 40, only 20% of that gain would be locked.

The other reason we clearly have to lock our gains in fast is because it is clear the downside is still the trend overall for the market. Even though we seem to be in some great stocks that are treating our portfolios like this is a bull market the fact remains that things are very ugly out there. We have only have 64 new 52-week highs (seems like we are long every one of them :)) to 738 new 52-week lows. So clearly this is not a market to be messed with and that is why despite the fact that you see us at BigWaveTrading.com doing so well overall everyone needs to just be patient with the market. I believe soon the market will be a buy. The press is just too negative.

That was confirmed via the Reuters/University of Michigan sentiment index which fell 3.2 points in June to 56.4. That is the lowest level since 1980 and that comes with current inflation near long-time highs. About the only good news from these fears is that personal savings rates spiked 4.6% to 5% in May which is a good thing for Americans who have an abitlity to spend money on stuff that no one needs. It is nice too see this saving rate go up. Maybe instead of buying another worthless non-durable good, some of the illiinformed invesotrs can start to leearn to take control of their financial future so someone like me who will have MS and have to pay for it out of my own pockets will not also have to take care of other people as they destroy their future by not investing

I want to wrap it up here by reminding everyone that we should not get as negative at the TV is. The bears on the Investors Intelligence is at 39% while the bulls are only at 33%. When I see the pros so negative, see the put/call stay over the 1.00 level for so long (like it is now at 1.01), and read nothing but bearish headlines about the market I know that I need to be looking for a rally and not a selloff. Therefore the longs, the max green BOP, the big tall green volume bars, and all the open daily pretty price candlestick bars are where my focus is going to remain. If you have not been studying my PAST BIG WINNERS, PLEASE!!!!!!! TAKE THE TIME TO STUDY EVERY SINGLE ONE FROM 1999 TO APPY IN 2007. That way when the next near-perfect to perfect chart comes around with the market making 2-3% plus gains on volume 25% higher than the day before YOU WILL BE READY TO MAKE A TON!! OF MONEY. Trust me, this bear market will not last forever. Another bull market will come shortly. Be patient, keep that cash high for those perfect stocks, protect that capital, and make sure you keep those green BOP and CANSLIM watchlist updated to that when the next real bull market with a lot of stocks rallying higher with CANSLIM quality eps and sales growth with max green BOP charts come along, breakout, and run producing us the kind of gains that we can think about retiring on.

DJIA, SP-500, NYSE, and Nasdaq Breakdown On Very Strong Volume; The SP-600 (SmallCap Index) Is Starting To Show Strong Relative Strength To The Market

Well there is absolutely nothing else that can describe Friday other than pure utter disappointment. I am telling you right now that the odds of us starting another leg lower has increased by leaps and bounds after Friday’s breakdown. Why? Because something that happened this time last happened in 2000. After an initial breakdown, some stocks recovered and some created very bullish chart patterns. After initially working, they soon all reversed as around August 2000 the stock market then resumed its trend lower. There is nothing that says that we are going to have a bear market like we did in 2000. However, the 10 new shorts that I have for Monday have the EXACT SAME PATTERNS that I saw in August to September of 2000.

What is that pattern? After years-and-years-and-years of price gains (most stocks now are from 2002-2008–six year uptrends) the stocks started to chop around creating a churning area that many amateurs mistake as bases. What these amateurs failed to notice was that those bases were created on HUGE volume, unlike anything that had occurred before that time frame. If you are a subscriber go take a look at those long term charts that I posted. I post those charts to show you the whole previous uptrend, show you the rolling over churning action on much heavier volume, and then you can go and look at your own charts at home and see the breakdown with my detailed analysis. These charts sure do look like the same charts in technology stocks with no earnings back in 2000. There is no difference in chart patterns. Only the stock names are different. The really scary part, this time, is that it is not money losing internet companies…it is money losing banks. This is sort of scary.

However, fear is just what a market needs to bottom. Is my fear of a bear market the perfect contrarian signal? I hope so! Trust me, going long my beautiful green charts and making a lot of money in stocks like QTWW or PDO on their most recent uptrends is much better than going short stocks from November to January and making 50% on CBEY SIGM and a few others. The most you can make on a short is 99.9% and the most you can make in a long so far is 80,000% (CSCO). I like my odds with the longs. Especially, considering you can find no money losing 20-year period in the stock market since 1880. Being long is what I like to do. However, if the market is moving lower and offering me up charts like it did on Friday, I must start to focus on the long side.

That is especially the case given that volume exploded higher on this huge breakdown day. Everyone will say volume is quadruple witching and that the selling isn’t real. But these are the same people that were just telling me a couple of months ago that the high volume on the quadruple witching that led to the FTD was real. Whatever. It is what it is: a much higher volume selloff. Not bullish at all.

The only bullish bit of information to come out of the market the past week is in fact on the sentiment side. But these sentiment indicators are not buy and sell signals. They are simply sentiment indicators! They help us judge the crowd and by knowing where the crowd is along with our chart knowledge we can see if “all the stars are lined up.” Right now by my definition of “all the stars lined up” we are not there at the proper moment to buy stocks. You can not buy stocks when the indexes are breaking down right after a few perfect charts setup, started to work, and then miserably failed. However, those small failures are nothing like the failures of the banks. While I may get a lot of 3% to 10% losses at least I will never hold a loss that I can not come back from. If I lose 7% on a stock, I only have to make 7 to 8% back to break even. But if I lose 50%, I need a 100% gain on my next purchase to break even. That is why I do not like buying stocks on the way down. How do you know when you are wrong?

You know how I know when I am wrong? The stock does not move in the direction I intended it. The greatest traders buy a stock and that stock either moves up a lot immediately or they sell it. They don’t mess around. If they buy a stock and the next day it shows a loss they will sell it immediately. They only hold green stocks on their books. I have learned that the best cut their losses the fastest. Therefore, I don’t mess around. Either my stock moves higher immediately or I sell it. I should probably be more tight but I like to give my stocks just a little bit more extra wiggle room in a market that is very volatile like the current intraday market we see daily. I recommend that newbies NEVER let a loss EVER go over 10%. No matter what sell all your long or short if you lose 10% or 5% respectively. Do not settle for any losses on your books.

On that same note, in this very choppy market where very few stocks run, I strongly urge ALL NEWBIES WHO DO NOT KNOW HOW TO SPOT TOPPING SIGNALS OR PROFIT TAKING SIGNALS TO DO THIS: If you have a 20%-25% gain, sell 20-25% of your holdings. Once you get a 50% gain, do the same thing. And when you have a 100%, 200%, 300%, etc…, do it again. This is only if you do NOT know what to look for when a stock is topping on the short term, sub-intermediate term, intermediate term, and long term.

Now, getting back to the market. Stocks plunged on Friday thanks to a reminder of how bad it is out there with the credit and rising oil prices. This bit of worry rippled through the market as quietly as a tsunami destroys all life in mere minutes of pure disaster and tragedy. Today was a tragedy for many, I am sure. I have to admit, however, that I (plus many many members of my chat room) did not suffer a lot of damage today to my portfolio, despite my biggest holding falling 2.6%. What hurt more was the damage the market did to my psyche. I was starting to see a lot of very pretty charts, and even though recently some were rattled, I still had that “hope” that the rally could go from base building to a breakout stage where the Nasdaq could run AT LEAST 20%. Sadly Friday killed that hopeful dream and replaced with a possible nightmare scenario. Why nightmare? Because there are some FUGLY weekly chart patterns in bank stocks.

I don’t know how well the market is going to do with banks selling off. About the only hope I can find in this story is that these banks have real money and unless the USA goes broke there is no way these banks are worthless assets. The good news is that buyers will come in EVENTUALLY (but that means could be tomorrow or could mean years :() and buy these stocks as they find real value in them. However, trying to GUESS the bottom which is all it is is a horrible and historically inferior methodology for buying stocks. Buying stocks in a downtrend is how you end up waking up one morning and see that your account is down 25% overnight. The trend is your friend; there is NEVER a reason to fight it.

For the week, the DJIA fell 3.8%, the SP 500 fell 3.1%, the NYSE fell 2.6%, the Nasdaq fell 2%, but the IBD 100 rose .4%. The IBD 100 matches my account for being up on the week. Except this week I dominated the overall market with a weekly 5% gain. Thank you PDO! This goes to show, once again, of the power of being long leading stocks with great fundamentals in leading industry groups. I went long some BEAUTIFUL chart patterns in stocks with great fundamentals. The stocks that came from strong industry groups did well and the longs from the weak industry groups did the worse. However, despite my gains, the fact that the Nassy has seen losses in above average volume the past four out of five weeks is enough to keep me away from buying stocks in bulk any time soon.

Volume on Friday was 8% higher on the Nassy and 36% higher on the NYSE, compared to the day before. This is clear distribution, even though it was quadruple witching. If it was not distribution, we would have seen a FLAT day with volume 36% higher. Instead we saw the DJIA, SP 500, the NYSE, and Nasdaq all breakdown. The NYSE, DJ, and 500 all undercut their recent lows while the Nasdaq remains, I believe, only 6 points away. Clearly there is no support here at all and it is now a very bleak technical picture on the major indexes.

Why did the market take a hit today, when so many big-cap stocks were selling off leading up to Friday? Well, despite the big-caps being sold, small caps were doing pretty well, riding the 50 day moving average higher the entire way. Even on Friday there was a huge intraday reversal showing clear support for this small cap index. The SP 600’s relative strength line is hitting a BRAND NEW 52-week high, despite the small cap index being 13% away from its old 52-week high. This is extreme relative strength, in the middle of all of this selling is very bullish for this index and for a market rally–IF WE RALLY. However, if the SP 600 with that strong relative strength and the Nasdaq breakdown, you can be sure we will probably fall I would ASSUME (this is an OPINION not a fact. It is simply an opinion based on history and the current technicals in the indexes) at least 20% from here to the lows. Like I just said, there is not a lot of real solid support on the indexes.

We broke down this week because leading stocks finally took on the selling pressure that the rest of the market was seeing in the banks and railroads. During the positive weeks we had plenty of leading stocks rally. That is why I had so many do so well during a choppy and rough past six months. However, all those stocks that were setting up are now showing signs of injury and this could lead, like I said, to the market giving up the hard fought gains we just received.

Stocks like SOHU, SINA, NTES, OMI, CETV, IEX, DV, LNN, QCOM, CTSH, OI, FDS, SQM, GLF, ROC, and SID are all leading CANSLIM stocks that felt some sort of pressure on Friday. Until this week, most of these stocks were looking good to great. Not anymore. I am raising my cash levels, protecting my capital, and playing defense as this will be the proper way to play this choppy market as it turns into a bear market THAT I WILL SHORT for more 2008 profits. This is a nice want, I hope I can deliver. It is up to the market if it wants to reward me or not. I will not force anything.

While I will not force anything I do have to stress that if this market turns lower and I continue to get heavy volume distribution days, I will be more-than-willing to go hunting for more shorts to add to my current holdings which are still not much of any position in my portfolio (maybe 4% right now). But if we start selling off I can get to 100% short VERY quickly. I just need the market to cooperate and move lower on strong volume. Higher volume but a directionless market does not help me long or short. I do not like swing trading support and resistance and I do not like daytrading futures currently. Therefore, I will keep all my new longs and shorts small. The only way I would go heavy right now, in this market is if the long setup was perfect with max green BOP, nothing but strong accumulation with no distribution for the past six months, and a perfect nice and calm uptrend followed by a cup with handle or any other correct basing pattern identified by Investors Business Daily.

I probably will not have to worry about that since the slow selling in the broad market has now rolled into the leading groups of the stock market. Charts that were once beautiful gems are now mediocre at best. DGLY was the perfect example of this. After April 16th and April 17th I was pretty excited that I probably was going long a monster stock. The chart was perfect with max green BOP, huge accumulation, and a perfect price pattern with the price bouncing right off the 50 DMA on very strong volume.

Too bad, a big boy decided that DGLY was not going to become the next monster. On May 14th the daily chart of DGLY could not have been more perfect. It was one of the nicest charts that I have seen in months and yet what happened? It failed…sort of. I am still long DGLY and have around a 20% on the remaining shares that I am holding. Plus I did sell 20% around the 50% gain area as per my rule of taking profits on the way up in this market. Still this chart on 5/14 should never have been followed by 5/21’s move. That move killed a perfect chart and led to even more selling that has made the stock only an OK stock so far.

Other great chart patterns hurt this year include BRKR, BKE, and AEHR. These were all near-perfect to perfect when I went long and now I have sold out of two completely and have sold out of 50% of the other one. The bottom line is that this market is not a market for hot stock charts right now. This is yet another reason to keep long small and to ONLY focus on the energy, metals, and other sectors moving into the top 20 of 197 industry groups. Today you only have about 10 groups up out of 197 so it should be pretty easy to find the leading stocks in a down market like today. The only problem is the lack of leadership overall which might make it hard for bulls to make money as everyone sees the same thing and thus it doesn’t work.

A lot of people are telling me this weekend that they think Friday will be the only down day because the put/call jumped to a very fearful level of 1.25 which is the highest since March when it jumps to over 1.00 it is a sign that the “dumb money” is very fearful and that stocks will rally because the dumb money is buying puts expecting lower prices and the stock market punishes those that think like this. Another area of sentiment that has traders talking of a bottom is the investors intelligence survey which this week showed bulls at 36% and bears at 37%. When the bears exceed bulls it is a sign that market professional themselves are too bearish and that stocks will be rising shortly. My only problem with this is that people put too much faith in it. Besides seeing these contrarian signals flash buy signs, I must see how the market is acting and how leading stocks are acting. If you did not see the market on Friday then you missed out on some ugly action. Maybe the bears will have to hit 50% and the bulls will have to hit 20% before a real bottom can be made.

And speaking of bottoms. Whatever you do, do not get involved with the SAD AND PATHETIC game of bottom calling. Let the professional amateurs that told us to buy banks in March go after the next bottom that they will miss over and over and lose money over and over. Do not get involved in this losing method of bottom calling. I just simply can not stress this enough! Remember, 3 out of 4 stocks fall in a bear market. You should not try to find the 1 out of 4 if this market rolls over. Let me give it a try, but it has been choppy and unless the longs that I pick are in the top 20% of industry groups based on six month price performance it probalby will not do well at all. We will definitely need a strong industry group if we want to get long. Not a bottom bouncer. Don’t play with falling knifes. How many people do you think are just now selling ABK and MBI after a morning Moody’s downgrade. I am sure there are some holding a 90% plus loss ON BOTH STOCKS. However, there are also some with 90% plus short gains also. This is why I do not buy falling knifes right there. Instead by following the trend you profited on the breakdown and swoon.

There is not a whole lot more that I can add besides some more technical information. The VIX is only at 22.97 which indicates that despite the investors intelligence survey and put/call ratio, those that are buying stocks are very complacent and bullish about their current holdings. It is going to take a big swoon to get this VIX up to the 35 to 50 level that I like it. Also, it is hard to put a bottom in when you have 415 new 52-week lows to only 68 new 52-week highs. That simply is not what you see in a market ready to run. We would be more near breakeven or the new highs would be beating the new lows.

The accumulation/distribution ratings on the indexes are getting ugly to with the NYSE sporting a lowest of the low E, the SP 500 has a D-, the Nasdaq sports a C, and the IBD 85-85 has a C+ to lead the pack. I tell you what, when a C+ is your top index you can be sure it is going to be a rough go of things for a little while. About the only place that might be safe is the energy arena. Metals, select medical, finance, and some utilities might make good longs in this environment while banks, retail, media, and big drugs all do very poorly in this current market environment.

For those that think the market has to selloff to get cheap again I ask you this where do you want the DJIA p/e ratio to be at? Right now it is at a staggering 97! That seems quite high to me but I know I have seen some high readings before. But the 52-week high is a p/e of 102. That is also a five year high. SHEESH, this market IS expensive!! Maybe we really do need to selloff to a “cheap” area so that we can get a massive long position going. This time hopefully, err…the next time we get long all of these beautiful chart patterns in stocks like BKE, BRKR, AEHR, and DGLY, I promise you, if we are in a new bull market, will produce powerful monster stock returns.

I am dead tired and believe I have given you enough to chew on this weekend. Remember, raise cash, protect your capital, keep new positions small until a downtrend or uptrend is officially clearly back in vogue. Defense is the name of the game, right now. Aloha and I will see you in my chat room where the ChatBlazer monster can’t stop eating me.

Amazing How This Market Changes Like It Does. Now I Have Nice Charts Literally EVERYWHERE!

These charts that are setup in extremely bullish patterns right now, however, will probably be destroyed on Monday. However, just the thought of me thinking this might be the bearishness needed to make this rally attempt work. The bottom line today was that my scans "went off" with a ton of stocks giving long signals. Not only that but there are now so many stocks in my watch list that if this market starts moving, I am 100% sure I am going to have no problem making a lot of money.

Even if it doesn't work out I am already back to almost a 10% gain after the great day in a few stocks I am heavily invested in for the YTD. If a rally would occur now I think I would have no problem beating most of my investing "partners" in the current market. I see a lot of bearishness on bullish stocks and bullishness on ugly bank stocks. That is just what I like to see by the general public. That along with the high NYSE short-interest ratio and no one believing that stocks can rally because Cramer says the market is oversold and an index is giving him a buy signal. This time, for a change, Cramer will be right. Unlike his Action Alert Portfolio which is down 8% YTD; almost an 18% difference in performance YTD. Maybe that is why he has to promote all those books and give away his service for a 50% discount. I can personally tell you right now that he WAS ONCE a GREAT trader. But now he is an also-ran and I hate to admit it but a site I once loved and had the GREAT opportunity to work for, for four months, is now a pile of crap.

The junk that I read on that site today was equivalent to a pile of trash in my backyard. It was simply disturbing for someone that has mastered the CANSLIM system, like me and so many others, to be forced to read the N O I S E that comes from that place. I work for some great sites and every once in a while some great material is out there but overall 80% of it is horrible advice.

Like the recommendation to go long PAL and SWC. I have NEVER heard anyone "so sure" of themselves as this particular writer was but man o man those are charts I would not even allow .01% of my assets to go into. When you have stocks out there like NCOC, ICO, QTWW, MA, CPST, and XIDE, why would you waste your time in stocks losing money? I can give you 5 stocks that start with the letter A that are setup for potential huge gains, IF THE MARKET CAN GET ITS ACT TOGETHER, that is.

I don't care how great a stock is as long as this market wants to do the exact opposite of a previous big day, then we will never make clear easy progress. However, like I continue to tell you, if you are long oil, energy, coal, solar, manufacturing, metals, or mining stocks, you can find a TON of stocks that are great longs. I can give you over 100 great longs right now in a market that is giving such "great professionals" as Cramer an 8% loss.

Not only does Cramer have an 8% loss, but the Stocks-Under-$10 service for TSCM is up a walloping NEGATIVE-14% for 2008. -8% and -14% for PREMIUM service is not too bad. YEAH RIGHT! ICO is up 75% in two months and MA is up 500% in two years. So I guess you really actually have to be more than a mouthpiece to make money in a market that is not in the 1980s and 1990s. This is not your Ronald Reagan and 2nd-term tax cutting Clinton economies right now.

I guess we can tell how good the quality is by the stock price. When I look at TSCM and compare it to some of my oil longs the past few months I see that we have a stock that is not doing well at all in this market. In fact that is an extremely ugly chart. As you can see right after I left, the stock fell apart. ;) All kidding aside, a stock under $10 in a nasty downtrend doing worse than the market is not good. I bet $5 is not far off. I now contribute to Seeking Alpha, Straight Stocks, and iStockAnalyst as they are free and open sites and I prefer to have my body of work put out to the public in my own creative way. I did not write any columns about any stocks the past week, but if you take the time to go to Seeking Alpha and read about all of the stocks that I have profiled up until now (should be about 5-7 so far) you can see that the stocks profiled are doing very well. I would keep an eye out for another 5 stocks that have very nice chart patterns that I want to bring to the attention of readers as possible long-term gems.

There are also other sites I read like Minyanville, Marketwatch, Sharkinvesting, HardRightEdge, and Investors Business Daily. The quality on those site I have found are of higher quality than what is on TSCM. So there are other choices out there, for some of you who have asked me recently where else they can go to get great research. The sad fact is since Gary B. Smith stopped writing for TSCM and RevShark stopped giving small and mid-cap stock picks on Realmoney.com, the site has gone down the tube. now reading SA, MV, MW, SI, HRE, IBD, SS, and iSA are much more enjoyable. However, do not dismiss Alan Farley, Dan Fitzpartrik, Helene Meisler, John Hughes and Scott Maragioglio, Mark Manning, Chris Schumacker, Harry Schiller, or Garry Morrow. They are all great technicians that do a great job on giving good TA coverage. However, sharkinvesting and hardrightedge cover it well also. Not only that but not many talk about Michael Ashbaugh who has a marketwatch.com column for only $300 a year. That along with Jeff Cooper at Minyanville.com make for great side-research to this site.

Other greats to read would be Dan Zanger, old TokyoJoe stuff (no longer available), and EVERY SINGLE BOOK I listed on my website. There is more than enough good information out there, besides the now failing TSCM. What a piece of crap that company has become. Maybe later on if they get rid of David Sterman and bring me back (yeah right, they prefer failures who "tow-the-line" NOW) someone like Kristin they can TRY to get back to that old site I once loved. A lot of recent readers have been asking for more SA articles and I promise I will get them up. This is just my good-will attempt at trying to promote other sites that I read daily and/or have respect for. I also think Brad Koteshwar who wrote two great stock market books has a site. I would like to check that out too. However, I am pretty sure none of them had ICO the past two months or MA the past two years. But heck maybe they had POT, CF, TNH, or SQM for the past five. I would LOVE to see that.

Ken Heebner WAS my favorite mutual fund manager and I DEFINITELY LISTEN TO EVERYTHING he says about the MACRO ECONOMY NOW. However, for those that rush out to buy what he recommends, I want you to remember that he is now a KNOWN MUTUAL FUND manager. When NO ONE knew him, but me and a few other hardcore growth addicts, he had under $500 million in assets. Now the guy has billions. He used to close it ALL THE TIME. Now it is always opened. The old Heebner way of buying stocks is not as easy. It still can be done. But like I was telling someone a month ago, when PBR was 75, to wait for it to pullback to the 50 DMA as Heebner is probably now using CNBC to sell. That person listened and has been rewarded as PBR pulled back right to the 50 DMA at 65 and bounced. I recently saw him recommend POT. PLEASE DO NOT CHASE POT. Will it still run. PROBABLY. But no way in the world can you look at an arithmetic weekly going back to 2002 and tell me that this stock is a "safe" growth stock to LOAD UP on. I know when it is too late. There is still probably another big run left. But the 2000% gains are over.

I am going to be away on the other side of the island all day Saturday so will not get a chance to update the rest of the commentary until Sunday but what I have written so far is a start and now you know where to go to read quality research whenever you are done reading what I post on my site. I am not bein cocky, I am not being an ass, I am being SINCERE. I have looked for a site like mine for 12 years. It took ME!!! to create it as I was looking for a mix of a speculative/momentum/CANSLIM site that produced some huge returns in bull markets and a few other times in super-bullish sectors when the market was bad. Not only that I wanted someone that was good at shorting.

GBS worked for a while, then he left. RevSharks picks were too short term and he was missing the HUGE BULK of the moves. Zanger did not "get involved" enough for me...and so now we have this site. And for those that are current subscribers that have followed my recently longs you know how well the "top performers" have been. The stocks that I have alerted to you as "must buys" have done very well. A few have had VERY BUMPY rides but their trends remain up and they are still making money. There are a few I really like right now that have done very well and I would hope they do AT LEAST another 100% well.

I will be back on Sunday to add some more thoughts (but you should know I am only 50% on following-through with that), HOPEFULLY. If not, then enjoy your weekend and have a great time with your family!!! After hearing of Tim Russerts death, I was pretty sad. 58 years old, only 58. Yet, it appears, to his son, he was invincible. I can only hope I am that kind of dad in the future. Republican or Democrat, Conservative or Liberal, it should NEVER matter when someone who was this kind dies. He was a great man and even though socially and economically I lean VERY Conservative, I must admit "Meet the Press" was a FANTASTIC show to watch on Sunday, when it wasn't football season. He will be greatly missed and must admit I feel deep remorse and sadness from his death.

Subscribers to my website will notice there are a LOT of longs. I will go into full detail on these and which ones are buyable and which ones need to be just observed. There are some real gems in there so make sure before the opening bell on Monday you make it back to check those out. Also for those without a subscription (what are you thinking!!!! SERIOUSLY!!! F the price! Do you know what kind of gains you are missing out on??) I will have 4-5 Seeking Alpha post this upcoming week. I would like to have one extra one but my right-hand man is being coy about sending me his PMFG submission. On that note, remember to enjoy your weekend and LOVE YOUR KIDS if you have them. Think of Russert. He was only 58. My dad was only 73. Do you know the kind of conversations I could POSSIBLY be having with him right now, if he was still alive, compared to when I was a crazy 18 year old? Time is all we have. Trust me, it runs out for everyone. We all will die. This life is only for a fleeting moment in time and it is a crazy world we live in. Live it up and love it up! ALOOOOHA!!!!

Friday's Reversal Destroys The Euphoria From Thursday; I Did Not Have A Single Long Give A Full Sell Signal (There Were A Good Amount Of Partial Sells

There is no other way to describe Friday as uglier than ugly. When you have 4-losers-to-every-1-winner you can be sure that it was a very ugly day. That ugliness can be blamed on the unemployment jumping to 5.5% from 5.0% which was the biggest gain in 20 years and oil jumping almost $11 and a total of $16 (13% gain) in two days which was also the biggest gain in 25 years when they started keeping records of oil. Economist were expecting the unemployment to only increase to 5.1% so this was a LARGE miss. You can't blame the market for doing what it did today after a miss of that magnitude, along with oil jumping 13% in two days.

However, as I will be doing quite often, as I write this I will try to interject some bullish points to the negative headlines. For instance, it could have been 10-losers-to-every-1-winner. But, actually, that would be bullish as it would show the crowd was extremely bearish and I would be looking to get very long very quickly. Still there is nothing good to say about a day when losers did beat winners by such a strong amount.

As it is and as it was Friday was a horrible follow-through to what appeared to me as a "confirmation of the rally" signal that Thursday seemed to produce. The only really good news is that all my new buys from Thursday held up really well and about half of the new longs actually produced some nice gains (one was up 4.28%). So overall my portfolio while it got a MAJOR whack this week is still up over 10% which is a heck of a lot better than a certain Action Alert portfolio that I am watching right now. So overall I have to admit, it is not as bad as it seemed once the bell rang and the market session ended on Friday. After taking some time to look it over, I have to say that it wasn't nearly as bad as the initial numbers from the market had me believe it was.

Those numbers go like this: the Nasdaq and SP 600 lost 3%, the DJIA and SP 500 both lost 3.1%, the NYSE lost 2.7%, the IBD 85-85 lost 2%, and the IBD 100 lost 1.8% on Friday. As you can clearly see the selling hit everything as only 5 of the 197 industry groups that IBD tracks were up on the day.

The other key measure I always keep an eye on is volume. Volume is key because that is how you know if the market is made up of a bunch of retail traders or if the market is under accumulation or distribution by the real players that drive stocks the pension, insurance, hedge, and mutual funds. Well on Friday, mutual funds were active on the NYSE as volume picked up 17%. But on the Nasdaq, volume was off 1% which shows that the big boys still had no real interest in distributing a lot of stocks. But still the damage was done, volume or no volume.

The euphoria that was starting to permeate the market before Friday's opening bell, imo, was not that "frothy." It seemed to me that there was a lot of poo-pooing of the rally. In fact there was so much "non-believing" in the rally that I was for sure it would continue. However, I know that in bear markets, if we are in fact still in one, I will turn very bullish the exact day that you will top. This happened in 2000, 2001, and in the summer of 2002 more than once. Still, I was able to cut my losses on some of the longs I took, while still gaining some huge wins in some charts that setup really well. That is a lot harder to do now, but as you can via my long-term holding MA and my more intermediate term GEOI PDO and QTWW, getting 100% gains is still very possible as long as you know where to go: pollution, solar, oil, oil, oil, energy, coal, nat gas, metals, mining, ag, and chemicals. There are a couple of other commodity related industries that you can include in that list also.

Speaking of commodities, oil was the talk of the day as it started a climax run on Thursday that is sure to cause a TON of pain for those trying to top tick oil. Oil flew $10.75 to $138.54 which promptly sent my behind to my local gas station to fill up our tanks before a price rise (later that night on the island of Lana'i gas went from $4.71 to $5.11; looked to be a great move on my part). This move in oil sucks and is for sure going to hurt those that drive long distances for work but at the same time you know you are allowed to invest in the United States of America and when you are here you can go long stocks related to the oil&gas industry.

I don't know about you, but since the rally of 2003 started after Bush cut the income and cap gains tax, the Energy sector has given us plenty of gems to help you combat rising gas prices. Instead of bitching about the cost of oil why didn't you go long TGE after the market followed-through on EXTREMELY impressive volume? If you did you are now the happy owner of a 7,833% return. GMXR is up 4,405%, SWN is up 2,820%, MCF is up 2,737%, ALY is up 2,173%, ACGY is up 2,142%, UPL is up 2,109%, and HK is up 2,064%. So there is 8 stocks that could have not only protected you from high gas prices but they could have saved you from your rising taxes, grocery bills, and everything else that will be EVEN MORE EXPENSIVE under an Obama Presidency. How scary does that sound? Yikes!

But besides those 2,000% gems, there have also been another 154 stocks that produced 100% gains since then which more than could have made up for some of that gas you put in your tank. So remember TGE the next time you fill your tank up. Instead of complaining about the cost of gas, you should try, instead, to look for ways to invest in the market that will make up for the losses at the pump. But I know that is not going to happen. This nation has become a lazy, self-absorbed, "daddy, mommy take care of me," country. We are weak and most will not take control of their future as they wait for Social Security to come and disappoint them. Too bad by then it will be too late.

Getting back to the current market which is more than a little nutty. Like RevShark said in his blog this market makes those nuts that think the market is "efficient" look a bit silly. At the same time it doesn't help our charts out at all when the market acts like this. In fact it hurts chart analysis greatly.

But by using charts you also can stay unemotional and look at the market from a point of FACTS and not opinions. By doing that a very surprising thing happened on Friday. Out of 100 stocks out of 10,000 that I am focused on NOT A SINGLE ONE gave a signal to SELL SELL SELL. This is kind of shocking as I expected my recent longs to have done poorly. Instead they continue to hold or rally as 90% of my longs are in the Energy related industries.

It is clear that energy is the only place to be and this can be seen in the IBD 100 and IBD 85-85 index with both outperformed the market on Friday as they were only down 1.8% and 2% respectively which is better than the 3% decline in the Nassy and sp6oo. Also for the week the IBD 100 ACTUALLY PUT IN A STRONG GAIN rallying .8% this week, compared to the 1.9% decline in the Nasdaq, 2.6% decline in the NYSE, 3.4% decline in the DJIA, and 2.8% decline in the SP 500. Those losses for the indexes took out the previously hard-fought gains. Not the best action for a market trying to rebound from a November to January selloff.

This is simply because leading stocks are dominated by energy issues and even though they are nearing the end of their long-term run (look at your LONG-TERM weekly ARITHMETIC charts going back to 2000) their still could be one last violent push higher as they go into a parabolic run and climax top. SWN, PBR, MCF, RRC, DNR, and CNQ are just a few of the stocks that on those long-term weekly arithmetic charts look to be very close to an end of the multi-year run. Still another 100% gain from a parabolic climax run can not be dismissed. It very well could happen especially with oil now going off.

Not only is oil going off, but have you seen the December contract for Corn. Sheesh. That was one heck of a powerful breakout ON VOLUME on Thursday. Corn added to that on Friday. This means not only is gas going to $5 but food is still going higher. I need more setups like DGLY to come along. Even if I only get 30% from it, it is that PERFECT SETUP!! that makes all the difference when going long stocks in bulk. However, it might be a while before too many more show up like that as the rally in the NYSE, SP 500, and DJ-30 is dead. However, the Nasdaq, SP 600, and Philly Semiconductor Index look good and are still holding. If there is more gains coming and this is a one day event, those latter three indexes will kill those former big-cap indexes.

That is if they can keep rallying. I am not happy to see that not much fear was generated after today's selloff. The put/call only jumped to 1.09 which is below two peak reading areas since the August lows, the VIX while it was up 26% on Friday is still only at 23.56 well below the peak reading of 35.60 on 3/17, and the investors intelligence survey saw the bulls jump back to 44% this week. This does not indicate that enough fear was generated yesterday to have us put in a bottom here and that is why I am still a bit fearful that there could be more selling coming. I hope I am a great contrarian indicator.

The one thing I know you must not do right now as we selloff is bottom fish. Bottom fishing is suicide and will leave you stuck in stocks like ABK. I really wish all those people that told me to buy ABK in November would have also asked me to short them the shares. I made a mistake by not going short off those horrible reco's and therefore lost 90% on a powerful short. However, I don't like to break my rules and my rules are more CANSLIM based. Though it may not be easy right now, it is still sometimes very lucrative when you are on the right side of the market in a bear market. That is the beauty about the CANSLIM system. Once you learn to use it right, you can constantly move yourself into the bullish sectors with no problem. That is why we are going long oil stocks and have been making money the past three months while many I know are just spinning their wheels or losing money. I can honestly say I am up 15% and while I normally would be PISSED OFF with such a return at the midpoint of the year, the facts clearly indicated that I am not. Why? I know my methodology will come back to working like gold. Another 1999 or 2003 will happen again and when it does ANYTHING UNDER A 200% annual return is PATHETIC. I expect a 200% return AT LEAST if we have another 2003 market environment. I have to stay positive because this market is making it real easy to get very down on yourself.

Some believe it is safer to protect capital right now and I can not say I disagree with them if you are a newbie. I believe if you are long a stock and it goes up 25%, 50%, 100%, and 200%, you should take 20% gains at each stop. And then when you learn how to spot topping signals and learn to sell stocks as they move higher then you can go back to systematically selling them on the way up. But if you are a newbie make sure you use my fixed result trading. Right now, it is probably safer for the extremely new traders to protect capital but if you are experienced and know what to do there is no doubt that if you get that signal to go long you should go long.

If the put/call can hit 1.5, the VIX can hit 40, and the investors intelligence can see the bulls and bears, we would be in much better position to have another 99 or 03 type of rally where our longs breaking out of beautiful chart patterns can produce some huge wins. Right now, we are no where near there. These numbers strictly do not show enough fear. But when they do there will be no doubt about the facts that we will see better setups that will produce for us better winners that will make us a lot wealthier than what this market can. If QTWW, PDO, and GEOI can do this now with a VIX around 20, imagine the gains of a PDO with a 40 VIX.

There are some things out there that make me think it could be possible Friday was a one day deal. The fact that not a single stock gave me a FULL SELL signal is a huge development as a lot of stocks did give me partial sell/profit taking signals. But the fact nothing said "SELL" is a big clue that this might be a one day event. The other thing that indicates maybe that is not the case is that I had 6 excellent setups for new shorts. So really, to be honest, it is very mixed. And while it is mixed, it remains a stock picking market. And for those following this blog it is obvious there are only a few places to go: energy and metals/mining. This is a development that has been going on for quite some time as oil stocks are the only stocks, besides a few tech, that are breaking out, holding up, and then breaking out again. However, there is not enough and they are not giving us the biggest of gains. But at least it is a start.

This market right now is a bit insane. There is no doubt that this is a headlines driven market that from one week to the next is moved on the most recent economic report or political event. That is not the kind of market that is healthy for those looking to go all-in on margin. This market must be treated carefully, unless your stock picking is around the top of the class. I don't know too many that are getting everything right out there but there are a few of us that have been doing very well when it comes to buying the best stocks that are currently moving in the hot industries. If I wasn't able to go long these great oil&gas stocks that are making me money the past few months, I am sure I would be looking to get about 50% cash heavy. As for most of you I suggest probably getting down TO AT LEAST 25%. I don't think I want to suggest anyone push it here, especially with the way this market is acting. If we recover on Monday and take back everything we lost by the end of the week AND we get quite a few green and max green BOP filled charts setting up in double bottoms, cups, cup with handle, flat base, high tight flag, saucer pattern, and two/three week tight patterns, there is no doubt I will be looking to get long and will be on the hunt for the next near-perfect to perfect setups that will setup out there.

There is no doubt that this is an extremely tough market but I must suggest that YOU DO NOT give up. I know it is hard. It has been very hard since the top of the October 2005 rally that topped out in May 2006. Since then my perfect charts have been hit and miss and before late-2006, it was about only a 10-20% chance that my perfect charts would fail. Recently, it is very much 1/2 and 1/2. Luckily the perfect charts, when they work, are still working very well, while the failures ALWAYS lose 10% or less. Very rarely, if these perfect charts fail, will you ever lose 10%. But at the same time when they work a 100% gain is almost always for certain in under six months. So don't get discouraged.

When should you give it up? Well, if we have a 1999 or 2003 kind of market and I return 300% and some members return 500% and then you LOSE MONEY!!!....yeah maybe it is time to hang it up. But if you are losing money now, don't hurt yourself or be too hard on yourself. Someone, even with a lot of my longs having a great week, I managed to lose almost 20%, as a 35% gain is now around 15% YTD. Very disappointing but if there is more room to run, like these stocks are hinting that there is, I am sure I will make that back up and then some. There was nothing I could do about Friday. There WAS ABSOLUTELY NO WARNING that that breakout was going to turn into a fakeout. The thing is is that sometimes that just happens. The truth of the matter is that we are on day 9 of a new rally still. Unless the Nasdaq breaks below the 50 DMA on huge volume, I will keep the faith that all my nice charts that are still very nice are still going to turn into HOT HOT stocks that will offer me new places to load up.

But until then I will be very careful with my longs. I will keep all new longs and shorts small UNLESS THE chart sets up in a near-perfect to perfect patterns and then those stocks if they have fantastic and strong fundamentals decide that they are going to continue to rally, i will continue to get very long those leading stocks.

Right now, things are not easy, and I suggest new traders be very careful. If you go long MAKE SURE YOU STICK TO THE CANSLIM LONGS ONLY AND IF YOU DO DECIDE TO TAKE THOSE LONGS PLEASE ADHERE TO MY CUT LOSS AREAS. Do not let them pullback any more than I have listed. Do not let losses grow in this market. It is not easy to hit a homerun and when you do hit a HUGE winner like PDO, you want to make sure a bunch (10 to 20) of those profits get locked in and that you can build a powerful positions around the remaining position that you can let run like the way I have let MA run. A nice 520% is my reward for being patient in this big cap winner.

I am extremely tired and I have about 4-5 articles/columns I want to write before my night on Maui is over (it is 630pm). I want to thank everyone, except skeezaroonie (Mark you are a DONKEY!!). This was a great week and I have to say that despite this market treating us like crap, we are still doing very well overall and even though I watched a 35% gain turn into a 15-20% gain, I have to admit I am still long stocks that are basing on heavy buying volume and low declining bottom. If the market takes off again, these stocks are DEFINITELY going to take off again. If the NYSE, SP 500, and DJIA is going to lead the market lower, and will be taking out key support and that then sends the SP 600, Nassy, and IBD indexes into downtrands well then I am ready to cut my losses, take in some shorts, and regroup while I wait for another bottom that will eventually turn the stock market into a big money making machine. Just like it was in 1999 and 2003. However, for now, we are no where near those environments.

For now, we enjoy the pain at the pumps by investing in stocks like PDO, MXC, FPP, and TGC which are acting like pure internet momentum stocks. They are dangerous up here but subscribers to this site are not unfamiliar with any of these names. So many energy stocks, so little time. BigWaveTrading.com's best oil long is MCF. MCF is up 173% from 4/25/07 to 6/6/08. You didn't just make 170%...you made 170% LONG-TERM capital gains. That is darn good. That is why I love this methodology. There is nothing out there on the internet or available in any printed publication that can come close to touching the CANSLIM methodology with my little tweaks.

Aloha and I will see you in the chat room where Chat Blazer has been horrible with their customer service. You may be booted off once in a while for a bit as we try to contract our software provider. You must realize this is happening to EVERYONE and that this IS THE BEST CHAT software for compatibility. Everyone doesn't run windows anymore. Now there are multiple operating systems, firewalls, and anti-virus programs that make it impossible for stuff to work for everyone. This is the best and normally when we have problems they are fixed fast. This has never happened before and if we can host the software on our server and fix this problem trust me I will pay up and have this fixed. ALOHA!!!!!!!!!!!!!!!!!!!!!!!!!!

Very Bullish Week Ends With Us Set Up For Some Big Gains

It was nice to see oil stop rising to the moon and for stocks to still continue higher as a constant rotation from commodity into higher quality tech stocks does seem to be evolving. In fact, it appears commodity stocks are going to continue higher with those new leaders that are starting to emerge. I can only pray that this trend of prettier charts and higher quality longs continues to show in the market.

There is no doubt when you see longs like HRS, PVA, FMC, COP, FST, JOYG, TUP, CRK, BUCY, and CLR move like they did today that we do not have some sort of speculative action in oil longs. Along with this action, you can see a lot of technology industries moving higher on the list of IBD industry groups. There is only one way to spin that: bullish.

The great thing that some commentators were actually complaining about being "nothing more than window dressing" was that volume did increase on the Nasdaq and on the NYSE with Friday's strong gains. I am not sure how they can spin that as bearish but they tried and probably succeeded amongst the masses as the majority of people I talk to HONESTLY believe we are in a recession. YET when I ask them how they are doing it doesn't seem to be at recession levels. So the facts remain that this is a much stronger market than anyone is giving credit for.

Not only was volume higher and above average on the Nasdaq but remember for the first time in almost a full month's worth of trading sessions the NYSE enjoyed volume above average on an up day. The Nasdaq is above the 50 and 200 day moving average...and is making gains on higher volume? Folks, I don't know about you but I know I do not want to be bearish even if the action is weak. And it is weak, there is no doubt about that. I still do not have any PERFECT charts and the near-perfect charts are still not producing HUGE GAINS IN extremely short period of times like they NORMALLY do in roaring bulls. So do not think this is 1999 or 2003. I doubt we are going to get any 1000% gainers, with a 18 VIX.

The good news included within this is that the market was just under a little bit of selling pressure and immediately has shaken it off. Are the skies all clear? Absolutely not. But I tell you what, thinks are looking better. I have a lot of stocks that have made some big gains in some short amounts of time but I am still waiting for a couple of more beautiful perfect stocks to setup and breakout on higher volume before I can get super bullish. But still the fact that we can bounce back so fast from a pickup in selling and after six days of distribution in the SP 500 and DJIA that is a bullish development; not bearish.

To go back to the "we are not in a bear market" rant again. The revised 1st quarter GDP was moved up to .9% and with a show of income growing faster than inflation I find to see where we are in a recession. Oh well. This just goes to show that following the price action of leading stocks, which while not being EXTREMELY BULLISH is STILL bullish none-the-less, is the most important factor in deciding when to go very long the market or rather to not go long at all. The market is telling us that it "is a bull market" (for those that have read "Reminiscences of a Stock Operator" you know what that means) and you will need to act accordingly. But remember this is a very lame rally for the time being and the market is going to have to prove a LOT MORE to me before I get too wildly involved with margin.

But I have to admit it would be nice to get some profit taking signals and some more climax runs so that I can shift topping stock's money to stocks that have a fresh rally ahead to come. Remember, a FRESH breakout to a new 52-week high is bullish; a 100th breakout to a 52-week high is bullish....but do you want to buy that breakout? Think about it.

Keep it simple, the trend is up for now. Aloha and I will see you in the chat room!

What A Difference One Week Makes; Leading Stocks Signal That There May Be More Work To Do Before A Real Strong Rally Can Ever Take Hold

There is no doubt that I am suffering my WORST Multiple Sclerosis attack to date. Since Saturday I have basically been bed ridden and RIGHT OFF THE BAT I want to apologies if any of this is a little hard to follow because I feel like trash. I am not sure if this will effect what I am about to write but do me a favor and do NOT bust my balls if I misplace a word or misspell a word. My life is too short to deal with this.

I had a completely different approach in mind when I first wanted to write this but I figure I will stick with the facts. The facts are as quickly as this market looked like good times could be returning it in fact was possibly throwing us false "all clear" signal. Now while I never fully bought into this rally due to the volume, I still held hope that the rotation that I started to see into technology stocks would continue. Now I am beginning to wonder if that is what is happening or if they are making it appear that this was the case just to shut the door in our face.

At the end of last week things were looking very strong for the stock market, despite the low volume, as a lot of stocks that were in our portfolios were producing some large gains. But without ANY warning or clear reversal signal, the stocks started pulling back slowly getting rid of all the gains. The lucky part is that we did sell SOME as they pulled back since volume was higher. But the stocks pulling back on low volume and green BOP gave us no reason to sell. Since stocks that move up 20% in two weeks should always be held for at least eight-weeks it seemed stupid to sell anything pulling back. However, now it appears we should have taken more gains. This is the one time not taking profits quickly hurt us. The low volume was the tell and I should understand that next time as this is nto the first time I have witnessed this action.

If volume would have been much higher on the Nasdaq and NYSE then I am almost for sure some of the stocks we lost a lot of our profits on would be flying. But low volume rallies are always dangerous if for no other reason that what happened the past four days in the market. The nasty action is most noticeable in the DJIA as you can see it trying to breakout through the 200 day moving average, failing, and then breaking down through the 50 day moving average. This gave it a 3.9% decline on the week which was by far the worst of the indexes.

However, the Nassy fell 3.3%, the 500 fell 3.5%, the NYSE fell 3%, and the IBD 100 did not show any positive divergence with a 3.4% loss. There is no way to spin ANY of this. Last week was a very bad week, considering the week before the market appeared to be ready to give us a bullish rotation into leading tech, retail, and some homebuilding stocks. Too bad that was was killed this week.

The big news of the day was the BUD takeover bid that bid the stock up 8% but overall the biggest economic news came from the fact that the backlog of unsold homes hit a 23 year high! This is just shocking and if you think about how much equity exist due to the housing bubble it should come as no surprise that money is not moving anywhere. Things definitely are not good out there. Especially with oil up 1.38 to 132.19. Ridiculous. Over here on the island of Lana'i, gash is already $5.03 a gallon for unleaded. NICE! :(

This cost of gas has to be the reason the market is trying to fall apart. It makes complete sense as oil takes off the stock market dips. But oddly enough, unlike most oil rallies, oil stocks for the first time did not come along and in fact started showing signs of wanting to pullback. Combine that with everyone talking about $150 and $200 oil and hopefully this speculative fervor has reached its boiling point. However, as long as this ONCE great nation wakes up and starts drilling in ANWR and the OCS, I doubt we will see oil below $100 EVER!!! again.

Getting back to the market, I am sure some of this is the reason we are seeing so many distribution days in the market. Since I like to think the opposite of everyone on wall and broad it appears to me that some had hoped oil was going to top along with the ags and were ready for a tech rally. The fact that has not happened is a big reason we are all giving up. Now, I sincerely hope I am wrong about all of this. In fact, for my accounts sake, I pray I am wrong. But 6 distribution days in the IBD 100, NYSE, and the DJIA is a major warning. You do not get this many distro days WITHOUT ANY accumulation days in a healthy market. When was our last accumulation day? How about March 20th since the NYSE actually had a higher day with above average volume. Isn't that unbelievable? I have to be honest. I have been around a long time (considering that THIS IS ALL I DO besides surfing) and I can not remember the last time I have ever seen this.

In hindsight, it just seems impossible to actually think this will turn into an uptrend. If this was going to be a real rally, based on history, we would have already had 3 to 5 days of higher days with higher volume within the first FEW WEEKS! Here we are a few MONTHS into this LAME rally and we have NOTHING. This is not good folks and this is the reason my potentially bullish stance is going back to a negative nanny.

It is very hard for me to be either bullish or bearish in a market that trades on low volume and goes nowhere and therefore I will stick by that bias about not making a bullish or bearish commitment here as I will need to see volume enter this market above or below the 50 day volume average on a more consistent basis. Some have asked me about the volume above average in the Nassy. Now while I must say this was very good at first, it has now turned into distribution above the 200 DMA toward the 50 DMA this week. Therefore, you have the same situation we have when we just take a look at the index.A muddled picture.

From the March lows, both indexes are technically in uptrends. But last week everything broke those uptrends. So it is going to be real important to see how the market reacts around this are to determine if more selling or some buying is going to come in.

Considering that I am a contrarian and believe we should be buying when everyone is selling, I am not sure everyone is selling right now and therefore it seems that this is just a mixed picture. There is simply no other way to play it. I have proven in these commentaries that I know when to be bullish in bull markets and bearish in bear markets. But this market is about as mixed as it gets. As soon as a stock sells off it starts moving higher, as soon as it rallies it starts selling off. Do you know what that tells me? DO NOTHING!

It is time to once again go back to raising cash. If your stock is falling on higher volume, and you have some gains in the stock, make sure you do take some. If your stock if falling on lower volume and you have big gains already I would hold on to it and wait for a support area to take a stand. If that does not hold up, you then may want to take some off.

But I want to warn you about taking profits quickly in stocks that move up 50% in one month. Sometimes, like now, with the low volume, that will be all you will get. But if any of you will just take the freaking time to spend a few hours on ALL OF MY PAST BIG WINNERS THAT I HAVE POSTED FOR YOU you will eventually understand that to make the big money you have to hold the stocks on the way up in a bullish market. All of you LAZY people that are NOT taking the time to study ALL OF MY PAST BIG WINNERS and current longs that are doing very well, you will never learn how to find the best stocks that make the biggest money in the shortest amount of time.

I hate daytrading, I can NOT stand wasting my day watching flashing quotes all day. Maybe some of you would be 100000x better off by STOP watching the longs that I go long intraday. If you want to daytrade, go for it. Just make sure it isn't the stocks that I am going long. There is NOT ONE SINGLE stock that I enter that I plan on selling before the day is over. What am I? 12 years old. This is a game for the lame that have NO CLUE how the biggest winning stocks are created. If you want to daytrade the index futures go for it, if you want to trade stocks don't be a donkey and don't touch my positions.

The biggest problem I have with the rally is that the worst groups of the last leg down are the best groups in the current rally. Not only are the same commodity stocks and past weak stocks leading they are doing so (most of them) on lower volume than on the selloff. That is negative.

Still it is hard to judge anything without volume. Which is why when I write all of this I just wonder why am I even doing it. The low volume market is a market that most players should be out of without a doubt. But somehow us traders have some problem and think that everyday there is a money making opportunity or a reason to do something. The truth is that is pure BS. About 3 or 4 times a year you get a perfect setup and even then I am learning 1/2 fail. This low volume market is making a lot of us overanalyze the whole thing when we should just take a step back and wait for volume.

Sometimes I am not even sure what the heck I am writing about because I feel like I have talked and written about it too much. Now I know how people go crazy. So from here on out I am going to lay it out point blank how this market is and what we should do.

Back when we started selling off, I was on top of it, we went short, and scored some gains. However, not a lot of the big gains came from the best setups which caused me (but not my subscribers who beat me--WTG [I am not the jealous type-in fact i WANT you to beat me]) to underperform my normal downturn periods. This led to the January lows that with the heavy volume sent the market into neutral territory. During that time I expected another rollover but insted in March we got a tiny rally with plenty of good stocks moving. But the problem became clear quickly. The gains in the best patterns kept failing or not holding. THIS IS NOT how real bull markets start and was our first clue this was probably not going to last.

But I am a natural optomist and did believe this could turn bullish as long as the pent up money on the sidelines came back on the bull side to chase that RIDICULOUS 13.86 NYSE short-interest ratio. However, I was wrong and instead many of my best setups (which none were great but they were good) have ALL failed. So what do I do now? The same thing I always do.

Now, that I realize this stupid market is not going to cooperate as it has now destroyed every single last one of my potentially hot charts is to lock in some profits on ANY stock that took more than 5 weeks to gain 25%. If it took the stock that long get rid of half of it and put that money into a potential mover. Now if your stock is up 25% in two weeks, make sure you hold on to some but still the way this market is acting you better take 20% off. Also if any recent buys have lost the beauty of green BOP, are in a downtrend, or have broken below a recent base you need to sell some or all of it if it has completely broken the cut loss rule. If I buy a stock it is because it looks like it is going to blast off. If it don't, then it has failed miserably and needs to be dumped.

I am one of these guys that KNOW it is STUPID to buy falling stocks as I lived through 2000-2002 and was involved in LTCM when I first started so I know as soon as I lose gains or rack up losses to get out so that I have more money to put to work when times are good. Right now, times are not good but you can GUARANTEE that they will be again. There will be more max green BOP stock, they will setup and they will be buyable. Some stocks to keep an eye on for potential entries at the 50 DMA include FLS, SD, SOL, CSIQ, MR, and TMRB. That is just a VERY tiny selection of some potential fundamentally sound stocks that are setting up.

Some that you should stay away from depstie the strong fundies include CHL DRYS DSX GNK OXY DIB GHM SNHY STD which are all starting to show some very negative short term action. This can not be good for now.

But still, how bad really is it with all this low volume? It isn't. And this is my point, until really powerful BIG institutional money returns to this market it is basically a stock pickers market and since that is what I do best I will continue to try to do that. BUt I want everyone to remember, when the market is trending up 70-80% of what I go long will go up a lot and be very rewarding. However 20-30% will be crap and must be cut short. At the same time, in a sideways to bear market less than 50% of the stocks I take will work as a TON of false breakouts/bounces happen as market makers artificial create these points to trick people like us. However, if you remember to cut losses faster and take profits quicker in markets like this, you can still do very well.

For now, I advice everyone to stay low for now. Do not go long stocks unless the setup is perfect, the stock is in a group FLYING up the industry group charts, and is a top performing stock in its groups. Right now, the market is a little rocky and has taken care of our longs that were once showing us super solid gains not so nicely. So I suggest caution and once again, guess what? CASH IS KING. I suggest raising cash on anything that doesn't work and unless it is perfect leave it alone. That is all I can leave you with.

My last words is I hope you all had a better Memorial Day than me. I came down with a severe MS attack that knocked me on my ass. In over...gosh I don't know...I have never felt so tired. I could only surf (still surfed strong) for an hour but besides that slept for three days in a row including 15 hours on Saturday. I am not sure if that is normal but if anyone is a doctor and has some sugestions please send an email to the administrators at BigWaveTrading.net and they will get it to me. Thank you. ALOHA and hopefully this weekend is not as boring as last week. At least we have the basketball, hockey playoffs and MLB. Thank GOD for that!

Have a great week and great luck. Remember, be careful out there this week and DO NOT come out of the gates with a "get rich quick" mentality in this market.

HAPPY MEMORIAL DAY WEEKEND!!!!!!!!!!!

Happy Memorial Day Weekend. The new commentary will be fully updated by Tuesday morning. I also expect to write a few columns for Seeking Alpha, iStockAnalyst, and StraightStocks for the upcoming week. So make sure you check those sites throughout the week for updated columns.

And for everyone that reads this that is either active-duty or fought for us before, know that I APPRECIATE EVERYTHING you did to make this a great country. The war on terror will be won and it will be won via the United States Military and not by the United States Congress. What the heck is wrong with the liberals/republican-liberals in Congress? Anyways, from the bottom of my heart, THANK YOU. I KNOW places like San FranFREAKO and Berkley exist because of great men and women in our military.

LONG: THE UNITED STATES MILITARY, FREEDOM OF SPEECH AND RELIGION, AND CAPITALISM

SHORT: TAXES, LIBERALS, AND SOCIALISM

If you are a "vote for Obama" kind of whacko, don't bother posting any comments. They will NOT see the light of day!! According to my liberal friend "the new free speech is censorship of the right." Spoken like a true marxist. How do you like being censored? SUCKS, don't it? Kind of like the extreme left-biased media that isn't telling you that WE ARE WINNING AND THAT AL-QUAIDA IN IRAQ IS NEAR DEFEAT!!!!!

BAGHDAD - The U.S. ambassador to Iraq said Saturday that al-Qaida's network in the country has never been closer to defeat, and he praised Prime Minister Nouri al-Maliki for his moves to rein in Shiite and Sunni militant groups.

HAPPY MEMORIAL DAY AND HUGE!!! THANK YOU FROM ME TO THE ARMY, NAVY, AIR FORCE, MARINES, RESERVES, AND COAST GUARD!!!!!!!!!!!!!!!!!

ps: GO PENGUINS!!!!! GO LAKERS!!!! GO CELTICS!!!!! and congrats to Manchester United for being the "illest" club ever!!

Looking For Leading Stocks

One thing that I do not hear a lot about but that is very clear to me is that stocks that are leading ARE REALLY leading. That can be seen especially when it comes to the amount of stocks that are hitting new 52-week highs. About a couple months ago things started to slowly change when new 52-week lows stopped expanding at the pace they were.

After the March lows and a small market rally, the new high list started to slowly build. And now we are at a point where even on down days, the past two weeks, the amount of new highs either match, are breakeven, or barely losing to new lows.

On Friday there were 244 new 52-week highs to 95 new 52-week lows. This was the best reading I have seen yet, since God knows when. I know in the August to October there were a lot of stocks hitting new highs but I am not sure it looked THIS GOOD then.

The leadership is clearly focused in one area too. The energy stocks had 96 of the 224 stocks hitting new highs come from their list. These stocks that you should be watching for future bounces off the 50 DMA or breakout are PDO, FPP, ATN, PHII, RAME, HUSA, RDC, APWR, TELOZ, WLL, ESV, APC, WMB, OXY, GMXR, COP, NE, CVX, GTE, SFY, CNQ, GU, HOS, BTU, NXY, ECA, BTE, HK, CAM, HES, PDE, FTI, UNT, WFT, MCF, STR, PXD, HP, CPX, PXP, SPN, PBR, HAL, MMR, E, SSL, SWN, WTI, WHQ, PBRA, SM, EAC, GLF, PVA, FST, TTES, CXG, and WES. All of these stocks have GREAT fundamentals and are all leaders based on price performance.

Other leading groups are the Metals/Steel with 14 stocks hitting new highs. The all-stars of this group are SUTR, MTL, MEA, GTI, GGB, TS, SID, X, NUE, RS, SCHN, VMI, and MT. Behind that was the Machinery stocks with 12 new highs and WGOV, ENS, AME, BUCY, JOYG, GHM, ABB, ATU, PDE, FTI, NDSN, FLS, and CFX.

One of the hottest groups with three of the top 20 industry spots are the Transports with EGLE, UNP, GNK, BNI, KEX, NSC, WAB, and CSX. Mining had 8 hit new highs with FCX, RIO, BHP, RTP, and CLF leading the way with strong fundamentals. The Medicals are still hanging on with 7 new highs and ZOLL, ICLR, STE, and LSR are the top guys in that group.

Utility, Retail, Computer Software all rounded out the top groups with five stocks hitting new highs each. EGN, NFG, SBS, BKC, CVS, GYMB, LL, BKE, BMC, ATVI, ANSS, SY, and ANST are leading the way in those groups on Friday.

Everything you see here are hitting new highs when the market is still a good distance away from its old highs. These are our current leaders and as long as this market rallies, I want to be long these stocks.

I know some of you believe we are going to top soon. But I am telling you RIGHT NOW that stock charts look great all over the place. You name a lagging sector three months ago and it has moved up the list with a lot of high-growth technology and consumer speculative sectors. Along with the old commodity leaders just slowly selling off, which gives them a weaker RS performance to the big winners, but still keeps them rallying is taking place.

Overall, volume or no volume, as long as we trend up and I have a couple of really nice stocks and that one perfect chart--I do however need a few more perfect stock charts to have me completely fall in love, however--continues to move higher, I am going to be very happy with what I can get in a market that has a low VIX (around 17) and is full of ETF's that now suck up money that used to find its way into "hot" stocks. This is just less money that can be put to work in the momo monsters like MXC and PDO.

Aloha and I will see everyone in the chat room at 630AM HST/1230PM EST.

current longs/(shorts) and their total returns: GEOI 118% CMP 65% SOL 36% ICO 49% VISN 52% DGLY 49% HA 42% PDO 78% CPE 46% CSIQ 56% HIL 50% MTL 67% MCF 172% JST 40% IHS 258% EBIX 169% MA 477% (EEFT 33%)

Bullish Week Ends With Leading Stocks And The SOX Taking The Lead (Part Two)

Randomly continuing where we left off yesterday, besides the put/call showing a little of fear coming back into it even with some indexes higher. One index continues to print what should be considered bearish numbers. That is the VIX. The VIX closed at 16.47 Friday and intraday on Wednesday hit 16.10. That was the lowest reading since October right before the November top.

I know I am very bullish on this market, even without volume, due to all the setups and charts that are already breaking out out there. But don't question if I would turn, if we got like three major distribution days in-a-row. If that was the case and there was no bounce here, then you have plenty of reasons to get bearish and top calling. But as long as we have stocks like EXM DRYS, and even CNQR showing up, I think I will hold off on top calling. For all I know it will take the put/call to hit .40 and the VIX to hit sub-10 before stocks finally top off this current run.

People that have already sold all of their holdings that they started buying in March, just like the people that told me to bottom fish in March, are just not at the level they need to be at. Nobody, should be out of any DGLY, GFA, or any of the other recent longs like PWRD ISYS and OTEX which have not acting perfectly since going long (that is unless you are a newbie then you should lock in anywhere from 10% to 20% on DGLY, VISN, or anything else up 50% since we went long the past few months). However, they are not acting like GENC and it is a great thing. FEED, even before the recent selling, gave us plenty of time to take some off the table; I took 50% off before the move down. Did you?

Why did I do that? Because look at the chemical stocks. They all look like they are near a major top and the fact that they have not topped yet is SHOCKING to me as the chart patterns have set themselves up more than once in becoming perfect tops and thus good shorts later on. But when I look at MOS, POT, CF, and TNH, I know that not only have I take a 300% and 500% gain in TNH and MOS respectively but that I am in the right place by being on the sidelines as the current chart patterns are LOADED with flaws and the EASY money has CLEARLY already been made in these chemical stocks. If you are focused on them now, I ask you, where in the heck were you in 2003, 2004, 2005, 2006, or 2007?? You are a little late buying up here for a big position play. I am looking for a top.

And hopefully when that group tops, the market will shrug it off and actually take off, as a rotation from commodities to technology could almost be done and waiting for that group to top before blasting off. We will see. At the same time this rotation is occurring it is obvious that money is not coming out of the energy/oil&gas sectors of the stock market. Those two groups continue to show extremely bullish action and there is no reason to think they are done when solar stocks are only now starting to blast-off. I also do not see any oil&gas stocks making clear climax tops. That means that the run is not over and the way they are dominating the top of the IBD industry groups, only a fool would bet against these stocks here. But I take it a lot of people are or else there would not be a near-fourteen day NYSE short interest. Amazing.

If you look at the top 20 industry groups based on six-month price performance, eight of them are energy related, three are transportation related, and three are metals related. What is even more bullish for these stocks is that the transportation-shipping group has gone from #133 to #15 the past three weeks. Stocks like TBSI DSX EXM and DRYS are all setting up in BEAUTIFUL bases. I want them all, when they breakout or bounce off key support, now that the charts are right.

If I was undisciplined I would just buy them now. However, I know my game and my game makes me a lot of money. I know either buying too early or doing the worst investing mistake and chasing a breakout too far past the appropriate pivot point is not the right thing to do. So I simply do not do it. It is that simple. Don't break rules that have been PROVEN to work. How so many people can have the CANSLIM system handed to them and they simply do not take the time to learn how it works properly is STUNNING to me. It is stunning those few seconds of the month when I waste my time and watch CNBC and see so many that subscribe to IBD NEVER talk about anything the paper preaches. Especially Cramer.

How can you know that history has been mapped and chartered to show us how the best stocks work and yet you tell us to double down on NXY, IMA, or SHLD back in the day POST-top? Horrible. Patience pays off. If you daytraders would look at how much easier your life would be by making one buy and a few partial sells before a big final sell and without paying constant commissions would really improve your returns and open up your day to more free-time. There are always a few who do better being more active but I doubt those people were long my LMLP, TASR, IST, FMDAY, AFSI, or HRZ for some nice easy-to-handle big gains.

I don't like being active as I know the big money is made in the holding. If you like being active, GREAT! However, if you are active and are not happy with your results, I must recommend that you read and study my Past Big Winners. If those, and the list and list of stocks in all of the O'Neil, Weinstein, Boik, Loeb, and Livermore books, don't convince you, I have no idea how you are going to last in this game. Especially as returns vanish with a low VIX and a market FULL OF THOSE HORRIBLE ETFs which now receive money that used to go into REAL stocks. The money in ETFs could be added fuel to the fire of DGLY. But instead a QQQQ or SPY will do. Oy.

Getting back to the market's performance the past week, I have to say while I am looking for a short-term top that could lead to a shallow pullback, I am not going to convince myself that it is a given that it will happen. If this market wants to continue to run that is fine with me. The stocks I am long are going to have to show me blowoff topping signals, reversal signals, or straight up fail before I will sell a market that has this many high-quality stocks moving higher. Even with volume below average on the NYSE and only a few days of above average volume on the market. At least those days are either up or have bullish reversals.

What clearly makes me bullish here (but remember I am ALWAYS ready to sell, if I have to) is that leading stocks and the exciting tech stocks are taking a clear lead. Last week, the SOX led everything with an incredibly impressive 5.8% gain and the IBD 100 was right behind the SOX with a 4.2% gain for the week. Both indexes did much better than even the strongest mainstream index. The SP 400 gained 3.5%, the Nassy/SP 600 3.4%, and the worst of them all was the DJIA with a 1.9% gain.

This to me clearly tells me that this is a market I want to be interested in. I am interested in all markets but when I see technology stocks AND leading stocks taking the reigns as we move higher, I have to support that. Low volume or not. Do I want to see volume return soon to the upside? You better believe it. Will I be OK with a low volume rally? FOR SURE!

Right now there are too many stocks extended or they have come off the lows too fast and need to base out. Stocks like FSYS, FSIN, HMA, and MVL would all make GREAT longs in my portfolio. But there is no way I will buy these until they calm down, setup, and breakout again. Just like my CLR long. Everyone seems to want to buy it now. I am NOT touching it again until it touches that 50 DMA. Better safe, than risky and sorry.

Other stocks I would like to get long at some point with a good entry would be SNHY, BUCY, WBD, HRS, ESV, EXM, DRYS, DSX, DO, UPL, and about another 100 oil&gas stocks. Chasing just isn't my game. Patience is.

I don't have much else to say other than without options expiration volume probably would have been lower on the Nasdaq. So I guess volume was kind of lame on even Friday's move. Not that it is important or anything. I just thought I would throw that in there to illustrate that a low volume rally is what this is.

That means that sentiment dominates. Since the big boys are not putting a ton of new money to work and the volume is real low, you would think the market would be going nowhere. But the old maxim is to "never short a dull market." Yet with all this low volume that is what knuckleheads are doing. The negative news that I have discussed earlier, the negative polls with another one being released Tuesday, and the SP 500 having the worst earnings, dropping 25.9%, slump since 2001, going three q's in-a-row down are all the perfect backdrop to continue to have that NYSE short interest ratio rise and to see the put/call climb higher. Right now, the media is a growth investor's best friend. Their lies and BLATANT exaggerations make this possible.

Every message board or blog comments section I read has at least a handful of doom-and-gloomers and if you guys did not have the pleasure to listen to the comments coming from the yahoo message boards posters the day BSC collapsed then you have no clue how negative it is out there. People are simply disconnected from reality and the poor continue to get more poor due to policies they THINK is helping them but is in fact making it worse. Ignorance and being uneducated is a horrible mixture. Along with being easily manipulated. Combine those three traits and you have the politicians favorite targets.

I am going to do a post later on tonight that will focus on the strong stocks in strong sectors. I recommend, while this market is moving up, that you focus on these areas of the market in the upcoming weeks. It will be beneficial to your bank account.

Aloha from a beautiful and gorgeous Maui "where every little thing is going to be alright." I hope you all got to watch the Penguins win and watch the Celtics win. If you did not, you seriously need to get a Tivo. And if you do not like sports...you are a nerd and are probably the donkey that decides to come to Maui and "learn to surf" then you paddle out to our breaks and get in our ways and almost kill someone. What a great year for playoffs in the NHL and NBA, we have the Yankees and Mets tonight, and this year's ASP has been incredible so far. Get off your butts and get to the gym!!!!!!! :) ALOOOOOOOOHAAAAA!!!!!!

Bullish Week Ends With Leading Stocks And The SOX Taking The Lead; The IBD 100 Finishes Up 4.2% And The SOX Finishes Up 5.8% This Week, Clearly Showin

There is really only one word to describe Friday's intraday action: bullish. Right off the bat, thanks to a report showing the University of Michigan consumer confidence number fell below 60 to a 28-year low, the Nasdaq fell 1.2% within the first two hours. This selling was pretty nasty but still the report should not have shocked the informed investors who saw the IBD/TIPP poll hit an all-time low last month. I am sure we can expect more of the same come Tuesday when the new data is released. Thankfully, for the bulls, cooler heads prevailed and quickly the consumer confidence news was taken as old news and shaken off.

By the end of the day, it was an impressive turnaround on all the indexes, as everything closed near their HOD. The leading index was the NYSE which scored a .5% gain. The SP 500 also was up today, gaining .1%. On the other end, the Nassy lost .2% and the DJIA lost .1% but both still closed near their HOD. Considering the losses that all the indexes had going after the first two hours there is no other way to call today anything but a victory for the bulls.

That bullish action was the second day in-a-row and the fifth day out of six that the market has started the day off weak and finished strong. I hate to think of everyone out there that is watching their stocks too closely and therefore have been shaken out of some good longs by watching the market during the day. I suggest when you are using this superior methodology that you best use it the correct way. That means not watching your stocks intraday. If you want to daytrade, fine, do whatever you got to do. But if you went long DGLY, you should still pretty much be long 75% to 100% of it for possible MONSTER stock gains. Those that have sold more than 50% of it have traded poorly and this is due to you watching the stock too closely.

The best daytraders that I have ever met only daytrade index futures. And I will tell you this. I know this methodology. I know how to make the MONSTER gains. And I know daytrading stocks will never get me what CANSLIM can. I have seen it all by now. But if you want to daytrade futures, you have my complete blessing. If I was forced to be a daytrader, I would be trading ALL of the index futures with huge margin (preferably at least 25 to 1). I know that game. But guess what? I would rather go looking for surf and then paddle out into a lineup with a lot of pretty girls and bombing sets. You can watch the market intraday, I would rather attempt to get barreled. After a good session, then I will check out the stocks. This is my lifestyle and I LOVE IT. However, if I did like sitting on my fat butt all day watching 8 to 12 monitors of flashing quotes then I would be daytrading index futures and using CANSLIM after-hours. There is not one stock I would daytrade intraday. NEVER. I know the BIG GAINS are in the HOLDING.

Speaking of big gains, since the lows on March 17 when the Nassy hit a new 18-month low the index has recovered 17% with many of my best stocks returning 30% plus gains. A lot of JERKS tried to get me to bottom fish some horrible stocks, a few days after they made 200% moves off the bottom. Those stocks all of those people told me to buy, since those initial runs, have basically returned NOTHING. But I told you then that you DID NOT have to buy the EXACT BOTTOM to make a KILLING in the stock market. And I still believe if you are 100% cash right now, if you buy the right stock you can beat ANYONE reading this who bought SPY on March 17. They bought the exact bottom and NAILED the bottom!!! WOOPPIEEE! But you didn't and instead you bought MXC and PDO two weeks ago. Now you have a 115% and 95% gain!!! Oh, but wait!!!! You did not buy the bottom. How stupid of you! Do you NOW see how foolish those people were then?? Do you see how arrogant and IGNORANT of history those FOOLS were. They blasted me for not buying the exact bottom on full margin. Since then, the returns we are seeing at BigWaveTrading is crushing the returns I am seeing in some of the "more popular" guys that I follow that were laughing at me for not going 100% long on March 17.

Those same brilliant geniuses are also now calling for a top. They believe the market has come too far too fast. Don't they understand momentum and short squeezing. We don't need volume and we don't need to rest, if the market doesn't want it. It does whatever it wants to do. And right now all you need to know is that all news is good news and that is why people keep shorting the market (NYSE short interest ratio is at another all-time high at 13.40--it takes almost 14 days to cover all shorts on NYSE based on average volume. WOW.) as they keep hearing nothing bad but news from our EXTREMELY biased news media. These blatant political lies, along with a heavy dose of global (w)fear(m)ing, keeps the public scared of the market. This is the wall of worry the market is climbing now and it is proving that it doesn't need a lot of volume.

But have you noticed that volume is starting to come in above average on the Nasdaq more consistently now. The days when it shows up the Nasdaq is either up or it has a bullish intraday reversal. That is a very key tell folks. That tells me the marketis healthier on the short-term than most give it credit. Heck even oil hitting $127 and closing at $126.02 doesn't phase this market. That is why all of our indexes carry acc/dis ratings of A and B and why we see so many technology, retail, and other growth sensitive areas of the economy starting to climb up the list of top industry groups. It is great to see so many technology, software, hardware, computer, electronics, biotech, transportation, metals, oil, and internet stocks rallying all at once. Included in that are a lot of HOT HOT stock charts. Sadly, there still is only one perfect chart out there that is working perfectly and it is up 56% from my lowest hit limit in a little under a month. That is how they should all act. There are a few cheap stocks setting up like that but nothing of CANSLIM quality has me excited of a future MONSTER stock like TASR.

Still overall it was a great week and the bears can't keep me down even though the media sure is trying. Stocks like WBD HRS ESV EXM DO DSX MTL and UPL are not listening. URBN and CSH are the exceptions and with recent longs of top quality that I have sold watch these two come back. TITN was a recent example of a top stock sold that is now back immediately. This is one strong market. Even gold looks to be bouncing again. But the stocks that are clearly dominating are the Energy stocks, especially oil&gas. However, energy stocks are coming on strong and I got my eye on CSUN and SOLF to add to my SOL, CSIQ, and FSLR collection.

The only thing I need to watch out for is getting too excited about this rally. Getting cocky about my gains is the LAST thing I want to do as I have to remember I only have one perfect chart that is out there working. Are there a few setting up that could be perfect b/o's? Absolutely. However, there have been others that have started and failed. Remember, NEU and CMP. They both produced some nice gains but the perfection ended quickly there. BRKR and ADEP are two that completely failed. Both had OBVIOUS flaws that kept them from being huge holdings. But BRKR had a great company and good growth but things don't always work out. And that is why I always cut my losses. But just like TITN, BRKR appears to be firming back up again. It isn't nearly as strong as TITN but a theme of strong stocks having trouble going down is becoming a very large and growing theme in this market. That has to be bullish, heavy volume or not.

Yes it is true low volume rallies are not healthy overall, but nobody knows how long Mr. Momentum can last. Usually when I see people calling tops long-term or short-term I get happy when I am long stocks like I am now. It is not like I am loaded up with longs but I only have 20% in cash now because SO MANY CANSLIM quality longs have been breaking out or bouncing off of great patterns. They are all working. How can I sell stocks when NONE of them are giving me topping, take profit, or cut loss signals.

On top of that the index have taken their key 200 DMA lines which is a very important technical line in the sand. A lot of funds do NOT buy the market until these key indexes are above the lines. Now that they are, it would be nice to see some big fund buying come in. But before that happens, watch for a possible pullback as the put/call buyers are starting to take an interest in the call side again. The put/call fell to its lowest levels since January on Thursday when it hit .64. But oddly enough, just a little bit of selling (or in the case of the NYSE and SP 500, a rise) is enough to raise the put/call back to .79. It isn't 1.00 but it is funny to see a bit of fear enter the market on just a morning two-hour dip that has an EOD close near the HOD.

...........it is getting late on Maui as I had a nice (but small :() surf session that lasted 1 1/2 hours. But it was enough to tucker me out early. When I wake up I will have part two finished by the time the NHL game is over. Go Penguins. You gotta have Sidney Crosbey in the finals!!!.........