This Is where I will post my blog on daily market action. I will give you facts and my personal opinion of where and what the market should and might do.
Revision History (1 edits)
MauiTrader - Wednesday, November 29, 2006, 2:13:22pm
Tuesday, July 25, 2006 Last Hour Rally Gives Indexes Nice Gains On Higher Volume; Where Are All My Pretty Charts? A final hour liftoff helped stocks overcome a lazy to negative day after an early morning spike which was immediately sold. This was a nice continuation of yesterday's move.
The SP 600 led the way with a 1.3% gain, the SP 500 and Nasdaq followed with a .6% gain, and the Dow Jones Industrial Average rose .5%.
Volume was higher on both the NYSE and the Nasdaq. The Nasdaq volume was just a tad higher but it was higher none the less. Breadth was positive on the NYSE by a 2-to-1 margin and was positive on the Nasdaq by a 3-to-2 margin.
This market is starting to act like it wants to put in a short term bottom. This action along with the oversold readings on a lot of oscillators and some sentiment indicators getting a little ahead of themselves looks good for further upside. I just wouldn't expect this to be the bottom that sets us up for a huge run to new all time highs. There simply is not the right kind of leadership for that kind of a rally. However, the strong closes are a positive and is a starting point.
Earnings are dominating the headlines and all the stocks gapping up and down on my charts is my signal that the market is still not the kind of environment I want to go all-in. If I had no way to receive any news I would still know it was earnings season (even if I couldn't see the months) because the amount of gaps up and down and the percentages are just in such abundance that you can tell it is earnings season.
So we need to just play a little, if you must play at all. Keeping cash heavy even though the indexes are going up is still the smart play. Trust me, Jesse Livermore, Bernard Baruch, Nicolas Darvas, and William O Neil wouldn't or is not investing in this market. They know it is better to wait till all the stars line up. Trust me when that moment happens, like always, I will let you know.
Stay positive and great luck out there. I will hopefully be back in action tomorrow.
Investors Paradise was hacked and my forum was the only one compromised. I guess that is the highest form of flattery: being attacked. Hacking is a form of terrorism and I laugh in the face of terrorism. We will be back up and running and even if all the great conversations are compromised for good it does not matter. We will build brand new again on my forum. How does that sound, guy who hacked me? LOL.
My whole life has been nothing but one big success story after extremely tragic situations. I have no family and after being clinically dead twice via two vicious accidents when I was in between the age of 16-17 things like this don't even phase me. This is nothing. Thank you for cleaning up my forum, hacker. You will never win. I always win in life.
New Swing Longs: NONE
New swing Shorts: HNR CPF VLTR XPRSA -- keep these very small. I will try to post charts on here later.
Wednesday, July 26, 2006 Late Day Pause Stops Most Indexes From Making It Three Days In A Row Of Gains. After two days of nice gains stocks finally ended it with a last hour selloff to finish the indexes in the red. Earnings were the blame of the day for the media.
The SP 600 led to the downside with a .56% loss, followed by the Nasdaq's .17% loss, the SP 500 lost .04%, and the Dow Jones Industrial Average lost .01%.
Volume rose across the board and breadth was positive on both the NYSE and the Nassdaq by a 8.5-to-7 margin.
The stock market and stocks overall are still kind of crazy in this earnings environment. If you are a new investor I hope you are still in cash as this is not the kind of market environment to be trading in. I am not sure why I am even doing it. Probably just to satisfy my gambling addiction. I know it will pay off. It always has before. But staying in cash for new traders is better than driving yourself crazy trying to make money in a market like this. It is better to just wait for an uptrend to be firmly established and for great stocks to breakout from sound bases.
Reading some good books or reviewing your past trades that have not worked out is probably the best advice I can give traders right now. There are some wall-street classics out there that are MUST reads. And if you have not read them yet this is the kind of market that you want to absorb as much info as you can. That way you will be ready for the next uptrend. And during that uptrend you can focus on making a ton of money instead of trying to learn how to make some money.
The market is still oversold on all the oscillators. This suggest that the recent rally has not run its course yet and that there is still more time for the market to make some gains. This market is acting better on this bounce this time around but I still wouldn't trust this rally to turn into "the rally." We are still in an intermediate downtrend on all the averages. It doesn't pay to fight the trend.
Don't commit hardcore one way or the other, right now. Some longs are acting well, some shorts are acting well, and some longs and shorts are not acting well. Blah.
If we get a pullback and hold the recent lows and start to rally again we may see some nice gains in some pretty charts that I am long. I just wouldn't bet the farm on it.
Stay positive and know this too shall pass. It has been a rough three days on multiple fronts and I am still fighting. Fight with me. It is the best defense against this ugly market. I would never sell me short! Are you the kind of trader that is basing right now and are ready to explod to the upside in a bull market; or are you just taking a rest before the final breakdown? Readers of this blog and followers of the CANSLIM system never give up. Don't you either!
New Swing Longs: WNR JLL ILC SMTX
New Swing Shorts: AGP RJF MAR BFAM LDSH STNR KEX NCI EXBD DDE
**For charts and more information on longs and shorts, go to Investors Paradise.
Thursday, July 27, 2006 SP 600 and Nasdaq Lead The Market Lower On Heavier Volume; Stocks Are Breaking Down Everywhere. Good earnings from XOM wasn't enough to keep stocks afloat. After a good start for the indexes, the markets decided enough was enough and rolled over to finish the day on a negative tone.
The SP 600 led to the downside with a 1.2% decline, the Nasdaq followed with a .8% loss, the SP 500 fell .4%, and the Dow Jones Industrial Average was down a couple of ticks.
Volume picked up on the Nasdaq and was ever so slightly higher on the NYSE. The losses with a pickup in volume on the Nasdaq gives the Nasdaq its second distribution day since the rally tried to start on the 18th. This pretty much ends the rally attempt. You don't want to see two distribution days before a follow-through.
Breadth was negative on the NYSE by a 9-to-7 margin and negative on the Nassy by a 3-to-2 margin.
Now as for the market I can say that after today it looks as ugly as I have seen it since 2002. I simply have not seen so many darn ugly charts in a long time. There are breakdowns everywhere. And when I say everywhere I mean everywhere.
If it is the former leaders of small caps, steel stocks, gold stocks, or even those oil stocks, most stocks have CLEARLY topped in those sectors and there is only one direction to go after three years of nothing but gains; down. The current leadership of the IBD 100 index gets killed every week too. The new stocks that then make it to the list are simply gone the next week. The breakdown in all the DJ Transport stocks and Basic Materials stocks and indexes today is another horrible tell that the market is not healthy. Then lets look at the defensive HMO sector. That got whacked too! Everything and I mean everything is getting sold. How does the SOX index look? How does the Nasdaq look? What about the recent breakouts in stocks with decent bases of BIDU and PMTI? Did those work? Nope. Not much is working.
What is working are your typical bear market sectors. The Utility-Gas and Utility-Electricity index is just FLYING up the list of top sectors during the recent three months. Then your top sector right now is the Food-Flour & Grain group. That sector is leading along with the Beverage-Soft Drink, Food-Dairy, Banks-Southeast, West, Northeast, Tobacco, Telecom-Services, Media-Cable, Medical-Nursing, Medical/Dental-Services, and the whole Leisure group. THIS IS BEAR MARKET LEADERSHIP! These stocks will go up but they normally don't go up in a smooth fashion. If you look at my list of longs you will notice something...most of them are in the top sectors. Odd! As Cramer says there is always a bull market somewhere. That may be true but how choppy and wild of a ride is that bull market.
I still think it is best to stay in cash and keep it heavy for the next real bull market. Then you can gun it and produce HUGE gains. Or you can trade yourself to death and drain the account slowly as you pay your commissions to your favorite broker. They are people too. They have families to feed.
So with all this data I still say: stay patient, calm, keep a smile on your face and keep your cash level high. This too shall pass and the skies will open up a fantastic bull market. Never sell America short, long-term.
Aloha and have a great Friday. I will see you at Investors Paradise, where I post charts and get in depth on the market. If you want more, you can't afford to not be there.
New Swing Longs: NONE
New Swing Shorts: CGX IJS LHO IJT HYDL DRIV SYNA RRGB NCC RACK FDX
Longs Outperforming: AKAM-130 STNR CTV BOT CTCI-67 LMT PAY-31 SEIC VLG-31 MO BWP TYL FORR DLP ABI GISX BSML
Shorts Outperforming: SWC JOYG BPFH ELY USG WSM RTP RES AVID MEOH MAFB BTH APOL GYI TXRH XNPT PBE MAS PII CXG POOL PWC VO OPTN IYT SUPX NTE GE WFSL PDCO ESIO C AME HTLD VXF VB WTI WERN FRC RS DSL CATY AF WTFC HMY IFX X STLD CPF MAR AGP LDSH EXBD NCI
Saturday, July 29, 2006 Huge Gain For Stocks, On Lower Volume, Bring A Close To A Very Wild And Positive Week; Where Was The Institutional Buying? The weak GDP report was taken as great news and sent stocks soaring on Friday, with all the indexes making significant gains.
The SP 600 led to the upside with a 2% gain, the Nasdaq followed with a 1.9% gain, the SP 500 and Dow Jones Industrial Average finished 1.2% and 1.1% higher respectively.
Volume came in much lower on the Nasdaq and on the NYSE. This low volume clearly shows that institutional investors were not buying stocks. Instead this had the classic look of an EOM markup, short covering, and oversold bounce. Breadth was positive on the NYSE by a 4-to-1 margin and by a 2-to-1 margin on the Nasdaq.
This rally on Friday helped cap off a very bullish week for stocks. For the Dow Jones Industrial Average it was the best weekly gain since November 2004. It sure seemed like a very bullish week, unless you actually look at a lot of charts. If you did that you were certainly confused as to how the market could of possibly been up this week, much less the Dow having the best week in a year and a half.
I have to admit, this market, even with this weeks gains is just all wrong. Two huge rallies on volume lower than the day before clearly shows that the big boys were not playing. The volume was not even above the 50 dma on either of the two day rallies in the Nasdaq. This also came with both indexes each having one very obvious day of distribution during the rally. This is not what you see at the beginning of a raging bull market. This is what you see in oversold bounces in downtrending markets.
And the fact that there are charts breaking down everywhere supports the fact that this market is not in the best of situations. You simply have more charts setting up in calm bases with accumulation days. Instead during this uptrend my short scans are thick and my long scans are producing stocks zooming out of ugly, sloppy, choppy, and bases full of distribution with little accumulation. This is not what you see in the rallies that launch major bull markets. Do you think stocks looked like this in March 2003? Do you even think there was this many ugly charts at the October 2002 bottom? Nope. These charts tell me there is more room to go on the downside or there is more time needed to go sideways before any rally can happen. These charts in the Gold, Steal, Oil, and other commodity sectors also have the look of Internet stocks in March/April 2000 and Sept/Oct 2000.
If you look at the charts of the past leaders of the bull market (commodity stocks), you will see that the past few months have been hell for these stocks. The big money is leaving them and the dumb money is buying all the Gold infomercials, Oil infomercials, and Jim Cramer favorites. The smart money is selling to the mass public and they are moving to cash because there is no clear rotation into any true leaders. I will say it again, Food and Beverage stocks are not bull market leaders. They are defensive safety nets in bear markets.
Don't let these low volume rallies fool you into being suckered in. This market is still being sold. Trust me, the stocks that race out with 100% plus gains will breakout after an uptrend and follow-through days are given. Just look at March 2003. The Nasdaq was up 10% in three days. How many traders do you think said this? "Oh man, I missed the bottom. It is too late now. Dang it." Trust me, a ton did. I remember clearly! What did the Nasdaq do after those three days? How many stocks went up over 100% in less than six months? This is rhetorical. I am sure you know the answers.
This week caught me off-guard but one thing remains true. Everytime I think the market is about to collapse or explode short-term, I invariably taking that position at the exact bottom or top. I am the master of mental capitulation.
We will see if all this good news last for the indexes. The indexes are in better shape than last week and last month but it is still very ugly out there in the land of individual stocks. It still isn't time to go all-in yet.
Have a great Sunday and I will see you on Investors Paradise off and on during the day. Stay positive and diligent. There is always a bull market after a bear market. Always. This isn't 1929!
Portfolio Holdings: Long - 61 stocks Short - 82 stocks.
Monday, July 31, 2006 A Quiet Lower Volume Day Kept Things The Same As It Was On Friday. It was without a doubt one of those lazy summer days. The usual low volume, choppy intraday action, and near unchanged close is always the ultimate tell. A day of this kind of action makes it kind of hard to analyze, as not much has changed since Friday.
The SP 600 led the way with a .3% gain, the Nasdaq and SP 500 were down .1%, and the Dow Jones Industrial Average fell .3%. As you can see, nothing changed.
Volume was lower on both the Nasdaq and the NYSE, indicating big boys were not interested in participating. Breadth was positive on the Nasdaq by a 8-to-7 margin and the advancers and decliners were even on the NYSE.
The big gains on Friday were digested quite well on Monday and that can only be taken as a bullish sign for the markets on a short-term basis. However, with the Nasdaq still leading to the downside in the overall sub-intermediate trend I am not going to get too excited over the markets just holding these gains.
We need more big boys buying, simply put, if we want to get this market going. The charts are rising in a wedging formation on all the indexes and most of the individual charts that have broken are now coming up to resistance as they rallied on lower volume. Without big boys stepping in and buying now I wouldn't doubt this market just rolls over. I hope I am wrong as I know a lot of people still long this market. But I just listen to the charts. I try not to ever have opinions.
The market is in a short-term uptrend, I want to remind you one more time. However, the bigger picture is full of distribution, broken charts, and downtrends. This is not the market to load up on longs. The intermediate trend is down and on the Nasdaq the long-term trend is down.
Remember, also, the NYSE leads at the end of a bull market. The big caps are the last to rollover. This happens after the leaders rollover. The Nasdaq leads (not lags) during real rallies. In March 2003, the Nasdaq led the NYSE. With the big-caps leading now, you know you are in not the right market for easy money. So as long as the NYSE and big caps lead and the Nasdaq lags this bad (the Nasdaq is very ugly) you should keep your portfolio in cash.
In one more week the FOMC will meet. I am sure the market will be held hostage till then. However, as you know, there can be some wild random volatility leading up to these events.
With all the uncertainties in the stock market and the world right now, I still say the safest and smartest play for any new trader is to stay 100% cash. Stay positive, patient, and keep the watchlist updated. This market will turn one day. I shall see you tomorrow at Investors Paradise.
New Swing Longs: LNCE--for more info on longs and shorts go to Investors Paradise.
Tuesday, August 01, 2006 Stocks Selloff On Heavier Volume; Nasdaq Flashes Another Clear Distribution Day--3 Since The Start Of The Rally. A gap down in higher volume caused stocks to fall across the board. Even a last hour reversal couldn't help mask the negative tone to the day. Rate hike worries caused by economic data was the reason given for the weakness in today's trading.
The Nasdaq led to the downside with a 1.4% loss, the SP 600 fell 1.3%, the Dow Jones Industrial Average fell .5%, and the SP 500 fell .4%. All sectors got hit today. There were very few places to hide.
Volume was higher on both the NYSE and the Nasdaq. That gave a clear distribution day to all indexes. Today's distribution day was also the Nasdaq's third distribution day since the rally began. In real strong bull markets that lead many stocks to great gains you simply don't see this kind of action. Breadth was negative on the Nasdaq by a 2-to-1 margin and a 19-to-12 margin on the NYSE.
This action of higher volume distribution days and low volume rallies is the exact opposite of what you see in healthy markets. You normally see gains in higher volume followed by calm pullbacks on lower volume.
We are still holding above the lows of the recent rally attempt and that is a positive that we can take away from the market. However, I am not sure, that I would start putting all of my money to work on margin with this technical action in the indexes. This could be a bottom and I could be proven very wrong with my analysis. If that is the case, trust me, I will be the first to turn and start buying beautiful charts breaking out of beautiful bases. So I hope my analysis is proven wrong but somehow I don't think it will be.
Stay patient and keep a positive mindset. This will pass and a new bull market will come along again. So make sure you keep your watchlist constantly up-to-date and fresh.
I will see you at Investors Paradise. Aloha.
New Swing Longs: GPK KONA
New Swing Shorts: CLX PZZA KNOT SKM ARO
**For more information and charts of longs and shorts, go to Investors Paradise.**
Wednesday, August 02, 2006 Stocks Rally On Heavier Volume But Late-Day Fade Leaves Questions About Today's Gains. Stocks gained ground on Wednesday as a good earnings report from PG helped prop all the indexes throughout most of the day. Sadly, for the bulls, the gains started to disappear during the last hour and a half. However, at the end of the day the indexes were up on higher volume. The bad news is that last hour and a half, while stocks went down, is when the volume picked up at a much higher level than what it was trading at before the selling hit.
The Nasdaq and SP 600 led to the upside with a .8% gain, the Dow Jones Industrial Average rose .7%, and the SP 500 rose .6%.
Volume rose on both the NYSE and the Nasdaq. The caveat to this, once again, is the fact that volume picked up as the selling hit the tape. Breadth was positive on the Nasdaq by a 18-to-11 margin and the NYSE was positive by a 2-to-1 margin.
Even after today's gains, there are tons of ugly charts out there. The stocks moving up on my scans are ugly. They breakout from wild loose patterns and make some crazy gains, then dip like a rollercoaster right back down just to fly right back up. Another classic of a lot of these charts is also that they are selling off on HUGE volume on the left side and then rising up the right side and breaking out on lower volume than what was had on the selloff. This with all the shorts that are coming in my scan that are in a position for a trade on the short side indicates that this rally is still too weak to be "the rally." It is simply still all wrong.
Look at the IBD 100. It was up only .3% today. Leading stocks are supposed to be LEADING the market in bull markets. This lagging shows that the market is being marked up and not accumulated.
After all this random action, and having the lows put in by the Nasdaq in July, we still have not had a follow-through on the indexes. Remember, the Nasdaq cutting below the June lows erased the confirmed follow-through of the SP and DJ. We could still get a follow-through but this market acts like it is not finished with the downside yet. However, the only thing for sure in the market is nothing.
I am sure there is going to be more of this action before the Fed meeting. So stay patient, keep sitting on your hands and cash, and if you must trade keep it small and take profits quick and cut losses faster. If you decide to daytrade, LOL, let me know how that turns out.
Great luck out there I will see you tomorrow. Remember the short-term and sub-intermediate trend is up on all the indexes, the Nasdaq is in downtrends in the intermediate and long-term time frame, and the DJ and SP is down in the intermediate trend and up in the long-term trend.
New Swing Longs: IMA MA
New Swing Shorts: TZIX BEC SBL IART FOXH HSY
for more info and charts on longs and shorts, go to Investors Paradise.
Thursday, August 03, 2006 Stock Market Indexes Give More Gains On Higher Volume; Still No Follow-Through Day. After an ugly gap down to start the day, buyers stepped in and bid stocks higher until the last hour when some selling hit the market. This rally was a bit better than the previous day as techs, leading stocks, and small caps led the way.
The SP 600 led with a 1.1% gain, the Nasdaq was up .6%, the Dow Jones Industrial Average rose .4%, and the SP 500 lagged with a .1% gain.
Volume was a higher on the NYSE and a tad higher on the Nasdaq. The gains on the Nasdaq was the second day in a row of gains on volume below the 50 day volume average. Institutions sure don't look to be in a hurry to buy stocks. Breadth was positive on the NYSE by a 5-to-3 margin and by a 3-to-2 margin on the Nasdaq.
It sure was nice to see buyers step up today after a nasty gap down. This kind of support after early morning selling is a very bullish situation that I can not remember seeing for a very long time. This has to be taken as bullish. This little bit of support on the indexes still should not be taken as a clear sign that all signs are clear and that we are going nowhere but up.
But one sector moving up was the Retail-Clothing/Shoes sector and that group got a lot of discussion today at Investors Paradise. Indeed by the end of the day stocks like CBK GES PLCE and the action in the etf XRT showed promise that this sector is going to join the other defensive sectors in moving higher. However, this sector shows that the consumers are still spending. Rather if that is typical back-to-school sales, or that the consumer still isn't tapped out, I don't know but the charts say good things are in store for some of these stocks.
I only bring this up because this market is still waiting on the Fed and since the consumer doesn't show signs of weakening and inflation still seems to remain a challenge it appears another quarter of a point is baked in. Will that set off a rally on Wall Street? Who knows. But recently all the pre-hype Fed hoopla has not ended well. With some of the overbought levels in the oscillators we may be at an important inflection point for the Nasdaq and the market overall.
There was better action in stocks and the indexes than on Wednesday but I am still not changing my stance that I have stated in this blog during the past week. There still is no follow-through on the indexes, no leaders showing up in leading innovative industries, and no volume in the moves when we do rally on the indexes. We are also still in a downtrend on all intermediate time frames. That right there is a signal to not be 100% long. You want all trends from the short to intermediate to be up. And you also want that trend in all the indexes. It is best for all indexes to be in clear uptrends with the Nasdaq leading. It isn't the most bullish of markets when the Nasdaq can't muster any decent gains and the SP and Dow rally with defensive stocks leading. I repeat it is best to have all indexes moving up with fresh leaders breaking out of sound bases. We still don't have that!
Until we do get that I remain the same. Stay neutral on the market, keep a positive state of mind, and stay extremely patient. This isn't the time to place big bets. Great luck out there and I will see you at Investors Paradise.
New Swing Longs: GES TP CAMT
Speculative Swing Long: ACY (limit only)
New Swing Shorts: NONE
**for more info on longs and shorts, go to Investors Paradise.
Saturday, August 05, 2006 Powerful Early Morning Gap Up For The Indexes Gets Sold Into The Final Hour, On Mixed Volume. After a very strong gap up, stocks reversed and slid all day long until the last hour where they were able to get a small bid before the closing bell.
When was all said and done, the Dow Jones Industrial Average fell a fractional .02%, the SP 500 fell .07%, the Nasdaq fell a bit more pronounced .35%, and the SP 600 led to the downside with a .36% decline.
Volume was mixed, with the Nasdaq having a slight uptick in volume and the NYSE having lower volume. The higher volume down day on the Nasdaq was yet another distribution day since the rally attempt tried to start 14 days ago. Breadth was positive on the NYSE by a 9-to-7 margin and negative on the Nasdaq by a 4-to-3 margin.
It was yet another day of gaps and reversals for the indexes. The past three days shows the obvious battles going on between the bulls and the bears. Neither one seems to be able to get an advantage in this market and it shows in the weekly scorecard. The Dow and the SP 500 rose .2% and .1% respectively, for the third week in a row. The Nasdaq continued to lag with a .4% loss for the week.
This past week seems to sum up the markets mood right now. Confused. The only thing that is not confusing is that this market is still in a downtrend on the intermediate term and in an uptrend on the very short term. Without all trends being in the same direction, it is best to sit back and watch the market action and see how this turns out.
Why don't we just buy stocks before the Fed meeting? Well, first off, that has been the wrong play the last two times not sure I would want to chance this being any different. And the most important thing is that we still have NOT had a follow-through day since the rally attempt started 14 days ago. This Monday will be day 15. Rallies can happen and work this late but they are very rare. Especially when the leading index (the Nasdaq) has its 50 dma so far under the 200 dma.
It is summer time on Wall Street and now we enter the first full week of August. This is normally the slowest month on Wall Street. It should be obvious it has been a slow summer already by observing the 50 day volume moving averages moving in a downtrend since June.
Now we must wait on the Fed to see what kind of move the market wants to make. We may not know what Ben is up to but since we know the trends that is all we need. Taking action after that should be simple if you have been disciplined and have created a plan of action for an uptrend or a downtrend.
Keep riding those winners, cut those losses, keep those watch list updated, and keep cash heavy. Stay positive and I will see you at Investors Paradise. Great luck out there.
New Swing Longs: CTCM MFA AVNC ZILG
Adding To Position: IDEV
New Swing Shorts: CBS SIGI ATPG GSF NC
**For more information and charts on longs and shorts, go to Investors Paradise.
Stocks Fall On Lower Volume, Before The FOMC Meeting; Slowest Trading Day Since Fourth Of July. Oil went leaping 3% today on the news of a shutdown of a BP oil pipeline in the Prudhoe Bay. That news along with the upcoming FOMC meeting tomorrow hamstrung stocks and all the major indexes fell for the second straight day.
The SP 600 led to the downside with a .8% loss, the Nasdaq fell .6%, the SP 500 fell .3%, and the Dow Jones Industrial Average only suffered a .2% loss.
Volume was much lower on the Nasdaq and the NYSE, offering some comfort to the bulls. It was more of a day with a lack of buyers than a day full of sellers. The volume was also around 25% lower than on Friday. This shows that investors are completely on the sidelines waiting for tomorrows meeting. This was the lowest volume day since the Fourth of July.
Decliners beat advancers on the NYSE by a 5-to-3 margin and by a 2-to-1 margin on the Nasdaq.
The market really did not do much today that changes anything in the near term. The BP Prudhoe Bay pipeline was the major story all day. Along with the FOMC meeting being tomorrow all eyes are simply waiting for what Ben is going to do. There has been a lot of chatter recently about a pause instead of a rate hike.
Either way it doesn't matter the trend is down for the indexes. Few stocks are working and that is enough of a signal to stay on the sidelines and wait for better opportunities to present themselves. There are simply no bets of any significance that will be placed before the Fed announces the decision.
We are still very oversold on a lot of oscillators but at the same time we have some very high levels of pessimism out there. This conflict of emotions sure is showing up in the tape with all these gaps and reversals and go nowhere days. Until this ends, I repeat one more time, keep cash heavy.
Great luck out there. This market will give us a direction soon. Never fear brighter days are ahead.
New Swing Longs: NONE
New Swing Shorts: AEE CBST
Longs Outperforming: USEY-76 VLG-51 GPIC-40 CTCM WNR DGX HMSY IMA BOT MA DDS TTG
Stock Market Indexes Suffer Another Distribution Day, As The Fed Pauses For The First Time In Two Years. An early boring market soon gave way to some wild action that eventually took the indexes down on higher volume. A selloff on higher volume, after the Fed made their announcement and kept the book open for more possible rate hikes, is not the action that investors were expecting coming off of this pause. This gave the market its third day of losses in a row.
The SP 600 led to the downside with a .9% loss, the Nasdaq fell .6%, the Dow Jones Industrial Average fell .4%, and the SP 500 fell .3%.
Volume picked up across the board by quite a lot, coming off the low volume session yesterday. This gave both the NYSE and the Nasdaq another distribution day. This is the Nasdaq's fifth distribution day since the rally attempt 16 days ago got started. The volume on the NYSE was below the 50 day volume average so that gives some comfort to the bulls.
Breadth was negative on the NYSE by a 9-to-7 margin and was negative on the Nasdaq by a 2-to-1 margin.
You would have thought that by pausing at 5.25% that the market would have rallied. But that is what everyone was expecting and when everyone expects the same thing the opposite happens. Today's pause was the first pause in two years since the hikes started. 17 hikes later we are done, for now!
Why do I say for now? Because the Fed did not sing the song that Wall Street wanted. The Fed not only acknowledged that inflation is still a concern but they also said that the economy is slowing.
Uh oh! That only means one thing. Stagflation. I don't want to get too pessimistic but when I see the Transport Index breakdown, the Utility Index make new highs along with Consumer Staples then I have to assume the market really is in trouble. This only helps explain why with all of this the CRB remains strong. Stagflation. The markets haven't seen that since the 1970's and for everyone sake we better hope that is not what happens to this economy. There is nothing worse than stagflation.
So where are we now? We are going on day 17 of the attempted rally and still waiting for a signal to get back into the market. However, I doubt we are going to get that. Since the attempted rally started we have seen virtually NO accumulation days, seen four to five distribution days on the NYSE and Nasdaq, and have no leaders in growth stocks breaking out but have a lot of defensive sectors making new highs.
The IBD Defensive Index also hit a new high today with the market falling. Food, Beverage, Medical, Small Banks, Consumer Staples, Utilities, and Telecommunication stocks do not lead in bull markets. They lead in bear markets. What kind of market are we in? What has been the trend since May?
A couple of key technical situations have happened on the indexes that I feel need a quick discussion. The wedging pattern the past three weeks on the Nasdaq has been broken to the downside, confirming the distribution days that the path of least resistance is still down. The SP 500 is at key support on the 200 dma. If it cracks here that will be bearish and will also give the indexes chart the appearance of a clear rollover.
I have a lot of shorts but have locked in gains on the longer term ones and the new shorts are not big positions as the market is obviously weak to a lot of people. If we get an extremely bullish reversal I won't be hit too hard. Even with a lot of shorts I don't have a lot of shares in all of them. If the market does turn I will have enough time to cover without much happening that will hurt me too much.
Plus if that happens I am long some pretty green charts and any rally here will only help these charts. All that green in a red market can only be good for the stock when the market does turn. And then if the turn is real I will have plenty of time to put all that cash on the sidelines and the cash from covering the shorts to work.
With that I hope you have a great day tomorrow and I will see you at Investors Paradise.
New Swing Longs: BRR
New Swing Shorts: LAMR GKIS STX CCO
**For more information on longs and shorts, go to Investors Paradise.
Stocks Reverse Hard On Heavier Volume, After A Big Gap Up; Ugly, Ugly Reversal! A morning gap that sent all the indexes into rally mode soon gave way to one of the ugliest selloffs I have seen in a long time. The selloff sent stocks down all the way till the close, where the market indexes finished near the lows of the day. At the close all indexes were down, for the fourth straight day.
The SP 600 and Dow Jones Industrial Average took the biggest hits with a .9% loss, the SP 500 fell .4%, and the Nasdaq fell a small .03%. The only index that closed in the green, on my screen, was the Nasdaq 100 with a .06% close to the upside. The fact that the markets ended down less than 1% on all the indexes does not minimize the major damage done. At one point during the day the Nasdaq had a 1.8% gain. It reversed all of it! Ugly.
Volume was higher on both the NYSE and the Nasdaq as both indexes suffered another distribution day. This gave the Nasdaq its 6th distribution day since the rally attempt started 17 days ago. The NYSE has suffered 5 since then. IBD agrees with me that this is a distribution day on the Nasdaq due to the severity of the reversal on the pickup in volume. This is not a healthy sign of a market trying to establish a follow-through day. The mere fact that we are holding above the rally attempt lows does nothing to hide the fact that this market is under major distribution.
Breadth was negative on the NYSE by a 9-to-7 margin and by a 3-to-2 margin on the Nasdaq. Not bad but with the reversal after such huge gains what did you expect.
What was interesting about today's selloff was that the big cap indexes led to the downside. This goes to prove that in a downtrending or bearish market there is no safe place to hide. All stocks eventually get hit. Now it appears the big caps are ready to catch up to the Nasdaq weakness. Cash is king right now. The only trading that should be done should by professionals who short bearish markets and professionals who are going long defensive stocks in defensive sectors that go up when the market goes down.
The past week has seen some nasty bearish reversals for the indexes. You can see this clearly on the candlestick daily charts of the major indexes. You see the tall tails at the top of the price range with the boxes near the lows. That is not good. Period. Keeping it that simple in picture form is the easiest way I know how to say this market is not acting well at all. Gap up, gains, reverse, close lower, and gap up, reverse, and then close lower again is not good. This is bearish action.
There are some "silver" linings in the precious metals sectors but the individual stock charts are UGLY!! Ugly, I tell you! I wouldn't touch most of these charts with free money to throw away. Yuck.
August is the slowest month of the year and historically is the weakest. This historical data along with the current action of the market should be enough reason to be in cash and on the sidelines. I don't know how else to say it. The only thing positive I can think of right now is that it is pretty bearish out there but I have a feeling there are still some longs waiting to sell on upticks and on those upticks a lot of bulls will probably call the bear market over. This is normally how long downtrending markets play out. Overbought conditions get sold and the markets gets more and more oversold.
Great luck out there and I will see you at Investors Paradise.
New Swing Longs: NONE
New Swing Shorts: VOL KG RMK KMR STNR HAWK CAT ARII CBG CPE CFC
Stocks Snap Four-Day Losing Streak On Lower Volume, After UK Terrorism Arrest. Another gap in one direction--this time to the downside--was immediately followed by a reversal and march in the other direction. The market sure doesn't follow-through from the morning futures. The reason today's gap down was bought was surely part-in-due to the "we aren't going to be afraid and sell stocks" attitude. No matter what the reason, the four day losing streak has been snapped.
The SP 600 and Nasdaq led the way with .6% gains, the SP 500 rose .5%, and the Dow Jones Industrial Average rose .4% All indexes closed near their highs of the day.
Volume was lower on both the NYSE and the Nasdaq. This is not good because it is the opposite of what is supposed to happen after a selloff. Especially a selloff on higher volume. When the market goes up, you want the gains to be on higher volume. When the market falls, you want the market to fall on lower volume. So far since the attempted rally 18 days ago we are seeing the opposite. Stocks fall on heavier volume and rise on lower volume. Not bullish at all.
Breadth was positive on the NYSE by a 10-to-7 margin and by a 3-to-2 margin on the Nasdaq.
The news of the day, of course, was the failed terrorist attack by 21 crazy terrorist. The UK and Pakistani authorities, thank God, uncovered the operation to blow up multiple planes with liquid explosives. The threat level was raised in the US. along with all liquids being banned from being on an airplane. This translated into Wall Street the same way it always does; with the markets closing with gains. It is obvious, after every one of these attacks, that Wall Street has priced in any attack these nut jobs can pull off.
How long will this terrorist relief bounce last? I don't know that answer and nobody else does. But I do know that the trend is down in all the indexes in all the time frames except the longer term trend of the Dow and SP 500. The trend is down and unless you are going long Medical stocks I simply don't see why anyone in their right-mind would buy equities here.
Semiconductor stocks might have had a nice bounce today but has anyone gone over the charts in that sector? It is a minefield of ugly patterns. Yes, there are the IIVI LSCC NVEC IDTI but besides another handful the sector is full of stocks that have TONS of resistance ahead. The stocks have come off the highs so quick that it is going to take more time to fix some of these. So I repeat, unless you are going long Medical stocks it is simply ten times smarter to stay in cash instead of "bottom fishing." A game that has been PROVEN to not be able to perform to the CANSLIM standards. If you learn and can apply the CANSLIM system, you will know why I make fun of bottom fishers all the time and constantly tell investors/traders to avoid it. Their returns NEVER beat mine or any other CANSLIM professional. I still have not met ONE SINGLE "bottom fisher" that can outperform the CANSLIM disciplined trader. Prove me wrong and a weeks worth of dinners is on me!
There is time to wait this out. Trust me the biggest winners on Wall Street almost ALWAYS breakout AFTER a follow-through day on the indexes. Until we have that I don't see how any stock is going to make headways. Taking gains at 25-50% is still my game plan on most longs and shorts in this market environment. That is unless the chart is perfect and has no sign of support or resistance against your play.
Stay calm in the eye of the storm. It really isn't that bad out there. Especially if you took my CONSTANT advice during the early part of May when this all started to go down. Stay positive, keep those watchlist updated, and I will see you at Investors Paradise.
Saturday, August 12, 2006 Wall Street Takes Another Summer-Friday Break, As Stocks End In The Red On Lower Volume. Another completely boring Friday in a dull summer ended a week of gaps and reversals for stocks. After drifting around all day, stocks closed with losses on lower volume. The blame of today's weakness was the inflation fears being sparked again by retail sales and the options crimes committed by executives. However, was this really new news? Is this why stocks fell? Whatever.
The SP 600 led to the downside with a .9% loss, the Nasdaq fell .7%, the SP 500 fell .4%, and the Dow Jones Industrial Average fell .3%. The worst of the selling was in the Semiconductor sector, Airline sector, and leading stocks. The IBD 100 fell 1.3%, the SOX fell a little over 2%, and the XAL fell 5%. So much for that rotation into Semi stocks.
Volume was lower across the board and breadth came in with decliners beating advancers by a 2-to-1 margin on both the NYSE and the Nasdaq.
For the week the Dow Jones Industrial Average fell 1.4%, the Nasdaq fell 1.3%, and the SP 500 fell 1%. Even with the minor losses, it sure felt a lot more volatile with all the crazy intraday action we saw this past week after early morning gap and traps.
There is still too many negative divergences and negative price and volume action, on the indexes, to trust going long anything of size here. Until this downtrend changes into some form of an uptrend, the path of least resistance is down. This means that rallies are to be shorted and dips are not to be bought.
This is a very geopolitical-news trapped market. The market does not like uncertainty and you can guarantee that one thing that is always certain about the Middle East affairs is its uncertainty. Hopefully, we can get some clarity on the conflict and that will help the market find a trend that is a bit more clear than random choppy floppy summer action.
The rest of August should be no different than what it was on Friday. If you go back and look at the last few summers you will quickly get an advance look at what the next two weeks will be like. This mind-numbing trendless drifting could continue for another week or two so be ready.
I highly recommend that you read my last two post (Wed, Thur) along with this one. If you do that you will know exactly where I stand on this market. I don't believe I have left much out the past few days. If I have, you know where to find me; Investors Paradise.
New Swing Longs: ISYS
New Swing Shorts: EL
Longs Outperforming(low vol. movers excluded): VLG-47 GPIC-29 SYKE-32 HMSY BWP MO RNST MA ALTH
Shorts Outperforming(all): SWC-37 JOYG-36 ZRAN-35 DSL NGS X STLD XPRSA LDSH NCI DDE USU AMAT RES MAFB TXRH PII RCNI VO IYT GE WFSL PDCO ESIO AME BLK VXF VB WERN CSX FRC AF WTFC RS IFX VLTR AGP EXBD FDX IJS IJT AHG ARO TZIX HSY IART SBL BEC SIGI ATPG NC CBS GSF AEE CBST LAMR GDIS COO VOL KG RMK HAWK CAT CFC CSE CEN
Stocks On Radar Screen: STEC DRYS GROW LINE TJX CLUB AMRN CAPA CKSW
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