Stocks Fail To Make It 5 for 5; Stocks Pullback On Lower Volume. Stocks finally took a rest, after four days of price gains. The blame on the poor action came from a weaker than expected consumer spending report and a high personal consumption expenditure index. Personally, I think the bulls, decided to take an early weekend after four days of kicking the bears a**.
At the close the SP 600 led the way to the downside with a 1% loss, the Nasdaq followed with a .5% haircut, and that was followed by the SP 500 and the Dow Jones Industrial Average losing .3% each.
Volume was about even on the Nasdaq or 1% lower, depending on where you get your data from. Volume on the NYSE was 1% lower. There was no distribution day on either index. Breadth was negative by a 10-to-7 margin on the NYSE and negative by a 3-to-2 margin on the Nasdaq.
For the week, stocks rose across the board. The Nasdaq was the leader with a 1.8% gain, the Sp 500 gained 1.6%, the Dow Jones Industrial Average gained 1.5%, and the SP 600 lagged with a .7% gain.
For the month of September, the Nasdaq led with a 3.4% gain, the Dow Jones Industrial Average and the SP 500 rallied 1.6% and 1.5% respectively, and the SP 600 lagged with a .8% gain.
For the quarter, it was the best quarter for stocks since Q4 of 2004. The leading index during this quarter was the SP 500 with a 5.2% gain. The Nasdaq rose 4% this quarter. These are simply wonderful numbers. The facts prove that the bears opinions did not matter the past three months. Opinions RARELY do.
The theme that has come to life very obviously, to me, is the fact that this rally is being led by big-cap, value, and some speculative stocks. This rally is not the strongest of rallies, since the growth stocks and leading IBD stocks are not leading the rally. But, we have a rally none-the-less. The fact remains there are plenty of stocks breaking out and making gains in the big-cap, value, and speculative names. Even defensive names like Beverages and Medical are having stocks breakout and rally.
It is obvious, to me, that if you are looking for growth stocks to be leading you are looking at the wrong place. This is a rally for the value guys. The growth stocks may jump in later on and the IBD 100 and SP 600 could retake leadership. But until that happens, ignoring the big-caps and speculative issues racing to higher highs just so you can wait for the perfect market doesn’t make sense.
With all the charts I keep posting everyday, there should be something in there that jumps out at your face as a “oh my God, that chart is so pretty and its breakout is so clean” that you should be able to produce gains in this market. Sitting in the sidelines in all cash is not a smart play when the markets are rallying like they are. This doesn’t mean you should be 200% on margin either. Trust me, I am not. This is not a growth rally. This is a value rally. The best of the best chart patterns in the best of the best names in the HOT technology industries are not the stocks moving in this rally. Therefore, the rally probably doesn’t have the legs to be a multi-year cycle. But that doesn’t mean you should miss out on all the great charts that are breaking out from pretty bases that evidently no other market player can see but me.
So, remember, for now it is about value; not growth!
If you are not doing well, it is no big deal. If this rally keeps going growth stocks are going to join. If you haven’t been disciplined and objective taking breakouts, I know this rally can be painful to watch it go without you. That is why you must always trade the chart and not your opinions. All the bearish arguments have PROVEN to be FOOLISH FOR NOW. Later on they may be right. But what if some stocks have 100-300% runs before they are right? I don’t want to chance missing out on that. However, if this thing is the real deal there will be plenty more charts to trade from proper breakouts from sound base patterns.
Monday is Yom Kippur and is bound to be quiet. In saying that don’t ever short a dull market and if the market sells off check the volume to see how intense market players are. I am sure it will be a quiet one.
If you have any more questions, I would recommend reading all of my post since I returned from my vacation around 9/21. Everything and everything should be discussed there. And if you are not reading my “general market observations” post at Investors Paradise, you are doing yourself a major disservice as I post random thoughts over there all the time. Thoughts I don’t post here. For instance, why am I bullish now? Could it be because of the IPO market? I haven’t talked about that a lot here. Maybe I have at IP?
Have a great weekend and I will see you at Investors Paradise. Aloha!!!!
New Swing Longs: RICK AVCA QI HDIX APRO PDSN BDX HB SOFO AXTI
Stocks Pullback On Lighter Volume, On Yom Kippur. Despite positive numbers from the SIA report showing semi sales jumped 10% and oil dropping 3%, stocks instead focused on the weak manufacturing data and closed lower for the second straight session. It could have just been an absence of bulls out there on the Yom Kippur holiday but no matter what the reason was stocks finished lower.
At the close techs and small caps led to the downside with the SP 600 falling 1% and the Nasdaq falling .9%. The big cap indexes did much better, with the SP 500 closing down .3% and the Dow Jones Industrial Average closing .1% lower. The IBD 100 lagged the big caps again but outperformed the small cap and tech indexes showing that a rotation into new leaders might finally be showing up.
Volume was slightly lower on both exchanges today. This was odd because many market talking mouths thought volume would be much lower; this includes me. Breadth was negative on the NYSE by a 6-to-5 margin and negative on the Nasdaq by a 2-to-1 margin.
The major stock indexes pullback on lighter volume today is a positive to see after the gains of last week. The count of distribution days is also about ready to get some relief as a couple of the distribution days from the previous month will come off the count by Friday. Currently there is 3 in the past four weeks. Not bad, considering the markets are higher since all the distribution days.
There still is some weak leadership out there. The rotation is slow but all the bases starting to show up along with all the stocks that I am long that have broken out and continue to make small gains indicate it could just be taking a while for a solid rotation to take place.
The IBD 100 is still not leading the whole market but it is outperforming small caps, as was mentioned above. So the quality of stocks in the IBD 100 are rising along with this market. That could set it up to start leading the market, should the market continue to rise.
There are still plenty of fresh longs even with the market being down the past two days. I was not getting that before from May-August. Now on down days I am getting plenty of stocks that are coming out of very green and pretty bases. It doesn’t mean they will all work but the fact that they exist now is proof enough that this market is in much better shape than it was in August.
Inside I still want to be bearish with all the possible indicators that are showing me that this rally is not the real deal. But the facts remain that this market has been going higher and is in a position for more gains. Until all those green, pretty, and uptrending charts turn into ugly charts there is simply NO reason to be bearish. This isn’t the best market but it sure as hell isn’t a poor market to make money in either. The only way to be missing out on this rally is if you are letting your opinions lie to you into not believing all the breakouts I am posting at IP everyday.
The markets should see some pressure tomorrow from MRVL. But that stock has been a laggard since May. Anyone still long that POS needs to take some IBD lessons on how to sell stocks and cut losses.
With that I wish you well. Stay positive, mentally strong, physically fit, get plenty of rest, cut your losses when your stocks don’t rise, and I will see you at Investors Paradise.
New Swing Longs: NOVA DLA HOTJ MCDT VCP NOC PHRM SUAI RIF
As The Dow Hits All Time Highs, The Bears Get Louder And Louder. A HUGE 3.9% drop in oil to 58.68 and the Dow Jones Industrial Average hitting an all-time high after 6 1/2 yrs from making it the last time were the stories of the day. The positive developments helped stocks snap a two session losing streak. With all the good news over the Dow, however, one must remember the Nasdaq is still 55% off of the old highs.
At the close the Dow Jones Industrial Average rose .5%, the Nasdaq rose .3%, the SP 500 rose .2%, and the SP 600 fell .1%. The IBD 100 lagged the market, AGAIN, with a .3% decline. Small caps and leading stocks continue to underperform the big caps in this rally.
Volume was higher on the Nasdaq and much higher on the NYSE, with breadth pretty much even across the board.
Oil & Gas stocks took the brunt of the punishment today, while Financial, Retail, and Airlines outperformed. Have you guys seen MER, GS, MS, LEH, BAC, etc...? I am not sure but that looks bullish to me at least for the now. I am not sure how hitting new highs can be bearish. I don't think the shorts in those stocks agree that the market is bearish in those stocks.
All of the bearish arguments are great. I agree with them ALL! However, the current market for the past month has been in total disagreement and a lot of select individual stocks do not agree with the bearish argument either. They seem to be either moving slowly higher or still setting up in bullish patterns. Until they fail, the stocks still make good longs.
Some of those bear arguments of lower volume during the rally, poor breadth, and negative divergences underneath the market make great reasons to not trust this rally. The fact that there are not a TON of beautiful charts is enough too. But there still are some very good charts out there still to take. Not taking them is a mistake as when the real rally starts you will probably convince yourself then (if it isn't now) that the last rally didn't work why should this one? Not taking all setups in good stocks will eventually come back to hurt you when all the "talking points" do NOT come true.
If the market fails, trust me, like always, I will react, take my profits, cut my losses, and start shorting. Until then, once again, it is stupid to fight the market. There is simply no reason to fight the trend. No matter how weak it seems underneath, momentum can last a lot longer than you think it can.
This rally might be near the end of its advance. If that is the case, I will be cutting tons of stocks and taking many small losses. But until they give me a reason to sell, I am not selling for emotional reasons. Being emotional will get you killed in the stock market. Much more than taking small losses will.
I am worn out!!!!! Have a great day and I will see you at Investors Paradise.
Bad news from the ISM service index and comments from Ben about the housing slowdown was no match for excited bulls on the back of possible rate cuts. Stocks soared, after a slow start, with indexes closing at their highs of the day. Hello bears! If this didn't convince you have been wrong since the August follow-through I am not sure what will.
At the close the Nasdaq led the way with a 2.1% gain, the SP 600 followed with a 1.9% gain, the SP 500 rallied 1.2%, and the Dow Jones Industrial Average rallied 1.1%.
Volume was a good amount higher and was well above the 50 day volume average on both indexes. Breadth was positive on the Nasdaq by a 7-to-3 margin and positive on the NYSE by a 13-to-4 margin.
This rally was strong and its breadth was broad. Some of the leading sectors included Internet, Software, Retail, Commercial Staffing, and Transportation stocks. This is bullish having all sorts of different industry groups moving up with a lot of stocks in each group participating in the rally. I know it says breadth is weak overall compared to previous highs. But in the industries that had the biggest gains today you can find many great looking charts in the group.
Large caps have been leading but small caps showed some major leadership today. I am seeing a lot more nice charts for traders to trade. If small caps, techs, and leading stocks keep making this many nice bases with green charts there should be no reason for anyone to complain about a lack of charts to trade. Also if the small caps and techs start leading nobody should be complaining about this rally. I think it would be funny to see them start to lead. If they don't, no big deal. That is why we have cut loss strategies.
There was a ton of negativity out there in the chatrooms and message boards I read. That tells me that a TON of people missed this whole move. That is awesome for me! I plan on getting more long if more charts keep popping up. If they do were not setting up I wouldn't be buying them now would I. The fact that stocks are forming bases and breaking out is all I need to know. I can worry about cutting losses if they don't work after I take my signal. It is all lined out in IBD'S CANSLIM. It isn't magic.
I am still hearing the overbought, too far too fast, negative divergences arguments and all I have to say to that is "I hear you." But look at your darn charts! What have the indexes been doing the past quarter? How many very green charts have setup broken out of bases and not violated sell rules? That is all the facts we need to know. Not some stupid overbought indicator. It is all fun to use. I use them all. But to trade off of them is just silly for long term gains.
Take profits in extended longs and don't get crazy on margin but don't expect a pullback to be too severe either. A TON of people have missed this move and they will be looking to get in on the action on any pullback.
What if the pullback gets severe? Well, if it does, cut your losses, raise cash, and take caution. I make money on what is happening now not what on I think might happen. That is not how I pay my bills.
Have you guys forgotten that since I started writing my blog I have NOT missed one important major turn in the market. Since March of 2005 I have ALWAYS been on the right side of the trend. Now is no different. If you don't believe me check out the October bottom on your charts then go read my blog. If you still don't believe me go check the May top on your charts and then go read my blog. So trust me bears this time ALSO you are wrong...for now. But when does it end? You and I don't know. That is why we play what is happening NOW. It is the whole basis of the CANSLIM system. The greatest stock market system in the business.
Aloha and I will see you at <a href="http://www.investorsparadise.com/b-JoshuaControl/">Investors Paradise</a>.
For the third day in a row, stocks rose across the board after a dull opening. After going nowhere basically for most of the day, by mid-afternoon stocks started to rise and by the end of the day were closing at their highs of the day.
At the close, the SP 600 led with a 1.2% gain, the Nasdaq followed with a .7% gain, the SP 500 rose .2%, and the Dow Jones Industrial Average rallied .1%. Leading stocks joined the SP 600 with a 1.4% gain on the IBD 100, leading the way.
Volume was lower on the NYSE and on the Nasdaq as it appears the rally might be getting a bit tired here. Breadth was positive on both exchanges by a 2-to-1 margin.
Leading stocks and small caps are now taking leading rolls in this rally. Like I said yesterday, this now should give no one an excuse for excusing this rally as just a big cap, poor breadth rally. Since this was one of the biggest complaints from most traders I know, this has hopefully convinced some of them that some stocks are in fact doing quite well. I know the advances in some stocks may seem not real but according to the brokerage statements they are real if they are cashed out today.
Today’s action seemed quite positive, in my opinion. Stocks were pretty much listless and just drifting around then after noon either bulls came back to work on what they started in August or the shorts sensed that the gains of yesterday were in fact the real deal and they may hold. Therefore, they covered their shorts into the close. That is what allowed the indexes to rise to their HOD’s.
Thank God, today was a much quieter day than yesterday. LOL. I did not feel the panic in the air like I felt it yesterday by overinvested bears and underinvested bulls. Sadly, the majority of these traders, are new to trading and have not learned that the market will be there forever and that there will be other rallies to invest in. Just because you missed this one or someone else is having success that you are not gives you no reason to lose your cool. However, I enjoy it when you do!! It is very fun to watch.
A pullback should be expected soon as people scramble to chase stocks that have rallied quite well since this follow-through day in August. But at the same time betting against momentum and the trend is a suckers play at best. I don’t know about you, but when I play any game on Wall Street or in Vegas I want the odds completely in my favor. If they are not and the trend is against me and my cut losses are hit I walk away and wait. So if you missed this move, no big deal; just stay patient and learn what you did wrong with this one so you don’t miss the next one.
The most important thing, however, is to never lose your cool. You should be playing this game like a world class poker player. How does Phil Ivey react when he wins a big hand? How does he act when he loses a big pot? He reacts the same way. There is nothing there. He is completely professional when it comes to this game of highs stress and wild emotions. Learn a lesson from Phil Ivey and learn to follow the trend and don’t argue with the market. And when you get it wrong, don’t freak out and player hate on the winners like RevShark. That just shows no class. There is only room for one classless guy in the world of stock trading. That is me.
I am very tired after the past two days of exciting baseball playoffs, excellent market action, and playing tour guide on the Upper West Side of Maui. I will see you tomorrow at Investors Paradise. Aloha!
Sidenote: New longs and other data will be finished before the opening bell. I have tour guide obligations to meet first.
Market Suffers A Severe Selloff...NOT!; What Were The Bears Thinking? Stocks ended the three day rally, as weaker than expected job growth and a selloff in GM helped contribute to the slight selloff. That is what CNBC told me. I, truthfully, just think it was time for a rest and traders simply took a break from buying equities.
By the closing bell, the SP 600 fell .5%, the SP 500 fell .3%, the Nasdaq fell .3%, and the Dow Jones Industrial Average fell .1%. The IBD 100 fell .4%. The good news about that is the fact that it didn't lead to the downside after leading the past two days to the upside over all the indexes. That is what I like to see, for a market that is rallying. The one sore spot was the Semi index down .9%.
Volume was lower on both exchanges which is very positive after two days of solid gains on above average volume. Breadth was negative on the NYSE by a 2-to-1 margin and negative on the Nasdaq by an 8-to-7 margin.
For the week the Nasdaq gained 1.8%, the SP 600 and Dow Jones Industrial Average gained 1.5%, and the SP 500 gained 1%. And the best news was that the IBD 100 lead all of them with a 1.9% gain. After such a strong previous quarter, stocks sure have not stepped where they left off. The other positive from the rally was the fact that NYMEX Crude fell 5% and Dec. Gold fell 5%.
This selloff in the metals could be what is fueling this rotation into better quality stocks in more growth and value oriented businesses. Hence the Dow Jones and the SP 600 making good gains the past week.
Today's pullback was nothing compared to all the gains we have seen the past quarter and the past week. The lower volume shows that the big boys are not bidding stocks up to dump YET but are buying stocks and letting the market pullback.
As I have mentioned here and at Investors Paradise at least 50x the small caps, tech , and leading stocks are showing leadership that the big caps had when the rally started. After four weeks of hearing this argument, like I have said earlier, this should now be put to rest with most critics of this rally.
Retesting the breakout areas of the Dow Jones Industrial Average would not be a surprise here and would be quite a welcome as that would setup a lot more stocks that I see having the potential to form some nice bases after having some big runs during the rally. As long as it is orderly and on low volume the pullback would be a very positive situation for stocks. If volume rises well then evidently we will have to reanalyze our charts and then make the appropriate moves. It isn't rocket science. I had a feeling if more people kept it simple, they would do 100x better.
This was a great week for longs! I can only "hope" that there will be more to come. I hope everyone had a great week. I know it was a fun one for me. I will see you at Investors Paradise.
Stocks Reverse Morning Weakness And Finish With Gains, On Columbus Day. After the first hour and a half of poor market action, stocks shook off bad news out of North Korea and higher oil prices to finish with gains, on a day where the bond market was closed in honor of Columbus Day.
At the close the SP 600 led the way with a .7% gain, the tech laden Nasdaq followed with a .5% gain, the SP 500 rose .08%, and the Dow Jones Industrial Average rose .06%. For the fourth day in a row, leading stocks led with the SP 600 with a .7% gain. That is what you want to see in a good uptrending market.
Volume was much lower on both the NYSE and the Nasdaq as the bond market was closed for Columbus Day (Federal holiday). So it wasn't necessarily a lack of institutional investors bidding up stocks as much as some important market participants were not at the office today.
Breadth was positive on the NYSE by a 9-to-7 margin and positive on the Nasdaq by a 8-to-7 margin.
Tech, small caps, and leading stocks led to the upside, again today, over big caps and value stocks. Biotech, Retail, and Banks all joined the rally along with some ex-leaders in the Steel and Metals sectors.
The higher stock prices, after the news of North Korea'’s nuclear test, shows that stocks have priced in the lunacy of Kim Jong Il. Remember, back on the Fourth of July when he shot off some missiles then. Well the market obviously knew that wouldn'’t be the last we would hear from him. So I would take today's action as positive overall.
However, I think focusing on this horrible sex scandal over the threat from North Korea is one of the most irresponsible things the media can do. In saying that I can't remember the last time journalist really did anything to change the course of history for the better anyways. The lack of professionalism from the current liberal media (ABC NBC CBS CNN PBS) is beyond repair. I am sure there are more bombshells to come so they can try to steal the election in November. Whatever it is, you can guarantee, the leader of Iran will be smiling all the way to the nuclear silo. I am sure votes are more important than coming together to confront real evil.
Despite all the talk of an upcoming recession and all the bears out there, stocks keep on going higher. That is all that my bank account cares about NOW. What are stocks doing now? How much money am I making now? Not how much can I make "if" this happens.
Until the bears actually get control of the indexes and start to take them down on volume, you are still fooling yourself if you are denying this trend. There are too many stocks making your bearish arguments look foolish. Let me help you bears out.
I will tell you when to get bearish like I have been doing since I started this blog in March of 2005.
It is still a market for the bulls. Just look at all my recent longs and all the pretty charts out there. Facts and reality say if you want to make money now you do it on the bull side not the downside. The downside will come back into vogue when the market averages cooperate and start moving down. Until then you are playing the suckers game bears. Hope!
I will see you at Investors Paradise. Have a great night!
Investors Get Ready For 3Q Earnings (First Up: AA and DNA). After a very wild day of trading with little news, stocks finished higher for the 2nd straight day in a row. The only news of the day was the same great news out of the Dow Jones Industrial Average. This time it came with .10 cents of hitting 11,878. Congrats, Dow.
At the close, the SP 600 led the indexes with a .23% gain, the SP 500 finished .2% higher, the Nasdaq followed with a .16% gain, and the Dow Jones Industrial Average cruised in with a .08% gain. The good news for the fifth day in a row was the fact that the IBD 100 led to the upside (or lagged to the downside) again, with a .4% gain. Just the way it is supposed to be.
Volume rose on both the NYSE and the Nasdaq, after a holiday shortened session on Monday which saw the bond market closed. Breadth was positive on both the NYSE and the Nasdaq by a 8-to-7 margin.
Even though the upside has cooled down the past three days, the bears still can not get much going on the downside. The longer the market holds these gains and shows no signs of rolling over, the more probable the dips will be bought by stranded longs and lost bears. Performance anxiety is bound to set in after such a great quarter for stocks. If the strength continues you can guarantee some traders will have to try to play catch up.
It is time for earnings season again. The way stocks have acted coming into earnings should be great news for shareholders. However, if stocks start blowing up everywhere then we will have to take defensive action and make the appropriate moves to protect our portfolio. Until that scenario happens, stocks are still acting like things are going to be fine and maintaining the status quo is the correct action to take.
The best scenario this earnings season is to see your stocks crush the EPS and sales guidance to the upside and then see those shares run. The other great news could be the stocks missing their EPS and sales growth but still make great runs. If that scenario happens, I would call that more bullish than the former situation.
The worst case scenario is no matter what the stock announces the stock sells off. If that is the case selling your shares and raising cash is normally the wisest of actions.
It seemed like a very boring day out there today. The intraday % swing on the indexes confirms that it just wasn't me that was bored; the market was bored too.
Enjoy the A's vs. Tigers game. Hopefully, we will have some fireworks tomorrow as the past two days have been quite dull. I will see you at Investors Paradise.
Tragedy In NYC Overshadows Today's Trading; Markets Selloff But Find Late-Day Support. Another volatile intraday session ended with stocks lower. A plane crash that killed Cory Lidle of the Yankees and hawkish comments from the FOMC helped the selling pick up around 2pm EST. But by the end of the day stocks finished off the lows, closing in the upper portion of their daily ranges.
When the bell rang, the SP 600 led to the downside with a .4% drop, the Nasdaq fell .3%, the SP 500 fell .26%, and the Dow Jones Industrial Average fell .13%. The bad news today was that leading stocks led to the downside with the IBD 100 and the IBD 85-85 falling .7%. The good news was that the SOX index rallied 1.3%.
Volume was higher on both the NYSE and the Nasdaq. That gave both indexes their first distribution day in over three weeks. However, the closes and small point loss suggest that stocks received heavier support than selling as the day went on. All indexes closed in the upper portion of their ranges. Hard to call that a scary distribution day.
It should also be noted that it is normal to see one or two distribution days every two weeks in a rally. It is what happens after those few bouts of distro that matters. If the market works them off, great. If more distro days pop up, then we have to take defensive action.
Breadth was negative by a 10-to-7 margin on the NYSE and negative by a 3-to-2 margin on the Nasdaq.
There was plenty of bad news today: AA earnings, DNA earnings, North Korea, free trades by BAC hitting other brokers, hawkish Fed comments, and the death of Lidle in a plane accident in the Upper East Side. Still stocks did not tumble. In fact, as I keep saying, they finished in the upper half of their trading ranges. Is this all the bears can do with all of this bad news? Yikes.
Financials did the worst today, overall. But an interesting fact amongst those is the fact that the leaders all held up well while all of the laggards like LM and AMTD fell. GS, MS, LEH, etc...continue to climb or pullback on lighter trade. This shows, that underneath, leading stocks are still doing well while the laggards keep falling.
The good news on the day was the SOX index. Seeing this index setting up in a nice cup with handle pattern is very promising. I don't like that it comes from a downtrend but the pattern is looking quite nice. I see a lot of stocks making bottoming patterns and have plenty of leading longs that are ready to make more gains. With the SOX setting up, we might see some more speculative money want to come in from the sidelines, since this is the momentum guys favorite sector.
It is earnings season and everyone should enjoy the fireworks. Not a lot changed today that has not been discussed about over and over. Read the past six post I have blogged and please go to Investors Paradise and read all the post posted today and yesterday. If you do that, you will know exactly what is going on right now. And that is way more important than guessing where we are going.
Indexes Blast Off On Slightly Lower Volume; Bears Keep Getting Left Behind. Good earning reports and a pretty tame reading from the Fed's beige book helped stocks explode to the upside, finishing near the best levels of the session. The DOW hit a new record high and the SP 500 hit new five year highs. Not sure what isn't bullish about that.
When all was said and done, the SP 600 led with a 1.9% gain, the Nasdaq followed with a 1.65% gain, the SP 500 rose .95%, and the DJIA rallied .8%. The IBD 100 gained 1.5% on the session, just underperforming the SP 600. However, being near the top, is pretty darn good.
Nasdaq volume was even to slightly lower, depending on where you get your data from. The NYSE finished with volume around 2% lighter than yesterday. Breadth was positive on both exchanges by over a 3-to-1 margin.
Even though volume was lower, the gains still happened. Rather if the gains came via the big boys buying stocks or the bidders bidding the prices to levels that forced shorts to cover, the fact remains that the bulls are still in control and if you were bearish you were wrong.
This market has proven over and over how silly it is to fight the trend. All the predictions and indicators have been wrong. Until prices rollover and join the indicators, there is no reason to think that this rally "should" be over anytime soon.
When you have 188 longs and 156 rise and NONE show signs of a climax top, it is really really really hard to think that this is over.
We don't have any climax runs that signal the end of an advance. When we hit these levels in the DOW back in 2000, tons of stocks were making climax runs. When we topped in May of this year, Gold, metal, and oil stocks were making climax or topping patterns. We simply do NOT have that now.
It is getting pretty late in this rally and I am starting to see some stocks blowup. However, this always happens anyways during earnings season. The question is how many are blowing up? The answer is not many. The other good news is the stocks that I own that are blowing up are doing so after producing some nice gains. If they were blowing up immediately after breaking out, we would be in a much worse situation. That is not happening yet so the trend remains our friend.
If you buy stocks breaking out of proper bases and you cut your losses on the stocks that don't work, you will do fine no matter how much this market keeps going up. You will not miss the boat. If you buy blindly the stocks that have made 20-30% runs after breaking out of a base, you are setting yourself up for some very painful pullbacks and some BIG losses.
It is still very very very negative out there in the world of stock market chatter. That probably means the bulls will keep this momentum train chugging along. We will see if tomorrow is another painful day for the bears on the stock market. Aloha and I will see you at Investors Paradise.
Bulls Keep Showing The Bears Why It Is Stupid To Fight The Trend For the second day in a row, even with retail sales falling in September and disappointing economist, stocks defied the odds and rallied on lower volume.
At the close the SP 600 led to the upside with a .6% gain, the Nasdaq followed with a .5% gain, the SP 500 rallied .2%, and the Dow Jones Industrial Average managed a positive close with a .1% gain. The IBD 100 kept up with the top indexes producing a .7% gain on the day.
Volume came in lower on both exchanges and breadth was positive by a 3-to-2 margin on both exchanges.
For the week, the big winner was the SP 600 with a 3% gain, the Nasdaq also scored big gains with a 2.5% rise, the SP 500 rose 1.2%, and the DJIA rose .9%. A very good week for the bulls, to say the least. The best news came from the week came from the SOX index and the IBD 100. Both are showing combined leadership in this rally, with the SOX up 4.4% and the IBD 100 up 2.3%.
The awesome action in LRCX and the very pretty well formed base being built by the Semiconductor index has to be seen as a very bullish development. What could make it get ugly? The base in the SOX reverses. That would be a failed breakout and very negative. However, I see TONS of beautiful green charts in that sector so my money is on the SOX breaking out.
Even with the lower volume, the gains still look the same to my portfolio. Volume was running higher most of the session till the last hour, anyways. It appears that traders just decided to step out early and get an early start on the weekend. As everyone knows volume is normally a lot heavier in the final hours. On Friday, traders checked out early. Could it have been because of the Mets game? Who knows.
Another positive that can be taken away from this session is that we closed near the top levels of the day and on the DJIA did close at top levels. This shows that even with the low volume, stocks are being bid up and forcing shorts to cover. It still is not looking good for the bears.
Leading stocks did well but still are not completely leading yet. Keeping up with the SP 600 and Nasdaq is still very bullish. As long as this top index keeps getting fresh new candidates placed in the index and those candidates keep setting up, breaking out, or are doing both, I will be happy with this current rally and keep looking for long setups.
As long as this uptrend remains in play, it seems very silly to me to try to predict a top and turning point. The smartest thing would be to take your clues from individual stocks and the indexes. If the market starts flashing distribution days and you notice all of your stocks violating key bases, then it might be time to protect yourself and raise cash. Until that happens, don't fight this trend.
Get ready for a busy week full or earnings. It is sure to be a fun wild one, like it always is.
Another Day Of Stock Gains On Lower Volume; Pullback Should Be Expected Soon. For the third session in a row, stocks rose on lower volume. The headlines of the day included the DJIA hitting new all time highs again, the SP 500 hitting highs not seen since February 2001, and the Nasdaq hitting six month highs.
At the close the SP 600 gained 1%, the Nasdaq rallied .3%, the SP 500 rose .25%, and the Dow Jones Industrial Average rose .2%. The best news on today's gains came from the IBD 100. That index managed a 1.2% gain, well outpacing the overall market gains.
Volume, once again, came in lower on both the NYSE and the Nasdaq. Breadth was positive by more than a 2-to-1 margin on both exchanges.
It was a weird day of leadership as the laggards (old leaders) in Metals and Oil & Gas took the top spotlights. The weakest sector today was in Retail. With this kind of backwards leadership you wouldn't think the IBD 100 and leading stocks would have done well; but they did.
The one thing I am sick of already is all the talk about Dow 12k. It is BS and meaningless to the overall game of making money in stocks. Too much attention has been put on this irrelevant number and now that all this attention has been placed on it I am sure this number will be worthless to most traders.
The important thing to watch isn't some silly arbitrary number. The most important way to follow the markets is by watching the action in leading stocks and counting the number of distribution days we see during the rally. This will give you the ultimate tell to how much strength this rally has. A random number is meaningless. The action of the market is what is important. Nobody knows when the market will stop going up or what number it might hit. It is all guess work and a waste of time to investors who need to make money NOW.
After reading Helene's column and seeing the Market Vane bull numbers (70%), it is becoming quite obvious that a pullback should be expected soon as now a lot of traders have realized this is a rally and are now probably late to the party. This uptrend is simply getting too obvious after one of the best quarters for stocks in three years and another month of gains.
It is earnings season and you know what that means. It is time to be careful and watch out for nasty surprises. It is very volatile out there and if you are long a stock before earnings make sure you pay close attention to it. Regulation FD has made the investment battlefield for chartist much harder during earnings season as info that was leaked out and appeared on the charts no longer appear until that big 20% swoon hits you.
With earnings season here I expect some wild action in the indexes. Remember, one more time, if your stocks has earnings coming up and you just bought it...watch it closely. Nobody likes to take unnecessary losses, especially if you did not buy right and you chased the stock. Those losses always hurt because not only did you buy wrong and break rules but then the reality hits you that you did wrong.
So be careful out there. I will see you at Investors Paradise.
Stocks Fall In Heavier Volume But Find Strong Intraday Support; No Major Selloffs In My Holdings. Stocks finally pulled back, as I suggested it was time for them to last night on my blog. An unexpected jump in core producer prices got the blame as inflation worries became the topic of the day on Wall Street. The good news is that the weakness was supported intraday and stocks finished well off their lows.
At the close, the SP 600 and Nasdaq led to the downside with .8% losses, the SP 500 fell .4%, and the Dow Jones Industrial Average fell .3%. The IBD 100 did its job by not leading to the downside, only losing .5%.
Volume was higher, giving the indexes another distribution day. This was the second distribution day in five sessions. However, the intraday support makes it hard to call this a clear distribution day. Breadth was negative by over a 2-to-1 margin on both the NYSE and the Nasdaq.
I did not have ANY stocks break down, during today's session. Therefore the pullback doesn't have me worried at all. But two distribution days in a five sessions is a reason to keep an eye open for more. But, once again, unless my charts start rolling over this looks like nothing but a normal start of a pullback after a very strong market advance.
Another positive was leading stocks. I didn't see any breakdown. The fact that none of those stocks broke hard, along with my longs acting fine is enough of a reason to stay bullish on this market, even if we get a 5% pullback. My charts are going to have to simply breakdown before I become a bear. There is still NO reason at all for me to be bearish on this market.
Earnings, earnings, earnings...that is all that we are going to hear about for the rest of the week. So enjoy an earfull of BS from your usual CNBC talking heads. I will see you at Investors Paradise. Aloha!
Stocks Finish With Small Gains On Mixed Volume; It's All About GOOG, Afterhours. The DJIA finally closed over the 12k mark! Yipee...whatever. Now that that is finally out of the way maybe we can get some peace and quiet over that number from all the financial TV networks. Besides the DJIA hitting that now-famous number, a weak Philly Fed report and a ton of earnings reports could do no harm or good for the market as the market failed to move.
At the close, the SP 600 led with a .42% gain, the Nasdaq and DJIA rallied .16%, and the SP 500 rallied .07%. The IBD 100 didn't lead but it didn't lag either, with a .2% gain.
Volume was lower on the Nasdaq and slightly higher on the NYSE. Breadth was negative on the NYSE by a 5-to-3 margin and negative on the Nasdaq by a 17-to-12 margin. Basically it was a meaningless day with a bit of a negative bias.
How about that GOOG afterhours? That might help the bulls catch some momentum but even if it doesn't there is one lesson to take away from this. It is never wise to be short a stock with EPS and sales growth rising quarter over quarter year over year by 70%.
Now back to the markets. Earnings were the dominate story of the day and will remain that way tomorrow after the GOOG numbers. Today's market showed no leadership whatsoever. The top groups were all in old leaders or just plain lagging sectors. I am not sure if it was because of rotation or just simple bidding up of old laggards for the big boys to unload but one thing is for sure momentum has slowed as the market has gotten overbought.
I still see a market pulling back quite normally. One or two disasters every three days in a portfolio of over 190 stocks is pretty darn good. That tells me that underneath the markets action my stocks are behaving in a normal fashion during a market pullback. If this pullback would be leading to something more severe I am 100% positive I would be cutting stocks left and right. However, everyday, I keep owning more and more stocks with nice chart patterns. The speculative ones are always rough, but the IBD stocks are doing very well, IF YOU BUY RIGHT.
Stocks like LOGI, HRZ, and NVEC show me that great earnings are being well rewarded. This makes me happy. At the same time, I see breakdowns in the SOX, and that worries me that momentum money may not be in the market.
That will make it harder for serious meaningful gains in the short term. A healthy SOX is very positive for momentum traders. When it lags, it usually makes it difficult to produce huge gains. Because as everyone knows the momentum money loves Semiconductor, Internet, and....Biotech stocks. Which leads me to this:
The Biotech sector has always been a home of hot money. If you look at the BTK--X, you will see we are not far away from new yearly and all-time highs. Breaking out to new highs without CNBC or the general market commentators bubbling over this is the greatest story not being told on Wall Street. Just like the AMEX breaking out to new highs in 2003 and the media completely missing it, the Biotech Index is about to breakout to all-time highs (look at your six year weekly chart) and the media is going to miss this too.
In the famous words of the police officers in Wednesday's South Park episode.....nicccceeeee!
Whew, I am so tired. I will see you tomorrow at Investors Paradise. SURFS UP! SURFS REALLY UP!!!
Stocks End A Quiet Week With A Quiet And Flat Friday; Dip Buyers Helped Stop Morning Selloff. After a brief morning selloff, a boring week came to an end with a boring Friday. The boredom was a bit odd considering how many earnings we had. Besides the lack of action in the indexes there isn't much to talk about. I guess, you could say, the biggest story of the day was CAT dropping 14%. But IBD readers already knew that that sector had topped. You can kiss the Machinery-Construction stocks goodbye now.
The market indexes didn't do much on Friday. The SP 500 rose .12%, the Dow Jones Industrial Average rose .08%, the Nasdaq fell .06%, and the SP 600 led to the downside with a .66% loss. The good news about today's market was the fact that the IBD 100 led with a .2% gain. That is always good to see.
Volume was a tad higher on the NYSE and lower on the Nasdaq. Basically a day where it is impossible to draw conclusions on what the big boys are doing.
Breadth was negative on the NYSE with decliners over advancers by a 6-to-5 margin and negative on the Nasdaq by a 3-to-2 margin.
For the week it was the fourth week of gains for the SP and the DJ. The DJ rose .35%, leading the indexes to the upside. The SP 500 rose .22%, the Nasdaq pulled back .64%, and the SP 600 eased back .31%.
It was positive to see stocks get supported all week long on any signs of weakness. Just check your daily candle charts and your 60 minute charts the past five days. Stocks got support off the lows after every selloff. Only one word to say: Niccceeee! (I can't get the new South Park episode out of my head, ugh!).
The dominant story of the market remains earnings. We had plenty of them this week that were basically worthless to the overall movement of the indexes. There are plenty more to come next week and a Fed meeting to deal with so I am sure this will dominate the headlines all week.
I will, however, concentrate on my longs. I am still overall happy to mildly relieved to see with all the volatile action this earnings season (AGAIN!; thanks REG FD) my stocks continue to act well and are not causing me any large losses. Most setbacks are coming after modest price gains. The losses that I am taking are coming from my more speculative or iffy chart situations. Those stocks are not causing large hits to my portfolio. But combine those with flatlining stocks and commissions and you can see things aren't entirely wonderful either.
It is still a traders market that is overbought on the short term on many different oscillators. Bulls are creeping back into all the market sentiment surveys and this should help start a pullback as too many traders are now bullish. This pullback will probably quickly turn those jumpy traders back to bears and the uptrend can then resume. Why? Because now that some markets are at all time highs it is going to be hard to stop that kind of momentum. It is all psychology. The indexes are not saying that they want to stop. Until that happens my that are going up or holding support will remain my tell to stay positioned to the long side.
Have a great weekend and I will see you at Investors Paradise!
New Swing Longs: TCHC MDCI CMO
New Swing Shorts: NONE
Longs Up On The Day (low vol non-IBD excluded): STEC-29 INPH-33 CXW-37 DA-42 CVO-126 SOFO-36 DIVX RICK HMSY CPA KBAY CAB SVNT PERY BITS NITE DJO PRFT JST AWH LWAY AYE BEBE EVR DUCK LTM ICE TIBX BEAS HCSG ISYS HRZ ABCB ETE FORR HOTJ CBF TSYS REGN SVVS MDRX VVI NU ASML PHRM TTEC ILC BULK NYMX SZE BARI GTSI
Shorts Up On The Day: DDE-22 HYDL-16 ARLP ASA SM MDG
Stocks On Radar Screen: OMCL GOOG CVGR MDV AVCA PMD STRS UU GCOM NIHD RDYN SAI CREL SYNA ECGI SOV FTGX GGY MFRI NWK
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