Stocks Spend Uneventful Day Consolidating Gains. Stocks pulled back on lower volume, on Wednesday. Stocks started the morning weak, managed a meager rally to mid-day, and then spent the rest of the day trending lower. There was nothing on the economic front or in the news that gave stocks any reason to do anything.
At the close, the Nasdaq led to the downside with a .3% loss, the DJIA fell .2%, the SP 500 fell a tad over .1%, and the SP 600 was the strongest only losing .05%. The good news is that leading stocks outperformed the major indexes, on a weak day. The IBD 100 and IBD 85-85 index both ended flat.
Volume fell on both the NYSE and the Nasdaq, with no catalyst to cause trading to jump. Breadth was negative with decliners barely beating advancers on both the NYSE and the Nasdaq.
The big winners today was, once again, the Homebuilders. The Philly Homebuilder index rallied 1.6%. The worst group of the day was, once again, the Metals. The Philly Gold & Silver index fell 1.7%.
Today was a nice pullback on lower volume, coming off the last two days of gains that saw volume above today's levels. It is nice to see pullbacks that are calm and collected like the one today. A more severe pullback on heavier trade is the last thing speculators who are net long want to see.
Today was a big yawn but underneath there was, once again, plenty of fireworks. I am starting to get that feeling that we have come too far too fast. However, my feelings don't mean anything but when I get these feelings I start to take notice and compare them to my stocks and the market.
When I do that I start to notice that I have been taking a lot of profits and funneling those gains into new breakouts that are in stocks that are of less quality than the earlier buys. So the fact that laggards are now breaking out is a concern. That along with the recent choppy action in the indexes has me raising my eyebrows.
However, when I look at that and then compare it to what really matters: stocks that I am selling because they are turning out horrible, I can see that things are still very fine out there. Today is yet another day where I am adding a bunch of longs and have NO complete sells via cut losses. What is that? Like three days in a row now? So that tells me that there is still more room to run.
Another reason why there appears to be more room to run is the action in the ever important tell stocks: IPO's. The action in these stocks indicate there is still more upside ahead. I have three new breakouts today that I am taking and saw another three that I passed on. This goes along with all the current new issues I am long and have NO sign of selling pressure on them.
The action in stocks tells me that this rally still has legs. But I am now putting the market on notice. I don't trust big buys at these levels and recommend investors keep new buys small unless EVERYTHING is perfect.
At these levels it would be nice to see more people bearish. But, instead, I see a lot of longs. I am not sure if that is because my readers are smarter than everyone else and do not try to predict tops or if everyone really is long. Since nobody has challenged my intelligence this entire rally and have not weighed in on how much money they are making on the bear side, I can only assume people are long and already invested. So I am not sure how much more we have to go, in the short term.
Longer-term and short-term, however, the trend is still up and that is the right side to be on. I am not going to fight the trend yet! The trend is still long and strong and that is what I am at 272 longs and 0 shorts.
This will change one day but not tonight. Aloha and I will see you at Investors Paradise.
Stocks Reverse Hard, After A Strong Open; Nasdaq Suffers A Distribution Day. Stocks started the morning on a positive note and then took a turn for the worse the rest of the day. Possible reasons for the selling could be that traders are looking ahead and expecting a weak jobs report. Whatever the reason is, all we need to know is that sellers overpowered the buyers. That is all you need to know; the reason is BS.
At the close, the Nasdaq fell .7%, the SP 600 fell .5%, the SP 500 fell .4%, and the DJIA fell .3%. The IBD 100 led the indexes on the downside, losing .8%. However, the losses were not severe and many stocks did not take massive hits.
Volume was higher on the Nasdaq, giving the Nasdaq its third distribution day in four weeks. On the NYSE, however, volume was lower, saving the index from recording a distribution day.
Breadth was negative on the NYSE and the Nasdaq by a 3-to-2 margin.
The selloff did not discriminate against any certain sector. The selling hit the laggard homebuilders, the technology related chip stocks, and the recent leading oil stocks. The wosrt hit index was the SOX, with a 1.7% smack.
This pullback should not come as a surprise as I have been hinting that the market may need a rest up here. This back and filling is not bad for the indexes. It is the three distribution days on the Nasdaq that has to have us raise our caution. A couple more of these, along with an obvious downtrend and it may be time to raise some cash and start cutting laggards. The other troublesome part about this selloff is that this is the first one I can remember where the selling started slow and then accelerated the rest of the day.
As of now, laggards have been holds, as long as they don't hit the cut loss point. But if the market weakens, I will start cutting some stocks that are not showing me gains. A down market will take down 3 out of 4 stocks so if my stocks are not going up in a bullish market why the hell would I think they are going to go up in a bearish market.
In saying that, longs that show no sign of being cut will not be cut simply out of fear. Some distribution days and severe down sessions are NORMAL during bull markets. This helps raise the fear level and that helps stocks find a floor as stocks go from weak holders into the strong holders hands. So if your stocks show no sign of selling off, don't cut them simply because we now have three distribution days on the Nasdaq.
The market is still in an uptrend on the long, intermediate, and sub-intermediate trend. The market is now in a short term downtrend but until the sub-intermediate term turns down, there is nothing to worry about. Leading stocks are still looking healthy and are still showing great gains.
On Friday, the Labor Department is expected to say that the U.S. economy added 105,000 jobs in November. The unemployment rate is expected to rise to 4.5%, while average hourly earnings, a key inflation metric, should increase 0.3%. These numbers will be the talk of Wall Street all day long. No matter what the numbers are, you know bears are going to b**** about them and bulls are going to praise them. So if you enjoy playing that game, have fun!
I am severly overworked and there is HUGE SURF on Maui so it is possible I am taking the weekend off from my commentary. I doubt anything is going to change the overall view of the market in one day. So with that I will see you at Investors Paradise.
Stocks Shake Off Thursday's Selling And End The Week On A Positive Note. Stocks started the morning on the downside, after a better than expected job report number. I am not sure how much impact this bit of news had but it was a major focus today. The number didn't mean much for the bulls as they stepped up, bought the dip that sent stocks up faster than they went down, and then went on cruise control for the rest of the day letting stocks drift to a positive close.
At the closing bell, the Nasdaq rallied .4%, the DJIA gained .2%, the SP 500 gained just under .2%, and the SP 600 diverged and closed lower by .1%. The IBD 100, remaining on theme, finished with a .5% gain, leading the market.
Volume was lower on both the NYSE and the Nasdaq, as traders started the weekend early. Possibly to get a jump on Chanukah and Chirstmas shopping, before the last rush starts.
Breadth was pretty much flat, with advancers barely beating decliners, on both exchanges.
For the week, the SP 600 was the big winner rising 1.3%, the Nasdaq was up 1%, and the SP 500 and DJIA were up .9%. The best part of the week came from leading stocks. The IBD 100 managed a 2.7% gain for the week, well outpacing all other indexes. This continues a trend of outpacing the market to the upside and keeping smaller losses on the downside, for the past five weeks.
The gains by the IBD 100 and the gains in the indexes, considering it was a week with a negative and bearish overtone, show that underneath, for now, the market is very strong and is not to be messed with. I mean, think about it, for a rough week we closed up.
This market has been very impressive with a broad rally lifting many leading stocks in many leading industries. The strength of the breadth is a testament to the strength in this economy. You can bash Bush all you want to about Iraq (they did this to Truman, Lincoln, Reagan, and Churchill) but if you bash him on the economy you are a fool. Stocks would not be going up in every sector the way they have since 2003 if this was not a strong economy. The tax cuts worked, rather you want to believe the facts or live in a fantasy world of utopian BS.
One of the more conflicting points of data I have reviewed is the sentiment surveyes. AAII shows more bears than bulls; however Investors Intelligence shows near record bulls and very low amount of bulls. II is a bad timing for market tops, normally helps when bulls bears cross showing extreme bearishness in the market and that normally marks a bottom. As for topping, the II has been pretty useless, unless the bears go below 20%. Then you know a top will be near.
You must remember, that these area all secondary indicators. The only important piece of data you MUST know is the price and volume trend on the major market indexes. This is the actual movements of big money. Their buying and selling will have the real impact on stocks. Not some stupid survey. Those are only guides to help you know where you are. Just like the VIX, as a timing tool, it is useless.
For now the market is in a strong uptrend and shows no sign of stopping yet. There are a few signs that momentum is slowing, via the recent trading, but that is no reason to assume that the trend is going to end here.
The stocks that I am long are still doing very well and few stocks are giving me the "bail, bail, bail" signal. The scans are still producing many new long candidates and there seems to be few stocks even showing extreme weakeness.
Three out of four stocks follow the general trend of the market and the right time to short is when three out of the four time frames of the market is in a clear downtrend. The only time frame not in an uptrend is the short term and that is in a lateral pattern. Until the trends say it is time to short, there is no way in hell I am going to bet against this market.
For more info on what the market is doing overall, I recommend reading the past four post.
Have a great weekend and Aloha! I will see you at Investors Paradise.
New Swing Longs: GRRF INMD MAMA TRMA MBLX
Adding To Current Positions: DLB AMSF ISIS PSMT
New Swing Shorts: NONE
**number is % gain from opening position. Only stocks up 25% have number**
Calm Before The Storm?; Stocks Close Higher On Mixed Volume. Stocks started the week on a positive note, ahead of the FOMC meeting Tuesday, with gains on three of the four major market indexes. Some more corporate deal-making in mergers and acquisitions probably helped keep the bullish mood going.
At the close, the DJIA, SP 500, and Nasdaq all gained .2% and the SP 600 diverged with a .20 cent tick lower. The good news, as has been the continuing theme, was with leading stocks. Once again, the IBD 100 outpaced the market with a .5% gain.
Volume was slightly higher on the Nasdaq and was about 4% lower on the NYSE. The light volume is the usual before an FOMC meeting.
Breadth was positive on the NYSE by a 10-to-7 margin and was even on the Nasdaq.
Today was a choppy day of trading on light volume. But the good news as was mentioned above came in the form of my stocks and leading stocks. They acted much stronger than what the overall market reads. Many leading stocks made 2% plus gains today. It was an OK day with nothing great happening. A typical pre-Fed day.
The worrisome part of today's action is the same as Friday's action. Stocks started weak, had a burst higher, but drifted to another positive close with a downtrending biase. This has the feeling of a heavy and/or cautious market. Normally after a big early reversal we keep buyers interested and work higher. Obviously, traders are more skittish ahead of the FOMC meeting.
But with movers like the Airlines today, I am not sure how much we have to worry about a nasty reversal. The AMEX Airlines Index rallied 1.9% today and many of the top stocks in this group produced solid gains today off a round of merger speculation. These stocks are leaders and today's outperformance should be no surprise to investors who buy strong stocks, growth stocks, and/or CANSLIM stocks.
We now look ahead to another famous FOMC meeting. Expect an unchanged outcome with the rate staying at 5.25%. What stocks will do I am not sure. But one thing for sure is it will be a whip one way then another whip in the other direction followed by a final trend definition into the close. That seems to be the norm. However, remember, that once something looks like a given...it no longer is.
Please read the last five post in this "daily market analysis" to understand exactly where we stand right now in this current uptrend.
Aloha and I will see you at Investors Paradise.
New Swing Longs: NYX AGR MXIC
Adding To Existing Positions: NSTC GRRF IMKTA
New Swing Shorts: NONE
**stocks w/ # are up 25% or more since long. only stocks up 25% have numbers**
Stocks Shake Off Early Morning Hit And Rally Off The FOMC; Nasdaq Suffers Third Distribution Day In Four Weeks. Stocks started the day pretty calm and soon gave way to some very rapid selling that dropped the indexes hard to their lows of the day; the Nasdaq fell as much as 1%. However, stocks found strong support on that selling and after the FOMC announcement stocks worked higher finishing well off the lows. Overall, a very impressive fight back from what looked to be like a really bad day in the making.
At the close, the SP 500 and DJIA fell a meager .1% and the Nasdaq and SP 600 fell .5%. The obvious bad news came in the IBD 100 as that index lost 1.3%, clearly signaling leading stocks were the hardest hit.
Volume was higher on the NYSE but still below the 50 day volume average. The Nasdaq's volume came in slightly higher. That gave the Nasdaq its 3rd distribution day in four weeks.
The selling in NYSE did not seem that severe as volume was under the average and stocks closed near the higher levels of the day. The Nasdaq's distribution also did not have that feel of extremely strong selling.
Breadth was negative on the NYSE with decliners beating advancers by a 9-to-7 ratio and decliners over advancers by a 3-to-2 ratio on the Nasdaq.
Steel stocks were the worst hit of the sectors today, with the IBD Steel-Specialty Aloy group getting crushed 4.9% and the Steel-Products getting creamed 3.3%. This goes to show once again yesterday's leaders are not normally tomorrow's or today's leaders. These are the old leaders and most of these chart pattern have the same patterns many stocks have on their last breath. I don't trust this group at all. NEXT!
I guess I should move on to the Fed speech. Well, no surprise, the Fed decided to leave the Fed rate alone at 5.25% for the fourth straight time. There was one dissenting member Richmond Fed Lacker who wanted a rate hike.
In its policy statement recent indicators showed that "economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market." Looking forward, the Fed said "the economy seems likely to expand at a moderate pace."
"Inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand," the statement said.
The FOMC said further hikes are still possible, saying that "the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."
I still remain caution that a pullback could be possible but the action in the market continues to show me buyers are taking every dip they can get. This can change at any time but for now it has not.
Some stocks are starting to show signs that momentum money is tired. Stocks like MAMA shooting up a lot show a lot of money is chasing few speculative issues now. Before a lot of stocks might have taken bids like this. But many issues like SWAT show what is really going on with most pure speculative issues. This is a sign of a tired market.
The poor breadth in my top stocks of 404 issues showing only 113 up shows that it was a weak day but in saying that at the same time I only had a few complete sells out of 285 stocks. There are a lot of stocks that needed some good profits locked in and a lot of stocks that need to have most sold now because they are not immediately moving up since breaking out. There are about 50 of these. So obviously I am raising cash here, by just reacting to how my stocks are acting. I am only making 2 new buys and selling partial shares in about 50-60 stocks.
I still don't know what this pullback will be. I have a lot of beautiful charts still but a lot more are now in that limbo stage where they could go either way. This is the first time I have seen this in this whole uptrend. This is officially day one where I have sold what I would consider a lot more than I am buying or interested in.
The key here is to be prepared for gains or losses. Right now is not the time to start buying tons of stocks because they are pulling back. This one could last longer than the others and adding to losses is a LOSER and LOSING game.
Just because the market looks ready to pullback, REMEMBER, it might not. So play the middle and be ready for either move. That way NOTHING can surprise you. Patience will pay off here.
You sure don't want to sell all your stocks and see stocks like MAMA start popping up left and right before the "real" rollover starts. It is best to wait for the market to tell us it is ready to rollover. I would look for a 1% down day across the board on heavy volume. When I see that...then I might get worried. For now I am just ready.
Aloha and I will see you at Investors Paradise.
New Swing Longs: PRXI ATX
Adding To: NONE
New Swing Shorts: NONE
**stocks w/ number up 25% or more since I went long**
Early Morning Fireworks Soon Give Way To A Dull Driftless Day Of Trading. A gap open in the morning, thanks to some Airline merger news and strong retail sales, soon gave way to some quick selling that took the indexes slightly to the red. After those early morning lows stocks danced around the flat-line area until the final hour when they caught a small bid and managed to close green.
At the close the SP 500 ticked up .12%, the DJIA ticked up .02%, the Nasdaq ticked higher by .03%, and the SP 600 continued its negative divergence with a .02% decline. The good news comes in the form of leading stocks, again. The IBD 100 gained .3% and the IBD 85-85 gained .2%.
Volume was decently lower on the NYSE and the Nasdaq, with volume below the 50 day volume average on both. Breadth was positive on the NYSE with advancers beating decliners by a 6-to-5 margin and diverging with the price gains breadth was slightly negative on the Nasdaq.
Something I saw that could be very positive for the market came in the form of leading stocks leading today and the fact that the top three industry groups in IBD's Industry Groups were part of the top 10 biggest gainers on the day. The leading Transportation-Airlines Group was up 2.6%, the Media-Periodicals Group was up 2.9%, and the Internet-Network Solutions was up 1.2%.
The loser of the day was the Semiconductor Index with a 1.2% loss. However, this group of stocks have been laggards the entire rally so this shouldn't be a surprise to anyone.
The Nasdaq just keeps on basing. This just leaves investors/traders to wonder what is next. The basing period right now is good for traders like me who are long and need the basing pattern to tell what stocks are setting up in strong bases and which stocks need to be trimmed back because they are lagging. Listen, if I am long a stock that is supposed to go up in a good market and it can't go up. What makes me think that it will go up if the market weakens? I know I keep on this point but it is a good point to keep harping on as we sit here in no man's land.
The basing pattern is really positive for possible longs. But the longer we stay around these highs without making any gains, the odds increase for a pullback since we are already up 10%+ from the lows.
The Nasdaq looks a bit weaker than the NYSE, to me. But I am still getting plenty of longs from both markets so I am not sure I am too worried about the Nasdaq giving it up. I am just ready, in case it does.
The fact is, after all that negativity that has followed since the one 1% across the board down day in late November, stocks are still holding up. Momentum is hard to stop when it is in full swing and I have watched many "smart" traders miss HUGE upside moves (99-early00, 2003, and Oct 05-May06 come to mind) trying to call the tops and reversals in the market. Nothing has changed in the trends. Are all up except the Nasdaq. There all are up but the short term trend which is in a lateral congestion trend.
I recommend reading the past couple of post to know where I completely stand on this market, if you have not read them yet. We will see what happens tomorrow. Aloha and I will see you at Investors Paradise.
New Swing Longs: FTK LFL TATTF WPZ PFWD NWK HA NMGC SNCR
Adding To Current Holdings: GIFI
New Swing Shorts: NONE
**stocks w/ number up 25% or more since I went long**
Longs Up On Day: MIKR-34 CPA-55 DIVX-32 IHS-92 FTEK-49 JST-91 DA-54 AOB-125 TTEC-59 BMA-30 HRZ-76 MA-93 SOFO-100 MEH-57 IDEV-38 MAMA-78 PTT-79 GENT-34 IIG ININ DLB BTJ UAUA GLDN PQ GIFI OMNI HOS RKT NITE CCO SQM FFH GRRF NU EVEP AMSF RBN WTS NUE MVSN CVLT SEIC SRSL SKX CBF BMTI KOG MBLX ULTR HINT CLRT LMRA IMGN BITI HCSG NRF CCBL ETE BUF ISBC IMA TSG ATX INMD TTG HEI
Stocks On Radar Screen: AMK HLT BRG MIDD XTO ONT LEAP IMMU KKD DYN LOOK MVIS HLTH BJ NI ADST PDA
Cut some losses/take some profits: GSL AOI TRT UCTT AGR ISE MCDT MNG INWK CHINA
The SP-500 Makes Another Six-Year High; Bears Still Don't Get It. Stocks gained ground off of crude oil rising 2%, drifting with an upward bias on the DJ and downward bias to a green close. The gains in the face of bad news was a clear sign of just how strong this market STILL is.
At the close, the Nasdaq and the SP 500 led the way with a .9% gain, the DJIA followed with a .8% gain, and the SP 600 lagged again with a .6% gain. The IBD 100 managed to stay with the top indexes, pulling off a .9% gain. The big bopper came in the form of the Semiconductor Index. This laggard delivered a 1.9% gain.
Volume was higher on both the NYSE and the Nasdaq. It wasn't a clear very strong sign of accumulation but coming off the recent consolidation it was an accumulation day none-the-less.
Breadth was higher on both exchanges, with winners over losers by a 3-to-2 margin on the Nasdaq and by and by a 5-to-3 margin on the NYSE.
Today was a bit of a mixed day for me, despite the markets gains. I had many stocks give me partial sell signals again and still did not have too many new longs come up on my scans. A lot of stocks, on the other hand, did very well today and some of my best stocks did surprisingly very well.
This basically shows a market that is rotating around with money moving from sector to sector. I guess that is why almost everday this week in the IBD Industry Group tables the top 10 winners and losers were all over the tables.
The indexes are all still doing very well and that supports further upside for the markets despite everyone thinking we need a rest. After such a strong move this morning a lot of traders expected selling to hit the market. It didn't happen and if it did, buyers didn't let prices slip a bit.
There is nothing new about this market that I have not spoken about in the past seven post. The trend is still up and nothing is changing it yet.
Even if this is just a Santa Claus rally, I don't care. A rally is a rally, and if stocks are moving up, I want to be long. If it is the "right" rally or the "wrong" rally, I don't care. I just want to make money. And the market is still offering longs so I will keep taking them and will continue this until the market rolls over.
The only real troubling thing is that I had a lot of charts to go over tonight and could find only four or five new longs. Normally, with over 600 charts in my scan I should have 8-10 new longs. So the rally could be ready to fizzle. I don't know. Nobody does. If they say they do, they are full of mess.
Until this trend changes, I am not changing my bullish positioning. Aloha and I will see you at Investors Paradise.
New Swing Longs: DWSN AEZ HLTH WOLF JCG
Adding To Existing Long: AMSF
**stocks up 25% or more since I went long have number**
Quadruple Witching Turns Out To Be Quadruple Boring. Stocks closed the week up for the third straight session, with the help of a kind inflation data. The CPI came in unchanged from a month ago and that helped lift stocks higher. But after stocks hit their highs of the day around 11am EST, they basically drifted lower for the rest of the session closing with small gains.
At the close, the DJIA led the way to the upside with a .2% gain, the SP 500 and Nasdaq closed .1% higher, and the SP 600, once again, diverged closing lower by .2%. The IBD 100 did not lead but it did not lag either. Instead it kept pace with the SP 500 and the Nasdaq, closing .1% higher.
Volume was much higher on both exchanges as quadruple witching contributed to the HUGE spike in volume. Trading for the last day were stock index futures, stock index options, stock options and single stock futures. These days, like always, are hard to analyze on an accumulation/distribution basis. However, on days where the market does nothing like today, it doesn't matter.
Breadth was negative on both exchanges, diverging from price, with decliners over advancers by a 6-to-5 margin on the NYSE and by a 8-to-7 margin on the Nasdaq.
The biggest movers of the day came in the form of Gold stocks which got hit pretty hard. This is normal, for old leaders. They come back from the dead after the "real" run and then everyone thinks that this run will be as good as the last one. Sadly, there normal is never another run. The AMEX Gold Bugs dropping 1.5% and the Philly Gold & Silv Index losing 1.4% show the true intnetion of the big boys. They are selling these stocks and some of the "true" leaders like GG on a weekly show the same patterns EVERY old leader shows. Goodnight gold.
For the week the SP 500 led the way with a 1.2% gain, the DJIA followed with a 1.1% gain, the Nasdaq followed with a .8% gain, and the SP 600 lagged with a .2% loss. Leading stocks, in the form of the IBD 100, rallied .5%. This is the first time in a while I don't remember this index leading. However, the fact that the SP 600 is lagging so bad and the IBD 100 is still keeping up keeps me positive.
Overall it was a pretty darn good week, considering all the positioning I had to do in my portfolio. I took a lot of gains/small losses this week on over 150 different stocks. But despite all this moving around in my portfolio, my account did pretty darn well. I know one thing, had I not taken profits and cut some laggards I would not have ended the week with gains. Discipline always works better than hope.
Today was not a big deal, unless you consider another all-time high by the DJIA and six year highs in the SP 500 to be news. For me, there is nothing of importance with this, besides the fact that it just confirms that this market and economy is currently still very strong--sorry bears, facts say you are wrong AGAIN.
We are starting to enter that time of the year where traders start taking vacations and get prepared for the upcoming Holidays. Normally this means stocks drift to the upside. Last year that did not happen. In 2004 we drifted up on low volume only to break really hard in January. Nobody knows what will happen this year but be cautious of a low volume drift higher. They have a good track record of ending badly.
However, with a backdrop of the PPI, the personal income report, the spending report, the LEI, and 3Q GDP, lower prices would not surprise me. I wouldn't mind them to be honest. The gains this week on the Nasdaq and SP 500 did come on heavier volume and since the last couple of trading weeks are on lower volume a low volume pullback would be welcomed here.
I hope you are having a great weekend and I will see you at Investors Paradise.
New Swing Longs: CACB GMRK VPFG MFG FSLR ISSC
Adding To Longs: NHWK BOBJ PFWD
New Swing Shorts: NONE
**stocks up 25% or more have % gain listed since long position taken**
Small Caps Lead Market Lower; Warning Flags Rising Everywhere. It was another merger filled Monday but this time the mergers didn't help. Stocks started the morning very strong and then reversed with the Nasdaq and SP 600 leading to the downside. At the closing bell, when all was said and done, it was a pretty ugly day.
The SP 600 led to the downside with a 1.2% drop, the Nasdaq fell .9%, the SP 500 fell .3%, and the DJIA fell less than .05% as big caps were the safe haven today. The good news is leading stocks did not lead to the downside. The IBD 85-85 index fell 1% and the IBD 100 fell 1.2%. But that was still even, rather than lower, than the SP 600 which has been leading to the downside the past week.
Volume was lower on both the NYSE and the Nasdaq but how could it not be with quadruple witching on Friday. However, compared to Thursday volume was lower on the NYSE and a tad lower on the Nasdaq. So it is good to see the big boys are not stepping all over each other to sell stocks.
Breadth was negative on both exchanges by a 2-to-1 margin.
The worst performers of the day was the Oil & Gas sectors. The Machinery/Equip group fell 3.6% and the Drilling group fell 3.5%. The funny thing about that is that was looking like a HOT group. The fact that these stocks are acting funny so soon after offering so many beautiful charts is very troubling for the rally. When this many pretty charts breakout out and so many get thrown back that is normally a very important sign to pick up on. We shall see if the stocks can hold support. So far, so good, but there are cracks showing up here.
This was the second straight day the market started very strong and ended pretty weak. This is much much different from the entire rally from the July/August lows. The entire uptrend has not seen back to back days like this. Adding to the problem with this was the fact that we have seen strength turn into weakness all month long on the SP 600.
If these stocks where the hot money chases are not doing well and the big cap indexes are doing well, you know we are near a short term top in the market. When it happens, nobody knows, but the signs are starting to show up.
The entire rally I have few to ZERO stocks that have blown up. Today I had 4 or 5 I believe. This is simply not something that has happened this whole rally and this tells me it is time to start being careful with my new buys and to lighten up on the laggards. I am not selling my strong stocks that show NO sign of selling. But the weaker ones need to start being trimmed back and new buys in the speculative issues needs to even be brought in more.
I started raising more cash last week than I was putting to work and after today's price action I see why. Today is no different. I am raising more cash and putting much less to work before tomorrow's markets. I am still very heavily long with around 285 positions but still no where nearly as heavily weighted as I was. I am almost off of margin.
The good news about this pullback is that it is happening on lower volume. A pullback now is much better than a low volume year end rally that ends with a high volume January selloff like in 2004.
Remember, I am still long a lot of stocks. That means that I have 285 stocks that are still holding above the most recent support and have not given a complete sell signal. This tells me that there could still be plenty of upside in many of my stocks if and when this pullback happens and the uptrend resumes.
I am not worried yet; I have just raised my red warning flags. Newbies should sit back and watch the big boys right now. Wait till the red flags come down.
The surf was HUGE today where I live and it was a blast. Hence the reference above to red flags. It is dangerous conditions here and only experienced surfers of the market should be taking off here.
Ugly Morning Finds Support As Stocks Rally Into The Close. The market started the day with a nasty gap down on two possible news stories. A big jump (largest since 1974) in Producer Prices for November and a scare over a possible new Asian-market meltdown put a lot of pressure on the indexes. However, bulls remain extremely strong in the face of selling and rallied the indexes off the lows all the way into the final hour.
At the close, the DJIA rose .2%, the SP 500 also rose .2%, the SP 600 gained .1%, and the Nasdaq lagged again with a .25% loss. The IBD 100 gained .2%, keeping pace with the market.
The numbers are not that bad at all, considering that the Nasdaq was down by 1.1% at one point. The SP 500 was down .5% before coming back to close higher. The SP 600 also reversed right off the 50 dma to close with gains. Overall, very positive action, considering what could have happened.
Volume was higher on both exchanges. The decline of .25% doesn't qualify as a distribution day for IBD. However, in my books it would HAD WE CLOSED NEAR THE LOWS OF THE DAY. The intraday reversal from a 1.1% loss to a .25% loss is BULLISH not bearish. Therefore, I now agree with IBD (for a different reason) and say this can not be called a distribution day.
Breadth was mixed, on Tuesday. Advancers beat decliners by a 9-to-8 margin on the NYSE and decliners beat advancers by a 8-to-7 margin on the Nasdaq.
The morning was pretty darn wild, if you ask me. It makes me glad I don't pay attention to the news when I am placing trades. The Thailand 15% crash would have gotten me nervous. Take that along with the 1.1% decline in the morning on the Nasdaq and I GUARANTEE many traders made panicky sell decisions. That is not a smart way to trade.
That kind of action was much different than many people obviously thought was going to happen. The last two trading days markets opened higher and sold off. Today, the market gapped down hard then rallied all day long.
To go along with this, I read in Helene Meisler's article today that the put/call ratio on the indexes was 2.99 and the put/call ratio was 1.13. That is very high levels and indicate extreme fear in the market. This data along with the high level of bullishness amongst investors is very confusing. This can only mean one thing, for now: choppiness. Get ready for some choppy trading. The market has some severe extremes in market postures. Bulls are very bullish; bears are very bearish. Like in politics, there seems to be no middle ground.
However, I know there is a middle ground (since realmoney.com's poll has around 25% neutral) but they don't know what to do or what to trust anymore. They are living from one data point to the next lost in no man's land.
Overall, the trend is still very bullish. The big caps are the stocks that are resilient and are showing NO signs of selling hit them. The DJIA hit another all-time high, so, obviously, that trend is UP. So if you are bearish on this market it is simply based on "feelings." Last time I checked you can not make money off of "feelings." Maybe you can but I still have not met a professional who could.
Therefore, even though I have some red flags and disappointing results in some stocks, I am still very long and have many stocks that show NO signs of selling. The trend is still up, though there are problems in the Nasdaq and the SP 600. Until these small worries turn into a downtrend, well that is all it is. It is just a worry. Nothing that will make you profitable in the stock market.
Let's see what happens. Here is my WORTHLESS opinion. We get a little bit choppy right about here. All the above reasons make me think that. Not that it matters. What matters are my stocks. If they remain in an uptrend, I hold them. If they start a downtrend on heavy volume, I sell them. No questions asked.
Aloha and I will see you at Investors Paradise.
New Swing Longs: VEH IMMU LYTS SMOD
Adding To Longs: WRLS BOBJ RMKR
New Swing Shorts: NONE
Longs Up On The Day (low vol. non-IBD excluded): AOB-98 IIG-26 AOI-32 TTEC-59 DA-54 ICE-44 IAAC-67 HMSY-36 IHS-94 SEIC-25 MA-96 MAMA-126 MEH-58 CVO-129 CCOI-33 GVP-50 PTT-88 OMNI RRC LCC BOT COH LFL BLUD NYX TMO AMSF HOS CELG GLDN CAM BTJ DECK PQ UAUA ASCA BMC RBN MVSN CACB INAP CMT SQM NU RKT CCO VCLK MAIL JCG OPTM KOG SNCR CTCM ULTR WRLS BOBJ ACTU BITI AZK MRB AEP AEZ PNW OEH GMRK IGT NHWK WPZ ADBE MOS NAVI TTG RMKR CRT PCC
Stocks End Slightly Lower As Wall Street Looks To Be Starting Christmas Early. Stocks started the morning pretty flat, then accelerated after the opening, but soon turned tail and trended down for the rest of the day. There were no news catalyst for the reversal but the fact is that stocks did reverse.
At the close, the SP 600 was the shining star rising .4% but the Nasdaq, the DJIA, and the SP 500 reversed to close lower by .1%. The IBD 100 kept base with the broader market also decling by .1%. Not really a horrible day but the intraday action was disappointing.
Volume was lower on both exchanges, as it does appear Wall Street is starting that winter/Christmas vacation. The small changes in the index combined with volume under the 50 day volume average is the tell.
The market was not really that ugly but today's price action was a harbinger of a weak market. This was the third day out of the last four trading sessions that stocks started a rally only to turn tail and close at the session lows. They are doing this also not in one fell swoop at the end of the day. Rather the selling is slow and consistent throughout the day.
I am not sure if that is really that bearish as if it were we would be seeing much higher volume. However, these poor days are not that bad. I mean come on the DJIA hit an all-time high yesterday, the Nasdaq is still above the 50 dma, and the SP 600 bounced right off the 50 dma. That isn't really a bad market now is it.
If the weak intraday markets are a warning before the storm we will be ready just by knowing this information. If a breakdown occurs we will be able to recognize that we saw the warning signs and can act IMMEDIATELY to lock in gains, cut losses, and keep cash heavy. However, until this trend actually turns down and the indexes breakdown, it is just a warning sign and NOTHING else. Look at stocks like MAMA and NAVI the past week. Is that a sign the market is doing poor? I don't think so.
If my large list of longs start showing clear downtrends, then I will get bearish. Right now, every single stock I am long is in an uptrend. There is not one stock I am long that is not in an uptrend. So I am not going to jump the gun and get bearish on this market.
The uptrend does look tired but we are in the Christmas trading zone where stocks like to rally on low volume. However, if stocks fall on low volume, to me, that will be more bullish. Like I keep saying. If we rally now on low volume we set ourselves up for a higher volume selloff. If we pullback on low volume we set ourselves up for a high volume breakout to the upside. This is just how it works normally. Does it mean it will happen that way? Once again...how the hell do I know?
I still remain in the choppiness camp as there is some major disconnect with sentiment surveys, put/call ratios, and VIX readings. My longs say more upside to come. The kind of longs on my scan say we are almost done. My final decision always last with the stock. Is it moving up or down. That is all that matters. I only want to be long stocks moving up and short stocks moving down. That is as simple as I can put it.
Aloha and I will see you at Investors Paradise.
New Swing Longs: JSDA RTSX ONSM Exxx
Adding To Longs: INO BMTI
Stocks On Radar Screen: GMKT THRM ATRS GSOL BCH PKTR MIDD RVBD CLWT JBLU HTI MSO DENN TGS TRP GHDX BUD KOF GETI; Food & Beverage stocks and Utility stocks in general.
Low Volume Pullback Is All I Want For Christmas. It was another day of a strong opening turning into an ugly close. For the fourth day out of the last five days, markets opened strong or at least positive to reverse and trend lower for the rest of the day. The data point that was blamed was the Philly Fed manufacturing index. It came in below estimates and was the lowest reading since April 2003.
At the close, the Nasdaq fell .5%, the SP 500 and 600 both fell .4%, and the DJIA fell .3%. Unfortunately, today, leading stocks led to the downside with the IBD 100 falling .9%.
The good news about the losses was volume. It was lower on both the NYSE and the Nasdaq. The lower volume continues the pullbacks trend of low volume and volume below the 50 day volume average. The only day volume was above the 50 day volume average was a day when the Nasdaq reversed off the morning lows and closed near the highs of the day.
Breadth was negative on the NYSE by a 10-to-7 margin and negative on the Nasdaq by a 9-to-7 margin.
The low volume on this pullback on the Nasdaq is just what I want to see. It is happening on low volume during the Holiday season. If we were going up on lower volume, I would be worried about a selloff. But seeing volume shrink as we decline is just perfect. To me, that is a perfect Christmas gift from the market.
The technical damage to the indexes has been very minimal on this pullback and all indexes remain above their 50 daily moving averages. The Nasdaq 100 and the SP 600 are resting on that line but they are still holding so there is nothing to get worried about yet. We just need to be aware that they are at the line.
It seems to me, with the light volume, that most movers & shakers have started the Christmas vacation early. I don't blame them. I am sure it is cold where most of you live. That really has to suck. I got sunburned today and surfed without a rashguard. It was nice! But if I still lived in STL or NYC, I would be at home bundled up and spending time with family and friends. I hate cold weather more than I hate computer problems.
The year is almost over and there are only a few full sessions left before the end of the year so the market is sure to offer some very exciting longs. ONSM comes to mind. I had to pass on that one. Everyone already knows about MAMA. And another beautiful stock that I passed on 12/15 because it was only in its third day in the base is HTI. This is the kind of end-of-the-year stock moves that make any Christmas a more enjoyable time of the year.
Aloha and I will see you at Investors Paradise.
New Swing Longs For Everyone: AB
New Swing Longs For Me: ISLN ONT MEMY SEAC SLXA MVIS HAUP
MERRY CHRISTMAS EVERYONE! ! ! ! ! ! ! ! ! ! ! ! On the last trading day before Christmas, stocks continued their recent trend of flat to positive opens that eventually lead to a consistent downtrend until the close. For the fifth day in a row on the Nasdaq and for the fourth out of five days on the SP 500, stocks fell on lower volume. The pullback, today, was blamed on the durable good numbers minus transports falling 1.1%. Talk about cherry-picking your data. Sheesh.
At the close, the DJIA and the Nasdaq fell .6%, the SP 500 fell .5%, and the SP 600 fell .4%. The good news is small caps did not lead to the downside this time. The bad news is leading stocks, measured by the IBD 85-85 index led to the downside with a .8% loss.
The wonderful Christmas holiday news was that volume came in well below yesterday's levels and was well under the 50 day volume average. This is just what you want to see on a pullback. Volume keeps coming in lower every day the averages pullback. PREFECT!
Breadth was negative on the NYSE by a 5-to-3 margin and negative on the Nasdaq by an 8-to-7 margin
Oil stocks were among the worst of the session. The Amex Oil Index fell 1.2%, and the Philadelphia Oil Service Sector Index eased 0.6%. The Nasdaq Telecom Index slipped 1.3%.
For the week, the Nasdaq led to the downside with a 2.3% loss, the SP 600 fell 1.5%, the SP 500 dropped 1.1%, and the DJIA managed only a .8% loss. Overall, it was a bad weak, just by looking at the numbers. However, when volume is included, it was the perfect pullback. It is very nice to see this selling come on very low volume. It would be MUCH worse if volume was rising. But it isn't.
The Nasdaq is now at its 50 dma, joining the SP 600 at this critical line. It will be important to see how the indexes shape up here in the coming weeks. Strong selling through this line will be bearish. However, if the indexes either drift around here on low volume or blast off the lines on strong volume, it will be bullish for the markets.
The Nasdaq currently is at the bottom of its trading range and has not broken down so jumping to the bear side is not a smart decision yet. The longer-term trend is still up on both the Nasdaq and SP 600 so the smart play is to remain focused on the long side. Until the trend changes, you have no reason to.
It is going to be a light volume week ahead. There will be many small stocks that should produce some nice gains in this kind of trading environment. At the same time, during this time, if you have any stocks that selloff on heavy volume you might want to consider getting rid of them. A lot of small caps run a ton during this kind of trading. However, if you are long a bunch of junk and they don't move and instead go down, you should get rid of them.
Hopefully, the market will keep pulling back all next week. That would create a beautiful basing pattern for a possible upside breakout for the indexes. Low volume pullbacks are about as good as it gets after such a strong run up as we have had in the indexes.
Even though it doesn't seem like the Christmas spirit is in the air on Wall Street, it is to me. I love low volume pullbacks during the holidays. More often than not, a low volume rally over the holiday periods leads to selling. Low volume pullbacks then lead to higher volume rallies. This is my perfect Christmas scenario right now. This is what I wanted and this is what I am getting, so far.
The big money will not be playing this week, so expect little changes in the markets.
Aloha, Mele Kalikimaka and Hau'oli Makahiki Hou!
I will see you at Investors Paradise.
New Swing Longs: NONE
Adding To Longs: NONE
New Swing Shorts: NONE
**number is % gain since long taken. Only stocks up 25% have numbers**
Longs Up On The Day (low vol non-IBD excluded): PTT-109 AOB-99 STEC-82 MA-94 FFH-27 PCCC-35 APLX-29 PSPT-32 TTEC-62 JSDA BLUD INAP MAIL HEI CCO FMCN EVEP IMKTA IFOX IWOV AMOT CTCM DECK GIFI PCC SKX NHWK VEH AB CVLT AMSF CACB IMA DLB WTS IPHS IMMU TZIX SEAC HAUP AFT
Stocks On Radar Screen: ATNI EMCI MOCO CALM TAST ITMN ISPH DAR PRKR TLEO STKR IDN SAB
The Important Partial Profits/Losses: RTSX ONT HOTJ SRSL
Markets Feel The Post-Christmas Joy And Rally; Volume Was Much Lower Than Friday. It was up, up, and away for stocks on Tuesday, as the market opened higher and did not look back all day, steadily making advances until the closing bell. The only news out there was holiday retail sales and that bit of bad news did nothing to stop stocks; it just stopped retail and you really can't call that much by looking at the RLX.
At the close, the SP 600 led to the upside with a .9% gain, the DJIA and Nasdaq followed with .5% gains, and the SP 500 rallied .4%. The SP 600 and Nasdaq both bounced off their 50 day moving averages.
Volume was lower by over 20% on the NYSE and the Nasdaq as many players with a lot of money are on vacation for the whole week. Do not expect volume to come anywhere close to the 50 day volume average this week.
Breadth was very good with advancers beating decliners, on both the NYSE and the Nasdaq, by a 2-to-1 margin.
One of the best groups of the day came in the Airlines sector. The IBD Transportation-Airline group rallied 1.4% today and the AMEX Airline index rallied 2.3%. Some leaders in this sector include LFL, UAUA, CPA, RYAAY, and LCC. Funny thing is, I am long 4 out of 5 of those names. You always want to have your money in the leaders. Not the laggards.
The other standouts on today's charts is in the China stocks. My only new long was a China stock and gains in other stocks like CHL, ACH, LFL, and many others show China is where the spotlight is still at.
The laggards on the session was the Retail stocks. The IBD Retail-Clothing group fell 1.2% and the RLX fell .3%. Overall, you can't call that too much damage. But it is where the pocket of weakness was today.
Today was the day after Christmas and a post-Holiday rally should have been expected. This market is supposed to have upside momentum for the rest of the week, since there are not a lot of sellers and it may be easy to bid up some cheap stocks. But a pullback continuation on the indexes would be much better as the low volume would make it a perfect low-volume pullback. Then the volume can come back in after New Year's day and the market can breakout on volume higher than what came on the downtrend.
There is nothing new to add to the commentary that I have not hit upon already in the past five post. This week is going to be slow, drift-less, and should have an upside bias. I am going to play long setups the same way I always play them. Just because it is a low volume environment doesn't mean that if a stock violates a cut loss point that you do not cut your loss. And if a stock breaks out from a nice consolidation pattern on heavy volume, you treat it the same way. Nothing is going to change.
Happy Boxing Day to everyone that celebrates it and Happy Kwanzaa also. Aloha and I will see you at Investors Paradise.
This is the last week for free market commentary, longs, and shorts. Starting January 1st, this blog is done.
New Swing Long: SNDA
Adding To Current Holdings: GRRF CLRT
New Swing Shorts: NONE
Longs Up On The Day (low vol non-IBD excluded): FTEK-44 DECK-27 IHS-95 IIVI-31 STEC-84 TYL-51 AOB-102 ICE-40 HMSY-34 HRT-27 TTEC-63 SEIC-25 DA-52 OMTR-77 GRRF JSDA BTJ AMSF IIG ININ SRSL UAUA LFL GLDN TSRA IWOV VEH RKT RBN IFOX MVSN CACB CTCM CMCSA HEI NU CNH LCC WTS CVLT ASCA LRCX OTEX SMOD EVEP CCO JCG VCLK INAP TMO BMC CELG MAIL ISLN OSIR BMTI CLRT BITI ECMV ISBC BPHX INMD
Stocks On Radar Screen: CHL ICON GSOL FCFS SBGI NCTY CBG MIDD SPI TELN MOCO MVE WEL KKD CBRX USEY
Partial Sells: AW KOG CAM OMNI CKSW ILC TATTF DIVX NMGC
A Very Broad Rally, With Top Stocks Leading, Lifts All Markets; Volume Picks Up From Yesterday's Levels. Stocks rose across the board, today, as the NYSE and the DJIA hit all-time closing highs. The reasons behind the gains are simple: more buyers than sellers. However, we always need an excuse and today's upbeat New Home Sales number seems to be good enough. If that isn't good enough for you, we can say we got a Patriotic lift off the passing of the 38th U.S. President, Gerald Ford. May he rest in peace.
At the closing bell, the SP 600 led the way with a 1.1% gain, the DJIA picked up .8%, and the SP 500 and Nasdaq rallied .7%. The big winners were the leaders. The IBD 100 rallied 1.8% and had 39 stocks in the index pick up gains of 2% or more. Clearly top stocks were top stocks today.
Volume was higher across the board but still well under the 50 day volume average. However, the higher volume on the gains is just what you want to see after the market fell on lower volume each day before Tuesday's session. This is proper volume action.
Breadth was remarkably strong with advancers beating decliners by a 3-to-1 margin on the NYSE and by a 7-to-3 margin on the Nasdaq.
It was another strong day for the market and if the market is telling us anything it is that trying to guess the top is a fools game. The bears have gotten it wrong again as the NYSE and DJIA prove with facts that the bears are still very wrong in trying to predict a top.
As long as the indexes are hitting all-time highs and holding above the 50 and 200 day moving averages there is no reason to even try to look for shorts. Longs are still doing better than shorts are on a relative performance basis and until the market turns its overall trends lower being long is the place to be. Just look at all the longs and how much they are up since the July/August follow through. Try to find me some stocks that did as well as half of those stocks with numbers after them.
It is possible the NYSE will close the market Friday in observance of the death of former U.S. President Gerald Ford. The NYSE normally closes its exchange on nationally recognized days of mourning following the passing of a President.
The 38th U.S. President was a good man and was the right man at the right time following the resignation of Richard Nixon. What he had to step into was more than what most people could deal with. He handled himself as well as they could have during his short time in office. God bless President Ford and may his soul R.I.P.
Aloha and I will see you at Investors Paradise.
This is the last week of this blog being free. Starting next week we move to a new site.
New Swing Longs: LOOK WFD ZNH WAUW CNR
Adding to Positions: SMOD IGLD MVIS EPHC
Longs Up On The Day (low vol non-IBD excluded): CVO-149 IIG-25 JST-86 INWK-53 PSPT-35 IHS-101 AKAM-241 IGLD-56 HMSY-37 AOB-106 LNET-25 STEC-88 HRT-29 ICE-42 BMA-31 CPA-49 AOI-33 SEIC-26 CXW-33 TTEC-64 DECK-27 IIVI-32 PCCC-33 DA-52 MA-98 OMTR-80 CLRT-32 HCSG-27 MAMA-132 BAM-51 NAVI-33 CMT SRSL BTJ SMOD CTCM GIFI BLUD LFL CNH ININ NYX NSTC HEI SKX NITE OMNI CACB HOS DIVX LCC IMKTA DLB IMA JCG GLDN INAP WTS VEH SQM FMCN ISE TSRA AMSF CAM RKT RBN PQ RTSX TMO IFOX LRCX VCLK BMC AB MVSN BOT NU CELG MAIL LINTA HINT OSIR VPFG IPHS HAUP LNUX ACTU ONT LYTS MVIS ISBC SNDA OEH ISSC RWT OME EPHC INMD
Stocks On Radar Screen: FRD NCTY DAKT GSOL CMTL MOCO TELN PENN SPI EFUT DEI ATN IPCS CHA PBH KNXA CRY ALU HYTM SCO ASIA BRG CPY PMD
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