Archives: 5/2000 4/2000 3/2000
OK, nobody gave a rat's patoot about the scan changes. Not a single message or suggestion. So, I'm considering discontinuing the daily scans. Anyone object to that? If there are no responses, I'll only do the scans over the weekends.
Wed 5/31
According to O'Neil a bottom can be called by a "Follow through Day" which is defined:
1% or better increase greater volume drops stay above the price on the first increase day.
Yesterday, by my calculation, was such a day. He attributes an 80% reliability to such action.
So, we may have a rally underway...a real honest-to-goodess rally? The last Follow-thru-day failed!
Too much. You can say that about everything that's gone on. Yesterday may have been too much recovery. That can't be sustainable. I am playing it as though the e-o-m players will keep things up today. I don't consider the currrent situation a serious recovery, yet. We could touch 3700 today if we have another blow out day. The futures say no to that. So, let's say we make another 100 by the close. That put us right in track for a lower high scenerio and be quite bearish. Bearish? Bullish? No tell exists. Time to reduce and preserve capital.
Tue 5/30
S: MLNM 78 1/4 14 USPIX ?? B:: GENE 15/16
The market went out with a rush on volume. The question is does the volume continue tomorrow. The big caps (N100) massively outperformed me today--up 10%+. I was only up 5.33%
Bought the GENE as a short term trade. Out tomorrow. Closed the USPIX for now; will reenter at around 3700 or so.
It is 12:45 and the volume on everything I am watching sucks. There isn't a stock here that I'd want more of. It may be some end-of-the-month marking up. Not really able to get excited about being oversold. I guess we could make it back to the 3700 range but not on this volume...
Got out of MLNM with a very small profit. That's a win these days. Not buying anything into this rally. Trying to sell more...
Well, the Futures are up 2%. So, we'll see what we get. I am still expecting a rally but am just about burned out by this market. If I'm typical, it could be a good rally.
Weekender 5/27-29
Well, there is two trading days left in a very ugly month. A very ugly month. I've added a new Composite chart that is quite interesting--to me at least. Take a look.
FRI 5/26
S:HGSI 80 1/2 PANL 15 3/4
I was stupid yesterday. Not for buying. But, I sat there and watch these stocks moving on very little volume and said that something wasn't right. Rather than grab the profits, I sat on my hands. Additionally, I track YHOO as my tell. I watched it start it decline early and felt the recovery was a fake out and still didn't pull the trigger. That was very stupid!
This morning I'll sell any of them on early gains. If it doesn't happen, I'll hold into Tuesday with the thought that the long weekend will have taken the traders out and they will be establishing positions again.
I have been trying to play one trick pony--biotech. One can make money in this market; but, not that way. We may be making a bottom here; but, I doubt it. It may take a couple of more months to make the bottom. If we do a 2000 bottom, we could be a couple of years coming back. But, there will be trading opportunities along such a route. But, no more trick ponies and no big commitments. For anything remotely resembling business-as-usual, we need the recovery to come off this level. The damage has been nasty but can build a decent recovery here. If it goes a lot farther, it means hot stocks will now trade on their multiple.
Money is tight. Until the Fed loosens the money supply, we will continue to flounder about. People are letting any bit of bad news take them out--that has to end before we get a recovery. Some of that has started to happen but it isn't endemic. When it is we have a bottom. In the meantime, eternal optimists like me need their clocks cleaned. Time to talk the bear talk and walk the walk and when all of us do, we'll make a bottom.
Again! Fibonacci levels: 38=3101 50 = 2501 61.2= 1911 We are at one and probably heading for the next.
Thu 5/25
S: CHK5 1/8 TRB 39 1/4 TUP 22 58 B: MAGN 3 23/32 MLNM 77 7/8 PANL 15 3/4 HGSI 75 3/16 GENE 14 15/16 S: BIOM 8 1/6 GENE 14 15/16
Afternoon selloff disappointed. Closed out even money or down slightly on some. GTC on the others and hoping for morning pop to get even. We are back to before. Cancelled sell on USPIX.
11ish and the techs are a bit disappointing. Volume has NOT appeared. I am up nicely but it's from the existing pieces--not so much the new stuff. Hopefully, the afternoon will bring better. I'm fully invested again. Have a sell in on the USPIX and that'll free something so I can play tomorrow.
Busy Morning!!!! Back into BioTechs!!!! I've long said they will lead any recovery. Time to put money where mouth is...
Well, does the GDP let the rally continue? The multi-day decline in magnitude does have us set for a rally. I still think it will be a oversold rally. But, it still could be a substantial one. We are moving toward June--which can be a good month for a gain. That is making me think that this could be the 50% recovery which would take us to 4000. There is resistance just below that level and I'd be happy to get to that.
I still think that Biotechs can lead any rally. Semis are also looking ready. I'm not big on the dots but my one did well yesterday on earnings and was up big overnight. I do like that one (GTHR) for the long term.
Overhead resistance will be the key for my buying. I don't mind nearby levels. What I don't want is a whole series of steps down that keep throwing resistance levels at me.
We had a recovery day for the Nazdaq. It meets the requirement for marking a bottom. It is right 80% of the time. Time will tell if it is the recovery or just a bounce. Getting invested but trying to stay nimble and not demanding huge successes.
Well off to prospect and look at charts. Meantime, I'm off to put in sell order on those defensive plays. Bye to TRB and CHK this AM.
Wed 5/24
B: CEGE 17 15/16
Saints be preserved...a profitable day...over 3%. After 5 down days one had to pop. Hope it has some follow through! The portfolio value went out at the days high...three cheers...hip hip... Look at the volume--it was back!
Bought CEGE near the close. Drooled all day over prices but there was no way to take them in the way things were running. But, the close was great and I had to trade something. CEGE is an old friend and should be good for a few bucks here. Don't expect a lot but do expect a profit for a change.
My TRB and TUP and doing just fine in this ugly tape. SRCL is mediocre but the tape shows major buyers stepping up to the plate. The hope/guess is they are holding it in check to try to accumulate shares. Big buys between the prices and them small lot selldowns. Still optimistic on CHK--three day pullback. Consider it if it does up on volume any time soon. Looks poised for a move. And, things really seem to be rallying here... (2:03)
Weak oil breakouts abound. Dangerous ground here and ripe to peak. Another bearish tape approaching 2PM. Can it rally? Doesn't look too promising... But... my stuff is rallying a bit so stranger things could happen. Those bears are getting overfed.
Ok, a new low but now relatively close to the old low. Did it on ascending but weak volume. But, some tech stocks are looking better. So, this could be a or the rally point. Thing is: if it ain't the next step down after 3000 could be a dozy. The support under 3000 can be drawn in a lot of places but it is roughly Pre-October 1999 point.
What everyone is doing--well or poorly...mostly the latter--is market timing. Those using entrails to time do as well a anybody. You can pick your favorite pundit but he's as toofless as the rest of us.
Fibonacci entrails show 3138 as the 38% retracement. That is a level of support that often stops declines. 50% is 2530 and the 61.8% is 1934. The latter should be a last gasp level. It is a possibility that was the laughable one not long ago. It is a lot less funny right now and a possibility on these charts.
1995 creates stable trendlines coming off the previous bad year. You can draw trendlines so that they are valid right up to October 1999. Then we started going exponential. Those lines, continued out.. intersect today at about 2610 for the upper and 2225 for the lower. They ballpark the Fibonacci 50% and 61.8% levels. (see chart)
You want my guess? We stall out at the lower and thats the area for the bottom. Between now and then we see fakeout rallies that can be short term opportunities for the nimble. I don't consider myself all that nimble a trader--never had to be... I'd say most of us without 10 years experience will be cannon fodder if that scenario plays out.
Yesterday was a real disappointment here. I was up nicely at 2 P.M and the hour later close showed me down that times two and my lowest value of the day. The three new buys are a couple of bucks ahead collectively with two above my buy point. My worst losers were in the 5% ranges; strange when that is something to be grateful for...
TUE 5/23
B: TRB 37 7/16 SRCL 22 1/2 TUP 20 1/2
We played the day with the bears ball and rules. The new buys are above water but barely
TUP took out Oct 99 levels on takeover rumor. We'll see. All positions bought today were half weight or thereabouts.
The open was pretty uneventful for a change. The pullback has been modest. Looks like good times are here, temporarily!
We tested the lows and did it on improving volume. Looking for a short term pop but not much else. Too many techs still look to be heading lower. Look for the rotations to other sectors for plays. N100 futures are up nicely very early.
Looking at TRB this morning. Really solid, tight consolidation. Sitting at the bottom of a long consolidation channel. Limit in at 36.50--yesterday's low. Doubt if it fills but what the heck. Will review an hour or so in and go from there. It is trading below all it's averages. Normally, that'd be a pass. Going into the dog days, it has earnings growth and a low (8.5) P/E (list I found it on) and should be recession worries proof. It is on it's bottom Bollanger so it seems low risk. It has a small money flow divergence as a plus. RSI is around 20 gives lots of room to the upside. Not the best stochastic with the short term crossing back through the longer term line near the bottom--but it is near the bottom. And made a spike reversal low yesterday. I may not make much off of it for now but I don't think it will bleed and the consolidation could make it move. The buy is premature but seems low risk and I could scalp if it can't take out the upper trend line.
Also trying to buy CI at 88 3/4 on the open. It has a head & shoulders bottom formation that could move it to new highs. This is a short term trade as it could be affected by the Fed. Cancelled the open order; will review later in day; stochastic made me nervous.
SRCL is an old play that I might revisit instead. Better price and a nice little cup&handle and a good stochastic. Might be a bit always from moving. Processes medical waste using patented process that gives cost advantage.
I have been yelling cash and now want to buy??? Well, I'd like to earn something between now and fall. It won't be from buying the beaten up. So looking at other pastures. Looking for a half weight position that I can add to and a tight stop about a buck under if it fills.
To prove how old I am... We used to sit in front of the radio. Yes, I predate TV! One of the shows was "Our Miss Brooks" and one episode registered strongly with my family. They'd accidentally had their radio set to shortwave and got a report of a hurricane. Of course that was in India and half way around the world. But they followed instructions. The one was " Tether the elephants and disburse the natives to the hill and one of the other was to cover their windows with bamboo--there went the porch furniture! We thought it was as funny a show as we'd ever heard--ya had to be there. Anyway, the when a member of my family was in doubt and things were going strange the family shout was: "Disburse the natives to the hills."
With that said, "Folks, Tether the elephants and disburse the natives to the hills."
Mon 5/22 S: HD 50 3/16 ADRX 57 1/8 LSI 44 1/4 LCOS 51 3/4
Successful retest? Major head fake? Bull Trap? Bear Trap? None of the above. All of the above. Tells ya da trut; uze gotts me Denny... Ok, I'll guess but that's all it is. Not a head fake. Just an oversold rally. I figure the N100 hits 3500 and maybe some change. That's the cup's move. That's also in the area of a 50% recovery to the previous top. At that point, you either punt or be an optimist and say it goes further. I don't know what I'll do there...if there gets there... Hey, I'm stunned and even the last line is starting to make sense; and, if you ain't stunned here/there/wherever you should be.
HD and ADRX were closed the others were 20% reductions. Adding to USPIX to increase hedge. USPIX will represent 1/3 of portfolio when completed. It isn't going to happen today though. Want to see the close.
I said that the lost leadership in Internets would not lead to any sector recovery there for a long time. So, what leads? BioTechs still seem like the only real chance. They remain up over a one year period and by nice amounts on the whole. They continue to consolidate; with those that had the jump recently returning to basing levels here. We need to keep a close eye on them into the fall. But, right now, nothing is leading. The defensive plays are taking it along with the rest.
Well, about an hour later and they are off the lows but so many of the good internets are now so damaged I figure we won't even see them as buys in the fall. They are so damaged that the market just has to go searching for new leadership. It cannot recover from this damage in weeks or even months. I want more cash but am holding into this decline with the hope of a dead cat bounce this week. I am now just under break even for the year.
It is 11:15 and the Composite and N100 are sitting dead on the previous low. If it holds here we probably get a mild rally. If it goes lower, you can put your head between your knees and kiss... I figured I throw in a smile; it is the only one we are likely to see today.
Reducing but can't bring myself to dump wholesale here. Give me a rally and everything is gone...
Well they are blaming Europe and several disappointing companies for the failures here. Seems a stretch. Things are really sick at the moment. Can we rally? The breakdown in the Nasdaq makes it really questionable!
The futures are up and things are looking like we could get the rebound I mentioned the other day. I still feel it is just a temporary rebound and should be sold into. Any longs bought during this period should be defensive stocks that should decline in this rebound. Also, consider semi here as there is a booking report coming out that should give them a pop.
Weekend 5/20-21
I reviewed the new RS list. At the end is there is a recap. It shows weakness in these stocks. Remember, these are our former leaders. Until those stats start to improve, it doesn't seem prudent to be too bullish. If you follow that recap, you just may get a tell on the reversal before others see what's happening.
The Chicago Sun Times article by Novak is a must read in my book. It discusses the Fed and the mistakes that are being made and who might be making them. I don't think it odd that Greenspan is from Chicago (U of C) and knew the well-respected Novak before becoming chairman. Looks like Greenie is moving toward "our" side a bit and wants us to know it.
The pundits say the Biotechs got beat up and maybe they have. But, I'm seeing more that I like (except for my CELG!) in consolidations and even things like CEGE managing to move up yesterday on modest news. Contrast that to a CIEN that seemed to kill on it's earnings report and then got clobbered. We need to see good news move stocks in the right direction before we can relax. It is starting to happen but has further to travel.
I made a mistake in getting too bullish this week. Lots of folks are admitting to the same mistake. I guess misery loves company. Belly up to the bar fellow suckers and we can take up a collection for the next round...
Fri 5/19
B: CHK 4 7/8
Well, I'm happy about the CHK. Went out with an OK but not great gain. Not many of even those today. I had 4 winners out of 10 but a net loss. The USPIX helped a lot. But, I regret reducing it when it looked like the recovery might run further. I'll hopefully be able to add back to the USPIX next week at close to the right time. I am expecting the Nasdaq to rebound a bit on Monday etc. But it didn't look that great going out today--not truly horrid close either.
"What can I say" is the embarassed comment. I put a bid in on what I thought could be the low for CHK and got hit. I did say I liked it intermediate term and it is one of those "flight to safety" stocks. Said I didn't want anymore stock and couldn't live by that for a day.
I am looking at the 11:15 volume--which is lighter than light. I am thinking how easily all the poor liquidity in stocks could be radically moved by some traders. I don't want to let that make me bail today! (I follow 4 screens of stocks and it is a sea of red.)
I am gaming the expirations as the cause of woe. I believe that this down volatility is the result of expirations and will correct next week. This may be very wrong; but, if you are on the fence about getting out of something it may be best to hold. Don't let this view influence your best judgment but take it into account. That said, I want to raise cash; I've gotten too invested.
See my white paper discussion on liquidity.
Well, yesterday was another I probably should have taken off. Although, I really like the CHK here and may add to it this morning. If you look at a chart of this one you get the "old fashion" chartist delight. The stock has built a nice long base. It is under accumulation. It is in a strong sector. What is not to like here? I need to start thinking more under those terms. Resistance is at 2.7 3.5, 7+ etc. nice spacing--good gains between. The first stock I've seen that I want for an intermediate term trade.
O'neil is one of the market greats. He has a strong TA orientation. He only buys stock that have a RS (price/price yr ago) He only trades the best 80% of those and would rather trade those at 87% or better. You will see stocks that you've never seen before! There is a big world out there--beside the techs. This is a list of 90% and up--80% was too big to import. The pullback list has both the "normal" style and IBM style limits in today's list.
I was tempted to buy the REIT's and it would have been a good buy then. I am no longer tempted.
If anyone is a Worden subscriber, I can package my scans/formulas for them; send me an e-mail and I'll attach them to the reply. Warning there's a lot of junk in the pile and you will have to set it in with yours on your own.
Thu 5/18
B: CHK 5 1/16 LSI 50 9/16
Couldn't resist adding to LSI. Averaging down isn't usually very smart. We'll see... Way overweight on this sucker. Could haunt... Trading lower as I write. Feel it might be the expirations acting up here.
Should play it safer! Buying a utility. Great base. Breaking out on volume here. The position is a full one based on number of shares--not dollars. 1/4 weight against dollars. Kind of like that! Reported Record Earnings, Cash Flow and Ebitda on April 27th. Natural gas is hot! <groan>
ADRX looks like it want to consolidate here. Wouldn't be all that bad. Would rather it resume. (No kidding!) Another that needs to resume here is LSI. BioTechs look to be getting weak. Hold til Monday make sense but may be the wrong answer. Think the consolidations needs more time. Suspect the leaders that have moved up nicely of late want to pullback and retest.
HD has me in a quandry. It has a double bottom; not quite but nearly a H&S top. Which to believe? Right now it is treading water. The stochastic is close to oversold, will that help? Remodeling is reputed to go up during high interest rate periods as people play fixup rather than move/buy. But, HD also has note that will renew at the new, higher rates. Got a coin?
Well, I'm "half way to whole" and only feeling like a putz instead of a total putz. Lot of big (600K was one) buying into this. Looks like it might become the real deal...
Well, I blew it. Big. Held the LCOS; looked like it trade to support and held (56ish); up a couple after hours on good earnings. Could take the loss on what was an obvious blowout. Figured the weak owners are gone by the end of the day and the stock could/should/would rally from today's debacle.
The DOW is looking pretty iffy here. Don't want to head in that direction. $5 are getting touted. None of the scans here search that area and with the current volitility those kinds of stocks tend to be even moreso. So I'm passing that area up. Several oil stocks are looking attractive but are hostage to OPEC.
Options expiration brings weirdness and it should start to pop. If you see one of your stocks drop like a rock, it may be expiration shenagans that will have it back up in a few minutes. They can be huge opportunities. Works the other way too, you might get out of something you want out of on a very short term push. Caveat emptor. I may not buy anything until Monday earliest...
Wed 5/17
B: LCOS 66 3/8
Well, if you are following my diary these days it appears more to be a what NOT to do diary...
MLNM is up almost 7 and has taken out resistance. I was tempted but the volume just wasn't quite there to feel secure in the buy. But, it does point out that Biotech is on the upswing. It makes me think about buy some other one that haven't taken off yet. Will look at it more this evening. CEGE is one. After I spake, the volume showed up...darn...
Well, currently my LCOS play ranks with my stupidest moves of all time...
More commentaries entered at 12:10.
Looked at the tape for LCOS and most of the selling were small blocks and buying was large. Gave me the nerve to average down and am now 1.5 weighted...
The Naz is down a bunch on the Globex. I'll go contrary and say that's bullish. My guess is a nice up day today. I'd say that guess isn't quite even money but I'll ride it. I'm see this as a relief rally and believing the buying into the close more than the Globex--which is weakly traded and manipulatable. Also, it has been more trap than oracle of late. By tommorow afternoon, though, I want to be more neutral/cash.
Friday is expirations. The smart money is probably short. That means Friday they drive prices down. My guess is that Friday is a bear market day that opens at the high and sells off for the day. It is the cynic in me.
Ok, I bought a bunch of stocks; sold a bunch of the short. I am reversing my bearish call, right? WRONG. This is a short term play into the exuberance. I just might buy back into USPIX as early as Friday late. I may sell the positions out if they can do a quick 8-10% today and probably will sell them, regardless, by midday tomorrow.
I bought the LCOS think the merger would be solid. TRRA is, as expected, down. The deal has a collar that protects LCOS from that--unless it really tanks. I am playing the move 2/3rd weighted into that 97.55 offer. May be wrong but it see the least gamble I can find for the intermediate term. WE WILL SEE...
I did a commentary on a stock that pretty much parallels my market view.
Believe it or not I am more cash this morning than I was yesterday. I rather like the feel.
Tue 5/16
B: HHGP 8 1/8 CELG 46 5/8 HD 53 USPIX ??
Well, the shoe dropped and the market went down after raising into the announcement which was what we expected. In other words, normal trading stupidity. I bought the HD after and the others before. These aren't full positions and there is still a quite a bit of cash to be used as necessary. I reduced the USPIX to 1/4th of the previous level. Time will tell. Now biased to the longs.
Ok, we have a rally; it might even be the rally; don't think it is but... It is still time to trade short term. If this is the rally then we should see the wounded ducks taking out those nearby resistances. I'd be a lot happier entering at those levels, honest... The rally could last out the week or go slightly beyond. The markets are slightly oversold and we could get a bit of pop as the shorts get damaged and seek neutrality.
I bought the HHGP in bottom fishing mode. Like others it doesn't have the volume that shouts buy me but it is an old favorite.
Yesterday's rally ran up a number of sectors, including: Oil, Semis, Financials
The volume sucked and we have to suspect short covering going into the Fed for the big pop. I am not ready to give up on the USPIX--although, it killed me yesterday. If you have a game plan for today your a better guy that I, Charlie Brown.
What we need to see is a period of stocks moving higher or better volume than their down days. Until that starts happening with regularity and the Dow trades 1B every day and the Naz near 2B, I can't see how we can sustain a recovery. A lot of stocks do seem to be making a stand at these levels and we could move sideways into and thru summer. There are some valid head & shoulder tops working out there too. The odds right now--either side--are better in Vegas.
Short term trading seems to be the rule. Even there, too many that look good fizzle on weak volume.
Mon 5/15
I have 5 open positions. All made money. 3 went out on the days high. And, I ended up down for the day because of the USPIX short. Volume still sucks--little solace...
I use two brokers: Datek & Waterhouse. Neither is anything to write home about. Waterhouse right now is being a major annoyance. I am still waiting for a check that should have been here over a week ago. And, there support people are drones that avoid responsibility rather than seeking solutions. I'll try to expand on both in the White papers area later on...
Still in maximum defensive mode. Would like to commit some cash but just can't game the next couple of days. If there is a buying opportunity it will be after the meeting. I may buy a bit near Tuesday's close but I just don't think I'll have the guts. Oil is touted but some of the drillers have M-top formations that make me nervous. REITS may be a pullback buy soon...or not. Nothing really excites me.
How about you? Say something in the guest book comment area and share your view.
The pre-market says down a bit. Nothing really of interest. We closed off on Friday and I don't expect much of a change--slight, very slight downward bias. I figure any money committed against what the Fed will do is already in play.
For the multi-nationals, I wonder just how much impact the fed can have. The European Union's not running their rates up. The multis are able to borrow in those very cheap environments. So, just how bad do the really big companies get impacted by the Fed? Doesn't seem like much. And, that makes them look a bit more appealing in the current conditions.
Dr. Wayne Angell is a former Fed member and is now with Bear-Sterns. For my money he is the best Fed watcher out there. He doesn't get carried away and isn't freaked by the unemployment rate. Any chance you get to hear his views should be taken.
Weekender 5/13-14 (visit the new Stock Comments area)
Volume is too light to trust any move. And, vacation time is close and will make it worse. Not a pretty picture. I know I keep beating a dead horse here but I am being as dumb as anybody could be by not raising more cash and sitting on the sidelines. Hey Ken, you stup, it ain't working. Forget the TA for a while and wean yourself off the stock market adrenalin.
Well Tuesday another one of Al Greenspan's shoes will drop. That sucker has more shoes than Imelda Marcos, it seems. The "smart money" says, one-half a point. Looks likely. Can we game this? I don't think so. You sure can't buy anything big going in. My Friday buy was a pittance and the sell wasn't. I raised more cash. If--big if--there is any play in this it is going to be to buy the pullback that is sure to happen. Because the announcement comes late in the day, that means buying near the close. And those buys would be for a short term pop and not longer term positions. The buys would be gambling. The "smart money" has already positioned for the Fed. I don't think it makes much sense for us to try to play the meeting. If you do, stay light in those positions. If you play, I'd scalp a bit and wouldn't go for the kill. If there is a quick little profit, I'd take it and run. If you get a good one, set stops to protect part of the profit.
According to Jim Cramer, here is what you can't buy during tightening: Banks, Financials, Retail, Cyclicals, Housing, and Brokers. Also, Foreign investment are going to be poor as money rushes to high US interest rates.
The best BOP in the holders is pharmaceuticals. That's followed by--believe it or not--B2B. Then comes BioTechs. In B2B I really like the look of GTHR here. It was strong on Friday and has a base built after a long decline. Don't think it is a big enough base though. Won't buy it here but would take some on a pullback.
AHP could be a buy on this pullback--the sector is less interest rate sensitive than most. It is probably the closest thing to a safe buy I can find before the meeting. After the meeting I'll be following the Biotechs closely--not buying a lot...watching. I still think they will be the first to start the recovery. And, I don't think it is anything more right now than a short term buy off of bottoms.
I remain net short and will probably dump the Friday buy that looked good until late. Not sure but cash is more appealing than a modest gain here. I wish I was more cash. We could see 2700 here or we could rebound in relief.
I saw potash in the scans and it made me think that we'll see some recovery in farming. A long term play in the area is TRA. It was really roasted by low fertilizer demand and could recover well, if farming does recover--another big if. It is a big alcohol producer--that'll help. Could be an 18-month out pick for a taxed account.
All the pundits have talked long and hard about the longest running Bull Market on record and it is still in tact. What we have right now is a cyclical Bear. We had one in 94 too. There is nothing to say, yet, that we are embarking on a Grand Bear. Yet, even a cyclical Bear can last several years. The recovery we see this fall (hopefully) could be taken away again next year. Going into next year, I intend to be a lot more defensive and take profits quicker. Somebody please beat me over the head with that comment come next year!
I have remarked on the lack of climax selling. We still need to see it and may need to see it several times before the real bottom. The real bottom is likely to be an uneventful recovery off a several month base. And that doesn't mean it won't be out the 3-4 years that cyclical bears can run. The average bear market last 18 months; although the last 3 have been shorter!
Greenspan is the cause of this market. I don't base that on interest rates. I base it on the money supply. He literally poured money out of the Fed in the late fall. He has since taken most of it back. It is the money that people like Schwab admit to. That money is gone from the market and won't come back soon! Right now it makes the monthly retirement contributions look petty. That is the inertia that is gone and that we won't see for a long time.
It isn't all short from here on out. Rebounds in this kind of market can be dramatic. We need to learn when to raise cash just as we learned to buy the dip last year. Look for quicker profits and look to preserve capital. Hope I can learn that!
Study Fibonacci retracements or use the 33-50-66 rule that recoveries often follow. Play them lightly. You cannot bet the farm when you are market timing--a very inexact art.
There appear to be more decent longs showing up on the scans. I'm not sold. The old leaders look like better shorts than longs. Any long is still a sort term effort to my view.
Fri 5/12
S: ADRX 60 B: OAKT 17 3/4
The N100 Failure. Chart w. RSI indicator This is what bear markets do; they find a high early in the day and then drift lower for the remainder of the day.
It is 12:18. The upper Bollanger band on the N100 has flatlined. The bottom is turning down. Just for the fun of it, I'm calling a down trend. No, I'm not putting any money where my mouth is! 2:18 and it is looking like I called it. I think it continues down and goes out close to flat.
One and one-half great days so far. Look at the volume--lousy. Used the runups to reduce a bit. Sold off half the ADRX position--broke even on average cost; up on low buy. Still like the stock a lot; it is the market I still can't stand.
Henry Kaufman interview on the Fed and the Wealth effect
Interesting Peter Drucker article on the technology revolution
After adding to my USPIX I feel comfortable picking up a couple of more stocks. OAKT is tech--the dirty 4-letter word. And, it isn't even great tech. They do the cheap Oak Video Chipset among other things. But, the institutions own them and probably for their optical side. They've been under recent accumulation and the 5-day shows a decent cup and handle here. The other stock that I am trying to buy is HNP--a Chinese Utility. Good money flow providing a bullish divergence. Should be less affected or benefited by Greenspan. Cheap stock so the buy is a full position based on number of shares--not dollars. The pullback is 3 days old and the lower trendline is ascending on the 5-day. You want a shock? Look at the P/E--5.7. I know it is a foreign Utility but that's value and probably as span-proof as they get. I didn't get the fill on HNP--although it traded at my price. Volume was very weak with almost all the volume in a single order. I canceled the trade
Normally, I don't track the 5-day charts that heavily. I'll use them but don't find them crucial. Now, trading shorter term, it makes them very necessary.
Well, the Investor Sentiment number went more bullish. This is usually a contrary indicator. We need more panic to call a bottom normally. Don't see the current setup bringing us out of the woods.
Thu 5/11
S: MAGN 3 13/16
Tonight's scans seem a lot healthier at first glance. We could get another day of rally out of this. I don't see any permanence to the rally at this point.
Sold the MAGN for a few nickels of profit. Entered the order just after noon and was the whole ask pool whenever my 3 13/16 was the ask. 9000 shares later at the ask, my order filled. The market makers weren't letting their order get to the market... Don't believe me, look at the tape. This was through Datek/Island. Not too grand an order desk or what they pass off for one. There was a nasty article about how these ECN's operate in the NY Times. They should all go to jail...
The one thing that is becoming obvious is that I'm over committed. Maybe buying some MO or KO is the move--hardly. I know it is going to be too easy to get whipsawed the way I have it gamed. The better gameplan for the last 2-months was cash or USPIX. Hindsight is glorious. Foresight is ever hazy.
A distribution day is a decline on rising volume. You can find multiple ones of theses on almost all the leading charts. I find that ominous...very ominous. You cannot profit long on such stocks. You also can't reallyshort particular stocks here. You can get whipsawd either way. Shorting the QQQ or buy USPIX or such seems safer than other plays. And that can be as big a fakeout as anything else we pick.
I look at charts of "favs" that look like teepees. HHGP is an example. Looking at the chart over 18 months shows a true head and shoulders top that would complete at around -20. (I have never been a big H&S fan--they are very failure prone.) Anyway, how much more can this one be punished? It approaches really decent support here; you really have to be tempted. Know what? At the current price the stock is in the top 1% of 1-yr price growth rate at today's price. (First buy was 12.1.99 at 5 11/16) This stock is selling for it's NAV...or at least a month or so ago's NAV. You can argue either side and be 100% right!
You see those hero fireman stories on the evening news; popular; he catches the falling baby; next you see crying mother, proud fireman, mayor handing out hero certificate. Well, we are the fireman. We are standing under the baby. We reach for him. And, our dream turns the baby into a piano.
We aren't going to see many longs in our old favorites camp. It is time to learn the trading truths about trading under all new circumstances for a while.
So when do you reach for a falling piano?
I don't see the 3-year bear scenario if you try dating it 1/1/00 or later. We've had a hidden bull market for 18-months or so. I am willing to try counting from there...
I think we get a modest fall rally that has followed the current strong (and quick) decline that will lead into a summer of trading range. 2001 could be trading range for the first half. Then, I expect a new bull market. Such a scenario would seem an acceptable compromise between all the competing truths--or as close as they can get. And, like all long term projections it won't work out just that way. We'll get a pile of surprises in the shorter term that will make trading a hard act. That's the only given!
The only stock in my portfolio that I really like here is ADRX...
LSI is killing me. Yet, it is sitting now on it's 200 day and could rebound. If you don't sell it it ain't a loss? Yeah, starting rationalizing. That'll work...
The other positions are small enough to hardly worry about.
Wed 5/10
B: IIN 31 1/4 USPIX 43.14 S: IIN 31 1/4
When any stock in a leading group breaks out on good volume and fails, the message is ominous. Especially when the group is one of the few to show leadership potential. These stocks must lead any real advance.
Let see...how do I discribe my portfolio today? It (I) stunk. Remember last week when I said I wanted out by last Friday. When will I start taking my own advise? Dumb, dumb, double dumb... Down 3.6 on the stocks and the 11.91 gain in USPIX didn't come close to fixing it. Ordered more USPIX. Is that the bottom? Don't think so but I am cold as it gets right now. I can't even take my own advise!
A helpful key are the totals for the MoMo and High. Keep the higher/lower totals in mind and keep the % gains in mind. It can give you an idea of long strength.
Well, I bought the IIN and I am up with it. Small position; just something to keep my hand in I guess. As to the rest of my portfolio. Very sad... Added to the Bear fund. Need to do one smart thing today... Make no mistake the market is brutal and any rally means sell into it. (Put the IIN up for sale at 31 3/8--weak volume. If I wanted weak volume I'd buy more of the dogs I own.) A stock with such good up volume that has such weak fallow-through tell us to sit the dance out.
The futures have gone from positive to negative (8AM) and my contrarian view of the futures says we might rally later today. So much for Ken's Ouija board...on to "real guesses"...
Helene Meisler is a technical analyst at The Street. IMO, she is worth the price of a subscription. You won't see here charts--more reason to subscribe. There has been talk about index patterns of late and I think she sums it up best:
Chart patterns are something I rarely pay attention to when looking at the major averages. The reason is that everyone sees these charts printed at every financial Web site or newspaper they look at and when a pattern is so obvious, such as a head-and-shoulders top in the Dow Jones Industrial Average, it rarely comes to fruition. This is because everyone sees it so everyone prepares for the eventuality of it. And the market will always do its best to make the most number of folks wrong.
However, after having received several emails lately about the diamond pattern in the DJIA chart, I've decided to show it here. The diamond pattern is extremely rare. In many ways it is a head-and-shoulders pattern with a V-shaped neckline. And we can hem and haw over it, but the pattern is there and I don't even have to use a thicker pencil just to connect the lines properly; this pattern is right out of a textbook. According to John Magee, co-author of Technical Analysis of Stock Trends, the diamond's "natural habitat" is at major tops. Should the DJIA break10,400, this pattern would be confirmed.
Since I tend to put more faith in the underlying statistics than patterns per se, a break of 10,400 would not in itself be bearish, in my opinion, unless the statistics were confirming this break.
As long as we're looking at patterns, the flag in the Nasdaq Composite Index is so obvious I can't believe I haven't heard one thing mentioned about it. And flags of this manner are not bullish, either. A flag is a process of minor fluctuations that move opposite to the previous move. For example, this flag slopes up after a down move. What caught my eye mostly was the fact that during the formation of a flag, the volume will shrink to a relatively low level. And we all know that's happening. If volume should pick up (as it did yesterday) with a break of this flag on the downside, it would send the Nasdaq down again. I am watching Biotechs for the tell on a bottom. Bios were the first to start the correction and likely to lead us from the bottom. They are pretty stable here and it looks like the bottoming may not be all that far away. If the Bios can continue to consolidate while the market bottoms their recovery could be a very strong one.
The lower comment box on the main page mentions ZoneAlarm. It is network security for individual users and is free for personal use. I highly recommend your downloading it. Windows has lousy security and this beefs it up quite a bit.
I put a limit buy in on IIN at 31. Stock consolidated nicely at the 50% recovery level. Volume yesterday was strong on the news it is expecting record year and moving toward being a net hardware provider. The 5-day shows a cup and handle that should let us move up enough to get a quick stop at break even. Just a 1/3rd weight on the buy. I'm doing everything in moderation. This selection came from the pullback list--my favorite list.
IBM had their meeting and that looked good. Lots of positive talk on it from the analysts showing up. But, I just can't see the stock here. The chart says no--to me anyway. Stochastic is crossing over at a lower high. Money Stream is poor. TSV is way down. RSI doesn't shout recovery. That said, it could show a rally but I'll wait for it to do something at all this nearby resistance. I can't see it doing much beyond the probably modest meeting pop.
I am very weak on Biotechs. Kept the MAGN and sold the GENE to keep about same dollars active in the sector.
Tue 5/9
S: GENE 17 7/8
What is the difference between -$197 and +$1070. Tonight it was owning the USPIX hedge. Not saying it will always do that but I will take it today.
Here's a post I made in response to a user on MetaMarkets:
Well that range has been broken today. That 3300 area support could hold. The thing that makes me question it all is volume. We haven't had the selloff. The March low had greater volume than the lower April one did. Both were obvious V-bottoms. Can we make a real bottom on V's? I question whether we can. History says no.
We haven't been above the 50-day since the aborted rally in early April. Since then the 50-day shows a steady downtrend. My guess is the 50 day needs to get close to or violate the 200 day. It has to decline dramatically or extend the congestion way out at these or somewhat lower levels.
The FOMC overhangs the market. 50 basis points may already be factored in and we'll probably rally after the meeting--whatever they do. But, without something significant, it would be a weak recovery. And the FOMC would still overhang with a tightening bias. That won't leave until the economy cools and the WalMart call today said there is no cooling there and they are seeing inflation. That's Greenspan's biggest fear and there is no abatement in sight.
A lot of stocks are completing pennants. Pennants indicate a move but don't specify the direction. So, you can make either a bullish or bearish call. With the market being what it is, it is darn hard to be the bull.
I don't think anybody will say we stand a snowballs chance at the moment for taking out the April high. So where does that leave us? I have to conclude with a very poor risk v. reward setup. So cash remains king and that doesn't bring money into the markets. The institutionals that aren't mandated to be fully invested are holding a lot of cash and won't play. The "average" investors are beaten down. A lot have seen substantial losses. That is worse than being in cash; that is capital that has gone from the markets. I'll admit that a 100,000 of mine has gone away.
I cannot say we are headed way down; but, it wouldn't surprise me.
The DOW (insignificant at this point) is up change. The others are tanking. The N100 question here is can it rebound off the 200 day. I don't think it does. The big opening pop didn't hold long. Volume is low. I don't think we see a bottom until we see a volume selloff. We need climax selling or worse. I don't think we've seen the bottom yet--maybe by quite a bit.
The premarket is wild. Things seem to be ramping. COMS is up 10%; the futures are quite positive. I wonder if this isn't one of those bounce backs that fail. The wholesale numbers are out at 10. I wouldn't fall for the open and only consider things after the numbers are out. We'll see... Hey, did I call it or what? The ol' opening headfake!
The tape was horrid yesterday. A test of the April lows looks more and more likely to me. I don't see how we can move up here. The test could be quick and the Fed moving up 50 basis points could be a huge buying opportunity, if it does play out the decline by then. Bear markets operate quickly and there may be enough time here to play out a major decline.
I will not play CSCO today. I didn't like the chart before the Barron's article. I am not a big earnings better anyway. But, playing CSCO would be like juggling straight razors. I think that the real issue is the P/E. Sometimes you can't ignore the fundamentals.So, I think CSCO could beat the number by a bunch and the stock could sell off. And if it is flat to the estimates...
Browsing the Pullback list this morning. Quite a few decent looking play. They are not leadership stocks though. There are REIT's, Banks, Utilities, small Retail... Recoveries aren't lead by these kinds of stocks. But there are some nice short term plays that are completing their moves on volume. I suppose I should be looking for modest winners like these. But, I can't get real excited.
The one big cap that looks appealing is JNJ. The congestion could have run a bit longer and the volume could have been better. PFE upgraded might have brought it along and the momentum might not be what's needed here. I might invest if the overall market were stronger. As it is, I have to suspect the PFE upgrade won't carry JNJ very much further. A couple of those utilities on the pullback list or even the REIT seem safer here.
The one oil sector stock that does look strong here is DRQ.
I'll try to get out of MAGN near the open. It is up and I'd like to get 4 1/4 to 3/8's. This could be a buy again later in the day. Under other conditions, I would hold this and expect at least a double out of it. ACLA is a biotech IPO that'd be attractive as heck right here if the market were more cooperative.
The futures are again down. They were right yesterday but they aren't that reliable an indicator of anything beyond the first few minutes. They've done more headfaking than predicting this market. Premarket stock prices are just as unreliable. You can't let them headfake you.
Note: The USPIX buy (Friday order) kicked in last night. That's the annoying part about these darn funds. If it had kicked in yesterday, I'd have been 2-gs up on the trade. Instead, it is looking like a loser today.
Mon 5/8
B: MAGN 3 25/32
So, we got another lightest volume day of the year. It is kind of like the Lakers not having 5 guys willing to go into the game. Hard to play b-ball that way; same goes for the market. Maybe we should be grateful; they could decide to take their remaining marbles out of the game. Our best shot remains consolidation around these levels.
3:56 - Trying to scalp a half point or so on MAGN. Not a big position; 1500 shares.
It is 12:30 EST and the volume remains weak with the market at the low of the day. Would not be surprised to see a late rally again today. It is easy to pull off on this kind of volume. Not betting, though; just wondering.
Looking back at Friday we have to note that the 97 point gain was on what is now very weak volume of 1.2B shares. It is hard to be bullish when the market lacked any conviction based on volume. Today looks to be getting off to the same thing in reverse. I guess the best hope here is a trading range. Not much of a hope, is it?
Well the Futures make the open look bloody. CSCO had a negative Barron's article. That'll lead the whole tech sector lower. Things like this aren't going to make the bearish scenario correct--except in the aggregate. Watch for a reaction rally about an hour in if you want to day trade. Not my cuppa...
Weekend 5/6-7
This isn't very well written. Will try to clean up later, if I can. Too many fragmented thoughts for real clarity.
Understand that my bear call is premature. It may not happen as I see it. I am betting but not betting the farm. It is a time for moderation in all things--trade lightly.
I am getting to like some of the bases that are now being built in the Biotechs. It is looking like they could be a summer winner. Don't get me wrong; they really need to build solid bases to prosper after the bursting of their bubble. Six to eight weeks of basing (or more) here would not be wrong and could lead to returns to the old highs. When you look at these stocks, many of them are building decent support levels that lead one to conclude that there may be entry levels here
The Bios are typical of the stocks that have made us money. They are wounded but seem to have reached some support levels. . But, then you look at the next support and it is typically a good ways down. So, I don't say it is totally wrong to vest somewhat here. You just can't go betting the farm. I'm happy being less than 50% long here. With the USPIX hedge considered, I am still somewhat long. Always want to be. But, the real opportunities are well ahead, IMO.
There have also been some really strong stocks on a selective basis across sectors. I'd be scared and looking for a profit on those. .
The US Dollar is at all time highs. This appears to be topping out. And, it appears that the Euro needs to be supported which will, of course, bring the dollar down. In such a market the multinationals and small caps share the pain. This is another, and major, market negative. The dollar is right against the upper channel line and should show us its direction in pretty short order.
Mr. G overhangs this market like a wet blanket. Face it. People will still sell into the meeting. I don't see much happiness for the long side the last week before the meeting. So, maybe we get some pop next week. Maybe not. But, we can pretty much count on volitility and real declines into the meeting. The best hope is a neutral stance coming out of the meeting. They have reduced the money supply dramatically since the first of the year and it looks to be at or near a low. They could certainly free some cash if/when things look a bit too bleak.
So we are looking at a limited upside and a strong possiblity of a downside. Wave counters see a wave 4 peak in a large, wave-5 decline having or currently Starting. That will set off the final down wave that could carry us to or below our previous low. The Naz Comp is looking at 4000 peaking to possibly 2650 as the down. That's a 25% plus range. And the down could be as bad as 2100--worse case.
On the plus side here, the Naz stayed above it's 200-day for the entire week.
I am expecting it to happen quickly. We could do it in just a couple of weeks. Boy do I want cash to by should we get there! Now that'd be the dip of dips to buy.
The long bond looks headed for 7%. Not a time to even consider a "flight to quality"; which should get on the pundits lips should the market decline as I expect.
If the market drops 25% or so, the volatile stocks will do worse...duhh...and we don't need to be there. But we do want to watch the favorites and how they handle the drawdown.
I want to buy the ones that decline least.
Fri 5/5
B: NOK 56 USPIX 36.89 S: CEGE 21 1/2 NOK 56 1/4
The more I thought about it, the dumber it looked. I am expecting a downside and buying a stock that has more downside risk than upside potential. So, I got out and just covered the trading costs.
Then, I decided to put some money where my mouth is and took a 15% position in USPIX which is a 2x Bear stock against the N100. That hedges me 30% against the portfolios 50% longs with plans to reduce the longs. The sell of CEGE was a wash; getting my longs down to 45% of the portfolio. I have some upside risk built into the USPIX. I figure the N100 could make 4000 and changes here and start me off losing a bit. The trick about these darn mutual fund hedges is that they aren't instantaneous. You need to plan ahead a bit with them. Of course market timing is anything but an exact sciences; so the idea is to get it mostly right and I think I have.
Couldn't resist NOK. Nice tight congestion at the 56 level made me a player. 1/4 weight though. This is not saying that it is time to buy. It is time to dabble. Until the market moves decisively in either direction, keeping things pretty much on hold. Then you will see leaders emerge that you can climb aboard. For those that will do shorts the same holds true to the downside.
TCO would be interesting here if it wasn't so close to that Jan high. It is a lucrative kind of pattern where it broke out of tight congestion and then did the two day pullback. If it starts up here it could do a quick buck but I can't see it doing much more. If you are a short term trader, it looks like a weak play if it can move above yesterday's high. But 12.25 seem like it could be the end. Just not enough to want to play. But, it is the type of pattern to look for using the pullback list. You just want to see the resistance up higher. CDWC has a similar pattern but hasn't consolidated nearly long enough. (In another market I'd want in this stock on the volume increasing.) You at least want the Bollanger Bands to be sucked in a lot more than they are. The closer the consolidation gets to a 6-week timeframe the better the move looks to pop. Now NOK is a heavy hitter that's done the pullback but has been a ramper. If the numbers are good, this is a play here! Its short term pullback may be our only chance to get in for a while. Would like to see better volume but a bullish chart. Am picking up a 1/4 weight position for the open. Not ready to let it all hang out but NOK is a core type stock and will lead if anything leads. The way underweight position is homage to my bearish bent. We'll see...I weasled out--cancelled buy.
I am trying to find reasons to buy, honest. I only play the long side. I hedge a bit but it is always longs. ALA looks ready. A number of Bios were back to being strong--some started back nicely yesterday. A trader's market if there ever was one. The trick is finding the brass rings. Lot of lead ones...
The only way I can describe things in the broad picture is boring. Worst volume in a long time. Everything is on hold. At 8:30 that should change. If it is benign, I should have been 100% invested. But, there's no way to know and a really bad one will draw blood. I want it to be kind and put things behind us until the 16th. After all, I still have 50% in equities.
Thu 5/4
B: MAGN 4 S:MAGN 4 3/32 4 1/16
Traded MAGN weakly but it helped get me up .5% for the day. I bought it on support with other Bios moving nicely. It failed but I got out with some extra change. Another big buy at the close. Still have all the others. Have we "priced" in tomorrow's numbers and the Fed at this point? Still can be even short term bullish. Don't think somebody will come in at the end on a Friday so it could be less attractive holding into the afternoon. We'll see. Limits sells still setting there.
We had a strong rally on good volume but no leadership to speak of. Strong rallies are often a bear market phenom. We had the pullback on weaker volume which is a Bullish sign. The last half-hour indicates the pullback may have been broken. I am not placing any great reliance on a strong up move that can be sustained. Bear market pullbacks are often on weak volume that is more the result that "big money" doesn't play the rally. That leaves fewer sellers to the downside. Fine if I am wrong, but I'd rather see a better risk: reward here. You cannot look at volume in a Bear market like you did in a Bull market! They don't have the same meaning or import.
I would still like to get out of more by Friday. I was lucky in that last half-hour. Whatever buying program that was seemed to take up everything. Maybe we get another good day or two. When you throw in the maybes, it is time to cut and run. Make no mistake; the tape was horrid yesterday. We can rally off that kind of a tape but you have to think it won't sustain.
"The numbers" keep looking more dire. Al gets to talk today in Chicago. Rate rumors abound. Another day or two up would be nice; but, very little shows that is likely. So I am sitting on 50% cash and I wouldn't complain if it went beyond 75% on or by Friday.
Looking at the charts I see a lot of stocks that are at topping out at levels consistent with first recovery attempt. Others are moving through the pennants without real indications. A lot of stocks are doing whatever on weak volume. Our best scenario is a fall back to some support level and taking the next shot off of a W-bottom or stronger consolidation. Stocks that have been beat up typically require a long consolidation/recovery before attempting to make themselves whole. With this short a recovery period behind our stocks, we can't expect the moon for quite a while.
And, if this recovery is an oversold rally, we are no longer oversold. Yeah, it could go a bit higher, but...
Wed 5/3
My intention is to still get out further by Friday and any buys after that will be very short term tries with limited goals--almost but not quite day trading. And they will be underweight positions. Preserve capital is still the mantra
Well, I hung around. The 50% cash was the solace I couldn't get really blasted. The market stayed above the magic 3600 so I played wait and see. Was down about 2 1/2% at one point; ended up 1/4 point to the plus side. Great action in the last 15 minutes that made me whole. It may make it to 4200 as Gary Smith said on the street. I will be happy going there with 50% cash. May daytrade a bit if I see the opportunity--not my strong suit. The market built the cups today for a lot of stocks. Let's see what happens.
What is the market saying? It is saying the Fed is truly ready to get nasty. Alan Greenspan my go from being a saintly hero to being the stockmarket's anti-Christ. Inflation is starting to look like more than a figment of Al's imagination. And this after one of the hugest of huge quarters on record. Consumption was outrageous. This can sustain--especially with Al in action.
For the bullish case, I'm a bear. Play it as a contrarian. The market is short term overbought now. Do we wobble and then proceed back up? As Harry said, "Well, do we?" Can't answer yes here; although, the OEX Put:Call is getting pretty bearish and that tends to be a contrary indicator. The tell seems to be 3600. It needs to bounce off that support. The McClellan Summation has a chance to cross from negative to positive which would be very positive.
Although, the VIX isn't saying that for sure yet, it seems to indicate more downside potential. It is in about the middle of it's Bollanger Bands and has just started trending higher. It needs to see the 40+ level to give out a buy signal or drop to the low 20's to give us true sell. So, do we flip a coin or what?
NOVL is going to overhang the techs today. Just when I'm trying to dump a couple. Do I hold them into a possible reaction jump back up? Can't decide; leaning toward cut and run.
I am still raising cash and will continue until I am close to 2/3rd or greater in cash. I may put 20% of my portfolio in USPIX to hedge what is left. I have been wrong about market declines before. I tend to predict them when they don't come to fruition. I did call the market top...almost to the day. But, I didn't see the pullback being as serious as it was and remained mostly long for too long. But I am seriously bearish at this point. A worst case scenario is outlined in the White Paper area on the main page of my site in the section On Measured Moves.
I am not saying it will happen. I hope it doesn't. I would love to be proven wrong. I am willing to reverse on a dime. But, at the moment, all I can see are failing rallies. And these failures are in those stocks we've long called market leaders. Add to that all these pennant formation indicating something is eminent. Now that may not be in the direction we were hoping. If so, this could be a major bull trap. Just can't take the chance.
If you read this diary, you will see my short-term upside bias. I am reversing that bias and worried about downside risk here that far exceeds upside potential
Tue 5/2
B: CEGE 21 7/8 CEGE 20 7/8 S: GTHR 11 - 11 1/16 PANL 18 3/4 MAGN 4 7/8 HHGI 10 7/8
The only reason to stay long is the weak Naz volume here--which contributes to the volitility. I think it is about ready to turn over though and any rally will be a dead cat one. I want out of almost everything by Friday. Raised quite a bit of cash today. Looking to raise more--lots more. I don't mind being wrong here. Preservation of capital! Why do I think this? Look at MLNM; it lead the rally and is tanking today. I figure others will follow. Everything sold right into the close. I'll take off the limits and let em go on any weak rally early tomorrow.
Not big on today's action. Hope the other limit orders hit. Have the feeling we've found or are near a top. I'll let somebody else make the profits on the longs for a while. Considering some USPIX as a hedge on what is left
I am loving the action but the back of my mind keeps saying it is the wrong month for anything to sustain for long! So, when we pullback do we stop at or before the low? Annual action for the spring to summer months say we could find a new low before the "real" rally. Keep your powder dry and trade short term is my game plan.
Well, the Globex tanked and the market opened lower but is recovering. Bought the CEGE based on yesterdays close and the 5-day chart. Looks to have potential to run. Bios in general have a run potential. The question is how far. The BBH index rally earlier this month aborted around 184. As I write it is 144. Can it take out the old high? Maybe, but I am guessing not by much...but that is still a nice move left...
Right now the Globex is pretty neutral; but there's time to move either way. How about this market? A two day rally! Seems unheard of...
Are we out of the woods? Fraid not. But I am willing to start thinking of new trades beyond a few days. That means I want to scope out the best of class stocks in the good sectors. I can either trade the secondary leaders that haven't moved but should pick up strength from the leaders move; or, I can say it is for real and buy into the realness of the recovery.
Charting now has to look at recovery scenerios that take into consideration overhead resistance. All those great momentum plays of the start of the year now overhang our charts. Even if we get a real recovery here we have real charting to consider. The rocket ride let us avoid be chartist. Now it is time to consider basic charting techniques more. It may also end up a time of more active intermediate term trading.
May usually, well..., sucks. And here is the start; but, we have a nice rally. Maybe; but maybe not. I remain questioning the recovery; but, I need and think I can participate long here. I am buying; but, I want to stay with fairly tight stops. Lots of buts here. The most important thing here is not the stock bought but money management. The best stocks are ones that go up...duhh. They allow you to set stops that keep you out of the loss column. See the FAQ for a discussion of running stops. P.S. Stops should probably be based on end-of-day prices. Daytime volitility can take us out. EOD stops (manual) let us out with more risk but should be adhered to and we sell the open--hoping for the opening pop and not getting faked out by it.
I've said but want to emphasize. I normally have a portfolio of 8-10 stocks. I am willing to go with more; maybe 15. This spreads the exposure and an 8% drop that takes me out multiplies against less capital. If this is a serious rally, which it really can't be. I will get out of the weaker ones and move that money to pyramid on the stronger ones to get me back to fewer stocks.
Mon 5/1
B: DUSA 18 1/8 PANL 18 MAGN 5 S: MAGN 5 1/2
Great 5-figure day. Traded a bit. Should have kept Friday's chargers.
Bios continued the run so I decided to bet the recovery here would continue. DUSA had built a very nice base. The PANL is an old favorite that's made me lots. It was a pullback buy on a lower base. The MAGN sale was just over half. I bought same amount back in on the pullback.
Nice early action almost across the board in the NDX stocks I follow. That market has not yet reached oversold and there is potential here, but I see it as short term. I am not rushing money back into the market and have limit sells set on several stocks.
As to my thoughts about marking up for the end of the month. That proved wrong. The stocks I sold are up nicely. But, I still believe I'll be able to buy them back at a lower price. We'll see...
The pre-market is saying an up move. I don't want to get faked out. Last week sprung two nice bear traps. I don't want to participate in a bull one. I think the best buying may be later in the day--if then. If the bears can drive some of the strong Friday stocks down, I'll probably jump back in.
The cynical in me says that we see some "selloff" early as some of the marked up numbers come back to earth and reality. I am going to watch for the half hour or so in where the stocks has tanked expotentially and appears ready to rally. It is a dangerous play so early in an iffy day but I hate to see money earning money market rates--a flaw in a bear market. This is before the premarket tape so it is possible I'll get chicken.