Monday, December 28, 2009

Sunday, December 20, 2009

The Market's Holiday Gift - A Rally

The market seems to be in the mood to give investors one more gift before the year is over.  One more tradeable rally before all is said and done.  We've shuffled sideways for the past 8-9 weeks with very few stocks making progress.  But we finally have a tape that typically precedes tradeable rallies.   Here is what I see:


  •  Large cap tech stocks have held up beautifully and consolidated their gains into new bases or bounces off moving averages.
  •  Small and mid caps are leading again with some new leaders and old leaders back at the helm.
  •  Overextended small and mid cap leaders have digested their gains and allowed moving averages to catch up.
  •  Recent breakouts have held…VERY IMPORTANT FACT.
  •  A lot of tight trading action after some wild weeks.


Other secondary opinionated reasons:


  • Fund managers are not about to set off a sell off and ruin their year end bonuses.  Why not try and run it and increase them.
  • Too much of an expectation for a sell off…Market does like to fool the masses (hate clichés, but they are based on truth).
  • Many investors that are flat or underwater for the year would love to jump in on a rally resumption to try and make something of this year.
  • I can list many more, but all you need to do is listen to the news.


I don't believe the rally will last very long (2-4 weeks).  The leadership has narrowed further from previous tradeable rallies and the base foundation underneath is shaky.   My plan of attack is to take the trades as they come along, and use my market tops analysis as a trading guide.  As of now it has turned positive for the first time since it's correction call in October. 


So The market may finally give investors the climactic part of the rally they have been looking for.  Of course it's all a self fulfilling prophecy as those same investors will be the one's driving the stocks up, with no one to sell back to eventually.  Good luck, don't fall in love with your stocks(trades), and I wish everyone a HAPPY NEW YEAR!





Gennady Kupershteyn

Follow me on Seeking Alpha or Twitter or Capitalist Bull 

Tuesday, October 27, 2009

Time For A Bounce?

We're real close to a possible bounce in the market. Maybe as close as sometime tomorrow. But first I would expect the market to follow through to the downside a bit more. Preferably to the 50DMA. There are a few reason for this:
- Many leaders are at critical support areas.
- The market is not used to the market being down more then two weeks in a row.
- Many of the better short opportunities have either sold off to or nearing critical support.
- Many funds close out their years in October.
The market in the short run is nothing more then the collective buying and selling of all of its participants. Considering that most participants have now gotten used to a quick selloff followed by a rally and the day traders are eyeing the critical support areas for a bounce, it would not be surprising to see a reflex reaction, maybe in the next day or two. Preferably next week…more of rubber band effect.
If you're a long term oriented investor, be careful as the bounce will most likely be nothing more then a bull trap. But traders, load your weapons, you might just get a nice quick tradeable rally. But it will only last a few days to maybe two weeks.
You can follow my short commentary in real time on either Twitter,, or seeking Alpha Stock Talk,  Enjoy.




Gennady Kupershteyn

Follow me on Seeking Alpha or Twitter or Capitalist Bull 

Sunday, October 25, 2009

Cash Cash and more Cash

There is no reason to be a hero at this point.  My weekly analysis of strength in the market already signaled the 2 week warning last week, now it's screaming to get out.  At best this has become a day traders market.  You can wait for a clearer signal on your stocks, but the analysis is doing it for you.





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Tuesday, October 20, 2009

Listen to the Market

There's an old cliché in the stock market, listen to the market.  Sounds simple.  It's not.    The market does a great job lying at key turning points. Take tomorrow for example, the market is poised to open 1% higher on strong earnings reports from AAPL and TXN.  Advancers will be greater then decliners, volume will run high, many new 52 week highs, etc.  Sounds great!!  It's not.  That's the lie.  You need to look under the hood, to really see what's driving this market.  So what do I see.


I see a market that's running out of steam.  Leadership is narrowing, many stocks are well extended, and we're at the perfect TRAP TRAP scenario. Shorts have been made to pay the price since the beginning of this bull.  But they have continued to try and hold on and can only endure so much pain. So they need to draw a line in the sand to cover.


Longs have continued to distrust this market, but after watching it rise 70%+, are nervous about missing the rest of the move.  So they too have to draw a line in the sand on how much longer they can wait before buying.


As kind as the market is, it gladly provides the line in the sand for both…at the same time…DOW 10K, Critical Elliot Wave Resistance Point, and strong earnings among other things coming together.  So the shorts are forced to buy to cover in panic, and the underinvested longs just must get invested. Sounds good on the surface.  Wrong again.  This was the final money on the sidelines.  If they come in and buy, who's left to continue buying?   I know the short sellers are ready to short sell…again.  That's my theory.


But I need to back up that theory and the question is, how long before it comes to bear?  That's where I turn to my market tops analysis that I run weekly.  It has run strong since the turn in early October until this week.  It dropped to 51% green from the 60% range.  In theory, as long it stays above 50%, you should hold.  So that's what I have done so far.  But, as I went through the analysis, I noticed that it would not take much to tip many stocks to Yellow or Red.  Which would drop the Greens under 50% and give the always accurate 2 week warning signal (which means that market will have a short term top anywhere between 1 to 10 trading days).  I believe that if I were to run the analysis after tomorrows action, it would give the 2 week warning signal.


The reason is that most stocks are overextended, moving on lower volume overall, climaxing, and other sell signals.


It also activates a different trading playbook for the next two weeks.  The most important part of which is to signal to immediately get rid of or tighten stop on any laggard positions.  Then continue to rotate that money into the stronger of stocks for another move higher.  But these stocks need to be monitored closely for signs of exhaustion.  So it's NOT a signal to run for the exits, just that money should start to move to the sidelines or into stronger stocks (the narrowing leadership) with tighter stops.


I've expanded that analysis to give me a better idea of what type of top it is, long or short, and depth.  Based on the added indicators, like breadth, leadership, etc…, we're most likely going to see a much longer deeper correction then we're used to.  It's going to be at least around 10%+ lasting at least several weeks.  Too far to figure out what happens then.


Ridicule me if you want on a big up day, but I'm 200% invested long and on alert.  After an awesome rally, I have to worry more about protecting my profits, rather then missing more.   By the time the market tells me to get out, I'll watch a nice chunk of profits disappear.





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Thursday, October 01, 2009

Market Update

We can pretty much go to sleep through at least next week, and I would be bold enough to say the following week too.  Then reassess.  The one or two we might miss if something goes this week or next won't be worth the hassle.  On the other look for key support areas on leaders for early entries.  But they have to be 10-15%+ off their highs, otherwise your better off waiting.  My 2 cents.





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Wednesday, September 09, 2009


Overall Bullish on the market...expect one more shakeout (quick)...setups point to a 3 - 4 week rally afterwards. Comments?


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Friday, August 28, 2009

Stocks Preparing for Next Move

At first glance, it doesn't look like this correction (my correction) will last longer then another 2 weeks. There are some new potential leaders that cropped up and many current leaders have pulled back anywhere from 3 - 5 weeks to their 20 or 50dma's. There aren't too many extended leaders, but enough to create a psychological drag if they correct, which they most likely will.

This list needs several iterations. I just see too much possibility right now.

I say next week is down and possibly right after labor day. Which would be a real good shakeout. But we need to be ready if market has other plans.

Thursday, August 13, 2009

Time for a Break

I don't believe anyone will miss anything over the rest of August except for sideways or corrective action. JMI, but everything is pointing to a correction.

Tuesday, August 04, 2009

Market Needs a Rest

Am I the only one finding the heavy volume within this consolidation as a potential major problem? My plan right now is to trail everything tight, but loose enough not to get tagged out in a morning drawdown like todays. I just find very little participation here, and the small caps are all very overextended. I personally believe that a correction is in the cards very soon, which will lead to another powerful leg in the overall rally.

Thanks and Happy Investing!

Wednesday, July 08, 2009

Time To Wade Back In

Today was a scary day if you were long or thinking of going long.  But days like today present buying opportunities especially considering the action of the leaders since we fell into this correction on June 11th.
Leaders continue to hold key support areas.  This is extremely positive considering we are down 8%+ on all the indexes at today's low. 
We had a scary shakeout in every leader today, while the general market managed to hold steady in heavy volume.  The pattern for this correction has been the exact opposite.  While indexes were getting hit leaders held.  Today's action is typical for shakeouts.
There have been, and still are, many early entry opportunities if this rally is to resume.  The best plan of action is to weed back in here.  Don't wait too long, as the risk increases as stocks move away from their pullbacks.  Reason, too much volatility around breakouts makes it very difficult to hold.
Everything I look at at, points to a resumption of this rally.  If I'm wrong, the risk is not high right here.
Good Luck



Thursday, June 11, 2009

A Tale of a Topping Market

Sell signals show up in every major leader from time to time on their way to the top.  Lots of or lack of distribution also shows up and the market doesn't top or continue higher, instead defies the distribution and rallies or defies the lack of distribution and goes lower.  So in a vacuum, negative action of one single stock or market, seemed to mean nothing.  So I needed to find a way to measure the signals of the leading stocks and markets in aggregate rather then in isolation (duh!!).  What evolved is what I called "The Market Tops Study".  It measure all the various sell signals amongst the leading stocks and indexes and categorizes into red (sell signal), yellow (warning signal),and green (sea's are all clear).  I do the analysis weekly so I can measure how a rally is developing or progressing.  Now, it doesn't predict the severity or length of the correction, it just says that the leaders or markets or both are pointing to a market that is tired, breaking down, or consolidating and you best start protecting yourself.  The warning signal is when the # of stocks that are acting just fine, showing no signs of sell signals, falls into the low 50% range and I mean (50 - 52%).  The major warning comes when it falls below 50%.  The last 5 weeks have gone as follows (hope you can see the chart and colors):
06/05/09 05/29/09 05/22/09 05/15/09 05/08/09
59 49 42 42 39
24 40.68% 16 32.65% 22 52.38% 21 50.00% 22 56.41%
4 6.78% 9 18.37% 1 2.38% 3 7.14% 2 5.13%
31 52.54% 24 48.98% 19 45.24% 18 42.86% 15 38.46%
 The week of 5/22 looked like the market was regaining it's footing. but that was mainly due to the leading gold stocks breaking out.  Right now the following is occurring with some subtlety:
1.  Slowly, some of the early leaders having been breaking there 50dma's on significant volume without being able to recover.
2.  Other early movers are now starting to reach the 20/25% profit taking levels.
3.  Leaders are also starting to move higher on below average volume.
4.  Many of the leaders are well extended beyond there moving averages (I have exceptions to this rule, not the place for the explanation, but not for so many stocks).
5.  New breakouts are coming from deep bases or on unimpressive volume or just starting to fail right out of the gate.  Not a good sign when the market just clears it's own consolidation.  Rarely do you see model stocks breakout and just run out of these deep bases anyway, they usually will consolidate a few more times.
6.  Market is not really making any progress and volume on the indexes has been increasing, indicating stalling action. 
7.  Based on model studies, almost everyone of my stocks and other leaders are violating upper stretch up (FB's term) or lower breakdown levels before correcting or breaking down for good.
My plan of action is always to let the market get me in and out (so sick of this cliche, overused and very misunderstood/misused).  Once the warnings from the market tops study start to flash, the first thing I do is get out of any laggards buys, new buys showing losses, and leaders on the edge of a sell signal.  I will hold the better of the stocks as far as I can, which in this market is now none, thanks to an after hours earnings report.  This process takes at times days, but usually, as is the case this time around, weeks to unfold. 
These are its' rules and current opinion, which I do not violate, as it has cost me handsomely in the past to do so.  The rest is up to you. 
Pass this along to whomever you wish.

Monday, June 01, 2009


Update:  If this were a stock, I would fully expect the VIX to retrace to the 50dma, which would indicate a correction in the making.  Between that, lack of volume on leaders, and overextension of leaders, I fully expect this market to start a real correction over the next week, maybe two.  I am still 148% invested, down from over 200%, but my stop have been moved up real tight.  I've basically rid my portfolio now of any laggards, and am trying to hold the stronger for the last spurt before the next set of bases and pullbacks.  Any opinions welcome.


Here's an updated snapshot of the double top on the VIX I sent out about 2 months ago when the market followed through.  It is acting well and trending right along the 20dma and consolidating right near a support area.  Another breakdown here could lead to a final leg up for this run.  It's probably going to be fast and furious and finally lead us to the long awaited correction, right after the final suck in rally.

Tuesday, March 10, 2009

Fw: Ugly Looking Market

Wow, I may have called the bottom yesterday with my overly bearish comments.  Biggest one day moves do come in bear markets, and we were quite oversold, so this could have been just a relentless squeeze set off by the Citigroup comments this morning and followed up by rumors of the uptick rule being reinstated.  But with this bear market anything is possible.


Yesterday's Comment:

"This market looks like it's about to get cracked wide open.  Not sure of the duration and depth, but the old leaders are all pointing down, and the few that managed to hold up are getting taken out behind the barn and shot (some are still holding).  This is probably the setup to the climactic end of this leg down, unfortunately not the overall bear.  Buckle up, it could get rough."


Monday, March 09, 2009

Ugly Looking Market

This market looks like it's about to get cracked wide open.  Not sure of the duration and depth, but the old leaders are all pointing down, and the few that managed to hold up are getting taken out behind the barn and shot (some are still holding).  This is probably the setup to the climactic end of this leg down, unfortunately not the overall bear.  Buckle up, it could get rough.


Friday, January 09, 2009

1924 - 1942 compared to 1994 - Present

Since the 1930's parallel has been brought up the most, I plotted the those market with the current markets.  They layover all the way back to 1924 quite eerily.   


Sunday, January 04, 2009

The market is truly designed to destroy MOST

The market is truly designed to destroy MOST.

I don't mean to sound pessimistic, since I've done well in it, but after an exhaustive study the past month of monster stocks and my own past trades using both CANSLIM and Darvas, I found that unless you're truly willing to hold through alot of early fiddling around and nasty volatility in the middle, trying to hold out for those promised 100's of percent gains is EXTREMELY difficult. I've bagged the triple digit winners in the past, but only because I did not try and trade around corrections and be too precise. I bought the initial pivot, allowed for the initial fiddle, and patiently waited out the week to see if the stock closed above or below the 50dma, unless the break was just enormous and near an already long bull market or the stock went climactic, as it scaled the chart (there are other reasons not to wait, but that's for another time).

In 2006 and 2007 even though I was able to bag some impressive winners (none over 100%, even though there were plenty), I found I did not really maximize the gain for the exact reasons I mentioned, I was trying to be too fine. The precision allowed me to get out near a top of an intermediate correction, but made it difficult to get back in because of the increased volatility as a stock scaled the charts. There are times for this type of precision, but that's too difficult to explain without illustration.

The reason for the title, most look at these monsters and just assume in hindsight that the moves were easy because of the way it looks in it's entirety. Most don't bother to measure the corrections a stock undergoes day to day, week to week. In many monsters, intra-week volatility can exceed 20% without violation in some cases of even short term moving averages (10 and 20). This simple oversight and misunderstanding leads MOST to overtrade, enter at the wrong time, and then in frustration of all the exhaustive non-profitable trading, become long term holders just as the stock is topping FOR GOOD (the laws of gravity eventually get them all, even if it takes decades, GM). Of course losing the majority of what they invested over typically the next few weeks and months.

Moral of the story, the only way to succeed is to study, study, and study some more and then execute your rule book. YOU MUST create your own rule book. No book or mentor can create it for you. They can get you started, guide and keep you on the right path, but in the end, you must understand how the different variables change and interact from year to year by learning it (repetition). Even though it's the same, there's enough of a difference to cost you plenty. YOU MUST write it down, your memory won't hold it or process it all when money is on the line. Your emotions will make your decisions. But if you learn to recognize the change, you won't be fooled because you will have a rule to handle the situation. It will take years to get it right, but the path is worth the trip once you do.

Most of you know this already, but thought it would make for a good new year reminder.


Some have asked about mentoring in the past, if you're still interested please let me know. In some cases I do it on a barter system for help in other areas.

Hope everyone had a nice NEW YEAR and all the best wishes going forward.