Sunday, December 19, 2010
$Market Action Now Dictating Caution...Profit Taking and Trailing Stops Should Be Tightened...No New Adds or Buying...
Thursday, August 26, 2010
Wednesday, August 18, 2010
Volume across the majority of stocks that could be considered leaders was extremely low. Volume in the market rose only because of the enormous volume in the fertilizer stocks and related stocks. We can argue it's August, but when they want to buy they buy. It would have been more impressive if volume would have risen minus the extraordinary volume in the Fertilizer and related stocks.
Maintain cash levels and look for shorts. If you don't short, go on vacation for the rest of the month and maybe beyond. Too soon to look out that far, but it doesn't look good.
Friday, August 13, 2010
Wednesday, August 11, 2010
The market continues its main theme, following the Euro/Yen conversion. As long as we stay correlated to the Euro/Yen we cannot expect the market to have its own mind.
Today's action is very worrisome. Not because it is a big down day on heavy volume, but because the market cannot keep up with the mini bounces in the Euro/Yen conversion. The last time we saw this action the market made new lows. So the market and the Euro/Yen conversion are now at even more critical levels then before. If today's or this week's lows cannot hold over the next week, we will most likely test the year's lows at a minimum.
Stay in cash and be patient.
Thursday, August 05, 2010
I've personally been taking some well needed time off, peaking in from time to time of course. So stay patient and prepared. With the summer doldrums upon us, you might be well served in joining me on a mental retreat. Whatever you miss in August, is generally more then made up for in the fall.
Thursday, July 29, 2010
Most leaders have only been able to muster one good day since the follow through. Many came on below average volume, while the one's that did have strong volume, failed to follow through with more volume over the following days. Most breakouts have been retraced in almost all of the leaders and are on the verge of failing. They need to hold or failure will be the next step.
As I noted in my Monday blog, the market had reached an area where failure or a shakeout was extremely likely. It did not take to long after the post for the market to stall and reverse.
Right now it's best to continue to maintain watchlists and monitor leaders from a distance. With next weeks big job report, there might just be too much uncertainty ahead of it. I would not expect the market to do much ahead of the report.
With the slow summer trading ahead of us, the worst case scenario is for the market to keep drifting up in the face of low volume. 9 out of 10 times this has led to a major Bull Trap. So let's get a nice quiet pullback over the summer and setup for something big in the fall.
If you're into shorting, there are now a good amount of setups that are ready to break if the market heads down.
Tuesday, July 27, 2010
Monday, July 26, 2010
Wednesday, July 21, 2010
Monday, July 19, 2010
Tuesday, July 13, 2010
Tuesday, July 06, 2010
After completing my markets model this weekend, I have no hope for a new rally beginning this week. Too much damage has been done, and too few leaders are left in tact. I would advise most to stay in cash or short if you know how, but do not initiate long positions. There will be plenty of time when the time is right.
The downtrend in the Euro/Yen conversion still dominates the market. Until we decouple we will have a hard time rallying.
For now just take a break but continue to work on your buy list. It will be frustrating as a day like today will make you feel like you've missed something. Don't worry, you haven't. Another point of frustration will be when the stocks on your lists that look promising breakdown and you'll have to start from scratch. That is all a part of a bear market. The good news, if you keep up, when the timing is right, you will be prepared and the first one out of the gate.
There isn't much to write about these days so I will post when I feel something is relevant. Hope everyone enjoyed the long weekend.
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Wednesday, June 23, 2010
There are others, but too much going on to list.
Keep your stops tight. If market fails to hold it could get ugly.
FD: Long AAPL, BIDU, NFLX, APKT, CRM
Monday, June 21, 2010
Thursday, June 17, 2010
Lets take a look at the chart of Sandisk(SNDK) below. The stock has been one of the best leaders of the entire rally. It has continued higher even as the market has struggled over the past two months. But it too cannot resist the gravitational pull of a market pullback. So everytime the market enters a correction or pullback so does the stock. But, as can been seen on the chart, SNDK maintains it's uptrend and finds support along its respective moving averages (green arrows). As long as it maintains this character or does not exhibit some other sell signal it has to be held. So a pullback into the 42 - 45 range (red circle) would be perfectly normal and acceptable.
Wednesday, June 16, 2010
Tuesday, June 15, 2010
But, until the market can stop trading tick for tick with the Euro, holding positions for too long will be too difficult. If you don't mind swing trading, have fun with it. If you're a more conservative investor, and the rally goes on to work, you will have ample time to participate. For now protect your capital at all costs, even if it means you are under invested early.
Right now I am still on the long side, but with stops very close by. I'd rather get stopped out and get back in, rather then lose profit or capital. I do have a list of shorts, and if the opportunity presents itself will take the trades. But even on the short side, profits have to be protected quickly.
The market is in uncertainty land and that's where it confuses everyone. So either trade or stay in cash.
Friday, June 11, 2010
Monday, June 07, 2010
What looked like a promising developing rally has turned into a big fake out. As I stated in my friday blog, the combination of a day 2 distribution day and a close below the follow through day's low, is a deadly one two knockout combination for the market. The lesson here for most is, when a market diverges from a precedent, you need to go on the defense quickly. Hesitate, and it could get REALLY ugly.
This looks like it could be the third wave down of the first leg that started 04-26-2010 which generally is preceded by another rally attempt, of several weeks, that sets up a second, multi-wave, leg down. Those rallies can be profitable as the market attempts to rally back to a key moving average.
I'd say to avoid the short side for those not able to monitor their stocks intra-day. The setups that are out there may be good for a few hours or days, but need more time to setup the ugliness of a continued to downtrend. So if you can't trade them, avoid them.
Stay patient and keep your lists fresh. You never know if the market has another diverging idea :o).
Friday, June 04, 2010
I drew my line in the sand at those lows and have now moved almost to cash. I still have some early buys acting well, but the line in those stocks is now drawn too. No need to give up all the profit.
Today should be a lesson in how quickly one must act in the market, especially aggressive investors.
Back to the drawing board.
Wednesday, June 02, 2010
Thursday, May 27, 2010
Obviously today confirmed my thought process. Between today and yesterday we have seen a number of fundamentally strong stocks breakout to news highs and bounce off their 50/200 day moving average on strong above average volume (APKT, VMW, SNDK, IPXL, SXCI, etc...). Pullback bases are plentiful and most are in a position for early entries and breakouts(AAPL, CREE, LULU, CRM, etc...).
Once we get a follow through day, my market tops analysis will be back in play. Its had an almost perfect record of getting us out on the way up before any real damage could be done to our capital. Sure it misses some of the final gains, but how would we know to sell at the peak anyway?
Stay patient and get your research done so you are prepared.
It is amazing how everyone views the market differently. This afternoon, a CNBC guest stated that if we were to top now, this entire rally from March 2009 would have been one of the weakest in history. How a 100% move by the NASDAQ and multi 100% moves by leading stocks is the weakest in history is beyond me.
FD: I own APKT, NFLX, CREE, AAPL, CSTR
Wednesday, May 26, 2010
Potential ETF Leaders In A New Rally
Do not look for new leadsership to emerge, even though some are bound to show up. Look for stocks that are already proven winners, have exhibited high relative strength during the correction, and are must owns for institutions that must be 100% invested (click on charts below).
I alerted readers of this blog early yesterday to the possible turn around. If you want real time alerts and updates, sign up at Twitter and follow Gennady17. Sign up for the FREE newsletter at Capitalist Bull for a daily digest of the blog's activites (don't forget to look for a confirmation email).
FD - Long APKT and NFLX
Tuesday, May 25, 2010
The NYSE composite tumbled 1.6%, the S&P 500 1.3% and the Dow 1.2%. The Nasdaq fell 0.7% as late selling sealed the index's loss. All major indexes closed near session lows. Volume was down sharply from Friday's options-expirations pace.
Wednesday, May 19, 2010
Tuesday, May 04, 2010
Just like death and taxes, pullbacks in the stock market are inevitable. Patience to wait for and during them is another story. If you did manage to wait, you are most likely extremely antsy to buy right now. After all, you either missed or did not profit as much as you would have like too in the previous rally. So you don't want to make the same mistake again and are ready to pounce on the first pullback. But I say wait.
The market and it's leading stocks are only in their first two weeks of the correction. The volatility day to day is a bit too extreme...one day up big followed by one day down big. Headline risk from Europe and Goldman Sachs add to the uncertainty. It's a rollercoaster ride you do not want to be on.
The game plan right now is to build a watchlist of stocks you are interested in buying. Try to identify the type of pattern the stock is forming and how much more time it needs to complete the pattern. Then determine what you would want to see, preferably based on previous model studies, in order to begin entering the stock. This takes away the risk of randomly buying and selling, which often leads to churning.
Based on the current action of the leading stocks, we have at least another 2 - 3 weeks of sideways to downward action before the rally can resume. Some stocks are further into their consolidations and could be buyable earlier. For now I would stay away from buying anything and focus all my efforts on research.
If you have been holding a big winner for sometime and the stock is acting fine, there is no reason to sell. Swing traders on the other hand need to be flat on the long side.
Friday, April 23, 2010
Each night I look at my short and long screens. I have found that, and this has been pretty common for some months now, short setups tend to break up, not down. Or they will start to breakdown and squeeze hard over the next few days. This is not the type of action you want if you're considering a short trade for more then a few hours. In fact this is the only reason that I have continued to take long trades even though it seemed on several occasions the market was ready to correct.
Even if I knew the market was going to go down tomorrow I would not attempt to short for more then a day. The bulls just have too much power right now to warrant the risk/reward. The short side will be no different then the long side eventually. You will see plenty of setups and evidence that it is working.
On the long side I continue to trade. I do not want to get caught over invested. If the market keeps rising I will participate as a swing trader. Most of the stocks I'd like to own are just too extended to take long term positions.
Questions, comments, and suggestions always welcome.
Monday, April 19, 2010
Comments and Questions Always Welcome.
Saturday, April 17, 2010
Friday, April 16, 2010
Thursday, April 15, 2010
Wednesday, April 14, 2010
So then why wait you ask? I found overtime that it is easier to deal with missed profits then with lost profits. If you're sitting in cash and waiting for the pullback and are ready to pull the trigger, it will be easier to do so. If you're invested and have to sit through a pullback, even though you may understand it is normal, your EMOTIONS DO NOT. They will force you to run for the exits just as you should be ready to add more.
I continue to swing trade this market and protect my profits and risk vigilantly. I do not want to get or be fully invested just when the sellers and buyers decide enough is enough. Stay patient and don't let those emotions get the best of you.
Comments always welcome...
Monday, April 12, 2010
So what if you've sat this one out? About the only thing you can do at this time is to take multi day swing trades and patiently wait for the next pullback opportunity. Is it possible this market just keeps going...sure. But you will get rotation amongst the leaders pulling back to their 20 or 50 dma's. Otherwise the risk is too high to enter the majority of stocks at this point to hold for an investment.
Unless we're going climactic, I can almost promise that you will get a chance to buy most of the leaders that have been moving higher at or near current prices after the next pullback. Except you won't have to sit through the eventual pullback. Now the only question is, will the next pullback be buyable? Only time will tell. I do know one thing, it will be at the worst moment when the best opportunities will present themselves.
Monday, April 05, 2010
If you've been following my tweets, you know that I've been quite cautious with this rally most of the time. But, 2 weeks ago it seemed the market could sit around and consolidate into a new strong move, but that doesn't seem to be the case as of this weekend. I do expect the current tightness to resolve to the upside first, but would not be surprised to see sellers come in within the next week or two, if not few days. So there could be big trading gains to be had, but they need to be protected. So why the change of stance?
- Low volume - leading stock have been drifting higher in low volume for the past few weeks. Some will argue that it was due to the upcoming holiday weekend, but I've found historically that that excuse tends to be more of a trap then a valid reason.
- New bases are either too wild, have extremely low relative strength, or very late stage. The argument here could be that new leadership is setting up, but you generally want new leadership to setup during corrections and pullbacks not while the market has already made a significant move from the lows, and the late nature of the other bases tends to be failure prone.
- Many leaders have exhibited mini climactic action. Keep in mind, climactic action is not always obvious on the charts. But pay attention if you're stock has had any type of unusually large spike on heavy volume that would be out of the norm for the stock.
- There have been a bunch of attempted breakouts that have come on low volume and others are failing or have failed pretty quickly.
- Markets and stocks have been acting extremely erratic intra-day. In many cases stocks are round tripping there moves 2 to 3 times a day. This type of action tends to be more indicative of distribution.
- Market is heading into overhead from the 2006 - 2008 rally. Again one can argue that it doesn't matter anymore because of the time that has passed. But, the market fell and then rose so fast, there might not have been enough time to shake out the weak hands. Usually such severe bear markets are followed by mild bear markets, and we did not get that this time. So there could still be a large overhang of supply (but this is just opinion).
- The rally off the recent lows has had very little participation from your traditional fundamentally strong stocks. Now sometimes it does take up to a month plus for stocks to get going, but the above points kind of invalidate that theory.
Right now my game plan is pretty simple. I won't defy the market. But I have tightened up my stocks and will take only the trades that do not risk my other profits. Any large out of the ordinary moves by my stocks will be a sign to sell not cheer.
I've been through these types of situation before. They generally do not end well when they stop. Especially with recent purchases. So take it one day at a time and be careful.
Tuesday, March 30, 2010
Good Luck. Others have started to bounce off them. Some are starting to tighten around them, while others are somewhere between their 3rd and 5 weeks of consolidation to the 50 . I'd bet this market is going to wait for the big jobs report on Friday and react to both the ADP (Wednesday) and weekly claims (Thursday). But the Friday jobs reports could be the catalyst. I don't see any reason why you should not start taking positions off logical areas of support now. I do believe if you were to wait for a little more of a confirmation from the market, mainly the leading stocks, there will still be some opportunities if not all the opportunities if there is one shakeout before we run. Otherwise about the only thing that derails this market now, is a piece of news out of left field no sees coming.