May Day

Sometime, long ago, before time was even timed I ticked off the wrong darned person. The worst thing is that this guy is still holding some kind of grudge after all this time. Back off man! I do see positive things coming from all this, I have a lot more empathy for those around me, and I realize for the first time since I was in 6th Grade that its not really money that makes the world go around but relationships. Anyway I'm up and out of the hospital. I had a pretty routine operation on Wednesday to remove a lymph node on my inner thigh. It all went well until the time came to “Clean the dressing”, unfortunate for my ever so often unfortunate body the dress (cotton) had coagulated and made a bond to a fairly important blood vein the shoots off the femoral artery, when I pulled at the cotton the blood was then broken. My bathroom looked like something out of the great horror show of all time. I decided to do what I could with it until the local clinic here open (cheaper than the ER and faster than the ER) in about 20 minutes. When I got to the clinic they called the Hospital and they chucked my merry ass down to the hospital. They always seem so cool and collected on TV, but in real life some are and some defiantly are not. In any case, I got some blood and stayed in the hospital a few days. They have 3 star meals and HGTV so what I can really complain about. This is really I think a great reminder though to keep an eye on what you don't see coming. This entire time I've been worried about cancer, and I was about 15 to 30 minutes from “bleeding out” ( I think that is the polite medical way to say you bleed to deal). It came from another direction. This applies in life and fiance equally, its the one you don't see coming that will take your wind way.
Also to hold your own life, and your vital relationships close to your heart, you don't have any idea when you will need them, and like I said above you have idea where it's coming from. Back in 1996 I had a brain surgery and the Docs and they Mayo Clinic had about a 60% chance of removing it, the other alternative was 100%, so I went to with sixty and made it out whole. I was nine-teen at the time. Then around 1998 of 1999 I sat on a nail and figured since Id had a tetnis shot I was fine (shows what you get for relying on me for medical advice) And now most recently this, but it was not cancer could have, should have and was actively working kill me Thursday, it was severe blood loss. I don't know how much of this it take as truth and also how much was me still being in shock, but the surgeon in the ER told me I probably had about 15/20 minutes of “good time” left, whatever that is. I'll have to track him down and ask.
The second point is that I really find myself feeling terrible to be agreeing with Barack Obama on anything. What do I agree with him on? The Fed Tax Holiday on gasoline is nothing but a scam. It's robbing Peter to pay Paul. The tax put on fuel is supposed to go to maintaining our roads and bridges. Well, ask the good people of Minneapolis how the project has gone over the last several years. Take way money and we will see more erosion of critical infrastructure. Not only that, but we will see a large pool of unemployed summer labor. A healthy portion of Americans Workforce is made up of construction crews who depend upon season a hefty part of this nations road work being done in the summer. In an already struggling economy, what do we do with these men and woman? I wish things could always be as cutsie and easy as the pols want you to think they are, but usually bleeding to death kills you before cancer. In this instance we need to address the core problem. So many things could be done even engineering wise before we have to star digging up ANWAR(which make no mistake, we will) and drilling off the west coast of Florida (and again we will) . Economy standards used to move higher every year, but then somehow subburn dad's thought they needed to look like farmers or contruction crew members and started buying picks, then all hell broke lose. At that time oil was under $10 per barrel. We in fact where giving tons of aid to those very seem middle eastern countries we now hate, the who's who through thick and thin (cept that one time so they could show off how buff their arms have gotten) have kept us with a good supply of oil, regardless of the economic hardship or benefit they got from doing so. So....Thats all that.
Just the Facts
S&P500 records a loss of 5.35 points, closing at 1385.59.
The Nasdaq lost 13.3 points, closing at 2412.8.
The Dow ended up closing the day down down 13.30 points, in spite of having been up nearly 180 points earlier.
Thats what we technically inclined traders would call an ugly reversal...more on that later.
The S&P600 (small cap) was down 1.18 points, closing at 378.90.
On the Nasdaq we saw 1457 issues advance on 785 milion shares, while 1460 issues rallied on more than 1.22 billion shares. 83 news where put in vs only 35, showing us that internals remain clearly negative in Nasdaqsville.
On the Nyse the volume numbers where not as pronounced, but still not good. We saw 1641 advancing issues on 651 million shares while the 1499 declining issues put in 684 miilion shares. New Highs led New Lows on the Nyse 53 to 23.
Yesterdays market action, as I mentioneed earlier is what we would normally term a downside correction day. For this to occur all you need is to have the major indexes up heavily going into the afternoon but for something to cause that gain to be reversed and brought into negative territory, and for that something to cause volume to be heavy. We had exacty that, and so the odds are that an important short to intermediate term trading low has been put in. I'd caution against getting too cocky with this though because in spite of itself some areas of the market are holding really well. Several names have been showing strong downside leadership the last few days/weeks as the market has been posotive. Among them MMM, MAS, NWS and KB. On the potential upside ITU had a massive breakout yesterday, as did PNRA (my favorite place to eat) and BRMN is worth watching as well.

In any case, I've picked a hell of a week to hide out on my pitty pot, which is pretty much what I've been doing I guess. Have a lymph node on my inner thigh that is about twice the size of my thumb and hurts like a mother. I've been pretending it wasnt there for about 5 or 6 weeks, I thought my doctor was ready to strangle me when I finally told her, but she's just a little Thai lady. Anyway, so I go in for surgery tomorrow to have another nymho node taken out. I swear by the time this is all done I wont have any sex drive at all. It's a quick in and out thing, so i should be back by the end of the day whining, bitching, complaining..the usual.

Wednesday

Just the Facts

The S&P500 gained 6.11 points, closing at 1334.43.

The Nasdaq gained 10.22 points, closing at 2286.04

The Small Cap S&P600 gained 2.86, closing at 365.53

Nasdaq Volume came in around 1.8 billion shares, substantially higher than on Monday.

NYSE Volume also increased, to around 1.14 billion shares. Most of the increase in volume on both exchanges occured later in the day after the markets had rebounded off lows, a bullish sign.

We saw 77 new Highs and 79 new Lows on the NYSE and 19 new highs alongside 174 new lows in the Nasdaq.

The Random Rants

Stocks started the day trading mostly lower until late morning/early afternoon buyers came in and bid the market up. It is worth noting that this movement to the upside occured on heavier volume then the prior moves to the downside. This tends to suggest more accumulation in a market than distribution. I know, This sucks and that sucks, and Food inflation is the worst it's been in 17 years and oil prices and gas prices are killing us and..and...and. In the big picture right now though, none of that matters. How do I know this? The market is telling me so, in fact it's telling all of us, rather loudly, that these numbers do not matter at this point. That's not to say that a bad economy with terrible fundamentals won't eventually catch up with the market and bring the entire thing down, thats for people smarter than me to figure out, but what I can see is that in the short term names are getting bid up and there seems to be more buying interest compaired to selling interest.

I've made the point very clear since earlier in the year that I do not think this is the best market to go out and try to accumulate massive profits, instead the order of the day is more along the lines of the preservation of capital. I still feel that way, have a heavy cash position and my accounts are at new high water marks. This has been done while taking very little market risk, and hiding out in the chicken coup an awful lot of the time. (If I start to strut around like a rooster you'll know why).

There are some good looking stocks out there, a couple of them we have picked up. Apache continues to produce gains since April 2nd, and Lindsay Corp broke out again from a new high level flag giving aggressive traders a buying opportunity. I'm watching CSX closely and should it move too much higher on any volume I will be picking up shares. Finally the Buckle (BKE) keeps showing good strength as it builds its flag, and any breakout is, in my opinion, a buying opportunity.

Finally I want to look at PVA, which is a stock that was mentioned in yesterdays post as a stock that might be setting up. While PVA did clear the high of its flag, the setup was negated on the gap, and I apologize to anyone who I have not made this more clear to earlier.

Gap rule is very simple. If any stock gaps up (or down) to produce a "setup" on the very first trade of the day, that is to be ignored. The stock must show additional strength in the move by breaking out above the high established in the first 30 minutes of the day. This one simple rule has saved me countless hundreds of thousands of dollars.

As mentioned yesterday Steel stocks continue to look pretty sharp. SCHN is forming a high level flag, while X looks like it has a ticket to $200. Other stocks such as MT, GGB and SUTR also are showing strength and should be watched closely and considered for buying opportunities on appopriate setups.

http://www.nytimes.com/2008/04/15/business/worldbusiness/15food.html?ei=5065&en=9e715f242c497f48&ex=1208923200&partner=MYWAY&pagewanted=print

Just the Facts
The S&P500 lost 4.51 points for the day, closing at 1328.32
The NASDAQ lost 14.42 points on the day, closing at 2275.82
The Small cap S&P600 was down 1.32, ending the day at 362.67.
Nasdaq Volume came in around 1.5 billion shares, with declining issues clearly in the lead. We saw 13 New Highs made and 166 New Lows made.
NYSE volume came in about 1.05 billion shares, declining issues beat out advancing issues on the NYSE as well. We saw 49 New Highs and 87 New Lows.

Random Rants and a few Rational Thoughts.

On March 20th the major market averages put in a follow through day. A follow through day is a pretty simple concept that everyone should be aware of. Briefly, a follow through days occurs when, four to seven days after a market puts in a bottom the indexes close significantly higher on significant volume. This tends to confirm that the prior bear phase has ended for the time being and its time for investors and trades to look for leading stocks in leading groups to buy. A follow through day, it's important to note, does not mean that a new leg up has begun, but no significant move to the upside has occurred without one.

So, on March 20th the market delivered us a FTD, but I gotta say it's not acted well at all. Typically after a follow through day I'd like to see new names breaking out of bases and leading the market into higher ground. At the very least I'd like to be seeing old names breaking into higher ground and carrying the market back to higher levels. We have seen old leaders re-establish themselves, especially Ags, Fertilizers and other commodity backed names. These types of names are likely to remain in a bull market until we realize how stupid it is to burn our food for energy while half the world starves (oops day I say that?) and the dollar stops its decline. To me the biggest problem with this rally has been the lack of participation at any real level by the financial stocks, I've never seen a meaningful rally begin without them coming out to the park to play as well, but with lingering fears over write downs in the Sub Prime situation, confidence in that group is likely some time away.

As I scanned the markets meager offers this morning and last night I have not been able to come up with very many groups or stocks to catch my eye. Like I said the Ags have their own little thing going on, but the air is getting pretty thin up there by now and we are just now starting to see the rumblings of backlash against biofuels. I have maintained very limited exposure to the market, remaining still around 80% in cash with my accounts at their high water mark currently. As one of my money management clients recently told me “You sure are not the most exciting guy around, but I sleep well when the market is going crazy knowing that you will take care of my money”.

A few stocks are worth mentioning for possible longs including LNN and CSX. Both of these I would only take as add on positions if I already owned them from the breakouts last week. APA and other oil stocks continue to put in superior performance and are likely to offer good buying opportunity on the first pullback so long as volume remains light and the decline orderly. PVA is a small oil and gas company that might be setting up here. The Buckle (BKE) is certainly one of the stronger names in retail land and I plan to pick up some of it myself should it break above the high of this flag its currently forming on the daily charts.

On the short side I only have a few names. I like IWM (small caps) as well as AUY should they break lower at this point. Should that happen I will be a seller of both of them.

You'd think that when the CEO of a major corporation, especially one as importance as GE comes out and says "We are going to have great earnings, its going to be a blow" he wouldn't have worded it incorrectly and instead said "Our earnings are going to blow", but that's just what he did. Jack Welsh, Immulet is not.

S&P500 was down 27.72 points (2.04%) and closed at 1332.83

The NASAQ triggered a trap, closing down 61.46 points (2.61%) and closed at 2290.24

S&P600 Small Cap Index also had a difficult day losing 9.44 points (2.53%) closing at 363.99

NASDAQ Volume was around 1.8billion shares, a decent dip from yesterday
We saw 10 New Highs and 122 New Lows on the NASDQ
NYSE Volume also dropped slightly to 1.17 Billion Share
The Big Board saw 24 New Highs and 50 new lows.

As I stated at the start of today's commentary General Electric's terrible earnings surprise yesterday thew the market into fits. The CEO of a major corporation does not just come out and promise blowout numbers then screw the pooch when the actual numbers come out. This caused a lot of worry, especially when that particular company is seen as being a barometer to the overall economy. Rising oil prices. I'm going to give today a pass because of volume, but also due to the fact that leading stocks held up pretty well overall, and we had a situation where they could have very easily fallen apart, but I'd say overall its held decently.

My involved in the market has remained very tepid. I just read the other day that the average mutual fund is down around 14% for the year and the average hedge fund over 10%. All year I have really been fretting the fact that maybe my clients would be unhappy with me for having such a large cash position (we've averaged about 80% thus far for 2008) and not producing huge gains, but all have expressed great pleasure with what I'm doing. One of the key things to trading, which I learned long ago, is simply not to go broke, nor allow yourself the opportunity to suffer a drawdown you can not recover from. This is the most important thing, everything else really is secondary. There will come times ago where you can grab 20% + quarterly returns, but for me right now is one of them, so I'm taking very few but carefully selected trades, most of which I have explained here on my blog.

Apache

Point and Figure charts are one of my favorite ways of getting a good look at a stock or index. By the very nature of how they are setup most of the noise is taken out of the picture and you get a good view of what the price action on a stock is. I always start off looking at my bar charts (Most people use Candlesticks now I suppose, but the data is the same in either case, it really comes down to visual preferance between the two) and that brings me to the list of names I might like to be looking into further.

The commodity related groups have been in a bull market for a long time now, led by Ags and Fertilizers, Oil and Gas, Coal and anyplace else you can think of that we are suffering from inflation due to the US Peso's (err I mean Dollar) fall from grace. Apache gave me my entry single on March 27th and I paid an average of $121.04per share (the breakout point was above $120.65 to give an idea how much I was willing to "chase" in this particular case. On Friday I sold half of my shares as APA declined under $133, but really this has been a pretty orderly decline in a strong sector, so I would anticipate buying them back at some point and holding onto APA for larger and longer term profits.

DELL Computer Trade

I just wanted to put up this chart example of DELL for you guys to look at and get something of an idea of what I'm doing and looking for. All of my scanning starts out with technical analysis, and from that I build further lists based upon additional fundamental and technical criteria. For whatever reason though I do find that I'm not as profitable on the short side, especially when its with individual stocks, so the majority of my shorts these days (68% to be exact) are in ETF's not a single stock. The shorts are almost always at least 90% technically based, which is a bias I would never give towards T/A on the buy side. In any even, attatched is a daily chart of Dell Computer showing the daily chart for the past several months. The thing that to me stood out immediatly on DELL is that long period of sideways movement, a base for lack of a better word. It continued to make this base, trading sideways, even when the overal market would rally. We'd get a market rally and good ole DELL just sat on its butt and did nothing. This is a strong cue to a trader that he/she should put a stock on their christmas list and be looking for opportunity. I finally took my on April 4th @ $19.76 per share. Obviously this hasnt turned into a huge winner yet, but for a stock that I was able to get into risking about 30 cents, I'll take that every day and sunday. Any questions feel free to ask.

April 11

Nasdaq Composite: +29.27 to close out at 2351.70
S&P600 (Smallcap Index) +3.53, closing at 373.53
Nasdaq Market Volume of 2.13 Billion shares, an increase of 17% vs. Wednesday
NYSE Market Volume of 1.228 Billion shares, up 8%.

New Highs on the NYSE came in at 37 vs. 40 new lows, although over in Nasdaq'svill the figure was not so pretty with 12 new highs being made and 93 new highs being made.

Markets opened on Thursday with a good deal of bad news, certainly enough that even just one week ago the indexes would have been sent tumbling. Oil is back over $110 per barrel, and it looks likely to settle in the $80 to $120 range for quit some time to come. UPS came out with bad news, and predictably they placed the blame right at the foot of higher energy costs. This did lead to a good number of Transportation stocks, both Truckers and Rails having a less then stellar day. Novellus (Nasdaq: NVLS) came out and said things are getting worse with new end in sight: What did the broad based semi-conductor do? It rallied, a decent rally even..this coming from one of the markets weakest overall sectors as of late. The Dollar is crashing and CNBC has even started to bring people on the network to remind us all how bad the great depression was ( I remember the great depression too, I once told my mom I didnt have to eat the Sh** she cooked, and so I was grounded to my bedroom for 10 days with nothing in there but a book, a pencil and paper...Now THAT is the depression!) and that the next one is just around the corner. We can of course take relief in the fact that the Great Depression Guru's CNBC keeps bringing out are the same idiots who have stayed bearish since the 1907 Financial meltdown almost destroyed American's young financial system.

So, in a nutshell here is what we see: The market is getting hammered, I mean pounded like my older brothers used to pound me, every single day with this company or groups bad news, or this jackass self important idiot in Washington thinking he's gonna fix the system. Overall the market has had very little but bad news through its way, but somehow it has managed to hold together very well: Not that it has gone up much, but most important is that it has not really gone down at all. A weak market, or even an average market, would have been beaten silly buy all this news, yet here we are. Now, I know a lot of people like to argue with the market: “You idiots, can't you see that all the numbers are coming out bad? Cant you see that the Fed has lost control of their mandate and they are printing dollars like they are Reichmarc's. Can't you see? You people are fools!!!”. Now you may ask how I'm so familiar with that psychosis, and the truthful answer is that I've been afflicted by it myself In the past.

Right now though I think that the market is speaking to us, and hat it might be saying is that its stronger than every one things it is. A few stocks you may want to watch on the long side LUV, RIMM, RIO, HAL (only on a pullback), CHK, EWZ, BA, PCU. The next group are all oils and steel stocks which need to pullback first in order to get a decent entry: APA (A note of disclosure I was in Toni Hansen's Free Mainstreet chatroom on April 2nd , gave the idea to the group and took it myself. I'm still long some APA from $120.35, in this case I will be looking to add exposure rather then to take on new exposure with this stock, in any even a pullback will present a nice opportunity IMO). Also on the list of stocks needing pullbacks NBL, MT, X. On the short side of the market there are fewer setups then I had thought we might have, but in particular WM, SIVA, PFE, GM and RF.

Also, please note that on the right hand side of my blog near the top I've added several RSS feeds so that you can be alerted as soon as I post something new. As always if you have any comments or questions please let me know.

Thats what you get for thinking

My grandfather was great with sayings. "Your digging yourself a hole you cant get out of, you better through that shovel down" he'd say, or "That aligator mouth of yours is going to get your tadpole ass in some trouble kiddo" and his favorite "Thats what you get for thinking!"

Well sometimes Gramps old advice is relevent to me in the market. Today I'd probably have to pick "Thats what you get for thinking". The majority of my longs are going down, my shorts are going up. The great thing though is that I still think the rally here is suspect, my own idea is that it will turn out to be not much more than a good sized rally in a bear market. These certainly offer trading opportunities, but not nearly as many or as good as a full on bull market would. For the time being I'm barely invested and sitting heavy in cash. Trying not to overthink things, I'd hate for Gramps to have to yell @ me from the grave.

April 10th

The markets started off with a bit of a double whammy today with higher oil and commodity costs as well as poor news from UPS which carried over to other Transportation names. The Retail tracking indexes hit the top of their most recent ranges and backed off from there, bringing those stocks lower. Likewise Financial groups had a hard day as well. Certainly this is not the type of market action you want to see if you are long. In fact, even though the DOW was only down 50 points for the day, the underlying action was much worse than the numbers on the index would have you think. Up/Down Volume was heavily in favor of the downside. The only area's retaining strength seem to be commodity and commodity related markets.
The Dow closed down 49.44 points for the day, settling at 12527, while the S&P500 was off by 11.05, closing at 1354.49. The Nasdaq closed down over 1%, losing 26.64 points, coming to rest at 2322.12. Smallcap stocks though took the worst of it, the S&P600 losing nearly 2% on day, losing 7.03 points and closing at 369.9. Volume was significantly higher on the Nasdaq than the prior day, up nearly 12% for the day. Over on the NYSE volume also rose, but not as much, climbing about 2% above Wednesday's levels. Yesterday marked a distribution day for the Nasdaq, the second such day since the rally was confirmed on March 20th. This is a pretty high number of them for the market to be having so soon after the FTD, not to mention that as stated its hard to find any real leadership outside the commodities and related areas. My own personal opinion would be that at best the market is seriously strained right now, and in a worst case scenario its backed to the chicken coup for chicken little as the bear market resumes.
There are a few stocks out there worth having a look at, the majority of them are on the short side. We did very well with the breakout from April 2nd in Apache Corp (NYSE: APA), with my own average entry point being 120.35. I will be watching it closely on any pullback to see if an opportunity presents itself to get bigger in this clear leaders. Lindsay Corp. (NYSE: LNN) has also been a stellar performance generator for me since the April 1st entry of 103.86. I was able to get into this one on a nice daytrading setup which significantly reduced my overall risk, but I slightly mismanaged the trade, getting out with a profit, but before I probably should have done so.

Now in the Brandon is a Financial genius we simply look back to yesterdays newsletter where I noted that I thought the Ag groups might be topping out and advocated a spread, DBA short and MOO long. It's just such a wonderful feeling when your longs go down and your shorts go up. Probably the market teaching me a lesson about trying to be too cute with things. Simplicity almost always works better.

As I said at the onset of today's report yesterday's market action was much worse then that of a down 50 point's DOW Day. Plenty of stocks and sectors are looking like the south side of a north bound donkey, while very few outside of the commodities and agriculture have much to write home to mom about. On the short side we have plenty of stocks to look at. Wendy's (NYSE: WEN) has over the course of the last several months been the picture perfect example of both a basing stock and of a stock that has a lot of relative weakness. Why? Well, during the entire time that the market did rally WEN was never even able to attempt to breakout of the channel its in. It has remained a dog for the entire time the market was offering buying opportunity and should the market turn lower I'd expect a name like WEN to be a clear leader. Wendy's is very similar to the setup we have seen in DELL, which I shorted on April 4th. In the troubled financial's sector I think that stocks like BAC, ZION, CORS and LM should certainly be on your radar as names worth following and potentially trading as well. One final stock I will give you to look at is Casey's General Stores (NASDAQ: CASY). The setup in CASY is actually pretty similar to the one in WEN, this simply being a stock that, even when the market did give it an opportunity to get a bid during the rally it could still not get out of its own way and remains trading near the lows. A break lower will trigger a short setup in this stock.

April 9

Despite a drubing of bad news the major US market indexes managed to put in relatively good performance. Led off by Alcoa several other stocks reported earnings under pressure currently and for the foreseeable future. Then the International Monetary Fund got in on the game, noting that Global Markets, particular American Financial Markets, remain under considerable strain. They stated that banks are likely sitting on nearly $1TRILLION in credit losses. But wait, wait, there's more fun to come. Later in the day the Fed minutes came out, and in that the wise men at the Fed mused about a severe and protracted downtrend in the US Economy over the coming year. All in all the news was pretty ugly. If I had not seen the markets action myself and some-one had just told me all of these things came out, I'd be expecting to see a several hundred point down move in the market. However, Mr. Market does not agree with my assessment at this time, and its better to be riding his coattails than standing in front of the avalanche.
This is a key principle that is responsible for a HUGE portion of the success I have enjoyed over the last 10 years, and its very simple. That which should go up, better go up. That which should go down, had better go down. If everything is terribly bearish but the markets continue to move higher, its not a sign of “idiots who dont understand how bad things are”, its a sign that the news that's come out has already been baked into the cake and the market does not mind what its seeing.

So, our markets. The Nasdaq closed down 16.07 points to 2348.76. This was on light volume, my main worry here is that we saw only 15 new Nasdaq Highs Vs 64 new Nasdaq lows. This goes right along with the theme I've been discussing that its been pretty hard to find quality setups out there. Declining issues lead Advancing issues slightly, 1678 to 1226. The more broadly based S&P500 lost 7 points, closing at 1365.54. Thirty seven new highs were made on the NYSE, while only 19 new lows appeared. Declining issues still lead advancing issues by a ratio of 1816 to 1325, but again we had a pullback on pretty tepid volume, so this is not something I'm going to spend a lot of time worrying about.

I generally like to have some trading idea's in here for you all, but as of late they have been few and far between even with a volatile market. Only a few stocks are really standing out to me at this time. In the agriculture arena the DBA looks like its putting in a decent top and could be shorted. I'm considering that along with a buy in the MOO to hedge myself a bit until a clear direction shows itself in the group.

The financial group continues to look like the south end of a north bound donkey, and this is of major concern because I have never seen a meaningful rally without this key groups participation. One stock that is making a nice base and looks ready to be coming out of it is MA. We purchased Visa the other day and already have nice gains on that, and MA is looking pretty good at this point. Oil stocks have been fairly strong of late as well, but I think we will want to wait for a pullback in them as they are up in the thin air right now. In Big Cap land IBM has held up nicely and looks ready for a decent run if it can break this base its in right now.

TUP Trade. March 31st to April 3rd

The prior two posts show a daily and intraday chart for Tupperware Brands (TUP) which I purchased on March 31st for an average price of $38.68 per share and again on April 1st for and average price of $39.77. I ended up selling it today near the open @ and average price of $40.93. Overall this was a nice, profitable trade, though the length of time I was able to stay with the stock before my trailing stops hit was less than I'd like to see. The markets right now though are anything but a sure bet, so I'm keeping everything on a very tight leash.
I started my life in the markets as a daytrader. My first dream was to become a pit trader in Chicago's Ag markets, but as technology progressed it became fairly evident that the days of the pit were numbered. I did come across a site though one evening about some new fangled thing called "Daytrading Stocks" and being a "SOES Bandit". The idea was that you could buy at the bid and sell at the ask. EUREKA!!!! Thats exactly the edge I wanted to have in the pits, so I contributed my money to the market god of tuition over the course of several months.
Eventually I learned that short term trading in the volatile markets of the late 90's could indeed be very profitable, but holding onto a stock for more than the simple bid/ask spread was the only way for me to become profitable. At first my approach was 100% technical, and to this day T/A and risk/money managment remain by far my better skills.

As time progressed I became more and more involved in managing other peoples money, and less involved in education. My style evolved into one that included both Technical and Fundamental criteria's, and generally a timeframe that is measured in a timeframe of weeks and often months. As I said earlier though the markets right now are not exactly in prime condition, so I'm keeping everything very close to the vest.

The setups that I got in TUP is by far, in my opinion, the best way to get into swing/position trades. I love nothing more than to have a daytrade entry that allows me to get in for less risk, but hold on for the potential gains of a swingtrade or position trade. You can see in the case of TUP that several months ago it had a very powerful move to the upside, then as the overall markets collapsed TUP held itself together fairly well. This is the very definition of relative strength, which is in my opinion the only technical tool that provides consistent superior returns. So, we now basically have the daily chart covered. Once I have isolated a daily chart that I like I go to work on the fundamentals, reading the annual reports, looking at the data provided by daily graphs and occassionally having Anthony call investor relations if I plan to hold onto a stock for a long period of time.

I was very pleased with the technical condition of TUP, given that it performed so well during the markets snit fit. Aside from a very high debt load, the fundamentals are also pretty appealing. The stock has a relatively low Price to Earnings Ratio, its EPS rating is 87 according to IBD, which means that its done a better job at growing EPS than 87% of all the stocks in the market over the last several quarters. Last quarter the stock saw EPS increase by 26%, just over the 25%+ that I like to ideally see. One thing I also liked is that its Revenue growth is fairly consistent with its EPS growh, so I dont have to worry too much that the growth is manufactured and not organic.

Now the intraday charts. As I said, the best situation you can find yourself in is to have a potential swingtrade or position trade that you are able to get a daytrading type entry on. The reason for this is simply that you have to risk much less when placing your stop loss on an intraday setup than you do using the daily. The downside of this is a slight increase in the number of stop outs you will have, but you simply need to be willing to get back in if the stock/market signals to you that this is the thing to do.

You can see that the first breakout entry occured late in the day on the 31st, and the second one around mid day on April 1st. Both of these daytrade entries allowed me to enter the stock with very low initial risk, and also to be moving my stops up fairly aggressively as well. On my first entry my risk was about 20 cents, and on the second it was around 35 cents. For this very small risk I was able to close the trade out with an average gain of $1.89 per share, which works out to a very nice risk/reward tradeoff.

Not every trade presents the opportunity to get into a longer term idea on a short term setup, but those that do should never be ignored as they can add substantially to your bottom line.
If you have any questions please feel free to ask away.

LNN Specifics

Attatched you will find a chart of Lindsay Corp which trades on the NYSE under the ticker Symbol LNN. Lindsey manufactures self propelled irrigation systems for the global agriculture industry. This is a group that, obviously, as world populations continue to grow, and the ranks of the middle class explode, is a very in depend group and area. When I look for a stock to buy or sell I always start off with a chart. For the first six and a half years of my trading career I was a 100% technical trader, and while I now incorperate a lot of fundamental analysis (Anthony) into what I do, T/A remains by far my strongest skill. Each evening I will download TC2000 data onto my computer and scan through the 2000/2500 most actively traded issues of the day. This gives me a good broad look at the market, something you wont get looking at only a few setup based scanned patterns, or even by looking at the indexes themselves. What I'm always looking for is relative strength in an upmarket and relative weakness in a down market. Once I have isolated that I start watching for patterns to show up that give me clues about what a stock might be doing. We can see here on LNN that on March 19th it had a HUGE up gap. That gap was not filled, which is very important. Most gaps try to fill in, those that do not often represent the very strongest names in the market. A few days after its large gap LNN did what most stocks will do in this type of situation and it rested. Stocks can rest in a variety of ways, they can trade sideways, or slightly down (such as LNN did) forming a flag. This high level and very tight flag that LNN formed is one of the very strongest patterns you are likely to see. After I look at the chart I want to have a basic look at the fundamentals. In this case I see that LNN is part of an industry that is having a global expansion due to fundamental shifts in world population trends that are likely to continue. The stock has had solid earnings and revenue growth going back the last three quarters. The most recent qtr saw EPS increase by 276%, which is well above the 25% I like to see. Not only is EPS growing nicely but this is a company with very little debt, decent cashflow and a respectable 12% return on Equity. So, when I combine these things with the technical I have a picture I like IF the stock confirms my opinion is a valid one. For me the only way for a stock to prove its validity is to trigger an entry. In the case of LNN I had my buy order placed above 103.50 and had an average entry of 104.11. In more "ordinary" market conditions I'd be inclined to give a stock like this a lot of room to move around once I got in, but in the case of LNN that was not the case. My first concern came about on the very day I bought the stock in that volume was not all that heavy. Yesterday the stock started off very strong, but pretty quickly turned to the downside and triggered my trialing stop loss around 109.50.

LNN Trade

april3

Yesterday the market did a pretty good job of digesting the gains from the large moves that occurred on Wednesday. There was not a whole lot of action, though the general trend was lower. The NASDAQ lost 1.35 points to 2361.4, the S&P500 was off 2.65 points to 1367.53 while the Dow Jones Industrials lost 45.36 points and closed at 12,609. Volume was light across the board, which is what you want to see in an uptrend. The ideal pattern is up days on heavier volume and down days on lighter volume. So long as we see this I will stay cautiously optimistic about the market going forward.

April 2

On Tuesday, for the first time in awhile, the financial issues jumped into the drivers seat on a rally. Indexes ended the day much higher across the board. The Nasdaq Composite jumped 83.65 points (a gain of 3.67%) and closed at 2362.75. The more broadly based S&P500 rose 47.48 points (3.59%), closing at 1370.18, while the Small Cap S&P600 Index rallied a strong 3.27%. Not only did we see large gains across the board, we saw some leadership names appear, which has been lacking on prior rally attempts, and we saw volume jump across the board. This should be seen as nothing but a bullish follow through day to the upside. It's important to note that no significant rally has ever taken place with out a follow through day, although a follow through day in and of itself does not always lead to a sustained rally. As we have seen over the last several weeks upside follow through days have quickly been followed by distribution on heavy volume, so, I'd say caution is still somewhat in order, but I will certainly not be sitting 70 to 90% in cash anymore. All in all, I must say it's not a bad start to the second quarter, especially after the drubbings of the first.
Today I started building positions in LNN (I wish volume had been better), ISRG which gave a great intraday entry point that I will cover in another article this evening, TUP (again I wish it had more volume behind it, but I'll also be doing an article on this trade for your educational enjoyments), OI and CSX. I've owned AMPH for some time, but it's a fairly low volume name so I have not followed it closely here. It would appear that for the time being we are “out of the woods” so to speak in terms of the downside in the market. Still play a bit cautiously though because if this is truly “the” bottom there will be plenty of opportunities to get on board the trend.

March 31

I want to be bullish. I terribly want to believe with rational cause that everything is going to be fine and the markets will see new highs soon, or at the very least that some decent and important sectors will. Much to my displeasure though, I cant say that with a straight face. We had a nice follow through day on the 20th with high volume and nice price action in all major indexes. That would be the good news I suppose. The bad news is that there where very few strong stocks that actually partook in that rally, new names breaking out of bases that could provide us with leadership and the like. Worse still it's only taken 4 days for a negative distribution day on heavy volume to occur after the follow through day to the upside. Important sectors such as the financials continue to look rather putrid, and the same could be said of retailers, semicondutors and utilities. Even the Agriculture related groups are starting to show some signs of strain. Not exactly the pretty picture you'd have in mind for the market to be showing right after a follow through day to the upside off a bottom. And, did I mention I really wanted to be bullish?
Because I wanted to be bullish I decided to look at a lot of stocks this weekend, hoping I could find some gem hidden someplace that had so far escaped my eye. No dice! I looked at the 2887 most heavily traded issues on the NYSE, Nasdaq and AMEX (yes all of them) before I gave up in in disgust. For all the looking I did, I was able to find exactly nine, yep you read it correctly NINE stocks that I thought had decent charts and management, enough so that if maybe the market would cooperate I'd be willing to put some of my own and my clients hard earned money into them. On the other hand, I had three pages worth of stocks that looked mighty fine to short, forty four that look excellent. Steel stocks and some oil companies look good (some oil companies also look terrible though). Horay for the incredibly shrinking dollar?!?!
So, where do we go from here? I dunno, a bar with good drinks maybe? About the only good thing I can think of to say about Friday was that the volume was the lowest of the year, but that's not the most unusual thing in the world to have happen after a heavy volume distribution day such as we saw on Thursday.
What to do, what to do? Well if your like me your picking up your toys and going home. My oldest brother is 6-5 and over 200lbs, I learned a long time ago that big kids who want to whop your butt have no problem doing so, and the only recourse you really have is hiding out with mom. So, my money, my clients money is basically still sitting in cash. I'm still working on getting some positive return out of the market. The accounts remain at their high water mark, but there is not much upside movement going on for us. The good news I suppose is that there is no downside movement which should make it easier for me to get paid when things do turn around and opportunities present themselves, which will happen.

Hillary is Only Human ya know

It's been a bit of time since I've posted here. I've become pretty bullish which I'll explain later on this evening or early tomorrow morning. In the mean time I will give you some humor.

When confronted with her lies about being under fire in Bosnia in the mid 90's,
Clinton told reporters in Pennsylvania on Tuesday: "So I made a mistake. That happens. It shows I'm human, which for some people is a revelation."

Now, I dont know about ya'll, but I've never been fired on by anything but my brother with his BB gun after my cousin and I sunk him with our BB guns in his blow up dingy where he was hanging out with his girlfriend in the shit slew. I was scared for my life, not just the gun...I was also afraid me might tear me apart limb by limb. He knew my only hope was either my mom or my gramma, so he kept the paths to them pretty well covered in his field of fire. In any case, you can damn well bet if I'd ever in my life had to be ducking sniper fire and run my ass to the armoured car Id remember the time and fucking place. I guess I just dont lead an interesting enough life!!!!

Do not trust yesterdays rally

Yesterday the Fed broughtt he big dope ship into harbor again and lowered rates by 3/4 of a point after having already lowered them 1/4 of a point on Sunday. The junkies threw a party, but the problem is that fewer and fewer of them are actually showing up at the party. The market had its largest up day in several years yesterday, yet Nasdaq volume was about 2% under Monday's levels, while NYSE volume shrunk by over 5%. Hardly the type of action I'd like to see on a rally. Not only that, but there are still far more stocks in bearish patterns and showing relative weakness than there are stocks showing relative strength. Look at names such as DELL, CREE, BIDU..the list could go on and on. The clear leadership in this market remains to the downside, and as such heavy investments in cash and some small short positions remains the best course of action IMHO.

March 12

First I want to thank everyone who has written to me over the last several days and wished me well with my health. I will email each person back individually to say thank you, but it will take some time, more than I want to have pass before you hear from me. So again, Thank you.
Next, it's going to sound like I'm talking out of both sides of my mouth here in this commentary, typical guru crap, it might go up and then it might go down, but that's the place we find ourselves in.
The Dow Jones Industrial Average experienced its single largest one day move in nearly five years, closing 416 points higher at 12,156.81. The broadly based S&P500 rallied 47.28 points to 1320.65, while the Nasdaq gained a rather staggering 4% for the day, up over 86 points, closing at 2255.76. Volume was much higher across the board, up 14% on the Nasdaq and climbing nearly 18% on the NYSE.
So why all the fuss? Well, on Tuesday the Federal Reserve rode into town with more heroin and the addicts, led by the financial indexes, rallied strongly on the news that the dry spell might be ending. Not only did the Fed ride into town, but it came calling with its friends from the Bank of England, the Bank of Canada and the European Central Bank. The Fed announced that it would be adding more liquidity to the system, $200billion in Treasuries to banks in exchange for their debt. Now, in normal times requires good collateral in order to loan this money to the banks, but, as they did in August the first time they tried this trick, they will be accepting any crap the bank would like to get off its own books and transfer to the Fed (ie. Your's and mine) account. This move comes just ahead of next weeks policy meeting where the spoiled children are kicking and screaming and demanding a new round of rate cuts since the other ones have proven so helpful.
So, now that I've gotten all that off my chest, lets have an objective look at the state the market is in at this point, the good, the bad and the ugly. Each of the major indexes gapped up significantly on the open today, in fact each of them trapped. A trap occurs when on the prior day you have a very strong directional move, with the market opening in this case at the days high and selling off all day to close at or near the lows. The next day, if the market goes over that strong selling days highs a trap is created. This tends to lead to very strong short term moves to the upside, and sometimes it starts off something more significant. Today each major index had created the trap on its open, which is an even stronger trap. Traps that occur on heavy volume are something you ignore at your own peril.
Now with that said lets come back up a little and try to understand what is going on overall. First, this is not the first time the Fed has ridden to the rescue and allowed banks to unload all their junk on them. In fact, they did it back in August as well. The fact that they are having to do it again is not a good sign for the overall health of the market. The fact that they had to recruit all of the major central banks in Europe and Canada is to my way of thinking an even worse sign. Typically when the Fed is lowering rates and adding liquidity to the system markets will rally (thus the saying “never fight the fed”). Right now though the problem is that the cuts and excess liquidity themselves are the culprits to our problem. Adding more of the problem to try to fix a problem is about as smart as, well adding more of your problems to try and fix your problems.
The liquidity infusion and rate cuts that started in August have been unsuccessful to this point, and there is little reason to think that this time will be too much different. I do suspect that we are in for some upside from this point, maybe even substantial upside, however I do not see it as long lasting. In the end none of the problems have been fixed, only added too. What the fed is doing is kind of like offering a kid extra recess time if he stops misbehaving in class, sure he will behave until recess, but you have probably harmed him greatly by giving him the expectation that bed behavior begets rewards. One of the most important thinks I look at are setups. What do I mean? Very simply, each evening as I manually scan about 4000 equities I simply take note of how many stocks are breaking out to the upside and the downside. I also try to get an idea of how many bullish setups (even bad ones) there are compared to bearish ones. Typically when the market is in good shape there are a lot of good setups, even when the market is coming off of a low. This is not the case right now, in fact in the S*P100 I only found 19 stocks I'd classify as having anything remotely close to a buy setup, and most of those were not very good setups. So, that's how I see the market technically.
I also think that the fact of the Fed having to bring in the Bank of England, The Bank of Canada and the ECB is not a good sign at all. I mean, if our banking system is solid and sound, why do we have to rely on CANADA, England and the friggin ECB to bail us out. Does not bode well.
So, what to do from here. I'm personally staying very cautious. If this is a rally that has legs to it that will show up soon enough and there will be plenty of time to make profits off the upside. I have some small long positions in the QQQQ, DIA, URBN, APA. I will try to find some other stocks I can add to my portfolio as the rally moves on, but each of them will have a very tight leash on them, and when the market turns back to the downside, which I think it will in a few weeks, I'll buy some QID and SDS and sit on those for awhile as this all unwinds.

MIA

I know that there are a number of people who enjoy reading this thread and I want to apologize for not updating it over the last several days. On Wednesday night I started to come down with shakes, a fever and body aches. Since Weds. up until now my temp has not dropped below 102 degrees, and has been as high as 104.1. I finally decided I should go to the doctor yesterday since I'm due to have the boobs I never knew I had in the first place taken off on Friday and they said I'm just sick from that, but its also possible I have some kind of infection so they put me on antibiotics. I'll keep you all updated as to how I'm coming along after friday. The surgeon has told me that the mesectomy is not too terrible for men and I can probably go home late the day of the surgery or early the next afternoon if I want so long as it's draining correctly and the pain is under control.

Market Comments

On Wednesday US Markets ended the day mixed, while having mostly traded entirely with-in the range of Tuesday's trading action. Federal Reserve Chairman Helicopter Ben Bernake signed that with the most recently released economic data showing a slowdown in the American Economy the Fed is set for more rate cuts. (ADD moment here: What happens when things are still bad and the Fed has cut rates to zero? What ammunition do they then have, rates are already effectively negative if you factor in inflation...Yes, I am including Food and Energy here. I know that Cosmopolitan Magazine is trying its best to make all of the worlds woman anorexic, but most still eat) The Dow closed 9 points higher, ending the day at 12,694, the Nasdaq climbed just under 9 points to close at 2352.78, while the broadly based S&P500 closed down 1.27 points, ending the day at 1380.02. Volume was down slightly on both exchanges.
Those of you who follow my blog or have me managing your money know that so far this year I have approached the market with a large dose of caution, staying mostly in cash. This has allowed for the preservation of both capital and confidence when conditions change and are more favorable for putting the money to work.
When I'm looking at any market one of the most important things I look at is the news. Not what specifically the news was, or any type of play off that news itself, what I find to be much more important is the markets reaction to any news. For example, it takes a strong market to shrug off bad news and not move lower. I know a lot of people will spend their energy in that type of situation screaming and yelling about how stupid everyone else must be, but in the end they often end up being the one's broken and fooled. Over the last several days/weeks the market has encountered really nothing but bad news, however the general markets, and even the specific sectors effected by the news are more often then not shrugging and moving on, higher. Again, this is a significant sign of strength, one that shouldn't be ignored.
So, whats the plan of action at this point: Investor's Business Daily, for the firs period of time in 2008, has the market listed as being in a confirmed rally. This suggests that traders and investors should start building positions in stocks coming out of sound bases and showing good relative strength. Although William O'neil and IBD's work and method have strongly effected the way I approach the market, there are some significant differences. For example, I will not consider the market to be in any confirmed rally until the first pullback. To my way of thinking this is the first important test and it gives some more evidence in favor of the upside. The psychology of a bear market is dominated much more by fear then that of a bull market, one effect of this is that most of the biggest single day up moves have occurred during bear markets, and as a general rule bear market rallies can be very strong.
Over the course of the next few days I'll be building a lists, both of relative strength and weakness, to be prepared for which ever direction the market takes from here.

Cash Trades

Over the last few days several people have questioned, and a few even challenged me on the relatively large cash position I have been holding for most of this month. As I write this the S&P500 is down 3.8% for the year, the Small Cap Russell2000 index is off by 6.2%, the S&P500 is down nearly 6.2%, while the Nasdaq is down over 15%. At the worst levels the S&P500 had shed 15.5% for the year, the Nasdsaq 19.8% and the Russell2000 just over 16%. Since most Mutual Funds and Hedge Funds actually put in worse performance than the Indexes its likely that the majority of them are down more. With all this pain present in the market positive numbers are hard to come by, and those who are lucky enough to have competent individuals handling their money (be it themselves or a paid profession) are happy indeed. My own accounts, both managed and personal are up just under 5% for the year, so while many on message boards complain, I've not had a single client express anything but pleasure in the performance so for this year.
Having spent a large part of my childhood in what could be seen as extreme poverty I'm very aware of the value of money. The effect of this is that I've always been much more focused on the worst case scenario than on the best. This has protected both myself and my managed clients on a number of occasions, including this year so far. The biggest danger that an investor faces is that of large losses, either generated by reckless trading or a bear market. In either case the effect can be devastating and very hard to recover from. A loss of 20% requires a gain of 25% just to get back to your starting point, while a 50% drawdown would require stunning performance to generate the 100% gain needed to get back to even. These are numbers you should BURN into your brain and always be considered. Note also that the losses generated from a bear market can take a heck of a long time to recover from, especially when you consider the inflation adjusted returns. The losses of the Nasdaq in this decade provide an excellent example of the damage a bear market can inflict upon investors. The Nasdaq 100 is up over 120% from its 2002 lows, but in spite of this spectacular gain it is still down nearly 64% from its 2000 highs. Long term investors in the Nasdaq will not find themselves BREAKING EVEN from 2000 levels until the market rallies yet another 175%. This is in real, not inflation adjusted terms. It's likely going to be several years until the Nasdaq finds itself back above water, and several more before it does so in real terms. Investors who bought DOW stocks in the mid 60's found themselves waiting nearly THIRTY YEARS, until the early 1990's to recover from the hit they took in a brutal bear market. Can you wait 30 years on your investments JUST TO BREAK EVEN? Even if you can, do you want to?
So what is the solution to this rather scary situation? In my mind trading into cash during periods of extreme uncertainty and declines. I charge no management fee's which means I only get paid for positive performance, doing better on a relative basis does me no good at all if the result is still a loss. So, even though being cautious might cost me a few percentage points on my overall performance, causing me to be paid less, its better in my mind than the alternative. Yes, maybe my gains, and as a result my paycheck, will be smaller for a short period of time. But, compared to suffering large, unrecoverable gains I'm a happy camper, and so are the clients put their own hard earned money in my hands to manage.

Feb 27

American Stock Markets started off lower on Tuesday after the Conference Board's Consumer Confidence Index fell sharply to 75, following an 87 reading in January. Next came the Core CPI, the Core CPI excludes food and energy costs since none of us really needs food and driving is bad for the planet so we should not do that either, which rose to 0.4% which was double the expected 0.2%. By late morning though the market was looking better after IBM announced a share buyback program and a talking head from the Fed had some dovish remarks suggesting they are less worried about inflation. This makes a lot of sense, because as I pointed out earlier obviously we don't need food, and Oil is evil and bad anyway. The Nasdaq gained 17.5 points, closing at 2344.99, the Dow Industrials gained 114 points, closing at 12,685, while the more broadly based S&P500 gained 9.5 points, closing at 1381.29. Volume was slightly higher on both exchanges, up about 1% on the NYSE and a bit over 8% on the Nasdaq. For the first time in awhile New Highs led new lows on the NYSE, though on the Nasdaq New Lows still outnumbered NH.
Investors Business Daily has already called the market as being one that is now in a confirmed rally. This suggests that Investors and Traders should be looking to add exposure to the long side of the market to partake in a bullish phase. While I've been a bit more cautious overall I can not ignore that the market has now started to rally on bad news, often the best signal of strength. I'm still heavily invested in cash, which is appropriate I feel until we see how the markets handle the inevitable pullback after this rally. Should that pullback be one that occurs with light volume then the obvious play is to be a buyer of strong stocks. I will at that point start building larger positions in leading names to take advantage of an up market.
Periods of weakness present traders with the very best opportunities out there for isolating pockets of strength in the market, similarly periods of strength allow for the isolation of the weaker names. With relative strength being one of the few technical measurements that holds up to vigorous testing this is very important. On the long side of the market Housing and related types of names have shown some very impressive strength. Names such as NLY and TOL are doing very well. Transport stocks too, especially the railroads, are performing nicely. Names like BNI, CSX, UNP and GWR have shown leadership even when the market itself was not. Finally some retailers have also shown some good strength in spite of a lot more bad news than good. Stocks like BKE, TJX, URBN. The Euro too has broken out of a long base, while the US Dollar has fallen. Investors and Traders can easily take advantage of the weak dollar with a long position in the FXE which represents ownership of Euro.
Isolating area's of trouble and weakness has also proven easy the last few days, and a number of important stocks are not taking part in the rally. They should be watched closely for shorting opportunities, because as I said earlier I do not buy into rallies until after they prove themselves by performing well on the first pullback after the follow through day. Since by my own set of rules then the overall market is still bearish until after this first pullback is well taken, I continue to look for short positions. Names like FRE and FNM, MRO, ADI, BUD, SNDK and GS all have shown poor gains even with the stronger market. Additionally the long bond is looking as though it could break down from these levels. This is playable with an ETF called the TLT.
Disclosure. My portfolio is currently about 82% cash. Stocks mentioned here that I have positions in are BNI, GWR, FXE, TOL, GS and SNDK.

Still hanging out with the Chickens

On Monday US markets across the board closed higher after a strong rally in the last 90 minutes of the day. The DOW gained just under 190 points, while the S*P500 was up about 1.4% and the Nasdaq was up around 1%. Volume was higher on the NYSE, beating out Fridays volume levels by about 8%, while on the Nasdasq volume retreated eight percent.
I tend to follow Investors Business Daily very closely, especially the Market Pulse and Big Picture. They are now calling this market as one being in a confirmed rally after having had a follow through day in the Nasdasq on February 13th (IMO A weak one) and then the follow through day today for the NYSE. Typically I try not to fight with IBD, but in this particular case I do not find myself strongly agreeing with them.
As I see things we have had very weak follow through days that did not not lead to any new leadership or strong market moves. In fact after the Nasdasq's February 13th follow through day the Nasdaq suffered a distribution day the very next trading session. Additionally, although volume did spike on the Nasdaq and the NYSE's follow through days it did so very slightly. Finally I get to market leadership. What leadership you may ask? Well, I have the same question. I see plenty of stocks that are coming off of lows, thats all well and good, but stocks coming off lows do not ignite bull moves. You need to have area's of strength in the market that can lead higher and generate excitement on the part of the crowd. This is sorely lacking right now.
So, for the time being I remain mostly in cash and on the sidelines. If this does turn out to be the real deal and we get a strong rally there will be plenty of opportunities to get on board. No market goes straight up or down for too long. My plan will be that if we do now get a pullback on light volume I'll start tip toeing into a few positions on the long side. For the time being cash is king as far as I can tell.