There are a few stocks doing alright. But this market is either:
A) Basing ~and that could take a while;
B) Teetering on the brink of breaching prior lows;
C) Getting ready for a bear rally due to stimulus bills, tax breaks, etc.
Leaders are few, and it wouldn't take much to crack them.
Cash is best for most...short term trading for others.
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31 comments:
Looks like the market is choosing option "C".
I concur. That is the most likely course.
Another possibility, if there is some real good policy coming out which will save all the banks fundamentally, there maybe a 11/1974 type of rally (since the pressure is released) that everything just wash up 5% everyday, leaders and laggards, for a few days in a row, and leaders have no chance to even set up any bases. This is remote but this is the one I mostly feared.
The only fear is the fear of missing the rally itself. I would rather the market go back to 1994 low.
Ge
hi ST
i got a qn for u.
previously i notice u have ASEI in your watchlist. I had it under my radar too.. but then subsequently you removed it from your watchlist.
Could you share your insights with me as to why you took it off??
thanks..
For a while there were only a small handful of stocks that looked strong. ASEI was one of them. However, I never felt comfortable with the daily avg volume of 190,000 shares traded...too thin. Once a few more stocks were on my list I just eliminated ASEI.
ST,
Some master in my meetup circulate the idea of a panic selloff of the market. Last year we had a controlled sell off although the weekly price drop did meet the historic panic standard.
So, we all thought that one last year was the panic selloff.
But think, now everyone is "all in", Bernake is in with 0 percent fed rate, paulson is in with TARP, now Obama and Geithner are in with the stimulus pacakage and bank rescue plan....when wall street finally realize that nothing is going to work.....then, we will have another panic selloff!!!!
Of course I am not predicting what will happen and stay strictly to the observation of price and volume action. BUy suddenly another panic selloff seems quite reasonable and in the horizon.
Based on the P/E and the historical standard, if using forward earning for SP500, we should go all the way to the low in 1994. I feel I am so stupid because I do not know how to short.
Ge
Hi Kevinsay,
I think you are probably right. I may have 2-3 years to study and really "get it" by that time. I should accumulate somewhere near 7000 hours of CANSLIM study after three more years and repeated Level III/IV a few more times.
Ge
ST,
Sorry I made a mistake about the rally in 10/1974. I studied it in detail during the weekend, and was very amazed by the powerful and the magnitude of the volume and percentage increase on that second week of october.
I cannot find the leading stocks for that rally. It seems both leaders and laggards were washing up by that tsunami rally.
The problem is, that rally lasted a few month and then failed. The leadership finally showed up in early 1975.
So you are right. I still need to wait for the right set up before I buy.
Ge
Hello.
Ive followed this blog for quite some time now (months). I have never commented before - I dont like to impose my thoughts/opinions on others, but I continue to see discussion comparing todays market with that of 1974. I firmly believe that is wrong. Recently I have created my own blog/site to track my progress/record (its still in the process of being made), in the site mentioned I have outlined my perspective of a "Market forecast". This compares the present day NDQC to the 1937/1938 Bear. You can visit this site at:
http://aztecsfinancial.com/?page_id=6.
Sorry ST. Not trying to Plug my site/advertise here. It is just easier for me to post the site than try to explain it.
I admire your trading qualities and enjoy reading your blog. :]
Aldo Aceituno
AztecsFinancial
And now it appears the market is choosing option B...
Aldo,
No problem. I don't make any money on this web log.
I haven't gone to your site yet, but I too have talked with a few traders about the similarities between this market and the '37-'38market. The charts are compelling -even the months match up.
If memory serves me correctly we should be startign another down leg here (In '38 I think the down leg started on Feb 20 - I don't have the charts in front of me). Then about the first of April we should see a big up move.
I've been thinking April for a long time now. As always though - we'll see.
ST,
Let's all hope that we do not repeat '37-'38. That took 4 years and WWII to bring us out of it. If we are truly mirroring that time (which I don't think we are), then that means we have about another 20% to the downside, and puts our bottom at about 2013.
When looking at the 40 year chart, 2000 - 2007 sure looks like a double top. If that's the case then this thing could get nasty. But not to worry. It only takes 1 or 2 stocks traded correctly to have a successful year. Waiting around for CANSLIM stocks right now (and in the foreseeable future) just aint going to get it done.
hi guys.. if i may. would like to reco you a book called 'manias, panics and crashes'
it is hugely a book written by an economist but it does provide a good insight on human psychology.
all major bull run are started by a 'shock' to the economic system which causes people to have distorted views on the economy which in turn leads to buying.
in the 1938 case, the 'shock' was the ww2. This is turn ties in with O'Neil's philosophy that every bull run had leading sectors.
ST,
I am so happy that Obama administration still did not realize that they have no choice but to nationalize the banks. So the market will keep going down.
If Obama realizes his stupidity and say something like "OK, I made a mistake and I am not God, let's nationalize the banks and because this is a root cause of the current problems and let's put it behind us, once for all", That will spark a tsumani type of furious rally of the market like 10/1974, isn't it?
IT is my personal opinion only. I do not mind if the market go down to 1994 level for two years. LEt's see.
Ge
The wall street already priced in the fact that Obama's stimulus package won't work and banks should be nationalized.
Open your eyes and have a look of the price and volume relationship in the major indexes and banks. can't you see the volume of BAC and C last week?
Do not tell me what to do. I am get my conclusion exactly from the market's daily action.
Ge
Sorry about that. I should not have added in that last paragraph. It was rude and I am not trying to tell you what to do. I wish you luck with your endeavor.
I am a little bit hot-headed too. I have been working hard on investing for the past two years or so, but still let ego get in the way sometimes. Your comment actually remind my what Mark Cook (wizard) said, something like "follow and do not anticipate". I should re-read the Wizard books again.
Here are a few of my observations of the market, maybe you, ST and other masters can give me some guidance:
1). Have you noticed that each time when leading groups rotate to the top, the wall street will reward the top groups with severe punishment? e.g., schools, although hanging tough, but look at how mnay times it was kicked around?
2). When "good news" "leaking out", the market respond smaller and smaller each time. Remember when Henry Paulson's TARP leaked out, the index was capably of swing 800 points in one hour, How about the "good news" when Obama comments on banks last friday or Geithner's "bad bank" last week? The market barely moved.
3). Even in the worst market of 2000-2003, we still have 20% stocks above 200ma and many groups and stocks bucking the trend and moving up (small banks, constructions groups, specific stocks like NVR and lockheed martin, etc). how about the situation now? It is definately worse.
4). Remember the comments of Bill about the market in 02/1973 before the market collapse when gold stocks was the top group? And look at the top group now. Bill said the market is alwasy trying to tell me something. I think the market cannot give any crystal clear message than this, do you think so?
5). A few weeks ago when MYGN and NFLX broke out but no other stocks broke out to support the feeble rally except one thin pasta company (you know what it is), I was thinking the collpase of the market was imminent. However, the market was holding and holding and holding until last week. A master in my meetup told me that the market moves slower than I think, and now I think that is absolutely true.
Anyway, with my limited experience, my above observation maybe wrong. Let me know what you think. Thanks.
Ge
Gli,
Getting good returns from the market is never easy. But don't complicate it further. You are worried and concerned about too many different things.
Let the market come to you. Just wait and keep an eye on those stocks that are bucking the downtrend. You mentioned a few of them.
We may get some solid opportunities in April and May.
Try not to worry so much. The market will let you know when it's time to get in.
ST,
Don't tell him what to do. He gets mad. :)
come on, chris 74, why not behaving more mature than this?
I come here to learn from ST and others, and I learned a lot. Why not put something more constructive on this website?
I do not know about you but I myself treat trading as a serious bussiness and trying hard to learn how to control my emotions. If you want to joke, why not joke with your friends or on some other low quality investment website? Otherwise, why wasting you and other's time?
Thanks for your consideration.
Ge
lol That was funny Chris!
Ge, On Jan 7th I asked Chris to share some info and what he traded. He shared his trading style and view about the market.
He was expecting the market to revisit Nov low levels. He even mentioned one stock specifically (MYGN) that he liked a lot for a long play. He shared few short ideas as well. After you cursed at him with your nonesense he erased everything and stoped posting.
MarketmakerX,
Did you realize you are wasting your own time?
Read my message. I was the first one that said I would stop the pointless arguement with chris, and I was the one saying that ego had no place in trading and I would focus my time on learning. After that, chris stopped. You said I cursed him, tell me specifically which word I used?
I can go really nasty at you because you are wrong about me. That was what Chris did on me when I recall the ENER broke out wrong. He continued with his excellent 20/20 hindvision opinion of what happened in the stock market.
I am not going to do that though. My time is too important to waste with you.
Imagine that a newcomer looking at this website and see the pointless argument between you and me, what will he think of the quality of this website that ST spend so much time to build?
Think, only use your head, and do not use any other anatomical part in your body, please.
Ge
MarketmakerX,
Did you realize you are wasting your own time?
Read my message. I was the first one that said I would stop the pointless arguement with chris, and I was the one saying that ego had no place in trading and I would focus my time on learning. After that, chris stopped. You said I cursed him, tell me specifically which word I used?
I can go really nasty at you because you are wrong about me. That was what Chris did on me when I recall the ENER broke out wrong. He continued with his excellent 20/20 hindvision opinion of what happened in the stock market.
I am not going to do that though. My time is too important to waste with you.
Imagine that a newcomer looking at this website and see the pointless argument between you and me, what will he think of the quality of this website that ST spend so much time to build?
Think, only use your head, and do not use any other anatomical part in your body, please.
Ge
lol Ge, you have some serious issues. Go get some help.
MMX, don't tell him what to do. He gets mad. :)
Ha.. Haa! Chris74, getting mad at you? Who do you think you are?
Your ego, emotion and focusing your time on this trivial nonsense will for sure help you with your day-trading, oh, and this will guarantee you to bring food to the table, especially in this market environment.
Ge
Has anybody every included relative slope evaluation in their technical analysis of individual stocks and the major indexes?
I have never read a publication on the technique, it's just something that I have found that works well, especially when evaluating descending triangles, tops, bottoms, etc. Wish I could provide some examples....ST maybe I could e-mail you a few and you could post them here for discussion?
Gli3, Ge, whatever your name is, listen to MMX and go get some help, will ya? :)
Chris74, you almost make me crack up and pee in my pants. Scroll up and read your old messages. YOU advised others TWICE not to tell me what to do because I will be "mad", but you are ACTUALLY doing the same thing. You raise your own hand and slap on your own face.
YOU know you started this, and YOU know you are wrong and you loss, but YOU still argue. What is your purpose for the argument? Let's say you win, what do you get from this? Your super-sized ego amazed me, Chris74.
Please do not use other anatomical parts in your body to think.
Usually I will stop a long time ago. But since last week I found there were NO charts to review. Besides watching the water cracking the dam, I actually found that I have free time to flip on the CNBC and MSNBC and enjoyed the "entertainments" created by the "experts". I hope the dam will still hold the water.
Ge
ST, please do not delete any of the above messages. People who think investment is jsut a hobby and fun should think twice before putting their craps here.
Whew...
Hehe...poor ST :[
but "whew" is just what I was thinking...
Hey at least you have some commentary. I have yet to get a single comment :/. Perhaps because I am not using Blogger.
Keep up the work. I really enjoy it. :]
Aldo Aceituno
Aztecs Financial
www.aztecsfinancial.com
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