There was no doubt that today was a very positive day as the market rode its way higher all day, until the end of the day when the Nasdaq started to weaken but then firmed up by the close. The gains seemed pretty darn good but once you start to look at the internals you can see that it was not that good at all.
There were around 50 new highs on the Nassy and NYSE compared to 160 new 52-week lows, breadth was poor with most of the market held up by a few select past leaders, and volume was lower on both the NYSE and Nasdaq showing that institutional quality funds have no quality purchasing stocks here.
However, there were some stocks that not only produced some good gains-they produced some excellent gains. Stocks in the Energy-Solar, Machinery-Farms, Steel-Producers, Oil&Gas-US Exploration Producers, and Ag Operations group just rocketed today with all of these industries gaining at least 2.6% with the Solars pumping out a 4.6% gain. Simply stunning and something a lot of players were not expecting. But there was one overall bearish trader that was expecting some bullish gains. Me.
And that is why the four longs that I admitted to really liking on Friday all moved up 10.6%, 8.19%, 5.65%, and 3.35%. Those four stocks all helped take care of the losses in my heavy shorts that all rallied quite strongly into what is sure to be very difficult resistance to get through. FSLR was the most painful but I still carry some strong gains in the stock and in fact if it continues to rally and volume remains lower than on the selloff in early 2008, I will look to add to my short. However, my other large shorts did not hurt me due to the four beautiful charts that showed up on Friday with two of them having beautiful patterns. And one was our third purchase. Before I move on, let’s not forget CMP, that was up 7.85% today. This poor-quality bounce is providing us with some very high-quality gains.
Too bad RealMoney doesn’t post my columns on time or else you readers could have gotten very wealthy today as two more stocks mentioned in that column were up 9.5% and 6.5%. This goes to prove that even with an overall bearish bent, you can still make a lot of money by being a long only trader. The only thing you have to do is go long stocks during the bounces knowing that when they hit resistance you need to get rid of them before the new lows hit. In bear markets, buying the best stocks in the best sectors that are moving up the industry list, during the bounces, will always produce higher returns than those going in to buy PRU on the great bargain it is offering.
Isn’t that funny. While most focus on the stocks beaten up the most, I am proving to you YET AGAIN, that buying stocks breaking out to new highs outperform stocks that are bouncing in N A S T Y sellofs. ETFC is up 120% from its ultimate lows which is great for a bounce. But that is THE ONE in 7,000 plus in my Telechart system. Now take that 120% and go match it to all of my ‘past big winners’ and you tell me which one you would rather have? ETFC is an anomaly. All of the stocks you see in my list are not. Those that also notice ETFC now are the traders you want to run away from as they are the ones that see a stock ONLY AFTER its biggest moves. The post-Featured guys. I liked ETFC once….but that was back in October of 2005 when the earnings first started to move. At this point the chart is for less-skilled traders. If you are long ETFC, you have some soul searching to do. Or maybe you just need to find a library and pick up “How to Make Money in Stocks” by William J. O’Neil.
Another big problem that continues to be shown every day, whenever I open up my thestreet.com browser, is the fact that yet another “bargain” has become an even “bigger bargain.” Well, one day, these guys get it right but I took a quick tour of AIG on TSCM’s articles and columns and it becomes clear that a lot of people found AIG cheap at 60, 55, 50, and now 45. I am finally starting to see some more clearly bearish comments. That isn’t to say a lot of people were right or wrong about this stock but it is just another example of the flaw of this methodology and why you don’t see ANY value plays even touching the top three growth methods that AAII runs. Not only has this stock been losing you money the entire past year but think of all the longs today that were up over 5% that were were long. Compare that to a -11% AIG and you have a relative difference of over 20%. So if you are long AIG and I am long MTL, you are very upset. LOL.
As night turns to day, I guarantee you will see and hear people telling you to buy AIG. You should slap them against the face with a rolled up stock certificate of NEU or SPW. Why go long an ugly chart? Who sees a mess and says…I want that. Those who buy AIG do. There is no reason to ever go long a chart with that much red. That much red is a clear telltale sign of something being wrong. Literally, consider it a “red” flag if there is red BOP and volume bars all over the chart. If SPW had max green BOP (you can pretend it does), that would be a near perfect chart. Those are the stocks you want to take home to mom and dad. Not a dirty AIG. Bad girl!
I am very tired from the “road to Hana” yesterday. We took a couple of friends (TRUE tourist) on the trip and it was amazingly fun. But that trip combined with a couple of hours of surfing of what turned out to be some big and fun waves and you have a very tired human.
If you have not read the weekend commentary, please take a minute to read it so you know to expect this upcoming week. Not much changed today that would leave anything from this weekend moot.
Don’t fall behind, don’t forget to cut your losses, don’t ever argue against cutting your losses, and let those winners run. Get long the stock moving higher and get short the stocks moving lower. There is NEVER any other reason to do anything else. Aloha from one of the most beautiful islands in the world and I will see you in the chat room!!
—Don’t forget to check the ‘Past Big Winners’ section tomorrow morning for another personal winner from the 2002-2004 bull market.
