Stand Aside
I’ve been sitting in front of my
computer screen for the past 30 minutes. Begin typing something, get about
two sentences into it, then…delete.
Wait, here comes another sentence. Oh,
this will really sound neat. Nah, who wants to read my corny thoughts.
I look down at my legal pad — the one
I use to jot notes about stocks I want to discuss in the column — blank. I mean
absolutely blank.
What could I possibly write that I
haven’t already tried to pound home a thousand times? Cut your losses, listen to
the market, etc… And don’t forget, Tom Landry’s watching you. If you screw up,
he might just yank you from the game. Yeah, I know, you’ve told me a thousand
times never to exaggerate.
Oh wait, I did jot something down on
my legal pad… let’s see — “Nasdaq Comp. — fourth distribution day.”
Despite upside fireworks early in
Wednesday’s session, the Nasdaq Composite recorded its fourth day of
distribution in the past six sessions, closing lower ever so slightly.
Wednesday’s volume of 1.46 billion shares eclipsed Tuesday’s volume by 9%. Four
days of distributive action within a two-week stretch is usually enough to kill
an upward trend in the market. But, of course, we already knew that. Let’s just
say, if the coffin was nailed shut last week, the last mourner just dropped the
last stemmed flower on it.
That’s where the market’s at. For the
intermediate-term trader with a bent toward aggressive-growth stocks, technical
breakdowns among leading stocks all over the chart books (or computer screens,
whichever you use) and continued distribution in the Naz can only mean one
thing: The show’s over (it’s been over) and the curtain’s been closed. The only
thing left is the janitor sweeping up the mess.
Don’t even bother praying for an
O’Neil follow-through signal to tell you it’s time to get back in the game anytime
soon. Considering the severity of the technical damage over the past week in
many of the “names” — the sharpness of their declines — it will
literally take weeks to repair the damage. Not that the damage is irreparable,
but time is imperative.
And while the market ferrets out when
the Fed will be done with its tightening cycle, where the economy is heading,
and adjusts the extreme valuations in a host of high-growth names, the
intermediate-term trader should be heeding the market’s latest round of the flu.
Even if you found a stock to play in here in one of those more defensive groups,
the aggravation-to-reward ratio may not even be worth it.
Do you remember back in April and May
when the Naz was getting the snot beat out of it? What was holding up? Energy
stocks. Most of those names didn’t do anything then, nor since.
The best thing to do now is go back
and examine everything you did in your trading over the past two months. You’d
be surprised how you can identify repeated errors in your trading over time by
keeping a diary.
TELEVISION APPEARANCES:
On Friday August 4, I will
be a guest on CNNfn between 9:30 a.m. and 11:00 a.m. ET, and on Fox News
Channel’s “Your World With Neil Cavuto” between 5:00 and 6:00 p.m. ET.