Angry Seas
“The seas
were angry my friend, like an old man returning soup at a deli.”Â
— George Costanza, “Seinfeld”
The Nasdaq dropped 9% last week, 23% in
November, and actually hit the 50% mark from its high on Thursday. Even with
this historic drop, second only to 1973-1974, I find no light at the end of the
tunnel. As I have been mentioning, there is absolutely no place to go for the
intermediate-term trader. The smart investor continues to stockpile cash as the
risks continue to heighten. This cash should stay on the sidelines for better
days to come.
Unfortunately, those better days could
take a long while. Rallies continue to be shorter in duration and price and the
subsequent drops are ugly. I am also worried about some past bellwethers. Did I actually see Intel
(
INTC |
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PowerRating)
break October’s low on expanded volume?
Am I seeing Cisco
(
CSCO |
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PowerRating) below $50
which is important support?
Did Microsoft
(
MSFT |
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PowerRating) get trashed
after trying to repair itself? While all three haven’t been the strongest of
leaders in a long time, I question whether the Nasdaq could rally without them.
A couple of names that are
acting well are Documentum
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PowerRating), Dentsply
(
XRAY |
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PowerRating) and Powerwave
(
PWAV |
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PowerRating).
In fact, Dentsply had a
clean, high-volume breakout on Friday. You may be asking why I would continue to
show these stocks when most breakouts have failed. I continue to watch them
because one day the market will bottom. It is my experience that those stocks
that move out first will will have a better chance to lead than those that have
to work through tons of resistance.
I urge you to do two things at this juncture. First, if some names do start to
break out, step lightly, as most have failed. Second, keep taking inventory.
Regardless of how bad the market is, I spend numerous hours each week making
lists of the stronger names with good technical foundations. Ultimately, this
will pay off when the market turns north. The biggest money is made in the first
few months of a new bull run as leadership shoots out of a cannon. If you are
not ready, it will leave you in the dust. Â Â Â