My scenario for a big Nasdaq rally
Timothy J. Truebenbach is the President of True Capital Management and
general partner of True Capital Partners LP, a hedge fund. He uses a
disciplined model that trades on the intermediate-term time frame. For a
free trial to Tim’s Nightly Stock Analysis Report
Today’s column is your window to two important thoughts about the stock
market. First off, we’re going to talk about the big picture, or
macro view that I believe is in place. Secondly, we’re going to discuss a
simple thing that will produce wonderful results for your portfolio and for
you personally.
The stock market is currently
emerging from a correction that began in August. We saw last Wednesday
produce a follow-through day. This is evidenced by a gain of about 1.5% or
more in at least one of the major indices along with larger volume than the
previous day. Additional validity can be found in the fact that volume was
above-average. We all know that the U.S. stock market and particularly the
NASDAQ suffered one of the worst bear markets in history. If you don’t
believe me, compare similarities with the Dow’s crash in 1929 and facets which
include declines in excess of 70% in both cases. The NASDAQ bottomed in
October of 2002 and has been working its way higher in an exact parallel of
the Dow (1929-1935) ever since.
What is the next step? Since
we have the Dow’s historical model, we might as well follow its lead. By
doing exactly that, the NASDAQ is on track to
begin a very strong move over the next few
months.
There are two things that
the market needs in order to rally. A confirmed rally in place is the first item,
which we currently have. Secondly, we need strong leadership from the growth
stock sector. Consumer technology, biotech’s and possibly retail names are
handing us this crucial element. It is probably not coincidence that the
market wrapped up the recent correction upon Google’s
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earnings release.
You have heard me say it
before and I’ll say it again: the news media is hardly worth paying attention
to. Every single story is told in a negative light and putting this garbage
in our head’s does not help our portfolios or increase our worth, (financially
or other.) Instead of allowing yourself to be influenced, whether you know it
or not, by surrounding elements; choose to control how you view the market and
execute your strategy. For example, if you find yourself in too many losing
names or do not have a set strategy to follow, start to tell yourself that you
are on the verge of adopting a very successful strategy. Identify the weakest
part of your trading and start looking at it in a positive light. The stock
market rarely does what anyone expects it to do and this will help you be
prepared to profit from the market rather than allowing it to exploit our
natural tendency to be afraid.
We have a market which I
strongly believe will advance to higher levels in the near future. There are
strong stocks and sectors to choose from such as Amgen
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Comtech
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positive and realize that if you are doing something that is not spoken of
around you or feels a little uncomfortable, you are probably growing your
portfolio and maybe even yourself as an individual.
Tim Truebenbach