No Trophy
Each evening we focus
on the most interesting aspects for the upcoming trading
day. The comments are based on observations of the nightly
updates of the Stocks/Sectors and Market Bias pages. They
are provided for educational purposes only and are not
intended to be direct trading advice. Also, keep in mind
that these remarks are made up to 12 hours in advance of the
markets opening. Therefore, overnight events may alter the
outcome of these observations.
On
Friday, the Nasdaq lapped down hard (a) and began to chop around. Then, it
mounted an impressive rally for what many thought was the mother-of-all
reversals. From its low, it was up over 100 points and was trading above the
prior day’s high (b). However, no sooner than you could say the bottom is in, it
reversed to end up back where it started.
For the week, the Nasdaq closed
near its low (a). This puts it at levels not seen since late 1998 (b). I don’t
see any support for a while. Do you?
I’m amazed at the amount of
complacency still out there. This market continues to rally just enough here and
there to breed false hope. For example, as the market was bouncing this morning,
I received a half a dozen phone calls telling me that this is “the”
bottom. This concerns me and supports my theory that the market won’t likely
bottom until we get a panicky sell-off.
Now, all that prognostication
doesn’t really matter. Other than looking for bounce plays here and there (based
on short-term market timing signals), I can assure you that I will be wrong when
“the” bottom gets here. In order for me to get bullish, this market
would have to have a sustained rally. Then, and only then, would I begin
to get excited about the long side. There’s no trophy for buying the exact low. Wait
for the market to prove itself.
So what do we do? At the risk of preaching, tread lightly.
Looking to potential setups, Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating), on the Proprietary
Implosion List, spiked higher but reversed to close poorly. This suggests
its downtrend remains intact.
VoiceStream Wireless
(
VSTR |
Quote |
Chart |
News |
PowerRating), mentioned recently and on
the Pullbacks
Off Lows List, still looks like it has the potential to resume its strong
downtrend.
Starwood Lodging
(
HOT |
Quote |
Chart |
News |
PowerRating), on
the Pullbacks
Off Lows List, looks poised to break down out of an inverted cup and
handle.
Random Thoughts
Earlier in the week I
stated: “After
postulating some complex theories (with the help from you, of course), I began
to think, maybe it’s just a good old bear market. You know, the kind young punks
like me have never seen. I heard we had one of these in the ’70s. Anyone
remember?”
My point was that
it’s one thing to study a bear market and another to live through it. I hoped
that I would get some responses to this and I did.
Here’s my favorite:
“I just turned
50, so I was a relatively “young punk” when the bear roared in the
70’s. In that environment you’d get faked out in a New York minute and
there were a lot of false signals. You never knew if you’re going to get
any follow-through in the same direction of your trade from one day to the next.
BTW, this past week in the Nasdaq is what it was like in the 70’s.”
Art Adams
Thanks for your words of wisdom Mr. Adams. May we all
learn.
Best
of luck with your trading on Monday!
P.S. Reminder:
Protective stops on every trade!
“..I
wanted to express my deep appreciation for your fantastic book. It’s right to
the point yet thorough and comprehensive…………..My
two pugs, Punkin and Peanut thank you too!!
…”
Shannon
D.
Honolulu
,
Hawaii
No risk, 30-day, money
back guarantee.