Shark-Infested Waters
I don’t need
to keep beating the same drum about the markets right now. It is
evident what is going on. You can’t hide institutional selling. You can’t hide
support levels being broken. You can’t hide the pickup in volume on the down
days. There will be bounces. I suspect that’s all it will be for the time being.
Just wait for an attempted rally and then some kind of high-volume
follow-through day before wading in shark-infested waters. You then have to find
valid breakouts.
What I did want to do is to revisit my July
18 report. I believe this was the day that stood out in telling me trouble
was ahead. Please review the report and the high-volume breakdowns in:
(
SEBL |
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News |
PowerRating),
(
MERQ |
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Chart |
News |
PowerRating),
(
DIGL |
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Chart |
News |
PowerRating),
(
VRTS |
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Chart |
News |
PowerRating),
(
AOL |
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News |
PowerRating) and
(
QLGC |
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News |
PowerRating). The lesson
here is that when a whole host of names in specific sectors break support on
heavy volume, time to really worry. The charts did not let us down on that day.
You may want to also review the high-volume tops on the homebuilders also.
In that same
article, I wrote up
(
MTON |
Quote |
Chart |
News |
PowerRating) as a potential classic Double Top. I would
post the picture up, as this doesn’t happen so well, so often. Notice that when
the initial drop started, it was on heavy volume. In fact, the July 6 drop was
on 3x average. Volume on the rally never reached the volume on the drop. You
then have to recognize the volatility at the highs. This is also usually a sign
of a top. You then have the July 18 reversal which led to the double top. The
stock never made it back up. When I mention a stock like this, you really never
know how it is going to play out. Pattern recognition is the key. I had seen it
before. It worked again.
Lastly, a little message
to all readers: I was indirectly hit by lightning a couple of days ago. This was
not an exciting experience. I was actually in my house at the time. Even being
in a house didn’t protect me. The message: I have to go see a neurologist
because of what happened. He won’t find anything in my head anyhow. The good
news is I only feel groggy and I gather I am OK. Don’t
play with thunderstorms and lightning. If I feel how I feel today and I
was indirectly hit, I can’t even imagine what a real
hit is like.
Take care of yourself.