Stick To The Rules
The craziness
continues and I think it’s great! In my opinion, no one can ever
know exactly what is going on in the market all of the time. Right now, I admit
that I don’t know what is happening next or where money should be placed at
this time. But the beauty of my current posture is that I am not getting hurt in
any way by this lack of knowledge. When I do see pieces of the puzzle fall into
place over the next few weeks, as usually occurs when I am unsure of the
market’s next move, I will either remain safely in cash or move into market
leaders that appear.
The overall market has been acting
very nicely with rallies on heavier trade and pullbacks on lighter volume. As I
write this, the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
volume is a little on the heavy side and may lead to a distribution day.
Unfortunately, this may lead to trouble in the broader market if the selling
persists.
<
Very few stocks have caught my eye. Dime
Community
(
DCOM |
Quote |
Chart |
News |
PowerRating) is one name that I saw with a solid technical
picture, but a few flaws on the fundamental side. ROE is a little light. The
stock attempted a breakout on 7/30, only to pull back below its pivot point the
following day, where it is currently trading.
Sierra Health
(
SIE |
Quote |
Chart |
News |
PowerRating) hails from the leading HMO group. The stock has stellar fundamentals,
but to this day, no one I have spoken with — from fellow investors to people at
IBD — have been able to describe what kind of base it has produced. It
has broken out of this “unknown” base and continues to push higher for
the time being.
Whatever the market decides to do next
will require us to use a very thorough set of rules. I will be looking to see if
individual stocks can emerge from solid bases out of the leading groups. If this
happens, the current, shaky rally will stand a much better chance of succeeding.
It is important to keep tabs on the
market every day, but be careful to not form opinions on the daily swings of the
market. The longer this poor market drags on, the more investor expectations and
opinions are lowered. Remember what happened with opinions and expectations
towards the end of the 1990s? Investors began to think price targets of $1,000
for stocks like Qualcomm
(
QCOM |
Quote |
Chart |
News |
PowerRating) were
actually realistic. Investors should apply solid rules and try and move forward
without personal opinion or bias.
Have a great weekend,