This Week’s Battle Plan
Ja Rule Meets CNBC
Oh baby it felt good! Wow! At 9:15 am
Friday morning we got to relive 1997, 1998 and 1999 all in 15 minutes.
The market had rallied the past two weeks and it was going to pop good
this morning. Globex S&P futures up 10, the Nasdaq futures up 25.
And our friends at CNBC were damn sure they were going to let us know
it! BOOM! Mark Haines’ two-year comatose condition is cured and he’s
now the Energizer Bunny. POW! Maria Bartiromo’s replacement on the
floor of the NYSE actually for one brief minute reminded me of the
Maria of up 100 points pre-opening days. BAM! We go to the
Nasdaq where the world’s second fasting talking Irishman (Haggerty
talks faster) rattles off in under 30 seconds the names of the 1417
Nasdaq stocks that will rise on the opening. And he assures us at the
same time that he’ll be keeping a “close eye” on every
single one of them for us throughout the day. What excitement! What
energy! And the only thing missing from this scenario was them not
having the rap singer Ja Rule on the air singing “Everybody is living
it up.”
What To Do
And as I’m sitting there watching all
this happen, I’m for one brief second panicked, because I have to buy
something. It doesn’t matter what it is, but I just have to buy. And
then reality sets in. Reality sets in from the fact that I know from
21 years experience at this game that the money for the day will be
made not buying into this BS, but by fading this thing. Just as it has
been year after year after year.Â
Getting Sentimental
And now I’m actually beginning to feel
bad. And I’m feeling bad because this craziness, this manufactured
excitement, this drug which I thought would never return to screw the
public, is now back to suck away the money of those unsuspecting
investors who didn’t learn their lesson last time.
The More
Things Change, The More They Stay The Same
And in fact, this is exactly what happened. Not too bad this time, but
it happened. Suck ’em in before 10 am (look at the intraday chart).
Let them buy from the pros, buy from the specialists, buy from the
market makers, buy from the Haggerty’s, the Saliba’s and hopefully,
from you. And then watch the market top out and reverse. Yes, I
honestly feel sorry for these people who get suckered into this over
and over again. I’m just happy I learned a long while ago to be on the
other side of this trade. And if you’ve been a member of this site
long enough, you know how to profit from this game. When we started
this site, we seriously considered having a “Maria Bartiromo
Breathless Indicator.” The more breathless Maria was in the
morning, the more likely the market would pop and reverse. Time to
dust this indicator off again
Lesson One for today. Use CNBC to your advantage! The
crazier they are in the morning, the more likely the market will jump
higher and reverse. And the more depressed they are in the morning,
the more likely the market will bottom in the morning and rally
higher. Their motto is “Profit From Us.” Listen to them!
Connors
Bull Market Club Now Has Lots of Members,
And He Is Not Pleased With Its Makeup
This column turned bullish in October 2001. It’s in the archives. We
were amongst the few at the time. War, terrorism and recession was the
prevalent theme of most. Not for us. It was leadership in the semis,
leadership in the retail stocks, and a market that defied going down a
few weeks after the Sept. 11 attack.
Today, too many of the guys who pointed out the obvious in October and
were dead wrong (the obvious is always too late when it comes to
market timing), have now shifted to the bull’s camp. The economy is
strengthening, business is picking up, markets are rising. They again
quote the obvious. Just as they did in October. I’m not coming off my
bullish stance. But the company that is entering my camp makes me
nervous. A good sell-off should flush them out. And then we can move
higher again.
This Week
First, the buying that came into the
market for the past few weeks has been very real. Kevin Haggerty and I
spoke about it in our live presentation a few weeks ago. When you see
stocks like GM, Maytag, Eaton, Cummins, and other heavy industrial
blue chip stocks breaking out ahead of everything else, you know the
buying is real. It takes big money (The Generals) to buy these stocks.
This is a good solid longer-term sign for things to come.
This week we are very much overbought. Incredibly, I have not had
multiple CVR sell signals in over a week. The market keeps rising but
sentiment has not spiked. But, with that said, the VIX has closed
under its hyper-sensitive five-day MA 11 days in a row. This rarely
happens, especially when it’s trading at such low levels. We also have
the brokerage index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) looking like it might want to roll
over short-term. The
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), on the other hand, is cranking.
I’ve preached in this column (as have many others who write for this
site) that no sustained rally will occur without the SOX. Well, up 25%
for the first 10 days of the month is one hell of a rally. It’s now
extended and it would not surprise me to see a pullback with the rest
of the market sometime this week.
If we do get a pullback, what then? I’d go right back to the
strength…the semis and brokers. And, I’d look at some of the bigger
Nasdaq stocks. They pulled back harder than the rest of the market in
January and February, and have a longer way to go to catch up. Use our
Indicator
Lists. Especially the Pullback
from Highs List. Multiple buy signals on our Market
Bias page combined with this list will get you a long way to be in
the right names when a new rally appears.
Don Miller
Last year Don Miller joined our site. At first, I was skeptical. Never
heard of him. No Fidelity, no “Market Wizards,” no outside
source like “Nelsons World Best Money Managers” to verify
his performance. After a few conversations with him we requested
brokerage statements (this usually ends most conversations). Don sent
them and the results spoke for themselves. 25 consecutive profitable
months. During a rising market and a declining market. So we invited
him aboard. And, since this time his column has been very well
received and his video course “How
I Make a Living Trading the QQQ’s” has become one of the
best-selling courses we offer. Why? Because Don makes money (he shared
his statements with me again last week, and he just had his best month
ever). And from the unsolicited emails he receives, many of the people
who have taken his course are also making money. Today we are
launching “Don
Miller’s QQQ Trading School.” It is an in-depth on-line
and off-line course Don has built and created to help you trade the
QQQs full time. The course also uses online real-world examples which
require you to make trading decisions on a bar-by-bar basis. These
decisions are the same decisions you make when you are trading and let
you see what Don is thinking (and how you should be thinking) as
actual trades evolve. If you would like to learn more about Don’s
QQQ Trading Course, click
here.
Have a great week trading and remember,
when Ja Rule is on CNBC singing “Everybody is living it up,”
count 20 minutes and then sell the market hard. Then you’ll be living
it up too.
Until next week!
Larry
Connors and
Brice Wightman
Larry Connors
is CEO and co-founder of TradingMarkets. He is also the author of four
books on trading, including Street
Smarts,
co-written with Linda Raschke, Connors
on Advanced Trading Strategies, and his latest release, Trading
Connors VIX Reversals.
Brice
Wightman is a Market Analyst at TradingMarkets.com.