Month: July 2005

Slammed leaders and rising rates increase market risk; GMI: +6; shorts as a hedge

@ 10:45 pm

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

Well, now I am a little concerned.  When stocks like GOOG and MSFT get slammed after reporting earnings, it may be time to take some money off of the table.  Yes, I know the GMI is still at +6, but if I wait for it to give a definite sell I will lose most of my profits.  If good earnings cannot support GOOG, then what type of news is left to support it?  Too many of the leaders are finding themselves in multiple point declines.  When the leaders get into trouble, the rest of the market is not far behind. Irx721 In addition, my short term interest rate indicator has gapped up and keeps hitting new highs.  Look at this ugly monthly chart of the indicator.  Note it took much less of an increase in rates from 1998-2000 to burst the market bubble.  Bonds also seem to be weakening.  Perhaps we are seeing the end of Alan’s conundrum.   I know I am not supposed to predict the market, but I have the feeling we are in for a rough period……………………….

The GMI remains at +6, but the 10 day new high index was weak today.  Gmi721_1 Only 92 of the 174 stocks (53%) that hit a 52 week high 10 days ago closed higher today than 10 days ago.  Only 17% of the Nasdaq 100 stocks and 16% of the S&P 500 stocks advanced today.  20% of the Dow 30 stocks advanced.  These are some of the weakest readings I have seen during an up trend–this was day 10 (U-10) of the QQQQ rally. There were 267 new highs in my universe of 4,000 stocks………………………………….

Maybe it is time to start looking for stocks to short, at least as a hedge.  I will run some scans soon.

Send me your feedback at: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

The Cramer Circus; GMI: +6; GOOG and IVGN

@ 10:30 pm

Did you see the Cramer Circus tonight?   It was   a live show complete with a hand picked audience filled with shouting fans and extreme adulation for JC.   Elmer Gantry could not have done better.   I   attended a speech by Jim Glassman around 2000, soon after he had published his book, DOW 36,000, in which he made the “rational” case for the bull market to exceed that figure. I remember thinking that if there ever was a sign of a bull market top, this was it.   And so I felt today.   It may not come tomorrow or this month or next month, but the Cramer show today smacked of froth and irrational exuberance.

We now know why the short term interest rate indicator rose and the closed end bond funds I wrote about declined   earlier in the week.   Alan is committed to more interest rate hikes.   It is my experience that when the market stops worrying about the higher rates and believes the economy can tolerate them, the bottom falls out of the market.   I think we are getting near that point.   Alas, October is always a good month for the market to bottom.

But I wait for the GMI to detect the change in trend.   And right now things are fine at a steady +6.   Gmi720 There were 250 successful 10 day new highs today and a whopping 423 new highs in my universe of 4,000 stocks.   One in ten stocks hitting a 52 week high–hmmm.   There were 10 new lows.   69% of the Nasdaq 100 and S&P 500 stocks rose today, along with 60% of the DOW 30 stocks.   This is day nine (U-9) of the QQQQ rally.

With EBAY’s stellar earnings release tonight, GOOG appears ready to take off toward that well expected $350 level.   Heaven help us if its earnings disappoint tomorrow. Ivgn By the way, I added more IVGN today. As this monthly chart shows, IVGN topped out in 2000 at 99.50 after a rapid run-up, declined until early 2003 and rallied and peaked again around $82 in 2004.   It began a new rally in August, 2004 and has recently broken through the   $82 prior 2004 peak.   IVGN’s earnings have been up triple digit.   The company provides supplies to many biotech companies. I think IVGN provides a way to ride the biotech boom without depending on new drug discoveries to power the stock.

Enjoy the earnings rally; GMI: +6; posted stocks at new highs

@ 11:04 pm

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

A lot of stocks are rising on earnings expectations and falling on the release.  It is not unusual to get an earnings rally in the general market and then to get a post-release decline. Gmi719  I would not be surprised to see a weak August through October period, but will let the GMI guide me.  The GMI remains at +6 and it was a strong day.  Many of my longs went to new highs today. In fact, there were 259 new highs in my universe of 4,000 stocks and only 11 new lows. The 10 day new high index bounced back with 243 successful 10 day highs.  59% of the 413 stocks that hit a new high 10 days ago closed higher today than they closed 10 days ago.  About 70% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose today. We are in day 8 (U-8) of the QQQQ rally…………………………..

Among the stocks I have mentioned before that hit new highs today are:  BTU, HANS, LUFK, NTRI, GOOG, PRGS, CME, GDW, BBY. (I own some of these.)  Other stocks I have started following (and may own) include DSL, KOMG and XWG. I have sell stops in on all of my holdings and am letting things ride for now.  Sell stops provide me the ability to focus on my job during the day and to sleep peacefully at night………………………..

Enjoy this rally!   Send me your feedback at: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.