Month: July 2005

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.

I watched some of the Cost of Freedom shows on Fox on Saturday and was struck by the focus on terrorism.  Imagine wasting viewers’ time by asking the financial pundits what American policy about terrorism should be! The fact that the market held Thursday and Friday did not garner much attention.  I may be wrong, but the strong market last week after the events in London made me really bullish.  The GMI is even back to +6. The market was very strong on Friday.  There were 151 successful 10 day highs–84% of the 181 stocks that hit a new high 10 days ago closed higher on Friday than 10 days earlier.  There were a stunning 478 new highs in my universe of 4,000 stocks and only 6 new lows.  More than half (53%) of the 4,000 stocks are in a short term up-trend and 79% of them closed above their 10 week average.  On Friday, 85-93% of the Nasdaq 100, S&P 500 and Dow 30 stocks advanced.  We are now in day 1 (U-1) of an up-trend.  So, why aren’t the media pundits more bullish–it must be a conundrum……………………………

I noticed a divergence between the Nasdaq Composite index and the Nasdaq 100 index, which I have been keying on.  Between 6/2-7/7, the QQQQ (which tracks the Nasdaq 100) declined 4.1%, while the Comp Index declined just 1.0%.  If I had been focusing on the Comp instead of the QQQQ, the GMI would have held up much better and kept me more bullish.  What is the difference between the Nasdaq 100 (QQQQ) index and the Comp?  The QQQQ tracks "all the stocks in the Nasdaq-100 Index, which consists of the largest nonfinancial securities listed on the Nasdaq Stock Market. "  The stocks that are excluded from the QQQQ must be  outperforming the tech stocks in the QQQQ–that is why the Comp performed better during the decline.  I have therefore been thinking about restructuring the GMI to include/replace the Comp.  Any suggestions?…………………………………….

How long will this rise last?  You know better than to ask– the truth is no one knows.  But I am placing my bets on the long side, in case we have a follow through rally as earnings come out the next few weeks.  I like lots of companies, including MW, BBY, HANS, KOMG, FTO, HITK, IVGN, GME, WFMI, GDW, DSL, NDAQ, NTRI–many of which I own.

I would greatly appreciate some reader reactions.  Is my blog of value to you?  What else would you like me to discuss?  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.

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.

Who would ever have believed that a market in a confirmed down trend could withstand a terrorist attack and actually hold its own?  Today, 50-56% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes actually advanced, far above yesterday’s performance.  In fact, only 7% of Dow 30 stocks rose on Wednesday, compared to 50% on Thursday.  There were 173 new yearly highs in my universe of 4,000 stocks and only 28 new lows.  Yes, we are in day 9 (D-9)  of the QQQQ decline, but 55% of its stocks advanced today.  And 109 of the 186 stocks that hit a new high 10 days ago closed higher today than they closed 10 days ago.  So there is a lot of strength under the surface………………………………

So where was the strength today?  I looked at the industries represented among the 173 stocks that hit a new high today.   I found that 7 stocks in the apparel industry hit new highs:  ANF,DBRN,SCVL,STGS,CHS,MW,CHRS.  There were 13 stocks in the independent oil and gas sector:  ECA,NXY,UPL,SFY,TLM,PTF,CNQ,SWN, SM,APC,XTXI,DVN,PVX.  Oil and gas equipment services had 11: BHI,NGS,SOSA,PAA,PPX,WMB,TMG,KMP,HOC,TNT,PCZ.  While not as many, the investment brokerage stocks were also strong:  TRAD,SCH,ET,LM,AGE.  It would seem to me that  the sectors that have a lot of new highs on a day like this are sending signals of future strength.  As for me, I added to some of my positions that rose today.  While the markets are in a down trend, it appears that the stocks that will report good earnings will buck the trend, at least until their earnings come out.  If stocks were going to decline more near term, I think the market had the perfect excuse to do so today–and it did not.

Send your feedback and questions to: 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.