Just the Facts The S&P500 lost 4.51 points for the day, closing at 1328.32 The NASDAQ lost 14.42 points on the day, closing at 2275.82 The Small cap S&P600 was down 1.32, ending the day at 362.67. Nasdaq Volume came in around 1.5 billion shares, with declining issues clearly in the lead. We saw 13 New Highs made and 166 New Lows made. NYSE volume came in about 1.05 billion shares, declining issues beat out advancing issues on the NYSE as well. We saw 49 New Highs and 87 New Lows. Random Rants and a few Rational Thoughts. On March 20th the major market averages put in a follow through day. A follow through day is a pretty simple concept that everyone should be aware of. Briefly, a follow through days occurs when, four to seven days after a market puts in a bottom the indexes close significantly higher on significant volume. This tends to confirm that the prior bear phase has ended for the time being and its time for investors and trades to look for leading stocks in leading groups to buy. A follow through day, it's important to note, does not mean that a new leg up has begun, but no significant move to the upside has occurred without one. So, on March 20th the market delivered us a FTD, but I gotta say it's not acted well at all. Typically after a follow through day I'd like to see new names breaking out of bases and leading the market into higher ground. At the very least I'd like to be seeing old names breaking into higher ground and carrying the market back to higher levels. We have seen old leaders re-establish themselves, especially Ags, Fertilizers and other commodity backed names. These types of names are likely to remain in a bull market until we realize how stupid it is to burn our food for energy while half the world starves (oops day I say that?) and the dollar stops its decline. To me the biggest problem with this rally has been the lack of participation at any real level by the financial stocks, I've never seen a meaningful rally begin without them coming out to the park to play as well, but with lingering fears over write downs in the Sub Prime situation, confidence in that group is likely some time away. As I scanned the markets meager offers this morning and last night I have not been able to come up with very many groups or stocks to catch my eye. Like I said the Ags have their own little thing going on, but the air is getting pretty thin up there by now and we are just now starting to see the rumblings of backlash against biofuels. I have maintained very limited exposure to the market, remaining still around 80% in cash with my accounts at their high water mark currently. As one of my money management clients recently told me âYou sure are not the most exciting guy around, but I sleep well when the market is going crazy knowing that you will take care of my moneyâ. A few stocks are worth mentioning for possible longs including LNN and CSX. Both of these I would only take as add on positions if I already owned them from the breakouts last week. APA and other oil stocks continue to put in superior performance and are likely to offer good buying opportunity on the first pullback so long as volume remains light and the decline orderly. PVA is a small oil and gas company that might be setting up here. The Buckle (BKE) is certainly one of the stronger names in retail land and I plan to pick up some of it myself should it break above the high of this flag its currently forming on the daily charts. On the short side I only have a few names. I like IWM (small caps) as well as AUY should they break lower at this point. Should that happen I will be a seller of both of them.
Just the Facts The S&P500 gained 6.11 points, closing at 1334.43. The Nasdaq gained 10.22 points, closing at 2286.04 The Small Cap S&P600 gained 2.86, closing at 365.53 Nasdaq Volume came in around 1.8 billion shares, substantially higher than on Monday. NYSE Volume also increased, to around 1.14 billion shares. Most of the increase in volume on both exchanges occured later in the day after the markets had rebounded off lows, a bullish sign. We saw 77 new Highs and 79 new Lows on the NYSE and 19 new highs alongside 174 new lows in the Nasdaq. The Random Rants Stocks started the day trading mostly lower until late morning/early afternoon buyers came in and bid the market up. It is worth noting that this movement to the upside occured on heavier volume then the prior moves to the downside. This tends to suggest more accumulation in a market than distribution. I know, This sucks and that sucks, and Food inflation is the worst it's been in 17 years and oil prices and gas prices are killing us and..and...and. In the big picture right now though, none of that matters. How do I know this? The market is telling me so, in fact it's telling all of us, rather loudly, that these numbers do not matter at this point. That's not to say that a bad economy with terrible fundamentals won't eventually catch up with the market and bring the entire thing down, thats for people smarter than me to figure out, but what I can see is that in the short term names are getting bid up and there seems to be more buying interest compaired to selling interest. I've made the point very clear since earlier in the year that I do not think this is the best market to go out and try to accumulate massive profits, instead the order of the day is more along the lines of the preservation of capital. I still feel that way, have a heavy cash position and my accounts are at new high water marks. This has been done while taking very little market risk, and hiding out in the chicken coup an awful lot of the time. (If I start to strut around like a rooster you'll know why). There are some good looking stocks out there, a couple of them we have picked up. Apache continues to produce gains since April 2nd, and Lindsay Corp broke out again from a new high level flag giving aggressive traders a buying opportunity. I'm watching CSX closely and should it move too much higher on any volume I will be picking up shares. Finally the Buckle (BKE) keeps showing good strength as it builds its flag, and any breakout is, in my opinion, a buying opportunity. Finally I want to look at PVA, which is a stock that was mentioned in yesterdays post as a stock that might be setting up. While PVA did clear the high of its flag, the setup was negated on the gap, and I apologize to anyone who I have not made this more clear to earlier. Gap rule is very simple. If any stock gaps up (or down) to produce a "setup" on the very first trade of the day, that is to be ignored. The stock must show additional strength in the move by breaking out above the high established in the first 30 minutes of the day. This one simple rule has saved me countless hundreds of thousands of dollars. As mentioned yesterday Steel stocks continue to look pretty sharp. SCHN is forming a high level flag, while X looks like it has a ticket to $200. Other stocks such as MT, GGB and SUTR also are showing strength and should be watched closely and considered for buying opportunities on appopriate setups.
Sometime, long ago, before time was even timed I ticked off the wrong darned person. The worst thing is that this guy is still holding some kind of grudge after all this time. Back off man! I do see positive things coming from all this, I have a lot more empathy for those around me, and I realize for the first time since I was in 6th Grade that its not really money that makes the world go around but relationships. Anyway I'm up and out of the hospital. I had a pretty routine operation on Wednesday to remove a lymph node on my inner thigh. It all went well until the time came to âClean the dressingâ, unfortunate for my ever so often unfortunate body the dress (cotton) had coagulated and made a bond to a fairly important blood vein the shoots off the femoral artery, when I pulled at the cotton the blood was then broken. My bathroom looked like something out of the great horror show of all time. I decided to do what I could with it until the local clinic here open (cheaper than the ER and faster than the ER) in about 20 minutes. When I got to the clinic they called the Hospital and they chucked my merry ass down to the hospital. They always seem so cool and collected on TV, but in real life some are and some defiantly are not. In any case, I got some blood and stayed in the hospital a few days. They have 3 star meals and HGTV so what I can really complain about. This is really I think a great reminder though to keep an eye on what you don't see coming. This entire time I've been worried about cancer, and I was about 15 to 30 minutes from âbleeding outâ ( I think that is the polite medical way to say you bleed to deal). It came from another direction. This applies in life and fiance equally, its the one you don't see coming that will take your wind way. Also to hold your own life, and your vital relationships close to your heart, you don't have any idea when you will need them, and like I said above you have idea where it's coming from. Back in 1996 I had a brain surgery and the Docs and they Mayo Clinic had about a 60% chance of removing it, the other alternative was 100%, so I went to with sixty and made it out whole. I was nine-teen at the time. Then around 1998 of 1999 I sat on a nail and figured since Id had a tetnis shot I was fine (shows what you get for relying on me for medical advice) And now most recently this, but it was not cancer could have, should have and was actively working kill me Thursday, it was severe blood loss. I don't know how much of this it take as truth and also how much was me still being in shock, but the surgeon in the ER told me I probably had about 15/20 minutes of âgood timeâ left, whatever that is. I'll have to track him down and ask. The second point is that I really find myself feeling terrible to be agreeing with Barack Obama on anything. What do I agree with him on? The Fed Tax Holiday on gasoline is nothing but a scam. It's robbing Peter to pay Paul. The tax put on fuel is supposed to go to maintaining our roads and bridges. Well, ask the good people of Minneapolis how the project has gone over the last several years. Take way money and we will see more erosion of critical infrastructure. Not only that, but we will see a large pool of unemployed summer labor. A healthy portion of Americans Workforce is made up of construction crews who depend upon season a hefty part of this nations road work being done in the summer. In an already struggling economy, what do we do with these men and woman? I wish things could always be as cutsie and easy as the pols want you to think they are, but usually bleeding to death kills you before cancer. In this instance we need to address the core problem. So many things could be done even engineering wise before we have to star digging up ANWAR(which make no mistake, we will) and drilling off the west coast of Florida (and again we will) . Economy standards used to move higher every year, but then somehow subburn dad's thought they needed to look like farmers or contruction crew members and started buying picks, then all hell broke lose. At that time oil was under $10 per barrel. We in fact where giving tons of aid to those very seem middle eastern countries we now hate, the who's who through thick and thin (cept that one time so they could show off how buff their arms have gotten) have kept us with a good supply of oil, regardless of the economic hardship or benefit they got from doing so. So....Thats all that. Just the Facts S&P500 records a loss of 5.35 points, closing at 1385.59. The Nasdaq lost 13.3 points, closing at 2412.8. The Dow ended up closing the day down down 13.30 points, in spite of having been up nearly 180 points earlier. Thats what we technically inclined traders would call an ugly reversal...more on that later. The S&P600 (small cap) was down 1.18 points, closing at 378.90. On the Nasdaq we saw 1457 issues advance on 785 milion shares, while 1460 issues rallied on more than 1.22 billion shares. 83 news where put in vs only 35, showing us that internals remain clearly negative in Nasdaqsville. On the Nyse the volume numbers where not as pronounced, but still not good. We saw 1641 advancing issues on 651 million shares while the 1499 declining issues put in 684 miilion shares. New Highs led New Lows on the Nyse 53 to 23. Yesterdays market action, as I mentioneed earlier is what we would normally term a downside correction day. For this to occur all you need is to have the major indexes up heavily going into the afternoon but for something to cause that gain to be reversed and brought into negative territory, and for that something to cause volume to be heavy. We had exacty that, and so the odds are that an important short to intermediate term trading low has been put in. I'd caution against getting too cocky with this though because in spite of itself some areas of the market are holding really well. Several names have been showing strong downside leadership the last few days/weeks as the market has been posotive. Among them MMM, MAS, NWS and KB. On the potential upside ITU had a massive breakout yesterday, as did PNRA (my favorite place to eat) and BRMN is worth watching as well.
More commentary will come tomorrow morning: Biggest lesson out of today's market action (at least to me) is that my continued use of "If Then" setups has saved my bacon I cant count how many time.s
My last market update/commentary was off the mark for sure. I just wanted to make a quick update to those following here that I've pretty much gone back to cash, but I do have a slightly bullish bias right now, esp with the coal and energy type stuff. I've got a ton of thoughts on that right now, but now the energy to write I think. Anyway, Disney's earnings today is something to think about, everyone is writting about how consumer confidence is way down, lower and lower and lower..where the hell are all these people taking their kids to Disney Land coming from.