Yesterday, I advocated caution. But like so many times since the February 27th market sell off, this market has bounced back strongly from a bearish sell off. Today was no different. It was a broad based bullish action that included the internets, techs, and even retailers. I also mentioned that Dow was hitting the upper trend. It is actually penetrating that upper line and if it stays above that trend line, it will be very bullish. Also, NASDAQ is working itself back onto the prior trend line and it is a very bullish action.
I also said that Google broke down yesterday but it came back with a vengence! A bullish report by Bear Sterns shows that Google with their new search algorithms are not losing market share and are in fact gaining shares. You Tube is also trying to schedule a meeting with the military to discuss the ban. Like I mentioned in the prior chart analysis, Google seems to have formed a double bottom base with an unusual long handle but clearly, it appears to be headed higher probably into earnings report due in July.
Crox took a breather today but gained back most of its losses today and finished in the upper channel. A new coverage by JP Morgan at Outperform (a new upgrade) in the stock had a bullish run up in the premarket and then continued to deteriorate until the end where it gained most of those losses back. This goes to tell you to never trade anything pre or post market. It is just too illiquid and you can get your ass handed to you. I initiated a September call positions today and will be adding throughout this month on any weakness. I believe Crox should surpass $75 to $85 by split record date of 5/31/2007.
Amazon also took off today gaining on their announcement that they will open a music download store much like iTunes. The stock needs to penetrate $65 to break out of the channel but it is a bullish action nonetheless and I anticipate that this stock will gain some legs if the market holds up.
United Online (UNTD) also broke out of its side ways consolidation today and appears to be heading higher. I think this stock has one of the best looking chart formations I have ever seen! I believe this stock can challenge $20 in no time.
I would still continue to stay bullish but keep one eye peeled. This run up is strong and without a rest. I think days like yesterday and last Monday are all we are going to get in terms of "corrections". We should embrace the market and make money. It is after all, that is when you make money, when you are fearful, no when you are giddy. Majority of retail is still on the sidelines waiting for the "sell in May" to actually materialize. They will probably begin getting in around September to October at which time, it may be too late. I once reiterate that I am very bearish in the month of October if this run up continues.
All of these came on the heels of housing starts which rose but building permits declined. The FED is expected to say tomorrow that inflation is moderating and may signal a possible rate cut. I don't know if this is good overall, but I am in it to make money not analyze details. Everytime I try to analyze anything, I have lost. Case in point is this March where I was bearish on the market. I am a bullish trend trader and I have learned to stick to what I do best.
Good luck everyone!
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2 comments:
I dont find your analysis thorough. Reading your blogs is not going to help me as an investor since you basically follow the trend. A month ago you were very bearish and were wrong..now that the market is going up every day you are bullish. I suspect that a correction is very close as we have seen an unprecedented runup in the markets over the past month overlaid with deteriorating economic conditions. Hence the odds of the market dropping soon are much higher than they were a month ago. Now is the time to consider some shorts and to cut back on longs. This market is totally unsustainable..its based on liquidity and fantasy and people just following momentum and then trying to rationalize why the market should be higher. This will all end very badly. Look at the Chinese market..its parabolic..it has to collapse sometime within the next 6 months to a year..and there will be only worsening economic news out of the usa..
Thanks for posting. I am not an investor but I do consider myself a momentum trader. I do agree with the unsustainability of this market and I do know that at a certain point it will correct. Probably end in spectacular fashion.
But you are right. I do follow the trend. But my fundamental analysis of the economy is also bearish. But the bearish sentiment appears to have been factored in the market and as long as the market factors it in that way, I will run on the long side.
I have felt that the market correction was near when we came out of the sell off in February 27th. But what has happened since then?
If you are a bear in this market since February, you have lost money, just like me, who lost a fortune on Countrywide and QQQQ puts and short positions.
I know that it is irrational. Markets seldom are. I have been trading since 1995 and it seldom acts in concert with mass psychology. Right now, many people are scared and on the sidelines and watching the indices notch higher highs every day. Eventually we must pay the piper, or maybe we already have.
But I have learned that in TRADING, it never helps to buck the trend. Sorry I flip flop so much but I know a change in trend when I see one and thus have recovered all of my losses from March and then some.
The economy is counting on a Fed cut or two this year. We were supposed to see deterioration of corporate earnings this quarter but saw that contrary things are happening. Have you seen the JC Penny and Kohl's earnings conference call? They are bullish. The subprime slime seems to be less of a threat right now. Now that doesn't mean that we will not feel the effects somewhere down the road. But right now, the market is too busy being irrational. I trade with one eye on the sell button, like all traders should.
I am thankful that at least you took the time to read this fledgling blog and any opinions are welcome!
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