Selling Hits All The Indexes On Higher Volume; Stocks In My Portfolio Outperform

August 29, 2007

Anyone who has been reading this blog for more than one day should have seen this coming. Today’s selling was expected and the writing was on the TA wall since the rally off the 8/16 lows. However, the timing was off. I was expecting this after Labor Day. Instead it looks like we started some selling early.

I am not sure if this will lead to more selling but the land of charts are very ugly out there. Many stocks have managed to fail right at key resistance. If they do not take out these resistance levels soon and turn them into new support, chances of more selling is very high despite the put/call ratio spiking over 1.10. This is a secondary indicator anyways and there is nothing out there that says that fear can not beget more fear. That put/call could hit 1.50 before we see any kind of rebound.

The only solace I could find out there today was that the stocks in my portfolio and leading stocks overall didn’t take in much damage. Instead it was the usual batch of housing and finance related stocks that got hit. The metal stocks have also been an OLD leader that has been taking a pounding. My two favorite shorts have even setup for another round of high reward/low risk entry. So despite my stocks holding up, it sure wouldn’t take much more selling before cut losses start getting activated.

If I can start to try to do a little predicting myself, I would assume we are not too far away from a real top. The amount of leaders showing topping patterns in the metals, chemicals, banks, and other sectors are growing quite large. At the same time, even though many big cap tech stocks continue to move higher, they are doing so either in a very V shaped manner and/or are doing it on lower volume. Also when I look at any chart someone mentions to me in the chat room it looks like it is in a parabolic run. I can not remember the two stocks mentioned for longs today by a chat member, but both of those charts are in clear parabolic runs.

However, the fact that stocks like RIMM BIDU and BCSI continue to go higher just proves with real money that the market still has not gone to hell yet. Has the indexes topped? Probably. But like I keep saying: until those leading high-priced technology growth stocks top, the big SWOOSH will not occur. Once these leaders top, the market will fall apart. Which is why I find it so funny that everyone is freaking out already on the horrible horrible station called CNBC. This channel is seriously a joke to the professional active investors that I know. We all know this channel is the worst of the worst (yes I said that right) of hype and misinformation. Things can always get a lot worse and no amount of Cramer freaking out will ever stop the market from moving lower if in fact that is what the market wants to do.

The best news about the market going lower here is that we are aware that it can. Therefore, we can take advantage and NOT buy the dips but instead short the low volume rallies. If we can make some money here, while the amateurs and CNBC talking heads lose money, we will have that much more to put to work when the real bottom comes. And trust me, when the real bottom comes I WILL BE ALL OVER IT. They are hard to miss. They don’t just follow-through on volume with a little 1.7% move. They will move 2.5% to 5% on huge volume, easily.

The most important thing to have learned about the recent market action is that cutting losses short probably saved you a lot of pain that people in AHM might still have not learned. Going with the flow will ALWAYS make you more money than trying to predict the future. The only thing about the future that is certain is uncertainty about the future. Don’t try to be a hero, that is a sure way to become a zero at this game. Continue to go with the flow of the trend. The big trend is still up. The little trend is down. So short but don’t get too crazy and longs you have been holding a long time that are holding support-keep supporting them.

Aloha and I will see you in the chat room. Where, thank God, most are in cash and avoiding the heartattacks and headaches that this market is giving many players who are going “all-in” on every extreme up and down day we have. They will certainly pay the price in time: financially, physically, and mentally. ALOHA!

Selling Hits All The Indexes On Higher Volume; Stocks In My Portfolio Outperform

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