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Monday, September 29, 2003
Good evening friends,
A see saw day today with the markets starting out with a gap up and then selling off to red conditions before bouncing from over sold levels and powering back to close near the highs of the day. This bounce was due and I mentioned it in last night's bulletin that it could come within 1 to 2 days. Well came it did, but don't get too excited about it yet. I would have like to have seen our target of 1775 hit before the bounce but this didn't happen. We got close (within about 10 points) (see chart to see why it happened early) and then the bounce started and never let up. This could be a 50% retracement type bounce from the recent highs to the low last Friday. A 50% retracement bounce will take us back up to around 1850 on the NASDAQ. This move is a chance for us to get back in and ride a few stocks up for a quick buck if this is a real move but we'll have to see. I'm not convinced yet as I think we are still headed lower over time. This move back to 1850, if it should happen is for aggressive traders only that can sit and watch their stocks during the day. If you have a job and are away from your desk, then you may just want to ride this thing out in cash for a month to see where we are headed. My guess is after we have a retracement of 50%; we will be stuck in a trading range that will form another wedge. This wedge could be resolved to the downside so this is why I say to wait it out if you are not an active trader. We'll trade the wedge when we see opportunity but it's very risky IMO and I don't like to accept a lot of risk. The good news is, If you'll look at the NASDAQ chart, you'll see that we are not really in that bad of shape so don't panic. We are still in a longer-term up trend as long as we stay above 1777 (the 50 DMA) and that will change slightly each day. If we close below that (and that is the key, the close not intra day) then we could be in trouble for a while to come. I am leaning towards this level holding and we continue in the up trend. If we fall below this 50 DMA then I'll have to rescind my year-end target of 2000 on the NASDAQ and I don't want to do that. I still feel we can achieve this target and have a great year-end rally and possibly break through 2000 and higher. I'm not at all turning bearish yet but for a week or two we may have to hold our cash and trade very selectively. Stocks like SOFO, our latest buy is ignoring the overall market right now. These are the stocks we need to find and take a chance on. Even though the NASDAQ chart I showed last week was negative, I still purchased SOFO. I was confident that there was minimal risk in taking a position and so far it has worked out.
Our list of stocks to watch is shrinking vastly. This is not necessarily a bad thing. We don't want to waste our time tracking stocks that won't move because of broken charts so we'll just eliminate them and make room for future big winners when the charts set up. It's hard to say what will happen tomorrow on the NASDAQ. We could head up to visit that 1850 target in a day or two or we may find that today was a suckers rally and head lower to test the 50 DMA. Best thing to do right now is sit tight and wait until we can confirm direction. I did find some stocks with good charts and have added them to the Bulletin tonight. I'll see you all Tuesday night.
* REMINDER- I am coaching in a fall baseball tournament in Nevada on the 16-18 Oct. It's a five-hour drive so I will be leaving Wednesday night the 15th. Because of this, only a quick Bulletin will be issued the 15th. I will issue a full Bulletin from Nevada Thursday evening from the hotel providing I have connection. If not, there will be no Bulletin for that night. I will not be on the boards Thursday or Friday the 16th and 17th but will view all posts in the evenings from the hotel. This is the final baseball tournament of the season. |
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