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Thursday, January 01, 2004
Good evening friends,
Happy New Year everyone! 2003 is history and the NASDAQ managed to close the year above the 2000 level. My long-standing year-end target for this index was achieved, and I'm very happy with the results of that prediction. I have some studying to do yet before I can predict year-end targets for 2004. The street wanted to close the year above 2000 and it became obvious when the NASDAQ dipped back into the 1990's yesterday and was immediately supported with buying pressure. Bulletin stocks making new 52-week highs on the last trading day of the year were IMOS, MDR, AIRN, SIRI and ENCY.
Chart Breakdowns and Selling
On Tuesday I sold IONA and these were my comments, “Sold today to free up cash for New Year. Chart showing signs of breaking down”. That break down occurred yesterday. Many times throughout the year we have been able to get out of stocks just before they break down. Granted, we do not always get out in time, but I think we do a good job of reading the chart and selling before the break down the majority of the time. This is why, it is just as important to pay attention to my sells as it is to my buys. If you can't read the sell signals on your own yet, you should follow my lead, it will save you tons of cash in the long run.
”New Today” Stocks
As far as buying goes, by now you know that we buy breakouts (buy high and sell higher) most of the time. I want to talk a little about “New today” stocks in the Bulletin. If you are fairly new to the service, we don't always buy stocks when they first appear on the bulletin. This is because if you will notice, most of our momentum stocks bounce off the 9 DEMA (this is why I use this indicator). It's a great place to try and play the bounce of a hot stock that has pulled back. Many stocks make it to the Bulletin on the day of a big breakout but you'll notice that I do not have buy points right away for these. That is because I wait for the chart to rest and set up for us to then take a position. If we buy right away, then we may be chasing the stock. I would rather buy the pullback in many of these cases. The 9 DEMA is a perfect tool to use to catch these pullbacks. So if you have ever wondered why I don't buy a stock that I place on the bulletin, many times I am waiting for this average to meet the price as well as some other indicators to set up the chart for a better risk/reward entry.
The January Effect
You will also notice in the Bulletin comments tonight that there are some stocks that I want to buy now. The charts look great and they are very strong stocks that I would otherwise be buying right away. However, these stocks were big winners in 2003 and people may be selling to lock in profits now that they do not have to pay taxes on those gains for another 15 months. This is the only reason I hesitate buying them right now. I will look for a chance to buy these when I see that there isn't much selling pressure. I'm a firm believer in history and I remember January of 2000 like it was yesterday. On first trading day of 2000, the markets shot up big and this was the blow off top to the last Bull market. NASDAQ 5000 was history from that day on. On 2nd day of trading in January 2000 the markets tumbled and the great bear market began which lasted for 3 rough years (unless you were short). This washed out many investors and now a new generation of investors have started to come to market. I mention this history so that you can understand why I'm hesitant to dive in headfirst into this market until we get a feel of what will happen. A 50% move in the NASDAQ in 2003 deserves some profit taking. Even though I like the NASDAQ chart here above 2000, we still need to be cautious. NASDAQ 5000 had no over head resistance because it was at an all time high, yet it still broke down. This is only one example of the January Effect. Also, Dow theorists will be out in droves the first week in January buying some of the losers from 2003. They will rotate from some winners into some losers. This theory has proven to be a good strategy the majority of the time in the past; however, there have been some years where this theory has not worked. It's tough to predict what to expect in the first few weeks of January. If the NASDAQ was still below 2000, I think there would be no question we would see selling but because we are above this psychological level, it may save us from any serious break down.
I look forward to another great year in 2004 and there are many charts that are looking very good right now, so let's get started.
Here are some OTC BB stocks ready to move soon. PTON, TENF, APLL, EDIG and MXDY.
Some Other stocks that may move soon are SBYN, EGHT (my indicators say this will bounce soon), IED (love the chart but too thin for me) and WBR (bounce coming).
Have a great night everyone, we'll see you all Sunday night.
Flash back June 29th Bulletin
Open trades TRAC 6/26/03 BP .80 Comments = Keeping us waiting but believe me, pay day is near. This stock went to a high of 3.18 for a 298% gain
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