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Thursday, February 19, 2004
Good evening friends,
So much for the good employment figures that preceded the market open and drove the futures up in pre-market. The market opened up but fell drastically by the end of the day. A few nights back I showed a chart of the NASDAQ and suggested the Index may be headed back to the 2000 level. That prediction is looking more likely tonight as the NASDAQ closed at the low of the day at 2045. More importantly, it also formed a big bearish engulfing candle as many individual charts did as well. This is not a good sign for advancing stocks in the next few days. I have started to lighten up a little where I could today once I saw the smart money getting out of dodge late in the afternoon. I think it's time to raise some cash and sit this thing out a few days. Tomorrow is triple witching Friday, so we may get a chance to unload some stocks into the weekend. HP's numbers after the bell were not very impressive so that is another negative for techs.
We have been trying to be too aggressive with our trades in the month of February. Recall I said to expect a rough ride in February because it is normally not a good month for stocks. Turn out history is repeating itself, and we are caught in the middle of it. We are getting the double whammy because small caps are also not performing. All this spells out that we should have been taking a more conservative approach and sitting on the side lines for a little while. We started the month 50% cash and we should have stayed that way, sometimes not trading at all is the best answer.
Because of the recent rough road, I am going to step back and re-evaluate which style of trading we need to take until market conditions improve. We may not trade at all for a week or two, or we may buy pull backs if I think we can get a nice bounce. Breakouts are obviously not working, and subscribers new to our system are concerned about our trading style. I would be concerned as well if I was new here. Subscribers that have been around awhile know that playing breakouts work most of the time, but there are markets when they don't and we are in one of those now.
Performance
Some have questioned our performance and are wondering if we can trade well in a flat to down market. Our gains over the last 9 months have been substantial compared to the overall market. We can trade and out perform the market in any market. I make no guarantees, however I'm confident we can continue to out perform the market no matter what conditions we face. Yes, I consider it very easy to beat the market in any market, Bull, Flat or Bear. But obviously our returns will not be as good in a flat market as they will be in a bull market, that's just common sense. I will say that even in a flat market, we will still most likely out perform the market, although not with the same success percentage gains as our previous 9 months. What we have to do now is preserve capital and be ready when market conditions improve.
Because of market conditions, there are no new stocks to add to the Bulletin tonight. I will take this weekend to look for the best bounce plays in case we decide to do at least a little bit of trading next week.
For the active OTC BB player, GOJO from last night's list was up 20% today, and AMWS is forming a pennant that could be resolved soon. Watch it for breakout.
As always, thank-you for your support past, present and future! Have a great night everyone; we'll see you all Sunday evening.
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