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Thursday, March 18, 2004
Good evening friends,
Market Recap:
Another ho hum day for the markets. At the end of the day, there was not much movement either way for the indices. Options expiration is tomorrow and that could cause some wild swings, so sharp day traders may take advantage of the volatility. If you have a weak stomach and do not like to watch a roller coaster, you may elect to stay away from your screens.
Studying the NASDAQ
I mentioned a couple weeks ago that I thought the NASDAQ was going to head down to the 200 SMA. Once it hits that level, I thought that we would then see a rally and a continuation of this bull market. It's been a couple weeks, and I still believe that will happen.
Looking at a chart of the NASDAQ, the 200 SMA is in an uptrend and will continue in the uptrend until the NASDAQ falls below it. If that should happen, the 200 SMA will begin to trend flat or down over time. When it points down, that will be our signal that we are now in a bear market and we should be taking short positions, or definitely selling all long positions and going to all cash.
I do not think the NASDAQ will go below this average. The fact that the 200 SMA is trending up means that it is rising daily, and today it is at 1883. Each day this average will rise as long as the NASDAQ remains above it. As it rises and the NASDAQ price falls, they will touch, and this is where we go 100% long and buy all the stocks we have wanted to buy (providing their charts are good). I can not tell you what level the NASDAQ will be at when it meets this average. It all depends on how much time it takes for the NASDAQ takes to fall.
Elect to Have a Good Year
As everyone knows, it is another election year. Traditionally the election year is actually quite a good year for the stock market. It usually starts off by heading a bit lower, and then builds as we approach the election in November. The economy is looking better in many ways; however, oil prices are at their highs. High oil prices are not good for the economy in my opinion. If people pay more at the pumps, they will have less money to spend elsewhere.
Energy Stocks
I said many months ago in a Commentary that energy stocks would do very well in 2004 and if you are the longer term hold type of investor, these stocks would do wonders for your portfolio. Keep this in mind as we get closer to the election. If oil prices start to go down, then you should lock in your profits on your energy stocks.
These high oil prices are about politics really. Think about this, President Bush is not well liked in some Middle East countries. If these countries want to make it difficult for him to get re-elected, they will squeeze oil prices higher and this could cost him the election if prices stay high.
It is just a theory and something to think about. I am sure oil prices will come down before the election, but if they do not, President Bush may have some problems. The election results will certainly have lasting effects on the future of the economy and the stock market. With the election coming in November, let's hope that it does for the stock market what it traditionally has in the past.
Note on Short Positions
Because we are not in a bear market and we have very few subscribers that like to short stocks, I am only updating comments on the short sheet once a week. However, I do look for new shorts every night, so I will add new shorts to the Bulletin when I find them.
Here are some OTC BB's for your watch list:
- BIOHF has the same chart that as MWAV did before today, I might even buy this one.
- IDWK
- UTWY
- BPWRF
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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