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Monday, May 03, 2004
Market Recap
The markets had a very nice bounce today with the Dow up 88 points and the NASDAQ gaining 18 points. Volume was anemic, but the NASDAQ did close back above its 200 SMA. This is positive, but we will need to see this happen for more than one day and with much more volume before we get excited.
Frankly, there is nothing to get excited about in this market. I would not be going long here until after we hear from Mr. “Greenspoil” tomorrow. I am not even sure what news I want to hear from him. By that I mean, an interest rate hike should not rally the market, but the market is unpredictable. The market never does what we expect it to do and tends to trade in advance of news. A notice of a possible rate hike should send the market down (that is the common sense reaction), but the market is not rational. What we think the market will do, is not what the market does.
React to the Reaction
Maybe the news of a rate hike is already priced in and maybe the market could do the unheard of and rally on this news. When it will happen is anyone's guess, but sooner or later rates have to go up. How will the market react when it does? I wish I had that answer. Markets do not care about news we have already heard about. It is trading on the future, not the past, and right now it is trading like it wants to go down. That tells me there is bad news to come that we do not know about yet. This bad news may not necessarily be a rate hike; I think we all know that is coming. I am talking about news none of us expect - the market has a way of forecasting both good and bad news and trades up or down in advance of that news. Remember: in the stock market it is always the reaction to a news event that is more important than the news itself.
Play It By Ear
We will just have to play it by ear for now. Cash remains king and if you are long, I recommend hedging your positions with some short plays as I am doing. I am not a bear or a bull; I simply want to profit over the long term by staying with the trend of the market no matter what that may be. If we have to reverse our positions and go heavily short because the market wants to go down, then that is what we will do. We are currently in no-man's land waiting for the market to decide on a trend. So hold on for another day. Hopefully, something will be resolved when the fed meets tomorrow. Until then, Cash is king.
No New Stocks
There are no new stocks tonight as the charts need some time to set up again. There is no rush to trade, let's take the “wait and see” approach before we commit to any more positions either way. Sometimes the smart money stays on the side lines and I believe this is one of those times.
As always, thank-you for your support past, present and future! Have a great night everyone; we will see you all Tomorrow evening.
OTC BB Watch List
- IFUE
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