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Tuesday, May 11, 2004
Good evening friends,
Market Recap
There was a minor rally in the markets today with the NASDAQ posting a 35 point gain and closing at its high of the day. However, volume on this rally as well as others were on the low side, and with this index still below its 200 SMA, I can not get excited about any of these small rallies yet. The Dow closed above its 200 SMA, but the volume was feeble at best. Today the Dow's volume was the lowest we have seen since Christmas Eve; that to me is a big red flag. The volume tells the story and it tells me, this was just a dead cat bounce. Volume must be heavy if the rally is for real.
CSCO Earnings
CSCO beat estimates by one cent. This is no surprise, looking at their earnings history, they beat estimates by exactly one cent over 90% of the time. When they are this consistent, what impact can it possibly have on the market? CSCO's earnings do not mean as much as they used to for the markets. Guidance is still important and CSCO's guidance can weigh a lot on the market.
My opinion is for us to hold our short positions for now, and if you are not short, hold your cash position. I would not be in any hurry to buy stocks at this time, a turnaround is possible but so far there is nothing to suggest a reversal to the upside is near.
Catching Snow Flakes
Remember catching snowflakes on your tongue as a child? When a child is catching a snowflake, they are looking up, and focused on the flake heading their direction. You will never see a child staring at the fallen snow asking, “Why did I miss that one”? Their focus remains on the sky, waiting for the next opportunity to catch a snowflake.
This is much like how our focus must be with stocks. Too often I hear people ask “how did we miss this stock?” It always happens after a stock climbs 100%+ or falls from the sky to new lows. Sometimes, we simply miss out on the opportunities that present themselves. Much like snowflakes falling from the sky, there are thousands of stocks to focus on. It is impossible to study each flake falling from the sky, let alone try to catch every one of them - so goes our stock trading. We can not possibly screen every stock out there, let alone be able to catch every huge winner. Rather, we must focus on what we can, and be happy with we catch.
It is quite easy to see which stocks have moved after it has made the moved and ask “How did we miss that one?” This is much like reading the chart from the left. It is another thing entirely to be able to find those opportunities before the move has been made. This means reading the chart from the extreme right, not seeing what will happen next. It is unfortunate when we miss an opportunity, but opportunities are like the snowflakes falling. There are thousands of them out there, and if we decide to look at the opportunities missed, we lose sight of the many opportunities around us.
We can learn from children, and what a great lesson they have taught us today. Do not dwell on stocks we miss and remember to always keep looking for the next opportunity. We will not catch every flake, but if we keep our focus where it should be, we will catch our share.
There is not much to update on the comments for our short positions. I have checked every stock on the Bulletin as usual, but if there is not anything to update then I will not make a comment. I am not finding any stocks worth adding to our list. We have plenty on shorts to choose from and we really do not want to be long right now anyway.
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
- None
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