|
The contents on this page are a small sample of StockTradersHQ's member resources (FREE Trial!)
1.
Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock picks with the greatest potential for explosive gains.
2. These stockpicks are traded with our real-time portfolio. Email alerts are sent for every entry and exit. Through the member-only website, you will have our support every step of the way.
3. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses.
SEE OUR TOP PICKS FOR 2006...
|
|
Wednesday, July 21, 2004
Good evening Friends,
Market Recap
This is an excerpt from yesterday's commentary: “one rally does not repair charts”. Today, the markets started off with a bang, gapping up on good earnings from many tech stocks and great news from MSFT. However, this was an opportunity to sell on the news and the smart money did just that. The Dow was up +90 points this morning when the selling began with vengeance and closed down -102 points at the low of the day. This negative swing of almost 200 points will send the bulls running for cover for the next few months.
The NASDAQ faired just as poorly with a 60 point negative swing, closing down -42 points. The NASDAQ is headed for that support area of 1860 mentioned previously. An alert was sent today reminding everyone that the pop in the Dow was mainly due to MSFT's gap up of almost $2.00. MSFT weighs heavily on the Dow and can skew what is really happening in the overall markets.
Charts Don't Lie
Folks, the charts do not lie. They have been indicating the market is down for sometime, so we cannot get excited about a little rally with no volume, similar to yesterday's rally. There was no follow through on today's rally, and unfortunately for the longs, it means lower prices are yet to come for many stocks over the summer.
Stocks do not go straight up when they rally, they always stop to rest, sell off a little and then resume the up trend. The same holds true for stocks going down. They never go straight down. They will stop, have a brief rally and then resume the down trend making new lows again. That is what is happening now. Every rally is met with selling and lower lows are made. This occurs because there are always some inexperienced investors who are trying to pick a bottom and play a bounce. Their buying causes these little rallies within a down trend. They think the first little rally is the bottom and they had better get in quick before they miss the move. Most of these investors know little about reading charts. They keep making the same mistakes over and over until they have lost so much money they finally come to their senses and stop trading, they learn how to trade before trading any more, or they completely give up and leave the market all together.
Bear Market
The bear market has resumed. It will be extremely difficult to make money on the long side at this point. I suggest going to cash if you do not have a margin account. If you do have a margin account, this is the opportunity to short this market. Looking at the charts, I can almost promise that it will not get much better for long positions. It is time to go to cash or short the market.
Our short positions are doing very well. OSIP is down $10 since we entered the position when it broke below $64. Even the shorts we entered yesterday like WEBX and LLTC that gapped up on us this morning closed at their lows for the day. Our shorts will not be covered at the open in this situation; we will not be fooled by the dumb money buying spree at the open. We saw the herd in a buying panic and by the end of the day they paid the price once again. Buying the gap open is classic amateur action. The smart money knows this and they will let them run at the open, then clean up at the end of the day when they control the close.
It is no surprise that many stocks had bearish engulfing candles today. With the indices closing at the lows, it would be foolish to list any new stocks for long positions on the Bulletin tonight.
EBAY and Analysts
EBAY reported earnings after the bell today. Net income was just under a 100% increase from last year, and they beat the street. So why is the stock down nearly 10% right after the earnings release? In a word - analysts.
The analysts wanted EBAY to say they would earn $3.21 billion on the year with earnings of $1.19 a share. EBAY's guidance was less than expected, with “only” $3.185 billion with earnings of $1.17 a share. That is up from $3.15 billion and $1.13 a share, but it did not meet analyst expectations. The stock is getting slammed after hours. This begs the question, “Who knows eBay's business better?” Do the analysts somehow know eBay's business model better than eBay? Or are they simply setting expectations so high that no matter what a company does, they are doomed to fail?
Company after company is reporting very solid earnings growth and many are predicting a brighter future, yet stocks are selling off and the markets are headed lower. Earnings season is always a tough one to play. Sometimes it is ‘sell the news'. Other times bad news is ignored and stocks seem to be bought by everyone coming out of the woodwork. This earnings season has been good so far and stocks should be performing well. Instead, we are seeing stock after stock get slammed because they did not meet analyst expectations. We will probably hold onto most of our short positions in this earnings season because even blow out numbers are somehow being spun in such a way that they come out negative. We will have to be careful though; the company that declares bankruptcy during this time is likely to get an upgrade on valuation!
As I type this commentary, EBAY is down 8% and YHOO is down 3%. This will crush the whole internet sector tomorrow and take the NASDAQ down with it. I suspect a major sell off tomorrow. This will play right into the bear's hands, because it would be follow the through selling that will confirm today's sell off at the end of the day. If you have any doubts about today's sell off, a look at the volume on the NASDAQ indicates the selling is for real.
A Peek at the VIX
The VIX still does not show any panic in the market. This means we will go much lower over time. Tomorrow may be very ugly; we may see heavy selling and another big down day in my opinion. If you are short, stay short. To use a fitting quote “If you're not short, you must abort.”
Security Conference
If you live in the Washington D.C., VA, or MD Area, there is a Government Security Expo & Conference being held in Washington, D. C. on July 28-29. ALL SECURITY, ALL GOVERNMENT. It is an event designed specifically for, and by, government security professionals. At the Expo, visitors will see the latest security innovations from the leading vendors working in government today. Asa Hutchinson is one of the key note speakers along with other Department of Home Land Security personnel, FBI, etc. The link is http://www.govsecinfo.com/ . This may give the security stocks a boost, but the security charts are not looking good at the moment.
OTC BB Watch List
- None
Please tell a friend about our service. We would like to become a referral service only, and with your help, we can be. As always, thank-you for your support past, present and future! Have a great night everyone; we will see you tomorrow evening.
|
|
|
|
|
|
|
