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Sunday, October 30, 2005
Market Recap
It's almost laughable, the volatility in the stock market these days is a beautiful thing for the day traders but it has been unbearable for swing trading. There is just no way can you hold a position for more than a day when the Dow has 300 point swings from one day's low to the next day's high and vice versa. Friday the Dow was up 172 points after being down 115 points on Thursday. The Nasdaq rallied up 26 points Friday but let's not forget, it was down 36 points on Thursday so it is still negative 10 points over the last two days despite Fridays big rally. The S&P gained 19 points on Friday after being down 12 points on Thursday. For the week, the Dow was the big winner gaining 187 points while the S&P and Nasdaq lagged only up 19 and 8 points for the week respectively. The market remains trendless as there is no follow-through from day to day on any particular market move the day prior. The Dow continues to consolidate between 10200 and 10500. The S&P and Nasdaq also continue to churn and these indices need to close above 1200 and 2150 to reverse the trend before a sustainable move up can take place.
End of the Fiscal Year
One more trading day in October and we are “outta here”. October, historically the worst month for the stock market, will be history again for this year. Market bottoms normally happen in October and hopefully we have seen the bottom. Friday's super rally was very impressive and with a new month starting on Tuesday, maybe it is the start of an end of year rally! According to historical market data, the best time to be in stocks is from November to the following April. If history is to repeat itself this year, then a rally should be underway soon.
T/A and Bottom Fishing
The charts of the indices are still in rough shape technically even after Friday's big rally. But having said this, the charts always look bad technically at the bottom of any market. The truth is, as good as technical analysis is, if it has one drawback, it is that it is not very good at predicting bottoms based on chart patterns. In other words, if you wait until the charts look great again, you miss a great deal of the move off the bottom. I do not want to miss a big move off the bottom waiting on charts to set up again and I am sure you do not want to miss a move either.
There are still some T/A tools available with helping to pick bottoms such as the VIX, McClellan Oscillator, TICK, TRIN and others but unfortunately, it is very difficult to try to guess a bottom strictly using chart patterns. There are some chart patterns that are good at predicting the bottom but they all need confirmation that the bottom has been put in. While waiting for this confirmation, you miss some of the move up. The fact is, by the time you realize a bottom has been put in place, the market has already moved up. This is unfortunate but cannot be helped. The only other way to pick a bottom is to keep guessing at what it will be (bottom fishing) and that has never made me money. If you start doing that, you end up being early and the market keeps falling with you in it. You either stop out for many small losses (if you are disciplined) or you are left holding the bag and waiting for the real bottom to take place.
Picking a bottom is something we are just going to have to get a feel for and try to make a best guess at. It is a game of chance when trying to find a bottom, but I think there are signs that it is either near or has already happened. Volatility is one of the signs lately. Often when just after a market bottoms, there are tremendous daily swings and volatility is running rapid. I think it is safe to say, this has certainly been the case lately.
Another FOMC Meeting
Believe it or not the Fed meets again on Tuesday to determine if it will raise interest rates once again. These guys are relentless, seems there is an FOMC meeting every time we turn around. This is the last meeting this year so maybe after this one, the market can put together a year end rally knowing the Fed is done for at least three months.
Stockcharts listing
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STHQ Chart Index
If you go to the chart index in the left side menu, you can review and study charts we have annotated for each stock listed in the past.
Earnings Calendar
We have added the earnings link for each stock on the bulletin. To access the link for earnings you can either use this link below or click the link on the bulletin for the corresponding ticker. Click the online bulletin in the left side menu for access to the earning calendar for each stock listed. It is not recommended to hold a position through earnings. You can always buy the stock back after the dust settles.
http://www.earnings.com
For New Members:
For all the new members with us, please make sure to read the link “How to use Bulletin” at the bottom of the Bulletin page on the website. It is critical you know how to use this trading tool before trying to trade the stocks mentioned. The effectiveness of your trades will diminish if you do not completely understand how the information is presented. |
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