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John Ward
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Equities trader. I currently live in California. Email: Twitter: JWard_73
  • June 22, 2010

    We presently have a market (and more than a few stocks) forming the ever dreaded “Head and Shoulders” topping pattern.  Everyone sees this, of course, though I would warn against concluding that it is then too obvious, as I heard much the same thing back in 2008.  Not that this market is anything like that one.  Still, the point remains: Ignore what others are doing and just focus on the market itself.  This is an unsophisticated-sounding tenet but one that, if followed, affords one a focus that the opinions of others tends to corrode.     


    Now when it comes to the Dow, 25 of the last 40 sessions have been triple digit moves.  10 have been triple digit gains; 15 triple digit losses.  10 sessions have seen the Dow up or down over 200 points. Now that’s some volatility.  And a great way to churn one’s account if you’re not careful.


    To my mind, however, the two most probable paths for the market are 1) Chop and slop (snapback rallies and selloffs that occur without rhyme or reason, frustrating bull and bear alike), or 2) Lower prices.  And if we’re in fact heading lower, then I imagine that the highs of 6/15-18 would be a ceiling.  Just keep in mind that stocks often form multiple shoulders before finally breaking down in earnest.  So being nimble, flexible and persistent is a must.


    We could always continue to rally, of course, so that has to be considered as well.  It could even be a powerful move; if so, one should know just what they want to own.  Focusing on stocks like AKAM and FFIV, given their fundamentals and the fact that the entire group is full of strong stocks, would certainly be the way to go.  Otherwise, stocks like AMZN, PCLN, AFL, BUCY, GS, V and GMCR should be your short targets, if not the many inverse ETFs out there.    


    Just take nothing for granted and, as always, be ready for anything….      

    Disclosure: Long: SPXU, TZA, SQQQ; Short: V
    Jun 23 12:04 AM | Link | 3 Comments
  • June 4, 2010

    While Investor’s Business Daily may say this rally is “under pressure,” to me it’s as dead as a doornail.  They cite two historical examples of distribution days hitting the market within two days of a Follow-Through Day (NASDAQ:FTD).  Those days happened in early October, 1966 and August, 1982; both produced a mere .22% drop on the Dow, though the action during that day in ‘82 was quite a lot wilder.  To my mind, however, there’s simply no comparison here.  The carnage on Friday was far too harrowing. 


    “Never trust the teller, trust the tale.”
    - D.H. Lawrence


    As I wrote on the first of June in my last report, I‘d covered all my shorts and was sitting in cash as it seemed to me that the sellers had backed away.  With the next day’s FTD I bought the best merchandise that was out there: CSTR, CRM, VMW, OVTI, ARUN and GIL, though I did keep my positions on the conservative side as the power of the move and the lack of quality merchandise made me somewhat cautious.  March, 2003 this was not.  Still, when we get a buy signal we buy, no questions asked.  Well, it was certainly short-lived, as I am back to a 100% cash position.


    Now I’m sitting on my hands and waiting to see what will happen next.  Even the most fleeting of glances at, say, the S&P 500’s chart should be enough to convince somebody that the chances are this market is heading lower from here though.  So, with this in mind, I am looking to short any rallies at this point and focusing on those stocks that the institutions have been busy piling into over the past year and, assuming the market continues to weaken, will now have to get out of, stocks like GOOG, GMCR, V, MA, FSLR, PCLN, GS and, yes, even a stock like AAPL.  I short no stock before its time, however.  Like in the army, it's "hurry up and wait" time. 

    Disclosure: 100% Cash
    Jun 04 10:36 PM | Link | 3 Comments
  • June 1, 2010

    By the look of things, it could be that sellers have exhausted themselves for now.  Not only did volume fall on the indexes when compared to Friday’s session, it fell for nearly every stock in my “short side” watch list as well.  While Tuesday was bad in terms of percentage losses, the lack of selling volume tells me that, even with all the bad news out there, institutional investors were just not aggressively dumping shares.  Volume on the Nasdaq didn’t even pick up during that last ugly hour of trading.  Things could no doubt pick up to the downside, yet it seems logical for the market to continue to get support at the “flash crash” lows, which is also right around the February closing lows for some of the indexes.  Doesn’t mean that we are sure to bounce off those levels, it just means that with volume easing here as we approach that area I don’t feel the need to be short.  It’s time to step back and wait for the market to tell me what it wants to do. 

    Disclosure: 100% Cash
    Jun 01 10:21 PM | Link | Comment!
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