Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Please Tell "Chicken Little" The Sky Is Not Falling!

In the original early 19th Century story of Chicken Little, the sky was not falling as it was only an acorn that hit the little chick in the head. In an animated version of the story, that I remember from my childhood, I remember it was merely a drop of rain. Listening and watching the current media hype surrounding the recent momentum stock, biotech and technology stock market correction, one could easily be convinced that this time is different and indeed, the sky is now truly falling. But the sky is not falling, Chicken Little! Please tell Marc Faber, we will surely not have a crash in the next 12 months, as crashes occur infrequently and are impossible to predict. The fact Mr. Faber is calling for a crash, greatly diminishes the probability of it occurring, especially in the timeframe he is predicting. Two types of traders are classic losers, those who are greedy, and those who are fearful. I refuse to be either. I will not let anyone frighten me into dumping my stocks just because they have suffered a correction. I will embrace buying when stocks are on sale! Buying low and selling high is what is required to beat the market. And I am seeing more bargains by the day!

Just look at the stock market this past week. We got a bounce off the lows which faded in a couple days. But I was able to buy on the early week lows to average down in BITA, and then sell out on the rally at breakeven. And even though we fell back by the end of the week, I now have a very small position that I can add to early next week.

Another stock, HALO, has fallen from a recent high of $18.18. to now trade down to a Friday low of $7.13. But the stock then rebounded to $8.01, allowing me to dump all of my recently purchased shares from $8.02 and lower. Then the late day selloff and 7 cent lower close at $7.42, was not a disaster, but a Godsend. I bought some shares on the close at $7.42 to average down a few shares I hung at $8.26, that I was unable to liquidate on Friday. Now, on a small rally on Monday to $7.84, I can dump out of those shares at breakeven leaving just my original core position priced in the $11.50 to $12.50 range.

Should we dip lower next week, before retesting $8, I will just add to the position at $7.00, $6.75 & $6.50, and make even more money when the stock rallies back towards $8 hopefully later in the week. Now that HALO is approaching major support, it should provide fabulous scalping opportunities from the long side and I should be able to reposition my entire losing position to break even within 2-3 weeks or less.

I recently wrote an article about Tesla Motors (NASDAQ:TSLA) where I explained how the stock likes to correct for 7 weeks. Next week is the 7th week, and I anticipate a major low is just around the corner. And instead of being disappointed with the recent corrective price action, I am quite impressed how the stock bounced recently from $203 to $235. And I am especially impressed how stubbornly the stock has held above $200. In a recent article I was suggesting that one buy TSLA in the $165 to $190 range but it is now looking like the upper end of that range is all we will get to buy, on this correction, if we even get that.

I also look at beaten down Twitter (NYSE:TWTR). After being down 8 of 9 weeks, I was sure we would be up last week, but no, I was wrong. That makes a lower weekly close, 9 out of the last 10 weeks. The stock closed Friday near major support at $40.05. Friday's low of $39.68 is just 88 cents above the all-time trading low of $38.80. I agree with Jon Najarian who mentioned Friday on CNBC that he likes the stock near all-time lows, click here. And regarding the recent major shorting of TWTR shares, Jon mentions how the large short interest could help facilitate a rally due to a short squeeze, on the video. In another segment, click here, shorts are warned to watch out for the April 29th earnings release that comes a week before the big share lockup termination in the first week of May. The company should make a positive announcement around earnings to cause a pop and soften the blow of so many shares coming onto the market. But even without any positive announcement by the company, I can't imagine insiders dumping at $40 or under. Maybe they dump at $50, or $60, but not at $40. You buy the rumor and sell the fact but in this case, you sell the rumor and buy the fact. In this case, they have sold off the stock in anticipation of the large unlocking of shares coming in May, so when the event arrives, we should immediately bottom and rally. It should mark a major low and be a time to buy and not to sell. If troubled Facebook bounced off its lows when its shares were released from lock-up, all the more TWTR should rally as TWTR did not mess up their IPO like Facebook did. TWTR was loved when it was an IPO, unlike Facebook that was despised. For anyone who likes TWTR for a trade, check out this TWTR bull spread trade suggested on Options Action, click here.

Late on Friday, I also bought shares in another recently IPOed stock, KING. I will continue to buy KING as it makes new lows under $18, as I expect it will finally trade at the IPO price of $22.50 some time in the next 30 days, and should hit $30 within the first 6 months of trading. With an IPO with a P/E ratio around 10, buying this stock is a no-brainer.

Another stock I bought on Friday was Angie's List (NASDAQ:ANGI). Buying this stock under $12 is another gift of the market that I will not squander. When I bought in the low $12s last week, as suggested in my article posted last weekend, I was able to sell out on a small rally to $12.86. I now bought at $12.02 and at the $11.78 Friday close, and expect a similar small rally at minimum, next week. I will be accumulating shares for as low as it wants to trade down to, in anticipation of a quick snap back to $16. I am not depressed, but in fact quite excited by the prospect of getting this stock at a giveaway price. Even if the bears are right and the company's business model is broken, it should not prevent me from making a lot of money buying the dips, even if the eventual price move is lower.

Conclusion

"Chicken Little, the sky is not falling! It is just a correction. It is big funds vacating the high momentum stocks. The big funds drove the stocks up to valuations that could not be sustained. Stocks got overdone to the upside when the funds got in, and now they are getting overdone to the downside as the funds get out and often short. And when the selling stops, which should be very soon, the stocks should quickly bounce back at least 50% of the recent selloff, even if a bigger correction is in the cards. This is the first dip off a major bull run which should be bought into. Only after rebounding close to the old highs and failing, only then should we begin a more serious correction, if one is truly coming. Right now is the time to buy and not sell. It is time to be greedy when others are fearful, as Warren Buffet suggests.

If you are still not convinced, just consider that Herb Greenberg is saying it is not time to be buying the momentum stocks, click here. This is the same Herb Greenberg who called Green Mountain (NASDAQ:GMCR) the "Short of the Century" when it was trading at its $15 bottom, just before it began a rally to over $100. Herb Greenberg is a smart man and he is quite accurate about saying where a stock is presently, or where it has been. He can explain why a stock is down, but expects the bad news to continue to infinity. Thus, he is clueless as a predictor of the future. With his Green Mountain call, he is probably the "Worst Timer of the Century", as that stock was the "Buy of the Century" at the same time he was calling it the opposite. Please forgive me if I take comfort in his warning to stay out of momentum stocks at this time.

Disclaimer:

The thoughts and opinions in this article, along with all stock talk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

Disclosure: I am long HALO, ANGI, BITA, KING.