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Posted on September 30, 2008 - by andrew

Market Update - September 29th 2008

The rally is dead now after markets suffered one of the worst days in history (…again):

There’s not much for me to say. The rally is dead now since the markets undercut their most recent lows yesterday.

Just be glad you didn’t jump the gun too soon after last week’s confirmation day. Leading growth stocks never followed the markets after the rally was confirmed. That was the main reason why I never got a chance to buy anything.

We’re gonna be in wait and see mode going forward. Don’t try to predict what will happen. Let the markets tell you what to do.


Posted on September 26, 2008 - by andrew

Market Recap - September 25th, 2008… Confirmation Day

The markets confirmed the rally yesterday by making sizable gains in higher volume:

Be Careful with this Rally! Get back in SLOWLY

After reading Investors Business Daily’s Big Picture yesterday, I am not fully convinced its safe to get back in yet. Here’s why you should be careful getting back in:

  1. Leaders didn’t make big gains - you want to see leading growth stocks lead a market advance.
  2. The IBD 100 lagged the markets - IBD’s index of the top 100 stocks only gained +.5%. It usually gains a lot more than the markets on big days
  3. Markets under pressure after-hours and pre-market - I definitely would like to see markets build momentum coming off of a confirmation day

Stocks to Watch RIGHT NOW

It’s too early to say whether this rally will succeed or not. But there were two stocks on my watch list that had black borders in Investors Business Daily’s Weekly Review. Stocks with black borders in IBD indicate that these are high quality stocks near buy points.

Here are the 2 stocks I’m looking to buy:

  1. Varian Medical Systems (VAR)
    1. $65.94 buy point.
    2. Downside volume has been low
    3. Positive reversals
    4. 50 day moving average support
    5. Strong volume on previous advance before settling into current base
    6. Top ranked stock in #21 ranked group in IBD’s Industry Group Rankings
  2. True Religion Apparel (TRLG)
    1. $31.92 buy point.
    2. Strong volume on right side of cup-with-handle base
    3. Top ranked stock in #20 ranked group in IBD’s Industry Group Rankings

Conclusion

Wait for stocks to cross proper buy points on high volume. But make sure you buy positions slowly:

  1. Buy 1/2 shares of your full position as it crosses the buy point
  2. Buy 1/4 shares of your full position as it crosses +2.5% above the buy point
  3. Buy 1/4 shares of your full position as it crosses +5% above the buy point

Posted on September 23, 2008 - by andrew

Market Recap - September 22nd, 2008

Market Recap - September 22nd, 2008

The markets suffered huge losses yesterday, but volume was way lower than Friday’s:

I generally don’t like to see such big losses when the market is attempting a rally. However, according to Investors Business Daily, a rally attempt isn’t killed until the low of the rally is undercut. Here are other reasons why yesterday’s losses weren’t so bad:

  1. Quiet volume - not only was it lower than Friday’s levels, volume was below average for the first time in several sessions.
  2. Leading stocks didn’t suffer heavy losses

Conclusion

I am still optimistic about the rally until the market gives me reason not to be. Here’s what to do going forward:

  1. Watch for the rally confirmation to happen since today is Day 4 of the rally attempt.
  2. Be very stringent on what stocks to buy from your watch list. I’ve seen a lot of potential buy candidates that are flawed or are too thinly traded.

Posted on September 22, 2008 - by andrew

Market Recap - September 19th, 2008

Market Recap - September 19th, 2008

The markets followed up Thursday’s monster day with another session of big gains on strong volume:

Friday’s action was very encouraging. However, volume was mixed with the ending higher and the lower. Overall, volume was still very strong and way above average.

Seeing such strong action only adds to my confidence in the latest rally attempt that began on Thursday. If all goes well, we can start looking for a confirmation day on Tuesday, which would be Day 4 of the rally attempt.

Beware of red flags in some stocks…

After reviewing the action of a few stocks on my watch list, I noticed that a few of them reversed downwards on big volume:

  • Concur Technologies (CNQR)
  • Aeropostale Inc. (ARO)

This is definitely not something I like to see when buying stocks. Don’t fall in love with stocks on your watch list. If a stock you were once hot on starts flashing red flags, then stay away. I’ve learnt that they aren’t worth the risk.

If this rally is the real deal, you’re gonna see plenty of good stocks breaking out when the market takes off. It doesn’t make sense to take on unnecessary risk now. There will be plenty of fish in the sea!

Conclusion

Keep your watch list up-to-date and wait for the follow through day. Once that happens, only buy stocks from your list that break out on strong volume (i.e. at least 50% above average daily volume).


Posted on September 19, 2008 - by andrew

Market Recap - September 18th, 2008

The markets made huge gains yesterday after a volatile start:

Stocks started off positive, then went negative….all on mixed volume. The exciting action happened around late in the session when good news about the credit crisis came out causing:

  1. Surge in volume
  2. HUGE gains in a short amount of time

This occurrence was very different compare to other sessions we’ve seen:

  1. That surge in volume caused the volume for the day to exceed the already high volume we’ve seen in the last few sessions.
  2. The way the markets reversed into huge +4% gains in such a short time was very impressive.
  3. Many leading stocks that were negative and had quiet volume most of the day ended up with big gains on above average volume.

Wait!!! We aren’t out of the Correction yet…

Yesterday was just an encouraging sign. It only marked Day 1 of a rally attempt. Many might be salivating seeing some stocks on their watch lists make solid gains yesterday. According to Investors Business Daily, you have to keep cool and wait for a confirmation day of the rally before you start buying. Don’t worry, there will be plenty of stocks breaking out if the rally is for real.


Posted on September 17, 2008 - by andrew

Market Recap - September 16th, 2008

The markets made a positive reversal and ended up with big gains on heavy volume:

Yesterday’s action was encouraging. Stocks were down most of the day until late afternoon when volume kicked in. Several leading stocks on my watch list made gains on above-average volume:

  • Concur Technologies  (CNQR)
  • McDonalds (MCD)
  • IBM (IBM)

Keep an eye on these stocks. I especially like CNQR because:

  1. it had a big run-up prior to its base
  2. its base doesn’t have any distribution weeks on above average volume.

Conclusion: We are not out of the woods yet. I am treating this as just another day. We need to see a confirmation day before I believe that a new rally has begun.

Yesterday counts as Day 1 of a rally attempt. According to Investors Business Daily and How To Make Money In Stocks, a confirmation day will happen:

  1. On or after Day 4 of a rally attempt
  2. When at least 1 of the major indexes gains +2% on higher volume.

Until then, stay in cash, keep your watch lists updated and wait for the rally to start before buying stocks again.


Posted on September 16, 2008 - by andrew

Market Recap - September 15th, 2008

The markets had one of the ugliest days in recent history…..on heavy volume too:

There isn’t much else to say except that things are really bad. I’m sounding like a broken record, but its important to remember:

  • DON’T BUY STOCKS !!!!!!!!!!!!
  • Keep an eye out for buy candidates to add to your watch list
    • stocks building sound bases
    • stocks showing resilience
    • stocks strength
  • Watch for a rally attempt and follow through

Posted on September 12, 2008 - by andrew

Market Recap - September 11th, 2008

The markets scored large gains on slightly higher volume:

 

Here’s a summary of the day’s action:

  • ’s rally attempt is still alive (Day 4). Watch for a confirmation day (+2% gain in heavier volume)
  • Several low-ranked IBD Industry groups performed well. Investors Business Daily recommends only buying growth stocks in the top-50 groups. Be patient and build your watch lists from groups that have the highest rank possible.

 

Conclusion: If you’ve been diligent and picking the best stocks for your watch list, you should see a few of them approaching buy points. Here are two stocks I have my eye on right now:

  • United Therapeutics (UTHR) is about -4% below a $117.92 buy point in a cup base.
  • Concur Technologies (CNQR) is about -8% below a $49.09 buy point from a recent trip to its 50 day moving average.

 

Wait for the confirmation day to happen on the . After that happens, buy slowly! I’m not a big fan of using the as a gauge of the overall markets. So I personally would be skeptical of the rally until:

  1. the S&P 500 or the start showing strength
  2. leading stocks start breaking out on heavy volume

If you do decide to buy, as always, make sure your stocks are passing their buy points on strong volume (+50% above average).


Posted on September 11, 2008 - by andrew

Market Recap - September 10th, 2008

The markets booked modest gains, but on light volume. Gains on quiet volume is typical of a weak market like the one we’re in rigth now:

Conclusion: Nothing has changed, the market is still in a correction. The good thing is that stocks didn’t go down today. The only advice I have is:

  • Watch out for growth stocks that score gains in higher volume and add them to your watch list. 
  • Be patient for a follow-through day

Posted on September 9, 2008 - by andrew

Market Recap - September 9th, 2008

The markets suffered huge losses in mixed volume today:

 

Volume finished lower on the and slightly higher on the . Today’s action confirms the market’s bearish mood:

  • Large losses are ugly regardless of volume - The was the only index to officially suffer a distribution day, but today’s huge losses were still a bad sign.
  • Drop in oil prices didn’t help - The markets typically go higher when oil goes lower, but this correction has been different.
  • Large losses during rally attempt - it was be bearish to see the markets lose a chunk of yesterday’s big gains
  • Negative intra-day reversal - the markets opened higher today (up nearly +1% at one point) but closed much lower. Strong markets do the opposite.

 

One silver lining is that several of the worst hit sectors today were former leaders, which could be a sign of :

  1. Fertilizers
  2. Energy-Other (including Solar and Coal)
  3. Oil exploration

 

Conclusion: The market remains in a correction. Here’s what you should be doing until the market rallies:

  1. Avoid buying stocks until a new market rally is confirmed.
  2. Keep a watch list of growth stocks that show resilience and/or building sound base patterns.
  3. Watch for growth stocks belonging to new leading sectors as old market leaders make way for new ones.

Posted on September 8, 2008 - by andrew

Market Recap - September 8th, 2008

The markets bagged gains on much higher volume today:

On the surface, this might look like a great day. Here’s why you should be skeptical:

  1. We’re in a correction after last week’s big declines in heavy volume - today’s action is too soon to mark the beginning of a new rally.
  2. ’s action today was weak - it was up as much as +1.5% at the open, turned negative as the day went on, and closed with a modest gain compared to other indexes
  3. Leading growth stocks still stuck - Few leading stocks are in any position to break out of decent bases

Conclusion: Keep an eye out for buy candidates and new leading sectors while the market attempts a new rally.