Monday, August 21, 2006
Buy on Dips?
Hell no.
I don't believe investors are courageous enough to keep this bull thing going for too much longer. After all, we are heading into the back end of August and we all know how bad September is for the market.
However, that does not mean the market cannot rally for another week or two.
My point is this: try not to fight the trend. The market is not healthy enough for you or me to go out and buy on the first dip we see. That's how you lose all of your money and end up on the soup line.
Instead, if you are inclined to be bullish, buy gradually in small increments. And, consider shorting some stocks, in order to hedge your long positions.
The aggressive downside moves in tech stocks are alarming because it can spill over and technically wreck whatever bullish patterns exist. Right now, I am very close to opening up a short position on RACK.
Anyway, the way I read today's tape vexes me because I have been buying stocks and covering shorts, as of late. It angers me to be in a position where I am at the markets mercy and need to wish or pray for the stock God's to smile upon me.
So, instead of wishing like an imbecile, I will take action today, in order to control my destiny.
More on this later.
I don't believe investors are courageous enough to keep this bull thing going for too much longer. After all, we are heading into the back end of August and we all know how bad September is for the market.
However, that does not mean the market cannot rally for another week or two.
My point is this: try not to fight the trend. The market is not healthy enough for you or me to go out and buy on the first dip we see. That's how you lose all of your money and end up on the soup line.
Instead, if you are inclined to be bullish, buy gradually in small increments. And, consider shorting some stocks, in order to hedge your long positions.
The aggressive downside moves in tech stocks are alarming because it can spill over and technically wreck whatever bullish patterns exist. Right now, I am very close to opening up a short position on RACK.
Anyway, the way I read today's tape vexes me because I have been buying stocks and covering shorts, as of late. It angers me to be in a position where I am at the markets mercy and need to wish or pray for the stock God's to smile upon me.
So, instead of wishing like an imbecile, I will take action today, in order to control my destiny.
Comments:
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Let's think about this for a minute or two. It's 2 P.M. - do you know where your volume is? Might finish with less than last Friday. The market going down on weak volume suggests (to me at least) retail trade taking some profit (fearful profit taking slime!) and institutional trading taking the day off. Even the machines are being quiet today although I think I saw some evidence of program buying between 12 and 1 (what's new?) I don't think I saw any evidence of program selling. The tick has only had a couple of extreme moments all day and they were between 11 and 12.
I'm thinking we're going to see a couple of days of aimless drifting followed by a couple of days of aimless buying and another flat Friday. What do you think?
I'm thinking we're going to see a couple of days of aimless drifting followed by a couple of days of aimless buying and another flat Friday. What do you think?
John-
I agree with the volume analysis. However, there is no reason to believe the market will not selloff on BIG volume, once the heavy hitters return.
So, we could drift lower on light volume, then leg down on heavy.
I have not done anything today, because I am second guessing my instinct to go short.
However, I do think it makes sense to throw some hedges out there just in case.
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I agree with the volume analysis. However, there is no reason to believe the market will not selloff on BIG volume, once the heavy hitters return.
So, we could drift lower on light volume, then leg down on heavy.
I have not done anything today, because I am second guessing my instinct to go short.
However, I do think it makes sense to throw some hedges out there just in case.
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