After Market Close February 25, 2008 |
Better
Last Friday morning we wrote: "Bad news can surely take this market down, but this Bearishness is unlikely to be rewarded for long." We went on to explain how excessive the sentiment was and how easy it was for us to feel Bullish, and thus how important it was for us to remain constructive. Those who bought that weakness on Friday are up nearly 50 S&P points. With a rally like this, you'd think we'd be seeing some Bullishness, but not so much. People are more confused than Bullish. That suggests that the end of the month should be OK.
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DJIA: The Dow mounted another nice rally. |
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SPX: The S&P is above some resistance and against some more. An uptrend is one decent day from confirming. |
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NDX: There's still significant pessimism in the Nasdaq. I have to think that the gang will rotate to the 4-letter stocks and the techs soon. |
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RUT: Looks like the Russell is coming on. Brea it out and it's heading for 750. Don't be short here for a while. |
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HUI: The miners were up and bounced smartly off support. This implies that my call for lower prices here is wrong. I'm not convinced, however. |
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ODP: Office Depot was up with the market, but can't break out, it seems. |
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RPM: RPM came on. I like it. |
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DV: DeVry was down on a big rally. Concern: I see a declining wedge shape developing. Of course, if it breaks down it's a BIG uh-oh for this stock. If it hits our target fast, take the profit. |
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ACW: Accuride behaved well. |
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GME: Gamestop behaved just fine for us. Poor relative strength is the short-seller's friend. |
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AVCT: Avocent was up big. Remember, if we're up 10% today, take the profit. |
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BKE: I'm a bit disappointed that we didn't get more out of BKE yesterday, but things may change. |
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AMGN: Sooner or later this sector is going to come on. |
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COV: Covidien broke up. |
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FFIV: F5 broke up and held. Try again. |
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CBE: Cooper is a good looking short as a hedge if we pullback. |
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FPL: FPL looks higher here. Tons of energy. |
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ADI: Analog Devices looks primed. I may buy this for managed accounts. |
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CCMP: Cabot looks primed to rally too. |
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Summary:
I'm a Bull, and I'm getting confirmation. Cumulative breadth has turned up, though the Nasdaq lags. I think we may have a pullback but end of quarter window dressing ought to provide a floor to this market. I see little or no signs of acceptance of the rally.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
Current Positions:
Long 25% ODP at 14.62, stop at 13.04
Long 25% RPM at 21.74, stop at 21.21
Short 25% DV at 48.47, stop at 46.54
Long 25% ACW at 6.78, stop at 6.78
Short 25% GME at 48.03, stop at 48.03. Target 43.03
Long 25% AVCT at 17.21, stop at 16.33
Long 25% BKE at 41.31. stop at 39.09
Watch List:
AMGN: Buy 25% on a print of 48.43, stop at 45.31
COV: Buy 50% on a print of 44.32, stop at 42.54
FFIV: Buy 25% on a print of 23.78, stop at 21.83
CBE: Short 25% on a print of 42.47, stop at 45.91
FPL: Buy 50% on a print of 65.91, stop at 63.27
ADI: Buy 50% on a print of 28.78, stop at 27.62
CCMP: Buy 50% on a print of 36.31, stop at 34.61
Changes in Current Positions:
Move the stop down on DV to 46.54
Move the stop up on AVCT to 16.33
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*30 Minute Trading Rule:
In order to prevent whipsaws, we use a 30 minute trading rule. This means that, as a general rule, we are going to "sit on our hands" during the first 30 minutes of trading, this includes the lifting of stops during this 30 minute period as well. Additionally, if after the first 30 minutes of trading the range of the stock pick is within the stop and buy/short boundaries presented, the trade recommendation is valid. If the stock's range is outside of the buy/short and stop boundary, the trade recommendation is VOID. E.g. if the recommendation is "Buy a print of 10.25, with a stop of 9.95," and the stop trades up to 10.50 during the first 30 minutes, we would pass on the trade. Similarly, if that stock were to trade down to 9.90 before 10:00, the trade would also be void.
There is no 30mn rule on limit orders, but if price gaps out of the buy/stop range the trade is void.
Rule on stops:
As a general rule for the model portfolio, we will lift all stops on existing positions for the first 30 minutes of trading. As a practical matter, subscribers may wish to leave their stops in place if they expect to be incommunicado or unavailable during that time to monitor positions.
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