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After Market Close April 20, 2005
A Demoralizing Market
The rally and decline was demoralizing. It also brought out a ton of Bears. That's often a marker either for a low being in or about to come in. Of course, price has to be our arbiter and there's no sign of strength showing anywhere, save in Globex this morning.
DJIA: The Dow would normally be expected to lead us higher, but I don't think it will. No signs of a turn here.
SPX: I drew that lower trendline a bit differently a week ago and it has appeared to be valid. The market stopped right on it and now we're gapping up.
NDX: The Nasdaq was actually a bit stronger than the other indices. I think this one will lead us higher.
QQQQ: The Q's were disappointingly weak, but I'm thinking that when these turn, we want to be in them (IF they turn).
VIX: Doug was right about the gap 'n' crap. Frankly, I thought it was too obvious. Maybe they get 'em with today's gap, instead?
NIKKEI: The Nikkei looks like it's in trouble. The good news is that there's plenty of support that could hold it.
KOSPI: It is intersting that Korea is predictive. I wonder what THAT means? Is Korea becoming a proxy for China?
HUI: The Miners are still in a down trend. I think we need to watch how the next pullback looks.
XLE: Let's take a pass on the Energy ETF's for now.
CMR: The Consumer sector looks rotten and is probably why Claire's is playing out well for us.
CYC: The Cyclicals are consolidating and may be near making a low. We'll have to see. A lot of them are pretty sick.
CLE: Claire's is apparently going on sale for us! We'll buy her at a deeper discount, I think.
FLR: Fluor still looks like a short.
TOL: Tol Brothers is still a short, but I suspect that it's going to give us a better entry later. Still a lot of sponsorship.
AMTD: We're in Ameritrade. Now we have to see if that relative strength was telling us about something good coming up soon. The gap up might help.
Summary:
The market is in some sort of bottoming mode. Unfortunately, there's little way of telling where, exactly that low will be. It might already be in, or it might be weeks and many percentage points away. I will say that we're closer than we were and the stage is beginning to be set for a rip-roaring rally. If they raise the pessimism just a bit higher (I measure this with my RSO at wallstreetsentiment.com) the risks of probing long will be very small indeed.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
Current Positions:
Short CLE at 22.19, hold stop at 22.19. Cover at 20.3
Long AMTD at 10.81, stop at 10.59
Watch List:
none.
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