After Market Close May 19, 2005
No Sign of a Top
This week, the market has been remarkably strong, but the Bears have been in denial.Things looked so iffy last week, and yet now everything seems to be aligned for higherprices. That often implies that it's time for a pullback, and to be sure, we're ready forsuch, but I suspect that we may have a "point of recognition" day first, wherethe markets are up over 1%-1.5% or more.
DJIA: The Dow is looking like it wants to pause.
SPX: The S&P is just shy of a target, too. The Weekly will turn upbarring a nasty decline on Friday.
MDY: The Midcaps have been particularly strong, but we're flirting with a targethere, and that could bring a pullback. Then again, break out and I'm not sure where thenext stop is.
NDX: The Nasdaq is just plain strong.
QQQQ: The Q's broke that rising wedge and now they're driving higher aspredicted. We can pullback at any time, but watch out for a short-squeeze.
HUI: The Golds may be bottoming, but they have more work todo, in my view.
XAU: The XAU is looking like it needs a bit more pullback to set up a worth-whilepattern.
GSS: I want more support from the Indexes before I buy Gold Star.
HHH: The Internets are doing as we expected, which is well.
BKX: The Banks are pulling back, but they're solidly in a an up-trend.
BBH: The Biotechs look pretty good. It's surprising that Amgen didn't do better.
WEBX: WebEx is now gone for a dandy profit.
NSTK: Nastech is still hanging in there, with a fairly close stop. I still havehopes for a big run in this one.
AMGN: Amgen is gone. Poor relative strength = quick stop out. Still I'm not asdisappointed by a nice profit as some folks.
AMZN: Amazon is grinding higher with the Q's and the HHH.
DCAI: I'm pleased so far with my Dialysis Corp. We can use a close stop becausethis one ought to run if it's for real. We may lighten up on this one, but let's see ifthe shorts don't cover and drive this one up quickly.
RTK: Rentech is mighty thin so we can't put it in the track record, but it'sbuilding energy, and could move big. This one is not for widows and orphans. Yo-yo ="You're on your own".
SIRI: I like the Sirius but it's tough to chart sometimes. I'd like it to build abit more energy, but if it can break above 5.58, it could really run.
Summary:
The market is probably pretty close to a pullback, so we're trying to lock in profits,even as we let strong stocks have their head. Remember, right about when"EVERYTHING" is looking so strong, it's probably a good time to start inchingfor the exit. I don't perceive any major decline coming, but a couple days of pullbackcould be in the offing.
Be Well, and Trade Smarter Than theAverage Bear!
-The ChartSmarts Team
Current Positions:
Long NSTK at 10.21, stop at 10.80. Take 50% profts at 11.90
Long AMZN at 34.17, stop at 34.17.
Long DCAI 50% at 17.6, move the stop to 17.6. Sell at 22.50.
Watch List:
SIRI: Buy on a limit of 5.58, stop at 5.35
*30 Minute Trading Rule:
In order to prevent whipsaws, we use a 30 minute trading rule. This means that, as ageneral rule, we are going to "sit on our hands" during the first 30 minutes oftrading. Additionally, if after the first 30 minutes of trading the range of the stockpick is within the stop and buy/short boundaries presented, the trade recommendation isvalid. If the stock's range is outside of the buy/short and stop boundry, the traderecommendation is VOID. E.g. if the recommendation is "Buy a print of 10.25, with astop of 9.95," and the stop trades up to 10.50 during the first 30 minutes, we wouldpass on the trade. Similarly, if that stock were to trade down to 9.90 before 10:00, thetrade would also be void.
There is no 30mn rule on limit orders, but if price gaps out of the buy/stop range thetrade is void.
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