9/22/2010 - Evening Review

General Market Outlook
Rafting is a pretty popular sport out here in Colorado. One of the first things you learn; When you fall out of the boat go with the flow. Never swim against the current. You can waste a ton of energy getting nowhere. I try to take that same approach with the market. When you start guessing what the market will do tomorrow, you are wasting time and energy that should be focused on analyzing the next possible setup.

Normally, a quick check of the Market Monitor will give you an idea of the day’s action. Today we had a negative breadth day. The primary and secondary breadth indicators are still positive. The primary indicator is still close to being overbought, or you can view this as the market still having plenty of strength.

Next, I check out the QQQQ to see where the trend sits.

Looking at the chart, we've barely put a dent in the uptrend that was in place. Could we correct more? Possibly hit the 47.71 mark...yes...will it happen? Who knows. It's not about predicting what the market will do next, instead observe what is currently happening and respond appropriately to that information.

Finally, you can review the stocks found in the scan Top 25 Stocks Down 4%+ and sort by dollar volume. This will show you which stocks were getting hit today. Were any of them leaders? Are they breaking down on big volume or is it an orderly pullback? If you start seeing a lot of leaders rolling over...it's time to pay attention!

I guess the point is, don't expect commentary and opinion on these evening reviews. My goal is to keep it as boring and neutral as possible. Predicting the next market crash or a short covering rally is not part of the plan. I just want to go with the flow and let the individual stocks tell me when to buy and sell.

2 Response to 9/22/2010 - Evening Review

September 23, 2010 at 4:40 AM

Hey, Dan. Funny - AKAM, RVBD, and ISLN were the three stocks that stood out to me in my scans as being bearish. Broke through their 10 day MA's on heavier volume. If I would see more of this, I would get more bearish. For now, things seem normal.

I am working on a "Above the 10 Day MA for Seven Weeks" scan from Kacher's book and how to perhaps trade it from the short side - I'll post it this week if you're interested. I was also thinking about the possibility of a "reverse" pocket pivot on the short side - don't know if this would work or not. Take care.

September 23, 2010 at 8:03 AM

Agreed, for now business as usual until we see a large negative breadth day. We might get some nice re-entry opportunities on those stocks.

Sure send over the link when you get it up and running. I still need to get the Pocket Pivot up on Stockfinder...been hammered with several projects.

take it easy.

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