My cautionary thought for the week.
Although there is more upside I believe. And certainly more upside if you are in the right place at the right time (that is our job..:))) My concern is that on cnbc they are starting the counting.
What is the counting? It is where "everyone" is counting how many days based to me on Linda Raschke's theory of the rubber band which works well with stocks as well as the market and just human nature. The idea that you stretch something so far one way it has to come back. And looking for high probability signs of a "come back" is, for example, when CNBC starts counting. The counting in this particular case is how many days of upside we have in the NAZ. I believe it was 5 or 6 on friday and I the record for a move on the dow is something like 5, or 7 or 8. All I know is that when they start counting it means "they" are talking probabilities and starting to worry and actually they want it to stop (perverse human nature worry wart thing on the street they can't stand too much of a good thing and their good thing mentality doesn't go too far/where do you think the "wall of worry" idea comes from? :)))
When I studied trading the S&P under a mentor we had a "rule" (that can be broken but it sure puts you in the mental frame to notice) that on 5 minute bars in one direction is it rather foolish to enter a position closer and closer to the 7th bar cause that had a high probability of turning against you.
So in theory and human nature and stock and market probability we are getting close to magic numbers of exhaustion erstwise known I beleive as "overbought" whichever way one wants to think about it. Basically in common terms for someone like me it means--ye ole rubber band is getting near it's stretchy limit so watch your p's and q's on some stocks.
Now the problem with this stretchy rubber band idea is it works more with the non-wildcats. It works with the regular workhorses better than the no real rules wild mustang breed of stock action we have going on right now in the wild west. We are in a period of very unusual and I may personally add exceedingly joyous and wonderful and mind blowing stock moves so it is good to know if you have a plow horse stock, a nice ride stock, a runaway stagecoach stock or a complete wild untamed mustang stock, an oblivious to what is going on stock and is on it's own agenda stock when you are making your determination to play the game this week. Cause rubber bands work better for some than others. And it is good to be able to know whatcha got on your hands.
And also there is the rotational cycle that is good to understand and grasp to play well.
For instance, perhaps the first group to alert us that the market is getting ready to "rest" and turn is the old standby tech like MSFT, INTC etc the old guard. Then perhaps it is the old guard internets like YHOO, AOL, CMGI, AMZN. Then perhaps it is the good earnings, bit wild good fundamental desirable fund buyer stocks like QCOM, BVSN, CMRC,AGIL, etc.
Then there are the outlaws like some of the recent IPO's and gamer stocks like DIGL (there may be overlaps of types and this is all just my opinion and I am taking this time to think out loud to all of you if you don't mind cause it helps me think better/clearer and of course if you see something in my thinking I haven't thought about or has some holes in it please show me cause I am hungry to learn and appreciate the feedback).
Then there is the psychology to think of. The, who is going to get into QCOM here questions to answer if thinking of entering into some of the stocks. Maybe plenty. Certainly the shorts. But then the analyst who raised QCOM on Friday morning knew what he was doing to look smart and prove how he could "move the market" with his call. Let the earnings be good. Let the "overconfident" shorting vultures start circling for a couple of days expecting a nice profit taking friday afternoon and wham!! give them another run for THEIR money:)) with a friday morning surprise oh, no! COVER wake up call. That is one thing to be careful of with delayed reaction stuff after good news.
Anyway, it would seem like it is a pick your place and know why you are picking it and what kinda animal you got on your hands and what to expect and go in and play the game.
And learn something new. Learn something important and valuable that you never knew before about the market and more importantly yourself.
Geez, how did I get into all this? Is any of this helpful? Am I missing something valuable?
Hope everyone is resting up well and getting ready for another good week. Perhaps it is watching Rosemary's Baby here and there in the corner of my eye at the same time that is affecting me now......:)))
Good luck.
Autumn |
