SUNW has always been a favorite despite it being over priced with a PEG of 3 most of this spring. I am worried about the series of lower highs though and am trying to catch a few other falling knives instead that have safer valuations in case we do get that steep drop the wedge is threatening.
Thank you and Challo for the kind words regarding our site and systems but Don is the true guru there. I, like Challo often "chicken out" when he is calling a turn as it just doesn't appear to be possible but then always is. <g>
I think if we can survive the next 2 weeks, the coast might be clear to go long and hold for a while despite the lousy time of year from a historical perspective.
One thing that worries me though is the apparent rotation of indexes and leading stocks so far. I first noticed some stocks like B2Bs and CTXS etc dropping like rocks, fulfilling the 3 peaks and a dome scenario etc. The DOW followed a few weeks later, then the NASDAQ and I have to wonder if the Dollar is next. Where the Dollar goes, the SPX usually follows and since the DOW and NASDAQ never finished out the scenario, I have to wonder if there is a larger drop just waiting in the wings.
As I scan over the charts this weekend, there are a boat load of wedges scattered around the charts form the last couple weeks. All point to at least a retest of the previous lows if not lower. Also looking back, every drop of this magnitude in the past had a retest within 6-8 weeks except one.
Away from the technicals, I attempt to fall back on fundamentals but that is of little help either. I feel the economy is fine. People are working, the baby boomers are still pumping in money at break neck speed into their IRA etc and that won't change for another 7 years or so. Foreigners want our higher interest rates so there is a flood of money coming in there also. On the other hand, we have a hostile fed, raising rates and this is not a new paradigm and the old adage of don't fight the fed is probably true here. I feel AG is right in what he is doing, and is probably actually behind and needs to raise by more than 1/2 or else Wall Street will laugh him off again just like the last few rate hikes since we are still in a mania. I do wish he would raise margin though as I feel this is where the bulk of the mania part of the market could be contained. These hikes have to hit pay dirt sooner or later and cool things down so this means don't buy. Good economy means buy, rate hikes means don't buy, so do I buy or not? <g>
Valuations are still extreme and there is no fear. I know I am willing to go long and think I can still make money long. No fear here. Put calls show no fear. All my J6P friends at work have no fear and view this as a buy opportunity. No Fear. The recent e-mail virus caused SYMC to go up 25% in one day. No fear. Therefore, we need to drop lower and we need to go a LOT lower to get some real fear.
On our board, there is some talk of the IPO lockups possibly causing a drop but we have already had that and it didn't do that much. I looked at many of the lock ups and they aren't that big of ones from my view so I doubt it.
I therefore tend to agree with Don and think we are stuck in a trading range until the FOMC is over. Then...? If the past is a gauge, we enter a new irrational exuberance blowoff up then corect at the usual time this fall around August September? My only problem in playing this out that way is those big ugly wedges all over. I always prefer saying I was right in my prediction of an up market but missing it than playing it then when we drop hard, looking back going "darn, I saw that wedge, why did I not pay attention". Better to have cash and draw the 5% in the broker account than lose it and not be able to fight later. <ggg>
I will be home Monday so it will be interesting to see how it plays out. I don't get to see the intra day action very often. I will probably be too rusty to do much but I have some longs picked out as potentials and will just short the indexes if we fall.
I am curious what the affects of the reshuffle on the SPX and OEX will be. These always mess me up since the lows could be affected. A higher low could really be the same low but since different stocks are now in the index, it will throw the numbers off. Also the change in GE weighting on teh DOW will case some disparity also on that index. Heck of a time for tehm to playing with things. How are us technicians supposed to make money <ggg>
Good Luck,
Lee |
