. . . Back to the Lows of May. . . . .
Today was the 4th day of the Clear 4DML [4 Day Margin Liquidation Squeeze] which began on Sept 29. Sept 29 started with the signature gap up. . .followed by a low set in the final 2 hours [the Liquidation hours] of the 3rd day and an extreme low set in the final 2 hours of the 4th day [today].
Based on what historical info I have currently on 4DMLs, the odds are in our favor that we should rebound from here in the near-term. Now as I've said, we may rebound right into another 4DML going into the early earnings fears.
However, I believe that while everyone's attention will be on the earnings plays of the day. . .the winners, like the Phoenix plays we have isolated. . .should buck the trend and creep up underneath the weakness of the markets . . .this is where my focus will be next week.
I am happily invested in the beaten down blue chip telecoms. . .like WCOM, VZ, NT, FON, etc. and chips like AMD and INTC. . .Could telecoms be the one to show leadership on the next rally. This will bring up fibre optics stocks and telecom related issues.
Another area that I believe is VERY hot and needs to be identified is that of Web Hosting Farms. In England they call them Internet Hotels. These are companies like Verio, Navisite and Exodus. Exodus is the big fish, but it is looking to me like many of the smaller fish are about to join the school. We could use a good list of these stocks and some charts to show how they've been performing.
Once again, this is NOT the time to be dumping, but rather accumulating. I buy the bargains. . .and when I find better bargain, I will trade away one for another. . .in an attempt to get the best possible hand.
And do not forget that if we get a poor earnings season, or if oil were to start moving up again, or if Asia were to go into turmoil, we could move much lower than we are now. . .so caution is urged.
This is not the time to take a "stand" . . . as you could become a martyr instead.
Unfortunately, many of the micro-caps will not rebound when the market does. Watch out getting allocated in small and micro caps moving into mid-October. Some will pop, but most will stay down until the company gets news which is strong enough to force a short-covering. This is a good time to be buying micro-caps for the long-term. . . but just don't have near-term expectations for them, or you may find yourself very frustrated very quickly.
There is little reason to be speculating in stocks which are unproven when the Blue Chips are as inexpensive as they are now.
Rande Is |
