I wanted to make a quick point before heading out. Anyone that has read my posts of the past couple of weeks knows my position. I remain skeptical of this recent strength in the markets. My underlining problem with this entire move is the basic structure of the charts. To have a bull rally that can be sustained you have to have a overall formation on the charts that support it. An item that I believe is severely lacking here. Forget for a second that tax loss selling is over with; or that seasonally this is the best time of the year to be invested. Two things that have been crammed down everyone's throat through this whole corrective process. Perceptions that are UNIVERSALLY KNOWN BY ALL! That alone should be a giant red flag as to what the market may actually be doing. The market has proven over and over again that it will reward the fewest number of traders as possible. Dismiss those for a second, and look at the overall condition of the group of stocks that have lead the previous bull run. Look at stocks like LU, T, WCOM, AMZN, INTC, AAPL, CSCO, QCOM, MSFT. Look at the damage done. Most are still bleeding, or in the process of going through some major restructing. Considering the market doesn't like uncertainties, who knows if they will even be successful. Each of these stocks currently finds itself mired in unresolved issues. Not exactly a platform for your next bull run. Now take a look at the recent trading in ORCL. The sideways action is attempting to hide weakness. Its breakdown could start as early as next week. ALTR's may just be beginning; RMBS from 59 to 36 in two days and then back up to 50 - with all its problems with INTC. Come on give me a break! The trading in this stock alone could be a case study in the tactics of the smart money.
Last week I pointed out two stocks, actually I've been pointing out weakness since I started posting on this thread. Nevertheless, the two stocks mentioned were CSCO and QCOM. Both companies, imo, could have a more dramatic impact on investor psychology if either were to break badly. Sort of a "straw that broke the camel's back" scenario. More importantly when looking at the charts I believe we could very easily see an acceleration in the downtrend with some stocks affected much more severly than others (RMBS, QCOM) come to mind. But overall, still an environment of PE compression.
The good thing about our current situation is we won't have long to find out which way it plays out. That downtrend is knocking at our door as we speak. Based on the way we closed today I believe the NAZ will make a higher high tomorrow. The highlight of the day will be QCOM's earnings which come out sometime tomorrow afternoon. The markets perception and reaction will be my main concern and should imo, affect closing weekly prices for most stocks overall. A positive (sustained) "perception" and I believe QCOM could breakout into higher prices through the end of the year. Negative, and I believe you're looking at a $20+ stock by year end. And the ripple affect: AMZN $15; RMBS $20: CSCO $35-40, likewise by yearend.
I hope I'm wrong. I hate bear markets. Besides the implications of such a market on jobs, real estate, and the overall economy. It would also screw up the holidays for most people. If this bull is real, prices will hold and move up strongly. And of course force guys like me to reassess my position in a hurry.
Good luck trading.
SO |
