Ray: For the types of stocks I follow, I still don't find any compelling long candidates. The only long positions I've toyed with (i.e. small positions) since I went mostly to cash in early October were QCOM (which I bailed out of at about 70 1/2 for a whopping 1 point profit--but at least the candlesticks guided me out before it got clobbered) and a couple of < 1 week plays on the drillers and oil service stocks. Short-wise, I was short MXIM and DELL, but covered too early, and short MANU, but got stopped out at a 1 1/2 point loss. Unfortunately, I chose MXIM over ALTR a couple days befor ALTR got clobbered. Woulda,shoulda,coulda! Most of the shorts I liked a week or 2 ago don't look so attractive from a risk/reward standpoint after last week, so I'm watching from the sidelines, still concentrating on the short side. Once I see the technical picture improve, I'll have plenty of ammo to strike the new leaders as they emerge from consolidation, on the long side, but I don't suspect that scenario to play out any time soon. It's tough to sit idle with cash (I'm always tempted to "force-fit" it somewhere), but sometimes it's the best thing because then you can cherry-pick once the uptrend resumes. In my opinion, the volatility must shrink from its recent levels, and stay that way for at least 4-6 weeks prior to a resumption of the uptrend--otherwise, equilibrium will never have been reached and any upward move will likely fizzle and bring back more volatility. Strong, sustained upward moves just don't happen out of a sideways area of wild swings. Expectations need to close in and hold on a stable range, preferably lower than what is really achievable. That provides the fuel for a strong, sustained, upward move. I monitor this via analyst downgrades, % change in estimate, and % change in number of downgrades. When I see this flatten out, and other indicators are confirming, the time to go long---and go long HARD---is near.
dh |
