Archive for August, 2007
Daaaa Bears
August 5, 2007 at 9:52 pm
Daaaa Bears.
Again.
Three straight weeks, and all of a sudden the bulls have gone from first to worst. Of course there’s only 3 camps out there (bears, bulls, and sideliners), but still, the pain level is increasing and bulls simply keep responding by raising more cash. Unloading shares. Joining the sideliners.
This remains a time to avoid the long side while the carnage continues, which means if you aren’t short selling stocks that cash is the next best alternative. You’ll have plenty of chances to buy once a real low is made, but so far this market is still searching for it. Of course there will be some lucky schmoes who happen to buy the lows (once they are seen), but rest assured it won’t be on their first attempt. And the charts aren’t showing us any reasons to think that time is here yet, so patience is a must at this point.
Perhaps the bulls will get some help this week from Bernanke & Crew, but even if they do, the key will be how a bounce is treated. If a bounce is produced, it’ll be difficult to trust for anything other than a quick pop, as all the others lately have been used for selling into. Either way, it should certainly be interesting! Be sure to check out this week’s Market View page over at TheStockBandit.com before you start your trading week for a closer look at the indexes and some chart comments.
If you’re a bull, remember that this too shall pass. But right now, the bears are growling and they deserve some r-e-s-p-e-c-t!
Trade well this week and stay patient out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Not A Dip-Buyer’s Market
August 1, 2007 at 10:37 am
For the past year, every dip has been bought. Bulls have enjoyed a nice uptrend, and with each higher low their confidence reached higher levels. Anytime stocks have gone on sale (ie: come under pressure), the buyers have been there with wallets open ready to scoop up shares. And they’ve been compensated quite nicely for it, I might add!
But things have changed. Stocks have been punished lately, and the swagger of the bulls has disappeared. They’re not eager to provide support, and instead they seem to be getting more spooked. Dips have become all-out selloffs, and the buyers are nowhere to be found. In fact, even the bounces have been brief, as bulls become sellers and jump quickly to unload shares into any strength as they seek to raise cash levels. Concerns are running high.
As the major averages reach multi-month lows, it seems emotions are reaching new multi-month highs. And when emotions are playing an increased role by boosting volatility, trading can get a lot more complicated.
I’ve noticed lately that resistance levels are being respected much more than support zones, and that goes with the territory of a downtrend. Take the S&P 500 for example, as it undercut the 1485 area last week with ease (like it wasn’t there), but failed to reclaim it this week on the bounce attempt. The same level which was ignored to the downside was like a brick wall on the upside. As traders, we have to pay close attention to these kinds of things, or else it can cost us dearly. The dip-buying mentality which many have enjoyed for so long is simply not working right now. Key moving averages are being sliced as if they aren’t there, and that’s just one example of how the environment has changed. It’s time to adapt if you haven’t already.
So here’s the bottom line. Unless you’re a trader who’s very quick on the keys and can scalp effectively, or you’re willing to short sell this market, cash is the place to be! Don’t attempt to buy dips in a market like this until some stability is seen and the dust begins to settle. Once a new uptrend emerges, there will be plenty of opportunities to catch a ride, but you sure don’t want to be the first one to buy. Remember, the first person at a party has no fun.
Respect the current market weakness and live to trade another day!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
