Hyper-reaction to earnings announcements was one market peculiarity that I pointed out in Friday’s blog post.  This trend continued today after hours as 2 “hot ” stocks – RAX and MAKO – were slapped down (MAKO almost 30%) due to imperfect outlooks for the near future.

Understand something – both companies are showing impressive growth and in a market uptrend, both will likely outperform a stock like CVS (no knock on CVS!). However, in a down market –  and we are in the beginnings of a downtrend (could end tomorrow who knows, maybe Ben Bernanke will spout something silly) – these priced to perfection growth stocks will [Read more...]

QQQ’s down on big volume, DIA also down on higher volume – a few people sold into the close as markets hit their low at 4PM

This doesn’t bode well for longs -however, the charts for QQQ and DIA look similar to two other recent mini flash crashes on 3/5-3/6 and 4/23-4/24. We will have to wait for confirmation though I will say that commodity charts are confirming a downtrend  - for ETF’s the oil, gasoline, some agriculture and industrial metals look bad with gasoline and heating oil breaking down – as is oil.

I’m keeping stops tight, reducing or eliminating trades and reviewing markets this weekend for next week’s action. What’s your plan? Are you simply holding your long term picks, adding on weakness or are you reviewing your charts for long and short candidates? Whatever your plan is, it better have some conviction next week and a plan behind it.

I or my clients own the following securities mentioned in this article: None

I’m keeping my eye on the market ETF’s like DIA and checking to see the volume. I don’t see any panic today and we’ve had plenty of minicorrections only to have shaken out bulls have to get right back in. The QQQ’s look a little more disturbing as the pullback volume over the past 4 weeks has been elevated.

Cases can be made for either direction. Gold avoided a break lower by moving up a tad today. Kinky stocks are getting slapped around and [Read more...]

Today seemed like a great day for bulls but I am a little cautious (am I ever not?). Of course the market was up, but under the hood, some interesting things were happening.

First off, in my opinion, the market is merely levitating because that’s what the market does absent of news. If the market is in an uptrend and no major news comes out, it will keep going up. Second, the schizophrenic nature of winners getting rewarded with 10-15% pops and losers getting pounded 10-15% tells me that either analysts were completely surprised (doubt it) or lots of money is looking for something to chase. Today’s hot stock du jour was Allot Communications, which is in an excellent little niche – but like most companies performing well, its PE will push up to 100 before it slows down. Today’s slap when to HFF Corp down over 6%.

I must also remind myself that [Read more...]