Despite the fact that I have not been doing much the past week-plus thanks to Doctors orders to stay off my feet, there has been one event that has happened that makes me very happy, yet sad. Oil stocks coming off their highs on huge volume signals that we might have seen the top for oil stocks. I hope so personally as it would just be a lot healthier for the world markets if the stock market of the USA was doing well. The fact that there is weakness world wide will eventually lead to some great buying opportunities. As long as we have population growth, in the future, we should be moving higher as we go along our little lives.
Those that have just recently gone long in the oil arena needs to realize they are going long a sector that has been in a cyclical uptrend since 2001. We are almost eight years into a very long bull market for oil stocks. It does appear that the top has come with the recent selloffs on the huge volume across the board on stocks like XOM and NBL. Even the speculative beauties like PDO and REXX have lost that special luster. This should be bullish for equities in the future. Not any time soon but eventually. Right now, there still is more work that needs to be done.
Right now, at the most bullish of cases I can make is that the new leaders in medical is where the money should be placed. Stocks like NABI prove to me that the biotech group is going to get the money flow while we wait for the new bases in new stocks to setup. I still don’t see anything setting up out there. They would be in my BOP scans and the fact those scans are still very dry at this point in the downtrend from the start in November 2007 proves that we are no where near being ready for the next leg up.
If we were, like I have said before, we would have more leadership other than medical related stocks, I might get more bullish. Too bad that really isn’t the case. There are a few other defensive groups like food and insurance that are doing well in a poor market but right now everything is suffering with an oh-so-uncomfortable and under performing market.
One of the problems recently has been intraday EOD weakness that was preceded by strength. Today was no exception with the Nasdaq up at one point 2% intraday. By having itself to a 1% gain it shows that the bulls do not have control of the market at all. This makes it an environment very difficult for growth investors to actively work in. Instead of trying to fight the market, I must say that raising cash will be significantly more beneficial to the new investor who has not been in a market environment like this. Only the best and strongest survive. I am going to survive. Are you also? Please, stick with this game. Realize that this too shall pass and that a new bull will one day arrive on our doorsteps. I will not miss it. Right now though this looks nothing more than a dead cat bounce off the most recent lows. I would love to build on these gains but I need to see more leadership before I will get too excited right here.
Cash is king. I will continue to say it till the day it doesn’t need to be said anymore. My job, right now, is to protect you from losing money in this market. My job before November and even during the short uptrend from March to June was to make you money on the best possible candidates. Right now, the charts are ugly. When they are this ugly I recommend waiting for them to fix themselves. I don’t adapt my style. I know better. However, when my style is out of favor I know when NOT to press it. Now is not the time to press it on the long side.
The short side is just as dangerous as I have seen some massive short squeezes the past week in a few names. I sure would have hated to have been long those. Maybe the most interesting play is going short MOS, POT, and CLF here as those charts look to be failing on some volume around these most recent levels. It is too much of a gamble for me. I like more “for sure” odds/trades. My time is yet to come. I have time to wait. Time is on my side. Aloha and I will see you in the chat room.
