Keep Listening (and Digging)

Random Thoughts

Bob Costas is not the only one that’s seeing red (feel better Bob!). From where I sit, things still look a little ominous. And, like Sochi pink eye, I’m not sure this bear move is going away anytime soon.

The Ps and Quack have made impressive retrace rallies. So far though, I think it’s just that–a retrace/pullback. Both indices are now shorter-term overbought and due to correct.

The Rusty’s rally is not quite as impressive. It too looks poised to make a new leg down.

Take things one day at a time though. If the retrace keeps on retracing, then at some point, it’s no longer a retracement.

As I have been preaching, it is harder to predict the overall market than it is to predict the movement in individual stocks. This is why we do not sell the farm every time the market gets a little iffy. In fact, we have 7 longs in the portfolio now. Some were put on long before the slide and some just recently. Stop by on Thursday and I’ll show what they are. See “Announcements.”

Of course, I study the overall market to see what’s happening but most of my time is spent digging within the database. Listening to the database more than anything can help to keep you on the right side of the market and/or in those stocks which have the ability to defy gravity.

For the aggressive, look to play an opening gap reversal (OGRe) should it occur. This isn’t a bread and butter trade but something where you can pick up a few pennies while waiting. If you don’t know OGRes are, then get educated (lots of free stuff on my website) and watch a few in real time.

Most areas still look questionable at best. Again, those stocks that have recently broken down from high levels such as Manufacturing, Financials, Banks, and Insurance look like they have the most potential (on the short side). I still think it can be a case of, the bigger they are, the harder they fall.

All isn’t bad in the world though.

Biotech is clawing its way back towards its old highs. This might be a case where the retrace just keeps on retracing.

REITS have been strong lately but I’m having a hard time getting excited about Real Estate. The stocks here usually don’t move around that much. I’d just prefer something like a hot biotech, gold stock, developing technology,the new fad, or an alternate energy—i.e. something that can move decisively. Sometimes though, you have to take what the market is offering. So, they’re not completely off my radar.

The Gold stocks broke out nicely yesterday. You’re welcome! Well, let’s not start kissing each other just yet but it does look like they are off to a good start.

So what do we do? I’m not a huge fan of the short side but I think as traders, we have to play it. Seeing both sides can really help your perspective. Also, right now the database is producing a plethora of shorts, mostly in those aforementioned areas. Therefore, look to put on a short or two if you haven’t already done so. Again, I’d much rather just play the long side but as traders we have to play the hand that’s dealt. Speaking of the long side, I think it is now a little too late in the Golds. Sit on your hands and wait for the next pullback here.

Best of luck with your trading today!

Dave