to shake off the damage incurred in the late Feb. We were hoping that people would forget about the mini correction sooner rather than later but unfortunately that may not be the case. Mr. Bernanke, of course, is not helping the situation either. " Uncertainty" .. Mr. M is creating a lot of that and we somehow just have to get used to his way of business from now on. The tension in mid-east also is adding salt to the wounds so it's almost a given that we have no where to go but down today.
Both indices touched 50 ema couple of days ago and now turned back down during the last couple of days. Right now, we are eyeing the top range of that mini correction we had last few weeks as the support of this breakdown. Although we are not making any kind of bets on that support but we are definitely hoping that support would be held going into the earning season. This brings to the question of "how is this market going to behave during the coming earning season?" We have said it many times before, under normal circumstance, market rarely crash before the earning season. The excuse to sell things usually happen toward the end of the season. This time, we aren't making any exception unless some major market moving events develop along the way.
We think it's best for this market not to test the old high anytime soon. Let this market churn and consolidate for a bit longer. During an earning season, a good earning report will get rewarded as long as the market is not in a corrective mode. We are looking for this kind of scenario during the next little while. A combination of boring market and strong reports would give us obvious and easy targets to trade. Believe it or not, when the whole market is strong, everything goes up and it's hard to distinguish a good earning play from others. When the market is simply not doing much and then you have a good earning play, we'd know right away which ones to jump in. This is also where DJIM background shines out the last few years.
Still a day like today brings out the DJIM methodology of discovering good stocks and coming back to them. Recycle. DJIM is also about accumulating points and 3 of the stocks below provided such.. MFW +3pts to high, VIP +2 , CYNO 1.5. These stocks have been big winners here in the past few months and today even on a dreaded day they were able to produce if you followed them with us at alerts. Considering the state of the market these stocks are not the longer term plays as they were before. We are prepared to take the points on any sign of weakness and move on the next stock or just sit in more cash. To those new at DJIM, please read the Alert-Comments description as to what purpose it serves. We are giving you the stocks we are buying or the stocks we are looking to buy on any sign of further strength ..very soon. Some like ALXA are no brainers in chasing.
MFW, this one was noted last night and today it did not disappoint. Despite the weakness from the overall market, this one held its ground right till the end of the day. No matter what you say about how strong the stocks in your portfolios were today, this one simply outperformed 99.9% of the stocks out there.
CYNO, we alerted this one in the mid 27 range and it firmed up throughout the day and closed near the day high at $29. This is also a nch. Volume is particularly strong today and this is the kind of stock we'd trade aggressively.
VIP, we noted on the weekend we are keeping it close on our playlist. Before 10am and in a bad market, we felt it had a chance and it didn`t disappoint with a move soon enough. The break wasn`t extreme to new highs, but in this market...we`ll take it.
VYYO, we are definitely a little disappointed on the way it behaved and closed but it's probably understandable b/c of the almost non stop action during the last few days. Probably should have stuck to past DJIMs and shut up after being up nicely on the first three. We retained a small position and will watch this one closely on any possible breakout setups. We'll alert the members if we see such an opportunity arises.
The bottom line, don't be too pessimistic about what's going on in the market out there. The key is to trade what's working and especially pay attention to those DJIM type of stocks that are green. Be disciplined when it comes to cutting losses and protecting profits. Given the uncertainty of this market, we literally have to act like `traders`, not pretend and not fall in love with our holds. Until the market gets a better trading environment, we just have to poke them one at a time for now. Hopefully, we'd get some big earning reports going into this earning season and create some stability for this market so we can do our wonders at DJIM.
cheers,