Monster Stock Trader

Widespread Fear as Crude Oil Helps Send Stocks into Correction Mode

Thu, 22 May 2008 17:57:54 +0000

Thanks to a parabolic move in Crude Oil, Financials and continued weakness in home builders have pulled the overall market into correction mode. The overwhelming fear is the consumer will not be able to handle Crude Oil at $135 a barrel. Most notably is gasoline consumption, with a gallon of unleaded 87 octane average in the high 3’s and low to mid 4’s how much can they handle? Is this just all fear driven and can the US consumer adjust their habits? Regardless of what I think Financial stocks and homebuilders are destroying the move in the NASDAQ. The NASDAQ has been the index that has seen most of the strength in the past few months. However, we can not ignore the overwhelming pressure coming from the New York Stock Exchange indexes like the Dow Jones Industrial Average and S&P 500. Time to start cutting laggards.

As we may or may not head further south one should be prudent enough to slash laggard stocks from their portfolio. I for one, cut out PWRD whose price and volume action is just atrocious! A once promising stock broke under the pressure of earnings guidance. When a stock moves against you, its time to let it go and protect that well earned capital.

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United States Adopting a Marxist Regime?

Thu, 22 May 2008 17:57:54 +0000

For a description of Marxism go here.

For Black Liberation Theology go here.

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OIL PRICES ARE ON FIRE, BUT INDEXES FALL ON HEAVIER VOLUME, THINGS AREN’T LOOKING SO GOOD NOW

Thu, 22 May 2008 09:57:19 +0000

Today didn’t start off all that exciting. Oil inventories were below expectations driving oil again higher to a record close. But that wasn’t what killed the market today. The Fed minutes were released where more inflation worries and a weaker dollar gave the hint that the rate cuts are probably over. I thought this information was priced in already but I guess I was wrong. This started a wave of selling that did not end until the close with the Dow, Nas and S&P closing near the LOD marking a distribution day for all three indexes.

Yesterday’s distribution day wasn’t too concerning but today’s is different. What is the difference? Volume today signaled that big institutional investors were selling. This is definitely not bullish as all major averages are failing at their 200 dma on heavy volume. I didn’t have a strong feeling about this rally anyway given the lack of volume so you had to wonder how long it was going to last. This doesn’t mean the market is now going to roll over and we better cover our longs, but it doesn’t mean that it won’t either.

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Crude Oil Prices Spread Fear Throughout Large Cap Stocks

Wed, 21 May 2008 17:48:50 +0000

As the price of crude was nearing and setting all time highs stocks were took a beating. The selling wasn’t necessarily “PANIC SELLING” like we saw on August 16th, 2007 but, it was starting to near those levels. At the end of the trading session the NYSE indexes that include NYSE composite, Dow Jones Industrials, and the S&P 500 notched distribution days. We now have the Dow and S&P500 with 5 distribution days in the past 4 weeks. However, the leading index NASDAQ composite has only one day of distribution. Volume came in 10% lower on the NASDAQ as selling did not accelerate on the tech heavy index. We have to be mindful of the heavy selling over on the NYSE, but they aren’t the leaders in this market. If the NASDAQ were notching its 5th distribution day I’d be more worried.

This market is zeroed in on the price of Crude Oil. The Main Street media continues to pound the record high prices into the minds of its viewers. We are definitely in the parabolic move in crude oil. However, its too difficult to pin point when we’ll put in a top. It could be Wednesday, could be in June, July…who knows. The fact is Crude Oil did the same thing in the 70s and history again will repeat itself. At some point, new supply and new technology will lower the price of crude oil. Its plain and simple. We have enough “known” oil reserves in the US for our own consumption yet we do not drill it. If you want alternatives do not give tax breaks, give INCENTIVES to produce those new technologies!!!

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A Stiff Wind Knocks down a Low Volume Rally

Tue, 20 May 2008 17:22:23 +0000

Stocks were enjoying nice gains on lighter trade for the better part of the day Monday. Crude oil traded higher by the end of the trading session causing some fear in the market. However, the sell-off came on lighter trade and couldn’t produce any type of distribution. A few stocks showed major weakness: PWRD and GA showed major issues as both stocks broke down. PWRD’s chart is not all lost but the action on Monday points to more weakness ahead. The NASDAQ, the current leader among the major indicies was able to hold its 200dma. The S&P500 continues to lag the NASDAQ and lacks the accumulation we have seen on the tech heavy index. Even with the S&P500 lagging Monday’s trade does not derail this bull market!

I stock a profiled over at Trading Goddess’ blog HOGS had a great day showing a tremendous amount of support. This is a nice growth story and I am looking for the stock to consolidate so I can add into the position. It is a very small position as it has not had a run of at least 30% and formed a proper base. If it forms a proper base I will load up on the stock. For now, I will keep it small and be patient.

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NOT SO BULLISH TODAY, BUT OVERALL TREND IS UP AND YOU DON’T WANT TO FIGHT THE TREND

Tue, 20 May 2008 09:13:50 +0000

The Dow, Naz and S&P started off strong this morning but then as the day wore on gave back their gains as all three indexes closed near their LOD. The good news is that volume was lower across the board helping to maintain the healthy gains made last week. The only question I have now is where is the freaking volume? The market has definetly rebounded and with all the beautiful charts that are popping up you have to ask yourself how long this can last on such low volume.

We are seeing some strong leadership among the energy stocks as nothing seems to keep oil from closing higher. I posted ANR back in February and now am up over 70%. I have already closed some of my position as the chart is now getting parabolic and could come back down in a hurry. 8 of the 10 groups with the highest percentage of stocks at a new high are oil stocks. If you are one of those people that are buying financials because you think they are cheap and missing out on the monster gains this market is offering you better rethink your strategy.

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NinjaTrader Review

Mon, 19 May 2008 03:39:00 +0000

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Stocks Avoid Distribution, Massive Intraday Support

Sun, 18 May 2008 00:36:58 +0000

Crude Oil was above 127 for much of the morning sending stocks lower. Fueling sellers was a poor reading from the University of Michigan. Consumer confidence hit multi-decade lows as Fuel Prices and the Housing Market are weighing on the minds of Main Street. For those with opinions sold on the news most likely thinking we are headed back for the lows. However, dip buyers began pushing the market higher and by the end of the day had lifted stocks from distribution levels. Volume was helped out by options expiration but the intraday action was mighty bullish for those who are long this market.

Do you get bearish when Main Street is bearish? Gosh no! Main Street just happens to be well behind the curve when it comes to the market. It is when Main Street becomes bullish you need to begin to worry. Right not, the Main Street Media and its liberal agenda is hammering it into Main Street that we are on the verge of an economic meltdown! It is their agenda to push you towards Obama and away from Republicans, Ron Paul, and Libertarians. Simple ignore these cries from these bias media types and see the forest for the trees.

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NASDAQ Powers up, Leads Stocks Higher

Fri, 16 May 2008 16:23:29 +0000

And on the second day the NASDAQ takes out its 200dma with increased volume. Not only was volume higher than the previous day but it was also higher than its 50dma. This is an important development as of late for the stock market. There is no question that the NASDAQ is leading us higher and its where the Big Winners are at the moment. Price and volume since the follow through day have had us pointed higher. I still believe that there are many Institutional players on the sidelines watching this action. Some came to play in the sandbox yesterday but, the majority still are hoarding cash. We continue to point to higher ground from a price and volume view and that is where I’ll be playing: The Long Side.

A stock I have owned for about a month now, VISN has been non-stop. The stock belongs to the IBD New America index and sports some pretty hefty growth figures. I am looking to add to the position but I need a proper entry and I will not chase this stock higher. A pull back on lower volume to its 21dma would be ideal. Another stock along the same lines is VIT. I am still looking to add to this position as well.

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NASDAQ Hits Resistance; The Battle at the 200dma is On!

Thu, 15 May 2008 15:48:54 +0000

A tame inflation report from the government, believe it or not helped stocks push higher throughout the trading session. The NASDAQ was able to take by storm its 200dma however selling ensued late in the trading session pushing the NASDAQ down near intraday lows. Volume swelled on the NASDAQ while NYSE logged lower volume on the day. Leading stocks took a hit as the IBD100 was down more than 1%. Although the index is loaded with oil and gas names its never a great sign when you see a leading index like the IBD100 down on a day like Wednesday.

Bears are going to put up a fight around the 200dma. The move above the 200dma did not trigger any massive short covering. However, if we are able to sustain the 200dma look for shorts to come in and cover helping stock prices move higher. On the flip side, we could face a pullback after a failed attempt at the 200dma for the NASDAQ.

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