Saturday, December 09, 2006

Wrapping Friday

I'm late - but had a party last evening - a lot of that happening lately. Going to keep this short as I have several ideas burning and so I will have several more posts on the chart before the end of the weekend.

A very weak day - up certainly - but nothing to really cheer about. I took some swing trades (deliberately) which include SYMC, ORCL and ALTR (with the proviso that I can't stand any of these stocks). These trades will be completed when I hit the targets which will be exposed in a subsequent post this weekend - stay tuned.

Of the several stocks I said I would be watching, only IM and NFLX set-up well enough to take a shot at - but I passed. There were some great trades to be had, mostly in the health related sectors, but I missed all of them because I don't follow that sector at all.

For Monday the up/down ratio is back into the neutral territory as is the VIX. The only promise is that the new 20 day highs only surged forward by 11 even though the new 20 day lows retreated by 25 or so. They are now printing 581 and 248 respectively. I thought we could get all of the major indices to print red in the last hour but Goldman Sachs (the proxy for the market for the 22nd century) surged to green at end. Can't keep a good brokerage down (or a bad one either for that matter).

Those of you who visit here often know that I firmly believe that the only thing that moves the markets is having something to buy and right now it looks as if the "buy me bin" is filling up nicely for the next year. In Tuesday's wrap I mentioned that the Bollinger Band high-low numbers were 200 high and 9 low - after Friday's close that number is now 85 high and 59 low. That is goodness for the bull case and it appears as if the bear case will just continue to be weak. It could always change but a bear market always comes at the very height of irrational exuberance and this isn't it. There is nothing irrational about the current valuations regardless of what the perma-bears say - the average market PE is not too terribly high (obviously I'm too lazy to look it up or I would tell you what it is) so I think this sideways-up stuff will just continue for some time. What is happening is that some stocks are getting way over valued and others are going way under valued. The hedge funds and funds of funds have been working for years and years in an effort to identify the market at that micro level and seem to be succeeding. (Quantitative analysis). They sell off the way over valued and switch immediately into the way undervalued. Consequently one day a stock is going up and the next it is falling and no one knows why except on bubblevision where some bobblehead blames it on everything (interest rates, jobs, economy, blah blah blah) other than what is really happening which is good old fashioned horse trading. Something to buy - something to sell - that's what it is all about kids - nothing more, nothing less.

The magic coin is 35 and 26 and is improving daily with its truly miraculous calls and I'm so impressed that I'm going to let it do it again for Monday - coin says --- Crikey! - Heads! Bull market again - start buying everything in sight at the open.

Don't laugh too hard - it may happen just that way.

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