Saturday, May 19, 2007

Wrapping Friday

A little late but it is the weekend and no blood no foul. I didn't observe the market yesterday on my usual, up-to-the-minute basis but I can say this - it wasn't pretty. Only the small caps showed any real spirit. The roller coaster ride yesterday just yields chop chop and that will chop chop a trader's account to pieces. I find yesterday's small cap trace most interesting - is it possible that we will see a rotation out of large and mid back into small? Something to watch for.

I let JNPR go to a very generous stop and picked up two new ones off the new weekly cross over filter - CNO and KTC. CNO is an insurance company that I think will probably return back below the EMA 21 soon and KTC is the Korean telephone company - one of the top 5 Korean companies listed on the NYSE. One lost about 14 cents and the other made about 14 cents and that's how I know that the market is running on empty. If every share isn't participating there is a reason and when two profitable companies don't participate the reason isn't good.

I monitor the three stocks that I call the "three amigos" to stay abreast of technology by watching the three "must-have" stocks of the past 5 years. They are currently telling a story about a market in distress. AAPL made 58 cents, GOOG lost 64 cents and MSFT lost 15 cents. This suggests that the market is drying up and losing momentum.

This also suggests, in a more visual manner, the lack of momentum

The market, regardless of what the indices do, is made up of thousands of individual stocks and a lack of buying or selling causes momentum to dry up. Without buying or selling there is no market and generally speaking a dull market drifts down. That's because in tough times there is always a seller willing to cut his price just enough to entice a buyer.

The INDU ATR went up to 100.18 and that continues to confirm the rally. I'm disappointed that the last sub-80 event was a one day drop that flopped but we take what we can get.

The model portfolio gained 1.26 to 18.07 and the benchmark gained .87 to 8.71. The rate of change in these two components also leads to back to market health. The fact that the model portfolio ran out of gas a week ago and can't seem to get back in the game even though the benchmark is advancing nicely suggests that buyers are running out of liquidity.

The VIX remains in neutral but the up/down ratio printed 68% and I go with the up/down ratio (especially the Monday following expiry). I'm calling Monday down.

The coin is calling Monday ... heads - an up day - we'll see.

I won the contest Friday and the coin missed that makes the score Marlyn 37 - 29 and 15 and the coin is 38 - 27 and 15.