After perusing the Investor’s Business Daily weekend edition, I am bewildered by the number of IBD 100 stocks that appear ready to make new highs. It was then I realized why slaughter yards use a series of sluices and gates to lead the naive beasts to their demise. The system allows the animals to be led easily to their deaths, keeping them calm and completely unaware of what is going to happen.
How many bulls are blindly following other bulls, straight to the house of pain?
You see, this oversold rally has unfolded just like every one that has come before it. For four days we’ve have bulls getting in line behind the other bulls, blindly following each other into the trap. Yes, that clanking of metal and chains was the gate being locked and shut behind you.
What? You say you did not notice volume decline as the price rose? Huh? You did not notice the Nasdaq reversal on greater volume than Wednesday’s big gain? What about the failures, across the indices, at previous resistances and a major moving average?
Sure, dismiss technical analysis as hocus pocus. Ignore the lines. Then ask yourself how often you develop habits. Then consider how often the people around you exhibit the same routines, day after day, month after month, year after year. As the market is a proxy for human beliefs and behavior, what habits and routines are in play at this junction?
The following is a handy dandy list of economic data to be released next week. There are some significant reports due, so bears and bulls alike should be braced for more volatility.
While I agree with you that the rest of the market looks like it’s *&^%$#, but there is always a potential bull market brewing somewhere. The IBD 100 may be highlighting future leaders, or it may be leading people to the slaughter. Tough call, but there’s probably some serious money to be made in there somewhere if you can recognize it.
Good thing I just sold everything.
Now I can enjoy shorting everything in that honey hole.
Life is easy.
Great post Shed. You are a beacon of light on an otherwise dimly lit site.
Seriously, you know I’m biased towards your inclination, but…
Really, really excellent post.
Well written, too.
PS — the new pic is awesome. Nice job Jeremy.
mh497
The “Bull” markets that are brewing and percolating like a fine coffee are within the currency markets.
The Yen is the best pick I feel, being seriously undervalued and contained in a 20 year bear market.
There is possibly a case to be made for the Yuan, but, that is too speculative for my blood.
jog
Fuck everyone on this thread, except Ducati.
I’ve come to like him, sort of like a crazy uncle.
Haha bearshitter, great pic.
Mh- one could easily throw a few darts at the IBD 100 and undoubtably get a few that will continue upwards due to earnings growth, momentum, etc… However, unless the markets go on to make new highs within a month or so, most of those names will not be on that list in February.
Ducati is like that crazy uncle who makes everyone uncomfortable at the dinner table, but then leaves millions to his nephews.
other than technical analisis I think the market will get some relif from the concerted action coming from Paulson and the Fed: rate cuts from the fed (candies to the banks) in order for them to accept the Paulson plan to freeze interest rates on those subprime mortgages.
Giuseppe (sic)
Hmmm… SPY below 200 day… COMP below 2700….
I can’t believe there aren’t more comments here…
Shed — you need to incorporate “Moo Boo Hoo” into your banner … maybe have the bear say it.
Shedley,
Check out Pattern Trader’s spot to get some juicy bear set ups.
This is the guy from Gary’s blog, and he just started up “his own ‘ting.”
The market has shown great performance since 03. If the S&P breaks above 1500 you bearshitters will look like this….
http://www.youtube.com/watch?v=XGOLzZ90P9w
I thought hippies hated guns?
Jake, the silence is deafening. Now, if today would have been up, then the bullshitters would have been all over this post. They are waiting (with baited breath) to say, “I told you so.”
I like how pattern trader operates, but his charts make me have epileptic seizures. No offense to vibrators.
Green Writer- the market has shown great performance since the 1880s, unless you count 29-33, 70-….etc…you get the point.
You stick to your liberal commie bastard treehumping and leave the technicals to me.
If you want to get technical check this out.
http://www.youtube.com/watch?v=OtOckG5tNhc
By the way Jake, I’m a gun owner…590 Mossberg, G32C, and my darling Cx4 storm (45ACP)…holla