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TheRumpledOne
6,358 posts
msg #43657
Ignore TheRumpledOne
5/12/2006 8:07:47 AM

We are finally compelled to take action regarding the environment for stocks, which we believe will very soon turn negative. While not one specific indicator is screaming sell, there are so many divergences that our only conclusion can be there has been a distinct change in the character of the market.

One indication of danger is the action in the QQQQ Trust, down 3.2% since the April 7th high, while the SPX has risen 2.1% in the same period and the Dow Industrials have surged by 4.7%, to within a stone's throw from a new all-time high.

The top 10 issues of the Q's total close to a $1 trillion in market cap and represent a substantial portion of investor's hopes. Noting the divergence mentioned above and for other reasons that will become quite clear in the May 22nd issue of Crosscurrents, we are initiating a 20% short position for the QQQQ in the Trading Stance feature (current quote - $41.54).

Given our negative outlook, it does not make any sense to retain the 15% long position for Newfield Exploration in the Trading Stance feature, thus we are closing NFX out immediately (current quote - $50.86). The shares have provided an 20.8% gain in only one month and have entered a wide band of what we believe will be strong resistance between $49-$53.

Of course, we may be early on our market call and we could be wrong, but after a huge bull run of three years and change, we believe the odds are now very much in favor of a substantial correction in price.

Alan M. Newman, Editor, Crosscurrents

visit us at www.cross-currents.net/






Tuesday evening of this week I gave a short presentation to a host of colleagues at the Los Angeles chapter meeting of the Market Technician’s Association (MTA).
STOCK MARKET
The Case for a Market Top
“Despite concerns about the wars in Afghanistan and Iraq, continuing fears of terrorism, the rising price of oil and gasoline, and an economy that was initially slow to pick up steam but has since “regained traction” – equities have powered their way higher under the positive influence of a number of intermediate and long-term market cycles. But markets don’t go up forever, and my indicators that measure price movement in velocity and percentage range on both a weekly as well as a daily basis suggest that this period of positive cyclical buoyancy is right at a peak in its bull market run that began off the March 12, 2003 cyclical low point. Several key intermediate cycles – 78.4 week, 59 week, 85 week, and 107.7 week – are all due in the present time frame and are suggestive of an impending reversal in the stock market. Moreover, the 215.4 week or “four-year” cycle has typically topped out in the third year off its prior bottom – and we are right in zone for that to occur as well.”
“The Dow Jones Industrial Average has stair-stepped its way higher and is now perched just above the 11,250 level. But while the Dow has continued to rise into this week, several other key benchmark indices have failed to keep pace. The NASDAQ Composite is beginning to show signs of laboring. Indeed, it would appear that the NASDAQ may well have seen its high for the intermediate term and is in the early stages of decline.”

It is my view at this juncture that yesterday, May 10, 2006, may well have marked the crest in the current four-year cycle run. All of my indicators have now broken sharply to the downside which would seem to confirm.
I just tried to post a chart using mycharts.com (www.ttrader.com/mycharts/mycharts.php) but I got a server error. Perhaps they are no longer operative?
Anyway, good trading to all!

Stan Harley
Registered Investment Adviser
Editor/Publisher, The Harley Market Letter
www.harleymarketletter.com


heyen
124 posts
msg #43658
Ignore heyen
5/12/2006 8:36:55 AM

my guts were telling me some days already and yesterdays market move was quite clear. there have been numerous stocks were "profit was locked in" right in time.

various positive earnings caused no great exitements last week. big boys are selling hard, what does this tell us?


itrademan
70 posts
msg #43661
Ignore itrademan
5/12/2006 10:41:18 AM

Looks like the correction is near.

I think it was easier to find companines with good fundamental with all those rating sites and positive news (ofcourse use TA on them).

What will be the best way to find shorting candidates. I would like to start devicing strategies for nailing the "falling Knives" for shorting.


heyen
124 posts
msg #43666
Ignore heyen
5/12/2006 10:54:30 AM

If those are not banned from shorting due to regulations...


heyen
124 posts
msg #43668
Ignore heyen
modified
5/12/2006 11:10:06 AM

Well, if theres a real strong trend then you can just pick whatever stock you like and it heads south.

One could apply the opposite of rsi(2)<1 which is rsi(2) > 99
Why should one not yield to fundamentals in bear market?
Aren't bad news in bear markets just as good news for bulls?

Fetcher[
market is nasdaq
avgvol(90) above 100000
close above 10
williams %R(14) reached a new 20 day low
]



Before i forget, yesterdays looser are todays loosers, if there is a reason for selling off.
I shorted NUAN today. I got out at 8% below previous close where i saw a bottom for today.
Bad news, strong southward move, a chance i had to take.

But i'm sure some wise guy has a good filter...
How 'bout "TRO" ?


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