SAVE

That was brutal today. If you held through the shakeout - good for you. This chart pattern - I call it "stilt" - is highly constructive. I'll be looking to add now.

New Chinese Techs

For a little while there new Chinese Internet techs - CCIH, NQ, VNET, and YOKU - were showing promise, flashing signs of bottoming. The party turned out to be short-lived. With VNET and YOKU failing miserably, the odds are not in your favor. Oh, well: back to the drawing board.

MARKET TOP?

Sure wasn't pretty today but is this the end of the rally? Have all the new zoomers topped?

AAPL sure has a lot of weight, but no one stock - just like no one operator  - can sway the market for long. Of all the recent zoomers only KORS seems to have topped out on strong earnings. ZNGA reported lousy numbers, GSVC got hammered by a secondary; but the rest are more likely having a healthy pullback. MELI and RPXC even bucked the trend, dispalying unusual strength.

Nothing goes up forever. The market has been unusually smooth. Now that the crowd has finally decided it is safe to get back in it's time for some turbulence. We do need a reality check: things have gotten a bit frothy, as exemplified by FOSL. A little pain won't hurt - in fact it's necessary.

Sunday Night Preview 02/05/12: Stick With Best Zoomers

The market is going to top at some point. Does not mean the uptrend will end – just that stocks cannot go up forever without a pullback. Probing for a top may be costly: if you sell too early you may end up buying back higher or risk being left behind; if you tighten your stops, you may get stopped out of a big winner too early. The best way to deal with it is to re-confirm your time horizon: if you trade intermediate trends, just accept that at some point you will have to give some of those paper gains back in a normal pullback.

With dozens of zoomers taking off, portfolio management is crucial:

• Stick with the strongest zoomers, don’t buy junk just because it is going up: you don’t want to be left holding the bag when the music stops. 
• Buy fresh breakouts, keep the leaders, chuck the laggards. It's better to add the freed-up cash to your strongest stocks than to hold the weaklings on the hope that some day they will too join the party - hope is a bad investment strategy. You don't get second chances in the market, if a stock cannot run in a strong market when can it run?

[Please see the Special for specific stocks.]

The January Effect

I wonder how long after tomorrow the talking heads will start talking about the January effect?

Sunday Night Preview 01/22/12

Regional banks and semis are leading. While it's hard to find zoomers among regional banks - there are too many of them, and most are thinly traded - KRE is a good proxy for that sector. Also, BAC has emerged as a deep value play in financials. Semis, on the other hand, offer a few good opportunities. INVN has emerged as a new leader (Watchlist 01/07/12 - up 24%); CRUS is not far behind (EOD Alert 01/10/12 - up 9%). (If you want to play it safe, there is always INTC.) Other than that, many zoomers are extended, offering few buying opportunities. As earnings pour in over the next couple of weeks we should see more new leaders emerge. For now: [...]

[Please see the Special for specific stocks.]

Sunday Night Preview 01/15/12

With 8 fresh breakouts on the Recap but few secondary trading opportunities on the Special it looks like the first squadron of zoomers has just zoomed past us and more may be coming later as earnings roll in. Never fails: when the market is lousy, there seems to be nothing to buy within 100 miles but as soon as things improve, zoomers start popping up seemingly out of nowhere. If a bull market climbs a wall of worry, we've got a pretty tall wall ahead of us. For now it's best to cast your net wide: grab as many good breakouts as you can and let the market do the sorting out: keep whatever goes up, chuck whatever stumbles. Just remember: it is easy to get carried away when everything is jumping up but institutions will use this opportunity to push junk out the door - don't become a bagholder.

Financials seem to be doing well, as evidenced by FAS and BAC; with regional banks outperforming, as evidenced by KRE and SBNY/TCBI. No sustained rally is possible without the financials participating. We are not completely out of the woods yet, BUT:

1) FAS's weekly chart looks especially encouraging in that it is similar to 2008 - 2009;

2) Oversold stocks bounce back pretty fast - BAC, for example, had a fake-out below $5.00 on Dec 19 and hit $7.00 just three weeks later - 40% for a 3 weeks work - not bad.

(Please see the Special for specific stocks.)

Value Vs. Growth

So many deep value stocks are breaking out of deep bottom bases that I am wondering if value is going to outperform growth for a while. Couple that with the large cap bias - and you get a strong case for buying a large-cap value fund.

Sunday Night Preview 01/08/12

3 fresh zoomer breakouts (1 made it onto the Recap); 8 zoomers on the Watchlist; 2 more additional new plays on the Special - not all of them will fly, but if this uptrend has legs, the early breakouts usually produce the biggest gains.

Sunday Night Preview 01/01/12

HAPPY NEW YEAR!

As tempting as it is to read 2012 market predictions, don't put too much value on them: the market will do whatever it wants to do, not what the predictors are saying it will or should so. Right now the market looks like it could go either way, with a slightly upward bias. But since the last week of the year cannot be trusted, we really won't know what's in store until trading returns to normal. All we can do for now, as always, is watch, wait, and be prepared to pounce. Running the Top 10 Dream List is OK - it's not a prediction but merely a shopping list of stocks we would like to buy if/when the conditions are right.

(Please see the Special for specific stocks.)