Monday, March 1, 2010


Do not go around searching for the next NUVA. You'll be wasting so much time. Instead, try to stay focused on your daily trading plan. I hate it when people ask me "How high do you think XYZ is going to go?" or "How do you find the next lottery winner?" Truth is, they just come on rare occasions and you either catch them, or you don't. Constantly expecting that you'll make a killing is comparable to the guy that goes to his local Wawa to buy a lottery ticket everyday. You may win big, but most likely you won't. I want to remind you to remain focused and aligned with your goals with reasonable expectations.

As for the market, it is still range bound, regardless of today's move. The SPX and DJIA are trading in rising wedges, both above the 50-day MA and also back within intermediate-term consolidation zones. The RUT looks the best with the highest chance of testing the January highs, followed by the COMP, both of which broke out of bull flags.

Most of the sectors are trading in consolidations.

Channels/wedges - XLV, XLK, XLF
Triangles - XLB, XLI, XLU, XLE

The best one that is holding daily highs and flagging is the XLP (staples). The number of consolidations indicate that there is a much, much greater move coming soon. Personally, I'd pay attention to the symmetrical triangles with near apex completions.

It is March, and I'm ready to buy some gold (IT/LT) on a successful break of the channel. There are multiple consolidation patterns, tight MA ranges, and a neutral range to consider - all of them indicating that a consolidation breaking move should be coming soon.

I always found Doug's work very interesting over at, especially the "Road to Recovery?" diagram. I believe we will mimic the S&P 500 Oil Crash Recovery and the S&P 500 Tech Crash Recovery. Repeating the 1929 crash is unlikely.

I am neutral on the general market on all time-frames and continually stress selection of individual equities as the main way to go.

No comments: