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Both the DOW and the S&P 500 indexes broke through the bottom of my
channels Friday. I had the DOW in a Raff channel from 5/1/97 thru
8/7/97, and the S&P in a Raff channel of the same dates. Both closed
below those channels Friday.
I also chart the number of new highs minus new lows (NH-NL), and that
graph look bad too. Usually the number is in the +100's. Last week
it dropped from the +200's to 40. When it goes negative we are in a
downtrend.
The NASDAQ is still inside its uptrend channel, which I draw as a Raff
channel with the same dates as above. But the Nasdaq NH-NL looks as
bad as the NYSE.
Stochastics and RSI on all three indexes are saying "sell".
The problem is, WHY? I see no bad news on the horizon. Interest
rates are not going to go up much if any.
The only thing I can see "wrong" is that the market is so high already
that people have trouble believing it can go higher. So they are
looking for any excuse to take profits.
If this is so, then the correction will be short and not too deep.
Hope I'm right. There is so much money flowing into this bull market
that it could spring back up at any time. In fact, if the market is
up tomorrow, just forget I made this post.
Anyway, don't fight the trend!
I sold some stocks Friday, and will sell more Monday. Mostly high PE
stocks that have room to correct. I want to have some money
available to buy on the dip. Also, I wanted to get off margin.
The large-cap stocks seem to have been hit hardest Friday (KO, MRK,
GE, etc.). But it will move into the growth tech stocks.
I sold my GDT, RSYS, and MRVC, and will sell my ASND, CUBE, and PAIR.
I am closely watching my QNTM and INVX.
I am holding on to my AGPH, APM, BEAV, COO, and IOM. (As well as INTC
and MSFT which I never sell.)
On the dip I am looking to buy more AGPH, CIEN, CSCO, and maybe KO,
HD, MTZ, and MTC.
I am also thinking about shorting MU. Others to look at are ACTM,
AMD, AMES, BOOL, EGRP, HD, MRVC, OAKT, TXN, and WWW.
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