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All,
This was one of those weeks <G>. I was stopped out of SIF Wednesday,
AOL and SHRP Thursday, and HRC Friday leaving me in an almost 50% cash
position. It looks like Guy correctly called the turn. Now I'm trying to
determine if we are heading into a significant correction or did we just
have a minor pull back. The answer is probably somewhere in between, but
school is still out using my trend channel analysis of the market indices.
The DJI and NYA indices tend to support the significant correction theory
since they both broke down, closing below the bottom of their MetaStock
Standard Deviation Short Term Up Trend Channel (STUTC) with the deviation
set at 1 (should hold 67% of the up moves). On the other hand, the NASD,
Russel, OEX, and SPX are still holding in the bottom half of their STUTCs.
Another puzzle is that while the DJI Binary Wave is dropping as you would
expect in a correction, the DJI QStick is rising rapidly which would
indicate that money is still going into the DJI stocks.
Over the years, I've found the best approach when I get a mixed picture
like this is to just sit and watch and that's what I'm going to do. In
fact, I was really tempted to close all my positions and go to 100% cash,
but decided not to after a hard look at the charts of my open positions
Thursday night.
I won't open any new positions until the mixed signals clear up and
I'll raise my stops just as soon as I can. If the DJI and NYA turn back up
and re-enter their STUTCs, I'll start to open new long positions. If the
other indices break down, I'll go to all cash and wait for turn back up.
After the turn back up, the initial new long positions will be in core,
market leaders like Dell, Cisco, Intel, America On Line, Amazon.Com, etc.
which are at good entry points.
That's it, no new pick this week. I'll send a DJI.GIF chart and my
Excel chart of open and closed positions to everyone on my chart email list.
If you aren't on my list and want on, just yell.
JimG
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