Tuesday showed that the bears are in control as an early rally attempt failed MISERABLY and we got HAMMERED as the day progressed.
If you are investing for the long haul in this market, I will tell you point blank you are a FOOL. We will get rallies, for sure, but the bias is LOWER here and bucking that bias more than likely will result in a CRACKED PORT, something that you should want to avoid.
There are better places to put your money right now than the Stock Market, unless of course you are a TRADER!
Wednesday should be interesting. I would say there's a good shot baring news that we go lower, particularly if we begin the day UP. That would be a great short I think, at least for a trade. We are oversold here a bit, but not enough to warrant a full bounce squeeze. Having said that, I doubt baring news that we go down that much more before getting a bounce attempt. If we get a big gap down, I think we should get a decent bounce.
Someone asked me today about the AGS and SOLAR stocks. Look, I love trading these stocks like POT, AGU, CMP (my fav, soon to be $100 stock) and FSLR and ENER, but eventually these sectors are going to get nasty drawdowns. I would not want to be buying POT here, if you missed it why do you want to be this late to the wedding, they have already gotten a divorce by this time and baby I don't want to be the last guy holding the bag!
Now, its possible that these stocks just continue to plow ahead, but I doubt it. My experience says that these things when they crack will crack HARD. The trick is not trying to pick that top, but rather take the short side when they start to crack. There's just no reason to short the strongest stocks on the board, but any bad news and I think they start to crumble. Bear markets go in stages. Stage 1 is the initial selloff and breaking of support. Step 2 the weakest get weaker. Step 3 the middle stocks start falling and Stage 4 the strongest stocks crack HARD! Look at 2000 to 2003, you will see that the strongest stocks held up the longest but then caught up in a HUGE way. We're not there yet, but unfortunately I think we will be not so far from now. We're here to help you find that place and take advantage of it.
I will see you guys tomorrow, if you see a late day rally start to develop on any day rest of this week I would jump; aboard. Same thing with a sharp selloff on no news that will probably lead to a real bounce, at least for the day.
See ya on the other side,
Michael "Waxie" Parness