The Stock Market

[DarterBlue]

Stocks closed mostly lower on much lower volume today. However, the indices were all down early on by significant amounts. The mixed close is actually outstanding given the magnitude of last week’s gains. At the close, the range was from a 1.14% on the NASDAQ 100 to a loss of 3.08% on the Mid Cap index. One interesting observation is that throughout this bear market, the NASDAQ indices, and in particular the NASDAQ 100 has played the role defensive stocks such as utilities and consumer staples used to play during times of market turmoil. What do I mean? Those indices have held up much better than all the others during this bear market, and in particular, on negative days, they have outperformed by even wider margins. Today, exhibited this behavior starkly. What exactly does this mean? I don’t know. Some would argue that staying at home benefits the tech sector, or at least it does not hurt it to the extent other industries are hurt. Another possibility, is that these techs which used to be viewed as speculative, high risk, high reward plays are now seen as the stable bedrocks of American industry. Whatever the answer is, their behavior is very interesting.

 On the day, travel stocks were some of the biggest losers with the cruise industry taking it on the chin. Airlines did not do much better and LUV was no exception losing 6%. Thus, I gave back a good portion of my profits today. During the course of the say, I attempted to buy call option on the S&P 500. However, my limit prices were not reached and the orders expired unfilled. If we get more weakness tomorrow, which would not be a surprise and in my opinion would be healthy, I may try to get the options at better prices. My preferred expiration date in July 17, which fits in with my intermediate term perspective for this current rally.

[Li-T]

It's interesting to read what you write. Keep it up, I like it. I hope you can make a lot of money.

[DarterBlue]

3 hours ago, Li-T said:

It's interesting to read what you write. Keep it up, I like it. I hope you can make a lot of money.

The key to success in this game is to learn the rules, both the obvious and those beneath the surface. Once you get to that point, focus on following them and block out your day to day emotions. If you have a very big ego, you will probably fail as when you are wrong, you will convince yourself you are right in order to feed it. If you learn the rules and can master your emotions, the money will come with the passage of time.

One other important thing: You must focus on risk management; never, ever go all in even if you are convinced you are right. Rome was not built in a day, and if you are good, like the house in a casino, you will accumulate profits over time. 

[DarterBlue]

A day after pulling back, if you can call it that, stocks closed broadly higher on slightly higher volume. Today, the leadership was among the NASDAQ type stocks with the NASDAQ 100 leading the way. What does this say for sustainability? If further strengthens the case that for the intermediate term, at the very least, the market will go higher. Now to be clear, the reason for this is two fold. The first reason is positive. It reflects the fact that Covid-19 has probably topped, at least through summer in the USA. The second is destressing in the long term but for now will fuel higher prices. It reflects the fact that the Federal Reserve Board has basically back stopped all risk assets  with its direct intervention in the market buying up garbage and essentially telling the big institutions that their wealth is protected. Why is this negative in the long run? The simple reason is that there really is no free lunch in financial markets. For eventually this will fail and fail it will spectacularly. The smart money knows this and much of it has already fled to other parts of the world. But most money, big or small, is not smart and eventually we will have a meltdown so big and all encompassing that the Fed will not be able to stop it. At this stage, the emperor gets exposed for what it is, and the entire US economy will probably never be the same again as it relinquishes its role of leadership it has enjoyed since the end of WW2. How far are we away from this? Hell if I know. What I do know is that if we continue down the current path of American capitalism, if we can even call it that, we will eventually go the way of Rome. If I a alive when this happens, I will have long fled myself. I was born and grew up in the Third World and I know a bit about essentially, failed states. They are not at all pretty. Given the rather unique nature of American society, ours would be especially ugly. But enough of my rant. For at this juncture, the focus is on making money out of this madness.

I tried again to get the options positions today. But the market never pulled back. Because I know this market is Fed juiced, I will not chase it. I will continue to try and get the position at the price I am willing to pay in this environment and if there is no pullback, then I will do without. The long positions I do have performed well today and marked gains which put my trading capital into new high ground on the year. I would rather underperform and make money than chase what I perceive as an overbought market. After the close, on of my positions LUV (Southwest) benefitted from good news for the airline industry, as it has agreed to the terms of the government bailout. So, at least at the open tomorrow, the entire sector will probably pop five percent or more (most were already up at least that much in after market trading activity). Tomorrow I will try for the S&P options again using the same limit order I have put in for the last two days. If we fill we fill, if not I won’t lose sleep over it. I have done this too long to be influenced unduly by FOMO (fear of missing out). On the day despite having less than a third of my trading capital invested, I was up on the aggregate balance by 1.5%. so, in that respect, the positions I own are outperforming the market.

[imaGoodBoyNow]

@DarterBlue I’m down %9 this morning alone, you better fix this

[DarterBlue]

5 hours ago, imaGoodBoyNow said:

@DarterBlue I’m down %9 this morning alone, you better fix this

I told you not to buy Penny Stocks. This is not my fault! I was up on a down day, last time I checked. 

[DarterBlue]

Stocks closed broadly lower on lower volume. But most indices closed in the upper end of their day ranges. That and the declining volume made it feel like a normal pullback within an uptrend. Stocks had been in significant overbought territory after their record week last week. So, the pullback was both expected and probably necessary. In fact, further weakness tomorrow would probably be a good thing, as it would clear out some of the froth that has been building up.

On the day, the range of losses was from a large 4.31% on the Russell which continues to under perform most days, to a very modest 1.15% on the NASDAQ 100. Declining stocks held hefty leads over advancing stocks by margins of 5-1 and 3.5-1 on the NYSE and NASDAQ. On a personal note, we took a modest loss today as LUV, which had been up overnight and which gapped up at the open reversed to close down nearly 5% and near day lows. This offset a solid gain in JD which made an all-time high and a flat performance from TEAM.  

Tomorrow, I would not mind another pullback day. First it would help work off the overbought nature of the market. It would also give me another opportunity to get the S&P Call options which for the third day did not fill. As I type this, the futures are down moderately ahead of tomorrow’s unemployment data which are sure to be very bad.

In separate topic I address some general rules for being a successful trader or investor.

 

[DarterBlue]

Stocks closed mostly higher after being all over the place, up, down, flat, you name it. But going into the close, things were decidedly positive. Volume was mixed with the higher volume coming on the NASDAQ, which is good, as the two NASDAQ indices were the strongest performers all day. Beneath the surface, the troops did not do nearly as well as the generals, as declining stocks had clear leads over advancing ones to the tune of 19-11 and 9-7 on the NYSE and NASDAQ. The indices ranged from a loss of .5% on the Russell to a gain of 1.93% on the NASDAQ 100. The good aspects of the day were: 1. Stocks closed at or near day highs; 2. The best performing exchange was the NASDAQ which traded on higher volume. The biggest negative was the fact that secondary stocks lost ground on the day. After a brutal selloff such as the one that lasted through March 23, it would be much healthier if secondary stocks participated. 

On a personal note, of the three positions I own, two prospered and one, LUV, tanked, as the airlines all took it on the chin today. If LUV were a sole position, I would have sold it today, as it surpassed the loss objective I have for individual trades. Because I bought all three in the aftermath of the monster follow through day on April 6, I treat all three positions as one trade. Thus, as two are significantly profitable, they more than offset the losing position, at least for now. With that said, if LUV cannot find support within 2% of where it closed today, I will sell it. As an intermediate term trader, I am well aware of the fact that profits are a function of both time and price. And if you take a position and it does not prove itself quickly you ditch it and move on to something else.  

After the close, Gilead Scientific announced some very promising news on a drug it has been developing to fight Covid-19. This caused a monster after the close market rally to ensue. If things remain the same as I type this, in the morning the S&P will open up over 3% to the good. So, my attempts to buy calls on it will probably end up being in vain, as in this environment, I will not chase any position regardless of money I may be potentially leaving on the table. Finally, both TEAM and JD, my other two positions, had great days with JD moving into all-time high ground. Nothing lifts the spirits of a trader than seeing a position score all-time highs. To be continued.

[golfaddict1]

11 minutes ago, DarterBlue said:

After the close, Gilead Scientific announced some very promising news on a drug it has been developing to fight Covid-19. This caused a monster after the close market rally to ensue. If things remain the same as I type this, in the morning the S&P will open up over 3% to the good. So, my attempts to buy calls on it will probably end up being in vain, as in this environment, I will not chase any position regardless of money I may be potentially leaving on the table. Finally, both TEAM and JD, my other two positions, had great days with JD moving into all-time high ground. Nothing lifts the spirits of a trader than seeing a position score all-time highs. To be continued.

Indeed... after hours up +16.41 pct.   Futures were up nicely prior to Trump's benzo-induced speech,  

[DarterBlue]

10 minutes ago, golfaddict1 said:

Indeed... after hours up +16.41 pct.   Futures were up nicely prior to Trump's benzo-induced speech,  

That did temper the optimism, but they are still up very nicely. Absent from the US media, is that Cuba, yeah that small island to the south of Florida, has a very promising vaccine in clinical trials. To the extent it were to work, what are the odds we would license it?

[DarterBlue]

Stocks closed broadly higher on higher volume. On the surface it was a great day. Despite this, to some extent I felt bothered by aspects of the day’s action. The funny thing is that there is nothing specific about it that I can point to. Breadth was good, all the averages were higher, and smaller stocks led the charge up the hill. Advancing stocks led by margins of 6-1 and nearly 4-1 on the NYSE and NASDAQ. But, for a good portion of the day, the generals of the NASDAQ 100 were actually in negative territory.

 Perhaps this is what bothered me about the day’s action, or perhaps I was bothered by the fact that my own holdings underperformed, though I was up on the day. Over the weekend, I plan to take a deeper dive into the overall state of this new rally. The strength of the action on April 6, the day I got a buy signal, was so strong I concluded the bullish trend would continue for at least the next three months. Overall, I think this conclusion is still valid. But a sixth sense, if you will, disturbs me.

[imaGoodBoyNow]

1 hour ago, DarterBlue said:

Stocks closed broadly higher on higher volume. On the surface it was a great day. Despite this, to some extent I felt bothered by aspects of the day’s action. The funny thing is that there is nothing specific about it that I can point to. Breadth was good, all the averages were higher, and smaller stocks led the charge up the hill. Advancing stocks led by margins of 6-1 and nearly 4-1 on the NYSE and NASDAQ. But, for a good portion of the day, the generals of the NASDAQ 100 were actually in negative territory.

 Perhaps this is what bothered me about the day’s action, or perhaps I was bothered by the fact that my own holdings underperformed, though I was up on the day. Over the weekend, I plan to take a deeper dive into the overall state of this new rally. The strength of the action on April 6, the day I got a buy signal, was so strong I concluded the bullish trend would continue for at least the next three months. Overall, I think this conclusion is still valid. But a sixth sense, if you will, disturbs me.

God I wish I knew 1/1000th of what you knew about the stocks

[DarterBlue]

1 hour ago, imaGoodBoyNow said:

God I wish I knew 1/1000th of what you knew about the stocks

I have been in the market 31 years. When I bought my first stock, I was literally palpitating and was bathed in cold sweat. I did not know what I was doing and when the broker asked me a bunch of questions, it must have been obvious he was talking to an ignorant person.

Like anything else, time and effort are the way you learn. It helps also if you are not just interested in making money out of the market, but if you find the whole game interesting like some kind a jigsaw puzzle or a strategy game such as chess. Interest will make you want to do the work to become proficient and at that stage you will make money consistently. No, it does not mean you won't make mistakes. But it does mean that over weeks, months and years, you will be profitable. 

 

[DarterBlue]

Stocks closed broadly lower and at about day lows on lower volume. Oil had an historic day, as the expiring May contract closed in negative territory down over 200% on the day. At delivery, buyers were actually being paid to take delivery of the product if they did not choose to cover the position before expiration. This pretty much defies logic in just about as big a way as negative interest rates! But I digress. Stocks opened broadly lower but recovered, to turn mixed with the NASDAQ indices and Russell 2000 going positive in late morning/early afternoon trade. Then a combination of oil’s historic drop, coupled with news that the Senate had failed to reach an agreement to fund the Small Business bailout plan with an additional $300+ billion did the rally attempt in. At the close, the range of losses was from a negative 1.03% on the NASDAQ to 2.44% on the DOW which got beat up by its oils (Exxon and Chevron) and by Boeing. 

So how do I see the day? The divergence between oil and the stock market bothers me a lot. The current rally in stocks is predicated on Covid-19 tapering off leading to a reopening of the economy. It also assumes that the recovery will be just as quick as the plunge in economic activity. There are grounds to believe this. After all, both Congress and the Fed have pumped trillions into the economy via both monetary and fiscal policy. If this can’t revive the economy, then the patient is dead. But the activity in oil seems to be telling the opposite story. The historic plunge in the May contract which expires tomorrow, tells us that economic activity is going to be weak at least through the intermediate term. Clearly either the stock market or the oil market could be right. Equally clearly, both cannot be right. With that said, despite the negative day, it was not especially harsh or troubling and a pullback was due given the steep run up over the past two weeks. On a personal note, I lost money on the day, but one of the three positions was up, and the other two were off day lows by quite a bit. In fact, one was off its lows by a lot. 

My feelings after weighing the evidence are that the rally is intact and that more upside lies ahead in the upcoming weeks. I will reassess this position if we were to have further major downside in the June oil contract, or if stocks had a 3% or greater down day on higher volume later this week.

[15yds4gibberish]

3 hours ago, DarterBlue said:

.... Oil had an historic day, as the expiring May contract closed in negative territory down over 200% on the day. At delivery, buyers were actually being paid to take delivery of the product if they did not choose to cover the position before expiration. This pretty much defies logic ...

A crude awakening?  😉

[DarterBlue]

11 hours ago, DarterBlue said:

So how do I see the day? The divergence between oil and the stock market bothers me a lot. The current rally in stocks is predicated on Covid-19 tapering off leading to a reopening of the economy. It also assumes that the recovery will be just as quick as the plunge in economic activity. There are grounds to believe this. After all, both Congress and the Fed have pumped trillions into the economy via both monetary and fiscal policy. If this can’t revive the economy, then the patient is dead. But the activity in oil seems to be telling the opposite story. The historic plunge in the May contract which expires tomorrow, tells us that economic activity is going to be weak at least through the intermediate term. Clearly either the stock market or the oil market could be right. Equally clearly, both cannot be right. With that said, despite the negative day, it was not especially harsh or troubling and a pullback was due given the steep run up over the past two weeks. On a personal note, I lost money on the day, but one of the three positions was up, and the other two were off day lows by quite a bit. In fact, one was off its lows by a lot. 

The current rally off the bear market lows is about to get its first real test. Oil prices continued to tank overnight as the June contract for both West Texas Intermediate (US oil) and Brent (world/European supply) sold off sharply. As I type this the stock futures are down close to 2%. I believe today we will find out for sure what this rally is made of. In other words I view the day as critical for forecasting the continued health of the rally and its sustainability. 

When I bought this rally, I stated that the technical action was superb, but the economic and social backdrop was poor. Nevertheless, as a technician, I first and foremost pay attention to price and volume action, as I am well aware that many a bull market has begun within the context of gloom and doom.

With that said, today should be very interesting. If stocks roll over, then my worst fears for our economy and society will be back in the forefront. Whether I close out my positions or increase my long exposure will largely be determined by today's action. 

[imaGoodBoyNow]

Winning stock of the day, way to late for me to get in on it , it definitely hit its peak

[DarterBlue]

Stocks closed broadly lower on flat volume. In the process, several major indices looked in danger of succumbing to the recent collapse in oil. First, is the S&P which got turned back in its effort to hold its 50 day moving average. Note that the 50 day is usually both a level of support (in a bull move) and resistance (in a bear move). Today it undercut it by a bit. Second was the NASDAQ, which closed right at its 50-day moving average. Intra-day, it briefly undercut it. But closed right at it. At the close, the range of losses was from 2.33% on the Russell to 3.71% on the NASDAQ 100. Note that the NASDAQ 100 has been the index holding up best, especially on relatively weak days. So the fact it led to the downside today is not good.

 Yesterday, I stated that the divergence between oil and stocks was troubling. That the fact they were going in different directions was not sustainable and that one or the other was misreading the other. Today, I had an in-depth discussion with an individual I respect. That person’s take was rather interesting. The essence of it was that oil’s weakness in this context can be seen as a lagging indicator as the failure of the producers to keep supply in check has led to the collapse in price. This is in contrast to my view that the collapse is a probably a harbinger of serious economic weakness ahead. While I am not sure my counterparty has it right it is food for thought.

Yesterday, I stated that I would get seriously concerned if oil continued to collapse and the stock market had a 3% down day on higher volume. Today, two of those three things happened. We had further collapse in oil and several of the market indices sold off in the 3% or higher range. Only the volume criteria was not met. When you combine that with the behavior of the indices around major support it paints a troubling picture. We are not quite in sell mode yet, but another bad day tomorrow or Thursday, will get us there. For the record, on the day I took it on the chin and am now only marginally profitable since I re-entered the market.  

As I type this, the futures are mildly higher as several big name stocks beat earnings estimates (CMG, NFLX, etc.). For bulls the hope is that this provides fuel to the upside tomorrow.

[DarterBlue]

Stocks closed broadly higher on lower volume. Percentage wise, the gains were quite decent ranging from 1.39% on the Russell 2000 to 3.11% on the NASDAQ 100. In a sense it was the opposite of yesterday’s down day in the sense that the NASDAQ was the star and the Russell the goat. While on the surface the rebound looked good after two days of weakness, if you dig a little deeper there were troubling signs. First was the lower volume rebound. You want to see stronger volume after days of strong selling. Second, was the fact that even though several of the stars of the current uptrend were up nicely percentage wise, they too lacked volume. And, there were no new breakout performers of any significance. Finally, in after hours trading, the futures traded down. 

With the negatives out of the way, there were some positives. Most notably, the S&P regained its 50-day moving average and the NASDAQ put some separation between its current levels and its 50-day moving average. If uptrends are to succeed, the major indices need to firmly establish themselves above their 50-day moving average which then serves as support for the uptrend as it works its way to new high ground. Second was the fact that the sellers, at least for a day, satiated themselves. An acceleration of Monday’s and Tuesday’s action would have likely spelled doom to the current bullish direction of stocks.

On a personal note, my three positions ranged from positive, to average, to mostly bad. JD rebounded strongly from three successive selloff days after making new highs last Thursday. In doing so, its uptrend is still intact. TEAM, though it closed up for the day, ended in the lower half of its range on weak volume and underperformed. Finally, LUV made a new 52-week low before rebounding to close down but in the upper half of its range today. I was 10 cents away from selling it, when it rebounded well from making its new low. Looking at an intra-day chart, the lows were recorded on the strongest volume of the day indicating that an institution or a number of institutions were liquidating shares. That is not a good sign; however, the strong rebound led me to keep it at least for now. Looking at a 52-week chart, it its pattern could be interpreted as an attempt to put in a peculiar looking double bottom after the sharp selloff in February/March. In any event, if the current low set today does not hold, I will get rid of it, as that would confirm a renewal of its downtrend. 

Tomorrow is an important day. Perhaps the best behavior would be calm action on either side of positive/negative. To me, that would be further evidence that the recent selling has dried up and a resumption of the uptrend may be at hand.

[DarterBlue]

On 4/21/2020 at 12:32 PM, imaGoodBoyNow said:

Winning stock of the day, way to late for me to get in on it , it definitely hit its peak

To make money in stocks like that with any degree of consistency, you have to have insider information (trading on insider information runs the risk of imprisonment). Such stocks are manipulable and are generally traded by, how can I put this, "less than honest individuals/low quality brokerage firms, with malevolent intentions." Your timing would also need to be perfect getting out, as these issues are almost always destined to fall just as  spectacularly as they rise, as they don't have much public float.

To be honest, if this is the strategy you tend to employ in the market, then I think you would be better off going to the casinos as you may get free drinks or food there and if you are good at poker or any such strategy game and can get seated at a table with a few idiots your odds of success are probably better than looking for stocks like the above.   

To make money in the market with consistency, you have to develop a well though out strategy, trade issues with some quality and liquidity, and employ discipline. That is why a majority of individuals lose at this game. They either don't put the work in or they lack the discipline. 

[DarterBlue]

Today was a tale of two markets. First, there was the pre-Gilead market, then the post Gilead market. The first was like a bright, sunny spring morning, as stocks picked up where they left off yesterday, and all the indices were broadly in the black. Then came the shock of post Gilead when information about preliminary trials of Gilead’s much hyped new Covid-19 drug were leaked to the press. The early results were not promising. Gilead tanked and, in the process, the indices quickly did a U turn and headed south. Volume which had been tracking higher during the sunny spring morning phase, kept tracking higher in the wintery phase. Missing from the whole process was the carefree, lazy summery feeling.

At the market’s close, stocks were broadly mixed. The range was from a loss of .27% on the NASDAQ 100 to a gain of 1.07% on the S&P Mid Cap index. At day highs all the major indices were well over 1% higher and most were in the mid to high 2% range. Had the reversal not come on specific news, my interpretation of the day’s action would be very negative. Given the circumstances, I actually see a few spring flowers in the way the market responded to the bad news. Most prominent among the flowers was the fact that breadth was (advancing to declining stocks) was positive and was reflected in secondary stocks outperforming the big names.

 On a personal note, I managed to close up on the day as two of the three positions held on to gains.

 After the close, the futures were weak. Unlike Tuesday evening when several bellwether stocks beat on earnings, Intel and Google’s parent did not blow away Wall Street and tanked in the after-market trade. With that said, we probably open lower tomorrow and quite likely end the week losing ground. This may not be negative. A pause in the rally was due and expected. The only problem I have with the way it has panned out is the extreme skittishness of the market action itself. Ever since the February decline began, the market has traded as if it were very thin despite the massive amounts of shares that have changed hands each day. Such feel is usually characteristic of bearish not bullish action. It would help if the market can work through this and normality can return. Then and only then, can I say with confidence that we have a truly new, sustainable bull market that has a chance of lasting several years.

By the way, for those curious, these daily updates are actually edited versions of my market diary which I have kept every trading day for the past 18 years. Keeping and reviewing a diary of your feelings, and actions to my way of thinking is an essential tool of those that take this game seriously. I review what I have recorded at the end of each month for insights into both my state of mind and activity (or lack thereof) during the preceding month regardless f whether I am currently active or not. 

[DevilDog]

On 4/6/2020 at 6:22 PM, DarterBlue said:

Today’s market action was significant. Based on the criteria I use, a buy (go long) signal was flashed loud and clear. Now to be precise, I am an intermediate term trader. I am looking to make money off the trends for the next three to six months. So, my buy signal is predicated on that. If you were to ask me about my opinions of the economy and, indeed, the overall state of America’s societal fabric I would be far less sanguine. But my trading is divorced from what my longer-term overarching opinion of fundamentals are. It is based solely on the shorter to intermediate term opinion of where the market is likely to trend.  

Today was a beautiful day for those with a bullish opinion. All major indices closed significantly higher; volume was significantly higher; breadth was nearly 10-1 positive on the NYSE and over 5-1 positive on the NASDAQ. Further, stocks closed right at day highs. In short, the day was flawless and such days usually herald further upside in the days, weeks and months ahead. Do I think the bear market is over and we will be at new highs before the year is over? Hell if I know! What I do know is that there is at least a 75% probability that the lows seen on March 23, 2020, two short weeks ago, will not be taken out over the next several months and that stocks will be higher at the end of June.  

Today, the averages gained from 6.42% on the NYSE to 8.24% on the Russell. Given the steep gains it is likely the averages may pull back a bit tomorrow. And that, in my opinion gives great cover to go long. So, as long as we don’t get a violent selloff tomorrow, by mid-afternoon, I expect I will have purchased several long positions. I intend to go long July Calls on at least two of the major indices. I will likely also purchase TEAM, JD, LUV and a few other individual positions.

 None of the above is meant to be a recommendation. Each person needs to evaluate his own situation and act accordingly. But I did promise a post on the market when my work commitment ended. Well it has, and probably could not have come at a more opportune time for me, assuming my read of the next three months is accurate.

 

Your knowledge on this subject matter is way outside my pay grade.  But damn I really enjoy the knowledge you drop.  And of course I dabble and this virus has dabbled back😎

Peace be into You sir

[DarterBlue]

3 minutes ago, DevilDog said:

Your knowledge on this subject matter is way outside my pay grade.  But damn I really enjoy the knowledge you drop.  And of course I dabble and this virus has dabbled back😎

Peace be into You sir

The knowledge has come from hard work and learning from my mistakes. It is actually strange, because I have never been sold on unregulated capitalism which I think is unstable, probably unsustainable, and inhumane. But the markets have always fascinated me going back to my days in graduate school.

I used to get blown away by the daily fluctuations in prices which I felt were irreconcilable to what my professors were teaching in class. That led me to doing some of my own research and also reading the works of successful practitioners, a few of whom have actually published useful information. 

[DarterBlue]

Stocks opened either side of up before steadying to close broadly higher on lower volume. While this ate into the losses of Monday and Tuesday, it was not enough to end the week up. The closest index to breakeven was the NASDAQ which ended down .11%. On the day, advancing stocks held a decent lead on both exchanges to the tune of 18-11 and 2-1 on the NYSE and NASDAQ, respectively. The day’s gains ranged from .93% on the NYSE to 1.68% on the NASDAQ 100. But both the Russell and Mid Cap indices were up well over 1% on the day as all stripes of stocks participated for a change.

 How do I read the day? Within the context of the selloff earlier on this week, it demonstrates the resilience of this current tradable rally. Stocks don’t want to go down for any substantial period.

 Personally, on the day and week I underperformed, giving back over half the gains I had going into the week. The chief reason is the continued poor performance of LUV. I bought LUV using criteria I don’t normally employ. Usually when I go long, I look to buy stocks exhibiting very high relative strength. I make exceptions in cases when we have had a very deep selloff. The theory is that many quality issues get beaten down as fear of bankruptcy drives them much lower than their fair value. So far, the LUV trade is not working out. While I have confidence that over time, assuming our airline industry survives it will be a survivor, profits are both a function of price action and time. It is not clear to me that this current move represents a new bull market. If it does not, it will probably end sometime this summer. With that being said, I am going on the assumption I have very limited time to make money on the long side. With that said, if it does not show clear signs of upward movement, by Tuesday’s close, I will ditch it then if not before.

[DarterBlue]

Stocks closed broadly and decisively higher today on mixed volume. NYSE volume declined while NASDAQ volume was slightly higher. It was a near perfect day for bulls as all major indices except the Mid Cap and Russell are now above both their 50-day and 200-day moving averages. In the case of the Mid and Russell, these closed right at the 50-day, but still well below the 200-day. Gains today were broad based and were actually led by the secondary stocks. Advancing stocks led by margins of nearly 4-1 on the NYSE and 3.5 – 1 on the NASDAQ. The market has sent a loud signal it wants to continue the uptrend that started in earnest in early April. The odds at this juncture, say it will do so at least for the next two months. Why? It has incredible momentum behind it.

 So, what do I expect beyond June? Personally, I would be surprised if the market does not have a second leg down, or at least a retest of the March 23 lows. Why? While the current data regarding Covid-19 is indicating that we may now be beyond the worst (I hope this holds, I actually really do), I don’t believe we will have a V shaped recovery. Many businesses will not recover despite the promised aid (hint, many won’t receive it, and for many it will be too little, too late), and for the ones that do, many industries will be hurt by changes in consumer behavior due to uncertainty surrounding employment and fear of contracting the virus which could resurrect, particularly in states that open too soon. With this said, the goal is to try and make money off the current rally while it lasts with one eye clearly focused on the exit.

 Today, the market performed very well. However, I did not participate as the net of my three positions put me barely in the black. Tomorrow, before the open LUV reports earnings. AAL also reports. These two should give us a clear indication of how much the airlines are hurting. As I stated in Friday’s writeup, my patience with LUV is wearing thin. While I believe it is a solid, well managed, company that will survive the pandemic, it has been a poor performer since I purchased it. With that said, unless it gaps up at least 2% and holds those gains, I will part with it tomorrow. While no one wants to take a loss (it is not the reason we buy), taking losses is an integral part of this game. So far, it has not done what I expected and that is the only thing that matters when you trade. You cut your losses before they damage you both financially and emotionally.  TEAM reports on Thursday. With that one I am inclined to be more patient. Unless it gaps down 10% or more, I will likely continue to hold it.