That's a selloff!

My last post was on 2/16. Since then the Nasdaq did in fact make an new multi year high as did the NYSE, marginally. But, upon returning to the office today from a nice vacation I note that I should have stayed away. What a day.

There was an inability for the exchange to properly calculate the Dow index and that seemed to lead to a 200 point plunge in a matter of minutes. Prices recovered but that was small consolation. On the NYSE 2,921 stocks declined, 458 advanced. On the NASDAQ it was worse than 10:1. On both exchanges, the up:down volume was at extreme levels. Up volume was a mere 1% of the total on the NYSE, 4% on the NASDAQ. Don't recall ever seeing it like that. So extreme was the day in general that it would suggest an end to the correction. While bull market corrections tend to be short and sharp, just like this one, my experience is that corrections last more than one day. But at the same time this one was a 3-4% affair and that's a lot for one day.

The fly in the ointment is overseas. We wanted a global economy? Now we have one and the markets are more interrelated than ever. China got whacked for 9% as did the Shanhai index. Argentina, Brazil, Mexico & Chile lost 7%, 6%, 6%, and 5%, respectively. China is the key emerging market and if that continues to tumble then it will ripple through the rest of the world. Since speculative excesses have been huge there, further declines in China would not surprise me.

Back to our markets, oil and gold fell so that tends to not hurt equities. And US govt's rallied quite sharply so that decline in rates could help.

My take is that this correction for the US markets is closer to the end price-wise than the beginning but may take more time to grind along and reduce the speculation somewhat. There are some terrific buys - GS down 7% today, 10% in a week, JWN down 8% today, 15% in a week - to name a few. Declines like this are usually a great time to add to positions or to trade relative losers for relative winners. When the snap back comes, you'll be glad you did...

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NASDAQ ready, set...

The market followed through to new highs again but Friday slowed down a bit. I've found the NYSE a reliable index to use in this market. Today had all the makings of simply a quiet day with an even advance decline line.
Check out a chart of the NYSE and note the nice tight consolidation from 12/14 thru 1/28. The NASDAQ has displayed a similar consolidation pattern since 11/22 and is looking like it's ready to bust out. If the NYSE is the reliable indicator then NASDAQ should be hot very soon.
STRA issued a nice report and broke out this week, up $10 to 123.67! It has cleared all but the last 10 points of a 6 month top formation from 3 years ago. I like to avoid overhead resistance but STRA has done ok since September and that little supply zone shouldn't be much of a problem. The bigger issue is buyer's disdain to certain members of this group. However, with STRA (so far) clean and improving, maybe they'll start taking notice. With an RS of 65, maybe it's too stodgy a name for this market but sometimes these types play nice catch up.

Efficient Market

You know it's a bull market when a little distribution occurs Thursday and Friday gets slammed, Monday shows more downside follow through and on Tuesday, just like that, the rally is back in place and the market is 1/4% - 1% from fresh highs.
Copper prices have acted more poorly than gold prices yet Southern Copper (PCU) keeps flying. Is the answer that PCU has done an amazing job of cutting costs and maximizing profits even as spot prices decline? Or is a stronger economy around the corner? If so, why aren't spot prices rising along with US Govt bond yields? I'm going with the story bond yields are telling, at least for now.
What will Wednesday bring?

Generals and troops

The Dow's recent pattern of one - three day vaults to new highs followed by one or two weeks of consolidation continues. It's a very strong sign and the NYSE index confirms it with new highs itself and new highs in it's advance decline line. This concept of the generals and the troops rallying together is considered by many to be the best type of advance.
Most of the stocks we own act as well or better than the market. We are happy to sell losers and recycle them into potential winners. What's a loser? Stocks that are trading at a loss but, stocks that are deteriorating technically and are not keeping pace with the market are the ones that can kill overall performance. These are the stocks that must be pruned so the portfolio stays healthy.
Our opinion is that we are in the early stages of a new bull market in the US. A typical secular bull market advances 1,000 percent based upon the AVERAGES. Picking the right stocks and maintaining a well managed portfolio are the keys to building tremendous wealth over the coming decade. Of course, it won't be straight up and it won't always be easy. But understanding the environment is a key step to outperforming the market. As an experienced investment advisor, my firm is well suited to perform this process for investors.
For more info, check our website at www.gellercapital.com or email me for a copy of my recent report that details the coming bull market for US stocks.

Follow-through

Animal spirits are still on the rise and the market is following through on a relatively quiet day. No small thing that the Transportation Index has broken out to a new all-time high. This confirms the recent strength of the Industrials and as I wrote back in the summer, the Dow Theory should be respected even though its out of vogue. The more out of vogue, the better.

Speaking of out of vogue, my call for a new secular bull market surprises many and impresses few and for that I am grateful. The prices of the stocks I own agree with me and that's all I need!

Here we go!

The new bull market is about to break out and resume its advance. Focus on stocks like GOOG that are telling us what innovation can do to build wealth. There are many such companies and they are the ones to buy.
As one insightful investor likes to say, "the animal spirits are rising".