With wild volatility whipping stocks around, it is a very difficult environment to make any moves. The best bet for now is to wait for the market to settle down, establish a trend, and wait for leadership to strut its stuff. The charts above of failed breakouts illustrate this point well.

I’d like to see the rally prove itself before diving in, but am willing to nibble and nimble. Keep in mind if today ends as a distribution (lower close on higher volume than yesterday on the DOW, S&P500, New York, NAS), then this rally will have a high probability of failing. However, if this rally holds, look for leadership in the railroads, biotechs, solars (maybe).

CANSLIM guru Gil Morales likes the action in the computer services in recent newsletters, a group I missed in my scans. These include IBM, ACN, and IT.

Related Stocks:  IBM

That’s me on page A4 of today’s IBD. The AP photographer was shooting these at the same time my SKF was tanking, so this was the best smile I could muster up. While I have my 5 minutes of fame, I like to thank some folks. God, mom, Susana, Rachel, Sarah. And the pros who help me keep an eye on the market: Covestor, IBD, Gil Morales and his newsletter service www.gilmoreport.com, Gary Kaltbaum’s Investor’s Edge radio show www.garyk.com.

Related Stocks:  SKF

The NASDAQ scored an 11th day follow through yesterday, a timing signal which IBD uses to determine a new market rally. For those not familiar with FT’s, here are a couple facts. No market rally has started without it, and it has a 70-80% success rate. But don’t stop reading yet, FT’s work best when it occurs on days 4 – 7 of a rally attempt, so an 11th day FT is failure prone. The market has also been going through wild swings lately, so I am mildly bullish at this point.

Today is the 6th day of a rally attempt and the market can go either direction; even both ways if volatility picks up. Former leaders; oils, ferts, techs are breaking down and a new crop of leaders are just starting to emerge; biotechs, truckers, industrial machinery. Keep an eye on SNHY, FLS, ODFL, JBHT, OSIP, CELG.

Related Stocks:  CELG, SNHY

OK, I really blew it with my SKF trade. I had two successful trades then let emotions kick in. Greed, pride, all the stuff that kills investors. The good news, I do know where I went wrong. I also successfully applied a CANSLIM day trading technique which worked and would have protected me had I followed the rules. Here’s a rundown on how it works:

1) Study a chart and get to know it daily price volume characteristics. I’ve used SKF. The financial’s are under pressure, it trades very violently, but followed a buy on weakness sell on strength pattern. So my strategy was to buy off of support then sell as it came through resistance. See my SKF chart.

2) Monitor market conditions. We continued to be correcting. Financials, housing, were leading the market down. Accumulation was picking up on the SKF and it was about to complete the right side of a cup formed from 3/17.

Things I missed. SKF started going parabolic on 7/11, and was up 11 out of the last 13 days. The NASDAQ tested support on 7/15. The Put/Call equity ratio was approaching 1. These signs indicated an SKF top and increased chances of a market turnaround.

So what, I had my biggest one day loss ever. No one is prone to losses, and I’m in good company. Best of all, I learned a valuable lesson which will equate to future profits. There was way more important things in life than money.

Related Stocks:  SKF

The last of our very thin leadership, ferts and oils, is breaking down today. One or the other has carried the market on certain days, but today, for the first time since earlier in the month, everything is down. Compound this with the fact that laggards are todays leaders, the home builders and banks, and this all adds up to a classic bear market. And this one could be huge!

6 distribution days on the DOW and S&P, with back to back days has changed the tone for this market. Also note the one day change leadership stocks. What a difference a day makes. Now is the time to get out and raise cash.

Last Thursday, Energy Conversion Devices (ENER) busted out on its highest volume ever. The pictures can tell you why. Not only are these modules frameless, they are easier to install, and work in indirect sunlight. I loaded up on this today, but am am expecting pullbacks into the 50-52 range.

Related Stocks:  ENER

Nope. This is Accuray’s (ARAY) Cyberknife, and this is now! THis is the world’s first and only radiosurgery system to treat tumors ANYWHERE in the body. While the product is very cool, it’s stock is yet to see any love from Wall Street, but it does look to have bottomed out. I would keep this one on the watchlist as it does have the qualities of a potential winner.

Investors Business Daily published their special mutual fund report and noted RIMM as one of the top buys by top performing managers, including my favorites CGM Focus, Fidelity Contrafund, and Janus Twenty. I tend to agree, and the reason is their upcoming Blackberry 9000 phone. While specs are yet to be announced, enthusiast sites such as www.crackberry.com and www.engadget.com  are already getting excited about its features. It looks as if this is more than an update. Look for 3G, much improved graphics, and desktop like web browsing capabilities.

As for the stock, it has been trending up but on low-ish volume. The price has good support off the 20-day, but I would look to buy on a pullback.

Related Stocks:  RIMM

With unemployment, $4 gas, inflation on the rise, and everyone talking about recession, why would the retailers be in their own quiet bull market. The anwser? Because it is. That’s the market, it’s always right and people who try to make sense of it are usually wrong. So, go with the flow … of the market. My favorites here are URBN on a breakout above 35.37 and BKE @50.50.

If you’re a William O’Neil follower, then you probably also know Gil Morales. If not, brace yourself. Gil has audited returns are in 10,000% range, he was recruited by O’Neil himself to manage and his personal portfolio and provide consultating to top mutual fund managers. Recently, he started a newsletter service to the rest of us. I’ve been very busy culling over every issue sponging in as much as I can. This has resulted in a 21% gain in my portfolio in 2 weeks! Check it out at www.gilmoreport.com

A weekly move from 3% to 39% of leadership stocks near buy points is huge! This leadership is carrying the market, now we just need to see the major indices follow the NAS is punching thru Feb highs. The commodies are leading the way with the fertilizers, oils, and steel stocks. But don’t forget Mastercard, and keep Visa on the radar

This current rally is starting to show signs of strength as leadership is starting to take form. Today’s scan shows the oils as the emerging industry group. With record crude prices increasing profit margins, oils stocks have double and triple digit earnings and sales. Technically, they have all held up and recovered well through the correction. The oils were also the top industry group in new mutual fund buys in Q1.

Just returned back from my fist visit to Disneyworld and to my surprise, the DOW follows through! DOW follow through’s typically are not good rally indicators, but combined with the Russell’s FT, there is validity. BUT, a distribution day just 3 days after this FT is bad - almost a sure sign of a failed rally attempt, BUT price/volume action looks good. The action in the IBD100 is also improving, with stocks near buy points increasing from 4% to 16%. I think the market still needs to prove itself, and the indices will be going up against critical near term resistance (DOW 12756, NAS 2419). In the meantime, I have one position in MA.

Related Stocks:  MA

Yesterday’s lows ended a rally attempt started on 3/10, but the market does appear to be turning around. Volume on up days has been higher than down days within the past month, a sign that the bulls are starting to wake up. Still, the market has yet to prove itself before it is safe to buy.

The heat map from the day before the 3/6 correction thru yesterday shows a lot of damage to the IBD 100. Also troubling is a lack of leadership to drive the markets back up. On the upside, today should end up being day 1 of an attempted rally - not a signal that the markets are turning up.

As the major indices break down below Jan 23rd levels, their shorting counterparts are nearing buy points, with the QID is breaking out today. The SKF, has also been busting out on strong volume and looks to punch through its 147.03 buy point.

Related Stocks:  SKF

IBD has been noting the similarities between today’s market movement and the 1920’s - 1930’s. Bill O’Neil also mentioned this on 2/12 on the Tom O’Brien radio show. It’s a common practice IBD, O’Neil, and his portfolio managers to look for tandem charts. As an example, O’Neil saw the potential in Crocs by looking at the past winners LA Gear and Rebok. It should be interesting to see is Visa will tandem itself with Mastercard

Less than 3 weeks into the current rally, IBD called the correction in today’s paper. This comes to no surprise as 90% of rallies will fail when a distribution day comes hits 1-3 days after a follow through. Surprising is IBD’s call after only 2 distribution days, when it usually takes 6-7.

4 IBD 100 oil stocks (3 from the Oil/Gas Exploration group) are setting up nicely, but with the rally under pressure, and the markets wild volatility, buy with caution.

From Wednesday 3/5’s IBD. This is the quarterly listing of new buys from the top 15% performing mutual funds (over the past 6 months). There are my notables:

AUY SWN RIG BVN BBD WFR HES APA ITU ECA CNQ ABX XTO SU

Related Stocks:  AUY, ECA, RIG, WFR, XTO

IBD changed the market status to “Rally Under Pressure” after Friday’s distribution day. It usually takes 4-6 distribution days to see pressure, but this rally is doomed to fail. One day after this rally started on 2/15, the indices marked its first distribution day - a bad sign!

Leadership makes or breaks the market, and my indicator of market health is the IBD 100, which has started to show some strength. The percentage of stocks near buy points increased from 16 - 23%, and the heat map is showing better coloring (less red) since last Friday.

News, economists, personal opinions are rarely in sync with markets. So it should be no surprise how the market can trend up when recession fears are at its worst. The S&P charts from today’s IBD illustrate this well.

Had a nice chat with the Associated Press which turned into an news story about commodities investments. Thanks to KSDK channel 5 in St Louis for picking it up!

Rise In Many Commodities Draws Some Investors Looking For Short Or Long-Term Gains

Created: 2/26/

2008 7:47:17 PM

Last updated: 2/26/2008 7:48:44 PM

NEW YORK (AP) — With oil prices touching record highs in February, it’s natural that some investors would want to jump into energy investments and others would recoil out of fear of a bubble.

Peter Kurata, an investor in Cypress, Calif., doesn’t care which theory wins out; he relies on technical indicators to move in and out of investments and for now oil has an appealing sheen.

“It’s very much in favor. I can’t estimate how long it’s going to run for but at least in the short-term it looks pretty good,” he said. “I just follow where the leadership is and right now the commodity-related stocks are showing the leadership.”

For investors looking to diversify their portfolios amid a pullback in stocks this year and who don’t want to miss out on the ride in commodities, the answer might be to ease into some corners of the commodity market while keeping in mind that not everyone has to the stomach to be an oil prospector. The commodity markets are known for their volatility.

Kurata in mid-February invested in the PowerShares DB Commodity Index Tracking Fund, a Deutsche Bank index fund that lets investors draw returns from the commodity and currency markets. He’s seen more than a 6 percent return.

He said he’s not concerned that such sharp gains signal a bubble is building. Individual commodities investments make up 20 percent of his portfolio — a larger percentage than many investment advisers might recommend — and his style of investing is also more aggressive than that of many people. But his enthusiasm right now

for commodities such as gold, wheat and oil is shared by others.

“I’m pretty fluid with my investments. I can get in and get out once I see it’s not working,” Kurata said.

But even for investors who might shy from such a sizable commitment to commodities and the rigors of having to make fast-paced investment decisions as Kurata does, commodities can

maintain a reasonable portion of one’s portfolio. But investors who might be fearful that some prices have gone too far, too fast

should be cautious.

Thomas Winmill, president of Midas Funds, said investors should consider an investment in a commodity like gold because of low interest rates and increases in inflation. He said investors should try to envision where demand might be in the coming months, not where it stands now.

“It’s the old Wayne Gretzky move to try to figure out where the puck is going to go. I think in six months from now people are going to be talking about inflation and saying ‘Gee, inflation is taking a whack out of my ability to buy stuff,”‘ Winmill said.

But investors should be ready for gyrations and, in most cases, have a long-term perspective. Winmill noted that while oil prices jumped 60 percent last year amid surging demand, zinc prices lost 40 percent.

Because many commodities are priced in dollars, a flagging greenback can also drive prices higher because it requires a greater number of weak dollars to buy a single barrel of oil, for

example.

“Take a diversified approach or a basket approach,” he said, referring to investments that hold positions in several areas at once. “It’s a volatile sector.”

Winmill suggests most investors have about 5 percent of their holdings in commodities investments.

While some observers say demand for commodities will likely rise thanks in part to growth in countries like China and India, others are worried that a global economic slowdown could dampen demand.

Frank Holmes, chief executive and chief investment officer for U.S. Global Investors Inc., said the enormous growth in the world’s

developing countries and what he described as a paltry investment in the infrastructure needed to obtain more resources makes it likely that many commodities will show long-term gains in prices.

To illustrate what he sees as seismic shifts taking place in the demand, he noted that in China and India, each person consumes an

average of two barrels of oil per year compared with an average of 25 barrels per person a year in the United States.

“And they’re growing at 10 percent,” Holmes said, referring to places like China.

Holmes notes that decisions by managers of big pensions and similar investments support a notion that long-term bets on commodities are not unwise even if prices soon recede.

The California Public Employees’ Retirement System has said in recent months, for example, that it would step up its investments into areas including commodities.

“You’re seeing each year pension fund groups are putting money into commodities but the average investor is not,” Holmes said.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

AP

After failing to breakout in January, HOS has built a new leg of its double bottom and regained the 50-day last week on huge volume. Another notable technical cue is the 4 tight weeks - a sign of support.

The major indices ended up 1% on higher volume then seen in recent weeks, but still below average. Volume on up days has been edging up down volume, so this may suggest that the bears are wearing down and the bull are starting to wake up. Look for above average on the upside to confirm this. Glancing a the IBD100 heatmap shows that few stocks near buy points, and many that are still damaged.

A distribution day 1 day after a confirmed rally spells trouble. Pages 10 and 11 of O’Neil’s “How to Sell Stocks Short” talks about this, and in fact, discusses how this could be a possible shorting point. IBD’s on studies confirm this as well.

Follow Through failure rate studies (presented at CANSLIM Masters Semimar). Distribution Day occurrences:

• 1-3 days after FT on sames index- High failure rate
• 4-5 days after FT on sames index- 50% failurerate
• > 5 days after FT on sames index- decreases with more days

Gary Kautbaum’s radio show, “Investor’s Edge” mentioned that a 1 day dist day could be as high as 90%.

Volume was a bit light, but the 2.2% gain on the NAS did trigger a follow through signal. Tread with caution. Although FT’s work 70-80% of the time, scale into positions and be on the look out for distribution days within the 5-8 next week to gauge this rally’s strength.

Read a couple books by John Boik last week; “Monster Stocks” and “How Legendary Traders Made Millions”. A reoccurring theme was following the action of leading stocks. Jesse Livermore, Jack Bernard Baruch started this in the 1900’s and O’Neil has carried this on. This inspired me to create a heat map of the IBD 100. This is a 20 week price chart. Colorings show a stocks price relative to new high, 50 and 200 day lines. Blue is good and red bad. Today’s map is looking pretty good, and with the NAS up 2% on good volume, IBD may just call today a Follow Through!!

O’Neil and his research team has not officially released how ETF’s trade with CANSLIM rules, today’s IBD featured DBC in the Exchange Traded Funds section, because it had all the great qualities of a CANSLIM stock. Flat base breakout on 2x average volume, record demand and price levels  for wheat and other commodities, and great relative strength compared to the major indices. In fact, according to the article, commodities are not directly correlated with the market, which makes DBC an attractive buy during this choppy, correcting environment. Here’s DBC breakdown:

Crude oil 31.8%

Heating oil (18.69%)

Wheat (14.88%)

Corn (12.76%)

Aluminum (11.84%)

Gold (10%)

Related Stocks:  DBC

Today marks the 11th day of a rally attempt. The most successful attempts occur within 4-7 days and the longer the attempt, the longer this drags on, the less likely a follow through will hold. On the other hand, one never knows when the market will turn, so always be ready with a good list of picks. My “cream of the crop” scan came up with a few notables; Intuitive Surgical (ISRG), Hologic (HOLX), and China Medical (CMED) - all from the Medical Devices group. This confirms IBD’s Industry Snapshot article “Good Medicine For Investors” from 2/4. We are an aging country, 12% over 65 and growing to 21% by 2050, and we’re living longer. Medical equipment is rapidly advancing, entering into Star Trek type therapies. Using robots, high energy laser and ultrasound, and organ cloning. These new products bring value to what is currently on the market will help hospitals bring down skyrocketing costs. Confidence is evident by the rising level of venture capital money which is up 78% from 2005

Related Stocks:  CMED, ISRG

Yesterday was a great day on the markets with the NAS, DOW, and NYSE all up over 1.7% on great volume. This should have been IBD’s technical signal to begin a new market rally, BUT their stand remains unchanged. Here’s why:

A 1.7% gain is usually a big gain relative to usual market action, but relative to today’s volatility, we would need to see something more. Take a look a how January’s price range measures up against past months.

Today marked day 3 of a rally attempt which started last Wednesday. When counting rally days, note the first up day is not counted. If one of the indices closes up 1.7% on above average volume (a follow through day), this rally attempt will be confirmed, and it will be time to look at getting back in the market.

Investor’s Business Daily has a 70-80% track record for calling tops and bottoms. The chart above shows when when “The Big Picture” section stated market corrections in red and market rally’s in blue. Check out the article “Look For Follow-Through Day To Start Uptrend” in the Investor’s Corner section of investors.com for more info.

Today’s reversal was impressive, volume was the highest its been in weeks, and the indices ended strong with 2% gains. Does this marked the bottom? Or an oversold rally? Only the market knows, so why risk it with IBD 80% track record. Your best bet is to wait for IBD to end this correction and call the new rally. This could be the start of a rally attempt.

Welcome to WordPress.com. This is your first post. Edit or delete it and start blogging!

Related Stocks:  BIDU

Related Stocks:  DSX

Related Stocks:  MA

Related Stocks:  CHTT

Related Stocks:  DSX

Related Stocks:  CROX