MPT Rating (06)

6. August 2008 by admin.

Wednesday, August 6th, 2008; MPT Rating (06)

I hate to rain on everyone’s parade and no one would rather have a bull market than I, but this run is momentum driven and will only take us so far…  In the end we have to ask “where’s the meat”?

This market run may look good on paper but in the end we are not seeing the technical requirements needed to support this run, and that means when the required elements do show up it will be on the sell side.  We have not seen the bottom yet.

The DJIA gained +40 points today, but buy volume is decreasing and we don’t like low volume advances as they tend to be nothing but a fake before the real move, and in this case I believe the real move will be lower – a lot lower.  The FED momentum is still effecting the market, but quality technical set ups are few and far between… the news of Freddie Mac’s $821 million second-quarter loss makes it more likely that the government will have to bail out the mortgage giant, but it also fell on deaf ears today as everyone was looking at yesterday’s gains with blinders on to reality… we are not out of the woods here, and those who think we are have not weighed out the facts or reviewed the technicals.

The NASDAQ gained +28 points for the day; less than half of yesterday’s gains, thus showing the decreasing effect of momentum’s ability to push stocks higher…  this does not  have to end tomorrow, but it is going to end and the pullback will be an eye opener for the majority of sheep jumping on the ban wagon today.  Technical Analysis only works for those who use it without emotion.  I know we all want to see a rally here after so much down time, but the slow stochastic indicator in the NASDAQ is at 81 and this is not a new development.  The test of eh previous up trend broke through support and this rally is nothing more than a FED feast that is going to end at some point with investors asking “Where’s the meet?”… When it is all said and done, we have more bad news on tap for financials, more banks to fail, and more negative economic reports to deal with…  Does this mean there are no opportunities out there? No, it just means we have to be very selective and sometimes that means playing the short opportunities as well as the longs.

Today’s MPT (Market Power Trend) Rating, which tells us what “Smart Money” is doing in the market and where support/resistance is came in at (06); We have seen this pullback show us that the higher the MPT Rating the more selling we have by “Smart Money” rather than buying, as they already know what we have just come to realize and that is that this market is going lower.  I would close out any long trade which is over extended from its support – lock in those profits and only trade the best quality available.

As Always; Be Smart, Be Patient, & You Will Be Successful.

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