|Beware the Iceberg
|March 6, 2007
I wasn’t alive on April 14, 1912, nor was I on the cruise liner, Titanic that now infamous night. But I can imagine — with some help from James Cameron’s Oscar-winning semi-factual tale — what that ship’s crew must have been thinking.
Staring straight ahead at a massive iceberg, knowing you’re going to hit but simultaneously wondering how, seeing as it was deemed “practically unsinkable.”
Yakety Yak—Now Talk Back
Most investment newsletters are like a one-way radio. You hear what the advisor has to say, and that’s it. But we give you a way to talk back: the Trending123 message boards. Now you’ve got to be a subscriber but when you join, you can ask questions about our stocks, hear from our staff and other subscribers, and post your own comments, suggestions, and thoughts on the market. And last week, John Lansing took the message boards one step further. Instead of just answering questions about his favorite stocks, he asked subscribers to post a few names from their own portfolios so he could give everyone updates of where those stocks look to be going for the longer term. The possibilities are endless. And while that might terrify an advisor who’s only used to hearing his own voice, at Trending123, it’s just one more way we’re here for you.
Well that’s exactly how traders took in the correction from last week. Eyes glazed over, panic-stricken, unsure where or how to move. Some just ran around selling everything like chickens with their heads cut off.
If that was you, I hope you’ve managed to ease up since. There really is no reason to get all tied up in emotions.
This correction was entirely expected. At least it was for my Trending123 subscribers — I’ve been warning them of this for quite awhile now.
Don’t Jump Ship Yet
Yes, there are reasons to feel jittery. The market is throwing us some definite curveballs to be sure. But there’s no need to hibernate for the rest of the winter (well even if you did, Spring starts in just 2 weeks!).
There are certain factors that are setting an historical precedence in the market right now. Whether those indicate a big rally in our near future I can’t begin to predict. But as I’ve said previously, this market is looking an awful lot like the late 90s when we took some big hits but it eventually led to a big payoff.
And because this market has many folks in a pickle, I figured now was as good a time as any to assess the entire situation. That is exactly why late last night (and into the wee hours of this morning) I decided to make an all-encompassing audio update on what I’m seeing from today’s market.
The McClellan Oscillator
When the market tanks, how do you know if you've hit the bottom? No one can be sure, but there are tools you can use to get an idea. One of them is the McClellan Oscillator.
The McClellan Oscillator is named for its developers, Sherman and Marian McClellan. It is based on daily market breadth, or the difference between the number of issues that advanced (closed higher) and the number of issues that declined (closed lower) on a given day. This can fluctuate a lot, so to make the data more useful and reliable, the McClellans created an oscillator subtracting the 39-day exponential moving average (EMA) of the daily breadth from the 19-day EMA of the daily breadth. If the result is a positive number, that means advances are winning out. If the result is negative, that means declines have taken over. Additionally, the closer the McClellan Oscillator is to 100, the more likely the market is overbought, and the closer it is to -100, the more likely the market is oversold.
As it turns out, the Nasdaq McClellan Oscillator (NAMO) just hit a new low. We’ve only seen numbers like this three other times in the past 8 or 9 years, and each time they preceded a major market move.
Stay informed with Trending123 as John continues to follow this story...
I was joined by two respected professional trader/analysts, Matt Frailey and Bill Baker and well, we discussed A LOT. Get a closer look at: major risk factors, unprecedented happenings, patterns to watch and more.
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P.S. No one likes a braggart. But when you’ve got great news to share, who can keep it contained? Not me! I just have to tell you about some of my winning trades: Superior Well Services — up 18.10% in 1 week, Air T Inc. — up 39.33% in 30 days and Berry Petroleum — up 27.20% in 6 weeks! Don’t be outta the loop for the next great gains. Join me now.
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