Volume could have been higher, but other than that it was a very ugly day. We not only failed to follow through on yesterday's strength but downtrended all day on better than 2 to 1 negative breadth. Gold was the leader, and oils managed to sneak slightly back into the green after an intraday dip, but it was technology stocks, semiconductors in particular, that caused the majority of the damage today.
Technology stocks have gone past the point of being ignored to being actively shunned. They have been declared dead and buried, and even the contrarians seem to hate them.
The technical picture is very ugly, the mood is negative, and there seems to be no positive news. Despite the overwhelming preponderance of negatives, or maybe because of them, I'm increasingly optimistic about a good playable bounce during earnings season. The psychology of this market is intriguing, and if nothing else it is likely to produce some volatility.
I am feeling so strongly that we are going to see a bounce that I increased my long exposure and loosened my stops. I'll be doing more positioning in the days ahead and am primed to become very aggressive at the first sign of strength. Have a good evening. I'll see you tomorrow.
P.S. Will you be there when Cramer makes his next move?
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Rev Shark Blog Style Makes the Trader 7/12/2006 12:48 PM EDT There's no single best approach to the market. Use the one that fits your personality.
Rev Shark Blog Bounce Fails, and Emotions Run High 7/12/2006 11:23 AM EDT Distrustful buyers step aside on the pullback, and we're seeing short-term volatility ahead of earnings.
Rev Shark Blog Shark's-Eye View on Technical Levels 7/12/2006 2:31 PM EDT Technical patterns can be predictive or serve to aid money-management schemes.
James "Rev Shark" De Porre is a self-taught trader who primarily trades for his own account from his home on Anna Maria Island, Fla. He is a member of the Michigan Bar Association and a former tax attorney and CPA. De Porre holds business and law degrees from the University of Michigan. He was formerly the host of America Online's The Shark Attack and presently operates SuperTraders.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here to send him an email.
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