Watching the Indicators

Every investor has a favorite indicator and the trader is no exception. But he's not betting the farm on it.
Author:
Publish date:

The problem is that the rest of the market is more interesting than tech! I was just commiserating with one of my emailers about how exciting

International Paper

(IP) - Get Report

is! Oh boy, what does that say about

Kana

(KANA)

and

Accrue

(ACRU)

? The banks and the drugs positively rock compared to

MicroStrategy

(MSTR) - Get Report

and

Micromuse

(MUSE)

which may soon be micro stocks if not microbreweries! (When is MicroStrategy going to stop issuing those 5% stock dividends every day! LOL!)

Everybody has his favorite indicator, the 200-day moving average of the

NDX

, the

volatility index (VIX), the oversold oscillator. I have my favorite, too, the

IBD Mutual Fund

index. I always use this because it has, over time, hugged the 200-day moving average. It is a classic barometer of the

momentum funds, the "Quints," the hot shots and the post-teen idols who can do no wrong. It had to drop about 9% to get there this morning.

As it probably has dropped another 5% already this morning, we are almost there. Hence the capital commitment.

But I am not going to bet the farm on this. Especially because we are not buying these kinds of high-octane stocks. Our biggest buys today have been

Amgen

(AMGN) - Get Report

and

Mead

(MEA)

! Now there's a pair!

So, an important indicator nears a short-term bottom. Stay tuned.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long International Paper, Mead and Amgen. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.