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June 3, 2008
"A Tale of Two Markets"
As pessimism continues to inhibit investor confidence, the market continues the rally that it started in mid-March.
It has been a broad-based rally with the Dow, the S&P 500 and NASDAQ all showing gains. Since March 1, the S&P and the Dow have posted gains of 5.26% and 3.05% respectively, which are significant advances. Without taking away from those gains, they pale in comparison to what has been happening in the QQQQs. Since March 1, the NASDAQ 100 and QQQQ's are each up over 16% while the Internets are not far behind at 14.39% and the semiconductors trump both of them as it is up 19.31%!
Meanwhile, the backbone of most major rallies—the financials—have been lagging, with banks showing a 7.55% drop and brokers sagging 7.44% since the rally started.
With that, you can begin to see what I have been seeing. This has become a tale of two markets. The major markets have (so far) been piggybacking on the explosive gains in technology—which is exactly why we at Trending123 have been setting our focus squarely on the outperforming tech sector.
If you've been in the market awhile or even if you've only heard the stories, you may realize that this sounds awfully similar to 1998. Your eyes and ears are not deceiving you! Ten years ago we had an eerily similar tale between old economy stocks versus new economy stocks. And everyone was piling into tech! Granted, by the end of 2000 it didn't end up well but at the height of the tech bubble people were having a lot of fun!
The best advice I can give you is to focus on the fun you can have in the present instead of awaiting the top that we will eventually hit. The last thing you should do is to huddle on and watch from the sidelines while everyone else grabs a piece of the action!
I've been encouraging people to claim their stake in several stocks that I've recommended to my subscribers in the Trending123 portfolio that are poised for hefty breakouts. I expect many of them to perform as well as SOHU, which is currently up 89% for us.
Trading in a Channel
We're currently trading in a narrow channel between the zig and the zag. Yesterday, for example, was a pullback—a tiny retracement, if you will. Fear not, my friends, we can expect the uptrend to resume. There will be days when we almost hit the top but never quite do, as there will be days when we almost hit the bottom but never quite do. With all this back and forth, you may wonder how it is we expect to profit?
The most successful way to trade in these narrow parabolic uptrends, my Trending123 subscribers will tell you, is to focus on certain bullish sectors—say, the semiconductor chips index—and play the patterns. With the chip index's bullish trend reversal, for example, we should expect a little counter-trend pullback, perhaps unload a chip or two, then get more aggressive on the options side.
In this vertical parabolic rising channel it's best to play around in the middle. Let's be honest, as far as stocks go, I've picked over the market. The best way to make that party bonus money is to play options on our current stock holdings! It's the quickest way to fast profits so when we finally do reach the top, we won't get caught empty-handed.
As long as we're in stocks that are in good trends, then we'll be on the winning side of the options game. Do days like yesterday impede our performance? Hardly because there are ways to play the market on pullbacks.
Luckily, we have these market patterns in our sights and my Trending123 subscribers knows they can ride those reliabilities all the way to the bank…
Sincerely,
John Lansing
Trending123
P.S. We JUST took profits in Western Refining Inc. (WNR)! In only five short weeks we pocketed 45.90% gains! And in just under four months we "RACK"ed up gains of 59.27% in Rackable Systems, Inc. Don't miss our next round of gains… try Trending123 today!
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