Down Up Down

The market is forming a small range here. Technology is the new leadership theme for market and when the market correction is over the sector would be ideally placed for rally. The biggest area of concern is small caps. The speculative favorites are the ones which are showing weakness. That is on of the reason the 65 days ratio is stuck in negative territory.

In the short term the low volume holiday environment is bullish and with one of the indicator (stocks up 50% plus in month at 2) showing possible strength around, we will likely see strength. The market is ideal environment for day traders and short term traders. Nimbleness is the key.

With Nasdaq showing strength the post holiday action might offer some opportunities for light commitments in technology sector. Number of stocks in the sector are showing relative strength, but again most of them are in the large cap technology area. However if the overall market gets in to downswing, much of this pocket of momentum in technology sector will not be able to sustain its up move.

Swinging Market

The difficulty of trading a highly volatile and low volume move is demonstrated by last two days action. Market is swinging from one extreme to another extreme. 2% days or days with 300 plus 4% bullish or bearish breakouts are now a days a weekly phenomenon.

After day before yesterdays weakness a retest of high was what I was expecting , but not so fast. The market opened in green and stayed that way and accelerated post 2 p.m. on news of Fed Chairman's letter. Technology was leading the way. INTC the tech bellwether had 4% plus breakout yesterday. Expecting this strength to not carry through much and we are likely to have a pullback from this level.

Market is in confirmed correction phase as per Market Monitor. The entire idea behind Market Monitor is to avoid risky , volatile period and trade during safe, less volatile periods. All such periods are ultimately followed by less volatile more predictable periods. More than that the profit one can make during the safe period can compensate for staying out during such period.

Buyer Strike

There is absolutely no reason to buy at yesterdays level. The buyers who bought the bounce weeks ago in fact had incentive to sell in to Friday strength. So we had a day where market dived on low volume and pretty much kept going down. There were no dip buyers.

The last Friday action was spooky and unexpected. A rally when 65 days bull/bear ratio is negative is always a tactical play. Probability of it failing or retracing is always higher. The market has behaved as per that script so far.

Many headlines were attributing the sell off to Fed meting minutes. But I don't see that as consequential. The market was technically due for pullback and that is what happened. Low volume on this move makes it tricky and by end of week, we might rally back in to recent high.

Excitable gloom-mongers and Apocalypse

Gerard Baker in TimesOnline sums up nicely the last months action:

Was that it? Can it really be that the violent storm that broke over financial markets this month has turned out to have been no more than a bit of noisy huffing and puffing, an empty squall that blew over at the first sign of a response from central banks? Have the excitable gloom-mongers in the media and parts of the financial markets once again been denied their Apocalypse?

There have certainly been encouraging signs in the past few trading days that, over here in the United States, markets are reverting to a sort of normality. Equities have shaken off the doldrums.

After a strong week, the Dow Jones is 6 per cent above where it started the year and only 5 per cent off its July peak.

Having spent much of the past two weeks bouncing around like a bungee jumper on a thin rubber band, US Treasury markets look comparatively becalmed – the yield on three-month Treasury bills has bounced back up from its low of below 3 per cent last week to a more normal looking 4.5 per cent.

In the interbank credit market, anecdotal evidence suggests that the August panic is giving way to a late-summer calm. Those nasty rumours about imminent bank failures – featuring, in the UK, names such as Northern Rock and, in the US, Countrywide – have dried up. The weird things that were going on in the interbank market two weeks ago – with overnight lending rates shooting up and down in an unprecedented way – have disappeared.

It is tempting for those of us who never signed on to the “sky is falling” hysteria to crow at the sheer dullness of it all.

But in truth even I did not think that it could really blow over this quickly. What kind of a crisis was that?

Central banks step up their overnight repos, the Fed cuts a largely symbolic, as opposed to a real, interest rate and a few big-swinging, money-centre banks make a very public appearance at the discount window, and that is it?

Low volume pullback

• Market continues to be in confirmed correction phase as per 65 days ratio.
• Market had a pullback on extremely light volume. With most market participants on holiday, it will be tricky market. Most of the action will be choppy and on low volume.
  
• China stocks were the star, they have been on tear since the end of down move.
  
• Patience is the key at this stage. Markets will set themselves for sustainable move only post holiday.
  

Market Monitor

• Market had a surprisingly strong action on Friday. This week is holiday shortened week plus last week of summer, so thin volume will likely move the market higher in near term time frame.
• 65 days bullish/bearish ration continues to show market in confirmed downtrend. Rallies during such period have high probability of failure.
• In seven days market has rebounded vigorously and now is back within a few percent of recent high. Panics are always good buy opportunities as long as you do not get sucked in by all the doom and gloom talk during such panics.
• Stocks which were not dented by the panic are now starting to breakout, the early part of the bounce was driven by heavily shorted stocks. This bounce is also setting up some potential shorts, as number of stocks are consolidating near their low or rallying on low volume.
  

Pullback time

Last week panic buy set up is now witnessing profit taking. As we continue to be in confirmed downtrend as per 65 day bull-bear ratio, rallies like we witnessed in past couple of days will be more tactical plays. From this level we might test and retest the panic low.

Quantitative funds rebound

When the market hit turbulence, the quant funds lost money. Immediate reaction from clueless perma bears and everyone else was to pile on and claim doom and gloom for quant funds. Now news is percolating down that most of them have rebounded. Obviously you would not see any comment or mention about it from the usual suspects. Go back and see the news and blog coverage from just 10 days ago, there was no shortage of commentators writing obituaries of quants.

Goldman Sachs Group Inc.'s Global Equity Opportunities hedge fund rose 12 percent last week after the securities firm shored up the money-losing pool with $3 billion of cash, investors said.

Assets more than doubled to $7.5 billion as New York-based Goldman put $2 billion into the fund and raised $1 billion from investors including Maurice ``Hank'' Greenberg, the former chairman of American International Group Inc., and billionaire Eli Broad. The fund lost about 30 percent in early August as rising mortgage defaults caused stocks to tumble, upending the computer models its managers use to select trades.

Global Equity and other so-called quantitative funds rebounded as market turmoil eased, said the investors, who asked not to be identified because the Goldman fund's performance is private. James Simons's $29 billion Renaissance Institutional Equities Fund made up almost the entire 8.7 percent decline it suffered in the first eight trading days of August, investors said.

Keeping calm during market correction is very important. Most immediate analysis about market corrections is often faulty and no more than just fear mongering by perma bears. See my previous post about this here.

Rebound continues

The market is witnessing a textbook rebound after the last weeks panic and weakness. Yesterday was second 300 plus breakout day post the rebound. Now this sets us up for a possible partial retest or sideways move in next smaller time frame.

Stability zone

After reaching extreme levels of panic few days ago, in last two trading session there is a bit of stabilization. The move post Fed action was subdued, which is not a very encouraging sign. So most likely scenario would be attempted retesting of the recent lows.

As the market attempts to stabilize here, my vacation is getting over and after sitting in cash through the entire turmoil, I will be back in USA by midweek. Updates will be infrequent as I am currently in transit.

Shorts Nightmare

A textbook bounce

When panic takes over market and people start to lose their nerves, invariably the situation resolves to the upside in the short run. That is the nature of market and that is why most traders find it extremely difficult to trade such market. Bounce happen when everyone is shit scared to buy even a dollar worth of equity. Bargain hunters and veteran traders thrive on such situation.

Going by the emails and comments, one can make out how the emotions played during the day.I was fast asplep during the entire drama and was reading the report early morning. I suspect the intra day 65 day ratio reached extreme levels of 1600/200 yesterday by mid day. Many people were convinced there will be no bounce.

Those who kept their nerves caught the turn. This kind of game is for extremely nimble players. If you are asking what to buy now, you should just stand aside and watch the fun. You should have kept the buy list ready in anticipation much in advance. Such bounce in first phase invariably have the most oversold falling knives bouncing back.Heavily shorted stuff with extremely negative sentiment will bounce back 10% plus in a matter of hours in such bounce.

Such bounce have certain common characters: panic, series of bad news, bears dancing on the street, perma bears on first page of popular sites claiming what you have seen is just trailer and there is more downside ahead, break of some technical level like 200 day MA, high volume selling, and capitulation by many players. Traps in market are always at levels where majority will get trapped.

Expecting the bounce to play itself out for couple of days.

Stage set for a bounce

Few days of selling and panic has set up this market for a bounce in a near term time frame. Such bounce will be a oversold reflex bounce. Such bounce are only for short term nimble traders and does not indicate it is safe to jump right back in for long term traders. For nimble traders this will be a playable bounce of few days with good profit potential.

For the first time in this correction we are witnessing good selling and some washouts. The stocks down 25% plus in 65 days has quickly climbed to 1183 after making an attempt to stabilize at 800 area. The stocks up 100% plus is also witnessing deterioration. All these things are good as this can drive the market down to levels from where a multi month rally can develop.

Low volume

While the selling was widespread yesterday the volume was much lower. The 65 days ratio continues to be in negative territory. Volatility still remains high. If volatility decreases and we get in to slow bearish phase, it will be time to look at some longs which have not been dented by the selling so far.

I have been looking at stocks which have demonstrated superior relative strength during the sell off and there are many candidates which are just clinging to the top of their range. They also have excellent earnings and sales growth and they are just waiting for the volatility to decrease.

Economic Prosperity and Crime Rate

The Mumbai SENSEX is not the only thing going up out here in India. One side effect of the economic boom in India is dramatic rise in crime rates. For last couple of weeks I have been reading local newspapers and watching local TV and talking to lot of people, one thing is clear , there is dramatic increase in crime rate.

This week TV channels were running a story of a daring day light robbery caught on CCTV in a jewelery shop in Bangalore. The footage showed 5 armed men entering the shop and pushing the employees and customer in a room and coolly walking away with all the jewellery in the shop.Out here in Pune where I am currently based there has been over 23 jewellery shop robberies in last one year according to the local newspaper.

Residential robberies are also a major problem. Most home owners are scared of robberies and break ins. According to the weekend newspaper here most housing colonies are hiring armed guards and in many areas local citizens have set up voluntary night vigils to prevent crime.

Two popular items with robbers are mobile phones and laptops. There have been number of cases since I came here of motorist being stopped at gun point on isolated spots on highways and asked to handover mobile phone and laptop. The highway connecting the city to the IT parks out here seems to be easy target for criminals.

Traditionally Pune was a calm, sleepy city with extremely low crime rate. Greater economic prosperity has made crime a high paying enterprise.

Volatility and noise

Market continues to be volatile and the 65 days ratio continues to be firmly in negative territory. While the volatility continues the market is essentially at stalemate for last 6-7 days. It is neither going down or going up but on day to day basis there is lot of volatility. Because much of volatility is being driven by unwinding of positions or forced selling due to losses or margin calls, there is some amount of randomness to it. many moves in individual stocks are illogical on day to day basis. Some good quality stocks are going down and some junk is rising. Selling to raise cash is concentrated in good quality stocks, while short covering is concentrated in junk stocks. That is creating a tricky market for traders with long term horizon.

While the market is volatile, there is lot of noise in the environment. There are number of views, editorials and other opinions and judgments being passed around by various market participants and market observers. Much of it is misinformation or propaganda. This is all noise. It will take six months or year for us to understand what actually happened. What you read currently is mostly speculation and gossip by motivated players. Much of what is being passed on as erudite commentary will prove to be far from the actual truth once the details about the crisis and panic come out. Remember all you are reading as of now is from the outsiders perspective. The insiders who really were in thick of the things and who really managed and gained or lost billions have not yet spoken.

The outsiders who are commenting are flying lot of kites. Some are failed hedge fund managers or marginal players in the industry , who never managed large pools of money, they are obviously tooting their drum. Some are publicity whores, who are constant presence on CNBC, WSJ, Barron's or Bloomberg and pretend to offer erudite opinion on every topic. Some are perma bears who are gloating because after predicting doom and gloom for several years day in and day out, finally for few hours they are partially right.

Lot of this noise is self contradictory and not based on logic. Lot of it is pure emotion and jealousy. From a trading point of view all such noise is of no use. The markets were due for correction. They are correcting currently. There have been corrections before this in this rally. But overall there have been higher highs and market has kept its uptrend intact. So as far as I am concerned sticking to methodology is more critical than getting swayed by noise.

Search For Stocks With Fattest Profit Growth

Today Investor's Business Daily has a piece on stock selection and importance of earnings and earnings acceleration in stock selection process.

What determines the value of a stock? Earnings, quarterly and annually. Current results and profit expected a year from now. These are the driving forces behind a stock.

True, the CAN SLIM model tells us to look for a recognizable base pattern, and to gauge volume against price action, and to track how many high-quality funds own the stock.

Watch that 10-week moving average. Are there too many stock splits? What is so special about Baidu's (BIDU) product that would make its stock fly?

But the bottom line is the bottom line.

Here's what you want to see in a company's profit record. Quarterly earnings gains of at least 25% over its year-earlier comparison. The higher the better. You don't want to see any profit shrinkage in recent quarters.

Slightly below-par results may be acceptable if they're moving in the right direction. For instance, a 20% gain in quarterly earnings doesn't look so hot.

But if it comes after a string of results that look like 3%, 8% and 15%, then the company is accelerating its earnings growth. If earnings growth is moving in the right direction, often the stock's price will follow.

Ideally, you want both fat numbers and acceleration. But be warned, that's a tall order.

Now look at annual earnings. The most recent full-year profit also should be at least 25% higher than the previous year. The three-year earnings growth average should come in at no less than 20%.

Which direction are the annual profit growth rates going? Just like the quarterly results, you want to see improvement from year to year. Any significant year-to-year earnings decline would be a big problem for a stock.

Too often, a stock that looks like a leader shows a big flaw in its annual profit growth.

Such a stock still could have great quarterly numbers, but one can easily end up buying a high-profile winner just as it's cooling off. Keep that big picture in mind.

Market corrections like the one we are currently witnessing are good time to focus on such stocks. These stocks withstand such corrections. Even if they pullback, they do it reluctantly. Most of the chart patterns which IBD talks about form during such market correction. When the weight of the market correction is lifted from such stocks, they just bolt out.

More Volatility

Downside moves are always more volatile. Volatile behaviors is even more pronounced during turns. Clustered wide range days are very common during market turns. So we have yet another volatile day with 750 stocks down 4% plus. In addition there was a hint of panic in the market.

Panic and fear is very good for markets. Panicky markets can turn on a dime. Some years back I had documented , every single 10% plus correction in market for last 30 to 40 years. I still have those notes in my files somewhere in USA. If you study all the panicky disruptive moves in market during various crisis you will see such moves resolve to upside with great force. Most panicky moves are followed by ferocious rallies, those rallies retest their bottom but after many weeks or months. Protracted downturns are less volatile and have systematic distribution with slow methodical selling.

From a more trading dynamics term, in my opinion and observation , in times of panic stocks go down due to absence of bids. The absence of bids forces sellers to aggressively bring down offers. You will realize this if you try and close a long position in panicky market. Once the panic subsides normal bid-ask behavior returns and hence the ferocious rallies.

As I have said before any market turn will be a process. If you want to play safe, best option is to wait for 65 days ratio to turn. When that ratio is in green all breakout based strategies have very high probability of success. In spite of the down move today, the 1000 plus breakout day still holds and it is time to anticipate turn to upside rather than chase the move to downside. For all the emotions around this move, this is just a 10% correction so far after multi year up move. Ignore the news look at the Market Monitor numbers.


Worst thing you can do during market correction is to listen to perma bears . All bearish scenarios and bearish propaganda sounds very logical and intelligent during market corrections. But the biggest strategic error a speculator can make is to get caught in bearish web. If you do that you will miss on next big rally. You should be tactically bearish, strategically bullish.

100 years plus of history of market clearly demonstrates triumph of optimism over pessimism. In few months time all this Armageddon talk will be just a blip. Perma bears are fools and idiots who do not understand markets and the markets statistical tendencies or want to ignore it to create a cult. Fools and idiots seldom make money in the market.

Current market is ideal for day traders and nimble swing traders. Alternatively one can use such period for R&D. The best thing to do during such time is to take a vacation, sit in cash and enjoy the fun and games from sidelines. Timing your vacation during market corrections is always good strategy.

Crazy action

Last night when I went to bed it was around 1 PM in USA and I was looking at some really crazy numbers on all scans(India is around 10 hours time difference, it is 7 A.M. here now as I write this). I thought the data is corrupted. Several stocks were flying. The small caps were melting up like never before.

First thing in the morning I triple checked the numbers.
1063

1063 breakouts on upside within few days of market taking a severe beating and after 2 days of back to back 300 plus upside breakout days is really crazy action. Looks like massive asset allocation or re balancing trade. That seems to have squeezed shorts mightily.

This is pure delight for day traders.

A powerful surge

As of now there are 110 stocks in the Episodic Pivots scan. If this strength holds by end of day, you are looking at a very powerful surge. Such high readings in the past have been associated with market bottoms.

ABBI,Abraxis Bioscience Inc (Google  Yahoo  Earnings  Chart) 
ABK,Ambac Financial Group (Google  Yahoo  Earnings  Chart) 
ABR,Arbor Realty Trust Inc (Google  Yahoo  Earnings  Chart) 
AHR,Anthracite Capital Inc (Google  Yahoo  Earnings  Chart) 
ALAB,Alabama National Bancorp (Google  Yahoo  Earnings  Chart) 
ALJ,Alon USA Energy Inc (Google  Yahoo  Earnings  Chart) 
AMSC,American Superconductor (Google  Yahoo  Earnings  Chart) 
ANH,Anworth Mtg Asset Corp (Google  Yahoo  Earnings  Chart) 
ASVI,A.S.V. Inc (Google  Yahoo  Earnings  Chart) 
AUTH,Authentec Inc (Google  Yahoo  Earnings  Chart) 
AVD,American Vanguard Corp (Google  Yahoo  Earnings  Chart) 
BARE,Bare Escentuals Inc (Google  Yahoo  Earnings  Chart) 
BBX,Bankatlantic Bancorp A (Google  Yahoo  Earnings  Chart) 
BIDU,Baidu.com Inc (Google  Yahoo  Earnings  Chart) 
BJRI,BJ's Restaurants Inc (Google  Yahoo  Earnings  Chart) 
BLKB,Blackbaud Inc (Google  Yahoo  Earnings  Chart) 
BONT,Bon-Ton Stores Inc (Google  Yahoo  Earnings  Chart) 
BOW,Bowater Inc (Google  Yahoo  Earnings  Chart) 
BRCD,Brocade Communications (Google  Yahoo  Earnings  Chart) 
BSC,Bear Stearns Companies (Google  Yahoo  Earnings  Chart) 
CCRN,Cross Country Healthcare (Google  Yahoo  Earnings  Chart) 
CGNX,Cognex Corp (Google  Yahoo  Earnings  Chart) 
CKXE,CKX Inc (Google  Yahoo  Earnings  Chart) 
CMRG,Casual Male Retail Grp Inc (Google  Yahoo  Earnings  Chart) 
COCO,Corinthian Colleges Inc (Google  Yahoo  Earnings  Chart) 
CPHD,Cepheid (Google  Yahoo  Earnings  Chart) 
CRZ,Crystal River Capital Inc (Google  Yahoo  Earnings  Chart) 
CRZO,Carrizo Oil & Gas Inc (Google  Yahoo  Earnings  Chart) 
CSGP,Costar Group Inc (Google  Yahoo  Earnings  Chart) 
CVBF,Cvb Financial Corp (Google  Yahoo  Earnings  Chart) 
CYBX,Cyberonics Inc (Google  Yahoo  Earnings  Chart) 
DFR,Deerfield Triarc Capital Corp (Google  Yahoo  Earnings  Chart) 
DXCM,DexCom Inc (Google  Yahoo  Earnings  Chart) 
ENER,Energy Conversn Devices (Google  Yahoo  Earnings  Chart) 
ENOC,Enernoc Inc (Google  Yahoo  Earnings  Chart) 
ESLR,Evergreen Solar Inc (Google  Yahoo  Earnings  Chart) 
FCF,First Commonwealth Finl (Google  Yahoo  Earnings  Chart) 
FLOW,Flow International Corp (Google  Yahoo  Earnings  Chart) 
GAIA,Gaiam Incorporated Cl A (Google  Yahoo  Earnings  Chart) 
GLDN,Golden Telecom Inc (Google  Yahoo  Earnings  Chart) 
GMCR,Green Mountain Coffee Roasters (Google  Yahoo  Earnings  Chart) 
GS,Goldman Sachs Group Inc (Google  Yahoo  Earnings  Chart) 
HANS,Hansen Natural Corp (Google  Yahoo  Earnings  Chart) 
HHGP,Hudson Highland Grp Inc W/i (Google  Yahoo  Earnings  Chart) 
HNR,Harvest Natural Resources Inc (Google  Yahoo  Earnings  Chart) 
HOV,Hovnanian Enterprises A (Google  Yahoo  Earnings  Chart) 
HSTX,Harris Stratex Network (Google  Yahoo  Earnings  Chart) 
ICOC,Ico Inc (Google  Yahoo  Earnings  Chart) 
ICTG,Ict Group Inc (Google  Yahoo  Earnings  Chart) 
ID,L-1 Identity Solutions Inc (Google  Yahoo  Earnings  Chart) 
IDA,Idacorp Inc Holding Co (Google  Yahoo  Earnings  Chart) 
IGTE,Igate Corporaion (Google  Yahoo  Earnings  Chart) 
IMB,Indymac Bancorp Inc (Google  Yahoo  Earnings  Chart) 
INSU,Insituform Technols Cl A (Google  Yahoo  Earnings  Chart) 
IRBT,iRobot Corp (Google  Yahoo  Earnings  Chart) 
ISPH,Inspire Pharmaceuticals (Google  Yahoo  Earnings  Chart) 
ISSC,Innovative Solutions (Google  Yahoo  Earnings  Chart) 
KNOL,Knology Inc (Google  Yahoo  Earnings  Chart) 
KNOT,The Knot Inc (Google  Yahoo  Earnings  Chart) 
LAB,Labranche & Co Inc (Google  Yahoo  Earnings  Chart) 
LF,Leapfrog Enterprises Inc (Google  Yahoo  Earnings  Chart) 
LGND,Ligand Pharmaceuticals B (Google  Yahoo  Earnings  Chart) 
LLNW,Limelight Network Inc (Google  Yahoo  Earnings  Chart) 
LNN,Lindsay Manufacturing Co (Google  Yahoo  Earnings  Chart) 
LXU,Lsb Industries Inc (Google  Yahoo  Earnings  Chart) 
LYV,Live Nation Inc (Google  Yahoo  Earnings  Chart) 
MATW,Matthews Internat Cp Cla (Google  Yahoo  Earnings  Chart) 
MRCY,Mercury Computer Systems (Google  Yahoo  Earnings  Chart) 
MSO,Martha Stewart Lvg Omni (Google  Yahoo  Earnings  Chart) 
MTG,Mgic Investments Corp (Google  Yahoo  Earnings  Chart) 
MTH,Meritage Homes Corp (Google  Yahoo  Earnings  Chart) 
MTMD,Microtek Medical Hldgs Inc (Google  Yahoo  Earnings  Chart) 
MXWL,Maxwell Technologies Inc (Google  Yahoo  Earnings  Chart) 
NEXC,Nexcen Brands Inc (Google  Yahoo  Earnings  Chart) 
NM,Navios Maritime Holdings Inc (Google  Yahoo  Earnings  Chart) 
NRF,Northstar Realty Finance Corp (Google  Yahoo  Earnings  Chart) 
NYNY,Empire Resorts Inc (Google  Yahoo  Earnings  Chart) 
OSIS,Osi Systems Inc (Google  Yahoo  Earnings  Chart) 
PCLN,Priceline.com Inc (Google  Yahoo  Earnings  Chart) 
PCR,Perini Corp (Google  Yahoo  Earnings  Chart) 
PLXT,Plx Technology Inc (Google  Yahoo  Earnings  Chart) 
PSEC,Prospect Street Energy Corp (Google  Yahoo  Earnings  Chart) 
PSEM,Pericom Semiconductor Cp (Google  Yahoo  Earnings  Chart) 
PSPT,Peoplesupport Inc (Google  Yahoo  Earnings  Chart) 
RAH,Ralcorp Holdings Inc (Google  Yahoo  Earnings  Chart) 
RIGL,Rigel Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart) 
RMIX,U.S. Concrete Inc (Google  Yahoo  Earnings  Chart) 
RSO,Resource Capital (Google  Yahoo  Earnings  Chart) 
RSYS,Radisys Corporation (Google  Yahoo  Earnings  Chart) 
SBKC,Security Bank Corp Ga (Google  Yahoo  Earnings  Chart) 
SKY,Skyline Corp (Google  Yahoo  Earnings  Chart) 
SNMX,Senomyx Inc (Google  Yahoo  Earnings  Chart) 
SOLF,Solarfun Power Holdings Co Ltd (Google  Yahoo  Earnings  Chart) 
SPAR,Spartan Motors Inc (Google  Yahoo  Earnings  Chart) 
SPWR,SunPower Corp (Google  Yahoo  Earnings  Chart) 
SUPX,Supertex Inc (Google  Yahoo  Earnings  Chart) 
SWC,Stillwater Mining Co (Google  Yahoo  Earnings  Chart) 
SWSI,Superior Well Services Inc (Google  Yahoo  Earnings  Chart) 
SYNT,Syntel Inc (Google  Yahoo  Earnings  Chart) 
TRGL,Toreador Resources Corp (Google  Yahoo  Earnings  Chart) 
TWTC,Time Warner Telecom Inc (Google  Yahoo  Earnings  Chart) 
TXCO,Txco Resources Inc (Google  Yahoo  Earnings  Chart) 
UFPT,Ufp Technologies Inc (Google  Yahoo  Earnings  Chart) 
VCI,Valassis Communications (Google  Yahoo  Earnings  Chart) 
VLTR,Volterra Semiconductor Corp (Google  Yahoo  Earnings  Chart) 
WAL,Western Alliance Bancorporation (Google  Yahoo  Earnings  Chart) 
WCI,Wci Communities (Google  Yahoo  Earnings  Chart) 
WMG,Warner Music Group Corp (Google  Yahoo  Earnings  Chart) 
WRES,Warren Resources Inc (Google  Yahoo  Earnings  Chart) 
YGE,Yingli Green Energy Hlds Co (Google  Yahoo  Earnings  Chart) 

Market Monitor

• There are lot of encouraging signs. back to back 300 plus days on 4% breakout indicate buyers as well as short sellers active in the market. Part of the move looks like short squeeze, part of it bargain hunting.
• Volatility is a big problem, but if this positive trend continues, it should subside in few weeks.
• For aggressive traders going long here is not a problem. For more cautious traders another few days would offer clearer picture.
• Overall the process of bottom formation has started and there are lot of stocks bolting out of gate. The Episodic Pivot list had so many good buy opportunities yesterday.
  

Relative Strength

These stocks from the stocks up 25% plus in last 65 days list have not been dented by the correction. Some of these started rallying during the correction and are likely leader for next phase of the rally.

AAON,Aaon Inc (Google Yahoo Earnings Chart)
AAPL,Apple Inc (Google Yahoo Earnings Chart)
ACH,Aluminum Corp China (Google Yahoo Earnings Chart)
ACO,Amcol International Corp (Google Yahoo Earnings Chart)
AEZ,American Oil & Gas Inc (Google Yahoo Earnings Chart)
AIRM,Air Methods Corp (Google Yahoo Earnings Chart)
AIXD,Access Integrated Tech Inc (Google Yahoo Earnings Chart)
AL,Alcan Inc. (Google Yahoo Earnings Chart)
ALNY,Alnylam Pharmaceuticals (Google Yahoo Earnings Chart)
ALVR,Alvarion Ltd (Google Yahoo Earnings Chart)
ALXN,Alexion Pharmaceuticals (Google Yahoo Earnings Chart)
AMAC,American Medical Alert (Google Yahoo Earnings Chart)
AMN,Ameron Internat Corp (Google Yahoo Earnings Chart)
AMSC,American Superconductor (Google Yahoo Earnings Chart)
AMZN,Amazon.Com Inc (Google Yahoo Earnings Chart)
ANAD,Anadigics Inc (Google Yahoo Earnings Chart)
ANIK,Anika Therapeutics Inc (Google Yahoo Earnings Chart)
ANW,Aegean Marine Petroleum Network Inc (Google Yahoo Earnings Chart)
APOL,Apollo Group Inc Cl A (Google Yahoo Earnings Chart)
APTM,Aptimus Inc (Google Yahoo Earnings Chart)
AQNT,Aquantive Inc (Google Yahoo Earnings Chart)
ARJ,Arch Chemicals Inc (Google Yahoo Earnings Chart)
ARRO,Arrow International Inc (Google Yahoo Earnings Chart)
ARTC,Arthrocare Corp (Google Yahoo Earnings Chart)
ARUN,Aruba Networks Inc (Google Yahoo Earnings Chart)
ARWR,Arrowhead Research Corp (Google Yahoo Earnings Chart)
ASTE,Astec Industries (Google Yahoo Earnings Chart)
ASYS,Amtech Systems Inc (Google Yahoo Earnings Chart)
ATRO,Astronics Corp (Google Yahoo Earnings Chart)
AUXL,Auxilium Pharmaceuticals Inc (Google Yahoo Earnings Chart)
AV,Avaya Inc (Google Yahoo Earnings Chart)
AVCI,Avici Systems (Google Yahoo Earnings Chart)
AXYS,Axsys Technologies (Google Yahoo Earnings Chart)
BCRX,Biocryst Pharmaceuticals (Google Yahoo Earnings Chart)
BCSI,Blue Coat Systems Inc (Google Yahoo Earnings Chart)
BG,Bunge Ltd (Google Yahoo Earnings Chart)
BIDU,Baidu.com Inc (Google Yahoo Earnings Chart)
BIOS,BioScrip Inc (Google Yahoo Earnings Chart)
BIVN,Bioenvision Inc (Google Yahoo Earnings Chart)
BLTI,Biolase Technology Inc (Google Yahoo Earnings Chart)
BMI,Badger Meter Inc (Google Yahoo Earnings Chart)
BOOM,Dynamic Materials Corp (Google Yahoo Earnings Chart)
BPHX,Bluephoenix Solutions Ltd (Google Yahoo Earnings Chart)
BRLC,Syntax-Brillian Corp (Google Yahoo Earnings Chart)
BRR,ACR Group Inc (Google Yahoo Earnings Chart)
BSQR,bSquare Corp (Google Yahoo Earnings Chart)
BTM,Brasil Telecom S.a. (Google Yahoo Earnings Chart)
BWTR,Basin Water Inc (Google Yahoo Earnings Chart)
CAF,Morgan Stanley China A Share Fund` Inc (Google Yahoo Earnings Chart)
CALM,Cal-Maine Foods Inc (Google Yahoo Earnings Chart)
CAVM,Cavium Networks Inc (Google Yahoo Earnings Chart)
CCC,Calgon Carbon Corp (Google Yahoo Earnings Chart)
CCMP,Cabot Microelectronics (Google Yahoo Earnings Chart)
CCOI,Cogent Communications Group Inc (Google Yahoo Earnings Chart)
CEO,CNOOC Ltd Adr (Google Yahoo Earnings Chart)
CF,CF Industries Holdings Inc (Google Yahoo Earnings Chart)
CFI,Culp Inc (Google Yahoo Earnings Chart)
CFSG,China Fire & Security Group` Inc (Google Yahoo Earnings Chart)
CHIP,Verichip Corporation (Google Yahoo Earnings Chart)
CIB,Bancolombia Sa (Google Yahoo Earnings Chart)
CKFR,Checkfree Corporation (Google Yahoo Earnings Chart)
CKSW,Clicksoftware Technlgies (Google Yahoo Earnings Chart)
CLN,Celsion Corp (Google Yahoo Earnings Chart)
CLRK,Color Kinetics (Google Yahoo Earnings Chart)
CLWR,Clearwire Corp Cl A (Google Yahoo Earnings Chart)
CMED,China Medical Technologies Inc (Google Yahoo Earnings Chart)
CMG,Chipotle Mexican Grill (Google Yahoo Earnings Chart)
CMG.B,Chipotle Mexican Grill Inc Class B (Google Yahoo Earnings Chart)
CMI,Cummins Inc (Google Yahoo Earnings Chart)
CNQR,Concur Technologies Inc (Google Yahoo Earnings Chart)
COMV,Comverge Inc (Google Yahoo Earnings Chart)
CPHD,Cepheid (Google Yahoo Earnings Chart)
CREE,Cree Incorporated (Google Yahoo Earnings Chart)
CRNT,Ceragon Networks Ltd (Google Yahoo Earnings Chart)
CROX,Crocs Inc (Google Yahoo Earnings Chart)
CTCI,Ct Communications Inc (Google Yahoo Earnings Chart)
CUB,Cubic Corp (Google Yahoo Earnings Chart)
CUP,Peru Copper Inc (Google Yahoo Earnings Chart)
CVGW,Calavo Growers Inc (Google Yahoo Earnings Chart)
CWCO,Consolidtd Water Co Inc (Google Yahoo Earnings Chart)
CYPB,Cypress Bioscience Inc (Google Yahoo Earnings Chart)
CYTC,Cytyc Corporation (Google Yahoo Earnings Chart)
DCEL,Dobson Communications A (Google Yahoo Earnings Chart)
DCP,DynCorp International Inc (Google Yahoo Earnings Chart)
DECK,Deckers Outdoor Corp (Google Yahoo Earnings Chart)
DJO,DJO Inc (Google Yahoo Earnings Chart)
DNDN,Dendreon Corporation (Google Yahoo Earnings Chart)
DRYS,Dryships (Google Yahoo Earnings Chart)
DWSN,Dawson Geophysical Co (Google Yahoo Earnings Chart)
DYII,Dynacq Healthcare Inc (Google Yahoo Earnings Chart)
ECLP,Eclipsys Corporation (Google Yahoo Earnings Chart)
EFD,Efunds Corporation (Google Yahoo Earnings Chart)
EGOV,Nic Inc (Google Yahoo Earnings Chart)
ELN,Elan Corp Plc (Google Yahoo Earnings Chart)
ELON,Echelon Corporation (Google Yahoo Earnings Chart)
EMKR,Emcore Corporation (Google Yahoo Earnings Chart)
ENG,Englobal Corp (Google Yahoo Earnings Chart)
ERES,Eresearch Tech (Google Yahoo Earnings Chart)
ESMC,Escalon Medical Corp (Google Yahoo Earnings Chart)
ETQ,Corriente Resources Inc (Google Yahoo Earnings Chart)
EVST,Everlast Worldwide Inc (Google Yahoo Earnings Chart)
EXM,Excel Maritime Carriers (Google Yahoo Earnings Chart)
FACE,Physicians Formula Holdings (Google Yahoo Earnings Chart)
FARO,Faro Technologies Inc (Google Yahoo Earnings Chart)
FCN,Fti Consulting Inc (Google Yahoo Earnings Chart)
FCSX,FCStone Group` Inc. (Google Yahoo Earnings Chart)
FREE,FreeSeas Inc (Google Yahoo Earnings Chart)
FRM,Furmanite Corp (Google Yahoo Earnings Chart)
FSLR,First Solar Inc (Google Yahoo Earnings Chart)
FSTR,L.B. Foster Co Cl A (Google Yahoo Earnings Chart)
FTI,Fmc Technologies (Google Yahoo Earnings Chart)
FTK,Flotek Industries Inc (Google Yahoo Earnings Chart)
FWLT,Foster Wheeler Ltd (Google Yahoo Earnings Chart)
GENT,Gentium SpA (Google Yahoo Earnings Chart)
GES,Guess? Incorporated (Google Yahoo Earnings Chart)
GGBM,Gigabeam Corp (Google Yahoo Earnings Chart)
GGL,Goodman Global Inc (Google Yahoo Earnings Chart)
GHDX,Genomic Health Inc (Google Yahoo Earnings Chart)
GHM,Graham Corp (Google Yahoo Earnings Chart)
GLDN,Golden Telecom Inc (Google Yahoo Earnings Chart)
GMCR,Green Mountain Coffee Roasters (Google Yahoo Earnings Chart)
GMST,Gemstar-tv Guide Intl (Google Yahoo Earnings Chart)
GNK,Genco Shipping & Trading Ltd (Google Yahoo Earnings Chart)
GPRO,Gen Probe Inc (Google Yahoo Earnings Chart)
GRMN,Garmin Ltd (Google Yahoo Earnings Chart)
GTI,Graftech Intl Ltd (Google Yahoo Earnings Chart)
GTLS,Chart Industries Inc (Google Yahoo Earnings Chart)
GTRC,Guitar Center Inc (Google Yahoo Earnings Chart)
HEM,Hemosense Inc (Google Yahoo Earnings Chart)
HIFN,Hi/Fn Inc (Google Yahoo Earnings Chart)
HLT,Hilton Hotels Corp (Google Yahoo Earnings Chart)
HMSY,Hms Holdings Corp (Google Yahoo Earnings Chart)
HMX,Hartmarx Corp (Google Yahoo Earnings Chart)
HOKU,Hoku Scientific Inc (Google Yahoo Earnings Chart)
HUN,Huntsman (Google Yahoo Earnings Chart)
IAG,Iamgold Corp (Google Yahoo Earnings Chart)
ICA,Empresas ICA Sociedad Controladora SA de CV (Google Yahoo Earnings Chart)
ICOC,Ico Inc (Google Yahoo Earnings Chart)
IDXX,Idexx Laboratories Inc (Google Yahoo Earnings Chart)
ILMN,Illumina Inc (Google Yahoo Earnings Chart)
IMMR,Immersion Corporation (Google Yahoo Earnings Chart)
IOC,Interoil Corporation (Google Yahoo Earnings Chart)
ISRG,Intuitive Surgical Inc (Google Yahoo Earnings Chart)
ITRI,Itron Inc (Google Yahoo Earnings Chart)
IVC,Invacare Corp (Google Yahoo Earnings Chart)
JASO,Ja Solar Hldgs Co Ads (Google Yahoo Earnings Chart)
JNPR,Juniper Networks (Google Yahoo Earnings Chart)
JRJC,China Finance Online Co Ltd (Google Yahoo Earnings Chart)
KAMN,Kaman Corp (Google Yahoo Earnings Chart)
KBR,KBR Inc. (Google Yahoo Earnings Chart)
KCI,Kinetic Concepts Inc (Google Yahoo Earnings Chart)
KEYS,Keystone Automotive Ind (Google Yahoo Earnings Chart)
KMGB,Kmg Chemicals Inc. (Google Yahoo Earnings Chart)
KOMG,Komag Inc (Google Yahoo Earnings Chart)
KTEC,Key Technology Inc (Google Yahoo Earnings Chart)
LDSH,Ladish Co Inc (Google Yahoo Earnings Chart)
LEND,Accredited Home Lenders (Google Yahoo Earnings Chart)
LFC,China Life Insurance Company (Google Yahoo Earnings Chart)
LKQX,LKQ Corp (Google Yahoo Earnings Chart)
LNN,Lindsay Manufacturing Co (Google Yahoo Earnings Chart)
LOCM,Local.Com Corp (Google Yahoo Earnings Chart)
LPHI,Life Partners Inc (Google Yahoo Earnings Chart)
LUK,Leucadia National Corp (Google Yahoo Earnings Chart)
LVS,Las Vegas Sands (Google Yahoo Earnings Chart)
LWAY,Lifeway Foods Inc (Google Yahoo Earnings Chart)
LYO,Lyondell Chemical Co (Google Yahoo Earnings Chart)
MALL,Pc Mall Inc (Google Yahoo Earnings Chart)
MATK,Martek Biosciences Corp (Google Yahoo Earnings Chart)
MCF,Contango Oil & Gas (Google Yahoo Earnings Chart)
MCX,Mc Shipping Inc (Google Yahoo Earnings Chart)
MDCA,MDC Partners Inc Class A (Google Yahoo Earnings Chart)
MDR,Mcdermott Internat Inc (Google Yahoo Earnings Chart)
MEA,Metalico Inc (Google Yahoo Earnings Chart)
MEK,Metretek Technology Inc (Google Yahoo Earnings Chart)
MFRI,Mfri Inc (Google Yahoo Earnings Chart)
MHJ,Man Sang Holdings Inc (Google Yahoo Earnings Chart)
MIVA,MIVA Inc (Google Yahoo Earnings Chart)
MMA,Municipal Mtg & Equity (Google Yahoo Earnings Chart)
MORN,Morningstar Inc (Google Yahoo Earnings Chart)
MOS,Mosaic Company (Google Yahoo Earnings Chart)
MPWR,Monolithic Power Systems (Google Yahoo Earnings Chart)
MR,Mindray Medical Intl Ltd (Google Yahoo Earnings Chart)
NAK,Northern Dynasty Minerals Ltd (Google Yahoo Earnings Chart)
NANO,Nanometrics Inc (Google Yahoo Earnings Chart)
NATH,Nathan's Famous Inc (Google Yahoo Earnings Chart)
NATL,National Interstate Corp (Google Yahoo Earnings Chart)
NAVI,Navisite Incorporated (Google Yahoo Earnings Chart)
NHWK,NightHawk Radiology Holdings Inc (Google Yahoo Earnings Chart)
NILE,Blue Nile (Google Yahoo Earnings Chart)
NOV,National Oilwell Varco Inc (Google Yahoo Earnings Chart)
NRMX,Neurochem (Google Yahoo Earnings Chart)
NTCT,Netscout Systems Inc (Google Yahoo Earnings Chart)
NVDA,NVIDIA Corporation (Google Yahoo Earnings Chart)
NVT,Navteq Corp (Google Yahoo Earnings Chart)
NWRE,Neoware Inc (Google Yahoo Earnings Chart)
OCAS,Ohio Casualty Corp (Google Yahoo Earnings Chart)
OCLS,Oculus Innovative Sciences Inc (Google Yahoo Earnings Chart)
OI,Owens Illinois Inc (Google Yahoo Earnings Chart)
OII,Oceaneering Internat (Google Yahoo Earnings Chart)
OIIM,O2Micro International Ltd (Google Yahoo Earnings Chart)
OMTR,Omniture Inc (Google Yahoo Earnings Chart)
OPTN,Option Care Inc (Google Yahoo Earnings Chart)
OSUR,Orasure Technologies Inc (Google Yahoo Earnings Chart)
PBR,Petroleo Brasileiro S.A. Petrobras ADS (Google Yahoo Earnings Chart)
PCP,Precision Castparts Corp (Google Yahoo Earnings Chart)
PENX,Penford Corp (Google Yahoo Earnings Chart)
PETS,PetMed Express Inc (Google Yahoo Earnings Chart)
PHRM,Pharmion Corp (Google Yahoo Earnings Chart)
PKOH,Park-Ohio Holdings Corp (Google Yahoo Earnings Chart)
PKX,Posco (Google Yahoo Earnings Chart)
PLX,Protalix Biotherapeutic (Google Yahoo Earnings Chart)
POT,Potash Cp Saskatchewan (Google Yahoo Earnings Chart)
PRTS,U.S. Auto Parts Network (Google Yahoo Earnings Chart)
PRXI,Premier Exhibitions Inc (Google Yahoo Earnings Chart)
PSMT,Pricesmart Inc (Google Yahoo Earnings Chart)
PTEC,Phoenix Technologies Ltd (Google Yahoo Earnings Chart)
PVG,Penn Virginia GP Holdings (Google Yahoo Earnings Chart)
PYX,Playtex Products Inc (Google Yahoo Earnings Chart)
QEPC,Q.E.P. Co Inc (Google Yahoo Earnings Chart)
RAVN,Raven Industries Inc (Google Yahoo Earnings Chart)
RCCC,Rural Cellular Corp (Google Yahoo Earnings Chart)
RDNT,RadNet Inc. (Google Yahoo Earnings Chart)
REFR,Research Frontiers Inc (Google Yahoo Earnings Chart)
RGR,Sturm Ruger & Co Inc (Google Yahoo Earnings Chart)
RIMM,Research In Motion Ltd (Google Yahoo Earnings Chart)
RMKR,Rainmaker Systems Inc (Google Yahoo Earnings Chart)
RPB,Republic Property Trust (Google Yahoo Earnings Chart)
RRST,RRsat Glo Comm Network Ltd Ord (Google Yahoo Earnings Chart)
RUSHA,Rush Enterprises Inc Cl A (Google Yahoo Earnings Chart)
RVBD,Riverbed Technologies Inc (Google Yahoo Earnings Chart)
RZ,Raser Technologies Inc (Google Yahoo Earnings Chart)
SA,Seabridge Gold Inc (Google Yahoo Earnings Chart)
SAM,Boston Beer Co (Google Yahoo Earnings Chart)
SBEI,Sbe Inc (Google Yahoo Earnings Chart)
SBS,Companhia De Saneamento B (Google Yahoo Earnings Chart)
SFLY,Shutterfly Inc (Google Yahoo Earnings Chart)
SGMO,Sangamo Biosciences Inc (Google Yahoo Earnings Chart)
SGR,Shaw Group Inc (The) (Google Yahoo Earnings Chart)
SIF,Sifco Industries Inc (Google Yahoo Earnings Chart)
SIGM,Sigma Designs Inc (Google Yahoo Earnings Chart)
SLRY,Salary.com` Inc. (Google Yahoo Earnings Chart)
SMDI,Sirenza Microdevices (Google Yahoo Earnings Chart)
SNCR,Synchronoss Technologies Inc (Google Yahoo Earnings Chart)
SNDK,Sandisk Corp (Google Yahoo Earnings Chart)
SNHY,Sun Hydraulics Corp (Google Yahoo Earnings Chart)
SOHU,Sohu.Com Inc (Google Yahoo Earnings Chart)
SPNC,Spectranetics Corp. The (Google Yahoo Earnings Chart)
SPWR,SunPower Corp (Google Yahoo Earnings Chart)
SQNM,Sequenom Inc (Google Yahoo Earnings Chart)
SRDX,Surmodics Inc (Google Yahoo Earnings Chart)
SRR,Stride Rite Corp (Google Yahoo Earnings Chart)
STRA,Strayer Education Inc (Google Yahoo Earnings Chart)
STXS,Stereotaxis Inc (Google Yahoo Earnings Chart)
SVR,Syniverse Technologies (Google Yahoo Earnings Chart)
SWHC,Smith & Wesson Hldg Corp (Google Yahoo Earnings Chart)
SWIM,Investools Inc (Google Yahoo Earnings Chart)
SXE,Stanley Inc (Google Yahoo Earnings Chart)
SYNA,Synaptics Inc (Google Yahoo Earnings Chart)
SYUT,Synutra International (Google Yahoo Earnings Chart)
TASR,Taser International Inc (Google Yahoo Earnings Chart)
TBSI,TBS International Limited Class A (Google Yahoo Earnings Chart)
TECUA,Tecumseh Products Cl A (Google Yahoo Earnings Chart)
TGB,Taseko Mines Ltd (Google Yahoo Earnings Chart)
TGI,Triumph Group Inc (Google Yahoo Earnings Chart)
TIER,Tier Technologies Inc B (Google Yahoo Earnings Chart)
TISI,Team Inc (Google Yahoo Earnings Chart)
TLEO,Taleo Corp (Google Yahoo Earnings Chart)
TMB,Telemig Celular Particip (Google Yahoo Earnings Chart)
TNC,Tennant Co (Google Yahoo Earnings Chart)
TNE,Tele Norte Leste Partic (Google Yahoo Earnings Chart)
TPL,Texas Pacific Land Trust (Google Yahoo Earnings Chart)
TRCA,Tercica (Google Yahoo Earnings Chart)
TRLG,True Religion Apparel Inc (Google Yahoo Earnings Chart)
TRMB,Trimble Navigation Ltd (Google Yahoo Earnings Chart)
TSL,Trina Solar Ltd. (Google Yahoo Earnings Chart)
TWTI,Third Wave Tech (Google Yahoo Earnings Chart)
UA,Under Armour Inc (Google Yahoo Earnings Chart)
UAUA,UAL Corp (Google Yahoo Earnings Chart)
UBH,Usb Holding Co Inc (Google Yahoo Earnings Chart)
USM,U.S. Cellular Corp (Google Yahoo Earnings Chart)
UVE,Universal Insurance Holdings (Google Yahoo Earnings Chart)
VDSI,Vasco Data Security Intl (Google Yahoo Earnings Chart)
VGR,Vector Group Ltd (Google Yahoo Earnings Chart)
VII,Vicon Industries Inc (Google Yahoo Earnings Chart)
VMSI,Ventana Medical Systems (Google Yahoo Earnings Chart)
VRNM,Verenium Corp (Google Yahoo Earnings Chart)
VRTX,Vertex Pharmaceuticals (Google Yahoo Earnings Chart)
VSCN,Visual Sciences Inc (Google Yahoo Earnings Chart)
VSEA,Varian Semiconductor Equipment Associates Inc (Google Yahoo Earnings Chart)
VSEC,Vse Corp (Google Yahoo Earnings Chart)
VSR,Versar Inc (Google Yahoo Earnings Chart)
WCG,Wellcare Health Plans Inc (Google Yahoo Earnings Chart)
WINN,Winn-Dixie Stores Inc (Google Yahoo Earnings Chart)
WMAR,West Marine Inc (Google Yahoo Earnings Chart)
WNR,Western Refining Inc (Google Yahoo Earnings Chart)
WRLS,Telular Corp (Google Yahoo Earnings Chart)
WRNC,Warnaco Group Inc (the) (Google Yahoo Earnings Chart)
WWWW,Web.Com Inc (Google Yahoo Earnings Chart)
YZC,Yanzhou Coal Mining Co (Google Yahoo Earnings Chart)
ZNH,China Southern Airlns Co (Google Yahoo Earnings Chart)
ZOLL,Zoll Medical Corporation (Google Yahoo Earnings Chart)

All these stocks from the 25% plus in month list have shown good momentum during market weakness.

AETI,American Electric Technology Inc (Google Yahoo Earnings Chart)
ALXN,Alexion Pharmaceuticals (Google Yahoo Earnings Chart)
AUXL,Auxilium Pharmaceuticals Inc (Google Yahoo Earnings Chart)
BLTI,Biolase Technology Inc (Google Yahoo Earnings Chart)
ELON,Echelon Corporation (Google Yahoo Earnings Chart)
EMKR,Emcore Corporation (Google Yahoo Earnings Chart)
HIFN,Hi/Fn Inc (Google Yahoo Earnings Chart)
HMSY,Hms Holdings Corp (Google Yahoo Earnings Chart)
ISRG,Intuitive Surgical Inc (Google Yahoo Earnings Chart)
IVC,Invacare Corp (Google Yahoo Earnings Chart)
LPHI,Life Partners Inc (Google Yahoo Earnings Chart)
MORN,Morningstar Inc (Google Yahoo Earnings Chart)
NVT,Navteq Corp (Google Yahoo Earnings Chart)
PHRM,Pharmion Corp (Google Yahoo Earnings Chart)
QEPC,Q.E.P. Co Inc (Google Yahoo Earnings Chart)
RGR,Sturm Ruger & Co Inc (Google Yahoo Earnings Chart)
RMKR,Rainmaker Systems Inc (Google Yahoo Earnings Chart)
RZ,Raser Technologies Inc (Google Yahoo Earnings Chart)
STAR,Starent Networks (Google Yahoo Earnings Chart)
SWIM,Investools Inc (Google Yahoo Earnings Chart)
UBH,Usb Holding Co Inc (Google Yahoo Earnings Chart)
VRNM,Verenium Corp (Google Yahoo Earnings Chart)
VRTX,Vertex Pharmaceuticals (Google Yahoo Earnings Chart)
VSEA,Varian Semiconductor Equipment Associates Inc (Google Yahoo Earnings Chart)

Market Monitor

• It was a impressive bounce going by the news accounts. Part of it was short covering. Part of it positioning before the Fed meet.
• You can read the news account, or you can look at actual numbers. When you look at actual numbers what do you see. First 300 plus positive 4% plus day since start of correction. First time the 50% plus numbers reaching 3 in this correction, signaling loss of upside momentum. Both these are early indicator of probable turn .
  
• You can also look at the numbers and find lot of negatives. 4% plus down movers were still in 300 plus territory. so selling still continues. the 65 days ratio is firmly in bearish territory. Everyday fresh set of stocks from the 100% plus (Double Trouble ) universe are witnessing high volume breakdowns.
  
• Look at the McClellan Summation Index, it is firmly in bearish territory.
  
• None of the sentiment indicators are showing extreme readings.
• So it is mixed picture. I continue to believe the bottom will be a process with slow stabilization in Market numbers. First active selling has to stop, at today's reading of 335 on 4% down, we are still not in the stabilization zone. The 100% plus number deterioration should stop and stabilize. The 65 days ratio should stabilize and start reversing. All these things on long side can happen pretty quickly if market reverses. But I would rather wait for the confirmation.
• Market Monitor is overall filter for all the trading systems which I trade and it is primarily aimed at anticipating risky and safer zones. The riskiest period is when the 65 days ratio turns negative. So I see no need to override a well thought out method and react to market bounce emotionally. Many of you who have been actively trading the various methods outlined here know, how quickly some of the stocks in these scans make 25% plus moves once they get going, so missing first few days of turn and waiting for confirmation is not going to affect performance much.
• As to what to buy, I am actively looking at scan members from all methods like EP, Double Trouble, 70 plus EPS and earnings breakout universe. Many stocks have not been dented by the correction and still in the Double Trouble universe and they are the ones to look at. look at stocks like AAPL, RIMM, CROX, CMG, FCN, GHM, FARO, ELON, LFL, ISRG, PRXI , NUAN, etc. They have withstood selling and might breakout in few weeks or days.
  

Bounce will be a mirage

Any bounce here will be a temporary respite. It is likely to be purely a short term phenomenon. Unless you are very nimble and can quickly grab the profit from such move in a day or two, it may not be worth playing it.

Market will take time to stabilize and form a meaningful bottom. At current stage I see no quick resolution to the situation. Bounce or sideways move here will have high probability of failure. The move so far has seen no buyer exhaustion, in fact if you look at the 4% plus numbers , there are still buyers active in the market.

Better buying opportunities will appear after some time. Currently many more stocks are still in early stages of their breakdown and the bounce will in fact create better and low risk opportunities for shorts.

Many of those who are clamoring for bounce are 1 or 2% kind of players, who operate on very short time frames and use trading vehicles like futures or options. So copying their style in a very volatile and tricky market can lead to big losses. Many of the dip buying based systems have low per trade profitability and occassional big losses or blow ups. Many of those kind of traders must have taken big beating in current environment and we will know about them in few months as more tales of blowups start percolating down.

Housing makes it to the cover of Business Week

If you are short housing stocks, its time to cover. What a perfect timing for BusinessWeek to put housing on cover.

There are no monsters in the market

A benign correction of less than 10% (as of now) has lot of people losing perspective and looking for monsters in the market. It is human nature to externalize the problem and to look for monsters in the market. Even a 20% correction at this level will be a normal market behavior.

The mortgage problem has been around for years and if you line up all the perma bears and macro commentators who claimed market doom based on it for last 4 years, the line will stretch to the moon. If you had followed their advise, you would be out of market for last 4 years. There was money to be made (and lots of it) till July on long side. Now the worm has turned and there is money to be made on short side.

Now there is a clamor for Fed rate cuts to get rid of the monster in the market. Every time market takes a 5-7% dip, if Fed starts bailing out, the markets will stop functioning. In fact if the Fed cuts interest rates on Monday, the market will most probably tank, because people will start believing Fed sees some monster we can not see.

This is just a benign correction after multi year rally. It is cleaning up some of the excesses in the system. Downside moves are always more volatile and attract more emotions. The market has acted as per script so far.

From time to time the market also acts to remind people there is no easy money and free lunch in the market. The hedge funds and the big banks had been in the news before this correction, for the ease with which they were making money and for their free spending ways, so Mr Market is just reminding them , who is the boss. Some veterans had forgotten the rules of risk management, so market is just reminding them their own rules. Some had grown too big and as a result realizing it is difficult to turn a large tanker. Some dip buyers are realizing the mathematics and probability distribution of dip buying based systems. If some hedge funds go belly up, some rich dudes will lose money, which is not bad. Some investment banks will go belly up, which is not bad, the business is about risk and reward. Good methods and judgment is what should get rewarded and bad judgment punished.

There are no monsters in market. There are only, for a given time frame and capital level, speculators with well thought out methodologies and risk management strategies and there are speculators who get it wrong. As long as your strategies are aligned to the market, you make money. When the alignment breaks, you see monsters.

The markets act the way they act, you can not control the market behavior, what you can control is your response to it. Methods trump over markets and any monsters in the market.
The market is a mechanism to transfer wealth from less skilled speculators to more skilled speculators. That is nature of the game since market inception.

Market Monitor

• The market correction is 10 days old and bulk of selling might be behind us.
  
• Any turn from here in my opinion will be a process. Anyone expecting a V reversal, might be in for some disappointment. Most likely course will be several attempts at rallying or sideways move which fails to downside.
  
• I will be watching the 50% plus in month carefully (currently at 5), it is approaching levels where a tradeable bounce might develop.
• I will also be looking at the 4% plus numbers, a number above 300 plus on this will indicate a probably sustainable rally attempt.
• I will look at survivors in 100% plus (Double Trouble) universe, IBD 200 members, recent 100 plus EPS list members which had positive post earnings reaction and have gone in to range or pulled back. These are the stock likely to bounce back first.
  
• On the short side a few days of rally or sideways action will set us up for low risk short in the Former Market Leader Breaking down scan.
  

Amateur bulls and dip buyers get whacked

I got lots of emails from readers who are down 20% plus in last few weeks. While I might sympathize with your pain, I have no empathy. When there is a change in market characteristics, if you are slow to react to it or if you failed to anticipate it, you get whacked pretty hard.Since the beginning of this correction, there has been chorus of amateur bulls exhorting dip buying. Action like what you witnessed yesterday is good to separate the men from the boys.

Market Monitor

Total 4% plus bullish breakouts=72
Total 4% plus bearish breakouts=816
65 day bullish/bearish ratio= 400/954
Stocks up 50% or more in a month=5
Stocks up 25% or more in a month=31

If you are down 20% plus in this correction, you need to seriously examine your methodology. There was ample time to get out early in this down move. There was no need to buy dips when the market character changed. One of the greatest strength for small and mid size speculators is flexibility, you don't have to turn big tankers like big speculators have to, plus you don't need to adopt their methods of dip buying when market is in confirmed downtrend.

The entire logic behind Market Monitor is to anticipate and avoid such periods and lower the drawdowns. For 350 days in a year, it seems like unnecessary chore to track it, but it pays you off in the 15 days, when it matters.

Market Monitor

• It was yet another volatile session, which ended on positive note.
• Market seems to be attempting to stabilize here. Such interim periods can provide good opportunities for swing traders. They also help set up good shorts.
• However overall the market continues to offer little for longer term traders and momentum based traders.
• If you go through the Market Monitor, I have color coded days for both 4% plus and 65 days during my free time. You will notice rallies have strings of green colored days with 4% down movers seldom exceeding 60 levels. Currently the down movers are still dominating.
• If market puts together 3-4 days of green action with 4% breakouts in excess of 200, then it might indicate end of the rapid selling phase.
• With a definite change in character and 65 days ratio still in bearish territory, I see no reason to be aggressive here on long side. There is high probability that the 4-5 days bounce here will fail and lead to more downside.
  

$100 for a comprehensive medical checkup

One of the hot trends out here in India currently is Medical tourism. Hospitals are aggressively marketing abroad to attract patients. The basic rationale is cost difference. Number of new hospitals are being set up to cater exclusively to such segment of the market.

Here in Pune a new hospital with US standard medical facilities has just opened in recent months. So even though we have insurance, my wife and I got a comprehensive medical checkup done here. It consisted of some 26 different medical tests for all organs and body fluids. It includes consultation with all major specialist like cardiologist, endocrinologist, orthopedics surgeon, ophthalmologist, neurologist, and gynecologists for females and number of high end tests. We spent a complete day in the testing facility and the follow up consultation is included in the price. All that I paid for it was Rs4100, which is approximately 100 USD.

Market Monitor

• While it was volatile, up and down day with wide swing, the numbers tell the story.
• Ratio of 4% up or down is at 128/290, skewed towards selling.
• The 65 days up and down ratio stands at 469/705, so even though the indexes had reversal, there is selling going on below surface.
• Can the market bounce from here, yes a reflex bounce after panicky selling is high possibility, the question is will it be sustainable.
• Your time frames determine everything. If you are day trader, this is an excellent trading opportunity. Wild swings and volatility is ideal for intra day time frames. Quick and nimble swing trader can also find opportunities in this environment, mostly on short side. If you are long term traders, there is no need to chase anything here, any rally of consequence is not going to be few days wonder.
  
• Overall the current action is still indicative of more downside to come. Once the 65 days ratio reverses, generally it takes at least few months for it to reverse. We are still in fast and panicky selling phase, if that stops and is replaced by systematic slow selling phase, then I will look at long exposure.
  

Notes From India

After spending a couple of days in Bombay (or Mumbai) , I am now based in Pune. Pune in last decade has grown up to be a major industrial center and alternative to Mumbai.

One of the biggest problem I have encountered so far is finding a reliable broadband internet access. That should surprise most considering India's reputation as IT outsourcing destination of choice worldwide. For residential use broadband is still in infancy here. The price is very high. The procedure is so bureaucratic that as a tourist you can forget about getting a connection in hurry. It requires local tax ID number, photograph and proof of residence. The coverage in patchy. The alternative in Cyber Cafes, which are in most cases very slow and expensive. Plus most don't allow you to plug in your laptop in to their network. I will have more about my experience of trying to get broadband later.

Here are couple of things I noticed based on my few days of observations and interaction with people here:

• Stock market and commodity trading boom- look like every single person and relative I interact with here can not stop crowing about his or her exploits in the stocks and commodities market. I have seen this movie before during Harshad Mehta days, we all know of the consequences.
• Watching CNBC in India: This is latest craze with even my mother in law actively tracking the ticker to see how much her share has moved higher. Last I counted there are around 7-8 channels devoted to only stock market coverage.
• Organized Retailing : This is the biggest trend and it has legs. The mom and pop stores have dominated Indian retailing for centuries. For the first time organized, multi format , modern retailing formats are being set up and I visited some of these outlets in last couple of days and the crowd in unbelievable. I will have more details on this later.
• Low cost airlines: When I shifted to USA in 2001, there were only 3 domestic airlines, today you have dozen airlines and hundreds of flights to small locations, never ever serviced by airlines before.
  
• Building Boom: This is the biggest building boom I have seen in my lifetime and even the old people like my father and father in law believe that this is the biggest building boom in last 60 to 70 years in India. Every where you go, it is one big construction zone. From small towns to big cities, you can not simply miss the incredible building and infrastructure boom going on here. Residential and commercial property values have gone up so much that when I hear prices I am shocked. In last 6 years prices are up 1000% plus in some areas.
  
• Farm land becomes hot commodity: Farmland closer to cities, mini cities, towns and industrial areas is in so much demand, that most farmers I spoke to cannot believe their luck. This has had significant social implications as the high prices are leading to family fights and lawsuits. Those who have sold their land have made so much money that they do not know what to do with instant riches.
  
• Mobile Phones: 10-15 years ago you had to wait 2-5 years to get telephone connection. Today cellphones have replaced landlines. Most of friends and relatives I visit have no landlines but several mobile phones with every member owning mobile phones. Mobile phones are everywhere from the rich to poor owning one in cities. The technology used here in the mobile industry is much ahead of the technology in USA, as these networks were set up in last 10 years. Youngsters have taken to mobile phones like fish taking to water. My niece and nephew, who stay and work in Mumbai were telling me that after rent the second biggest monthly expenditure for them is mobile phone. Their mobile phone monthly bill is almost twice that of their monthly food bill.
  

These are some of my initial reactions and it is fascinating to watch so much change in just last 6 years since I relocated from here. It is an economic miracle at work.