Schaeffer's Trading Floor Blog
Stocks quoted in this article:

In response to my comments on in my post Updated Index Charts, Mark says - "Speaking of trying to fight what seems like irrationality, there's an old saying (I forget who said it) but "the markets can remain irrational much longer than the average investor can remain solvent." An important thing to remember. "

My response - This is one of my favorite quotes! A search shows I have posted it at least five times in this space but I don't think it can hurt to mention it again -

Markets can remain irrational longer than you can remain solvent

~John Maynard Keynes

As I have said before, I used to have this posted on the wall above my screen as a constant reminder of the power of risk.

Note - I have seen this attributed to other authors so if someone can point me to evidence of the "real" author I will change it.


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Stocks quoted in this article:

As promised, here is a chart of the networking index...


Created with SuperCharts by Omega Research

The index has rallied back to its recent lows which is the site of the 20-day moving average. This group has had a horrible 2005 so this will be a good test to see if the downtrend is showing signs of changing...

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Stocks quoted in this article:

As usual, this table lists stocks that have at least 10 percent of their float sold short and then shows the top ten based on the previous day's gain. The last field shows how the stock is performing in today's session. This can be a useful tool for finding situations where stocks with heavy short interest have begun to move. All returns are shown in percentages.

Note - The short interest data below is still based on March's data. I will upload April's data into my database as soon as the Nasdaq data is available. More information on short interest can be found by clicking here.

Company Yesterday's
Gain
Percent of Float
Sold Short
Yesterday's
Close
Today's
Return
TASER International, Inc. (TASR) 24.7 36.6 9.53 -5.36
Cypress Semiconductor Corporation (CY) 15.4 11.0 13.25 -2.49
Wabash National Corporation (WNC) 14.7 11.7 27.30 -1.98
CoStar Group, Inc. (CSGP) 10.4 13.9 37.24 0.81
Ariba, Inc. (ARBA) 10.3 10.3 8.16 -5.29
Shanda Interactive Entertainment Limited (SNDA) 10.2 18.6 33.60 -3.49
Northwest Airlines Corporation (NWAC) 9.4 28.3 5.91 -3.88
Champion Enterprises, Inc. (CHB) 8.5 12.2 10.33 1.55
K2 Inc. (KTO) 7.8 17.3 13.90 -0.50
Rambus, Inc. (RMBS) 7.7 11.7 14.49 -2.62

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At the Open

by 4/22/2005 9:55 AM
Stocks quoted in this article:

The last opening bell of the week has rung and here is what I see...

As indicated by the pre-open futures action, the broad market indices opened with a pullback and are still holding losses...despite some very enthusiastic comments on Google the internet group is flat...bonds are popping...gold and gold stocks are bouncing back after yesterday's pullback...networkers have an interesting chart that I will post in a minute...

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Updated Index Charts

by 4/22/2005 9:10 AM
Stocks quoted in this article:

As I promised last night, here are the updated daily charts of the major indices...

Created with SuperCharts by Omega Research

In a word, these charts can be summed up with - resistance. All have broken below their recent lows (support) and are now pushing back towards them. The RUT and SPX are very near these zones while the QQQQ and DIA have a little more room to run up.

Perhaps the most difficult matter to wrestle with is how "obvious" these levels are. As we discussed yesterday, there is a tremendous amount of noise in the day-to-day action. And with so many hedge funds chasing performance I don't think it will be as simple as "SPX>1160=bull market".

Having traded through the bubble, I learned how devastating it could be to try and "fight" moves that seemed not only overdone but even irrational. Perhaps I am a relic from a long-gone era but I still believe that you need to give upside momentum a wide berth.

While the fear of losing can lead to quick panic selling, the "fear of missing out" can lead to traders taking on very heavy levels of risk...


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