August 26th, 2008

Thank You, Readers; Shippers Interesting

I have a great group of loyal readers who take the time to comment and share their suggestions and opinions. Since the first of this month, they’ve suggested the following (in reverse order is you care to look at the comments): HNZ, ENS, WGOV, FMX, POT, AA, ACH, WMB, COF, SAM, SRS. I, too, have put my laid out some ideas for all to share but I think I’m losing to Anonymous when it comes to the number of recommendations.

What should come out loud and clear is that one must be cool and have the patience of a saint to be in the stock market. When you look at a stock chart it looks so compelling that you feel that you’ve got to jump on immediately. But three months go by, the market turns down and what looks like a sure thing now looks like some dead money for the foreseeable future until the market turns up again.

That’s why in market’s like these, until we get a signal confirming a bull market has arrived, the best strategy seems not to try to make a buck on a quick trade but to sit on the sidelines and let others fight it out for those few points. When we’re in a Bear Market, stocks that looked like they were about to breakout or bounce back only turn out to extend their consolidation or base building. A perfect example are the homebuilders and TOL. I first mentioned them on March 15 and TOL, specifically, on March 21. Today, they’re essentially were they were 5 months ago, still building a base.

Yesterday, Anonymous wrote:

“Whats your take, if you have one, on steel and nat gas, they seem for example like PKX [click here for chart] which is down at its March lows worth a trade with a tight stop like the SLV was a week or so ago. And on the nat gas side the UNG [no comment on “falling knives”] seemed like kind of a no brainer yesterday and it was as it spiked today. Any take or are you just staying away from the falling knives?”

My answer is by asking another question: Is there greater profit with less risk buying a breakout or buying a successful bounce off a trendline retest? I first wrote about this question on December 18, 2005 and still haven’t made up my mind.

Having said that, some beautiful long-term charts forming for the shipping stocks. I don’t know how long it will take until they’re resolved either as a breakup or down but it will interesting to watch:

  • EXM (Excel Maritime)

  • DRYS (Dryships)
  • DSX (Diana Shipping)
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