8-1-2012 comments

I have been distracted lately because my main computer crashed. I either got a virus or Windows 7 got corrupted some other way. I am back on line as of this morning.

The market has been quite choppy. Numerous stocks have gone through shakeouts. Netsuite (N) and 3-D Systems (DDD) had shakeouts at the open today. The DDD shakeout caused SSYS to gyrate (I own SSYS), they are companies in the same 3-D manufacturing space. Two days ago SLXP crashed and burned. Last week GNC had a shakeout. This kind of action makes CANSLIM investing more difficult. When I look at NASDAQ market volume I find it is lighter this summer than last summer. Light volume makes for choppy action. In this kind of market I find it is better to lighten up, be extra careful about buy points and also choose more liquid stocks, stocks that trade more than $50M per day perhaps.

The Market Exposure Model is at a +3 (75% invested) with one day of distribution (yesterday). Any day that the NASDAQ closes up without penetrating the 21-day ema will increase the count to +4 (90% invested). Remember that the MEM is a mechanical model that is not looking at the action of leading stocks, leading stocks are the final arbiter of a healthy rally.