Q: Do you think MIC is a buy and hold stock, because I plan to do so.
Suppose they will get down the drain somewhere this year, am thinking of adding some.
Anyway I bought this stock for a 2nd time for 1.20 this year, so you can imagine
how amused I feel right now.
Btw, I like to read the smarttrend reports and the tweets.
Best regards and keep up the good work.
A: Thanks for your question. From the perspective of trading with a technical system like SmarTrend, there is no such thing as a buy and hold stock, as you can realize much stronger gains on the downside as well as the upside. If you had bought and held MIC anytime before March of this year, you probably would not be in very good shape (SmarTrend’s May first $2.75 Uptrend is currently up 90.9%) . The charts below show that while SmarTrend had a few misstep Uptrends in H2 08’s severe bear market, a long only strategy with our calls would only be down 1.6%, compared to a 77% loss if you had bought on August 8, 2008. Since the period leading up to March was one of the most powerful bear markets in history, our Downtrend calls performed very well, so a long/short strategy would have yielded 137% worth of gains. MIC remains in a definitive Uptrend, helped by a positive response to today’s earnings report. We can’t claim that SmarTrend is going to be right all of the time, but as you will see below and with any of our other charts, it consistently catches the big swings. Should the stock begin showing signs of a Downtrend any time soon, SmarTrend could make you among the first to know.
Below are the updated statistics for all trends issued by SmarTrend over the past two weeks.
As you can see, there were a significant number of stocks that moved from a Downtrend into an Uptrend over the past week. This correlates to the near 7% rise in the S&P 500 last week. The % of Uptrends that are currently trading above the alert price (profitable) has jumped to almost 88%. Conversely, the % of Downtrend that are trading in the money has fallen to around 38%. It is important to note that this does not mean only 38% of our Downtrend calls were profitable. There were a large number of profitable Downtrend calls that have shifted to Uptrends and are no longer tabulated in the Downtrend row below.
This is why it is very important to add stocks to your watchlist, wait for the trend alerts, and then trade the trend. You can then be sure that you are trading only when the momentum is in your favor. As markets ebb and flow, so do the number of Uptrends vs. Downtrends, and the relative outperformance of each. When we had the S&P in a Downtrend, our Downtrend alerts outperformed. Now that the S&P is in an Uptrend, the total number of Uptrends has increased as has the % of those that are in the money. There will be bumps along the way as the trade term trend shifts from oversold to overbought, but you can stay one step ahead by reading our Morning Call newsletter where we provide insight as to when broader markets are beginning to turn across multiple time horizons.
With the S&P now off 5% from its high of 956 on June 11, the question on everyone’s mind is whether or not the rally is over. From the March 6 low, the S&P gained 44% in a relatively short amount of time and now market pros and technicians are tripping over themselves to suggest how deep this next corrective phase will be.
Mary Ann Bartels, a technical analyst at BofA/Merrill Lynch, thinks the downside will be about 7-10% from current levels. She cites failure to break above the Jan 2009 high of 944 (on a closing basis) and failure to break above the May 2009 down trendline as reasons for concern from a technical standpoint. She also points out that the 90% down day on June 15th also suggests that some “backing and filling” may be necessary before the market can move to new highs. Bartels also said that recent leading sectors such as consumer discretionary, energy, materials, and technology are showing some signs of fatigue and may correct further in coming weeks. Bartels sees a break below 875 would point to a test of secondary support at the 810-850 level.
NYSE floor trader and frequent CNBC commentator Art Cashin sees the next few days as critical as Monday’s big down day “moves the momentum to the bears.” Cashin said “The market will probably go [down] about 15% just to fool everybody. You get in about the 10% level and people say ‘oh my god the market’s going down’, so you need about 15% down to make everyone feel bad.” You can see a video of Art’s comments here: http://www.cnbc.com/id/31504070/site/14081545
With so many voices trying to talk the market down, will they be proven right or will it just be another contrary indicator?
If you would like to know when a stock or ETF changes trend, be sure to add it to your watch list on mysmartrend.com. This way, when a trend alert is issued, you will be notified by email in real-time.
Be sure to add an email address and enable alert in the Preferences tab.
