• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / U.S. Equity

Nasdaq Strength Offsets Any Worries

Market players are unlikely to retreat until we push through 5,000.
By JAMES "REV SHARK" DEPORRE
Feb 26, 2015 | 04:31 PM EST
Stocks quotes in this article: MS, YELP, PCLN, LNKD, GRUB, FB, AVGO, AAPL, AMZN, SMCI, ARIA, IDRA, ADXS, CAPN, CCRN

There were a few minor negatives today, but overall the pattern that's been in place for over two weeks occurred once again. We started slow, had some dip-buying and then closed with a strong run. Breadth was positive, with the Nasdaq and small-caps leading. 

It was bit choppier intraday and the S&P 500 took out its intraday lows late in the day. Still, the strength in the Nasdaq offset any worries that were created. At this point, market players are very unlikely to back off until they push the Nasdaq through the 5,000 level, which is the major focus of the business media.

There continues to be a great temptation to try to guess when this streak will end. However, the key to trading momentum is to remember that it always lasts longer than seems reasonable. It's extremely easy to apply our subjective beliefs as to appropriate behavior to the market beast that has a mind of its own.

The easy thing to do here is to give warnings that things are going to change. The hard thing to do is to stay with the action as long as possible. Being anticipatory has carried a heavy price. At some point we'll get a reversal that will sting the bulls but we'll worry about it when it starts to happen.

Have a good evening. I'll see you tomorrow.


Feb. 26, 2015 | 1:33 PM EST

A Slow Walk Up

  • I wouldn't mind some downside to spice things up.

There is nothing new about the market today. It continues to do exactly what it has done for the past 11 days. A little weakness early in the day attracted dip buyers and slowly trended upward on mediocre volume. There are pockets of momentum in Avago (AVGO), Super Micro Computer (SMCI) and LinkedIn (LNKD), and speculative interest in low-priced biotech stocks Ariad Pharmaceuticals (ARIA), Idera Pharmaceuticals (IDRA) and Advaxis (ADXS), but it is a bit slower than usual.

The bears continue their futile attempt to time a top, but plenty of bulls also wouldn't mind some downside to set up more trades. Despite what some folks may be wishing and hoping for, this market keeps slowly walking up and there is little choice but to stay with buys as long as possible.

I'm dinking around with a few odds and ends again -- Capnia (CAPN) and Cross Country Healthcare (CCRN) -- but I wouldn't mind some variety to spice things up.


Feb. 26, 2015 | 10:38 AM EST

Shake It Up

  • One-sided action isn't healthy. We need to build up a little worry.

The atmosphere was almost frothy this morning as the bulls celebrated this persistent upward trek and analysts rolled out a number of upgrades and target increases. Morgan Stanley, for example, initiated coverage on names including Yelp (YELP), Priceline (PCLN), LinkedIn (LNKD) and GrubHub (GRUB). We also have some interest in Facebook (FB) and big movers like Avago (AVGO).

Despite the upbeat mood, the market is showing signs of rolling over. There was a very brief bounce off the open but now breadth is slipping. Precious metals are leading while biotechnology and oil are lagging.

Apple (AAPL) is causing problems now. It led on the way up and is now leading to the downside as the market struggles a bit. It actually looks like rotational action into some other names like FB and Amazon (AMZN).

Although many bulls will disagree, the best thing this market can do is shake things up. The one-sided action isn't healthy. The mood is too complacent and we need to build up a little worry so we can regroup and make another thrust higher.

My goal is to protect some good recent gains. The setups are not easy after 10 up days, but it is important to keep in mind that markets at their highs don't just suddenly fall apart and go straight down.


Feb. 26, 2015 | 7:47 AM EST

The Old Rules No Longer Apply

  • Embrace the idea that the market has changed.

Mindsets play strange tricks on us. We see things the way our minds have instructed our eyes to see.

--Muhammad Yunus

If you focus on the fact that the market has been going straight up with hardly a downtick for two weeks it is very tough not to be bullish. However, if you focus on the fact that it is technically extended on light volume, it is easy to think that something negative is about to occur.

That conundrum has been at the heart of this market for nearly five years. We have consistently streaky action that has very a very questionable technical foundation but the bears and the underinvested bulls never seem to be able to come to grips with the pattern.

What works best is to just ignore the technical and the big-picture issues that keep driving the negative views. There simply is no advantage to trying to time a market turn. You navigate this market by staying focused on stock picking or by just embracing the indices and not letting them go until there is an actual change in price action.

The biggest challenge of dealing with this market is simply having the right mindset. If you keep thinking it is going to trade like it did in the days prior to the Great Recession, you will never be in tune with the action. You have to embrace the idea that the market has made a very basic change and the old rules about how things were supposed to act no longer apply.

Many traders who cut their teeth in the 1990s and up to 2008 are still struggling to understand this market action. Things as basic as volume don't have the meaning that they used to. Ten years ago there would have been very little confidence in a market that has gone straight up on declining volume like we have seen over the past two weeks. Traders who still think that way are handicapped in dealing with this market, while those who have started focusing on the market in the last five years know no other behavior.

If you are one of the traders who has a tough time embracing this market environment, the best advice I can give is to filter out the big-picture views and stay focused on individual stocks. If individual stocks are acting well, stick with them and try not to let the pundits and market timers influence you into feeling that disaster is just around the corner.

The easiest mistake to make in this market is to sell stocks that are acting well just because you are worried about a sudden collapse. The folks who tend to underperform are those who don't stick with the momentum. There are good reasons in their minds for that behavior but the need to recognize that this market operates differently than it used to.

A positive open is on the way and there are quite a few upgrades and target increases on the wires. The bulls are getting rather cocky, but there are still plenty of underinvested bulls climbing that wall of worry.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline on this article.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Rev Shark was long AVGO, SMCI, ARIA, IDRA, ADXS, CAPN, CCRN and GRUB, although positions may change at any time.

TAGS: Investing | U.S. Equity

More from U.S. Equity

4 Reasons to Be Cautiously Optimistic About the Tech Sector

Eric Jhonsa
May 25, 2022 5:15 PM EDT

Many tech valuations are now back to 2016 or 2017 levels, and quite a few contrarian indicators point to extreme bearishness.

Have You Noticed This Shift in the Market?

James "Rev Shark" DePorre
May 25, 2022 11:00 AM EDT

Bonds tend to gain strength, and interest rates decline as worries about a recession increase.

Investor Sentiment Remains at Historically High Levels of Fear

Guy Ortmann
May 25, 2022 10:15 AM EDT

Here's where things stand in this volatile stock market.

Snap Judgement, S&P Basing Pattern? Spiraling Macro, Trading Lithium Stocks

Stephen Guilfoyle
May 25, 2022 7:49 AM EDT

A lot of folks haven't even realized that their 401(k)s and IRAs have been 'smashified' -- and that their homes are not worth what they think.

Overnight Blood, Didn't It Matter? Snap's Whammy, Trading Bank Stocks and Zoom

Stephen Guilfoyle
May 24, 2022 7:35 AM EDT

There was the 'momentum play' on Monday and not much else as portfolio managers resisted temptation to increase risk exposure.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:33 AM EDT PETER TCHIR

    Thoughts Ahead of the Fed Minutes

    Recent economic and earnings issues are convincing...
  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login