33% and No One Cares…Market Top?

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I’ve been trading a long time. I vividly recall trading in the late 90’s while I was in college in between classes. I would enter a trade at 10am and return by 2pm having made several hundred dollars. I didn’t have a big capital base to begin with, so I’m not going to embellish the dollar amounts but a few extra Benjamins on a Tuesday for a broke college kid was absolutely huge. (Is it cool to still say Benjamins?)

The thing was, everyone was doing it. If you weren’t trading stocks you were leaving  easy money on the table. Getting  in on IPOs was like the Golden Goose and even if you couldn’t get in on the syndicate pricing, it was a sure thing to buy after the first print and ride it for at least the day. A 50% return was expected and often it kept right on running.

2000 came and that bubble burst but trading didn’t end. In fact, when the market turned in 2003 and ran through 2007, trading was still all the rage. Those of you who have  been around the block will remember Gorilla Trades, watching Tim Sykes become famous, the start of Mad Money radio, followed by Mad Money TV and everything in between. Trading was still incredibly popular. 2008 came and almost everyone but traders got absolutely creamed. One would assume this bear market would lead to a significant drop in trading activity but it only accentuated it further. It was in 2008 I made my first appearance on CNBC doing a chartology for Dryships! Dryships! FastMoney was the coolest thing in town and I was lucky enough to be one of the early stand ins. Twitter launched and quickly was followed up by StockTwits. For the first time ever, traders for all walks of life were brought together under  the common thread of stock trading. It was incredible and folks couldn’t get enough.

Despite the general decline in equities, trading during 2008 and 2009 was still very popular. Folks flocked to technical analysis and do-it-yourself investing because of Wallstreet’s lack of help when the bear market crushed traditional asset allocation.

Unfortunately, the early 2009 bottom and subsequent rise in stocks was not easy to trade as an active trader and the meteoric rise gave new life to passive allocations and index investing. All the folks who rushed to the trading world just a few years before, left just as quickly. It was a complete cycle in trading which ironically led to a bust in enthusiasm just as the markets were finally dishing out exceptional trading gains.

So now here we sit. The markets are at all time highs. Stocks are moving incredibly well and no one cares. When I say no one cares, I mean literally NO ONE CARES. This my friends, is NOT the sign of some top in the market.

Last November, I decided to start archiving a 100% transparent portfolio for the purpose of eventually educating my children in technical analysis. It is not a subscription service, it is not a product, I do not have some hook. The portfolio is up over 33% since November, with many names notching well over 100% returns. I have over 9,000 twitter followers and guess what, not a single person cares one bit.

Sure, I could chalk this up to the fact that I may not have the following of some of the others out there, but the reality is, market participation is just not there and not a single person cares that this has happened.

More than likely they just believe that sooner rather than later the market will blow up, returns will falter and it will once again be a market that crushes any dreams and hopes. Maybe this is the case, maybe this isn’t, I’m not sure but the reality is that the response rate over something like this is pretty incredible and leads me to believe that the current psychology of market participants is still very far away from a meaningful top.

I wonder how far the market has to go or how much of a return it has to dish out before passive investors start to wake up once again. So far, It’s not even close. Is it 40%, 50%…100%? Time will tell but for now we’re still a long long ways from people caring about stocks and therefore a long way from a real top.

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New Trade: EMKR

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I have been watching EMKR for quite some time and have wanted to enter the stock after its most recent trend break. I feel that this little pause is giving me an opportunity to do so. With a stop below the most recent pivot, I have taken a new position in the name.

Entry: 10.14
Stop: 8.00
Shares: 280
Risk: $599.20

Click to enlarge

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New Trade: SHAK

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I believe that SHAK is bottoming out and presenting a nice buy opportunity. The stock has seem recent accumulation and good volume. I entered the position buying 81 shares at $37.81 per share with a stop set at a historical all-time low at $30.35. Initial risk per share is $7.46 and total initial risk at $604.26. Bottom fish plays are tough and often take more patience to work out, if they work out at all. Presently I only have ACIA as a bottom fish in the portfolio and can afford to have one more.

Entry: 37.81
Stop: 30.35
Shares: 81
Risk: $604.26

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JIVE Bought – Shares Sold

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An offer has been made by Jazz MergerSub, Inc. a wholly subsidiary of WaveSystems Corp. to purchase all common outstanding shares of JIVE for $5.25 per share. I have decided to shed shares as they are trading right around the acquisition price.

You may see all previous alerts HERE,

 

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