SHREVEPORT, La., April 14, 2007 (PRIME NEWSWIRE) -- DonHarrold.net says investors downside risk continues and savvy traders will profit from the move.
Don Harrold, stock analyst for http://www.DonHarrold.net wrote this on April 16, 2006:
"When I look at daily charts I see a market that wants us to believe it's cool to jump on in: A little pullback has occurred (as I predicted). No real "bad" news on the horizon (unless you count rising oil prices, skyrocketing commodity prices, rising interest rates, continued "war" in Iraq, the threat of international "bird flu" outbreak, imminent "war" with Iran, and inflation numbers -- real inflation, not the bogus "no inflation in sight" baloney from the government). Plus, I've got some stocks coming up on my OVERSOLD scans.
"So, all that combines for reasons to buy with abandon, right?
"WRONG.
"Weekly and monthly charts show stochastics and RSI are still in "fall off a cliff" or "time to jump ship" mode. Folks, you gotta look beyond the daily charts. You must look deeper. Wallstreet hopes you don't, but I'm here to give it to you straight.
"My opinion is that any buys you make now should be made with a high degree of caution. If you buy any stocks make sure you've got stop/losses in mind and you are READY to sell in a down turn. The point I want to make here is that this is not the time to "go long" or "set it and forget it."
"If you buy stocks this week, understand that what happens this week may give you the false impression that the market is about to begin a STRONG move higher. I would not buy into that until the technicals confirmed it." (Source: http://www.donharrold.net/blog/?p=20)
"That was 1 year ago. 2006. 'Dow 11,300.' The market moved up and then got hammered into the summer," says Mr. Harrold.
"But, doesn't it sound so very, very familiar and close to what's going on right now?" asks Mr. Harrold.
"Think about this: An entire year goes by and commodity prices are still high (in some most cases higher - see Gold, Silver, and Corn, for example), the 'war' grinds on in Iraq, 'war' is more 'imminent' with Iran than ever, and inflation is now plainly above the bogus 'official' numbers," adds Mr. Harrold.
"2007, though, holds other, more ominous issues: 'Subprime mortgages' unravel daily, Alan Greenspan is calling for recession (when he's not calling for recession, that is), margin debt is at an all-time high, the manufacturing sector continues to lose ground (and jobs overseas), personal savings rates are at historic lows, and credit debt is at historic highs. Let's not forget the dollar continues to drop versus basically every major currency," states Mr. Harrold.
"Plus, (well, more like a minus) the Dow is up nearly 1,000 points. The mainstream media and Wallstreet are pushing harder than ever to jam you into stocks. And, oh yeah, the worst day in the history of the markets happened a few weeks ago," comments Mr. Harrold.
"Yes. The worst day in the history of the markets. Here's a fact that you've not heard on CNBC, Bloomberg, or Fox News: The 'market breadth' (number of stocks moving up versus down) on February 27, 2007 was 498 down versus two up, on the S&P 500 (Hand verified this fact)," reports Mr. Harrold.
The stock analyst repeated, "498 down versus 2 up."
Mr. Harrold added, "That negative market breadth was not seen on any day in the history of the U.S. markets. Not in the crash of 1929. Not on 'Black Tuesday' in 1987. Not during the 'Asian Contagion' of 1998. Not on any day during the 'dotcom bubble' collapse."
"Nope, not ever. Not until February 27, 2007," he said.
"It is with no great glee that I report to you that the market has plenty of downside ahead. If I thought last year's spring rally was a 'market sucker punch', this year has the potential to make last year look like a relaxing massage," adds the market maverick.
"I do believe there are stocks with upside now, though, in the coming days. You just need to keep shorting big rallies on the Dow, Nasdaq, and S&P 500, though. You need to keep your stop/losses close on long positions," says Mr. Harrold.
"You need to keep your emotions in check and trade with an even, rational hand. Overall, just keep on your guard. Don't get caught up in the hype, and you should be fine," concludes the outspoken contrarian.
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