Tuesday, May 21, 2013


We are near the end of the road for this burst higher.  There is a point where you get too far above the 50 day and 200 day moving average that the rally just feeds on itself, and eventually, you flatten out.  We are right at that point, as you can see in the intraday reversals yesterday, and in the previous few trading days.  Also, a lot of investors are now heavily buying into calls over puts, as the put/call ratio gets extremely low.  So with fewer investors buying protection, you are setting this market up for consolidation and a sharp pullback.

On to more interesting topics, the solar stocks are now everyone's favorite trading toys.  Yesterday it really got manic, as I saw almost all the stocks in the big up moves list being solar stocks.  After doing a bit more research into this solar phenomena, the fundamentals just don't back it up.  They will not be like internet stocks in the late 90s, the growth and excitement just isn't there.  So I am looking to fade some of these solar stock moves real soon. 

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