Market Notes
The major averages made a valiant attempt to burst out of recent resistance on the open but the bears quickly crashed that party ending the day on a down note. Adding fuel to the bears’ fire is the VIX which is stealthily inching higher.

Historically, market rallies are accompanied by a concomitant drop in the VIX (unless the VIX is already at a low) but not this time. Is this a bullish sign or a bearish one?

Traditionally it would be viewed as bearish (and I’m actually expecting a lower open tomorrow) but I’m thinking that this could actually be looked at as a contrary sign.

Here’s my reasoning.

Corporations are sitting massive amounts of cash and can easily raise cheap money by issuing corporate debt thus giving them the ability to make strategic acquisitions and participate in share buy-backs. Couple this with the extremely low P/E valuation of 13.6 on the market and you have a classic recipe for a massive rally in stocks.

Now here’s where the VIX comes in. Suppose we do have this massive rally. If the VIX is already near a low, it has no place to go, right? Ergo, an elevated VIX gives the market more room to zoom.

That’s my theory and I’m stickin’ to it.

New Long Portfolio
Today’s portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (6), Breaking out to new highs on lower volume (1), Darlings of the Day (2), and Speculative Leaders (1).

Today’s portfolio close-out
The 9/15 portfolio was cashed out for an 0.8% gain. Nothing did too badly but nothing did all that well either except for Monro Muffler, MNRO.

Stock Watch
There’s nothing we could have done following the bad news on Green Mountain Coffee Roasters, GMCR, in the 9/27 portfolio. It gapped down 17% and has just been rolling around at its current level for the past two days. My philosophy is why not wait and see what happens? We’ve nothing to lose unless it slides further and my stop/loss set just under $30 will ensure that the loss doesn’t get worse.

A couple other stocks are taking a little breather. To prevent further downside, I also set a stop/loss on Spreadtrum (SPRD) in the 9/20 portfolio for just under $12 and on Looksmart (LOOK) for just under $2 in the 9/22 portfolio.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
Ol’ Dr. Kris is excited that the Dow Transports (DTX) FINALLY managed to close above the pesky 454 level–not by much, but just enough. Too bad the other indices didn’t follow suit, but as they say, tomorrow is another day. We’ll see if end-of-month window dressing can force them into the bull ring. Ole!

New Long Portfolio
Today’s portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (3), Breaking out to new highs on lower volume (4), Darlings of the Day (1), and Low-priced Leaders (4).

Today’s portfolio close-out
The 9/14 portfolio was cashed out for almost a 4% gain. All were winners. Being a cheesehead I’m rather sorry that the only non-performer was Wisconsin Energy (WEC).

Tomorrow, the 9/15 portfolio will be sold.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
Disappointing consumer sentiment numbers this morning dragged the market down but the headache was only temporary as the major averages did an abrupt turnaround and marched straight back from whence they came. A bull/bear face-off ensued with the bulls finally getting the upper hand, but it still wasn’t enough to break overhead resistance (1150 on the SPX, 454 on the DTX) which is becoming firmer with every passing test.

Might we break that magic spell tomorrow? It’s tough to say how Wall Street will react to tomorrow’s economic numbers, considering that traders shrugged off today’s bad news. Technically, we still could be in for a rough ride as volatility is still hanging in there. Specifically, we’re not seeing the VIX putting in a relative low when the market hits a relative high, and this could prove to be a thorn in the bull’s hoof.

Yet in spite of all the gloom and doomers on CNBC and sub-par economic news, the market somehow seems to want to do its own thing, and just from the action I’ve been seeing, the thing it wants to do is to rally. If any fundamental reason appears as to why it should, I do believe the market will have no problem breaking out. I’m also sure we’ll see an ebb in volatility and maybe, just maybe, a return of the retail investor.

Fingers crossed.

New Long Portfolio
Today’s portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (1), Breaking out to new highs on lower volume (1), Darlings of the Day (5), and Low Leaders (3).

Today’s portfolio close-out
The 9/13 portfolio was cashed out for a 1.0 % gain. Although we squeaked out a profit, it would have been better had massive profit-taking at $10 not hurt HOOK.

Tomorrow, the 9/14 portfolio will be closed out.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
The market was percolating along just fine, thank you, up until about an hour before the close when someone turned off the burners. The major averages ended the day slightly lower, but the real bummer was that none of them, especially the DTX, were able to pierce recent resistance. What do we gotta do here to get some action around here???

But I’m not expecting a lotta love as this week is chock full of thorny economic reports. The market will be wrapping its collective brain around the following numbers that are considered to be indicative of either growth or stagnation: consumer confidence, jobs, housing starts, and manufacturing growth.

Good numbers and we should see a decline in volatility; bad numbers and we’ll see both the VIX rise and the market sink. Never before have the telltale signs of green shoots been so important.

My advice: Protect your positions and fasten your seatbelts. The ride could be very bumpy.

New Long Portfolio
Today’s portfolio selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (2), Breaking out to new highs on lower volume (2), Darlings of the Day (5), and Speculative Leaders (1).

Today’s portfolio close-out
The 9/10 portfolio was cashed out for a 1.8 % gain. This portfolio somehow lacked the jazz of its contemporary brethren but a mother loves all of her children.

The 9/13 portfolio will be sold tomorrow.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
With an apparent mind of its own, the market abruptly reversed course which, frankly, caught good ‘ol Dr. K off-guard. The previous day’s action gave little indication that it was setting up for a rally but if the market was completely predictable, there would be no such thing as alpha.

Will the rally continue? The indications are good that it will. First, both the Dow Industrials and the Nasdaq blew through recent resistance. So did the S&P 500 but it passed the 1042 hurdle only to bump its head against 1050 resistance. What we’d really like to see is the Dow Transports, the DTX, break above the 452 level which, so far, it’s been unable to do. Maybe Monday.

Also bullish are the facts that the SQQQ, the ultrashort QQQQ tracking stock, gapped down making a new low while its inverse counterpart, the TQQQ, broke out. I know these aren’t indicators that are widely watched, but I find that they do a pretty good job of determining near-term market direction.

A robust rally includes positive participation in all of the “important” sectors—financials, materials, tech are among them. Most of these important sectors have been rallying, especially tech, but the relative lack of participation in the financial sector is a bit disconcerting. If that sector, represented by the XLF, can break recent resistance in the $15 area AND if the VIX, the volatility index, can pierce the $20 level, then the market will really be off to the races.

That might happen next week or we may have to wait until the November elections. If the Republicans can retake the legislature then Santa Claus will definitely be comin’ to town.

New Long Portfolio
Friday’s portfolio selections came from the following *Blue Plate Specials* lists: Breaking out to new highs (4), Darlings of the Day (1), and Low-priced Leaders (5).

Today’s portfolio close-out
The 9/9 portfolio was cashed out for a 3.2% gain. Note that Sprott Resource’s symbol changed from QCC when it was first selected to SILU.

Further Actions
Satyam Computers (SAY), a component of the 9/22 portfolio, is having accounting problems (rarely a good sign) and issued a press release on Friday saying that it was going to have to delist itself from the NYSE because of filing noncompliance. The stock tanked and I exited the position at $4.52.

You win some, you lose some—what can I say?

The 9/10 portfolio will be sold on Monday.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
It’s beginning to look like the market is in for a sell-off instead of a minor correction as the major averages closed below recent support levels. The bottoming tail in the VIX plus the gap up on the open suggest the VIX is looking to float higher—bad for any near-term rally.

On the other hand, techs, especially internet and software stocks, were bucking today’s downtrend, and that’s something you don’t see often. What does this mean? It means that the market is bullish on the future but not so sure about the present. And what’s to love about present conditions?

Well, if you’ve been following the headline news, not a whole lot. Negative reports on housing and the job market are weighing heavily on the investing zeitgeist, but what isn’t given much press is the good news–stuff like across the board increases in corporate earnings plus the much overlooked fact that US non-financial corporations are sitting on something like $1.3 TRILLION in cash. That’s astonishing!

So why aren’t they spending any of it? Well, one reason is the political climate. Corporate CEOs aren’t sure what the Obama administration is going to do or even who is going to take control of Congress come November. The uncertainty in national and international politics combined with economic uncertainty are what is keeping companies from opening their coffers and hiring workers.

Until Wall Street can get a better handle on the present, I don’t think we can expect any sort of major rally to take place. When the VIX falls below 20 it’ll finally be safe for the bulls to enter the ring.

New Long Portfolio
As I mentioned yesterday, speculative stocks can be stellar in roaring rallies but are the first to fizzle when the market is under pressure, and so it was with many of the fund’s micro-cap holdings. The group was out of favor with the investing community today as I couldn’t find one to put on my speculative list.

Today’s selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out (2), and Low-priced Leaders (3).

Today’s portfolio close-out
The 9/8 portfolio was cashed out for a terrific near 10% gain. All were winners. I booked profits in Radware (RDWR) on 9/15 after a huge runup.

Tomorrow the 9/9 portfolio will be exited.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
It doesn’t come as much of a surprise that some profit-taking was in order but is that what today’s slump was or perhaps the beginning of another major downturn? The market internals are pointing to more downside which is pretty normal in an oversold environment.

Mildly disturbing is the fact that the DTX and the Nasdaq took the sell-off much harder than the other averages. It is the DTX that is a leading market indicator and most market economists feel that a rally isn’t confirmed unless there is leadership in the tech sector (the Nasdaq is a tech-heavy index). We’ll find out soon if this is just a normal market respite or the start of a downward spiral.

New Long Portfolio
The speculative stocks looked particularly appealing today so I bought them all. In bull markets, these small stocks do great but in watch out if the market does an about-face! We’ll see if these plays pan out.

Today’s selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out (1), and Speculative Leaders (4).

Today’s portfolio close-out
The 9/7 portfolio was cashed out for a modest gain.

Further Actions
Tomorrow the 9/8 portfolio will be exited. We are also watching HOOK in the 9/13 portfolio and URRE in the 9/21 portfolio. Smaller, more volatile stocks require a bit more wiggle room in terms of determining the appropriate stop/loss but if either moves down further, they will be closed out.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
The feel-good mood spurred by the Fed quickly waned as the post-decision rally lost ground as quickly as it rose, leaving the major averages essentially unchanged from the open. The good news is that the DTX almost closed above 452 major resistance; the bad news is that the Trin and the VIX both closed higher so don’t be surprised if the market takes a breather tomorrow.

New Long Portfolio
Today there were quite a few low-priced and speculative leaders and I chose two from the speculative list. During a bull market, better returns are made from the smaller stocks and they are something you might want to consider adding to your own portfolio. Today’s selections come from the following *Blue Plate Specials* lists: Breaking out to new highs (5), Breaking out to new highs on lower volume (1), Low-priced Leaders (2), and Speculative Leaders (2).

Today’s portfolio close-out
The 9/3 portfolio was cashed out for a nice little two week profit.

Tomorrow the 9/7 portfolio will be exited.

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
The market blasted through major technical support—all except the Dow Transports (DTX), generally considered a market leader, and the the volatility index (VIX). This gives good ‘ol Dr. Kris a cause for concern because whenever the S&P 500 (SPX) has risen above 1130, the VIX has correspondingly dipped under 20.

Not so, now. What does this mean? Maybe something, maybe nothing. On the one hand, higher volatility means that if the volatility drops, prices will rise higher; on the other hand, it could be that investors are wary about the future state of the economy and don’t want to risk full positions.

Your guess as to which (or neither) is right is probably better than mine.

Other bullish indications are the following:

1. The tech sector (XLF) broke out today. The bank indexes did okay, too.
2. The ultra short Q’s (SQQQ) hit a new low while it’s long counterpart, the TQQQ broke out. (Note that both of these tracking stocks have only been in existence since this February.)

I do think we’re leaning towards the upside and if you’re a bear, I’d definitely cover my shorts if the DTX breaks 452 resistance.

New Long Portfolio
Choices, choices, choices–so many lovely ones today! I don’t think one could go wrong with most of them. Here’s what I selected from today’s *Blue Plate Specials* lists: Breaking out to new highs (4), Breaking out to new highs on lower volume (1), Low-priced Leaders (3), and Darlings of the Day (2).

[See 4/21/10 blog for further details on how these portfolios are constructed.]

Market Notes
After the opening surge, the major averages settled into a trading range. Too bad that this quad-witching expiration had to end on a middlin’ note for the S&P 500, the Nasdaq, and the Dow Industrials; the good news is that the tech-heavy Nasdaq (and the Nasdaq 100, NDX) closed above resistance.

While the major averages were waffling, volatility (VIX) was declining, at least until a half hour before the close. This plus a higher Trin might suggest further downside Monday morning, but the fact that the SQQQ closed below its recent closing low bodes well for the bulls.

On the other hand, we’re still in the no-man’s land of testing major resistance. Next week, when many traders return from the Jewish holidays, we’ll know if the autumn rally is on or not.

New Long Portfolio
Today’s portfolio components were selected from the following *Blue Plate Specials* lists: Breaking out to new highs (7), Breaking Out (1), Speculative Leaders (1), and Darlings of the Day (1).

[See 4/21/10 blog for further details on how these portfolios are constructed.]