Driven by the desire to make fun of talking heads and pundits we often check up on them to see what silly things they are saying at present. Not that we are saying that Dvorak (Marketwatch) is silly (right now).
It’s not particularly silly, but it’s not exactly a recommendation to good practice either. He is contending that the tech stocks are due for a correction and even recommending they be shorted.
Here are the stocks he talked about: PALM, JNPR, SNDK, YAHOO, MOT, INTC, AMAT.
Here is what is questionable about his commentary: There are no short signals in any of these stocks. You could short them and get squeezed as they go higher.
What is interesting about these stocks is top patterns which are suspicious. We talked the other day about Apple and its exhaustion gap. Almost all of these stocks we looked at have some similar type of pattern. A surge up and a retracement. These could well be signs of the beginning of the end.
INTC exhaustion gap.
As we know acting too soon thinking we have correctly forecast the future is often humbling. What should be done in these cases is find the nearest basing point and set a stop under it. But we wouldn’t short anything till some downward momentum is established. But we would take Dorak’s column as an alert and review our tech stops and their stops.