No matter how hard I promote my core strategy of short selling surging microcaps, the sheer volume of emails asking me about when slumping blue chips like Starbucks Corporation (NASDAQ: SBUX), Sprint Nextel Corporation (NYSE: S) and Nvidia Corporation (NASDAQ: NVDA) will bottom is astounding. So, this is my answer to you guys. I'm also going to throw in Broadcom Corporation (NASDAQ: BRCM), AT&T Inc. (NYSE: T) and Ebay Inc. (NASDAQ: EBAY) because they all share the same horrifically downtrending charts!
I've already written about how you should avoid these kinds of stocks, but I know many of you are already down too much to even contemplate getting out now. Luckily for you, there now looks to be a glimmer of hope.
I'm not going to try to call a bottom or for any major market rebound-the odds of that happening aren't very great-but it's definitely a good sign when similarly hard hit stocks like Comcast Corporation (NASDAQ: CMCSA), KB Home (NYSE: KBH) and Toll Brothers Inc. (NYSE: TOL) stop going down.
And, that's how these things work. No sharp reversals. No about faces, just some sideways action and higher highs. Look at KB Home's chart-it's a picture perfect trend reversal (now if it could just break $30, it'll really be a nice breakout, but let's not get ahead of ourselves). But do understand bottoming in these market conditions is a multi-attempt and usually a multi-month process-filled with plenty of fakeouts.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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