Wk17: Market Recap

A slew of earnings announcements came out this week however many at which were less weak than estimates predicted. The NASDAQ internals showed a mixed reading on Thursday where advancing stocks to decliners was negative 624, yet stocks rose 1.3 to 1.

The strength in the market is being lead by the NASDAQ, followed by the S&P and then the Dow. The NASDAQ tends to usually lead the market, therefore with many of the big names already reporting earnings; a slightly bullish bias could be expected in the following week.

Looking at the weekly chart we are in an area of high resistance so we may see more of a tug of war between bulls and bears in the short term which would hold prices steady.
Las week the S&P and Dow both violated the prior week’s low and failed to make a new high after 6 weeks of progressively higher movement. The NSADAQ however, did make a new high and did not violate the prior week’s low.

Wk18: Market Forecast

Market movers in the week to come are…
· Tues: Consumer Confidence 10:00 AM ET
· Weds: GDP 8:30 AM ET
· Weds: FOMC Meeting Announcement 2:15 PM ET
· Thurs: Personal Income and Outlays 8:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Fri: Consumer Sentiment 9:55 AM ET
· Fri: ISM Manufacturing Index 10:00 AM ET

Also note…
· Paul Volcker Speaks Thursday at 3:45 PM ET
· Tim Geithner Speaks Friday at 8:00 AM ET
· James Bullard Speaks Friday at 9:45 AM ET

We remain cautiously bullish. Staying delta neutral is a great way to remain hedged in times like these. The key is to balance relatively strong stocks with relatively weak stocks (relative in terms of the broad market), thus allowing the highest probability for both the position and the hedge to be profitable.
Watch for the top line figures (S&P, Dow, NASDAQ, and Russell) to continue moving between their rising channels. As we said before the NASDAQ tends to lead the market so watch for a break of the NASDAQ’s channel to be a leading indicator. For now the upper and lower ranges can be looked at as daily support and resistant areas. Keep in mind the weekly’s are at a heavy congestion zone.

Wk18: Stocks to Watch

Long ideas for the week are ARST and QSII as they continue to break out to all-time highs. We are also watching CPSI, DRI, and PNRA to consolidate and make another push higher if the broad market chooses to do so as well.

Shorting into resistance we have FWRD, HRS, and VIVO.

A big week filled with economic news and earnings ahead, tread lightly. Preserving capital should be your #1 goal.

Wk16: Market Recap

Regardless of the earnings announcements last week, we continue to push higher. The weekly candle ranges are becoming smaller as bears are stepping in to hold prices at these levels. We touched the 875 level on the S&P which was our target in last week’s forecast. We should see resistance at these levels so a pullback in the form of a gap down Monday would be expected.
The S&P has held a close relation with the 10-Day Moving Average and can be used as an initial target for any pullback that may occur. Notice how we tracked along the lower side of the 10-Day Moving Average on the move lower and once we closed above it, began tracking on the upper side.With the big names like Google, Citigroup, Intel and Goldman Sachs reporting earnings last week, we can assume those prices are factored into the market already leaving the market in need of some other catalyst to drive prices higher.

Wk17: Market Forecast

Potential market movers in the week to come…
· Mon: Leading Indicators 10:00 AM ET
· Tues: Redbook 8:55 AM ET
· Weds: EIA Petroleum Status Report 10:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Thurs: Existing Home Sales 10:00 AM ET
· Fri: Durable Goods 8:30 AM ET
· Fri: New Home Sales 10:00 AM ET

Earnings announcements for the week can be found here.

The next logical target on the S&P would be 910, but before that happens, a pullback should be in store. A move down to 840-845 would be healthy. We will watch for a break and close below the previous swing low of 835 before becoming increasingly bearish as that would confirm the trend of higher highs and high lows broken.

Wk17: Stocks to Watch

As we are expecting a gap down on Monday we are looking at a few select longs to buy early in the week those names are ADBE, CTRP, ESRX, LFT, MYGN, and SMG. We will follow up later in the week once a market sentiment is established. Remember we are still in earnings season so expect whipsaw action.

Wk15: Market Recap

Last week’s internals split the market in half. Notice how the Breadth and A/D Lines were stronger on the up days. This strength in the market was confirmed by a declining VIX that broke down and closed at the lows.
Back in week 11 we reported that a buy signal was printed on the Bullish Percent Index Point and Figure charts. That rally has continued nicely up to this current congestion zone of 805-875 on the S&P.

Wk16: Market Forecast

The week is filled with economic news, Alcoa kicked off earnings season last Tuesday with a Q1 loss of $0.59 per share and revenues declining 36%. We have some big names reporting this week including Goldman Sachs (GS) Monday, Intel (INTC) Tuesday, and Google, (GOOG) Thursday. Economic news for the week is as follows…

· Tues: Producer Price Index 8:30 AM ET
· Tues: Retail Sales 8:30 AM ET
· Weds: Consumer Price Index 8:30 AM ET
· Weds: Empire State Manufacturing Survey 8:30 AM ET
· Weds: Industrial Production 9:15 AM ET
· Weds: Housing Market Index 1:00 PM ET
· Thurs: Housing Starts 8:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Fri: Ben Bernanke Speaks 12:00 PM ET

OPTIONS EXPIRY 4-17-09!

You can find the list of earnings announcements here.

We have a target of 875 on the S&P at which a pause or pullback should occur. If we do pull back, we will watch for the pattern of higher highs and higher lows to be broken before becoming increasingly bearish. There are a lot of earnings announcements over the next few weeks so we should expect to see some whip saw action from day to day.

Wk16: Stocks to Watch

Last weeks watchlist was solid once again, with a few of our longs FDO and FNF bringing in quite a profit. Be cautious heading into next week as Economic News will be the catalyst for movement. Here are the tickets we like thus far…

Long
CTR – On a breakout of $19.
DLTR – On a breakout of $45.
LANC – On a breakout of $43.
MJN – Potential entry on this recent IPO, easy to manage the trade with a stop under Friday’s low.
NTES – On a breakout of $28.75.

Short
BAX – Shorting into resistance at $49/$50.
DVN – Triangle forming, we will watch for a break either way before taking the trade. It is currently in a down trend.

Revenge Trading, Find a Release

For newer traders, revenge trading can become a big problem and lead to over trading. When a trade goes against you, some traders see the need to make their money back from that particular stock and force trades, which can lead to more losses. The most important thing about trading is knowing when to stop. Having a rule, or line in the sand as to what dollar amount or loss you will stop trading BEFORE you place your first trade is vital to keeping your account alive. Remember, the market will always be there.

So find a hobby or fun activity that takes your mind off trading, preferably outdoors, for during those rough times or when the markets are closed. Whether it's hiking, biking, running, playing sports, working out or golf, studies have shown that being outside in green spaces like gardens and parks can act as a recharger to the mind, and as traders, we always need to be on top of our game.

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Wk14: Market Recap

News of GM and Chrysler on the brink of falling into bankruptcy and President Obama’s removal of GM’s chairman made for an unsettling opening to the week. The markets gapped lower Monday, but strengthened as the week progressed.
The ISM manufacturing report Tuesday pointed to a sign that the worst may potentially be over for the economy. This is the second month of improvement with new orders showing a shallower rate of reduction. Friday Employment Situation report showed another 600k+ loss of jobs raising the unemployment rate to 8.5%. Nonetheless the top line figures (S&P, Dow, NASDAQ, and Russell) closed higher on the week breaking the prior swing highs.

Wk15: Market Forecast

Not too much this week in terms of economic news…
· Thurs: International Trade 8:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Fri: Matket Closed/Banks Open - Good Friday

We’re looking to the S&P 875 area as the next price target, that being prior resistance. The 820-830 area will act as support if we do pull back and will make for a great buying opportunity. Watch for reoccurring higher highs and higher lows to signify an uptrend. As soon as a close is put in that does not make it up to the prior high we will watch for a double top signaling a reversal in the trend.

Wk15: Stocks to Watch

Week 14’s watchlist was quite profitable once again. We’re looking for the rally to continue in week 15, but as always want to stay balanced with our longs and shorts.

Long:
FDO – A move above Friday’s hammer should lead to a return to the $34 area for this stock. Otherwise watch for a consolidation here at the $30.50 - $32 level.

FNF – We like this stock on a breakout and retest of the $20.50 level.
HGG – A nice Ascending Triangle in HHG. A buy over the hammer and a stop under the low is how we will play this stock. Price target $16.
MOS - We are looking for MOS to break out of the $46 area which has been a long time resistant point. Once a breakout occurs, this resistance will act as new support.
SMG – A break of $37 and we are long this stock. You have to look back over a year to find prior resistance, however even though it’s far back, it is still in play. Always back out of your time frame if you don’t see any support or resistance areas on your time frame.

WPI – Ascending Triangle with a great spike and pullback on low volume. As usual we enter over the hammer with a stop under the low.
Watch for dips in ADBE and GMCR for re entry and BKC for a breakout at $24.
Short:
GIS – Shorting GIS at $50.75 with a stop at $52.08 will allow for an easily managed trade. Watch out for a bounce at the $49 area, if it breaks with little hesitation a move down to the prior lows is likely.
HRS – Potential short here. We are waiting for a close below the last high candle which right now is last Thursday, Apr-2.
MATW – Shorting below Thursday’s low is where we like the entry into MATW. Watch for relative strength and weakness in all of these stocks. If the market is up and the shorts are only up slightly or down, then they are relatively weak to the market and are likely to head lower.SIGM - We are short underneath the inverted hammer with a stop over the high.