Sunday, March 29, 2009
· Tues: Consumer Confidence 10:00 AM ET
· Weds: ISM Manufacturing Index 10:00 AM ET
· Weds: Pending Home Sales Index 10:00 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Fri: Employment Situation 8:30 AM ET
· Fri: Ben Bernanke Speaks 12:00 PM ET
CCK – An ascending triangle is forming on CCK. We typically trade a move like this in one of three ways, an anticipatory trade here, buy the breakout, or buy the retest of support.
CLB, MOS and RCII can be traded in the same way as CCK.
GMCR – Very nice triangle consolidation pattern forming. A break in the direction of the trend should result, which in this case is up.
LINC – A buy over the hammer at $17.50 with a stop under the low at $16.50 allows for an easily managed trade.
RIG – A bounce off support here provides a great entry.
HMSY – Bear flag pattern forming. Notice how the current rally is on declining volume and has not retraced more than 50% of the “pole.” An anticipatory entry or an entry on the breakdown of $29.50.
SIGM – An easily managed trade with an entry below the low of the inverted hammer and a stop above its high, the low volume on the prior rally adds confirmation that the stock is likely to decline more.
ESRX, HBC, HME, K
Monday, March 23, 2009
Sunday, March 22, 2009
Following a withstanding rally in week 11, week 12 economic news hinted that confidence may be instilled in the markets sooner than previously thought.
The breadth ratios on the advancing days (Tuesday and Wednesday) we’re relatively stronger than the declining days (Thursday and Friday). Monday’s action was mixed after Ben Bernanke said it’s possible the recession may come to an end this year on a CBS Television interview Sunday night. With many investors and Hedge Fund Managers sitting on the sidelines through these uncertain market conditions, bargain hunters are back on the prowl.
We usually see stocks rally into Option Expiry (the third Friday of every month) and this cycle was no different. This particular expiry is know as a Triple Witching, meaning contracts for stock index futures, stock index options, and stock options all expire on the same day only occurring in the months of March, June, September and December.
· Mon: Existing Home Sales 10:00 AM ET
· Weds: Durable Goods Orders 8:30 AM ET
· Weds: New Home Sales 10:00 AM ET
· Thurs: GDP 8:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Fri: Personal Income and Outlays 8:30 AM ET
· Fri: Consumer Sentiment 9:55AM ET
More Shorts (Caution: 10/20-Day MA’s turning higher):
Saturday, March 21, 2009
ARO & XLNX - Broke out and is retesting the old resistance (which is now new support)
BR - Holding sideways
GEOY - Fell back to the prior swing low where a new entry was established over the high of 3/16, earnings are coming up so be warned
SVR - 7 up days in a row and climbing
ADBE - The stock moved higher on earnings news, the stock never broke to the downside, waiting for confirmation helps keep up out of to-be losing trades
BBT - Moving sideways, slowly breaking it’s down trend, no trade here
CBU - CBU fell nicely on Monday, but began climbing slowly during the week finishing right where it started. A stop above the prior swing high would have kept you in the trade, but with tighter stop over the current swing high, you may have been stopped out. There’s nothing wrong with re entering a trade after being stopped out if the entry signal arises. Sticking to your trade plan is ALWAYS the most important thing so getting stopped out should be looked at as a success when this is the case.
This is a contrarian indicator, meaning it has an inverse relationship with the market. A ratio of 1 means the market is at parity, above 1 indicates more volume is flowing into declining stocks, and below 1 indicates more volume is flowing into advancing stocks.
Used in conjunction with the A/D Line and Breadth, the TRIN ratio can be used as an intraday indicator to confirm or deny the changing market trend. It can also be looked at from a daily perspective, when applying a 10-Day Moving Average Arms considers a decline below .8 overbought and a move above 1.2 oversold.
Tuesday, March 17, 2009
Saturday, March 14, 2009
As the week progressed more good news rolled in, well investors liked the news anyways. Bernard Madoff was jailed on Thursday after pleading guilty in the largest investment fraud in Wall Street history, drawing in $65 billion over his 20 years scandal.
Last week’s rally looks small on the longer term chart. With a strong S/P previous support at 800, it seems likely that we would turn lower before breaching this point. That 800 level also happens to be where the 50-Day MA is currently sitting, for those of you who use Moving Averages. The indices broke their down trend line and closed above their 10 and 20-Day Moving averages and are sitting just below the 30-Day MA.
For those of you that are bullish, a buy signal printed on the NYSE Bullish Percent Index on March 12. The BPI is applied to a group of stocks as compared to another and charted using Point and Figure Charts. Since we received this signal in an oversold state, it does give higher probability of success to bullish positions taken at these levels. While the chart may not make much sense, it is based off the simple rules of supply and demand.
· Sun: Ben Bernanke Speaks on CBS 60 Minutes 7:00 PM ET
· Mon: Industrial Production 9:15 AM ET
· Tues: Housing Starts 8:30 AM ET
· Tues: Producer Price Index 8:30 AM ET
· Weds: Consumer Price Index 8:30 AM ET
· Weds: FOMC Meeting Announcement PM 2:15 ET
· Fri: Ben Bernanke Speaks 12:00 PM ET
Other economic news reports are Housing Market Index Monday, Petroleum Status Report Tuesday and Jobless Claims Thursday. Visit the Economic Calendar on the Links Tab for a more in-depth look at economic data.
It would be expected to see profit taking in the week or two ahead so a move to the S/P 800 level may be a stretch. If we do begin to sell off one of two things are likely to happen. We see a move lower that does not break the previous low, at which point we put in a slightly higher low. Or, we break the all mighty 666 level where a move down to the 650 area on the S/P would be likely before the bears have had enough and the bulls step back in.
Watch out for news this week, there’s a lot of it so stay on your toes and have your risk managed.
Saturday, March 7, 2009
Tuesday a very weak pending home sales report headlined the day's economic data. The report points to deepening declines for current home sales. The Fed’s Beige Book reported that the recession is deepening, and a series of comments from Federal Reserve officials seemed to confirm that accusation.
February's atrocious jobs report was expected. The markets expected the unemployment rate to move to 9 percent sometime about mid-year.
· Tues: Ben Bernanke Speaks 8:30 ET
· Thurs: Retail Sales 8:30 ET
· Fri: International Trade 8:30 ET
Look for a break of S/P 725 or 665 for continued moves to the up or downside. We are in uncharted territory so proceed with caution. The most important thing through these times is to preserve capital.
Sunday, March 1, 2009
Even though we are primarily swing traders, it is important to back out and review the indices and individual positions on a larger timeframe as prior levels of support and resistance can come into play matter how far out they may be.
As we continue making these new lows, the VIX (Volatility Index) is remaining steady with no major price swings. It seems that investors are not in all out panic mode day-to-day and rather accepted the markets slow grind lower.
While we haven’t seen a strong rally OR panic sell that we have been discussing, one of the two on its way here in the week or weeks to come.
As we wrote about on February 18th, we are in an area with very little support, looking back 12 years to even find a point where the SPX was at these levels. Straight lines (moves higher without consolidation) don’t make for good support levels so we may not see a significant support level until the S/P 650 area.
· Mon: Personal Income and Outlays 8:30 ET
· Mon: ISM Manufacturing Index 8:30 ET
· Fri: Employment Situation 8:30 ET
Also pay attention to Tuesday’s Pending Home Sales Index at 10:00 ET and Thursdays Jobless Claims 8:30 ET.
We like the recent pullback in gold and use GLD to play the metal.
Long Setups: ACS, AU, CSTR, FCX, ORLY
Short Setups: BBT, CBU, ESV, FLIR, GMT, SON, VMC