Sunday, July 26, 2009

Wk29: Market Recap

The market internals started and ended the week strong, however midweek showed some divergence as the broader market paused only slightly. We have seen quite the move higher off the lows set back in March 09. The S&P500 is +47% from the March 09 lows, Dow +41%, NASDAQ +55%, and Russell +60%. These moves are incredible and to have the VIX retract nearly 70 points is astonishing. Looking back only a mere 6 months and option premiums were through the roof.
We saw the S&P500 finally break out of the 956 level and once it did prices have not stopped. Nonetheless this 10-day run is due for a pullback. When one does occur, look for the old 956 resistance level to act as new support.

Wk30: Stocks to Watch

Look to stocks that act relatively strong or don’t pull back as much in relation to the market. Here’s a list of some of the strongest stocks in the market, any pullback in the broader market will provide a good entry for the following stocks that hold up relatively strong.
Watch Price and Volume!
Stocks we are looking to short.

Wk30: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Mon: New Home Sales 10:00 AM ET
· Tues: S&P Case-Shiller HPI 9:AM ET
· Tues: Consumer Confidence 10:00 AM ET
· Weds: Durable Goods Orders 8:30 AM ET
· Weds: EIA Petroleum Status 10:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Thurs: EIA Natural Gas Report 10:30 AM ET
· Fri: GDP 8:30 AM ET

A good amount of news ahead in the week to come, all eyes and ears will be on Friday’s GDP number. We will be looking for a slowing in deceleration of the economy.
We see the S&P 1,000 level as the next target, but foresee a pullback to 956 before this happens. Getting short with a stop over the S&P 980 level would be one potential play here; however with many traders’ thinking in this way, a move above 980 could send the market catapulting higher as stop orders are triggered.

Sunday, July 19, 2009

Wk28: Market Recap

With a market breadth of 28:1 and 10:2 confirming the intraday moves higher, it was apparent that they would hold throughout the week. The breadth is an indicator of volume flowing into up stocks compared to volume flowing into down stocks. Essentially 10 and 28 times more volume was flowing into up stocks than down stocks. Any reading over 10 is extremely bullish. 1:1 is parody.
When a pattern as strong and clear as a head and shoulders fails, the amount of people covering their shorts involuntarily pushes the markets higher. This is what we saw happen in week 28.

Wk29: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Weds: EIA Petroleum Status Report 10:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Thurs: Existing Home Sales 10:00 AM ET
· Thurs: EIA Natural Gas Report 10:30 AM ET
· Fri: Consumer Sentiment 9:55 AM ET

No major economic accouchements this week, but Ben Bernanke speaks this week delivering his semi-annual monetary policy testimony to the House Financial Services Committee in Washington, Tuesday and Wednesday at 10:00 AM ET.
Looking for the S&P500 to consolidate here at the 940 level, a break of its recent high of $956.23 and we should see a large move higher perhaps to the 1,000 level.

Wk29: Stocks to Watch

After a failed head and shoulders pattern, the broader markets broke out and sent our bull picks soaring while deflating our potential shorts. The tech sector remains the strongest and we will continue to watch tech names like the infamous AAPL which has broken out above its prior highs. Keep in mind we are still in the midst of earnings season.

Sunday, July 12, 2009

Wk27: Market Recap

A spinning top candlestick formation on the weekly bar of the S&P500 shows the sideways action we faced last week. As stated in the prior week's forecast, volume is quite lackluster and we are seeing a strictly news driven market.
The weekly chart is quite messy and the price patterns forming are weak as well, with the exception of the head and shoulder formations on the S&P, Dow and Russell. The NASDAQ could be in a H&S formation if you look closely, but is clearly the strongest of all four top-line figures.
We saw a continued drop in crude oil and gold prices this week and will expect this trend to continue as recession troubles are not nearly over. The 10-Year Treasury Notes ($TNX) have fallen quite a bit as well from their prior highs and are now coming into a support area. We will continue to watch these correlations as the change.

Wk28: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· 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
· Thurs: Jobless Claims 8:30 AM ET
· Fri: Housing Starts 8:30 AM ET

News, News, News, and lots of it will be the talk of the media this week. Earnings season is underway with Goldman Sachs (GS) Tuesday morning and Google (GOOG) Thursday evening and the FOMC minutes will be released Wednesday at 2:00 PM ET. The top line figures remain trading at levels of support and should continue to do so until a catalyst-either positive or negative, moves them higher or lower.

The EUR/USD has also been trading in a tightening range which could be forming a triangle. A break of its 1.38 or 1.42 level should act as another form of confirmation.

At this point volume is quite low and makes it harder to gauge the strength in market moves. We will be watching for a break of 869 or 900 on the S&P500 to be a convincing breakout.
The same goes for the Dow, NASDAQ, and Russell, a break of last week’s candle tails to the downside or a break of the large body candle’s high to the upside.

Wk28: Stocks to Watch

Sideways market action yields less momentum in individual stocks. We have not seen very many stocks giving quality entry signals due to this summer slowdown and decrease in volume. Earnings season is here, kicked off by aluminum manufacture Alcoa (AA) which reported its 3rd consecutive quarterly loss. Regardless, these are some of the stocks we are watching in the week ahead.

ICUI – Strong trend, waiting consolidation of the forming bull flag pattern.
MMSI – Awaiting retest of last week’s breakout, Note: lots of congestion a few months back.
NTY – Breaking out on strong volume.
DORM – Ascending Triangle, approaching all-time highs, however the stock is a teen and trades on low volume so proceed with caution.
FUJI – Strong trend, but the stock gaps due to foreign markets trading.
DPM – Strong trend, lower volume stock though, look to buy breakout or retest.

CF – Potential short, but watch out for a double bottom here.
CLB – Clear break of uptrend and has established a downtrend on the daily, wait for low volume bounce to enter.
CRS – Declining fast on higher volume.
FCL – Great down channel. Entry $25.34, target 127.1 Fibonacci Retracement $21.00.
PSE – Another good down channel, wait for low volume bounce before entering. Note: The stock doesn’t trade in high volume to begin with.

Sunday, July 5, 2009

June09: Recap

The markets put in a Doji for the month of June, not surprising after one of the largest bear market rallies ever. Small Cap and Tech acted relatively strong this past month.
We will keep an eye on the SPY, DIA, QQQQ, and IWM volume as we anticipate a drift sideways or lower from here. If we do breakout, we will look to a spike in volume to confirm this rally. Remember your timeframe; a candle is not formed until the bar is complete.

Wk26: Market Recap

We saw no follow thru this week as a hammer was put in on week 26 of the S&P500 chart. Until the tail of week 26’s candle is broken to the downside we remain a sideways bias and believe that the bottom has been put in for the year. The summer slowdown is in full force and we should continue to see sideways trading.

Wk27: Market Forecast

In the week ahead look for these news announcements to act as potential market movers…
· Weds:
EIA Petroleum Status Report 10:30 AM ET
· Thurs:
Jobless Claims 8:30 AM ET
· Thurs:
EIA Natural Gas Report 10:30 AM ET
· Fri:
International Trade 8:30 AM ET
· Fri:
Consumer Sentiment 9:55 AM ET

Timothy Geithner Speaks Friday July 10 at 10:00 AM ET.

Not much is happening in the week following the holiday. Often times we find trading following a 3-day weekend to be more on the bullish side, but all signs point to sideways action in the weeks and months to come. Looking at a chart of the SPY we can see the clear trading range we have been in for the past few months and it is likely that we will continue in this range. Our bias is sideways until the 880 level or 955 levels are broken on the S&P500.

Wk27: Stocks to Watch

Most of last week’s stocks to watch pulled back nicely to support forming decent entry points, with the exception of RDY which took off and hasn’t looked back. The tech plays of GOOG, AMZN, and AAPL have begun trickling lower along with the NASDAQ. AMZN, while providing a nice 5 point rally, is currently acting relatively weak to the broader market so we will make note and continue watching its price action.

It’s important to remember when trading that you want the odds as large as possible in your favor. When the broader market is moving sideways, the individual price swings in stocks may be subdued; nonetheless we keep these on our radar for the coming week, primarily long plays.


May09: Recap

The month of May continued its bull rally, but on a smaller body candle and decreasing volume. The S&P500 saw the largest gain with the Russell posting the weakest gain. Watch for the move to run out of steam noted by a bearish or sideways candle.

Thursday, July 2, 2009

The Ticks

The Tick Index is a short-term trading index which takes the difference in up ticking stocks from down ticking stocks. For example: if there are 2000 stocks trading on the NYSE and 1500 trade higher from the previous price and 500 trade lower from the previous price the Tick Index will read +500 (1500 - 500).
The Tick Index is a Market Internal used to and validate moves in the markets. When using the Tick Index we are looking for extremes to confirm or deny a move. Tick readings of +1000 or -1000 are considered quite strong as we tend to stay within the 1000 and -1000 levels most of the time.