Tuesday, August 25, 2009

The Top is Here!

Well, for the short term anyways... The two bearish candlestick patterns on the daily chart of the S&P and across the top line board look to be a telling sign that a pullback is in store, all we need is a catalyst. Look for a quick and vicious move back down to $1000. Of course, if the market likes Thursday's GDP # and we do happen to move above $1038, we will be buying with both hands as bears' stops will be triggered initiating a rapped move to the upside.

Sunday, August 23, 2009

Wk33: Market Recap

Monday’s gap down was short lived as the bulls took over once again. As we move higher week after week, we continue to harp on the Fibonacci levels and targeted support and resistance. The S&P pulled right back to the 38.2% Retracement Monday before moving higher.

The Fibo 38.2%, 50.0% and 61.8% are the most commonly talked about areas, as these tend to act as the strongest resistance points when drawing a retracement. Fibonacci lines can also be looked at using extensions. A 121.7% and 161.8% retracements can be used as price targets in breakouts.

Wk34: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Tues: S&P Case-Shiller HPI 9:00 AM ET
· Tues: Consumer Confidence 10:00 AM ET
· Weds: Durable Goods Orders 8:30 AM ET
· Weds: New Home Sales 10:00 AM ET
· Weds: EIA Petroleum Status 10:30 AM ET
· Thurs: GDP 8:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET
· Thurs: EIA Natural Gas Report 10:30 AM ET
· Fri: Personal Income and Outlays 8:30 AM ET
· Fri: Consumer Sentiment 9:55 AM ET

It’s easy to be bullish in this market environment. Buying pullbacks is certainly the thought on everyone’s mind. That being said, the bears do have a valid argument, that being the widening triangle forming on the top-line figures. This coming week is heavy on the economic news so stay on your toes and remember rule #1 PRESERVE YOUR CAPITAL!
We are looking for a break of the trend line in the top-line figures to the upside, but are hedged for a pullback.

Wk34: Stocks to Watch

We are watching for stocks that are not too overextended in this market, yet breaking out. Preserving capital for the next few weeks as big money traders begin to flow back into the markets. No blog next week.

Wednesday, August 19, 2009

Las Vegas Traders Expo

November 18-21 will be the Las Vegas Traders Expo, held at the Mandalay Bay Resort. I will be a guest speaker talking about what it takes to become a successful trader and how to build a solid trading plan. Registration is Free and it will be a fun and educational experience!

Sunday, August 16, 2009

Wk32: Market Recap

Week 32 put in lighter volume trading and formed a doji on the weekly bar, however the more we move sideways here the more of a bullish bias we will take. Sideways action after a vertical move higher forms a bull flag formation (a bullish chart pattern). While, not much has changed from week 31, the sideways action creates a base of support here which if broken to the upside should send stocks higher.

On the weekly chart of the S&P the 50 and 200 Exponential Moving Averages are turning slightly higher. Keep in mind the down trend line across the lower highs of ‘07 and ’08.

We remain at the Fibonacci 38.2% Retracement level on the S&P500 and the NASDAQ is approaching its 50% retracement level. Volume should begin to pick up soon as the summer comes to an end and big money traders come back from holiday.

Wk33: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Mon: Treasury International Capital 9:00 AM ET
· Mon: Housing Market Index 1:00 PM ET
· Tues: Housing Starts 8:30 AM ET
· Tues: Producer Price Index 8:30 AM ET
· 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: Existing Home Sales 10:00 AM ET


Ben Bernanke Speaks at 10:00 AM ET on Friday (8/21) about the year’s crisis.

Next week watch for a break of 1020 or 980 on the S&P as those are the current support and resistance levels. If we break lower look to retrace back to at least the 980 level, if not further to the $945 area. If we break higher, the 50% retracement would be our target with a price of $1,121 on the S&P.

Wk33: Stocks to Watch

Watch for stocks that are relatively strong and relatively week to the NASDAQ this week. Once we break in one direction or the other, the relatively weak stocks should tank and the relatively strong stocks should spike.

Sunday, August 9, 2009

Wk31: Market Recap

Another positive week across the board with good news as the employment situation bettered in July. Small Cap and Tech continues to lead the market higher which is common when pulling out of recessions in past.

We saw the bullish internals outweigh the bears this week with high/low closes of +1938/-536 on the NYSE, however +1167/-1003 on the NASDAQ. A pause could be in store, but sideways movement would be considered a positive thing at this point.
The S&P500 came right up to our 1007 target level, closing just a bit higher at 1010 on the week. We are also at the 38.2% Fibo retracement level and are showing no signs of slowing. On a monthly chart we see the next potential target to be the 1040-1060 area.

When a stock or market moves up at such a fast rate without pauses or sideways action it doesn’t give it time to create support levels, looking at the S&P we see a wide support level back down at 840-940.

Wk32: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Weds:
International Trade 8:30 AM ET
· Weds:
EIA Petroleum Status 10:30 AM ET
· Weds:
Treasury Budget 2:00 PM ET
· Weds:
FOMC Meeting Announcement 2:15 PM ET
· Thurs:
Retail Sales 8:30 AM ET
· Thurs:
Jobless Claims 8:30 AM ET
· Thurs:
EIA Natural Gas Report 10:30 AM ET
· Fri:
Consumer Price Index 8:30 AM ET
· Fri:
Industrial Production 9:15 AM ET
· Fri:
Consumer Sentiment 9:55 AM ET

We continue to look towards the NASDAQ and Russell as leading indicators of market action. The NASDAQ has already reached its 2006 lows. In the short term we will continue to buy pullbacks in the market. A price of 1044 on the S&P500 is our next target.

Wk32: Stocks to Watch

It may seem odd, but stock picking actually becomes more difficult in times. When markets are on runs higher many stocks are just rising with the tide. As it goes, “a rising tide lifts all ships,” so picking out strong stocks that have pulled back can be tricky. We like AAPL and BIDU on a breakout of its consolidation levels, however AMZN is forming a descending triangle with room to fall.

Buy breakouts for short term swings and record weak stocks because when we do pull back those stocks will be the first to tank.

Thursday, August 6, 2009

Is the Recession Over?

With all the negative headlines like “Job options narrow as recession bites” and “Biggest Recession Blunders” one would believe we are headed for another downturn in the markets. While the summer month’s lower volume trading can distort the longer term outlook, it is often said that by the time the media get’s long, it’s time to go short and vice-versa.

Sunday, August 2, 2009

July09: Recap

The month of July was quite bullish, however the decline in volume continues as the summer begins to wind down in the coming month. While some of the volume decrease can be attributed to the summer months, it will be crucial to watch what happens when big money steps in again in September. The S&P, Dow, and Russell are all hovering around their 38.2 Fibonacci retracements, with the NASDAQ approaching its 50% retracement level. Tech being a leading indicator, we anticipate the rest of the top line figures to follow suit.

Wk30: Market Recap

We saw a tug of war at these levels which was confirmed by the breadth, staying inside 3:1 all week long on the close of the day. We put in a spinning top candle pattern on the weekly bar and two inverted hammers on the daily SPY.
We have two support levels on the S&P500, the 975 level and 945 levels. If/when a pullback occurs; watch how we act around these levels. If we blow right through them then it will be a sign to get out of longs, however if we come down to these levels and chop around watch for volume to be your second indicator or exit or hold.

Wk31: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Mon: ISM Manufacturing Index 10:00 AM ET
· Tues: Personal Income and Outlays 8:30 AM ET
· Tues: Pending Home Sales Index 10:00 AM ET
· Weds: ADM Employment Report 8:15 Am ET
· 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: Employment Situation 8:30 AM ET

The S&P 1000 is our next target, followed by 1007 and 1044. We have support at the 975 and 945 levels. We will also focus on the NASDAQ retesting the 2000 level. If it breaks and moves higher we should see the other indices follow thereafter.

Wk31: Stocks to Watch

A strong list of bullish names in last week’s watchlist helped drive the market higher, although at a mixed rate with some stocks holding their gains, others giving them back after breaking out. We continue with a bullish bias and will be looking at these names in the week ahead.


BMI & MSCC ended the week lower and GHDX is forming a good entry point here. We are also adding BKC to our short list for the week. Keeping in mind these shorts are essentially hedges for our bull positions.