Thursday, July 24, 2008

Bulls Need to Step Up Here or Things Will Likely Get Worse in the Short-Term

Good evening, traders. Here are the major indices. There was definitely some short-term technical damage done today but volume was lower, so perhaps the market will be able to shake it off. If we don't get some buyers to come in tomorrow or get more heavy selling, then I think it is likely inevitable for the market to test its recent lows. Sometimes that is a normal process in establishing a bottom. We shall see, but I would definitely be cautious about making random buys right now. The Market Monitor did turn back to bearish after only two days, and the two prior times it did that this year led to more downside for about a week or more.

Dow and S&P 500
Nasdaq and Russell 2000

I took one earnings trade after-hours today - VISN at $20.00. It beat by $0.03 cents, beat on revenues, and raised guidance. Both sales and earnings were up about 50% since last year, so it has great fundamentals. This is a newer stock that I have been watching to see if it formed a base, and it looks like it is - that's the main reason I went with this. If the chart didn't look good, I would probably have passed. ARBA is an earnings trade I missed today.

ARBA, VISN

A few other earnings-related stocks to watch tomorrow include NTCT, PLXS, ANGO, and PCTI. The earnings look good here, although no one knows for sure how the market will react.

I really didn't find any long setups that interested me tonight, and with the market back to being questionable here, that may be for the best anyway. Here are some stocks that did have great days today in spite of the crappy market, and are worth keeping an eye on. I believe most of these moves were earnings related.

QDEL, TDY, SNA, CPWR

There are stocks I am watching to see if they can tighten up their patterns a bit (IMAX, DAIO, EURX, SXT, ECOL, VNUS, IRIS, CALM) but I don't think any of these is worth posting yet.

The only long play I may make tomorrow is swinging one of these oil stocks on the long side. Many put in bullish reversals today, and I have a feeling they could bounce strongly from here, especially if oil holds support here. I picked the ones below to watch because they have a moving average close by that could act as a stop loss level in case I want to get out. I would say these should move immediately - I wouldn't wait around to find out. If they don't move tomorrow or head lower, I would cut my losses right away. Longer-term, I'm still shorting the bounces.

CHK, GMXR, PXP, SM

Here is the only short I took today but it worked out well. Based on a few blogs I read, it sounds like a lot of people saw this same setup and took it. Hopefully it is not too crowded. It might bounce around $60, but if that doesn't hold, then watch out below.

ENER

It may be a little late to get short, but there are a few plays I am still watching. Here are a couple of dead-cat bounces that look shortable to me. OSTK probably will be impossible to borrow, however - just a guess.

OSTK, ERES

China is looking very weak to me here and I found some China charts that reflect that. I would also consider looking at the inverse FXP, although that was already up a lot today.

SINA, CHDX, CDS, CFSG

I wish I would have gone ahead and shorted some of the financials I was looking at today, but I didn't and there isn't anything to do about it now. Here are a few that probably are still in a shortable position, but I don't know how they will be there. They are still a little risky.

GHL, FCSX, NMX, PACW
All Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

That's about it for tonight. I think we'll learn a lot more about the short-term direction of this market based on what the bulls can do tomorrow. They need to make a stand here or things will likely get worse, and those lows from two weeks ago are likely to be tested. Maybe they will be able to do so - I am willing to give them the benefit of the doubt. One bad day is not the end of the world. Two bad days in a row would not be good. And if oil starts moving higher as part of a relief bounce over the next week, which is a distinct possibility, defending the current area may be too tough of a task for the bulls to handle. We shall see. Best of luck tomorrow.

7 comments:

Anonymous said...

You always have some great charts for us to ponder- May I ask what your routine is on scanning and how you go about looking for stocks to trade?

Thanks-
Tom

Mac said...

Thanks Tom. If you look at the top of the page and click the "using telechart" link that pretty much explains what I do on a nightly basis. Hope that helps. Let me know if you have any other questions.

Anonymous said...

Perfect! Phenomenal info here... I don't use Telechart (although heard excellent things). I can manipulate your scans into my own scanning program. Thanks Alot -truly appreciated

Tom

Mac said...

No problem, Tom.

Mika said...

Very good charts, shame I didn´t check them earlier. I would be long allready with VISN, it´s very clear pattern for me.

Regards,

http://just-charts.blogspot.com/

Mika said...

Hmmm, I read your older posts also, sounds for me you´re one of these folks handle this market pretty well, congratulation - allways pleasure to read hardcore professionals charts.

Regards,
http://just-charts.blogspot.com/

Mac said...

Thanks - unfortunately VISN didn't work out well for me which I will explain later.