Tuesday, December 29, 2009

State of the Market - 12/29/09

No market summary again today as there really isn't anything to talk about - very slow once again today and my guess is it will be like this until next Monday. I made a small entry into DUG today at $12.49 as a play on XOM and XLE, both of which look shortable to me.

I do plan on putting a few year-end posts together over the next few days - one dealing with the market as a whole and what this year has taught us as traders, and also one dealing with my personal experiences as a trader, my performance, and what I need to improve on to make next year better than this year. These posts may be in written or video form or maybe a combination of both. If I find time, I would also like to take a look at some of the top stocks of 2009 (probably in video form) and what we can learn from these big movers. That might not get done until next week however.

With the birth of our second child along with moving into a new, bigger house and the projects and work that go into that, it was quite the busy year for me. Finding time to spend reading about and studying the market has become much more difficult - not that I am complaining, just stating a fact. I don't know if that affected me this year or not, but it may have and is one of the things I want to work on in the upcoming year. Finding time to put meaningful content up on this blog was a challenge as well at times, but I hope the writings and videos from this past year were helpful and somewhat meaningful for you readers out there.

As this blog enters its third year, I wanted to encourage any readers out there to pass on suggestions as to what you would like to see from the blog as the new year starts. It is often hard to get a feel for what readers are thinking about the content I put out and feedback, whether good or bad, is always welcome. My main focus will continue to be market commentary but as time allows, I would like to provide additional content to interested readers. Again, this is only as time allows.

Feel free to leave comments or email me at mac_rmm@chartswingtrader.com with suggestions. I included a poll below as well with some ideas that if you have time you can share thoughts with as well. Thanks and best wishes as the new year approaches.

Sunday, December 27, 2009

Some Weekend Thoughts...

Hi, traders. Sorry for the lack of posts last week but with the slow holiday trading environment along with being busy with Christmas preparations, it was hard to get material out there. I do hope you all had a great Christmas and enjoyed the time spent with friends and family. With two little boys and a big extended family on my wife's side, Christmas was certainly fun and exciting here.

As for the market, I am just going to post some thoughts randomly as I look at my charts and you can take the comments as you want. I do think this week will be very much like last week - slow, boring, but likely with an upward bias. I don't plan on making many moves but if you really have to trade, there are some candidates out there to watch.

Overall Markets (S&P, Nasdaq, Russell 2000) - Both the Nasdaq and Russell have had breakouts and are quite extended in the short-term, along with showing negative divergences on my indicators due to the low volume last week. Normally, I would be very tentative, but were not dealing with a normal market environment, so I would not be surprised to see the market grind higher next week on more low volume. You may just have to throw the low volume out because volume really hasn't mattered much all year. If you're buying, be aware of that these indices are technically looking risky here, but again, the seasonality might trump things. The S&P continues to lag but is now slightly above its recent range. Certainly not the most convincing breakout but with the holiday environment, maybe asking for more is unreasonable.

U.S. Dollar - Bounced off short-term support Friday (9-day moving average) and could just rest a few more days or chug its way higher. I am very surprised that the dollar and the market have risen together but perhaps I shouldn't be - everything that makes sense has been thrown out the window this year and this is just the latest example.

Oil and Gold - Gold tried to bounce a bit Friday but is still somewhat oversold. Oil meanwhile has bounced right back into its channel after breaking below it about two weeks ago. It is very overbought in the short-term so I would be careful chasing names in this sector. Both XLE and OIH have patterns that look like potential short-setups so that is another reason to be careful with this group.

Other Sectors - Financials and retail continue to basically go nowhere except sideways - I am keeping an eye on XLF for a potential breakout but right now it just looks like it is asleep. Keep an eye as well on the truckers - I am seeing a few names setup in this group (ABFS, UACL, VTNC)


Hope this helps someone out there - take care and good luck this week.

Tuesday, December 22, 2009

State of the Market - 12/22/09

Another short post today because there really isn't much to say. The market was up again today but just slightly and the S&P continues to struggle breaking through resistance. Volume was very low and it does look like traders have started to shut it down for the holidays.

We only have one and a half sessions left this week, and I really don't plan on trading them. I didn't do anything today - really didn't even watch the market - and based on my scans, I am finding very little that would even interest me in this low-volume environment. China stocks continue to chop around but go nowhere and I am even seeing some breakdowns in those names - check out CAAS today. The market could keep griding higher this week much like it did today but in terms of how you play it, I am having trouble finding good ways.

Good luck this week if you're trading - I may shut it down for a few days unless I see some really interesting stuff out there. Take care and enjoy the holidays as they approach.

Monday, December 21, 2009

State of the Market - 12/21/09

I don't have a whole lot new to say from my earlier post this morning - the market had a nice day today but it was a little weird from where I sat. The Nasdaq clearly broke to new highs for the year which is great but the S&P did not follow suit and continues to be stuck under that resistance around 1115-1120. That is typically negative and I expected more from the S&P with the market breaking past heavy resistance, at least in the case of the Nasdaq.

I also saw very few stocks that I was watching move higher and have nice breakouts today, which is also a bit weird. I was ready to put a few positions on this morning near the open but I simply didn't see anything that interested me. The only two stocks that did anything that I was watching were SWI and HGSI and volume was not super strong on either. The Chinese momo stocks moved a lot but went basically nowhere if that makes sense.

I was stopped out of my small SDS position today at $34.94 but just barely - not really a big deal to me. I am not planning on shorting anything here as I feel the more likely move this week is up. The fact that the dollar continues to be strong and the market is holding up and in some cases moving higher is very impressive - hard to believe as well. If the dollar pulls back sometime, I still think the market could move a bit faster to the upside than we've seen recently. We'll just have to see. I will be looking for potential plays on the long side this week but as of today, there just weren't many out there for my taste. Good luck Tuesday.

Monday Morning Thoughts - 12/21/09

Sorry for the lack of a weekend post, but with my sister-in-law's wedding, it was quite busy here the past few days.

Based on futures, it looks like the market is going to try and break out here AGAIN, at least on the Nasdaq(watch 2220). The S&P looks like it will open slightly below its resistance area around 1116. The dollar is quite overbought and looks ripe for a pullback - if we get it, perhaps that will eb the catalyst to get a breakout going. The next two calendar weeks are typically bullish, although my guess is that volume will be low today and the rest of this week (year actually) as traders shut things down for the holiday. That means we either go nowhere or we have a lot of volatility and whipsaw type action. I hope we don't see that, but it is certainly a possibility.

I don't know that I will be trading heavily this week, but if I make trades, I will keep my eyes on commodities, specifically gold, which is at a five month trendline, quite oversold, and should bounce if the dollar pulls back. I have yet to go through my scans but will do so now to see what else is out there.

Chart from Telechart, Courtesy of Worden Brothers, Inc.

I continue to see a general loss of momentum in most of these China stocks (CAAS, RINO, etc.) but they could always bounce and run in a low-volume environment, so keep them on your list, even if it's just for day trades. GPRE, CGA, GSI, SWI, SFLY, and SDTH are others I will be watching today.

Good luck today, and I did want to let my readers know that Telechart is running their holiday special - four months free on a twelve-month subscription to both their Telechart and Stock Finder products, and as always, they offer a 30-day free trial. I've been a Telechart users going into my third year, and I honestly don't know what I did without it - it saves me so much time and helps me find the stocks that are moving in any market. Now playing them - well, it can't help me with that - that's my problem....

Thursday, December 17, 2009

State of the Market - 12/17/09

My sister-in-law is getting married and as such, the wedding festivities are already starting here in Pennsylvania. Posts are likely to be short or non-existent for the next few days - I hope you understand. Things don't look great out there right now and if the dollar continues to stay overbought, then the market will likely pullback further. Right now, however, we're still in a range and there isn't a ton to do in terms of anything more than short-term plays. I am still in SDS and today illustrates why I use stops - got me out of some lagging positions today. I probably won't be trading much tomorrow - hopefully someday we'll get out of this range. Good luck Friday.

Wednesday, December 16, 2009

State of the Market - 12/16/09

A pretty boring and slow day overall today on Wall Street, as stocks started the day strong but for what seems like the millionth time reversed lower as new highs for the year were attempting to be made. From about 11:30, the market slowly drifted lower and didn't even get much reaction going when the Fed decision was released. A late bounce brought stocks slightly off their lows as they finished with very small gains. Volume appears to be lower than yesterday's distribution day.

Technically, the market once again fiddled with new highs and the top of the trading range, with the Nasdaq breaking slightly through yesterday's highs but as of the close, we still have not seen a new high close on either the S&P or Nasdaq. Normally, so many failed breakout attempts would signal a bearish trend on the way, but the market hasn't sold off either, which is confusing if nothing else. It just isn't doing much of anything right now and as such things are tough.

I made one new trade today - bought NLST at $6.10 early in the session - but once again I was whipsawed out of the position as it reversed. My stop was hit at $5.96 for a small loss. My stop was also hit on VISN at $11.45 for a very small gain as it showed absolutely no follow-through on its breakout from yesterday. I luckily made no others moves as several other stocks I was watching closely (namely CTFO) finished well off their highs as well. Momentum continues to be very spotty and I have just been spinning my wheels this week in the few names I have tried, so staying away might indeed be the best idea unless you're day trading them - I just need to listen to my own advice. I still have my SDS position but that's it.

We have kind of a weird market right now in that we continue to fail anytime a breakout to new highs is attempted, but at the same time the market continues to not sell off hard, especially in the face of a rising dollar. I would imagine both the bears and the bulls have to be a bit frustrated right now as neither can do much of anything. This current dynamic makes trading more than a few hours or so difficult and cash still is a good place to be - although I've made a few trades this week, I've remained mostly in cash the entire time. Today brought very little in terms of a catalyst via the Fed but perhaps it will just a take a day or two for the market to react. Or perhaps the market is already on its Christmas vacation and this chop is what we have to look forward to for the rest of the year. Let's hope it's the former of those two options and not the latter. Take care and good luck Thursday.

Tuesday, December 15, 2009

State of the Market - 12/15/09

A poor day today on Wall Street, as a stronger dollar sent stocks lower at the open and after an early bounce, they faded throughout the session. There was a gap down to start the day, but that gap was quickly bought, and by 11:00, the Nasdaq was actually positive for the session, breaking slightly to new highs. The top of the trading range, however, quickly reared its head again at that point, and stocks fell from there. The selling picked up some steam around 3:00, but a late bounce helped the market close slightly off its lows. Volume appears to be lower, at least right now.

Technically, it looks at first glance that today was a perfect chance to "sell the rip" as the upside resistance continues to be very strong for both the Nasdaq and S&P. With the dollar continuing to strengthen, it is asking a lot for the market to break out above such heavy resistance, so today's trading is not a surprise. Keep watching the 1120 and now the 2217 area to see if we can get through.

Speaking of the dollar, it is a little overbought and I am surprised (shocked actually) the market hasn't been hit much harder than it has as this dollar bounce has occured. Although we are at the top of the trading range, this revelation has me leaning a little more bullish here, believe it or not. I've said for a few days now that we clearly need a catalyst, and a pullback in the dollar could be it. As the dollar has come off a potential bottom from the beginning of December, the market has basically gone sideways, which is bullish overall. Gold and oil are still oversold, and a dollar pullback could blast these groups higher, which would likely push the overall market higher as well. Just an idea, but that's what I am looking for now. Of course, if the dollar continues to strengthen, then that idea probably goes out the window and we are just stuck in our trading range.

I made one trade today - CAAS @ $21.49 - that I was soon whipsawed out for a loss (stopped out at $20.50). It looked like it was moving out its range this morning and volume was heavy (that was the key at the time for me) but it obviously didn't last. A lot of the China momentum plays reversed today after being up earlier (TSTC, RINO, CAGC, FIRE) and it may be the end of the road for these stocks, at least in the short-term. I mentioned last night that the momentum seemed to be waning a bit and although the setups were there this morning, the lack of follow-through means this is probably true. Ironically, I am still holding VISN and it was one of the few that did have a good move today. I thought about adding to it as it broke out but I will just hold what I have and may take profits quicker than I originally hoped.

Overall, I am happy being mostly in cash but continue to look for longs to play for a few days as they present themselves. I am not trading heavily, but am not opposed to taking opportunities if they are there. I will share them as I see them - right now cash still remains a good main option. Take care and good luck Wednesday.

Monday, December 14, 2009

Momentum Watchlist for Tomorrow

The Russell 2000 outperforming yet again today (and breaking slightly over some resistance) gives me a bit of hope that we can break out to the upside of this range soon. I still think we need a catalyst, but we'll see. Right now, if the dollar happens to sell off, commodities are still very oversold, which would give some steam to the overall market as they bounce. As of now, my game plan is to keep my eye on some momentum-type plays that may work well for a short period of time just in case the market can breakout. Here's a list to watch:

Strong Today: CAGC, MEA, XTEX


Beaten Down and Ready to Bounce (perhaps): EBIX, CBAK, FUQI

Good luck tomorrow!

State of the Market - 12/14/09

We saw a positive start to the week today on Wall Street, as stocks started up and stayed up throughout the session, although it seemed to be a slow day once again intraday with volume coming in lower once again. Stocks gapped higher, pulled back and then rose to their highs for the day a little after noon. They pulled back a bit from there but started climbing again around 1:30 and kept climbing slowly throughout the rest of the session. Stocks, however, really couldn't break to new highs for the day and still have yet to break through key overhead resistance.

Technically, the numbers I showed last night in the video and have been discussing seemingly forever still remain in play - 1115 to 1120 on the S&P and 2215 on the Nasdaq. Until they are broken on a closing basis, we remain locked in the trading range. I still believe we need some sort of catalyst to get us out of this range, as volume continues to shrink and intraday action continues to be quite boring. Shorting might be a very smart play right here with a tight stop as the possibility of the trading range continuing remains high in my opinion.

I made no moves today and still hold VISN long and SDS as a hedge. There were some nice moves from stocks shown in the video last night (TSTC, JASO, XTEX, RINO, and XTXI all had moves of 7% or higher today) while only CMFO had a bad day. If you're bullish, it is good to see some of the momentum names moving again, but I still get the sense that it (momentum) is not as strong right now as it was a few weeks ago. Volume today in these stocks were in most cases not as strong as they were last week, and the moves seem less powerful. They also seem to be less consistent - anything China was moving last week but now it is hit and miss - CAAS and VISN did very little today. Maybe I am just expecting too much.

Overall, I remain in mostly cash and that is probably the best play until we get this range resolved. There is some action in individual plays but again, mostly only very short-term plays make sense. On the surface, it makes sense for the market to pullback here as volume has been lacking on the recent bounce and the market is short-term overbought - it looks to be time to once again "sell the rip". That doesn't mean, however, the market can't break to new highs. I am pretty neutral right now and have my finger ready on both sides - I just hope we don't get a false breakout that causes a lot of whipsaw action. That would be frustrating (which means that's probably exactly what we'll see.) Take care and good luck Tuesday.

Sunday, December 13, 2009

Stock Market Video - Weekend Market Summary - 12/13/09

Hi, traders. Here's a video for the upcoming week with a look at the indices and some potential plays, mainly on the long side. Still locked in a range overall but there are some things to keep your eye on this week, and hopefully we can break this range soon. Have a great week of trading and best of luck.

Weekend Market Summary - 12/13/09
Click above link to open video in a pop-out window.

I also wanted to give a final update about my consumer experience with US-Appliance. I did finally get my TV delivered this week - about five weeks after I ordered it. It was certainly a long wait, but it is an awesome TV and I can't complain too much since the price was about 25% lower than anywhere else I would have been able to get it when I factor the blu-ray player I plan on selling soon. By the way, if you're looking for a new TV, the LH90 series by LG is about as good as you can get, especially for the money.

In the end, US Appliance did deliver the goods - it was just a very long wait. So if you are looking to do business with them, I would say "go ahead" as long as you realize their shipping times are not great and they often don't have stock of the item when the order is placed. They also do charge your credit card which I don't like either. I don't know if I would do business again with them - depends on the price and product - but I don't plan on purchasing any big-ticket items for a while now, so it probably doesn't matter. Just my two cents.

Friday, December 11, 2009

State of the Market - 12/11/09

Here's the short Friday summary for today - the market was up slightly today which on the surface looks good, especially in the face of the strong dollar we saw today. However, it was really only the Dow that was up a decent amount and volume was once again very low and momentum seems to be slowing drastically from where I sit. Because of that and the fact we are quickly approaching the top of this trading range, I am leaning more bearish going into next week.

I made a few trades today - I was stopped out of my TSTC position at $14.85 for about a 3% loss. This is a prime example of the lack of momentum - this stock tried to bounce the past two days from a pullback but couldn't get that frenzied buying going again and when it broke the 9 day moving average, I was out. It might still bounce as it closed off its lows but I have my doubts. I also sold out of SEED at $11.68 for a small 2-3% gain. It spiked today but quickly fell back and seems to be lacking the momentum it had the past few weeks, so I got rid of it. I still am holding VISN in case momentum starts picking up but that is it for the longs.

I put a test position in today with SDS at $36.03 as the lack of momentum is bothering me here. It is hard to put a finger on it, but when I've watched the market this week, things have seemed to be extra slow, even though there have been gains. I am sitting on a small loss right now with SDS and will get out with new highs in the market, but my gut told me this afternoon that it may be time to start thinking about some shorts. We'll see if I am right next week - probably won't be given my luck this year.

Hope everyone has a great weekend - I'll be back Sunday with some thoughts after going through my scans. Take care.

Thursday, December 10, 2009

State of the Market - 12/10/09

An up day on Wall Street today, as stocks rose for the second straight day, although not as impressively as they looked to be early on. The day got off to a good start with stocks rising quickly for the first ten or so minutes of trading. From there, however, it was just a chopfest, as stock fell, rose, fell, rose, fell and bounced slightly one more time into the close to finish in the middle of their range. Volume looks to be lower once again.

Technically, the story remains the same for the big two - the Nasdaq and S&P are still locked in this trading range. Until the range is broken, it is hard to predict for sure what is going to happen next. I still tend to think a top is being put in over the longer term but I've thought that several times this year and have been wrong. Around 1115 and 1085 are the numbers to watch for the S&P for a breakout or breakdown, and 2214 and 2160 represent the key numbers for the Nasdaq.

I mentioned yesterday that a lot of the movement for the rest of the week will likely depend on how the dollar holds up - a consolidation phase here off its recent bounce would be bearish for the overall market, while a quick trip back into its downtrend channel would be bullish for the overall market. The dollar did bounce back off a weak open today and based on its daily chart looks to be consolidating here - UUP is developing a nice bull flag. If we see a breakout, I would expect some major short covering in the dollar and a break of the market's trading range to the downside.

The only problem I see with that setup is that the main areas that would be affected by a rising dollar and therefore the best areas to short are commodities, but they are still very much oversold right now. Oil fell slightly once again today and although I am expecting a relief bounce soon, I know it doesn't have to happen. Gold is also quite oversold but once again, there has not really been a strong bounce back after being sold off so hard last week. Perhaps that is telling - very oversold stocks that don't bounce when stretched to the downside typically lead to further selling and further oversold conditions. Just something to think about.

I made one more small trade today, going long VISN at $10.94. I like the flag it is forming here and have a clear area to get out at near the short-term 9 day moving average. I am anticipating a bit and that can get you into trouble, but I won't be sticking around long if this doesn't work right away. I am still in TSTC and SEED, but neither have bounced off their 9 day moving averages the way I like to see in strong momentum stocks, so I may not have those for much longer either. We'll just have to see - right now I am sensing a lack of momentum. In addition, a few stocks I was watching had very slight breakdowns today (CEU, PNCL, CHBT, OPLK, and LUV) so that bears watching.

All in all, today was a pretty boring day in that we didn't get much intraday movement and very few stocks that I was watching did much of anything. If this market has new highs in its future, I think it has to get it going much more impressively than it did the past two days. The low volume and lack of momentum tells me that perhaps we are set to fall again. However, until the range is broken, I don't know how comfortable I am about getting short. I think the dollar matters a lot right now and as always, watch it carefully. Take care and best of luck Friday.

Wednesday, December 9, 2009

State of the Market - 12/9/09

We had a bounceback session today on Wall Street, which is not surprising given the range-bound market we are in and the fact that the market was close to the bottom of that range. The market started the day slightly lower and slid slightly further from there, coming close to some key support levels. Buyers started to come in around 9:45 and pushed stocks higher for about an hour before pulling back again into lunch. They held their morning lows and then rose back into the close, finishing close to their highs for the day and with decent but not overwhelming gains. Volume appears to be lower yet again.

Technically, I said yesterday that I expected a bit of a pullback in the dollar due to its overbought condition and we did see that today, which likely led to some of the bounce we saw today. The pullback wasn't harsh however and in order for the market to rise further from here back up to the top of the range, I think the dollar would have to fall further. If it just consolidates in a bullish fashion, that would be obviously bearish for stocks. I think we need some sort of trigger to get stocks moving out of this range and perhaps the dollar could do it. The S&P and Nasdaq are still trapped in a sideways pattern and are doing very little.

Sector-wise, oil was hit yet again today and I would expect a bounce soon in the commodity area as it is quite oversold. However, if the dollar doesn't move lower, that may not happen. Financials did little today and continue to move basically sideways as well with a slight downward bias. Retailers pulled back yet again today but RTH is right on its 50 day moving average and is oversold so a bounce wouldn't surprise there either. If they break that 50 day, it would of course be bearish for this group.

Although it is smart to remain in cash during a sideways market, I made two small trades near the open today - bought SEED at $11.36 right after the open and later bought TSTC at $15.34 and $15.39 a bit after the open. Both looked like low-risk pullback plays if the market bounced. We'll see if they get moving - I will not hold through any further pullback and my stops are in place as always. I want to see some immediate movement (saw a little today in TSTC). Overall, I am still mostly in cash but will continue to keep an eye several charts, particularly the airlines I mentioned yesterday. They are consolidating nicely (look at PNCL and UAUA for two examples) and if the dollar remains strong and oil doesn't bounce, these look like strong potential plays.

That's about it for Wednesday - range-bound markets are pretty boring, but there are a few plays here and there to keep an eye on, so always be on alert. Continue to watch that dollar - a consolidating without much giveback of the recent gains would be bullish for the dollar but bearish for the overall market. That will likely determine much of what happens the rest of this week. Take care and good luck Thursday.

Tuesday, December 8, 2009

State of the Market - 12/8/09

A rough day today on Wall Street, as a higher dollar caused stocks to fall. However, most of the selling was done on the opening gap, as stocks moved basically sideways in a range for the rest of the day rather than selling off. The Nasdaq actually rose above its morning gap before falling back a bit into the close. Volume looks like it will be light compared to yesterday.

Technically, it is not surprising to see the market drift lower here after banging its head against the top of the current range last week and with the dollar continuing to rally. No real damage has been done however and basically the story remains the same - we are in a range-bound market. Watch 1080 as support on the S&P as the 50 day moving average is right there, and watch 2135 as support on the Nasdaq. I don't know however if the Nasdaq will get that low.

In terms of sectors, the financials continue to drip lower and oil broke a little support today via USO but the small caps are suprisingly hanging in there a bit which is good to see. We'll have to see what the dollar does - it has put in a nice move here including today's pop, but with President Obama coming out and saying things like "we are going to spend our way out of this downturn", I have a hard time believing the dollar is truly bottoming here. Oil and gold have been hit hard this week because of the dollar bounce, but I expected more of a rush out of these areas than we have seen. As it is, the dollar is overbought and a pullback would not be surprising at all. That's why I am expecting a market bounce over the next few days as well.

In terms of individual plays, I do see some longs that have pulled back nicely (TSTC, QLTI, SALM, SEED, TTM) and I will watch these over the next few days in case we do see a bit of a bounce here on the overall market. If the dollar does stay overbought and we see futher selling, I am looking hard at the airlines (XJT, PNCL, UAUA, LUV) as they have rested for a day or so now and look quite strong. A higher dollar means lower oil which benefits these airlines so that's why I will be watching. I do expect the dollar to pullback soon but in case it doesn't, this area looks good to me. I still don't feel comfortable shorting anything so I won't.

That's about it for today - still stuck in a range so I won't be doing a whole lot but I am getting interested in a few pullback plays so my eyes will be on them the next few days. Watch that dollar and trade accordingly. Take care and good luck Wednesday.

Monday, December 7, 2009

State of the Market - 12/7/09

I once again have very little to say today simply because very little happened. Stock rose slightly early on, fell slightly into the final hour, and then bounced to close basically flat on the day. Volume was lower compared to Friday's heavy totals and just about the same compared to the rest of last week.

Technically, we are still just locked in a range here and that makes swing trading difficult. As I said last night, I did nothing today and will likely continue to do nothing until we break this range one way or the other. Both oils and financials were lower today and appear poised to breakdown soon - if that happens, then I would assume the market overall will breakdown as well. There are certainly enough reasons for it to do so, and the possibility of us putting in a slow top here is very high. It's not certain, and a break to new highs would have me reconsidering my views, but that's the way I am leaning right now.

I don't know how comfortable I feel getting short yet - I want to see some confirmation first - but I will go through my scans tonight to see if I see anything interesting. I certainly didn't this weekend and I doubt one day will change things. To wrap up, I will be remaining patient and mostly if not totally in cash as sometimes that is the best play in the stock market. Until we break this range, I think now is one of those times. Take care.

Sunday, December 6, 2009

Still Locked in Range, But Some Possible Churning Going On

Hi traders - here's some weekend thoughts. First of all, I had very few interesting setups show up on my scans in terms of individual stocks - so few in fact that it isn't worth posting them. Perhaps the lack of setups makes sense as we continue to just chop around on the overall market. As I look at the indices, I see some possible churning going on here. For three straight days now, the market has attempted to break to new highs only to close back in the middle of its range. Friday's heavy volume along with very little price progress has me thinking churning, which is typically something seen during topping processes. Add another log on the bearish fire.

S&P 500

Nasdaq looks like it could be churning as well. Of course, a close at new highs would negate those concerns.

The U.S. dollar was very strong Friday and with the amount of people short the dollar I can imagine a lot of short covering if a bounce finally sticks. As you look at this chart, certainly Friday was a bullish day for the dollar but as always, follow-through remains a key. Watch this - if the dollar does follow-through, I would expect the market to test at least the bottom of its recent range and its 50 day moving averages.

U.S. Dollar

On the bullish side, there are a few charts that should make bulls a bit optimistic - small caps outpeformed on Friday and transports broke out. These are both positives.

Russell 2000
All Charts from Telechart Courtesy of Worden Brothers, Inc.

All in all, my guess is that this will remain a difficult market to trade as breakdown attempts continue to fail at support and breakout attempts continue to fail at resistance. Since there aren't too many individual setups out there, I think I will likely be taking it easy yet again this week and not make any big moves. I need those setups to trade- we had some last week, but I just don't see many right now. There are times to make big moves in the market and times to sit on your hands, and as boring as it is, I think sitting on your hands is the smart thing to do right now.

The bearish signs remain present and a pullback would make sense here, but we know how little sense this market has made, so as always, be ready for anything. Maybe the fourth time will be the charm sometime this week for breakout attempts and the market can get going on a new leg to the upside. Take care and best of luck in the week ahead.

Friday, December 4, 2009

State of the Market - 12/4/09

Today's post will be short because it's Friday and because nothing really changed today in the market. For the fourth straight day, stocks took a shot at establishing new highs for 2009 and for the fourth straight day they reversed and closed off their highs for the day, failing to close at new highs. A good jobs number boosted pre-market futures, and stocks gapped up and rose for the first half hour or so of trading. From there, however, it was bad news, as stocks reversed hard and gave up all of their gains by lunchtime. They bounced from there, fell back to retest those lows around 2:00, and then bounced a bit into the close. But overall, another disappointing day for the bulls in that they just can't seem to get a breakout going that sticks.

I thought long and hard about buying this morning but I really couldn't find anything interesting and therefore I just passed. Perhaps that was a sign (not finding anything) that I should have paid more attention to as it was telling me the market wasn't going to work today either. I am still in cash and as long as this market remains range-bound, that probably is the best play out there. I will be back this weekend to look at things more in-depth, but seriously, until this range is broken, trading will be quite difficult. Take care and enjoy the weekend.

Thursday, December 3, 2009

State of the Market - 12/3/09

Not a very bullish day on Wall Street today, as stocks rose early once again and tried to push to new highs for the year, but failed to do so. They started reversing shortly after the opening but just moved sideways for most of the session. Around 3:30 however, things got nasty as the S&P fell 10 points and the Nasdaq almost 20 points in the last thirty minutes of trading. Volume appeared lighter for most of the session but I don't know what that last half-hour did to the trading volumes overall.

Technically, if we had heavy volume over the past few sessions, I would say we are no doubt churning here, meaning lots of trade with very little price movement. The little price movement is certainly true, as today was the third straight day the S&P attempted to move to new closing highs for the year and the third straight day it was unable to do so. Perhaps a catalyst is just needed here, but the action does look toppy on the surface. The fact that the Nasdaq attempted to get to new highs as well but reversed does not paint a very bullish picture right now. My guess is that last half-hour was related to traders just not wanting to stand in front of the jobs number tomorrow, but it was bearish nonetheless.

I know I have been harping on these two groups for a while now, but both the financials and small caps put in bearish technical days as well today. XLF started out very well today, breaking a downtrend line and its 50 day moving average before selling off hard and putting itself back down below those important levels. The Russell 2000 did pretty much the exact same thing today, starting the day above resistance but falling back below it by the end. So as I've been saying for a while now, these two areas in particular give much reason to be cautious with this market as a whole.

I did make a few small trades today but in hindsight, with the jobs number coming out tomorrow, I probably should have just waited. I entered BAC at $16.66 as it got above some resistance around $16.60 this morning. That breakout attempt as you may guess failed and reversed, and I was stopped out at $16.17 for a small loss. I also entered HGSI this morning at $28.25 as it attempted to move above some resistance as well. It did move nicely for half the day, getting as high as $29.29, but reversed hard as well and I was stopped out at $27.96 with another small loss. Perhaps it is for the best anyways, as I am back in cash before the jobs report tomorrow.

So overall, there are technical reasons to be bearish here, but at the same time, I do realize that a good number tomorrow could push this market higher so I don't want to short just yet. I keep thinking we are reaching an inflection point soon where this market is going to just tank or really ramp up to the upside hard. The technicals for the most part say that the move lower has a higher likelihood, but they've said that before as well and the market hasn't listened. I guess the best thing to do is just watch and see how the market reacts tomorrow - one way or another, we will hopefully get a trend going again instead of the chop we've seen for about two weeks now. Take care and good luck Friday.

Wednesday, December 2, 2009

State of the Market - 12/2/09

A pretty slow day today on Wall Street, as stocks tried to move higher early on in the session but failed and just meandered their way sideways for most of the afternoon. Volume looks to be lower for the third straight session.

Technically, the S&P poked its head above key resistance around 1113 this morning, getting as high as 1115, but that move couldn't hold and the S&P closed only slightly positive and in the middle of its intraday range. Perhaps the S&P just needs a day of rest or two before blasting through this level to new highs for the year, but as of now, the resistance looks formidable. The Nasdaq got close to its 2009 highs around 2203 could not get through as well, rising as high as 2198 before reversing slightly lower. That remains the number to watch there. If the bulls can get through these levels, then another round of short covering would not surprise me, pushing the market even higher still. We have to wait for that breakout however.

Financials were flat all day and still remain below their 50 day moving average and a downtrend line. The same description works for the Russell 2000 today as well - it tried to get above its 50 day but finished right at it. It did however outperform the other indices with a 1% gain today, so perhaps that is encouraging. If the small caps can catch up, I would feel much more confident about a potential breakout here than I do now. Oil was down as the dollar was slightly higher.

I sold out of my TSTC position today at $15,65 for about a 14% gain today - I probably should have held on as it finished almost a dollar higher than where I sold it, but for now, I am going to take some gains when I get them as just getting gains have been such a struggle this year for me. When you are in a losing streak, just hitting some singles and doubles as opposed to swinging for the fences is not a bad idea - it lets you get your confidence back, and confidence is a huge part of trading. That's the way I look at it at least. I am back in cash but will continued to maintain my long watchlists for potential momentum plays like TSTC.

Not many stocks moved much on my watchlist from last night - EXLS was about it. Right now, XJT, CEU, LZB and CHINA all look like potential runners if buyers come in but am in no hurry to get into those stocks so I will wait for a little confirmation. With Friday being jobs report day, things could get a bit more volatile over the next few days, so I don't know how agressive I want to be going into that session. Hopefully it can be a market mover and we can get out of this range, but you just never know. Take care and good luck Thursday.

Tuesday, December 1, 2009

Some Names If We Breakout Here

I don't have time to put a video together or post the individual charts, but here are some stocks I will be watching tomorrow in the event we do get a breakout on the S&P and keep today's momentum going.


Good luck Wednesday.

State of the Market - 12/1/09

A nice strong day today on Wall Street, as futures were up big in the pre-market and stocks stayed strong throughout the rest of the session. After running for the first five minutes or so, they did pull back, but righted themselves quickly and rose slowly from there, holding intraday support several times. However, upside resistance was tested several times as well so for now the market is still locked in a range. Volume appears to be heavier which is a good sign.

Technically, the big number on the S&P is 1113 and the market bumped up against that number several times today without being able to get through. Perhaps it just needs another day to do that - the consolidation is bullish overall but bears watching in case we reverse here. The Nasdaq broke about a slight downtrend line today but is lagging the S&P in that it is not close to new highs yet. As I've mentioned several times, that along with the Russell 2000 continuing to lag is a negative divergence, but we've seen those divergences for a while now.

The dollar was lower for most of the day and that caused oil to move higher. Financials continue to lag the market as they were flat for the day - not a good sign when you consider the gains in the overall market. You would normally expect this to cause problems - the market typically needs financials to move higher - but as I just said, this market has ignored so many negative divergences up to this point that it may just do that again with XLF.

I bought TSTC this morning at $13.70, anticipating the breakout that did come. However, that was my only trade of the day. I am kind of kicking myself because I did not go through my scans last night and in hindsight, with all the China stocks that were moving yesterday, a simple look at my China watchlist in Telechart would have given me more ideas for today. From the weekend video, CAAS, CYD, and TSTC have all moved very nicely, but CAGC, HRBN, and WATG all had moves today that would have been playable if I paid better attention. That's what being in a losing streak does - you tend to slack off a bit in your preparation out of frustration and then you end up missing opportunities.

Overall, we have to see if we can break out on the S&P over the next day or so - 1113 proved to be formidable resistance today and I assume it will be tomorrow. A move above that could accelerate the rally, but I would really like to see the Nasdaq, small caps, and financials catch up and join the party before getting heavily invested. A reversal back into this trading range here remains a strong possibility, especially as these momentum stocks get a bit too extended. Right now, I think being careful remains a smart play, although if you're nimble, the momentum plays may continue working (short-term plays only). Good luck Wednesday.

Monday, November 30, 2009

State of the Market - 11/30/09

A slow and boring day today on Wall Street, albeit a higher one, as stocks rose early on, pulled back to their morning lows by lunchtime, and then slowly climbed back into positive territory by the end of the session. Some late-buying/short-covering allowed all indices to finish at their highs for the day and with modest gains. I am sure volume is heavier than Friday's half-session but I don't yet know how it compares to volume earlier last week.

Technically, we are basically still in this sideways range shown last night on the video (1080-1110ish on the S&P and 2140-2200ish on the Nasdaq) and until we break one of those levels, trading lightly probably remains smart. Financials via XLF bounced back nicely today after a bearish gap down Friday but still remain below their 50 day moving average. Oil also bounced back today as the dollar was down slightly.

I did watch the open closely today looking for potential movers from last night's video, but the only one that stood out was CAAS. It moved about $1.50 in less than two minutes this morning, and realistically there was no way to catch an entry perfectly as it moved above the $17.60 level in a flash. By the time it settled, it was extended so I passed. However, that stock acted very well and if you did get a good entry, congrats. Anticipating the breakout would have been key there. A few other China plays like RINO, CYD, and SEED all were strong momentum-wise today and day-traders probably made some money in those names. However, these names are getting a bit frothy so be careful - don't chase them.

Overall, not a whole lot changed today. It seems like Dubai may be just a little blip news-wise as it is bullish to see the market bounce back off of Friday's bad open with very little difficulty. However, all of the negative divergences remain out there, with both the financials and small-caps continuing to lag the other indices (although to be fair both put in some bullish action today). There are small pockets of momentum to play in individual stocks if you are so inclined, but overall, light and careful trading probably remain the best strategy here, as the market remains tricky overall. Good luck Tuesday.

Sunday, November 29, 2009

Stock Market Video - Weekend Market Summary - 11/29/09

Hi, traders. Here's a video for the upcoming week with a look at the indices and some potential plays, mainly on the long side. Right now, the market remains difficult and in my opinion, less is more in this environment in terms of trading. We have moved nowhere over the past two weeks and with the holiday season starting along with the Dubai situation, I have the feeling we are going to become a much-more news driven market over the next week or so, which is always tough to predict and to trade. Just be careful out there if you're trading heavily.

Weekend Market Summary - 11/29/09
Click above link to open video in a pop-out window.

Friday, November 27, 2009

Some Morning Thoughts - Dubai and the Dollar

I have to start by saying that with Thanksgiving, I did not go through any scans yesterday so I don't have a great feel for where we are at at this very moment. With the very low volume so far this week, I didn't think it mattered much anyway. However, today should be an interesting session. Half-day, probably lower volume still, but with some panic thrown in with the Dubai situation - certainly a wild setup.

So what will happen? I don't know. I won't be trading it - I do know that. Asia closed very rough and futures are down big right now, but Europe has rebounded from what I see to actually be positive on the session so seriously, anything is possible. I think as always, the dollar will be the key. This article from Zero Hedge caught my attention - Japan Prepared To Sell Yen To Keep Currency Below 14 Year High Against Dollar. The market has been running on fumes for a while now in my opinion, and one major event that would spike the dollar and put in at least a temporary bottom could crush the overall market, as the falling dollar has obviously been one of it not the key factor in pushing the market continually higher. Is this an event that would do it? I don't know but it bears watching.

Good luck today - a huge gap down on lower volume in a half-day session is not the situation I want to short just because of how volatile things will likely be, but perhaps this will be a turning point in the overall market, especially if it's a turning point for the dollar. Then again, we are in a Costanza market until proven otherwise, so be careful. 1084 is key on the S&P but the 50 day moving average is right below it, and 2137 is the number to watch on the Nasdaq. Interestingly enough, we are set to open right near those numbers. Fun as always.

Wednesday, November 25, 2009

State of the Market - 11/25/09

It was an expectedly boring day today on Wall Street, with little price movement and extremely low volume. It was so boring in fact that I see little reason to comment on it. I hope next week will see a pick up in volume and some better trading conditions because right now there simply isn't much to do.

I hope all of the readers of this blog have a wonderful and blessed Thanksgiving. I know I am blessed in so many ways - a great wife, two healthy and active young sons, a steady job, a new house. Especially in these difficult economic times, I do give so many thanks to God for blessing me so much. Take care and enjoy the holiday.

Tuesday, November 24, 2009

State of the Market - 11/24/09

We had a pretty "blah" day today on Wall Street, with stocks selling off very slightly but in this very low volume holiday environment, nothing can be taken too seriously in terms of the action. Volume looks to be even lower than yesterday's putrid totals and it looks like this entire week will be quite slow, although the price action may actually fluctuate more due to the low totals.

Technically, we may be forming little flags here on the indices and financials - rest would be good to continue these formations. Of course, if we would break above them, I would want to some decent volume accompany the move and until it does, I still have doubts in the back of mind.

I am still in cash and will be the rest of this week. Someone commented yesterday to remind me that cash is a position, and that is true. In my opinion, it is the best position right now because we are just in a chopfest. There are very few individual setups that look good at all, and while you may be able to catch a CGA or SEED for an intraday move if you day-trade, holding them more than a day or so is very tricky in this environment, as you can see with SEED today. So as a swing trader, cash remains my play.

That's all I have for today - good luck if you are trading heavily right now. It is just too slow and choppy for me to do that. Take care.

Monday, November 23, 2009

Update on US Appliance TV Order

I posted a few days ago about my experience purchasing a TV (the LG 47LH90) through the website http://www.us-appliance.com. At the time, I was very disappointed that they charged my credit card and then three weeks later told me they would not be getting any more TVs in and that I was out of luck.

Well, after talking to them several times today, it does look like they have found stock of the TV and have told me that I should be receiving tracking information on the TV by next week. I wanted to share this information to be totally fair to their website - they have always been very polite through my interactions with them, but I was just disappointed with their ability to deliver the goods in a timely manner.

I will update this issue as next week approaches. If I get the TV I ordered in the first place, then I will officially take back any comments I posted last week. I still don't like their policy of charging credit cards immediately, but as of now, it looks like they have worked hard to come through with the TV. Maybe my negative comments were made too early, and you should check them out this holiday season, at least as of now. We'll see when next week arrives. Just passing on the information. Take care.

State of the Market - 11/23/09

Same old story today on Wall Street - dollar down, stocks up. Futures were up big in the pre-market session and stocks did open strong due to positive news on home sales and of course the falling dollar. They stayed strong for the first hour or so of trading, with the S&P rising as high as 1112. Interestingly enough, 1113 was the high last week for the S&P. Perhaps because of that, stocks slowly drifted back from there, never able to regain their early momentum and finished in the middle of their intraday range, although with large gains. Volume was extremely low and likely sets the tone for what this week will be like volume-wise due to the holiday.

I did nothing today and am glad I did. Looking at my watchlist from last night's video, I see quite a few stocks that opened at or above resistance and looked like possible breakouts, only to reverse hard and probably frustrated a lot of buyers. Remember the article from last night? The action in stocks like KNDI, TSTC, PCLN, and to a lesser extent UFPT, IUSA, and RDWR fits the description of common setups that are perhaps being manipulated by the HFT traders. I have no way of knowing if this is the case or not, but all started the day at or near their highs and quickly reversed off those highs. Probably tomorrow they will all be up.

To be perfectly honest, I am really losing interest in this market and just haven't spent as much time studying charts and going through scans recently as I have in past months and years. Perhaps a part of this is the losing streak I can't seem to get out of, but part of it is that the market doesn't make sense to me right now and I continue to lack a feel one way or the other as to where we head on a weekly basis. If the writing or videos on this blog suffers or has suffered because of this, I do apologize, but it is what it is. There isn't a lot I can do about it. My normal analysis and way of looking at things just isn't working and I have yet to figure out the alternative method to use, or at least I haven't allowed my mind to believe that alternative method.

This week has the look of a total chopfest due to the very low volume so I will likely continue to do other things and remain totally in cash. I remain hopeful that we will get into a better trading environment soon but as of now, that good swing trading environment is not there, at least from where I sit. Take care and if you are trading this week, best of luck.

Sunday, November 22, 2009

Stock Market Video - Weekend Thoughts - 11/22/09

Hi, traders. I'm taking my chances trying to figure this market out again with this video, although a big part of me is doubting the validity of technicals in this crazy environment. If you are like me and use technicals to read the market, you may have had a difficult time in this market over the past few months. Maybe I am the only one experiencing this - I don't know. Anyway, here's an interesting article to check out sent to me by Position Trader about high frequency trading and the affect it is having on traders. I think it is worth a quick read.

In the video, I look at the all-important dollar, which is at a very interesting point and will likely continue to drive trading as we go forward this week. The video also includes some short-term momentum setups that may work if Thanksgiving week proves to be bullish - of course, that again comes back to the question raised in the article. I will not be trading heavily if at all this week due to the holiday, but it is always good to have some ideas on hand just in case. Good luck.

Weekend Thoughts - 11/22/09
Click above link to open video in a pop-out window.

Friday, November 20, 2009

Consumer Warning - Don't Buy From This Website

The stock market did nothing today - it was quite a boring options expiration. Since it's Friday, I don't have much to say but I will look over things more this week and see what may be happening. I still don't have a good feel overall for many of the reasons I have explained this week.

Although this has nothing to do with the stock market, I wanted to share a consumer experience I had, which I feel is especially appropriate right now as the Christmas holiday season approaches. I have been looking for a new LCD tv for awhile now - one that's a little bigger than the one we have now with better features. Anyway, I found a deal November 1 on www.us-appliance.com for an LG LED tv with a free Wifi Blu-ray player included. The price was excellent and so I went with it as the TV had terrific reviews. The web page said it would be delivered in two to three weeks.

On November 4, I noticed that US Appliance had already charged my credit card the full amount of purchase. I thought this was odd considering they didn't even have the item in stock yet and called to inquire. Their response was that "this is just our policy". No other business that I have ever bought from charged my credit card before the item was in stock and shipped. I didn't even think this was legal, to be honest. I had a problem with this but felt the deal was so good on the TV that I would wait until the three week period was up.

I emailed last week as two weeks came and went and got a response that they were waiting for the stock to still come in and that it might not be until late November now, but they would let me know. After checking in today again as the three week mark approached, I received the following email.

"We are sorry for the delay in updating you on your 47LH90 + free BD390 bundle order. After promising we would have a 47LH90 shipment this week, LG has now informed us that this model is no longer available and they have no models with which to substitute."

Interestingly enough, I called LG and asked about them discontinuing this model, and they said there were no plans to do that. Why would they - it is a very popular and well-reviewed TV.

So basically US-Appliance took an interest-free loan out for three weeks on my behalf and then couldn't deliver the product. If that's the type of company you want to deal with this winter, feel free to do so. To be fair, they were always very polite to me and they did offer me another package when they told me about the cancellation, but it included a blu-ray player that's not even for sale anymore (after checking online it came out in the middle of 2007) and a TV that is somewhat comparable to the original TV, but it is not nearly as well-reviewed. So anyway, I am back to looking for TVs. At least I learned there is one website that I will not even consider in the future as my search progresses. I just wanted to share my experience to hopefully prevent anyone else from having to go through the same ordeal I did. Stay away from US-Appliance.

Thursday, November 19, 2009

State of the Market - 11/19/09

We saw a down day today on Wall Street, as stock sold off very sharply for the first hour or so of trading, paused for a bit, and then fell to new lows before lunch. From there, it climbed slowly and steadily off its morning lows, but still finished with large losses by the time the closing bell rang. As of now, volume looks to be lower on the S&P but higher on the Nasdaq.

Technically, today could be meaningful because three week uptrend lines were broken today on both the S&P and Nasdaq. In addition, key breakout levels around 1100 on the S&P and 2190 on the Nasdaq were broken today to the downside as they could not hold as support two days in a row. Does that mean we sell off tomorrow and get follow-through to the downside? Normally I would say yes - we could be looking at a failed breakout attempt here. We however are not in a normal market, not by a long stretch.

S&P 500

We all know (or at least I do - maybe it's just me) how well technicals have worked recently and I tend to think today's selling may have simply been some game-playing before options expiration tomorrow. There is no way of knowing for sure however so I am still open to anything here and really remain without a good feel for things. Having been burned so much over the past few months trusting technicals, I have a hard time putting any faith in the pierced trendlines and broken support today - that's all. A big part of me thinks it may have just been a fakeout to try and reignite shorts to add fuel to another bounce up.

As it is, divergences remain all over the place so there are certainly reasons out there for the market to fall further if it wants to do so. No volume on the most recent move, negative divergences on several indicators, lagging small caps and financials - I've pointed them out many times here the past few weeks. I noticed today that GS (a bellwether for this whole rally) has lagged tremendously as well over the past few weeks, never rising above its 50 day moving average even with the S&P moving to new highs. AAPL broke down a bit today as well on heavier volume - another bellwether that couldn't break to new highs when the market did. Maybe these leaders breaking down would throw another log on the bears' fire, that is if they ever have enough confidence to ignite it.

I remain totally in cash and don't plan on doing anything tomorrow with options expiration occuring. I continue to just have little faith or confidence in any of the things that happen or signs I see just because of the past few months, and it will probably take those historically correct indicators and signs to start working again before I put my confidence back into them. There haven't been many individual setups anyway over the past week, so maybe it's for the best that I remain in cash. Overall, I think it may be the best play right now. Good luck Friday and take care.

Wednesday, November 18, 2009

State of the Market - 11/18/09

For the second straight day, I really don't have much to say. Today was quite a boring day with more low volume and very little price movement. The S&P and Nasdaq do keep holding their former breakout levels around 1100 and 2190 respectively, so that is good news for the bulls. Those numbers should remain important. Perhaps the Thanksgiving holiday is starting early with the volume being so low, but it's been that way for a while now.

I remain totally in cash and don't plan on building any big positions anytime soon because I just don't see much that is worthy of big positions right now. Swing trading remains difficult as many strong stocks are very extended and just won't rest, but also that leaves them very vulnerable to sharp pullbacks like we saw in NANO today, so chasing them is risky. I have my eyes on a few plays that are forming little flag patterns (RDWR, ISSI, EXLS, IUSA, UFPT) or cup with handles (G) but that's about it.

My guess is that due to seasonality and the continued weakness of the dollar, this market will grind its way higher over the next week or so. If the dollar ever does bounce significantly, then heaven help those that are aggressively long, but right now it doesn't appear the bears will ever come out of hibernation. Take care and good luck tomorrow.

Tuesday, November 17, 2009

State of the Market - 11/17/09

We saw another up day today on Wall Street as stocks were able to bounce back from some light early selling to close near their highs for the day. Volume however was once again lower and below average. All in all, it was a pretty boring and slow day.

I really don't have much to say today - nothing has really changed. I still don't have a good feel as to where we head from here and much will depend on the dollar. I would not be surprised we keep heading higher because nothing surprises me anymore, but I am unfortunately still not seeing a great amount of long setups out there. Because of that, I will probably keep my 100% cash position and not do much this week. If I would make some trades, I have a feeling I would just get chopped up and be making them for the sake of trading - never a good idea. From where I sit as a swing trader, there still just isn't much to do here, as boring as that sounds.

Good luck tomorrow - like I said, there isn't much to say today that hasn't been said before. Sorry for the lack of ideas or analysis - I just don't have any for today. Take care.

Monday, November 16, 2009

State of the Market - 11/16/09

Another new low for the dollar, another new high for the stock market. That statement pretty much sums up today's session on Wall Street, as stocks started the day higher at the open and added to their gains thanks to short covering as the session progressed, finishing a bit below their highs for the day. As has been the trend recently, volume appears to be anemic and well below average, at least on the S&P. On the Nasdaq, volume was closer to average but it looks to still be below as well.

Technically, I don't think anything matters right now. Technically, this market should have gone down many times and it just doesn't. Normally, you would think that means we have a super strong market, but super strong markets don't go straight up on way below average volume. I continue to be at a loss for why this market keeps going up but the theories I shared last week seem to make more sense to me as this goes. I'll probably figure it out just in time for the market to start acting "normal" again (by normal I mean based on historical tendencies). The longer this goes, the more it looks like a anti-dollar rally driven by cheap money, government intervention, and short covering. That's it - wash, rinse, and repeat.

For what its worth, there continue to be all sorts of negative divergences out there. Moneystreams on both the Nasdaq and S&P are continuing to lag price and volume continues to remain below-average - since November 2 (the start of this most recent rally), neither the Nasdaq or S&P has seen a day where volume to the upside was above (or in many cases even close to) its 50 day average volume. The financials and small caps continue to lag here as well. Does any of this matter? Probably not.

The dollar is all that matters, and it broke to new lows today for 2009. Once this happened this morning, you saw shorts start to cover and therefore we had another new high for the year on the indices. That's about it - I don't know what else to say from a technical perspective. The bottom line is that this has been a pretty bad few months for technicals and as a technical trader, that makes it rather hard to be successful.

I was stopped out of all my inverse positions early on in the session - SRS at $8.87, SDS at $35.98, and QID at $20.67. All gave me small losses. I don't know if I can say I am becoming used to these losses as the losing streak goes, but it could be the case. They don't bother me as much any more, which I don't know is a good thing or a bad thing. If it was just losses on shorts, I might feel less apathetic, but even my longs haven't worked so it just is what it is.

I wish I could buy here but as I said earlier, as a technical trader I see virtually nothing that makes me think buying here is smart. That doesn't mean we can't move higher, because we likely will, but what I have used in the past to make trading decisions is not working right now and it is tough to give up on what has worked historically so well and just "buy blindly" which, when we look back on 2009, will probably be listed as the best performing strategy out of anything. There are a few stocks on my list like FSYS that moved today, but I am just finding it hard to buy here. Not a ton of candidates and only a "theory" of why the market keeps moving higher to go from. Luckily I continue to not get very agressive on the short side, but after today, I am in cash and will likely remain mostly there for the forseeable future.

Good luck Tuesday - if the dollar keeps heading lower, I would fully expect to see more low-volume gains caused by short covering. If you want to play, feel free. Take care.

Sunday, November 15, 2009

Weekend Thoughts from A Professional Trader

You know, after a lot of activity this weekend, I was just getting ready to look at my scans and put a few thoughts down when I read a post from another trader that couldn't possibly sum up any better exactly what is going on in this market and where we may be headed. Here's the link from Upside Trader. Check out the whole article - it is worth it.

Here's a snippet (from Upside Trader's website)....

"First the Bull Case:

1- Low Rates- The Fed has corporate America convinced that they will be borrowing money at zero forever. Their language is vague but excruciatingly clear at the same time, the buzz phrase that they like to use is is “extended period”. The banks are having a bigger and better party than any other sector because they borrow from the FED at zero and loan to the Treasury at higher levels. I’ve heard of borrowing low and lending higher, but that is ridiculous. By the way, it’s great work if you can get it. The reality still seems to be though, they are still not lending, but hoarding, at least that’s what successful business people tell me and friends of mine that have high level banking jobs.

2–Liquidity and the Carry Trade- Mutual fund inflows have been lackluster, money is coming in, but at a drastically reduced rate. Joe Sixpack may have had enough, buying all those fake bottoms may have shattered his faith and his wallet. Some won’t EVER come back. But as I mentioned in a post the other day, who needs mutual fund liquidity when corporate issuance is exploding? That money has to go somewhere.

The carry trade is when institutions borrow relatively cheaply in the short-term financing markets, and then use the proceeds to buy, on a leveraged basis, longer-term and higher-yielding assets. Treasury bonds are the most common asset that banks purchase with the carry trade, but hedge funds will also purchase anything from corporate bonds to emerging market stocks with the proceeds.

This setup usually occurs after a crisis, as the Fed keeps short-term rates lower for a longer period of time than would naturally occur, thus allowing banks to earn back some of their losses by capturing the spread.

The Fed has been unusually clear in stating that conditions are “likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

Despite this clarity investors have not believed the Fed and have been betting on higher yields. These bearish bets have actually hindered the carry trade; but have gotten crushed in the last few weeks as the Fed reinforced their message.

The crushing of those bear bets is likely to open the financing market further, which will likely intensify the carry trade. The carry trade is nothing new to us, but it could pick up steam.

3- The Dollar- This one could go either way, but if the greenback does cave and go lower, and by that I mean a break last months lows, the market should fly and the remaining shorts will be squeezed.

4- Disbelief Factor- No one can understand why we are where we are. The market seems to go higher everyday on lousy volume and bad news. Don’t kid yourself, that could last, again, to reiterate, there are NO sellers. Markets stay over bought and oversold longer than we ever think.

The Bear Case

Earnings- Bears think the current earnings reports were and are a joke. With the exception of some real organic growth numbers, they believe the bar has been lowered to the ground and “beats” are/were due strictly to the slashing of corporate spending and general poverty level spending.

GDP- Bears think it was a jacked up, hacked up number with more smoke and mirrors than a fun house.

Unemployment- We are at 10.2% and going higher, many astute economists say the real rate is closer to 18% when you take in to account the “under employed” and those that have just given up. I classify an M&A analyst at Lehman who now works at the DMV or the Fed as under employed.

The Dollar- Many bears will argue that the dollar is oversold and the short trade in that currency is way crowded. They hope for something, anything to set up a short squeeze in the greenback.

In that sense, every move upwards in US stocks or gold or the Aussie dollar or junk-bond indices is another step in exactly the wrong direction: it’s a step towards yet another massive crash. And it’s all being turbo-charged by Fed policy. If there’s a painless way out of this situation, they don’t see it.

Volume- Let’s face it, it’s anemic. I’ve needed epinephrine blasts just to stay awake the last few months. The bears don’t believe the market should go up or stay up with such light volume.

Interest Rates- The bears argue that when rates do go up, the economy and corporate America will not be able to handle the sugar shock wearing off. When I started in the business in the eighties a very smart guy told me “Son, remember one thing, it’s an interest rate sensitive market and never fight the FED”. I honestly never did forget that and it served me well over the years, but rates were 20% then, Carter was getting kicked to the curb and there was room to lower rates then. It’s hard to get excited by rates going to…..an 1/8th????????"

I've made some attempts this week in my posts to explain what is going on in this market and why (perhaps) it has been so difficult to trade from a rational and historical perspective. I don't know if it will remain that way, but I have a feeling it will and that very few people are going to play it perfectly from here to the rest of the year. I am short right now but will get out if we break to new highs without hesitation. The bearish signs remain out there, but they've been out there for a while now, and it hasn't mattered. Who knows when it will matter? I am off to watch Curb Your Enthusiasm - good luck next week. .

Friday, November 13, 2009

State of the Market - 11/13/09

Friday the 13th turned out to be a little scary for the bears today, as stocks did bounce back a bit today due mainly to dollar weakness. The market started only slightly higher, but from there steadily rose through the morning into lunchtime. They broke to new highs around noon, but really couldn't move any higher and challenge yesterday's highs. Around 2:00, there was a sharp pullback but the market did bounce back into the close to finish with decent gains. Volume was lower as has been the case recently on any up days we've seen.

Technically, the bears saw no follow-through to yesterday's heavier volume sell off and still may not be ready to take control of this market. Both the Nasdaq and S&P could possibly be forming a little handle here on a cup pattern - however, the volume patterns are still completely wrong, with several heavier volume declines and very little upside volume in the cup. You know what that means, right? Yes, we will probably break to new highs next week based on the way this market has acted this year. Common sense and historical tendencies?? Forget about it.

The dollar had a very rough day today and has really been chopping around recently. UUP almost broke to new lows for the year and you know the drill - if this happens next week, I would expect the market to rally in reaction.

Going through my scans last night, I saw many short setups and everything I see continues to point to that side of the market, but that really hasn't meant anything this year so who is to say it will mean anything now. I am still in my three inverse ETFs but added nothing today and remain mostly in cash. If we happen to breakout and nice charts set up, then I will have to consider going long, but right now there just aren't many nice charts at all.

It's Friday so I will end it here - I'll try to be back at some point this weekend with a video or more commentary but it looks to be a busy two days so I can't promise anything. Not that there is a lot to say - the market seems to just be moving in response to the dollar so whatever happens there will likely dictate where we go. Enjoy the weekend.

Thursday, November 12, 2009

State of the Market - 11/12/09

We had a definitive down day today on Wall Street, the first one in a long time, as stocks responded to a rising dollar the same way they have all year - by selling off. The day started with an attempted move higher, but stocks couldn't make their way through yesterday's highs and started to fall when that occurred. There were some bounces along the way, but all turned into just bear flags on the intraday chart and stocks finished slightly off their lows for the day thanks to a late little bounce. Volume appears to be heavier on the Nasdaq and lighter on the S&P. Overall, volume has been very light over the past five to six days.

Technically, today was certainly not surprising given that the market had bounced straight up over the past eight days and had gotten quite overbought in the short-term. Of course, this might be surprising simply given the fact that this market rarely does what it "should" do, but at least for this one time, it did. Now we just have to see if the bears have any ability to follow-through on today's pullback. Up to this point, they haven't, and the S&P and Nasdaq are still above their short-term moving averages. I will be watching the following levels for support - breaks of these would be bearish. For the Nasdaq, 2140, 2128, and 2119 could act as support, and for the S&P, 1078 and 1071 are where the short-term moving averages are as of now.

Although the Nasdaq and S&P are holding up OK, the main reasons to be bearish right now lie with the small caps and the financials. The Russell 2000 reversed hard today right at its 50 day moving average and continues to lag the other indices. There looks to be a pretty clear bear flag that was pierced to the downside today, and the head and shoulder setup is still present here. The financials via XLF also went back below their 50 day moving averages today and also have the potential to be forming a right shoulder here. Maybe today was nothing and the bulls will shape these two charts up quickly, but if we see further selling, it would be quite bearish.

Russell 2K
(Click for larger version)

In other sectors, energy has been holding up fairly well up to this point but today we also saw a slight break in both OIH and XLE, and this could also be bearish. If we get further selling here, the charts will look like bear flag breakdowns. This weakness in energy was most likely tied to the strength in the dollar today, which could be putting in a little double bottom here after breaking its most recent low yesterday and then bouncing back. As always, dollar strength should equal market weakness.

I am short right now via SRS, SDS, and QID, which I added yesterday. I am not heavily short - I still have about 60% cash in my account. I still have trust issues overall with the market so I am not being super aggressive yet, but if we get some follow-through over the next few days to the downside, I won't have a problem adding to these positions or starting others. I need to take a look at my individual short setups as I was not able to yesterday, although playing the inverse ETFs is easier in some ways for me.

Good luck tomorrow - we will just have to watch and see if the bears can get follow-through tomorrow to the downside. Lots of bearish charts out there, but you and I both know that this market doesn't enjoy doing what makes sense, so be careful and alert. Take care.

Wednesday, November 11, 2009

Some Morning Throughts

Here you go...
  • The U.S. dollar is set to open at new lows for the year and that of course is pushing the market higher. The dollar has a bit more to fall until it reaches the bottom of the downtrend channel it is currently in, therefore you can guess the market has some more room to run to the upside.
  • If you've read my last two posts, you have some possible ideas as to why this market keeps rallying. My guess is that we are in the middle of another major short squeeze and if the S&P gets above 1101 (it should open close to that) I expect more shorts to get squeezed further and then you know the drill.
  • Unfortunately, after going through my scans, I see nothing worth buying - just a bunch of choppy, unattractive charts, not only on the long side but the short side. Everything looks like a mess. I guess you could just play the indices but I can't get over my skepticism.
  • Several extremely good traders that I read from time to time are very bearish right now, probably because there are so many signals pointing that way. Harry Boxer, who is an awesome trader, ended his summary yesterday with this quote - "Stepping back and reviewing the hourly chart patterns, tomorrow’s going to be a very interesting session, as the indices stand precariously on the edge of the abyss in my opinion. We’ll see if we get a sell-off in the next day or two. Many technical indicators at this point are screaming sell." At least I don't feel too bad when I read experts seeing the same thing I am seeing.
Good luck today - as I said yesterday, I won't be around today and probably won't have a post up later. Not that there is much to say - the dollar is falling, free money is rising, and shorts are getting squeezed by the big boys. That's the story of this market and looks to be for the near future.

Tuesday, November 10, 2009

State of the Market - 11/10/09

A little different post today, as the market did absolutely nothing overall and I still don't have a good feel for where we go from here, at least not any better of a feel than I had yesterday. I actually have spent most of the time that I spend thinking about the market (which conicidentally is becoming ever smaller as this year goes on) wondering why the market is doing what it is doing this year. I've been trying to figure out a reason for all of the bizarre behavior seen this year and why most things that have worked historically just haven't worked well this year. So I came up with this step by step process that might explain some of the behavior we've seen this year. This is the best I could do and feel free to share you comments.

A Step by Step Guide for Market Behavior in 2009

Step One - Flood the market with (virtually) free money and low interest rates that make investing in anything other than the stock market foolish. This pushes the market higher off of a bottom even though it lacks any fundamentals to back it up.

Step Two - Get the market to overbought levels on less than stellar volume(due to no real interest from buyers other than those with the free money). This pulls in bears that realize there are no fundamentals to back prices up and starts them on the path to shorting the market heavily.

Step Three - Have the big brokerage house (i.e. Goldman) come in as a buyer with that (virtually) free money and push stock prices back up just when it looks like things will break and the negative factors present will come into play. Remember 2008 virtually eliminated competition on Wall Street as Lehman and Bear Stearns are no more. Goldman is no doubt the top dog, perhaps the only dog. Basically let them roast the bears that are heavily short based on the merits of the market.

Step Four - As step three occurs, there begins a natural short squeeze that becomes more powerful as it goes as more people jump on the negative bandwagon based on the merits or lack thereof of the market. This short squeeze pushes the markets to new highs regardless of fundamentals and technicals.

Wash, rinse and repeat. As this process occurs over and over, it gets to be a self-fulfilling phenomenon and a more powerful one each time it happens. As the technicals and fundamentals get worse and as the market keeps moving higher regardless, more people recognize these factors and think "well, these negatives have to matter at some point. I will start shorting." As soon as that happens, the (virtually) free money comes back into play and another short squeeze is ignited.

I don't know how long this can keep going on and how long this market can be out of whack with its fundamentals and technicals, but as of now, it doesn't look like it will stop soon. What this may lead to is indeed a blow-off top where finally everyone that is using common sense and historical tendencies (i.e. the IBD style system) up to this point to prematurely short the market throws their hands up and says, "that's it, I'm done, this market is never going down, so I am buying." Then of course the market does go down on all of its merits. Or maybe it doesn't because the free money doesn't look like it will be ending soon. Either way, the historical strategies that have worked in the past don't seem to be working in this market and traders need to adjust accordingly.

Good luck Wednesday - I have the day off work and my wife and I will be taking our two boys to the local Children's Museum, so I won't be trading. That is probably a good thing. Take care.

Monday, November 9, 2009

State of the Market - 11/9/09

Well, it looks like we are going to get a repeat performance from July, September, and October with this market, because stocks today once again threw to the side all the bearish signs out there and just rallied higher throughout the entire session. Stocks gapped slightly higher to open the session due to a weak dollar and from there just worked their way steadily higher, closing at their highs for the day. Volume appears to be below average but above Friday's poor levels.

Technically, I really don't know what to say. Perhaps the reversal on the dollar last Tuesday was the clue that this market was ready to bounce straight up once again, but that was it. As I showed last night in the video, there were tons of negatives and very few positives from a strictly technical perspective with this market, but it doesn't matter. The weak dollar was the story today and it looks like we could be back to the weak dollar, strong market play.

The S&P climbed back above its recent former trendline today and the potential head and shoulder pattern looks now like it's voided. For the Nasdaq and XLF, the pattern is still out there but after today, I don't think it will work, just like it didn't back in July. Highs for the Nasdaq are at 2190 and for the S&P are at 1101 - it looks like those will be challenged if not broken through soon.

I was stopped out of my SRS position early on today at $9.83 for a small loss and am back in cash. I am glad I haven't gotten heavily short this past week, although the small losses from continued test positions do add up over time. Unfortunately, as I go through my scans, I see virtually nothing that looks interesting to buy - the charts just aren't there right now, at least not the type I look for. CTDC, HGSI, and SLH are the best I can find right now.

Overall, it looks like the beat will go on for this market, and I have no problem admitting I am clueless about things anymore. I've always tried to be completely honest on this blog, and I am being honest when I saw I just don't know what is going on. Everything I learned and believe as a price/volume, IBD-style technical trader seems to be getting thrown out the window. I believe IBD will put the market back in rally mode today after moving to a correction a week or so ago. They are the experts and yet this will be the third or fourth time in a row their system has basically been whipsawed.

Right now, I just am at a loss for what works besides buying every dip blindly and use ETFs to do so. Even buying individual stocks is a difficult task because they have become so volatile that normal stop-loss levels don't work as they used to, so you get stopped out before the stock makes its big move. I hope I don't sound bitter here - I really don't intend to sound that way. Confused would be a much more accurate description of how I feel. Perhaps in several years I can look back on 2009 and say I learned an important lesson from it in regards to trading.

To wrap up, although I feel a little weird for putting this on here, I feel it's worth it. I read this today on the comment section of a TechTicker post on Yahoo Finance and thought it was well written and well thought out. And as I try to find a clue as to what is happening out there, this made some sense. Good luck Tuesday.
"Rick - Monday November 09, 2009 10:49AM EST

I THINK I FINALLY GET IT! I have been scratching my head trying to understand … Good news, market goes up … no news, the market goes up …. bad news, the market goes up … how can this be possible. Logic says that smart people would be getting out when stocks are as overvalued as they are today. Then I talk with people and find out that the smart people are out of the market. The normal people are just letting their 401K go with the flow (and still contributing), and the dumb people do not have any money to be in the market. BUT the part I had not been getting is that the investors, banks, speculators, etc … all have free money with no risk (thanks to Obama). This market is not a market of earnings and performance; it is a market of government induced greed from free money! Each of them are feeding the market the billions of free government money … the value of stock has nothing to do with it. I guess the question becomes … when do they run out of free money … when will Uncle Sam shut off the printing presses … OR Is this the future, the stock market always rising because the government will not let it fall (too big to fail) … A subsidized market that will insure peoples 401ks are there for their retirement and replaces the Social security system (think justification) … A giant, never ending, government run, ponzy scheme … NOW I am thinking …. If I was smart, I’d be back in the market. The true indicator of when it is time to get out is … When will the government free money stop flowing."

Does this make rational sense to anyone else, or am I going crazy?