Saturday, February 28, 2009

Video - Weekend Market Summary - 2/28/08 - Could Bounce, But It Won't Matter

Here's the video for the upcoming week. We are slightly oversold and sitting at the bottom of a descending channel on the indices, so we could bounce a bit early next week, but if that happens, I really think it will be a gift. I haven't seen much leadership this entire year, and the few areas I did see are now breaking down hard (health care and education). Gold is it right now and that is not good. So I am expecting a move lower, perhaps a sharp one, at some point soon and want to play it from the short side. The video has some short plays to watch for the upcoming week. We'll see what happens - it is still news-driven out there and that will always make things tough - but it certainly looks bad all around. Good luck and be careful.

To download directly, right click the above link and "save link as".

Friday, February 27, 2009

State of the Market - 2/27/09

The market that goes nowhere continued today, as nationalization news and a 6% retraction in GDP caused stocks to start lower early on today, with the S&P breaking their December lows. At that point, it looked like things may finally break wide open. They didn't, of course, as stocks bounced quickly after the open and rose in a very choppy manner throughout the rest of the morning. Stocks moved basically sideways through lunch and into the early afternoon, and they tried to breakout around 2. This didn't work, and they fell back into their consolidation before falling more during the final hour to almost test their morning lows. They tried to bounce again, but couldn't do it and closed near their afternoon lows. Volume appears to be heavier.

Technically, both the Nasdaq and the S&P look like they will close below the lows from Monday and the S&P will close below the important November lows of 741 as well. I am kind of surprised that we seem to just be dripping lower here on such an important technical break, but it is what it is. We are probably getting back to oversold levels in the short-term but the trend is definitely down and as I said last night, since we could not get anything more than a one-day bounce on Tuesday, things are really bad out there and oversold conditions may not matter that much. We were extremely oversold after Monday and it mattered for exactly one day.

I made a few trades today with limited success. I shorted ITRI on the breakdown from the bear flag at $46.90, EDU at $43.43, and QSII at $39.00. EDU reversed higher and I was stopped out at $44.13 for a 1.8% loss, but that was actually good as it moved more than a dollar higher than that later. I was stopped out of QSII at $39.51 - I think my stop was ran on that one as it reversed lower at $39.54. ITRI worked pretty well and did what I expected it to do. I am up about 4% on that right now and will try to be patient with it as it acted technically well today - breaking down on heavier volume. I am hopeful this can get down to the $35 area it hit back in November.

It's Friday so I am not going to do a long analysis of things right now. I will be back this weekend with a video about where we may head from here. Take care.

Thursday, February 26, 2009

State of the Market - 2/26/09

The sellers came back to Wall Street today, as an early rally attempt faltered around 11:00 and stocks stairstepped their way lower the rest of the day, closing near their lows and with decent sized losses. Volume appears to be lower on the S&P but heavier on the Nasdaq, which drastically underperformed today.

Technically, I said last night that it looked the indices were just consolidating their recent move lower and since many individual stocks were forming bear flags, I had to assume we are just pausing here before heading lower. Today fits with that description. If you look at things this whole week, we had extremely oversold conditions, and we got a total of one day of bounce. Since that one-day bounce on Tuesday, we have fallen and the fact that that was the best bounce the bulls could manufacture in the face of such extreme conditions is very disconcerting or should be for any bulls out there. We have worked off a lot of the oversold condition so a big move lower would be perfectly normal here - most oscillators or indicators are pretty much neutral right now. I was hoping for a bounce that went a little higher, but it is starting to look like we may not get it.

This is a short commentary because my household is kind of sick - including me. Having two young kids is challenging enough, but when you have a stomach bug going through the house, it becomes even more challenging. For tomorrow, I would watch for a break of 743 on the S&P and 1386 on the Nasdaq as signals of the possible continuation of this move lower. I didn't pay much attention to the market today but I should have watched the financials more - XLF almost touched the top of its channel today and definitely looks poised to head lower. Check out the watchlist I put out last night - most look still playable as bear flags that haven't yet broken down. Depending on how I feel, I may start playing some of these tomorrow. Good luck.

Wednesday, February 25, 2009

I Found Three Really Nice Looking Charts

I found three great looking charts in my scans and wanted to point them out. Check them out below.

Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Oh, I forget to list the symbols for these charts. The first one is DOG, the normal inverse ETF for the Dow. The second is SH, the normal inverse ETF for the S&P. The last one is RWM, the normal inverse ETF for the small caps. So basically, if you turn the indices upside down right now, this is what they would look like. Not really bullish from where I sit.

After going through my scans, I found a lot of bear flag type patterns setting up in individual stocks. Right now, I think we are heading lower soon - I just don't know when exactly. I would prefer to get a little more of a bounce, but that may not happen. One more up day would give a pretty nice setup in terms of risk/reward and allow these bear flags I am seeing to form even better patterns. You still have to watch the news side of things, as supposedly the market tanked late today in conjunction with comments (or lack thereof) from Tim Geithner and President Obama. I realize that it is possible certain news or comments could spark more of a rally, but the longer this situation goes on without any clarity or any ideas being presented, I think traders are going to get tired of waiting. Be careful as always, but I still hold by my bearish outlook based on my scans. Below are some of the charts I am watching with their bear flags - again, some of these are just starting to form and could use another day or two of a bounce. Good luck Thursday.


State of the Market - 2/25/09

This commentary will be a little shorter than usual as I was away from my computer most of the day and made no trades. It looks like we had an up and down session - down in the morning, up in the afternoon, and then back down into the close - that really puts things up in the air a bit for both bulls and bears in the short term.

What I was hoping for today is a gap up this morning that would push more shorts to cover and get us up to the levels I mentioned yesterday where I could put some shorts on. Rarely does the market give you what you want. As soon as I saw us open lower, I figured I was done for the day as the setup I was hoping for didn't take place. I was surprised we opened lower, and at that point, I expected some more heavy selling. I kind of said, "uh-oh" when I saw immediate selling after yesterday's big gains.

I have to admit that when I saw the upside reversal in the afternoon, I began to think I may have to reassess my bearish outlook, as a positive close in the face of the opening selling would have been very bullish. That reversal of course didn't last, and the nasty close really just puts things up in the air from my perspective. We are no longer oversold, but we are not quite yet overbought either short-term. Overall, I am going to try remain neutral but my guess is that any more bounce we get still looks like a good shorting opportunity. I will focus on the same levels I mentioned yesterday and we get up that far, I think we would be overbought and the risk/reward for shorting would still be good.

Kind of rambling here so I am going to wrap this up. Hopefully my scans will give me a better feel for what's going on out there right now. Good luck.

Tuesday, February 24, 2009

Where I am Watching to Get Short

Just a quick chart of the financials - it most likely won't be this easy, but you can see a LOT of resistance converging right around $8.70 to $8.80. I will be looking to get short there via SKF or FAZ unless this market just takes off. After going through my scans, I am still a non-believer and everything I said earlier today still holds true from my perspective. Good luck Wednesday.

Chart from Telechart2007, Courtesy of Worden Brothers, Inc.

State of the Market - 2/24/09

Wall Street finally got that oversold bounce so many have been looking for today, as after a slow start, stocks gradually moved higher throughout the day and closed with large gains. The main move started a little before 2:00, supposedly on news of Ben Bernanke saying that this recession could be over by the end of the year. Supposedly he said that with a straight face, which I am sure added to the optimism. Regardless, if I was a bull, however, I would not be very excited. On the contrary, I would be pretty upset. I'll explain that in a second.

Technically, the S&P did bounce off the lows of November but never technically tested the 741 level. It's hard to tell yet if that's significant, but I woul d have like to have seen that level breached and then recovered. Short-term resistance for the S&P is around 788 and 1462 on the Nasdaq (9 day moving averages). I wouldn't be surprised for the indices to get through those levels, but 800 on the S&P and maybe around 1495 on the Nasdaq is where I would expect heavy resistance to come into play.

So why do I believe this was actually a bad day for the bulls? Well, it seems like I have written this about fifty times over the past year, but what I would really like to see is a capitulation event to establish a real, tradeable bottom. IF we gapped down today and went to new lows, with fear spiking and the VIX hitting new highs, then I would be excited about the bounce that ensued - very excited. Today we saw none of that. We saw a marginally higher open, some choppy trading through most of the day, and then a spike in the afternoon. The VIX did move lower today but never went above yesterday's highs and certainly didn't reverse. On the surface, this certainly does not look like the type of reversal or capitulation that will lead to anything special.

I could be wrong of course. I really wasn't impressed with the move up on November 21, when we didn't spike down either, but it ended up starting a decent move that I missed. Maybe the same thing happens here. I don't think it will however. I will use this short-covering relief bounce to get short, hopefully from a level between 800-820, because I think that will act as heavy resistance on any bounce we get. I think there is just as good a chance of today being similar to September 30, 2008, where the market was oversold, got a one-day relief bounce, and then sold off even harder. We'll see which one occurs.

I obviously didn't play the long side today and I am not going to chase a rally now that I missed this one. I was looking for a gap down to maybe play one and since that never came, I just turned the computer off today. I may try to start shorting tomorrow if we get more of a bounce. Obama speaks tonight and as I have been saying this week, "what is the government going to do?" is still a valid question and a question that will continue to make things volatile. I would rather be sitting in cash right now, waiting for a better risk/reward shorting opportunity, than put my money and faith in Washington to come to the rescue once again. If you haven't noticed, none of the government-induced short-covering spikes have amounted to anything, so I don't know why this time would be different. We'll have to see.

I'll try to post some individual charts tonight that I may watch on the short side, but right now I think it is probably just easier to go with SDS, QID, FAZ, etc. if you want to play the short side. That's what I plan on doing. Good luck Wednesday.

Monday, February 23, 2009

State of the Market - 2/23/09

Despite very, very oversold conditions, traders sold stocks off once again on Wall Street today, as a strong open was quickly reversed and stocks fell steadily and methodically throughout the entire morning session. Stocks hit a temporary low around 1:00 and did bounce for about 90 minutes, but it was weak and at 2:30, stocks quickly fell back down to their lows and broke through them as the final hour approached. I was not around my computer for the final hour but it looks like a volatile hour in which stocks could not hold a bounce and they finished at their lows for the day. Volume was not as heavy as Friday, but that was options expiration so it is hard to compare the two days.

Technically, the picture is still the same as I showed in the video this weekend - we are EXTREMELY oversold on a number of measures but there are times where being oversold doesn't matter (October 2008 was one of those times). I am not going to over all the indicators because they are all in agreement with the oversold condition of the market. It just seems the market doesn't care about the condition. The S&P came very close to touching its November low this afternoon and a powerful break of that low could lead to much more selling, regardless of how oversold we are. 741 is a number that must hold or we probably get another major move over the next few days.

The thing that is scary the more I think about it is that there still seems to be very little fear out there. I look at the VIX nowhere near its highs of October 08 with the market breaking to new lows and I say to myself "what is going on here?" Heck, we haven't even cleared the January highs on the VIX. I said this weekend that if we don't bounce soon, we are probably looking at a mini-crash and that possibility seems to be presenting itself very clearly here. A bounce is always possible, but the longer it takes to develop, the more likely people that were expecting one (and there are a lot of them out there - me included) will start to question whether it actually will happen and turn fearful. That fear will then feed on itself, leading to some major, panicky-type selling, even worse than we have seen lately.

I went into the day expecting a bounce due to the futures being up so I looked to play a financial or two if the opportunity presented itself. I went into FAS at $5.30 after it pulled back from its opening gap and set my stop underneath the lows for the day. Perhaps I should have waited for a breakout, but I went with my gut. Obviously, it didn't work and I was stopped out at $5.14 for a 3.3% loss. It was a small position though so it's not too big of a deal.

When we reversed, my attention turned to the bearish side as I saw the financials setting up in pretty clear head and shoulders patterns on the five minute charts. Because of this, I went into FAZ at $75.40 as I believed it was breaking out. Much like this morning when my gut expected a bigger move up, I was anticipating a real bad afternoon and anticipated the breakout just a bit. It did pullback right after I entered but my stop was not hit and it did break to new intraday highs in the afternoon. Those highs didn't last, however, and a sharp reversal took me out at $74.52 for a 1.37% loss. I moved my stop loss up as it brokeout so that limited my losses, but I am guessing a lot of people got shaken out at that point. I am disappointed that I missed out on the later selling, but I also know that this market can shoot up super quick, so I can't take the risk right now of a position going against me big.

We'll have to see what happens over the next few days but things look very, very bad right now. The question I asked this weekend - What will the government do? - is still valid and will likely cause a very volatile rest of the week. I got this itinerary from Yahoo Finance today -

* Monday: Starting at 1 pm ET, President Obama is hosting a Financial Stability Summit featuring his economic aides, cabinet members, Congressional leaders and think tank-types.
* Tuesday: President Obama speaks to a joint session of Congress in a prime-time (9 pm ET) address that some are calling a de facto State of the Union address.
* Wednesday: Following Treasury Secretary Tim Geithner's recently announced plan, the nation's largest banks are slated to undergo a "stress test." (I believe expectations Citigroup would "fail" the test prompted discussion of the government upping its stake in the back to as much as 40%, as discussed here.)
* Thursday: President Obama is scheduled to unveil his budget and provide a blueprint that will "tip the president's hand on his plans for near-universal health care, changes to entitlements such as Social Security and Medicare, tax policy, and a budget deficit widening into territory never seen in peacetime," The WSJ says.

Sounds like a very busy week and it's not only these news events that matter but what the market's reaction to these events also matter. My basic outlook is that we could certainly bounce hard at a moment's notice anytime over the next week (mainly if the market hears something it likes), but we could also trade down another 5-10% from here over the next week (if the market doesn't hear what it wants to hear). We could theoretically do both of those things in a matter of days. Sounds like fun, huh? I may try to play some moves over the next few days but as I said this weekend, they will all be short-term trades and they will all be smaller positions. More than likely I will just watch. The bounce will be very powerful when it occurs but I have no way of knowing what the specific catalyst will be. There is just too much risk on both sides of the market right now to do much else in my opinion. If you feel like making big bets right now, you are better off going to Vegas - you would probably have better odds. Good luck.

Saturday, February 21, 2009

Video - Weekend Market Summary - 2/22/09 - Oversold Rally Probable....Maybe

Here's the video for the upcoming week. My basic thesis is that we are at oversold levels from which we have bounced over the past six months for at least for a few days due to short covering. So the likelihood that that happens again this week is highly likely. Is it guaranteed? Heck no, and that is why I think if we don't get this bounce soon, then we are just going to break wide open (regardless of the oversold conditions) and have a mini-crash, much like we saw in October. Which of these outcomes occur really comes down to one question - "what is the government going to do?" Traders are waiting for some clarity from the people in charge. Whatever happens on this front will likely determine if we get that short-covering bounce or just fall apart. I wish I knew for sure which it would be. I will be ready on both sides - I put some possible bounce plays in the second half of the video. Good luck next week - I think we all need it.

To download directly, right click the above link and "save link as".

Friday, February 20, 2009

State of the Market - 2/20/09

After being down four straight days, the market continued its recent slide early this morning, with stocks opening lower and selling off hard for the first five or so minutes of trading. They quickly bounced for the next thirty minutes, with the Nasdaq closing its opening gap, but the S&P got rejected at its gap as it formed a bear flag and stocks fell for the rest of the morning. They bounced a little into lunch, but soon after noon, stocks started falling again, breaking to new lows for the day as they entered the afternoon. At this point, several oscillators were hitting very extreme levels, and with the market so oversold, stocks did put in a temporary bottom around 1:15 and staged a very sharp reversal over the next hour and half, with all the indices breaking their morning highs around 2:50 before pulling back as they entered the final hour. That final hour was quite disappointing, however, for the bulls, as they could not press their luck and stocks pulled back throughout the entire hour, not managing any bounces into the close, and causing the indices to finish right in the middle of their intraday ranges. Volume was very heavy today but that might be caused by options expiration.

Technically, the McClellan oscillator hit the second-lowest level I have ever seen based on my Telechart data (October 10 was lower) and with the Dow breaking to new 6-year lows this morning along with the S&P coming very close to its November lows, the reversal we saw was not unexpected. I was hoping for much more however. Since we didn't get much more, I will likely be sitting things out for a few day unless the market can rally back up to resistance. We could still bounce because the oversold conditions obviously still exist, but I don't know how likely it is after today's performance. The levels to watch are still 802-820 on the S&P and between the 1485-1500 area on the Nasdaq if we bounce from here.

I entered two trades in the afternoon after holding off on any during the morning (although I was tempted). I entered QLD at $24.23 with a tight stop after it bounced off its morning low, and I later entered FAS at $4.35 as it looked to break out of an intraday channel. I didn't feel too bad with the QLD, but the FAS made me a little nervous. I was off today from work so I was posting these trades and some other thoughts on Twitter throughout the day, as both sons took nice, long naps this afternoon. As the rally occured, I tried to give both positions some room to roam, just moving up the stops as time went. I ended up getting stopped out of both (QLD at $24.76 for a 2% gain and FAS at $4.76 for a 9% gain). I regret not selling FAS much sooner, but I expected much more from the bulls given how oversold we were and didn't want to miss a huge run into the close. It just never came. I forgot this is a hit-and-run market where you take what you can get and then run. Either way, I would have sold out of both going into the weekend - no way I would hold positions overnight right now. I tried FAS once more before the close at $4.83, hoping for a quick spike into the close, but it never came and I sold out at $4.87 right before the closing bell rang.

So where do we go from here? I showed last night that a bounce was certainly something that could happen today given the oversold levels we were looking at, and as the selling continued today, it pushed those levels to even more extremes. Being that we were so extremely oversold, a very powerful bounce should have developed. It did for about an hour and a half and that's all the bulls could muster. I personally think the bulls should have done much more than they were able to do today. They had the perfect setup, and all they could do is rally us to about breakeven for the day before dying into the close. In my opinion, that shows the bulls are even weaker right now than most think. Since we're still oversold, I would not be shorting heavily here, but a possibility of a major move lower Monday is still in my mind regardless of the oversold conditions. This of course is barring any government intervention over the weekend. Perhaps I will look at some daytrades from the short side because my guess is things may get very ugly next week, but it will be a tricky market regardless, full of rumors, news, etc. I hope I am wrong of course, but with the bulls blowing it today, I just don't know. I was really thinking we would bounce, but I am much more pessimistic now.

Enjoy the weekend - as always, I will put a video together at some point looking at the indices in more depth. Until then, take care.

Thursday, February 19, 2009

A Look at the Indices and Some Indicators

Just a few charts to look at highlighting the main reasons I am uncomfortable shorting here. The odds say we should get a little relief bounce soon and with options expiration tomorrow along with the guiding hand of your friendly government authorities always present, you just never know. That being said, if we don't bounce soon, I suspect we may be looking at a mini-crash like we saw in October, where oversold conditions really just don't matter. I am assuming we get one or the other - I don't think we'll just drift slowly lower here. If I was already short, maybe I would let a few run here, but as it is, I just have to wait for a bounce to get short and maybe try to play a bounce. Good luck tomorrow.

S&P 500
T2106 (McClellan Oscillator) and T2108
All Charts from Telechart 2007, Courtesy of Worden Brothers, Inc.

State of the Market - 2/19/09

Another down day today on Wall Street, as an early attempt at a rally failed quickly, and stocks stairstepped their way lower throughout the rest of the day, ignoring short-term oversold conditions. The final hour was volatile but stocks still finished near their lows for the days. However, volume was once again lower and looks to be below average overall.

Technically, we are even more oversold after the selling today, with both the McClellan Oscillator and the T2108 indicator now in oversold territory in addition to the indices. There are a lot of weird things going on right now that frankly are confusing. I already mentioned the volume, which has fallen three days in a row. In addition, the VIX has been lower each of the past two days, although it seems to have gotten support once again at its 50 day moving average. I expected more volume and more volatility when the S&P broke a key level (800) along with the Dow testing 6 or 7 year lows, but we just haven't had it. Weird.

My guess is that we are either setting up here for a big crash, much like we saw in late September/early October, where oversold readings don't matter and we slowly drift lower before falling over the waterfall, or a healthy, short-covering bounce that will take us up to former resistance levels before reversing. My guess is still the latter of those two, and that's really the only option I can play at this point - I still don't feel comfortable shorting a market that is oversold such as this one. It may work, but the odds are you will just get whipsawed. So for me, I have to stay on the sidelines and wait to short and (maybe) try to play a bounce in the indices. I would like to see a little panic spike down before trying to go long, and we haven't had that yet. Nothing has been easy in this market and trying to catch a bounce here will probably be tough too.

I did enter one position early today (GRS at $7.31) as it looked to be breaking above resistance, but as usual, that quickly reversed and I was stopped out at $7.08 for a small loss. Once again, I got a bad fill on this, as my stop was around $7.15. I continue to have pretty poor luck or pretty poor skill in terms of trading - I am hoping its more the luck than the skill. I didn't do anything after that morning trade - my quote screen was off for the rest of the day.

I'll have to see if anything comes up in my scans tonight, as none of the stocks I was watching from last night did much of anything today. Timing a possible short-term reversal is always difficult, but the possibility certainly exists right now from where I sit. I'll try to post a few index charts here in a little bit showing the oversold conditions. Again, I would be very cautious shorting here because it carries a lot of risk when conditions are as they are right now. Tomorrow is options expiration, so maybe the volatility will pick up tomorrow. Good luck.

Wednesday, February 18, 2009

A Few Stocks That I am Watching

After looking at things, I still stick by my thoughts of being uncomfortable shorting the market right here. I know we can head much lower and if we do, it won't surprise me, but there is no doubt we are short-term oversold and I just don't feel comfortable doing it. I need a better risk/reward setup and shorting here may indeed have some reward to it, but fpr sure I know it has a lot of risk. So overall, I am looking for a bounce soon. I don't know if I will play it - perhaps if we are down big tomorrow, I try to play a swing higher. It doesn't make much sense that we would bounce a bit with all that's going on, but maybe that's why it may happen - because it doesn't make sense.

Anyway, here are a few stocks I may look at for various reasons. And if we do get a bounce, I still be watching 802-820 as possible areas to reshort. Some individual stocks that are a bit oversold and sitting near support include DSX, SEA, AGU, MOS, NAV, and POT. I still like the pattern shown on MYRG and it is in a lower risk position right now, so I will watch it. A few recent earnings moves like BWLD have held up well but could use a bit more rest (I would put COO and AKAM in this category). Finally, STAR looks potentially good above the $15 area. Good luck Thursday.

State of the Market - 2/18/09

A very boring and slow day today on Wall Street, so slow in fact that it really doesn't deserve to be written about heavily. The markets fell early on, bounced back slightly, but basically just moved sideways for the rest of the session. Volume was light as well.

Today is a perfect example of why this market has been so tough. We can never seem to get any follow-through where we have two really great days back to back or two really bad days back to back. Today's action reminds me of last Wednesday - we had a huge down day on Tuesday with only a slight bounce-back the following day. The problem with that comparison is that Thursday was the government-led reversal which I am sure skewered many shorts out there. Bottom line is that it is still tough out there to trade for more than a few hours with the lack of consistent direction in this market.

My thoughts from last night remain the same - I am hesitant to short here due to fairly strong oversold conditions, although I know we could continue lower without bouncing. The safer play odds-wise seems to be to wait for a little bounce up to the 802-820 area on the S&P and then go short, perhaps with the market a little overbought rather than a little oversold. That's just my opinion. 820 is right where the short-term 9 day moving average is sitting at and that area would also come close to the former trendline we broke yesterday. We have a bit more room to the downside on the oscillators but I lean to a little bounce soon before we head lower.

We'll see what tomorrow brings - we have options expiration on Friday and Thursday before those day can be quite volatile as well. This remains a market that absolutely nothing it does surprises me. Good luck.

Tuesday, February 17, 2009

State of the Market - 2/17/09

A big down day today on Wall Street, as futures were lower from the get-go, continued lower during the pre-market, and stocks responded accordingly when the opening bell was rang. The first twenty minutes of trading was nothing but more selling, which took the S&P well below the 800 level that has acted as support several times now this year. However, stocks found a bottom around 9:50, bounced for about an hour, and then slid slowly lower to test those morning lows around both 12:30 and 1:30. The lows did hold both times, and a slight bounce higher took place for the next hour. Stocks started pulling back from there, and once again drifted lower to test the morning lows around 3:30. Those lows held again, and a super-sharp spike occured for five minutes, which I am sure stopped many out of short positions. That spike went nowhere, however, and stocks fell back toward their lows at the close, finishing at their lows for the day. Volume looks to be pretty heavy for the session.

Technically, today looks to be an important technical breakdown, as both the Nasdaq and S&P gapped lower out of the coil patterns I showed this weekend and the S&P also broke key support at 800. So common sense says this should be the start of a major move lower, probably one that breaks the November lows (around 740 on the S&P). We shall see - one thing this market is good at is not making any sense, so I am not discounting anything. We are starting to get oversold on a number of measures so it wouldn't surprise me to see a reversal if we get more selling tomorrow. It is probably risky to short here at this moment as you stand a good chance of getting whipsawed. If you want to get short, I think waiting for a bounce up to the 802 area (and even up to 820) would be much safer and possibly more profitable. See if some individual stocks set up bear flags and go from there. That final half hour shows how this market is still being played with and manipulated so you always have to be mindful of that.

I tried three positions today from the short side, but in hindsight, the big money today was obviously made if you had positions already established entering the session and the sideways action for most of the day made making money off new positions difficult. For some reason, I tried anyway, probably because I was anticipating a final, meaningful breakdown below 800 and didn't want to miss it. I started with a trade is SDS at $85.43. That wasn't a bad entry but it didn't move much higher and I was stopped out later in the afternoon at $85.34 for a 0.2% loss. I also entered SRS at $76.59 around the same time while the market looked really bad, but I think I chased a bit. That didn't move higher at all and I was stopped out at $74.41, for a 3% loss. Finally, later in the morning, I went into QID on the pullback around $55.73. It did move higher but not by much, and I was stopped out later at $55.72 for a 0.7% loss.

I am not too upset overall with these trades, especially considering I know I would have been stopped out around 3:30 with that curious mystery spike for bigger losses if I let my positions go a bit, but at the same time I continue to just not trade well. I am hesitating on entries. I am not giving positions any room to do anything in fear of taking another loss. I get greedy when I have a profit and don't take it quickly enough. I continue to trade this market that is very choppy and difficult unless you are a day-trader. I am just in a losing streak basically. I have gone through these stretches before - I think every trader does - but they are frustrating. Confidence is a big factor in trading because so much of trading is psychological, and right now my confidence is for whatever reason just not there. I will get out of this little funk at some point - I always have before - but it is tough to deal with. I hope most of it is this market and not me. For the year, I am down 6.8%, which I can easily come back from, but I don't like losing.

I may be back later with a look at the indices and some of the indicators I am using to take a look at the oversold conditions - they aren't severe yet but are getting there, so just be careful. This weekend, I really tried to keep my mind open about a possible rally due to the decent charts I was seeing, but I knew it wasn't a given. Today certainly seems to say that the trend is now definitely down and that any bounce can be shorted again. That's my game plan I guess - wait for a bounce and try and short it. Hopefully I'll get something going soon. Good luck tomorrow.

Saturday, February 14, 2009

Video - Weekend Market Summary - 2/14/09

Since this market continues to go pretty much nowhere, I am just basically keeping my options open and trying not to get locked into one side. In the video, I go over the outlook for the indices and where the levels I will be watching are at. I also look at the oscillators, which continue to be neutral and are one reason trading has been difficult. I also go over the nice-looking stocks that have started popping up in my scans, some that need pullbacks or rest, but some that could be buyable here if the market decides to move higher. Enjoy the long weekend. Good luck next week.

To download directly, right click the above link and "save link as".

Friday, February 13, 2009

State of the Market - 2/13/09

Short post today because it was kind of a boring day even with the market being down. As has been the case, we got absolutely no follow-through on the big bullish reversal late in yesterday's session - the bulls had a chance to shine and they choked just like the bears did yesterday - so this market basically continues to go nowhere. With Monday being an off day for the market, perhaps traders didn't feel like doing much over the long weekend. Whatever the case, things are still up in the air and I have no bias either way right now. The S&P is sitting right on its trendline while the Nasdaq is basically in no-man's land - right in the middle of a triangle. We aren't overbought. We aren't oversold. The oscillators are stuck in neutral. Until we break out of this tight range or this coil pattern we have been forming, I don't see myself doing much of anything. I made no trades today. Let's hope sometime soon we get a legitimate break (up or down - I don't care) so that some trades can be made for more than a few hours.

I will be back at some point this weekend with a more thorough look at this market and where we could be headed. I want to also show some of the charts I was discussing last night that looked decent - most of them held up just fine today. So I'll put another video together tomorrow. Until then, take care.

Thursday, February 12, 2009

Surprisingly, I See Some Nice Charts Out There

I still really don't know what to make of today's late surge. I know what to think about it as a taxpayer and a citizen who bought a home they could afford and has in the mean time saved for a bigger one, but that is for another time and another day I guess. I did want to put this quick post out tonight because I was surprised by the number of decent looking charts I saw in tonight's scans. It also surprised me that a lot of these charts were IBD-quality in terms of earnings ratings which is good to see. The BOP (balance of power) levels in Telechart that I like to use are also nice on a lot of these. This is new because for a long time, I haven't seen any charts that interested me, and I have harped on that in this blog. If I keep seeing more of these nice charts, then I will have to reconsider my bearish outlook because I think individual charts always give clues as to where the overall market is headed.

Here are some of the charts that interested me tonight: SXCI, NEOG, NTCT, NVEC, GRS, NFLX, ASIA, STAR, and BLUD. These are the IBD-quality stocks.

Here are some stocks that are still lagging in terms of relative strength but may be ready to break above lateral resistance or have pulled back nicely the past few days: AXE, HRZ, MWE, BOLT, GASS, SEA, MOS, NAV, SOLR, MRVL, and VLTR.

Gold stocks still look like they could breakout again: GRS, KGC, ABX

I also saw some earnings breakouts for the first time in a while and that could be the sign of good things to come - look at AIPC, BWLD, and ATRO are today's examples.

I don't have time to put charts up tonight, but I will do a video over the weekend. With all of this said, please understand that I know we could be down 200 or up 200 tomorrow with the complete randomness of this market - absolutely nothing would suprise me. If this market was acting in a sane manner, I may put more credence in these charts showing up. As it is, I am still cautious. I have to be. Just wanted to point this out though. Good luck Friday.

State of the Market - 2/12/09

Another awful day on Wall Street, not awful so much in the losses that were taken, but awful in the sense that it was another day filled with whipsaws that made swing trading very difficult. Stocks opened sharply lower with the S&P gapping below its uptrend line and continued to sell off for the first half hour of trading. As has been the case recently, the bears couldn't press their bets, and stocks bounced back all the way until around 12:30, with the Nasdaq actually turning positive. They fell all the way down from there, breaking to new lows around 2:45, and things once again looked very bad. But out of nowhere, a super sharp bounce occured at the beginning of the final hour, with the S&P running up over 30 points and the Nasdaq gaining over 40 points in the final hour. Supposedly, this spike was caused by an Obama adminstration proposal to bailout more homeowners, which led to some short covering. Volume looks heavier.

Technically, I'll be honest - I haven't a clue. The trendline for the S&P was broken this morning, was broken once again in the afternoon, but now the S&P has a bullish tail. The trendline was never broken on the Nasdaq and maybe that was a clue that we would reverse. The VIX also reversed and could never break above its downtrend line. Both indices are still below their 50 day moving average and for the S&P, I would still look at that as major resistance. I have said this before, but I'll repeat it - when you have a market that can be influenced so easily by news items, then technicals don't matter as much. If only I could listen to my own advice...

Although the gap down made us a little oversold in the short-term, I felt it was worth taking a chance on a few shorts early on, as I thought this might be the type of open that could finally break things open and get a tradeable move going. I entered OXY short right after the open and was filled at $54.18, which was not great. I entered the order when it was around $54.60. Later on, I entered FAZ for a short-term trade as XLF looked to be breaking to new lows. I didn't take any other shorts as I still think going all-in right now can cause you problems. I'm trying my best to remain patient, cautious, and opportunistic all at the same time if that makes any sense at all. That is perhaps why I've been having trouble recently - it probably can't be done.

I was later on stopped out of my OXY short at $54.61 for a small loss of just under 1%. It went on to move two points off its morning lows before (of course) reversing without me. This was the type of pattern I was talking about yesterday - a bearish head and shoulders pattern that just barely was holding support at both its 50 day moving average and an uptrend line. You would figure a gap below this support to open the day would cause the start of a move lower, and it did for about thirty minutes. But then it just did what all of these stocks seem to do now - reverse as soon as support is broken. Maybe I should be buying all these breakdowns, huh? I am not doing that however.

My stop in FAZ was set very tight because I was looking for an immediate breakout and didn't want to get caught holding it if it didn't happen, so that was hit at $47.78 for a 1.9% loss. I said I was going to keep an eye on it, and I did until around 1:00, as at that time I expected the market to continue to rally and for this to drop. It didn't do that however. I did miss a move up to around $51 on this, but then it got slapped in the final hour, so I would have been out anyway.

So basically, the beat goes on for me, as I was stopped out of shorts that eventually moved lower without me. However, it turned out to not be a big deal because I would have been stopped out in the afternoon spike anyway and probably would have just been more ticked off. This market continues to frustrate most (I assume I am not the only one, right?) and although I have remained mostly in cash this whole year (more than 50%) it is still frustrating to continue to try and make progress in this chop. I really don't know how it is possible to be very successful right now unless you are trading on very short-term time frames (I mean hours, not days).

As it is, we are somewhat oversold short-term and with the late reversal, I don't think I will be taking any shorts any time soon. I have to wait for a bounce. Based on the close, we may bounce here a little higher, but I don't trust it - how can you? - and won't be playing it. And as if we don't have enough craziness right now as it is, I believe tomorrow is also options expiration. Joy, joy. I don't plan on doing anything tomorrow - I need the break. Good luck.

Wednesday, February 11, 2009

State of the Market - 2/11/09

Another day, more chop on Wall Street today, as after a very bearish day yesterday, the bears couldn't push things to the downside and stocks put in a small relief bounce. Stocks opened slightly higher today, but after about a half hour reversed lower and things looked bad given yesterday's action. However, around 10:30, stocks found a bottom and rose all the way back to the morning highs, but after a false breakout, they then fell again throughout lunchtime and into the afternoon. Around 1:40, stocks broke their morning lows and once again, it looked like maybe we would break open, but yesterday's lows acted as support and stocks bounced once again into the final hour. Of course, that bounce amounted to nothing, as they could once again not break to new highs and stocks moved lower into the close, finishing with small gains. Volume was quite light today. All in all, it was a day with a lot of movement but none that was productive, as neither bulls nor bears could take control of things.

Technically, the Nasdaq tried to retake its 50 day moving average, but couldn't do so in a decisive manner, while the S&P seems to have gotten rejected at its short-term moving averages. Both are still obviously holding their trendlines that I showed last night but just barely. Short-term, we are now a little oversold on the indices based on the RSI(2) but most other indicators remain pretty neutral. I think the overall picture remains the same - a breakdown below that trendline (and after that the 800 level on the S&P) would be significant. The VIX could not break above the resistance I pointed out last night but I will continue to watch it.

Not a particularly great day for me today trading, as the whipsaw action continued in individual stocks. As I said last night, I was looking for a breakdown and when we reversed off the morning highs I thought we were finally going to get it. I went short two names early in the session with small positions - FAF at $25.38 and LEAP at $26.32. Both appeared to be ready to break support levels and with the market looking bad as well, I felt it was worth taking these. I waited a bit on both however, which was a mistake. LEAP spiked hard upward a little while later and stopped me out eventually at $27.01 for a 2.9% loss, although my stop was tighter and I got another bad fill. FAF broke down a little from my short point but then also slowly reversed higher throughout the morning, putting in a tail on the daily chart. I was stopped out there at $26.06 for a 2.85% loss.

I was also stopped out of my QID position from yesterday at $52.60 for a 2% gain. I gave it a little leeway early on and when the Nasdaq reversed, I thought things looked good for a further breakdown in tech, but that didn't happen. I moved my stop up on the first pullback, and when that was broken soon after, I was out. Perhaps I should have given it more room, but it was a large position. I am the first to admit this market has me spooked in terms of letting positions run. I just can't give them much room right now because I never know where the market is going next.

The losses on the shorts basically cancelled out any gains I had in QID, so I keep running in place right now, not going much of anywhere. Another stock I watched closely, ELS, also reversed off its lows so I am glad I went a bit cautious today with the shorts, only taking two. There were also several times I almost tried FAZ but would have gotten stopped out anyway. If I went heavily short, I would be even more upset right now, so I am glad I showed a little caution.

At risk of stating the obvious, this continues to be a frustrating market. These are the type of days that kill you as a swing trader. Daytraders probably love it though. I just wish we could get a move already, either way, that would last for more than a day or two and that you could put some trust in. I haven't been trading very big or very frequently - most of the time I have had more than 50% cash this year - but it still is tough to deal with. I continue to spot these short setups teetering on the edge of support which do break but then reverse back up above support. Persistence I guess is a key now as I still think at some point these breakdowns stick, but it is certainly tough.

We have a market full of both weak bulls and weak bears, and until one of them gets some guts and takes control of things, we will continue to have very difficult conditions in which to trade. They are both choking right now when their opportunity to shine comes up. Today was the perfect chance for the bears to take this thing down, and they just couldn't do it. Yesterday was a great chance for the bulls to take this thing higher, and they threw up. I have to assume at some point, one of these two do take charge, but it really sucks while we wait for it to happen.

Overall, I am still expecting a breakdown at some point, but I've said that for a while now, haven't I? Like I said last night on the video, with this market, you really just never know. From a bullish perspective, I guess it is good that the market bounced back a bit today, but from a bearish perspective, was that really the best they could do after being down 4% the previous session? Who knows? My guess is we could bounce a bit more but that is simply a guess and that bounce would be shortable. I don't expect any new setups tonight. Good luck Thursday.

Tuesday, February 10, 2009

Video - Tuesday Short Setups - 2/10/09

With the way this market has been so far this year, you can't take anything for granted, but if we do breakdown further tomorrow (which looks like a possibility) then I want to be ready with some shorts. I look at the indices first in the video and then go through some good looking setups that are sitting right on support levels. Hope it helps. Good luck tomorrow and as always, stay on your toes - there are already rumors flying about mark-to-market being suspended, and who knows what that does to this market. We are still in a range but it looks like it may not be for much longer. It would be nice to get a tradeable move one way or the other, wouldn't it?

Direct download link here.

*** I just realized some of the video got cut out for some reason - I also went over FAF, UNP, HUBG, AAPL, and ACM as possible shorts. I have no clue why it did that. Oh well.

State of the Market - 2/10/09

We had a very negative day today on Wall Street, as traders did not like the lack of new ideas presented by the Treasury, and stocks sold off for most of the day. The market gapped down slightly at the open but quickly bounce back, with the Nasdaq turning positive around 9:50. From there, however, things got bad, as stocks pulled back into the 11:00 hour, and when Timothy Geithner started to speak, the "sell the news" reaction played out and stocks moved quickly lower. They consolidated briefly, but the selling lasted almost all the way into the lunch hour. Stocks then bounced slightly higher for about an hour, forming a bear flag that they broke down out of around 1:00. The rest of the day was a slow decline lower, although a late bounce allowed stocks to finish slightly off their lows, but still with massive losses. Volume was very heavy today and adds to the bearish tone set today on Wall Street.

Technically, today was obviously not a good day for a number of reasons. The Nasdaq closed just below its 50 day moving average, while the S&P has now put in a second failure at the 50 day moving average in about a month. The S&P certainly looks poised to test the 800 level once again, and that is the area I would focus on. If it is broken, then the November lows will likely await. The Nasdaq needs to hold the 1440 level or it will likely be testing its November lows at some point as well. I also still see the head and shoulders patterns that I showed in the video this weekend, and further breakdown here would vaildate that pattern. The VIX looks poised to break above its 50 day moving average and a downtrend line, and if that happens, it could signal a start of a major move lower.

I went into today with a slight bearish outlook due to the overbought conditions and hoped I would be around my computer to make some trades when the market moved. Unfortunately, my timing was not good and I completely missed the 11:00 move lower as I was doing other work. I made one trade around lunchtime - QID at $51.49 on a pullback intraday. That worked out ok, and I was set to buy some FAZ if it broke to new highs ($47) around the same time, but by the time it did, I was once again away from my computer and missed it. I could have set a limit order - maybe I should have. So alas, I was not able to profit mightily from the move lower - just a small amount. My mistake was not entering into some shorts a few days ago when I knew the market was short-term overbought. I went against what I saw and let the uncertainty with the news items take me away from this trade. It turned out to be a good one, but that's how it goes. I was tempted to enter a few shorts at the end of today, but passed as I still don't trust this market on either side, although I will continue to watch for shorts and may take some tomorrow if we move lower again. I have to see what my scans show me.

Today obviously seems like a "sell-the-news" reacton today, and even supposedly positive news on the pork/stimulus bill passing the Senate didn't cause any sort of bounce in the afternoon. We are still technically stuck in a range in the intermediate-term, but if we get more selling like we had today, I think that range will be broken soon. The short side definitely appears to be the side to play right now, although we all know this market is good at changing its mind in a hurry, so be careful. If I find anything interesting in my scans, I'll try to be back later. Take care.

Monday, February 9, 2009

State of the Market - 2/9/09

We had a snoozer today on Wall Street, as the news items that are holding this market hostage remained unresolved, and until they are resolved, we might continue in a holding pattern like we saw today. I went into the day not planning on trading at all because I knew that if I wasn't by my computer all day, I would be at a distinct disadvantage due to the news-driven trading. I didn't even watch much today, although it did seem very boring from what I saw. Tomorrow is when the new Treasury secretary is supposed to detail the newest attempts to fix this financial crisis(unless he delays it again) and that will most likely drive trade in one way or the other. We also still have the Stimulus/Pork plan still up in the air, and that will also affect trading until it is completely resolved. Therefore, things may not clear up completely tomorrow even with Geithner speaking.

So which direction will the market go from here? My outlook hasn't changed today - we are a little overbought here but I am keeping my options open, basically preparing for going short or long depending on what the market wants to do. I am not getting locked into one outlook - I think that would be a mistake. I will say that if you are bullish, you want to see more days like today - light volume and light selling. If the market was up another 1-2% today in anticipation of what might be said tomorrow, I would definitely be looking to sell the news, whatever that news may be. I think it is very good and very healthy to pause a bit here. As it is, if we rest a little more tomorrow, I am more open to a bullish outlook. We'll see what happens.

If we do get a sell-the-news reaction, then I am planning on just playing the inverse ETFs instead of trying to short individual stocks. The action in individual stocks has just been too difficult for me this year so I'll just stick to SDS, QID, SKF, etc. On the long side, I really have decided to focus on a small group of stocks (GERN, NFLX, and NTCT) from which I hope to get insight as to whether we can move significantly higher from here. These are what I see as leaders right now, and if they act well, then I will become more bullish. If they act poorly, I will take that as a sign to go short.

If you need some possible plays, check out the video from the weekend where I go over charts I am watching on both sides of the market. I would guess that today didn't change much in those setups. I doubt I will be back later because I don't think today's action is going to add any more setups to the list. Take care and good luck Tuesday.

Saturday, February 7, 2009

Video - Weekend Market Summary - 2/7/09

Here's a video for the weekend, going over the indices and some short and long setups. I have about the same number of setups for both sides of the market, so I am trying to remain as neutral as I can. However, we are short-term overbought and I am looking more at shorting any more of a bounce we get here rather than chase it. The only thing I really see setting up on the long side are commodities, but these are so beaten down, I don't know if they would count as "leadership" or not. My guess is we'll remain in a news-driven, choppy, stock-picker's market. If that's the case, keep your trades small and take profits quickly. Good luck next week

Friday, February 6, 2009

State of the Market - 2/6/09

A pretty strong day today on Wall Street, as another bad jobs number and higher unemployment didn't dampen the spirits of traders. Stocks rose quickly for the first ten minutes of trading, consolidated for an hour or so, and then went to new highs again from there. That move wasn't that powerful though and it led to more consolidation. Around 12:15, the morning highs held as support on the pullback, and stocks moved higher from there, breaking out once again around 1:00. They started pulling back again around 1:40, once again held support and made another run at new highs, but couldn't break out again and pulled back as the final hour approached. Support held once again for stocks and they rose back up to their afternoon highs into the close, but could break through those levels and finished just a bit off their highs, but with strong gains nonetheless. Volume was lower compared to yesterday's strong levels.

Technically, both the Nasdaq and S&P broke clearly above their most recent downtrend lines this morning but the S&P closed right below its 50 day moving average while the Nasdaq continued to lead. The morning pop took both indices to overbought levels on the short-term time frame, again more so on the Nasdaq than on the S&P. Not all my oscillators are overbought however, so we could see a bit more of a rise in the indices early next week. 877 is a key level for the S&P to overcome, while the Nasdaq broke to a higher high and only has 1665 above it as heavy resistance. If you're bullish, you definitely want the Nasdaq to hold the 1525-1530 area where the moving averages are consolidating. I would also want to see the 850 level on the S&P hold as well.

I kind of had a gut feeling that the market might respond higher regardless of what the jobs number was today, so I went into the day with a few stocks I was watching but really still nothing that got me super excited. I guess the heavy volume yesterday made me suspicious that we might rally today. When the market did move higher and the S&P got over the 850 mark, I decided to try SSO ($23.34) and GNK ($19.83) from the long side as possible day-trades. I didn't enter either with the intention of holding them for more than today, especially with the weekend ahead of us and the short-term overbought conditions. I just moved my stops up on them as they moved higher (although I did give them more room that I was doing to start the year). I was stopped out around 3:00 of GNK at $20.46 for a 2.9% gain - not much but better than nothing I guess. This one could never break to new highs for the day even as the market did so in the afternoon. Later I was stopped out of the SSO at $23.90 for a 2.2% gain - again, pretty measly but better than nothing.

Right now, I still don't have much faith in this move, and everytime we have gotten overbought like this, we've pulled back rather quickly. Although we still have a little room to the upside on some of my oscillators, I don't know why this time would be any different. I've said this before - if we had a lot of interesting leadership emerging right now, then I wouldn't be as worried about being overbought, but I still just don't see that leadership. The only thing I see moving lately are the ags (beaten down and now extended), big-cap tech (beaten down and now extended) and the banks (yeah, right). None of the few stocks I have been watching with interest like GERN, NTCT, and NFLX did much of anything today which is disconcerting. Add in all the news that is still out there, and you have a market that still needs to earn my trust rather than me just giving it to it. If we gap up on Monday, I actually may look to fade it and take a few short trades, perhaps just playing the ETFs unless my scans tell me differently over the weekend. I think the risk/reward for that trade is getting close to promising after today - more so than chasing this move I guess.

I am going to try and get a video out for the weekend and go over the overall outlook for this market since I haven't been writing much this week. Keep an eye out for it. Take care and enjoy the weekend.

Thursday, February 5, 2009

State of the Market - 2/5/09

The chop continued today, as the stock market started lower at the beginning of the session and looked to possibly put two days in a row in the same direction, but that selling didn't last long. Another rumor came out (this one about the mark-to-market rule) around 10:00 and stocks quickly reversed themselves and moved higher all the way to lunchtime with the Nasdaq leading the way. From there, stocks bascially just moved sideways for the rest of the session - traders probably remembered the jobs number tomorrow and were hesitant to do much else before that comes out. Volume was a lot higher today.

Technically, the Nasdaq closed just above a downtrend line on heavier volume but the S&P closed belows its downtrend line and still has its 50 day moving average to deal with overhead. The Nasdaq is getting slightly overbought in the short-term but the S&P is still pretty neutral. My other oscillators and indicators are all still pretty neutral so there still isn't a big edge out there from what I see. I continue to see a possible head and shoulders pattern of about two months setting up on the Nasdaq in particular, but I also can see a potential longer-term inverse head and shoulders pattern setting up on all the indices, so who knows? I'll be honest - I certainly don't. Anyone that tells you they know what is going to happen next with this market is just guessing - no way to know with as many news items and rumors flying around each day.

Based on some setups showing up last night on the short side, I decided to make a small foray back into this market, basically just to see if it was ready to start acting right. My foray lasted for about an hour. I went short UNP at $45.49 based on it being right near a downtrend line and its 50 day moving average. It did break down from there almost another dollar, but then the whipsaws started showing up again and I was stopped out at $46.24 (stop was at $46.14 - another bad fill) for a 1.8% loss. Not a big deal - it basically tells me that it is still not time to trade heavily in this market because it is not ready to act in a manner that is tradeable for more than a few minutes or hours. That's why I only went into one short. If I had success, I may have added more, but that didn't happen.

I still see very few longs that interest me and I continue to ask "what exactly is going to lead us higher?" when contemplating a possible rally in this market. I just don't see it, but I can be wrong. My longer-term outlook is still bearish, but as I said earlier, who knows? We are kind of in uncharted waters here, not just as a market but as a nation, with the entire crisis we are facing and that is making things tough. No one know what to expect, what will happen next, what will work and what won't. Tomorrow will likely be crazy because of the jobs number, so after poking my head out today to check the weather, I am probably going to go back into hibernation for a few more days or at least until trades start acting right. I don't think we're there yet and until we are, 'why trade?" is still my motto. Good luck if you are still trying to fight this market and as always, if I see something that tells me it is time to start making bigger bets, I will let you know. Take care.

Wednesday, February 4, 2009

Stuck in Holding Pattern

I really do wish I had something unique and interesting to say right now, but I don't. The story remains virtually the same as what I wrote this morning. We are just in a tight range here and until the government decides what it wants to try this time to fix this whole financial crisis, my guess is we still just chop around. My longer-term outlook is still bearish, and I expect lower prices and a break of the November lows at some point this year, but it is hard to tell when that will happen. Oscillators and indicators are still completely neutral and although I would look to get short at some point, I would much rather do it when the market is overbought in the short-term to setup a decent risk/reward. I don't think we have that right now - I think there is as much chance of getting whipsawed out of short positions here as there is making gains on them - probably more of a chance actually. I want good odds, not questionable odds. But that's just me.

I am going to try and get back into a normal schedule by this weekend with maybe a video if I have more setups. I can't deny that not thinking about this market much this week has been nice - sometimes you need to do that. I am hopeful after this jobs number that we get some movement. I still don't see a ton of setups - here are the shorts I am watching that could work out but only if the market starts falling - STT, USB, INT, TSCO, UNP, NTES, UAUA, LEAP, WFC, BBBY, SVR, LPHI, RRGB, CHA, HAS, ROG, QSII, SYNT. If we get more overbought, I might start getting ready to make some moves on a few of these. Good luck Thursday.

Still No Tradeable Edge From What I See

As the title states, I still see no edge out there in this market. My oscillators and indicators remain stuck in neutral mode. The indices are still stuck in a range and are going nowhere fast, yesterday's "rally" not withstanding. All of the short setups I had at the beginning of last week have not broken down the way they should have. Meanwhile, I continue to see very few candidates on the long side that excite me (ANSW, GERN, GRS, NTCT, NFLX, and gold is it). Until we get more candidates that show that leadership is ready to emerge to lead this market higher, why do anything?

I wish I could say something different - I wish we had a trend to trade but I don't think we do. I really believe we are in a holding pattern until all of these games being played in Washington come to a conclusion and traders have some understanding of what is going to be done next. Until that happens, I plan on staying on the sidelines and not stressing myself out instead of fighting this market, feeling like a mouse on a wheel, trying my hardest but going absolutely nowhere because of things I can't control. Good luck out there. Remember that patience is a virtue as a trader. I think it is necessary right now.

Monday, February 2, 2009

What a Game!

First of all, I was stopped out of my last position today, ACM short, at $24.39 for a 7.4% gain. I really enjoyed not caring in the least what happened on Wall Street today. From what it looks like, it was another choppy day that I am sure was a lot of fun to try to trade (yes, that was sarcastic.) I don't plan on returning to this chopfest until I get a really good risk/reward setup on the overall indices and we definitely don't have that now. No edge on either side from what I see. Why try to force a trade when it's not there?

Now onto the game. As a Steelers fan, it was obviously awesome and it is easier to talk about it since they won, but I would assume anybody that loves football had to love that game. There were so many amazing stories and plays - the biggest lead ever blown, two lead changes in the last three minutes of play, the longest play in Super Bowl history, and then the final 88 yard drive that won the game. Last year's game was amazing, but I have to say this was probably better by a smidge, although I am obviously biased. ESPN ranked the top 10 Super Bowl plays of all time and three of the top ten and two of the top three were from this game. That's pretty impressive.

I do feel bad for the Cardinals and if anyone else besides the Steelers were in the game, I would have been rooting hard for them. Kurt Warner is about as classy a guy that will probably ever play in the NFL, and is one heck of a quarterback to boot. He is a strong Christian guy and the things he does off the field are absolutely amazing. I watched Larry Fitzgerald in person several times in college when he played at Pitt and besides being an awesome talent, he is also a humble guy. I was always impressed when in college, after coming down with a crazy touchdown grab, his response was always to run to the ref, hand him the ball, and run back to the sideline. I hope he gets his championship at some point in the future.

I'll be around so if you have any questions, feel free to ask or email me, but I am going to enjoy not trading or following this crappy market while I can, possibly for a while. Take care.