Friday, May 1, 2009

State of the Market - 5/1/09

A very choppy and very boring day today on Wall Street, so boring that analyzing it doesn't seem to make much sense. The indices tried to sell off early, couldn't but also never really bounced, and the battle for the S&P right around 875 continues. It once again tried to poke its head above that level, getting as high as 880, but looked like it would close below it for the third straight day until a late (and I mean in the last three minutes of trading) pushed it slightly above. The closes for the past three days on the S&P are within 5 points of each other and on the Nasdaq the past three closes are all within 7 points of each other. If there was heavier volume right now, I would say we are probably churning right now, but volume appears to be much lower today, and that is usually a prerequisite for churning action. Maybe this is just consolidation.

I took one small short in AAPL this morning at $125.90 but that was the only new position for today. Still trying to take it slow. My stop was hit at $127.50 (it was higher than that however) giving me a very small loss. I will continue to look at this though as a short. My stop was hit in ADM at $26.35 in the morning giving me another loss. Earnings are next Tuesday so I would have gotten out anyway by Monday, but I should have paid more attention before I shorted it and just stayed away. I never like to go long or short into earnings.

It was nice to see HERO move 12% higher today without me as I was stopped out yesterday. I really must be missing something right now, because I looked again at intraday charts of HERO in several time frames trying to figure out if I should have not set my stop where I did. $3.07 was the breakout point and I bought at $3.09. When it moved up to $3.20, I set my protective stop under $2.90, figuring that a move that low (a drop of 10%) would definitely signal a failed breakout and that I wouldn't want to be holding it then. Really, is a 10% stop too tight? I guess it was. Volume was higher too intraday on the selling that took it down all the way to $2.83. The only thing I can see is that perhaps I should have paid more attention to the 9 day moving average and where it was, because that's where it looks like it bounced from. That happened four times in the last two weeks so maybe that was the sign I was looking for. I continue though to just be so frustrated.

I'll be back at some point with a more in-depth look at things although I continue to have a tough time reading this market correctly. I still think we are due for a big pullback but it still doesn't come so maybe I am just being stubborn. Take care and enjoy the weekend.

4 comments:

bmbull said...

On the HERO stop, Dave Landry talks about taking into consideration the normal daily range of movement for a stock to avoid being taken out on normal noise alone. From that perspective, maybe a 10% stop was a bit tight -- yesterday's bar doesn't seem to be of a wider range than has been 'normal' for that stock over the last few weeks.

Just a thought.

seeer said...

When I want to play a breakout I usually wait until the close, and then I buy it if the price is not much higher than the breakout point. If it's much higher I let it go. If it come back to the breakout point (consolidation, intraday or not), I buy it.
Btw if you look at the 60min chart there is a trendline which is the lower trendline of the ascending triangle. That was the bounce point. It looks like very clear to me.

rol lew said...

HERO....... hi mac, i can say shoulda, coulda, woulda, looks like the buy point was on april 19 @ 1.84, or on april 29 @ 2.87, as it had begun lifting off the 50 dma..... regardless of missed opportunities, the rest of 2009 is still available. HERO has been basing from march 23 to april 13, around 1.70 to 1.90, which would have given me about 16 trading days to make even an exploratory buy, even 100 shares would be worth while today. HERO peaked at around 39.00 back in july of 2008. i would hope, that with oils & oil services strengthing the last few weeks, HERO can / should get back to 4.00 in the next 2 months. it would be a shame if i did not own it when/ if it does.

Hercules Offshore, Inc., together with its subsidiaries, provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the U.S. Gulf of Mexico and internationally.

Looking at a 2 year chart of HERO, and of OIH, i note that they are both waking up from a 6 - 7 month slumber. i think i will be able to make a couple dollars with this HERO. thank you for bringing it to my attention. it is easy to second guess the charts, and hindsight is 20/20, yada, yada, ya-de-da, words, words, words, but if i do not get positive & make a few dollars with this stock in this spring month of may... shame on me!

so what can i do if it plunges back to its april 13 level 1.80 from here? that would be a loss of about 172$ on 100 shares.

i maybe can find some protection in OIH. if HERO goes back to 1.80, it is "possible" that OIH would go back to it's april 13 level of 81$ ... possible.... nobody really knows.

the OIH june 80 put is 1.91 bid x 1.97 ask. so if i sell one contract i will collect & keep 191$ provided that OIH is above 80$ on june 19. this could be a way to "get back" the 172$ i would have lost on HERO - if it fell to 1.80. the july 70 put is 1.33 bid x 1.39 ask. that is another possibility.

with all the turmoil over the last year & the plunge in oil stocks and oil service stocks, OIH has been as low as 60.62 on dec 5, 67.92 on jan 20, 66.77 on march 6. it is possible that it could go back there. but sentiment on oil service stocks appears to be improving. OIH is trading around $93$ today. so "possibly" it will not trade down to the sold strike, and "possibly" the HERO will rally also.

rol lew said...

hi mac, second post comment today from me - i read the following on another blog, that was posted there on APRL 14 2009.

(OK...enough already )

http://www.stockscores.com/newsletters.asp?subpage=viewnewsletter&err=1026&id=22502

readers here may not have access to stockscores, but i need to acknowledge that these words are not mine - although i mostly agree with them....

" I am able to gauge general investor sentiment from the content of the email that I receive from Stockscores users. Right now, the general feeling is positive since the market has been makng good gains lately and there are lots of trading opportunities. But, I have had so many questions about whether winners should be sold that I have been reminded that fear still dominates trading decisions. We have a fear of seeing our winners turn in to losers.

People check their stocks each day and are looking for any reason to exit because they doubt the validity of this rally. On the heels of the losses that the market provided, this sentiment is understandable but the pessimism that the optimism is not real has no foundation. The market has not told us that the market is more likely to go down than up. That may change tomorrow, but as it is today, there is no reason to be bearish.

Yet, this is what investors seem to want to feel. They want to lock in profits and take away that stress of holding on to winners. They remain attached to the pain that comes with holding losers.

That Nasdaq moved to a multi week high today. The Dow closed at a multi week high today. The S&P hit a multi week high today. The TSX closed at a multi week high today. Get the picture?

I guarantee you that the market will eventually fall so you can stop worrying about that. But it will not happen overnight.First, there will be a breakdown. Until we see the breakdown, stay long, stay strong. Hold all of your stocks until they give you an exit signal."