Monday, August 31, 2009

State of the Market - 8/31/09

Not a good start to the week today on Wall Street, as a big drop in the Shanghai index (mentioned here in the video yesterday as a possibility) led to a gap down to start the day. The selling was intense for the first fifteen or twenty minutes of trading, but from there basically nothing happened. It was kind of a weird day that way - the S&P stayed in about a four point range from 10:00 on, and the Nasdaq stayed in a ten point or so range as well. Stocks did bounce slightly into the close to finish near the top of their intraday ranges, but still finished with losses. Volume looks to be lower as of now so the indices may avoid a distribution day.

Technically, the beat goes on in this choppy, directionless market. Both the S&P and Nasdaq closed below their former breakout area around 2015 and 1018 (obviously bearish) but the fact that the bears once again couldn't take this thing any lower than they did tells me they are still rather weak here. In terms of support, both major indices finished near uptrend lines from the beginning of July so I do think it is important they hold in this area. The 20 day moving average for the Nasdaq is around 1990, so I would watch that as a number.

Oil had another major down day today and based on the USO chart just barely broke through a lower trendline starting at the beginning of July as well. It is in an area where it needs to hold as well. Your guess is as good as mine as to whether it does or not. I will keep an eye on it however. Financials were only down a slight amount today and showed some relative strength.

I continue to have little confidence in this market, either short or long, from day to day and remained in cash today. I am really hopeful that September brings some more "normal" trading because I think August was just weird. I want to go back to a post I wrote at the beginning of this month when I said August would likely be a chopfest....

"I don't know why - call it a hunch - but I am thinking that the month of August is going to be a difficult one to trade. Volume will likely contract even further this month as traders get in their final vacations (me included) and I just think we could be in for a lot of volatile chop, which is never good to trade. Perhaps that's good in that some significant sideways movement could set us up for a really big move come September."

Turns out I was right with that prediction for the most part. The first trading day of August (8/3) we closed at 2008 on the Nasdaq and 1002 on the S&P. Today, the last trading day in August, we closed at 2009 on the Nasdaq and 1020 on the S&P. So the S&P rose a bit while the Nasdaq was completely flat. There has been some movement both up and down in that time period, but the swing setups have been difficult. Again, I hope we can get some more "normal" trading conditions going soon, and that some setups will start showing up soon as well. To be honest, I am getting a little bored, but it is what it is and I can't fight the market. If it isn't giving me many opportunities, trying to force them will only lead to problems.

I will go through my scans tonight as I always do, but for now it seems like we continue to have a market full of weak bears and weak bulls, and that is not exactly a good combination. The weak bears showed their face Thursday, came back today, and in between we saw the weak bulls come out to play on Friday. Until one of them gets some guts and take charge of things, I am guessing thing will remain tricky. I don't know what else I can say. We'll see what September brings us I guess starting tomorrow. Good luck and take care.

Sunday, August 30, 2009

Stock Market Video - Weekend Market Summary - 8/30/09

Hi traders -here's a short video with some setups to watch for the upcoming week. After going through my scans, I admit I am basically clueless about the short-term direction of the overall market right now, because we continue to just chop around. Therefore, I have setups that I will watch both short and long for the upcoming week, and if they trigger, I will likely try them with small positions. I still think this is a time to be NON-agressive and smaller positions are one way to do that. I didn't show these charts in the video, but I think GGC, BCRX, and CHINA may be good stocks to watch as possible day-trades. I would not hold these overnight, but they may pop at some point soon. Hopefully as August comes to an end, we can get back to a more normal environment. This market just continues to seem out of whack overall - maybe it's just me. Take care and on a lighter note, check out for my NFL predictions posted earlier today.

As always, you can right click and hit "save as" to save the videos to your computer.

Saturday, August 29, 2009

Some NFL Predictions for 2009

This has nothing to do with stocks, but I always wanted to be a sports columnist so I figure, at the risk of alienating readers across the country,"why not?" Plus hundreds of people make meaningless predictions about the stock market at the beginning of each year, so why not do the same thing at the beginning of my favorite sports season of the year. Here we go and I apologize if I offend anyone out there. Remember, every year is full of surprises and the "chalk" picks rarely work in the NFL.

AFC East

#1) Patriots (12-4) - I don't think they're as invincible as two years ago, and avoiding injuries will play a major role in their success, but the talent is still obvious and really, who is going to challenge them in this division?

#2) Jets (8-8) - If the Jets had a better supporting cast, I think they could win with a rookie quarterback much like my Steelers did during Big Ben's rookie year. The defense is stacked, but with no receivers and a solid but not spectacular running game, I don't see it.

#3) Dolphins (6-10) - The Dolphins benefited from a last place schedule last year and the suprise factor that the Wildcat formation brought to their offense. They play a first place schedule this year, and teams have had a year to study their offense. I don't think it will be as successful this time around.

#4) Bills (5-11) - When will teams ever learn? Signing T.O. means disaster. Possibly the most overrated player in the NFL in my opinion. One of several teams I will mention that don't have a quarterback and in the NFL, that's a problem. Have looked horrible this pre-season.

AFC North

#1) Steelers (12-4) - I know I will sound like a homer, but when a Super Bowl champion returns 20 of 22 starters, and the two new starters have the potential to be better than the men they are replacing, you can't pick against the Steelers. Main concern for me as a fan is the health of Big Ben. The o-line still looks shaky, but the schedule should be much easier this year.

#2) Ravens (11-5) - Baltimore is a nasty team that may be better than they were last year. They did lose Bart Scott, but that D still has so many parts that it will be formidable. Look for Haloti Ngata to get much more national attention this year. Biggest question is whether Joe Flacco can grow from his rookie year and win games for this team when they need him to instead of just not losing them. If he does, this team can win the Super Bowl.

#3) Bengals (8-8) - If Carson Palmer stays healthy, I think this could be a sleeper playoff team. The talent is starting to develop on the defensive side of the ball. If Palmer gets injured, I don't think they stand a chance, however.

#4) Browns (4-12) - Perhaps I will be wrong, but I get the sense Cleveland is a team without a plan and without strong direction. They have a potentially strong o-line, but a headcase is their best offensive player and the battle between two mediocre quarterbacks probably doesn't really matter in the long run.

AFC South

#1) Colts (10-6) - I think this out of all the divisions is the hardest to predict. I think top to bottom, it is still among the most talented. Indy is a very solid team that always has a chance, especially when your quarterback is Peyton Manning. I think the loss of Tony Dungy will be bigger than people realize, although I think the Colts will still be very competitive.

#3) Texans (9-7) - Going out on a limb here predicting the Texans to come out with a wild-card based on their 8-4 finish last year. This is a very young team with a lot of potential - perhaps it will come together this year.

#2) Titans (8-8) - Tennessee is talented as well but I have a feeling things won't come together for them as easily as it did last year. Kerry Collins is a year older, and their defense is going to miss Albert Haynesworth. I don't think they will fall apart - just having a feeling with a first-place schedule they struggle a bit more.

#4) Jaguars (7-9) - I think the Jaguars will bounce back a bit but they have probably the weakest passing game in the NFL and in a tough division, I still think they struggle.

AFC West

#1) Chargers (13-3) - The Chargers are always among the most talented teams in the NFL and hung tight last year although their record was disappointing. Getting a healthy Shawn Merriman and LT back should be enough to put them back in the Super Bowl hunt. Playing in the worst division in the NFL doesn't hurt either. Coaching is the question here.

#2) Raiders (6-10) - There is some talent here but this is probably the most dysfunctional organization in all of professional sports and I'm sure they will mess up any success they may have anyway.

#3) Chiefs (6-10) - Some young talent here as well but I am curious how Matt Cassell plays without the supporting cast he had in New England. This could be a really good team in 2011, but right now I don't think they are there yet.

#4) Broncos (3-13) - I think this year could be a disaster. The whole offseason was a circus and it looks like the new 32-year old coach hasn't a clue as to how to handle a team. Too many distractions and really, they aren't that good talent-wise either.

AFC Playoffs

Seeds: 1 - Chargers, 2 - Steelers, 3 - Patriots, 4 - Colts, 5 - Ravens, 6 - Texans
First Round - Patriots over Texans, Ravens over Colts
Second Round - Steelers over Patriots, Chargers over Ravens
Championship - Chargers over Steelers

NFC East

#1) Cowboys (11-5) - Just a hunch - I think they will be much better without T.O. and Romo can relax a bit more. Coaching is still an issue but talent-wise, they match up with the Eagles and Giants. They are probabaly due for a good year too.

#2) Giants (11-5) - The Giants' defensive line is scary good and this will be a tough team to play with their power running game. As long as they stay healthy, they have a shot at the Super Bowl. However, their passing struggles last year when Plaxico left were large, and they haven't solved that yet from what I see. They need several young receivers to step up.

#3) Eagles (8-8) - This seems to be a popular Super Bowl pick and talent-wise, I would agree. However, I have a feeling the Michael Vick thing may blow up in their face, and they have already suffered many pre-season injuries. I think it is a disappointing season.

#4) Redskins (6-10) - Defense looks good but I just don't think Jason Campbell is a playoff-caliber quarterback. He will hold them back and in this division, not having an offense to go with a good defense is too much to overcome.

NFC North

#1) Packers (11-5) - This is my sleeper pick for the entire season, and I think Aaron Rodgers will get some MVP votes when it is all said and done. The offense looks very strong and the switch to the 3-4 with Dom Capers as coordinator was a good move. Every year a team comes out of nowhere and this is my pick this year.

#2) Bears (8-8) - Jay Cutler was a nice pickup but really, who is he going to throw to? The Bears strike me as a good team but not anything special, so a .500 finish seems about right.

#3) Vikings (6-10) - I think the Brett Favre move has disaster written all over it, both on and off the field, and I think Vikings fans will be very disappointed this year. I am wondering if the Favre move will cost Brad Childress his job.

#4) Lions (3-13) - Just not much talent here - perhaps Jim Schwartz can get this franchise on track, but it will be a while. They have pieces (Calvin Johnson, Kevin Smith) but just not enough.

NFC South

#1) Saints (11-5) - The acquisition of Gregg Williams as defensive coordinator is a big one, as the Saints' D has been the only thing holding them back. The offense is obviously very strong, and this trendy Super Bowl pick from past seasons also seems due for a breakout year to me.

#2) Falcons (8-8) - Sort of like the Dolphins, I think the Falcons pullback a bit this year with a second year quarterback and a very young defense. They also have a lot of pieces but I just don't see the amazing story happening two seasons in a row.

#3) Panthers (7-9) - After his five interception performance in last year's playoff game, questions will linger throughout this season unless Jake Delhomme plays mistake-free football. As soon as he has a multi-interception performance, the questions will start again. He's not wired for conservative, mistake-free play, and therefore I think the Panthers struggle, even with their strong running game.

#4) Buccaneers (4-12) - I just don't see much talent here and I expect the Bucs to struggle, perhaps for a few years. Another situation where a very young coach is coming into a team that is lacking personnel and I don't think that's a good mix.

NFC West

#1) Seahawks (10-6) - I don't think too many people are thinking this team has the potential to do anything this year, but they had so many injuries last year that I think the chances of a bounce back are good. If Hasselbeck is healthy, then a passing game with Branch, Houshmanzadeh, and Carlson is pretty darn good.

#2) Cardinals (10-6) - Typically, the losing Super Bowl team goes on to struggle the following year, but as long as Kurt Warner stays healthy, I don't think the Cardinals will struggle too much. I am interested to see if the late-season run gives them the confidence they need to be more consistent throughout the year.

#3) 49ers (7-9) - They may be a bit better this year, but this is another team with no quarterback and I really don't think you have a chance in this league if you don't have one. There is young talent here and Mike Singletary looks like a great coaching prospect, but I still think they are a year or two away.

#4) Rams (2-14) - I think the Rams will be fighting with the Broncos, Bucs, and Lions for the first pick in next year's draft (although the Broncos already traded theirs to the Seahawks). Beside Steven Jackson, there isn't much talent on offense, and the defense is lacking playmakers as well. This will be another major rebuilding project.

NFC Playoffs

Seeds: 1 - Saints, 2 - Packers, 3 - Cowboys, 4 - Seahawks, 5 - Giants, 6 - Cardinals
First Round - Cardinals over Cowboys, Giants over Seahawks
Second Round - Cardinals over Saints, Packers over Giants
Championship - Packers over Cardinals

Super Bowl - Chargers over Packers

There you go. I hope my Steelers can pull off a repeat, but realistically that is a lot to ask and I doubt it happens. I will check back on this as the season progresses to see how I do, and if nothing else, maybe this will get some discussion going in the comment section. The market doesn't seem to be doing that, so why not football? Good luck during the upcoming week if you're trading heavily. I will have a video up later today.

Friday, August 28, 2009

State of the Market - 8/28/09

Are you having any fun yet? That's the only question I can think of to start off today's market summary, as the market played a trick on the bulls today after playing a similar trick on the bears last week, all the while going virtually nowhere. Pre-market futures were up big today as a few tech giants reported good numbers or raised guidance, and both the Nasdaq and S&P opened at new highs for the year. Well, that was the high point, as stocks immediately started fading the gap up and sold off all the way from the open until around 1:00. They bounced back a bit for the rest of the session, but still finished well off their highs. As disappointing as yesterday had to be for the bears, today has to be at least as disappointing for the bulls. Volume appears to be lower on the S&P and higher on the Nasdaq.

Technically, what can you say? This market is just chopping around and likely chopping traders up in the process. The S&P opened exactly 1.5 points above its former high at 1037 and then fell straight down. The reversal on the Nasdaq looks a bit worse as it had a bigger intraday swing. This certainly looks like a mini bull trap At the same time, the bears still couldn't push this thing that much lower and stocks were able to finish a bit off their lows. Neither the bears or bulls seem to have much strength here and that is probably why we have such a muddled technical picture right now.

At the risk of sounding like a broken record, I did nothing today once again and remain in cash. As I showed in the video last night, the lack of good setups really stood out to me and took much of my brief bullishness away, and I guess that was proven to be the correct outlook at least for today. Day traders have to be loving this market as the moves being made in junk stocks like AIG, FNM, and FRE are tremendous, but I can't day-trade these (especially now that I am back to work). They are so unpredictable and have no concrete reason to be moving higher, so holding them for more than a few hours seems too risky for me. I continue to see very few nice swing setups and until I do, cash is it. I don't like it, and I am getting a little bored, but there is no use in fighting it. We are just in a crappy market here (emphasis on the crap part) and all we can do is hope that it improves and the setups come our way. But when you start trying to force things, you usually get yourself in trouble, and that is not something I have any desire to do.

I will go through my scans as usual this weekend but don't really expect to find much. If I do, I will share as always. As for now, I plan on not thinking much about this market and enjoying the weekend instead. I recommend you do the same. Take care and have a great few days ahead.

Thursday, August 27, 2009

Stock Market Video - Thursday Market Summary - 8/27/09

Hi traders -well, after seeing the inability of the bears to do much of anything today, I was more bullish than I have been in about two weeks today. That is until I went through my scans. Unfortunately, when I did that, all I found was a lot of super-choppy charts that were all over the place. I was hoping to find some very nice bases being formed, but at least in the charts I follow, I just didn't find too many. That has me back to being basically neutral on this market and expecting more chop.

You need real leadership if the market is going to make another run north (AIG, FRE, and FNM aren't going to cut it, sorry). Since I don't see much, I don't expect a huge run here. At the same time, the bears have seemingly been completely declawed and until they start showing the ability to take this market down for more than a day (or a few hours), it is hard to expect a meaningful pullback to occur. Where does that leave us? More chop. Hopefully I will be wrong however.

The video takes a look at the indices and the few number of setups I found - most are stocks I would focus on more as a day-trader and not as a swing-trader. The week to two week swing setups I prefer to play just aren't out there right now. Hope you enjoy the video and good luck Friday.

As always, you can right click and hit "save as" to save the videos to your computer.

State of the Market - 8/27/09

Based on only the closing numbers, today would seem to be pretty boring to a casual observer of Wall Street, as stocks were up only slightly across the board. However, it was quite a bullish session when you consider the intraday action we saw. Stocks sold off hard for the first half-hour of trading, which took them below their former breakout highs, particularly on the Nasdaq. But after about an hour and a half of consolidation, the bears could not push stocks any lower and from there the market bounced hard all the way into the close. There was a brief pullback as the final hour started, but even then stocks bounced a bit in the final few minutes to finish close to their highs for the day and in the plus column. Volume appears to be lower than yesterday as of now.

Technically, the support I've been mentioning this week around 1018 and 2015 was tested this morning (in a severe manner on the Nasdaq) but did hold by the close, and that is important. When you also consider that both the S&P and Nasdaq bounced off their short-term 9 day moving average today, it was a very bullish session overall. I mentioned yesterday that we could just be consolidating here and action like today gives credence to that idea. Another few days of rest would be good, but to the upside the numbers to now watch are 1037 and 2040. If we climb above those, then we are probably looking at another leg higher, as hard as that is to believe.

There was a major bounceback today in oil, which was down early but then reversed much like the market to finish higher. On the other hand, the dollar fell so the overall theme of dollar weakness, oil strength = market strength continues to be pretty reliable. Financials also bounced off some support today and appear to be forming a nice little bull flag. All of these are good signs for the overall market.

As I started back to my full-time job today, I did not make any trades and actually need to catch up on my scans tonight to see if there are any nicer charts setting up from this week as I've been slacking a bit there. Right now, things are back to looking bullish. Perhaps the words I wrote yesterday about a pullback in this area being too obvious are playing out. Sentiment did seem to be extremely bullish and we have gone up a large amount already and low-quality stocks were popping out of nowhere (all signs seen typically near tops), but maybe too many people saw those thing as well. Now, maybe the market is going to do the opposite of whatever everyone expects. I certainly expected a pullback soon for a number of reasons I have written about this week, but after today I have my doubts. The bears continue to show absolutely no strength. This remains a market where you have to expect the unexpected and be ready for anything. That "anything" now may be another move higher.

Tonight, I hope to get through my scans and see if there are some nice setups out there, and I will attempt to share any I see in a video. I don't see myself trading a ton tomorrow, but if I find some setups, I may have to at least consider some longs after today's bullish reversal. At least I haven't been trying to short here, I guess. Good luck Friday.

Wednesday, August 26, 2009

State of the Market - 8/26/09

A very boring day today on Wall Street, as stocks traded in a very narrow range throughout the day and ended up basically flat for the session, going absolutely nowhere. Volume appears to be lower as well.

Technically, not much happened today - the possibility of a flag pattern being formed on the S&P and Nasdaq certainly exists as we continue to rest and hold above the previous resistance levels that were broken on Friday. As long as those levels (1018 and 2015) continue to hold, you have to respect what the bulls are doing and not get overly bearish. If we get a few more days like today, the bulls will have worked off some overbought conditions and perhaps primed themselves for another move higher. I am not saying it will happen - I am still leaning slightly bearish right now - but you must respect the possibility.

Oil was down a bit today but closed off its lows and certainly didn't see much downside follow-through to yesterday's selling. Financials continue to consolidate much like the indices - I'll be watching there as well for a possible breakdown which may never come.

On the sentiment front, there were some interesting changes today to some important indicators that I follow from time to time. First, the Investors Intelligence Survey came in today with 51.6% bulls and only 19.8% bears (thanks to Bear Mountain Bull for pointing this out). This is the highest level of bullishness and lowest level of bearishness this survey has seen in almost two years. Remember, this is a contrary indicator and lends credence to my gut feeling that this bull run is going to get a bit more difficult in the next few weeks. We also have a lowest short interest level for the S&P in over two and a half years (see article here). On the other hand, we saw a pretty big jump in the put/call ratio today, perhaps because many "pundits" such as Doug Kass (who has been right most of the past year and a half) are coming out with caution flags for this market. Most of the people I read seem to have a slightly bearish stance right here including myself as well. So where does this lead us? Once again, it is hard to tell.

I hear often that the news is worst at the bottom and best at the top, and right now, all you seem to hear is "good news". Housing prices are up, car sales up, blah, blah, blah. The question I guess is are people really believing those headlines? Is there really a reason to be optimistic economically right now? I have my own thoughts on those questions but I realize my opinion doesn't really matter to the market. Another question to ask is that is if all the news is "good" and most people are optimistic, then does it become too obvious to go short here, much like the head and shoulder pattern in June and July turned out to be too obvious to play because everyone saw it and we ended up going in the opposite direction. Is everyone going to get bearish quickly because everyone seems bullish, and then once again, we get a move in a direction counter to what seems sensible?? I am probably rambling here, but the way this market has been this year (the ultimate Costanza market) I am just trying to get my thoughts out. It seems like if you do whatever the opposite of what is logical and sensible you will be successful in this crazy market.

Once again, I did nothing today and although that may seem boring I continue to feel it is the right play. My guess is that the next two days will be slow as well and then when September starts, we will begin to see a few more fireworks and an environment that is more suitable to trading (trading that is for more than a few hours). I head back to my full-time job tomorrow so if you follow me on Twitter, I will not be posting as much as I normally do during the day. Good luck tomorrow and take care.

Tuesday, August 25, 2009

State of the Market - 8/25/09

A rather boring day today on Wall Street, as after a reversal was put in yesterday, neither the bears nor the bulls could do anything to claim control over the market. The day started with some strong buying in the first half hour or so of trading, buying that did take the Nasdaq and S&P to above yesterday's intraday highs. Unfortunately for the bulls, that spike did not last and was met with equally sharp selling that took prices down to the opening levels. Stocks bounced back up to their morning highs a bit after lunch, but could not break through and fell slowly for the rest of the session, closing with modest gains. Volume appears to be close to the levels from yesterday.

Technically, as I just said, neither the bears nor bulls did much of anything today. The bears could not capitalize at all on weakness yesterday, but the bulls once again could not get stocks to finish near their highs. I think this paints a muddled picture in the short-term. The morning highs around 2040 and 1037 now stand as a clear resistance point for the very short-term picture. It is possible that we could be forming a little flag pattern here right above the former consolidation area and that after a few more days of rest, the market will regain strength and keep this amazing move going. It is also possible this market is getting tired based on two weak closes in a row and could be setting up for a significant pullback as September approaches. I wish I knew which one was more likely. I am leaning toward the second option and a close below 2015 and 1018 would confirm that view a bit more, but I realize it is not a given.

One bearish technical development I saw today was another sharp drop in oil. Now, I've seen technical breakdowns in oil twice so far in the last month (7/28 and 8/14) and each time, crude just moved up over the next three or four sessions, so I am hesitant to put a lot of faith in another breakdown. As it is, today's move took it back below the resistance it has been trying to clear above $72 which is not bullish. If further selling comes into play tomorrow, then I think the bearish scenario for the overall market becomes more likely. On the other hand, if today's selling is another one-day phenomenon, I would imagine the market keeps moving higher. The dollar was flat today but is a bit oversold so if it bounces, that could affect oil.

No moves once again for me - actually, I spent most of the day at the park with my family. There continue to be a few stocks I am watching, but I continue to believe this is not the right time to be going aggressively long or short unless you're day-trading. Because of that, I'll just remain patient here. I did go through my short watchlist today just to be ready and found a few that interested me - GMCR, POT, XOM, TSRA, BKE, TSL, KIRK, and JST all look like candidates to me now on breakdowns. I am also keeping a close eye on DTO (double inverse of crude oil) and on further weakness in crude itself may start a small position.

That's about all I have for today - I still believe it's a dangerous market right now for longs or shorts, and sometimes sitting out is best. Let's see what the market wants to do and then go with it - whatever direction that may be. That's what I plan on doing, but will continue to use my scans to try and give me some early clues. Best of luck Wednesday.

Monday, August 24, 2009

State of the Market - 8/24/09

After four straight days of gains, the market finally took a rest today, ending up basically flat for the session. However, the day did not start off that way - as has been the case recently, the market opened slightly higher but took off upward for the first few hours of trading, all the way up until lunch. From there, however, the market started to pullback, perhaps getting a bit ahead of itself, and that pullback lasted all the way into the close with a few failed bounces mixed in. All in all, a day that could have been much worse but flat for the bulls can probably be considered a victory here. Volume looks to be about even with Wednesday's and Thursday's levels from last week. Comparing to Friday's options volume is not something I normally do.

Technically, the market certainly had reason to rest a bit after being up the four days last week, but the only worry for bulls here is that today's action put in quite the bearish reversal bar on the daily charts. We've seen them before during this entire uptrend so it might not mean anything at all - we'll just have to watch the rest of this week to see. The Nasdaq did hold above its former resistance around 2015 but just barely. Obviously, you would like to see these breakout areas hold, especially so soon after the breakout occured. For the S&P, that number to watch would be 1018.

I have talked about some divergences recently in these posts that had me less than bullish, and one mentioned Friday was that financials and retailers failed to break out on Friday even though the indices were doing so. Well, today saw XLF reverse and close below its breakout level around $14.60. Retail still never broke to new highs, even during today's morning trading. I still believe this is worth watching as a potential warning sign for this rally and its ability to continue. Oil was up slightly today bucking this trend but I will continue to watch this to see if it can hold its former resistance around $73.40.

As I said this weekend, I made no trades today as I just didn't find anything worthwhile and had a gut feeling that buying here, especially with early strength, would not be smart. Turns out that was correct, for at least today. Tomorrow could be a different story - the bulls could bounce back strong and negate those reversal bars that are probably going to be seen on quite a few individual stocks after today (BAC, GS, AAPL - some of the big boys). The only stock that did much of anything today off last night's watchlist was CNXT, which did have a very nice breakout. So there are a few stocks working right now.

Speaking of GS, I posted on Twitter today that I see a potential head and shoulders pattern setting up on this chart, and today's reversal certainly doesn't dispute that. If it climbs over $167, then I think the setup would be negated, but much like I said GS could be a clue for the breakout we saw in July, perhaps this is another early warning sign for this rally. Just saying.

It may seem boring to be in cash here, but I am comfortable with the play as I continue to stand by my call at the beginning of August that it would be a very choppy and volatile month where we probably won't go anywhere. There continues to be a lot of action for day-traders, but for my style, it has been harder. I may have missed some plays, but we'll see how the rest of this week goes and see if it turns out that I really didn't miss anything at all except some stress.

After today, I am interested to see if the bulls can keep their death grip on this market. The bears have a setup to possibly run with for a few days, but they haven't been able to do much of anything for a long while now - that's why I am staying neutral here. Perhaps if we see more selling tomorrow and fall back into the consolidation area, we will get that pullback I thought was coming at the beginning of last week. We'll see I guess. Take care and good luck tomorrow.

Sunday, August 23, 2009

Some Weekend Thoughts

Hi, traders. Sorry for the late post but it was quite the busy and tiring weekend with some projects around the house along with two bad little boys around my house that felt the need to make their parents' lives very difficult today. Anyway, I was going to do a video but after going through my scans, I still really don't see too many charts setting up that I am excited about, so my basic outlook remains the same. The market broke to new highs on Friday and I am not going to stubbornly fight it - that means no shorting for me (although a big gap up on Monday would certainly be tempting).

I will continue to take longs if they come and I like the setup, but something (call it a gut feeling) has me holding back a great deal on the long side at the juncture. I still see several divergences going on that could be setting up a disappointing end to the month for many bulls. It could be, however, that the pullback/reversal I am sensing will not happen until September and maybe just won't happen at all and we'll continue to move higher and higher. I've been wrong many times so far during this crazy year, so it won't be the first time. That's why I am not shorting this thing yet - I would just be guessing and gambling and that's not real smart. I just don't think going aggressively long here is a good idea either.

If you need some names to watch, here are the ones on my watchlist for the upcoming week. There aren't nearly as many as usual and that is one reason I am tentative here.


If you have any questions on any of those, feel free to email me or leave your question in the comments section. I have a busy week ahead with a doctor appointment and a return to my regular work schedule, but I will be around on Twitter and here at the blog. Take care and best of luck during the upcoming week.

Friday, August 21, 2009

State of the Market - 8/21/09

The bulls made it four for four today on Wall Street, as we saw once again a slightly higher open turn into some frenzied buying during the first forty-five minutes of trading today, which took the S&P to new highs for the year and the Nasdaq very close to new highs as well. From there, however, it got quite boring, as stocks consolidated in a very tight range for most of the rest of the session until the final hour - for instance, the S&P had a 3.5 point range for about a four hour period today. As the final hour started, stocks started to move up and finally did break to new highs for the session, but it was a brief pop as stocks drifted back down to the top of their consolidation into the close. They still finished with large gains but the late day pop that many likely expected never materialized. Volume was higher as expected on options day.

Technically, we did have the breakout in the S&P over 1018 and for the Nasdaq over 2015 and I have to respect that as bullish. However, with the late fade, the Nasdaq just barely made it to new highs. We'll have to see if IBD puts the market back in "rally" mode after today - volume was heavier but it was also options expiration so that tends to skew things. The percentage gains were also lacking a bit for a true follow-through day. The ETFs that I focus on - USO, XLF, RTH - all attempted to break to new highs as well but all faded a bit and did not close at new highs. That is a divergence that perhaps bears watching. Short-term, we are a bit overbought now and since we are sitting right above heavy resistance, it may pay to be careful here.

If you follow me on Twitter, you know that I had my shares of doubts intraday with today's move and I said yesterday that I didn't plan on trading today as well, so I didn't. I don't like the way I can't find any really, really attractive setups right now. That bothers me. Maybe I am just missing some - please feel free to share any setups you think I may be missing. I also don't like the way the top of the IBD 100 (which should the top stocks in this market) all look crappy - for instance, CISG, CFSG, FUQI, NTES, GMCR, EBIX are all stocks that I wouldn't touch with a ten foot pole based on their charts, except on the short side. Typically, that is a big warning sign - when leaders start to show major cracks. I will say that many of those stocks are China-related so maybe I need to look at them in a different way.

Intraday, there were several things I didn't like about today's action. I didn't like the way the S&P was clearly breaking out but the Nasdaq, financials, and oil had trouble clearly breaking over their resistance levels. I also saw stocks like BAC and HIG trying to break out above key resistance levels but struggling to do so on very low volume. I realize I may be looking only at the negative here and not focusing on the positive movement in the indices as a whole, but I can't just ignore these typical warning signs that I see. I kind of felt today was lacking even though we were up big on a numbers basis. All the buying took place in the first hour (options related?) and then stocks did nothing. I never got the sense that there was massive buying going on - maybe I am just looking at things the wrong way. If the attempted breakout in the final hour gained steam and we closed up 2-2.5% on a late push, I would have been much more impressed.

The weekend is here so I am going to cut this short for now. I will be back at some point over the next few days with more thoughts after I go through my scans once again looking for clues and trying to figure this thing out. I am still in cash and pretty much as neutral as I can be. I am not planning on shorting anything - that seems to be a death wish right now - but unless we rest and nicer setups start showing up, I will not be going long either. If you're going heavily long here, good luck, but just realize there are some divergences that bear watching here. I stand by my claim in early August that this entire month would be choppy and difficult to trade. I could be wrong of course - won't be the first time - but I am sensing we could still see a bull trap much like the bear trap we saw on Monday. Take care and enjoy the weekend.

Thursday, August 20, 2009

State of the Market - 8/20/09

Let me start today's summary by saying that I was not watching the market at all today - I spent the day with my wife and two sons at the zoo and then Chuck E. Cheese's. So I will just share some thoughts that I have as I arrive back home and look at what happened on Wall Street.

Looks like the market was up once again today, as stocks rose early, consolidated for most of the session, and then rose once again as the final hour approached and closed with good sized gains for the third straight day. Volume was slightly higher on the S&P compared to yesterday (although still below average and lower than Monday) and slightly lower on the Nasdaq.

Technically, the gaps that looked like breakaway gaps to the downside on Monday have been completely filled and basically the market is back into its consolidation from late July. I did not expect this action over the past three days, but perhaps because I didn't think it would happen I should have expected it. Expect the unexpected, you know? I guess based on this action that I will go back to looking at 1018 on the S&P and 2015 on the Nasdaq as key resistance to the upside that needs to be broken before I would start looking to go long again. About the only difference we saw today technically was that the dollar and oil were both down slightly, ending the inverse correlation between the two, at least for a day. I am about as neutral right here as you can be from a technical standpoint because of the reentry into the trading range. I still think a pullback into the 950 area would be absolutely ideal for some longs but after the last three days, I don't know if it will be that easy.

Right now, I don't trust this market on either side and that is why I haven't traded this week. As I said last night, if we break out over the next few days to new highs, we will do so likely from slightly overbought conditions due to the straight up move of the past few days. It is looking like Monday was potentially a bear trap, and I am hesitant to believe that a break to new highs wouldn't be a bull trap as well. I don't know why I feel that way - I just do. It's just been a weird market this week and that's why I don't trust it. IBD put the market into "correction" mode on Monday and since then, we've been up each day. The market is seeming to continue its pattern of confusing the most number of traders as possible.

With tomorrow being options expiration, I will not be trading Friday as well. I haven't gone through my scans in much detail this week but plan on doing so tonight or tomorrow, and perhaps that will give me a better feel as to which direction this market is likely to head. The fact that I found very few long or short setups that interested me early in the week was another reason I felt it was best to sit this week out due to the possibility of chop. Perhaps I was wrong, but I don't sense that I missed a whole lot so far this week. Take care and best of luck if you're trading tomorrow.

Wednesday, August 19, 2009

State of the Market - 8/19/09

After a seemingly very bearish down day on Monday, we had another bounce back session today on Wall Street, as although futures were down pre-market and stocks did open lower, they put their lows in at the open and bounced for the first hour or so up to flat for the day. After consolidating until lunchtime, there was a huge spike higher a little after noon (sort of out of nowhere) that took stocks to new highs and past their lows from last week. From there, stocks basically went into consolidation mode with a slight downward bias into the close, finishing slightly off their intraday highs but still with decent sized gains. Volume appears to be higher on the Nasdaq and lower on the S&P.

Technically, I said yesterday that 992 and 1962 would be interesting resistance points for the S&P and Nasdaq, and the bulls were able to push past those today. So does that mean going back to a bullish short-term outlook makes sense here? I have to be honest - I really have no clue right now with this market and how it's acted this week. The very bearish breakaway gap we saw on Monday below support has quickly been filled, but it was filled on volume that was much weaker than the distribution day on Monday, at least on the S&P. What that distribution day also did on Monday was setup a situation where, if it was indeed just a one-day drop and we are going to move higher from here, we will likely be approaching the former highs in an overbought state, which is not a great setup as well. If we would have just moved sideways like the previous two week, it would have been a great setup for a breakout higher. Alas, nothing can be easy in the market, can it?

One of the big pieces of news today was Warren Buffet's big editorial piece in the New York Times about the amount of debt our country is taking on and how it will destroy the dollar. Well, I am guessing he had a short position in the dollar or something - why else would he write this piece yet have no problem with positions of his like WFC and GS getting billions in government money via taxpayer bailouts - and the dollar did respond today as you would expect. It was down a good amount, which in turn caused oil to spike once again. I said yesterday that oil had made a 3% or higher move in six of its last fifteen session - make that seven of sixteen after today. I don't trade the commodity markets but on a technical basis, it has to be tough from what I see right now. The USO chart has been anything but smooth over the past two months.

We'll see where we go the rest of this week, but your guess is probably just as good as mine. With options expiration on Friday, we will likely continue to see many games played and that is why I plan on doing nothing the rest of this week. I really don't have a good feel and when that's the case, I admit it and take a break. If you are intent on trading this chop, I would focus on the dollar/oil relationship, because it continues to drive the market direction for the most part. We don't have that much longer until August is over, and the way it is going so far, I think we will all be happy for that. Good luck and take care.

Tuesday, August 18, 2009

State of the Market - 8/18/09

After getting beat down yesterday, the stock market bounced back a bit today on Wall Street, as traders pushed stocks up slowly and steadily throughout the session today, with very few pullbacks intraday. They leveled out a bit as the afternoon went on, but still closed near their highs for the day. The only problem is that compared to yesterday, volume was very low across the board and that is not what you want to see on a bounce back day.

Technically, it looks like we have just a relief bounce on our hands today when you consider that the lows of the late July/early August consolidation were not overcome today and that the market sat right below them the entire afternoon but not really making a run at them. Combine that with the much lower volume we saw today, and I have to assume that this was simply a relief bounce that could end soon. If I was more aggressive, I may even consider shorting this little bounce but based on the lack of nice short setups I am seeing, I will likely pass. The numbers I will watch are 992 on the S&P and 1962 on the Nasdaq as overhead resistance. If we get above those, then perhaps yesterday was a one-time thing, but as for now, I am still bearish short-term. I could see a bear flag forming on the two main indices with another day or two of light, flat trade, and if so, I may consider shorting it for a few day period. The 950 area is still my target on the S&P as I showed yesterday and if I am or was short, I would cover there.

Oil bounced back big today and continued its extremely volatile trading - today was the sixth time in the last fifteen sessions that USO had a move of over 3%. This move was in response to a drop in the dollar and that inverse relationship continues. UUP is under its 50 day moving average but is still looking like an inverse head and shoulder pattern to me - if it gets above the $23.75 area, then you are looking at another big move lower for the overall market. Other areas that gapped lower yesterday like retail and the financials bounced back as well today but on what looks to be lower volume.

I didn't spend much time looking at the market today and made no trades. It remains a very tricky market and one that is quite choppy, and because of that, I don't see a real edge here in terms of making a lot of trades. Less is more in my opinion right now. As I said yesterday, if we pullback into that major support area around 955 on the S&P, I will likely look at entering long there, but as today showed, who knows if that will happen? If the dollar is down tomorrow again, then the market might bounce right back up into its former range and chop sideways a bit more. All in all, there just isn't much to do right now, at least not much that would be profitable. The trades will come, but sometimes (many times actually) sitting out and doing nothing is the best trade to make, and I will continue to do that. Good luck Wednesday.

Monday, August 17, 2009

State of the Market - 8/17/09

A terrible start to the week today for the bulls on Wall Street, as stocks gapped down, sold off hard for the first fifteen or so minutes of trading, and could not manage to bounce back into the close, finishing near their lows for the day. The indices put in large losses across the board and those losses came on heavier volume, which will give them another distribution day, bringing the total to four in the past few weeks based on my count. All in all, a very bad day that from the looks of it will start a meaningful correction over the short-term at least, if not longer.

Technically, it is never good to see key support broken with a gap, and that's exactly what happened today. The numbers I posted in the video last night (985 and 1962) where never even challenged and both the Nasdaq and S&P are now below their short-term moving averages. The action looks particularly bearish on the Nasdaq, where the gap looks like a possible breakaway move to the downside. When you add in a breakdown in the financials(XLF), possible breakaway gaps in XLE, OIH, and RTH, along with a gap up in the dollar (UUP), it does not paint a pretty picture right now for this market, at least over the next week or so. The only bright spot is that crude oil did come off of its lows and the dollar did reverse off its highs, but there is little doubt a lot of technical damage was done today.

This is not to say that we are going to be testing the March lows in another two weeks or anything like that. After the move put in over the past six or so months, it is perfectly normal to get a 10% or more pullback, which is what we could see here. It may not even been that big percentage-wise. As I showed last night, there is a TON of support stacking up in the 950 area on the S&P and 1880 area on the Nasdaq. I didn't even see the uptrend lines (until now) that also coincide with these areas, which just adds another layer of potential support. Because of this, a pullback here will likely be a good thing as long as these levels hold. I will likely be a buyer in that area as of now, as we will likely approach it with oversold readings. We are somewhat oversold currently on the McClellan. If that area happens to not hold, then this market becomes an entirely different story.

S&P 500
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I did nothing today other than thank my stops for getting me out of my positions last week and into 100% cash. I didn't short anything as I never like shorting a gap down, and will likely not short anything the rest of this week. I showed a few setups on the video last night, but they aren't there as a whole yet and if indeed this is a more intermediate-term correction rather than a short-term one, they will need some time to setup into ones I like. Although I may play that 950 area long, I do think doing nothing is the best play here. I had quite a few breakdowns from my long watchlist last night and I see absolutely none that interest me after today.

That's about it for today - a really bad day overall for the bulls but as long as they defend that key area I mentioned earlier, then I still believe they are in control of this market longer-term. Short-term, they are in for a little more selling, at least it seems that way after today. We'll see if the bears follow-through tomorrow I guess. Take care and good luck.

Sunday, August 16, 2009

Stock Market Videos - Weekend Market Summary - 8/16/09

Hi traders - back from vacation and trying to get back in the swing of things. Here's a video for the week ahead - as always, part one takes a look at the indices (a lot of mixed signals out there so I am pretty neutral right now) and part two looks at some stocks to keep on your watchlist for the week ahead. Hope the videos help you out. As always, feel free to leave comments or email me with questions. Take care and best of luck during the week ahead.

As always, you can right click and hit "save as" to save the videos to your computer.

Thursday, August 13, 2009

Another Quick Update From the Beach...

Well, time goes fast when you're on vacation and we're down to our last two days here. It's been fun however. I continue to keep an eye on the market and when it rained like yesterday afternoon, it makes it a little easier to do so. I was stopped out of my CHDX position early yesterday at $15.02 for a small loss - it never really acted well after breaking above resistance around $15.60. It could bounce soon and still turn out OK, since volume was lighter the past two days, but I figured it wouldn't be worth hanging around. I did start a position in CHK yesterday afternoon at $23.82 and will look to add more if it breaks to new highs for the year. I have a feeling commodities could run here - we'll just have to see. As always, I could be completely wrong and if so, I have my stop set.

As for the overall market, we are still chopping around in a range here but the potential is there based on individual charts for a breakout and move higher. I don't know if that will happen - I hope so, but we could also get a bull trap going and reverse back into this range with August being typically a slow and volatile month. I do see a good amount of bullish consolidation patterns in quite a few stocks and if these act properly - remember, I saw the same thing back in early June and when they started breaking down, it was a warning sign for the June pullback. These patterns are what I will be focusing on for clues to the next move overall. I am also seeing some bullish setups (cup with handles, inverse H&S) in the commodity areas and if they move higher, the market will likely follow.

Right now, I am long three stocks and am willing to add more from my watchlist if we breakout and am not looking to short anytime soon. I think it is about 50/50 chance we move higher from here or keep the chop going, which is why I am not heavily long yet. It looks like we may have a good opening today - let's see if the bulls can build on it and not give it back like they did at the end of the session yesterday. Best of luck out there.

Monday, August 10, 2009

Some Quick Thoughts From the Beach...

Hi, traders. Vacations are always nice, and although the drive was not fun (I-95 from D.C. to Richmond has to be the worse stretch of highway in the entire U.S.) we are enjoying the beach and the relaxation. I checked in on the market a bit today and actually made a small buy around lunchtime - CHDX at $15.59 - but that's about it.

Overall, the markets look to be pulling back here (not withstanding the pop Friday) and that's not a bad thing. This pullback has coincided with a bounce in the U.S. dollar. The dollar is fast approaching its 50 day moving average so a pullback there would not surprising, and that would likely be good for the overall market. I will be watching a possible move in USO (crude oil) over $38.44 as it is consolidating fairly well. The S&P and Nasdaq continue to hold above their 9 day moving averages and that would be a good sign if that continues - a break of that MA might lead to further pullback. Kind of neutral overall and wouldn't be surprised to see more chop - therefore I probably won't be doing a whole lot although if I see a good setup on either side of the market I will take it.

Long watchist - JDAS, CISG, HITK, VCI, SSRX, WMAR, AFFX, JAZZ, ISLN, MNI, PCAP, HMA, BCRX, LOPE, APAC, WTFC, NTE, AAWW, CSIQ, CYD, ELGX, SHOO, UEPS, SOLF, OFG, NFP, BABY, SGEN, CNA, KEX, THC, GT, GPN - a lot of decent looking pullbacks in this list and because of that, I will keep an eye out in case they want to move higher.

Short watchlist - CYOU, N, THQI, BKE, SNDA, RGR, BAMM - just staying ready in case we start selling off on heavy volume - these look quite good as bear flag type setups.

That's about it - I'll check back in sometime later in the week. Take care and good luck.

Thursday, August 6, 2009

State of the Market - 8/6/09

Another day of rest for the stock market today, as stocks started a good bit higher but started selling off almost immediately after the open. The selling lasted for about 45 minutes before a bounce occured, and the rest of the day the market kept that pattern going of pulling back and then bouncing up slightly, all with a downward bias. By the end of trading, stocks did finish slightly off their lows but with losses nonetheless. Volume looks to be lower on the S&P but possibly higher on the Nasdaq - I don't have the final totals.

Technically, today was a day that saw the S&P try once again to crack that 1008 level that corresponds with the November '08 highs but once again, it couldn't do so. Resistance is become quite clear then, which is good, and it is possible the S&P is consolidating a bit, which is healthy. It is sitting very close to its 9 day moving average around 992 and should have support about 10 points lower as well around 982. The Nasdaq is showing a little more weakness that the S&P, with a slight break below its 9 day moving average today. With the heavier volume, we've now had two back to back distribution days on the Nasdaq and that typically is a warning sign.

I said last night that I am leaning more and more to a decent pullback soon, and a few other things I saw today flashed more warning signs. Both of the past two days, the Nasdaq has led to the downside and given its status as the leading index on the move up, that is not a good thing to see it moving down faster than the S&P. The financials closed off their highs and finished slightly lower, which isn't a big deal, but they did have massive volume today compared to the past few days of upward price movement and that's interesting. I saw some slight breakdowns in stocks that have been setting up nicely such as MKSI, ELGX, OREX, and GOK. Nothing crazy, but interesting. I also saw some earnings plays from yesterday such as WFMI, SCLN, and GRMN give back WAY too much of their gains today (in my opinion) and that is not good either. Finally, watching FUQI (an IBD leading stock) put in a gap (possibly exhaustion) but finish in the bottom half of its trading range strikes me as a possible blow-off move. We'll see if these things mean anything I guess.

Although I watched CSIQ put in a nice breakaway earnings gap this morning, I didn't make any moves other than to get stopped out of JDAS around $20 for a breakeven trade. It hasn't done anything since earnings but I will keep it on the watchlist. Right now, I don't see any point in taking on risk here with the market extended and fewer nice charts showing up. I thought about CSIQ but with earnings plays in general not working that well this week, I passed. I am once again completely in cash and not disappointed at all. A lot of this has to do with leaving for vacation tomorrow and not wanting to be heavily positioned one way or the other.

We'll see what happens tomorrow on the jobs number but there was a subtle change today in that the bulls for once couldn't push stocks back up near their intraday highs by the close. If this continues, it suggests that they perhaps have run out of steam in the short-term and we are due for a bigger pullback. No one can blame them - they've had quite the run - but a pullback would be good here for the longer-term outlook. A move down to maybe 1870 and 950 on the Nasdaq and S&P would likely set up some nice bases and allow this market to prime itself for another run up into the end of the year. So although I am short-term more bearish, I am not saying that this market is going to tank now. Heck, we may up 200 points tomorrow, as crazy as this move has been. I will be looking to buy a nice pullback if we get one.

Best of luck tomorrow and next week - I will be on the road driving to the Outer Banks of North Carolina for a week-long vacation so no posts tomorrow and next week will be light. I will have my laptop and can answer any emails or comments you may have, but I won't be putting any videos together and will be commenting on the market maybe only two or three times next week. With all of the free information given here each day, I think I deserve a little break. Take care and good luck.

Wednesday, August 5, 2009

Investors Intelligence Survey Showing Possible Pullback

After looking at a few things this evening, just thought I would point out that the latest Investors Intelligence Survey numbers for this week show as big a spread of bulls vs. bears since June 10, which was only one day before a month-long pullback started on the S&P, Nasdaq, XLF, oil, etc. - pretty much everything. Bulls back then were at 47.7% versus 23.3% bears. This week, we have 47.2% bulls vs. 25.8% bears. Not quite as many bulls today, but very close to the spread we had, and regardless of past comparisons, it gives the impression of a very complacent market.

We'll see if this matters tomorrow and the rest of this week I guess, but the more I think about, the more I expect a pullback soon. We're at the top of this broadening formation on the S&P and Nasdaq and the Dow so it would make sense. Based on this, I am pretty sure I will be taking the rest of the week off - I get the feeling buying here is just too risky unless you're scalping intraday. I could be wrong and we could move another 10% from here, but it would be surprising. A pullback is healthy and beneficial and if it happens, that doesn't mean the bulls are done. But for now, I think I will be staying in cash. Best of luck Thursday.

State of the Market - 8/5/09

We got a small pullback today on Wall Street, as traders took some profits from the most recent bull run early on in the session. The first hour or so of trading was nothing but down for stocks, but as has been the trend recently, the bulls were able to bounce things back up a bit into the close at least on the S&P, which outperformed. A pullback in the last half hour took stocks off their afternoon highs, but overall it was a healthy session, given that a pullback was not unexpected and probably overdue. Volume looks to be flat to lower across the board, but I do not have the final numbers.

Technically, the S&P tried for the second day to climb over the 1007 level that corresponds with the November, 2008 high (11/4/08 to be exact). It could be consolidating a bit in this area, and that would be healthy - who knows however if we get some?. Short-term support is around 987 and 982. The Nasdaq pulled back all the way to its 9 day moving average today around 1980 and bounced off of it, so that is a good sign. Just like the S&P, a consolidation here, if even only for a few days, would be very healthy, but who knows if we will get it?

The real story today in the market was the continued outperformance by the financials, which were up big again even in the face of the early selloff. After gapping above resistance around $13.08 on Monday, XLF hasn't looked back and closed with large gains once again today. Today's move put it over its December 2008 highs as well. Before today, I saw some negative divergences here with on-balance volume and moneystream, as neither of those indicators had broken to new highs even though price had done so a few days earlier. Volume lagged both Monday and Tuesday, but rose today so perhaps that will eliminate some of these divergences. As long as this is moving higher, I am going to guess the market will follow. However, a pullback would certainly be beneficial and healthy in this area as well, so be alert.

Oil rested today once again, although it did bounce off its morning lows. Right now, the U.S. dollar and crude oil continue to trade inversely to each other, and the patterns look to be more bullish for crude that the dollar. USO has paused here for three days right under $39.40, while the dollar looks to be forming a possible small bear flag (looking at UUP here for the dollar). Continue to watch this relationship, because if the dollar falls further, I have to assume the market will continue to move higher, whether it needs a pullback or not.

I once again didn't do anything today - I am still holding my JDAS position waiting for it to do something, anything, but that's it. I am more hesitant to play earnings gaps here as I saw more stocks close at the bottom of their intraday range today, stocks like WFMI, TSRA, SCLN, and DVAX. GRMN, PEGA, and CBOU had nice closes, but their intraday patterns were extremely choppy and not the easiest to play due to the volatility. Overall, earnings plays don't seem to be working with the immediate level of success that I would prefer to see. With my family leaving for vacation on Friday, I don't know that I will be doing a whole lot Thursday either, although I will have my laptop on the beach and can make moves. I am just debating whether I really want to do so, especially with my long watchlist dwindling a little each day.

Overall, the story remains the same - we could certainly use a pullback here and may get one, but until it actually happens, the trend remains up. Every time it looks like we are going to get a really bad day, it doesn't materialize, and today was another example of that. Be careful because we are still a little extended and one of these days, the "buy the morning dip" trade is going to be too obvious and hurt a lot of traders, but I am still not looking at anything except longs right now. I just don't know if I will find any I really like that much to jump in. Take care and good luck Thursday.

Tuesday, August 4, 2009

State of the Market - 8/4/09

A very boring day overall today on Wall Street, as stocks meandered their way through the day, moving higher for the first half of the day, then lower into the close until the last ten minutes of trading, when the market spiked up quickly. That quick spike allowed the market to finish with small gains across the board. Volume appears to be a little lower on the S&P and about even to slightly higher on the Nasdaq, but I do not have the final totals.

Technically, both the Nasdaq and S&P moved nicely above resistance (2009 and 1000) early in the session and it looked like they would not be able to hold them. The late spike allowed them both to hold those levels so the bulls remain completely in control here. We are still in an area where a pullback could certainly happen as I showed in the video last night, but we'll just have to wait and see if it happens. The financials continued to move higher today (albeit on lower volume) and oil was basically flat today as the U.S. dollar did not fall any further today.

I made a small trade in CAEI today intraday - more of a day-trade than anything as I missed the open today and therefore missed the big move in this stock and the better entry. I entered $2.46 as it tried to break above an intraday flag, and although it moved up as high as $2.57 after that, breaking some key resistance around $2.47, it could not hold that move and fell back, stopping me out at $2.36. Not a big deal but it would have been nice if I was able to catch it at the open.

From the video last night, there were a few stocks besides CAEI that moved, but not many and much like yesterday, it tells me a lot about this market right now. POL, SQNM, BDK, and RICK had nice moves today, but POL's breakout came on much lower volume so I passed. Same deal with BDK. I perhaps should have looked at RICK a little closer as volume did come in higher by the close, but intraday it wasn't as heavy as I would have liked. Perhaps I am expecting too much right now with volume being that it is August, but I can't just ignore warning signs when I see them. I want to see more breakouts like WMS, which closed near its highs, had very heavy volume, and has good fundamentals. I missed this one in my scans however.

GIVN and ABD are two breakdowns that will cause me to take them off any watchlists after today. Meanwhile, my favorite setups are VNDA, TBI, and GOK - we'll see if i get any more tonight but I somehow doubt it. At this juncture, I am willing to take positions if these stocks breakout, but I will remain in short-term mode in terms of taking profits if I get any.

That's about it for today - short post because it was a boring day overall. We may have a lot of these over the next few weeks as August volume makes things very slow. I still have a feeling August is going to be a choppy month but we could melt-up further much like we did today. Trading less in a slow environment is usually a good idea. Perhaps my family timed our vacation for next week very well. Good luck Wednesday.

Monday, August 3, 2009

Stock Market Videos - Monday Market Summary - 8/3/09

Here's a few short videos for you to check out tonight traders. As I show in part one, we are in an area where certainly a pullback would not be unexpected, but that doesn't mean it has to happen. The U.S. dollar is really dictating a lot of action right now, and with its breakdown today, the market can still move higher this week. Part two looks at some possible setups if that happens. Good luck Tuesday.

Part Two - Long Setups - 8/3/09

As always, you can right click and hit "save as" to save the videos to your computer. I changed the dimensions to 1024 x 768 so it should be easier for everyone to watch.

State of the Market - 8/3/09

A good day for the bulls on Wall Street today, as stocks started higher at the open and stayed higher throughout the day, closing near their highs for the day. It was somewhat of a choppy session, but had an upward bias throughout. The only negative was the volume came in lower on both the S&P and Nasdaq (quite a bit lower on the S&P) and just about average overall. That's not what you want to see as the market breaks to new highs for the year.

Technically, the numbers I put out this morning as important were 1000 on the S&P and 2009 on the Nasdaq. We closed just above that important psychological number on the S&P, and the Nasdaq closed almost exactly at 2009. So although today was a nice day, it wasn't as powerful a move as we could have hoped for given the circumstances - ideally you would have liked to have seen those numbers clearly taken out. As it is, we'll see if we get more movement upward tomorrow that would allow us to clearly move to new highs. The financials via XLF gapped above resistance and also closed at new highs for the year around $13.35. Again, the only problem with this is that volume was lower today. Maybe it doesn't matter with an ETF but I'll be watching it nonetheless. If they keep moving higher, I think the market would have a hard time not following along.

It was kind of a weird day from where I sat as something just didn't feel right for most of the session. It seemed like more of a melt-up than anything and because of that, I didn't make any moves. I saw some stocks like PZE and SPF breakout but on subpar volume(although SPF closed on higher volume so some must have come in late - it did lag most of the day). I saw more stocks fade breakout attempts like TNDM, an IBD 100 stock, and close in the middle of their range. The only stock that I really liked from my earlier watchlist in terms of how it acted was CLWR, which did have a nice, higher-volume breakout. So for me, it was a day to do nothing as I didn't trust the action, even though on the outside it looked very positive.

Another reason I passed on several names is that when checking the news, I noticed that several of my possible plays had earnings reports mid-week, and I NEVER like to step into a position right in front of earnings. There is a casino that is set to open soon here in Pittsburgh and I would be much better off taking my money down there than buying a stock right in front of an earnings report, so I had to pass as well on CSIQ and EXM, both of which I thought looked decent.

We'll see what tomorrow brings and if the bulls can keep this going the rest of this week. I don't like the volume today but am fully aware that the market can go up without, especially in August. It is not a healthy pattern, but the old rules don't seem to be working as well as they once did, so whereas before it might be a warning sign, who knows right now? I am certainly not looking to short right now, but I am going to patient here with potential longs. My favorite setups as of now are POL, VNDA, TBI, and BDK. Those patterns look good. I'm not seeing that many more right now that excite me - we'll see if I find some in my scans later. That's about it for today - good luck Tuesday.

Outloook for the Upcoming Week - 8/3/09

Sorry for the late weekend post traders - I had some family issues to take care of this week and they always take precedence over my trading. As for the upcoming week, I am very neutral overall as right now, I don't have a great feel for where we go in the short-term. I still think Thursday's action was very bearish, and leaves things kind of up in the air. Longer-term, I still think we probably are more likely to head up than down.

I don't know why - call it a hunch - but I am thinking that the month of August is going to be a difficult one to trade. Volume will likely contract even further this month as traders get in their final vacations (me included) and I just think we could be in for a lot of volatile chop, which is never good to trade. Perhaps that's good in that some significant sideways movement could set us up for a really big move come September.

Technically this week, the key numbers to watch on the S&P are 982, 972, and 956 to the downside in that order, and 1000 to the upside. On the Nasdaq, watch 1978 and 1953 to the downside and 2009 to the upside. The U.S. dollar had a mini-breakdown Friday and that caused another spike in crude oil. The trade from a technical perspective has been crazy in that sector the past three days. Thursday saw a 6% loss in crude and a key breakdown below a rising trendline. So what happens the next two days. It spikes right back up over 10% and is close to breaking to new highs around $73. Crazy trading there. Keep an eye on the dollar however - if it breaks this area any further, commodities should continue to spike. Keep an eye on XLF over $13.08 as a possible breakout this week.

As for my trading, if I do much of anything this week, it will be very short-term. Looking back on trades I made the past week along with some of the leading stocks from this market run, I realized that very few of the type of stocks I like to follow (small-caps) have had smooth rides up and although I missed many of them anyway, if I was in them, my trading rules would have likely had me stopped out - breaking short-term moving averages, heavier volume selloffs, etc. Two stocks that stood out to me when I was thinking about this was FUQI and VIT. Congrats if youy have stayed with these over the long-term but I know I would have been out way too early. All this being said, with these volatile moves, I think it is wise (for me at least) to take 20-30% profits when I have them and move on to another stock or rebuy at a better spot. So that's what I plan on doing. My family is going on vacation next week as well so I don't want to have too many positions to manage while I am away, so that plays into my outlook as well.

I am also a little more hesistant trying earnings plays right now after seeing the whipsaw action in a name like FSLR after-hours last Thursday and also the poor short-term action in some recent earnings setups like AMSC, BABY, ASIA, and SHOO. Therefore, I am going to be much more careful in selecting possible plays in this realm.

If you're looking for stocks to watch this week, here is my watchlist. RINO, POOL, POL, CAEI, CLWR, VNDA, ELGX, OGXI, RICK, PZE, TBI, BDK, DCP, SPF, LEN.B, NBG, SIVB, SCHL, EXM, BCRX. Most of these are little flag patterns and could be buyable on a breakout. I would get out however quickly if they reverse or show little strength after a breakout. If you have Telechart, it will be much easier to see why I picked these - most show very good BOP strength which is a major factor for me choosing stocks.

Another group to watch as a whole this week is solars. Many have pulled back to some key support areas and could be forming handles on cup with handle patterns. If they breakdown further, these patterns could be destroyed, but they bear watching this week. YGE and CSIQ are probably the two that I would focus on most right now.

That's about it for me for right now - I will try to get a few videos out this week if I see worthy setups in my scans. As I said earlier, for some reason I feel some chop coming on so we'll have to see how the market reacts. If that happens, I will not be doing a whole lot. Take care and best of luck this week.