Tuesday, September 22, 2009

State of the Market - 9/22/09

We had an up session today on Wall Street, but much like yesterday it wasn't all that eventful. Stocks opened slightly higher but did sell off for the first half hour or so of trading. From there, however, the bulls righted the ship and pushed them back up toward their opening levels, where they stayed for most of the afternoon, moving sideways in consolidation mode. So similar to Monday, where I didn't sense a ton of selling even though the market was down, I didn't sense a ton of buying today even though we closed higher. Volume appears to be lower than yesterday.


The technical picture for the market remains the same - the Nasdaq continues to ride up the top of its wedging pattern and is now very close to that overhead resistance coming in from '08 around 2150. If it gets above there, particularly in breakout fashion on heavier volume, then this market could really run. If it falters there, I would guess we probably see another pullback to at least the 20 day moving average around 2060 or so. We really are at quite an interesting juncture on the Nasdaq from a technical standpoint. The S&P is still consolidating as it did not break to new highs today but the sideways action in not at all a bad thing. More of it would actually be good. 1075 is the number to watch to the upside there.


The big story today was the U.S. dollar gapping lower this morning, which of course pushed crude oil back up. I talked yesterday about crude being at its long-term uptrend line so a bounce was not unexpected here. It is still coiling overall and I am guessing we will see a big move soon in oil (and probably other commodities) as this things get tighter and tighter. This relationship definitely bears watching as it has the past few months.


If you read yesterday's post, you may remember I said the following when discussing the watchlist - "I am watching one particular chart very closely and almost entered today, but will wait for now." Well, that stock was XTEX and this was a time that not following my gut was a bad move. I thought yesterday would be a lower-risk time to enter with oil being down so much, but I instead waited to get some confirmation. I did enter today at $4.90, but that is not the greatest entry all thing considered. As I mentioned in the video this weekend, I do like the chart as it looks similar to BEXP from about a month ago, so I felt it was worth taking the entry where I did. We'll see what happens.


One potentially worrisome development from today is some weak (or in some cases failed) breakouts in stocks like FIRE, CBRL, CAST, and ININ. I mentioned yesterday that seeing more of these type of reversals would be bearish for the overall market, and as of now, that could be the case. KONG did not reverse yet but is not following through either after setting up in a nice flag pattern last week. After going through my scans, I'll have a better idea of what to expect the rest of this week. There are some nice moves out there if you can catch them - for instance, RINO was a stock that popped up in my scans last night but I didn't pay enough attention to it today, when it was up about 15%.


I may be back later with a video but only if there are enough interesting setups to share. Right now, this remains a market that could certainly pullback as it is near resistance, but since no clear signals have shown that is going to happen soon, I still think the trend is your friend. Good luck Wednesday.



10 comments:

Anonymous said...

You seeing the future now Mac?? Go figure out! lol

Anonymous said...

Mac, thanks for the updates! Does VDSI look like breaking out? Thanks! Elena

Mac said...

Elena,

VDSI is sitting right above its 50 day moving average so if you're interested, it is in a pretty low-risk buy area. It's not something I would be interested in because it didn't show up in any of my price/volume scans or BOP scans but it doesn't look bad overall.

Mac said...

Anonymous - no clue at all what you're talking about; I don't get it.

theoiltrader said...

...well done on xtex it seems you have you break out on good volume and continuation on after hours, but to be honest with you I am bearish on natural gas for now, and even this co. have their products hedged way out forward, sometimes this kind of stocks will follow the underline product, but it is a stock which I was not aware off but from now is in my watchlist , thank Mac !!

Anonymous said...

You have the date on today's blog wrong :)

Mac said...

Anonymous - OK, now I get it. Thanks for pointing that out - don't think I would have noticed. That's what having two kids do to you, I guess. :-)

Mac said...

Oil trader - I am just going by the chart and it looked pretty good. Volume was extremely high today so that is good. We'll see if it follows through I guess. Thanks.

NYC Trader said...

What's the difference between xtex and xtxi ? I am in xtxi myself

Mac said...

I am not sure actually - I know you picked the better one today. Hopefully they will both continue higher.