Wednesday, September 30, 2009
I sold out of the rest of my holdings with the Dow down around 50 this morning. I just didn't like the "follow-through" since Monday and the stocks I had weren't doing anything. CGA ($11.71) and PDS ($6.42) gave me small losses while BX ($14.17) gave me a very small profit. Basically I thought the possibility of the selling picking up was high and didn't feel like sitting through it - I felt cash was a better place to be. I didn't consider shorting anything however.
Today was obviously a crazy day intraday and I really don't have a clue what it means in the short-term. Your guess is as good as mine. The next two days may be news-driven trading with the jobs report coming out on Friday. Those days are usually tough, so I may just sit out here until the market figures out what it wants to do. I think the potential to get chopped up right now is very high, as seen in the intraday action. So be careful out there.
Gotta go. See you tomorrow.
Tuesday, September 29, 2009
Technically, we saw a slight change of character in this market from all of the previous bounces off pullbacks we have had since March. What I mean by this is that if you look carefully at the first day of rallies off pullbacks (6/24, 7/8, 8/18, and 9/3), we always had immediate follow-through. Stocks kept moving higher off the pullbacks with very little if any rest, which showed at each of those times how strong the bounces were going to be. The times we didn't get immediate follow-through following a three-day or longer pullback were 5/14, 5/26, and 6/18. The May period was a time of sideways action overall for the market, but the June example did lead to more selling two days later. I am using the Nasdaq chart here by the way.
My point with all of those dates is that tomorrow could be a key day. I want to see the bulls take this thing higher tomorrow and get the rally moving like they have up to this point in the overall move since March. We did see a change today with the lack of immediate follow-through to the upside, and if we get more selling tomorrow, it will indicate even more of a change from what we have seen since March, perhaps giving us a signal that this pullback is different from the others and we have more selling in store. Like I said yesterday, for the most part dip buyers have been immediately rewarded by this market for almost six months now, and if they don't keep getting rewarded quickly, then some worry might pop up.
Because of this, I am kind of neutral for the next couple days and will be watching 1041 on the S&P and 2085 on the Nasdaq as support if we get more selling. As long as we hold above those, then perhaps we can still rally, just in a choppier and slower manner than we have seen in the past. If we get below those levels, however, then we will have put in our first lower low since July 8, which probably would be meaningful. So overall, to answer the question of "are we topping here?", I can only say, "perhaps, but it is too early to tell". Ideally, if you're long, you want to see the bulls step up tomorrow, especially after fading rather badly today.
I actually did enter one more position today - PDS at $6.50. I thought this was a pretty low-risk entry due to the reversal yesterday and the support levels it was sitting on, but it closed slightly lower today. None of my positions did much today and I may be out of them soon. I like to see a move higher quickly after entering positions, particularly in pullback plays, and right now I am not seeing that. BX looks more like a small bear flag after today, and CGA closed below its 50 day moving average today as well - not very bullish action there. My stops are in place and if they are hit, then I accept it and will move on with the small losses. I however will still not look to short anything until we get a lower low on the major indices.
There was some very nice follow-through today in two stocks shown in the weekend video - L$$$ and E$$$. Too bad those weren't the two I went with yesterday. I have not see much follow-through in the others however and perhaps that is a sign as well for the overall market direction. We'll see if they start moving soon - I want to see that or I would start getting a little worried as a bull.
That's it for today - I will not be posting tomorrow as I have to have a medical procedure done after work and will be gone for most of the evening. I hope everything goes well and comes out normal but won't be around to write, so I'll catch everyone on Thursday. Take care and good luck Wednesday.
Monday, September 28, 2009
Technically, if you watched the video this weekend then you knew today's bounce wasn't a real surprise. We were sitting on several support levels, particularly on the S&P, and the dip buyers came out in force as they have for a while now. The main concern I have is that volume was so much lower today on this bounce. I didn't expect huge volume but there really was a major drop off today so that is something to watch. Wednesday's reversal highs were at 2167 for the Nasdaq and 1080 for the S&P, so those are number to watch to the upside. Those are a ways away however and it may take a few days before we get a retest.
As I discussed this weekend, the strength of the bounce will tell us quickly if last week was simply a normal pullback or the start of a topping process. I think it is still too early to tell for sure over a longer-term time frame, but short-term I remain bullish (today's volume not withstanding). Unless you believe we are just going to go over a cliff here, (which today kind of proved is not likely), then this topping process will take a while, if we are topping here at all. Dip buyers have been rewarded for the past six months and because of that, it will take a few failed bounces before sentiment changes. That's why I haven't been shorting anything for a while. Wait for some confirmation to the downside. We haven't gotten any and in fact, today was possible confirmation that this rally has more legs to it. Ride the trend until it ends and as of now, we haven't seen any reason to believe it is ending.
I entered two positions this morning near the open as I wanted to be long for a possible bounce. The tough part was that there were so many setups that interested me, I had a hard time choosing which to go with. I entered CGA at $12.20 and BX at $13.86 based on their overall setups and what I looked at as their risk/reward ratios. As has been the case this year, I ended up missing out on several other, better trades today. We had many winners today from the weekend's video (it's hard not to when the market is up) - T$$$, L$$$, C$$, P$$, and E$$$ were all up over 5% today, while the only stock lower was (of course) CGA. I am still watching several stocks from the weekend list and may start one or two more positions depending on how the market moves from here.
So overall, a good day although the low volume casts a little darkness over the gains. It would be nice to see more gains tomorrow as this would give more credence to the idea that last week was simply a normal pullback in an uptrend. If for some reason we reverse and close below Friday's lows, then we may have to start looking at this market differently. Take care and good luck Tuesday.
Saturday, September 26, 2009
One quick note - I realized I left two setups out of the video that I planned on putting in - CGA and THS are both sitting on their 50 day moving averages and with tight stops could be high reward, low risk setups. There are your freebies for the day.
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Chart Swing Trader is a website intended for the education of online stock traders. The website is an information service only. The information provided herein is not to be construed as recommendations to buy or sell stocks of any kind. They are simply the opinions of the author. It is possible that the editor of this blog may own, buy, or sell stocks presented. All investors should consult a qualified professional before trading any stock. The author is not an investment advisor. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts made by the author are committed at the reader's own risk, financial or otherwise.
(If you are looking for a stand-alone player to watch the Flash video in, I would look at Swiff Player. It is completely free and easy to use - just open the file using the Swiff player and you will not have to watch it in your internet browser. It allows you to easily adjust the window size based on your monitor size for optimum viewing.)
Friday, September 25, 2009
Thursday, September 24, 2009
Technically, we broke some short-term support levels today but there wasn't that much damage done...yet. On the S&P, we should have some pretty strong support around the 1040 level (give or take a few points) and I would expect at least a temporary bounce from that area. If we break that, the 50 day moving average is right around 1010, so that should act as a secondary support area. For the Nasdaq, I would expect the area from 2060 down to 2035 to act as strong support and a bounce could (should?) occur someone in that area. Unless we're looking at a waterfall here, those are important levels to watch if you plan on playing a bounce.
I've been talking about oil all week and today we saw further selling in crude which I continue to believe will be very bearish for the overall market. USO had its second day of heavy volume selling and it certainly looks like this is a significant breakdown in this chart. I would expect a bounce in USO anywhere from $32-33 where there should be some support, but after breaking down from this coil pattern, it very well may be that any bounce is shortable in oil.
I was stopped out of my last two long positions today - KONG at $14.73 for about a 4% loss and PLX at $7.57 for about a 2% loss. I guess I should have raised more cash yesterday but I was willing to give the market a chance. As it is, I am starting to see some breakdowns in charts that have been very hot and that I've been watching recently, and that is normally another warning sign to pay attention to. There wasn't massive damage done the past two days, but there was some for individual charts. I will have to start looking more closely at my short watchlist to see if those setups are popping up. As of now, I have no plans to short anything because I think it is too early, even if we are topping out here.
I think we are kind of in no-man's land right now for a few days until we can get a better idea of what the market wants to do. If we sink further tomorrow to those levels I mentioned above, I would look to buy the dip because that behavior has been rewarded for six months now and I don't think it will change overnight. However, given some of the breakdowns in key sectors we are seeing, I have my doubts whether a bounce will take us to new highs like all the others have. There are signs that the market is changing its character right now, and it is always important to watch those signs. If you're heavily long, I would be a little worried right now. Take care and best of luck Friday.
Wednesday, September 23, 2009
We had a pretty typical "Fed day" today on Wall Street, with some very volatile trade late in the session that makes interpreting the action more difficult. Stocks started flat but fell quickly for most of the morning, mainly due to a sharp drop in crude oil. They stablized before lunch and rose back to their opening levels where they moved sideways until the Fed decision came out around 2:15. At that point, we saw a very sharp pop followed by a very sharp drop which is pretty normal on these days. However, that very sharp drop was never reversed, and stocks fell throughout the final hour in very bearish fashion, with the Nasdaq falling more than thirty points in a little over an hour. Volume looks to be lower as of now but with the late selling that could easily change when the final totals come in.
Technically, today COULD be a technically significant day. I say "could" because you just never can put too much stock into what happens on a Fed day. That being said, the reversals we saw certainly look bearish, particularly on the Nasdaq. That 2150 area I've been mentioning as important for the Nasdaq was broken past today, with the index getting as high as 2167, but we closed more than 35 points below that high and also below the wedging pattern. So the Nasdaq attempted to breakout above a wedging pattern and overhead resistance from 2008 but closed well below both and that is not good. Short-term, watch around 2120 for potential support - if that happens to be broken, I would guess the 2060 area could be tested.
The S&P doesn't look quite as bearish as the Nasdaq today but it did close below the wedging pattern it has been holding above and is right at its 9 day moving average. Support could come in here, but if we get further selling tomorrow, I would expect the 1040 level to be tested.
Oil, after bouncing up yesterday, fell right back down today and that was a major story today. The move lower today has it looking like it wants to breakdown from this coil pattern, as the long-term uptrend line was pierced to the downside today and based on the USO chart, it was pierced on much heavier volume. If we see follow-through there, it would most likely be quite bad for the overall market. The dollar was up slightly today but not enough to cause this spike down - that was caused by supply and inventory news. This breakdown is what should worry the bulls the most in my opinion.
I made two trades this morning based on the individual charts, entering JAZZ at $9.69 and PLX at $7.77. Both were shown in this weekend's video. Both are biotechs which I normally don't trade much but both made moves early that I thought were worth pursuing. Both looked pretty good until the late selloff hit. To raise some cash (although I still wasn't heavily invested at all), I ended up getting out of JAZZ at $9.66 (pretty much flat) and took my small profits in XTEX at $5.33 for about an 8% gain. I was willing to hold XTEX longer but with two gaps in two days plus the reversal today, I thought twice. I will keep it on the list however. I am still holding KONG and PLX but have tight stops on both.
There wasn't much else from my watchlist moving this morning, and my long watchlist was smaller in general which is why there was no video last night. YRCW had a great move today and it did come up in my scans this week, but I thought it needed more rest for this flag so I didn't really consider it and it wasn't on my list today. That was obviously the wrong assessment - tremendous breakout from the short flag pattern today. Keep this one on your list to see if it setups again.
I've been saying now for the past week or so that although we are certainly in a position from which we could see a significant pullback, we also have not seen any clear signals that have told us that pullback will happen, so "ride the trend until it ends". Well, today may have been the first signal that tells us trouble is on the horizon. Today wasn't the end of the world, and with it being Fed day, who knows if it means anything? It could be significant, and if we get more selling tomorrow, then I think we can put more credence into today's action. I would tighten stops if you are long and perhaps start raising cash if you are heavily invested. I am not looking to short yet, but will keep my watchlist ready there just in case we are beginning to top. As of now, it is too early to say that's happening for sure, but it wasn't a great day. Take care and good luck Thursday.
Tuesday, September 22, 2009
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.
Monday, September 21, 2009
Technically, I showed the possibility of short-term bull flags forming on both the Nasdaq and S&P over the weekend and that still holds true today. Right now, the consolidations we are seeing are bullish and remind me of what we saw back from July 23 to July 29 on both major indices. Back then, we moved slightly higher out of these consolidations but then just kind of ground our way sideways. We'll have to see if we do the same thing here. We remain at the top of or just slightly above the top of the wedging patterns so a significant pullback could always occur based on those resistance levels. As of now, I really don't expect one as much as I did last week, but I am not dismissing the possibility.
As for numbers, I will be watching 2103 and 1053 as short-term support areas for both the Nasdaq and S&P respectively. To the upside, we could some acceleration to the upside if the Nasdaq breaks above 2150, as it coincides with what should be important overhead resistance from the middle of '08. That number is a bit above the most recent highs, but that's what I will be watching. On the S&P, a mover above 1075 would take us to new highs as well.
In terms of sectors, we saw another slight bounce today in the U.S. dollar which is probably one reason the market is consolidating here and not moving up. UUP has a lot of resistance to deal with at $23 and is sitting at $22.84 today, so keep an eye on this. A move above $23 and all bets are off for a potential breakout in the overall market. Crude oil did what you would expect it to do with the move higher in the dollar - it gapped lower and stayed lower throughout the day, closing right at its rising trendline from February. This continues to coil and is an area where it should bounce. If it doesn't, maybe that will be a clue as well that the market wants to pull back more than it is letting on right now. Financials are also pulling back but holding the $14.90 area on XLF so they overall look quite good right now.
I did enter KONG today at $15.35 on the breakout - I didn't catch it at the breakout but went in later based on the heavy volume. It didn't close as I had hoped but we'll see what happens. I saw a few other breakout attempts that closed in the middle of their range today (SGMO, PWRD, ININ) so perhaps this was a trend today. With the market at the top of its wedge pattern, you may see a lot of whipsaws on breakouts here. Keep an eye on this. If we see breakouts working well, I know I will take that as a good sign for further market movement, but if they fail, then it could be problematic for the market as a whole. STAR was the only other stock that moved a lot from the video this weekend but volume wasn't that heavy until very late so I passed. REXX was the only stock I would take off the watchlist - the others look OK after today and just appear to be consolidating as of now. I am watching one particular chart very closely and almost entered today, but will wait for now.
That's about it - sorry for the lateness of the post but I had to go get a medical procedure done after work. The overall market looks pretty good here and therefore I am short-term bullish, but if the dollar keeps rising and oil breaks the support it is near, then my outlook will likely change quickly. I think those two areas bear watching this week. Take care and good luck Tuesday.
Friday, September 18, 2009
I have been running this website for almost two years now and have been very happy with the growth of the site. I really didn't know what to expect when I started this - if I would get readers, what direction would I take the site, etc. - but now to have over 1,000 followers on Twitter and almost 900 Feedburner subscribers, along with the growth in the number of hits per month, I am quite happy. So far, everything on the website has been completely free - the videos, the charts, the commentary - and I have always intended to keep most of the site free. To be honest, I think I have put quite a bit of very useful and informative work out there for readers to hopefully enjoy and profit from over the past two years. However, for the amount of time I put into the videos published on the website, I am going to make a small change to that service that will allow me to be compensated slightly for my work there. I hope you understand.
Some readers have asked me before about starting a full-time paid service and my answer to that has always been, "well, with two young kids and a full-time job, I can't lock myself into that type of time commitment," and that is very true. My family is most important and I never want to have something else monopolize my time over them. I also have personally always questioned the necessity of subscribing to a service that charges a monthly fee, many of which are quite expensive. When I am fully invested, what good does a subscription service do me? In addition, when the market is in a position where I know there aren't too many trades to be made, what good does a subscription service do me? This is not to say that all subscription services are bad - there are many great traders that run great services out there. But for me, it never fit with my style - I would feel guilty about having people pay me to tell them to sit on their hands and do nothing, which really is the best advice many times in the stock market.
So, what I've decided to do is charge a small fee ($3) from now on for any video I put out on the website. I do believe that the videos contain a wealth of information that not only help traders prepare themselves a game plan for the market every few days, but also allow them to learn technical analysis and how to read charts as they go. I think $3 is more than reasonable for the information you get in the videos, including the individual setups on both sides of the market. Since I am charging this small fee, I plan on making the videos a little longer than they may be right now and will try to include specific buy levels and sell levels on the setups I include. You will likely notice the change in the sample video below.
The reason I chose to progress in this manner is that it also allows me flexibility in my writing and workload. I will likely do two to three videos per week, but if I have other commitments, I will do less. If the market is dead and I don't see many opportunities to make money, then I will just tell you that straight out and avoid the video all together. I believe this also allows the reader flexibility as well. Perhaps you are going on vacation for a few weeks and won't be trading. Well, that's fine - you won't be paying for anything you won't use. Maybe you are already as fully invested as you want to be - well, that's fine as well. Maybe you just need a few weeks away from the market (always a good idea from time to time). When you are ready to trade again, the videos will be there for you. Maybe you are having trouble finding some setups and want to get a few ideas. The videos will be there for you.
Basically, I look at these videos as trading tools for use as you like. I will share the setups and stocks to watch that I find in my scans with you, stocks like ...
- BEXP (mentioned here and now up over 100% from buy area in less than two months)
- CVGI (mentioned in video here and here and now up over 40% from buy area)
- KONG (mentioned here on 9/1 and now up over 30% from that buy area in under three weeks)
There will be no change in the rest of my website - I will still do the "State of the Market" reports with my thoughts daily along with random posts on trading topics from time to time and those will remain completely free, although I will not be sharing my watchlists in those commentaries as I do now. Occasionally, as well, I will share some videos for free. In addition, you are always welcome to email me or leave comments regarding stocks shown in the video and I will do my best to answer your questions.
I hope you understand and accept the change - I am not attempting to make a fortune on this website and all of my writings will remain completely free, but I think being compensated slightly for the amount of information shared and time spent in the videos is fair. You can check out the video below and then look for the change sometime during the upcoming week. Thanks and best of luck next week.
I really don't have a whole lot new to say today because nothing really changed. My basic thesis is that although we are overbought and in a technical position right above long-term wedging patterns to have a significant pullback, I still think there is just as good a chance (perhaps even a better chance) that this market starts ramping up very soon, possibly forming a blow-off top. The action of the past two days on the daily charts is bullish, with the S&P, Nasdaq, and XLF all forming mini two-day bull flags. This is one reason I will not be surprised at all to see increased buying next week. I continue to watch a few stocks on the long side and if I find any more in my scans, I will put together a video this weekend to share those, although the setup for the videos will be a little different from now on.
Since it is the weekend, I am wrapping this up for now. As I said earlier, not much changed today overall. Take care, enjoy the next two days, and look for a video at some point over the next few days.
Thursday, September 17, 2009
Technically, we saw some rest today and that is healthy and completely normal. Actually, about a week of this type of action would be absolutely perfect in that it would let the market digest these recent gains, but I somehow doubt that is going to happen. The technical picture I've been painting for the past few days remains the same - we are at or just above the top of wedging patterns on the indices starting back in March and although these are typically bearish and a pullback would make sense here, a real acceleration of this latest move leading to a potential blow-off top is just as likely in my opinion. The McClellan pulled back a good deal today (back under 200) so it does seem like these little pauses or sharp one-day selloffs are doing the job at relieving overbought conditions.
The U.S. dollar was up just slightly today but oil was flat. Keep watching these two as I continue to believe they are controlling a lot of the direction we are seeing in this market. The dollar is now below the shorter-term channel I've shown here before but may get some temporary support around $76. Longer-term support, however, doesn't come in until around $72 (around $22 if you're tracking with UUP) so if that $76 area falls, then I could see a very sharp move lower that would likely push the overall market sharply higher. Keep your eye on this.
I didn't make any moves today although I continue to keep my eye on a few stocks like KONG and ININ. There really aren't that many more however, and one I was watching (F) has not acted well the past two days so that may be off the list. I am still not looking to short but will point out that STEC had a huge breakdown today and with a bounce could be very shortable in a few weeks. I have pointed this chart out over the past few weeks many times due to its many negative divergences and today those divergences played themselves out I guess.
I did see that CVGI was up another 10% today, which really stinks for me. That was a chart I also consistently pointed out here before last week and when I bought into it at $5.10, my stop was run and now I am looking at a stock up 40% in a matter of days that I was stopped out of. If I could summarize my year in one example, that would be it. I have had good stock selection, but poor trade management combined with perhaps a little bad luck, and it continues to be beyond frustrating. About the only thing positive for me this year is that my patience in some ways has improved in terms of not overtrading and forcing things. I realize now that I don't have to make trades to be happy, entertained, etc. and I think that is an important step for a trader.
Tomorrow is options expiration and of course, anything can happen on those days. I think that really holds true at this moment, as a big selloff would not surprise me in the least. A parabolic move higher would also not surprise me in the least. As I said yesterday, if you're long, I would stay long until we see some clear signs that this run is over, which haven't come yet. They may come very soon however, so be ready to switch your outlook on a dime. Just like the market switched suddenly in March from extremely bad to extremely good, I am thinking it could happen again (in reverse obviously) whenever this move eventually tops out. Best of luck Friday.
Wednesday, September 16, 2009
I really don't know what else I can write today that is different from what I said yesterday, so this post may be short. This market refuses to do anything but grind its way higher, while leaving bears in its dust, and we saw much more of that today. It was pretty much a straight shoot higher throughout the day, and volume looks like it will come in higher than yesterday.
On a technical level, the financials staged their breakout today and have completely voided the bearish patterns they were setting up for the past week or so. This is another example of a bearish setup with negative divergences that did the exact opposite of what "normal" T.A. would suggest. The finnies are obviously overbought but so is everything else (McClellan is at 227 as I write this), so maybe it will continue to just not matter. My guess is they were the main reason the market was up so much overall today because I didn't see much else moving overall.
The S&P broke above the upper trendline of its wedging pattern today so the chances of us seeing a real ramp upward here (a possibility I've mentioned for a few days now) seems more likely. The Nasdaq went above a short-term wedge yesterday but is now right at the top of the longer-term wedge from the March lows. It will be interesting to see where it goes from here. 2150 will also be an interesting number to watch if it the Nasdaq gets that high, as there should be much overhead resistance in that area from important lows in 2008.
I watched the market this morning with a small list of stocks that interested me (F, PCAP, CATM, and a few gold stocks) but nothing triggered and I remain in cash. The gold stocks gapped up and I did not feel comfortable chasing the gap. I think the lack of great individual setups (in numbers) is what really has made this market so tricky, at least for me. I have had days where there were a few nice setups, but it's seemingly been a long while since I have had over 10 or setups that I entered the next trading day interested in. You figure that if the market was ready to make another move higher it would have a lot of great individual setups but it just hasn't. Oh well. The weird thing is is that the last time I saw a TON of great setups was back in June when we ended up topping out for small period of time.
I said yesterday to just ride the trend if you are already long but be aware that this thing could turn in an instant and get very nasty. I think that remains true and is the best advice I can give. If you aren't invested, we are quite overbought so buying is risky. There are a few patterns that are still setting up (KONG, KEX, ENER, ININ) and entering these on breakouts may pay off, but the risk of buying here is seemingly high as the market starts to go parabolic.
I am still disappointed that I have missed pretty much all of this run - either by getting stopped out of positions too early or passing on setups due to the way the overall market looked - but it is what it is. Perhaps this is my inexperience overall showing up as I wasn't trading back in 2003 at the start of the last bull market or in 2000 when the Nasdaq was running skyward every day as well. At least I haven't been shorting this thing and losing money, I guess. I don't plan on doing that either until we get a clear breakdown and a bounce that doesn't work (for once). Who knows however when or if that will come? I am done guessing. Take care and good luck Thursday.
Tuesday, September 15, 2009
Another up day on Wall Street (am I sounding like a broken record or what?) as stocks shook off a slight pullback at the open and then did nothing but move steadily higher for the rest of the session, closing only slightly off their intraday highs. Volume looks like it will come in slightly higher.
Technically, the beat just goes on for the market. The Nasdaq and S&P chugged higher once again and this is really starting to look like a move similar to what we saw in July. The indices had a decent selloff in June, bounced up to their former highs and got overbought, but simply stayed overbought, going through those highs regardless in a slow and deliberate manner. That was similar to what we are seeing now. Everyone is expecting the pullback and it just never comes. I don't know what is causing this move - short covering, the government, performance anxiety from fund managers. It is probably a combo of all of those, but whatever it is, it sure is making the bulls happy.
As I showed last week, from a longer term perspective, we could continue to melt up toward 1200 on the S&P and 2150 on the Nasdaq without much resistance if we get over this wedging pattern. If I was a hardcore bull, however, that is what would have me worried. The Nasdaq tried to get out from its short-term wedge but couldn't today, and the S&P continues to sit right at the top of its wedge. Going back all the way to the start of this rally in March, the uptrend channel has gotten more narrow as we move higher, and typically these upward wedging patterns aren't very bullish. That's why I still think we have a significant pullback coming at some point soon. The problem is soon could be next week or it could be in two months. Overall, I guess the trend remains your friend but I would keep my stops quite tight on profits I have.
In terms of sectors, the XLF rose again today and that head and shoulders setup is looking less and less likely here. Maybe we'll see a double top as the former high is around $14.90. The divergences are still there - it hasn't broken to new highs yet and is lagging mightily behind the market, but right now, I guess it just doesn't matter. This is another example of how what I would call "traditional" technical analysis is not working as well as it has in the past in this market. Oil was up today and continues to just chop around it seems. The heavy volume selloff we saw Friday once again hasn't seemed to matter on a bigger timeframe. It basically looks like it's coiling here. The dollar is still holding that bottom trendline...barely.
In terms of individual stocks, I would be careful right now with these biotech stocks. I posted TSPT, SVA, MNKD, PLX, and JAZZ on the weekend video as possibilities, but none have acted well so far. SVA had a failed breakout today. MNKD made a weak breakout attempt. TSPT broke down all the way to its 20 day MA (it may bounce there for a bit however). JAZZ had two mediocre bounce days in a row. PLX had a mini-breakdown as well today, so overall, I would pass on the biotechs. I'll see if I find anything else in my scans tonight but ULTA, F, PCAP, and CATM are the only stocks left from my weekend watchlist as buy possibilities now. On the short side, BKE still looks interesting but I am still leery of shorting anything yet.
That's about it for today - best of luck Wednesday.
Monday, September 14, 2009
The technical picture really didn't change today - both the S&P and Nasdaq are bumping their heads against the top of this wedging pattern/uptrend channel that I showed in the video this weekend. Right now, a pullback certainly would be logical, but as illogical as this year has been, I would not be surprised at all if we bust out of this wedge to the upside and the market really ramps things up. Either option is viable right now so be prepared for either.
In terms of sectors, USO is at a long-term uptrend line, so crude oil bears watching here. The U.S. dollar continues to hold onto the bottom of its channel but just barely. I am assuming one of these will break and then the other will react accordingly and move in the opposite direction. I wish I knew which one would break. The financials are in that possible head and shoulder pattern but just barely - they could invalidate it very soon. That is something to watch as well. Several important individual financials (GS, MS, BAC) finished off their lows today so perhaps that will lead to a breakout in XLF as well.
We had some decent movers today from the video this weekend - ISLN, CHINA, IEC, and OWW all moved up nicely off the levels I showed. I was not able to be by my computer early today so I was not able to play any of these myself, but I hope you were able to catch a few of them. The only real breakdown today was TSPT, so continue to watch the other setups shown in the video as most look good. If for some reason the market breaks above this wedging pattern over the next few days, then these longs should work well. Although the execution and managing of my own trades has been quite poor for various reasons this year, I do believe I am still sharing interesting and profitable setups in each of these videos completely for free. As I rarely even get so much as a "thank you" from readers, I am debating internally how much longer the "free" setup will last.
Good luck tomorrow with your trading - I am off to do some investigating. Take care.
Sunday, September 13, 2009
As always, you can right click and hit "save as" to save the videos to your computer.
Friday, September 11, 2009
Technically, another three or four days like today would be very bullish and could allow this recent move to continue north. There is little doubt that the market could stand to rest for a few days as that is healthy but who knows if that will happen. As I said yesterday, we are at the top of wedge-like patterns so the technical setup for a pullback or at least a rest is there. The bear flag setup in the financials still looks valid after today although MS (one stock I've been watching) did get above its 50 day moving average today. Basically, the technical picture I painted yesterday is still valid, so you can check out yesterday's post for further analysis.
My trading day was "fun" but brief. I posted the list of stocks I have been watching recently and one that was on that list and that I have consistently mentioned here over the past few weeks is CVGI. Well, today it was strong very quickly at the open and I entered a position around $5.10. This was slightly below resistance but I thought it would bust through and move to higher ground, so I went in a bit early. It did run through resistance at $5.20 and got as high as $5.37 before settling down a bit. I then set a trailing stop, which put my stop level a little under $5.00. I was ready to let it run north but also realized it could reverse and didn't want to see it get below that level. I felt that was a pretty reasonable cushion to give this stock after breaking above that resistance. Being back at work, I also cannot just not set stops as my eyes aren't on my computer screen but for a few times per day.
At 10:05, I have a strong feeling that my trailing stop (which isn't supposed to be seen) was simply run as there was a massive spikedown over a few minutes which took me out between $4.93 and $4.89(the low of that spike). I don't have the one-minute chart so I can't check how quick the drop was. After this quick spike down, it bounced right back into the heatlhy consolidation it was forming and ended up moving higher throughout the day. I was done after this and made no trades from there, as nothing else was moving anyway.
Hopefully some of you were able to benefit from this setup as it does look like it has potential to run, but I am just continually frustrated. My scans continue to pick up the vast majority of the stocks that are moving in this market and I have posted many here before they move, but I am not catching the moves myself for whatever reason - bad trading, fear of losses, bad luck. I for one will be very happy when 2009 is over. It just continues to seem that whatever I do, it is the wrong thing this year.
It is the weekend, and I am done complaining, especially on an anniversary like today when so many people lost something so much more important than money. A bad trade is beyond trivial when you remember what happened to our country on 9/11/01. God bless those families who continue to mourn loved ones lost eight years ago today. Take care and have a good weekend.
Thursday, September 10, 2009
Technically, we are at the top of wedge-like patterns on both the Nasdaq and S&P, but maybe it doesn't matter anymore. This remains an area where we could get a big pullback (according to a normal way of thinking) but it is possible we could also break out of this wedge pattern to the upside and see some real acceleration to this uptrend. I still have a hard time believing that will happen, but a lot of things have happened this year that I had a hard time believing so anything is possible. For the Nasdaq, it is possible for a run up into the 2150 area where important lows were made back in '08. For the S&P, those lows would be around 1200, which is a significant amount higher than where we are right now.
Although the bulls keep rolling here, I will point out the same setup I have been pointing out this whole week - the financials still look bearish here to me. They have not broken out to new highs yet unlike the indices and have bounced for five straight days on weaker volume than the distribution we saw last week. This still looks like a textbook bear flag pattern, and it has yet to be voided. Perhaps it will be soon, but this chart along with along with BAC, MS, and C don't look promising. On the plus side, GS has broken out and did so today on heavier than average volume so maybe the financials will catch up soon.
The dollar did not bounce today and therefore oil moved higher once again, but it is still holding the bottom trendline for the time being on its downtrend channel (using UUP here). If the dollar breaks even further, then perhaps we get that breakout move in the overall market out of its channel as well. Looking back over this year, if I had one thing I could do over again, it would be to simply track the dollar and trade opposite of it. Maybe that's why I've been so confused this year - is this rally simply an inflation trade? It is certainly possible.
The only other bearish note I can point out here is that there are slight negative divergences in the Moneystream right now for both the Nasdaq and S&P as neither has seen a new high in their moneystream along with the new highs in price they have established this week. I've seen these divergences before and they haven't mattered much, so maybe they won't matter here as well. We are also quite overbought in the short-term, but again, does it matter?
I was stopped out of my small SDS position from yesterday at $42.07 for a small loss - no big deal in that it was more of a tester position than anything. I don't want it to seem like I am totally bearish here - I do have a watchlist for some longs, but once again none did anything today and that is why I remain in cash on the long side. CVGI, AM, OWW, F, IEC, and ISLN are all stocks I have been watching this week for a sudden move upward. They all look like possible bounce plays to me off of these pullbacks or consolidations. In hindsight, I found some good setups last week when we had the big drop but didn't play them at that time as I was watching for a bounce at a lower level. That was obviously the time to buy and once again, I missed it.
I am still watching those financials as possible shorts but I am very hesistant to do so now as I don't want to get my face ripped off by another July-like move upward that just doesn't stop, which we are possibly in the middle of right now.
My Steelers open the NFL season tonight so that's what I'll be doing tonight - no late post. Best of luck Friday to wrap up the week.
Wednesday, September 9, 2009
The bulls continued their parade today early on Wall Street, as stocks rose sharply after a flat open to add to their four straight days of gains. The buying lasted all the way until lunchtime, when the market moved sideways a bit but didn't give much of their earlier gains back. However, after the S&P attempted to break to new intraday highs before 2:00 but the Nasdaq did not, stocks began to sell off a bit. The selling ended as the final hour started, and stocks did bounce back into the close, finishing near their highs for the day in most cases. Volume looks to be heavier.
Technically, first of all, I found it interesting that the August high on the Nasdaq was at 2059.48 and we closed at 2060.39 - less than a point above those highs. So on the evening news, you will likely hear that the Nasdaq closed at new highs for the year, but just by the slimmest of marging. The S&P is still about six points below its August highs of 1039. Those numbers should be important and need to hold on any breakout. Ideally, if you're a bull, you want to see further follow-through tomorrow from the Nasdaq, especially in the face of short-term overbought conditions.
I guess we'll soon see if the "buy the dip, sell the rip" playbook will keep working or if the market has indeed changed over the past week, because after this morning's move, we are certainly overbought on a short-term basis. With the market right at its recent highs, it makes some sense given the recent trading that we pullback here. This rising, wedging pattern we are seeing right now on the indices is also not the best to get a successful breakout from. If we do bust through and hold new highs, then all the bearish bets should be taken off the table, but for now, I am still short-term bearish. The head and shoulder possibilties have been eliminated, but the potential double tops are now out there. I showed the financials as looking bearish last night, and the XLF still looks the same to me - a bear flag and potential right shoulder.
The drop in the U.S. dollar continued today but for the second straight day we saw a close well off its lows and I get the sense that this move is a bit overdone in the short-term. It did bounce off the bottom of a channel I showed last night. As always, I could be wrong, but I am looking for a bounce soon in this that would likely affect the commodity sector and the market as a whole. The chart for crude oil itself could be seen as a possible bullish cup with handle, but it is very choppy and volatile and not what I would call a great setup.
I made one small trade today as I felt I should go with my gut here, entering SDS at $42.76. Since I haven't been finding many individual setups, I went the index route. I felt bearish during the afternoon, thinking that this four day spike was soon to reverse but didn't act immediately on that hunch. Seeing another spike down in the dollar, another attempted breakout from overbought conditions on the Nasdaq - it just seemed like the right play. It wasn't a big position, so if I am wrong, oh well. I passed on making any other moves before the President's speech tonight, but will be prepared to take another short or two if necessary. Going long after five straight days of gains is not something I am very comfortable doing, so I will likely avoid those for the next two days.
Tomorrow should be interesting - will we see another bull trap, or for the first time in a long time, will a breakout stick? For all I know, we could be in the middle of another move like we saw in mid-July where the market just doesn't stop going up? I doubt it, but after this year I certainly realize anything is possible. Good luck Thursday.
Tuesday, September 8, 2009
You may be assuming I am bearish short-term based on the charts I put up, and if you really twisted my arm, I probably would agree. Mainly, however, I am watching these charts to see if they negate the patterns showing here. The Nasdaq and S&P (almost) have pretty much negated the bearish patterns setting up in the middle of last week. If these charts do the same, then I need to throw those bearish ideas out the window. We shall see I guess. Good luck Wednesday.
We saw a choppy, slightly higher session today on Wall Street, as trading seemed sluggish overall even though volume was higher. Stocks started higher but slid immediately. They righted themselves around 10:00, went to new highs, but from there just drifted back to their morning lows through lunchtime. They started to move back toward their highs around 2:00, but couldn't quite get to new highs for the session, closing right at those morning levels. Volume looks to be higher than Friday but not above-average as of now.
Technically, there isn't much to say that I didn't say this weekend - we are in a choppy market and it is going to be hard to trust any possible breakout or breakdown that occurs over the next month or so, at least for me. The breakdown we saw last Tuesday has been totally reversed, but we are now overbought in the short-term after being up three straight sessions and I am expecting a pullback soon just because that's how it's been lately. Buy the dips and sell the rips has worked out as well as anything else over the past month or so. Let's say we do continue to move up toward the highs of two weeks ago. By the time we get there, we will be very overbought and faced with another potential breakout during overbought conditions. Perhaps this time will be different, but everytime we've faced that scenario since the beginning of August, it hasn't worked out well.
The head and shoulder setup remains a possibility on the S&P with a reversal soon but on the Nasdaq the setup is now sketchier. 1039 and S&P and 2059 on the Nasdaq are the levels that need to be overcome for the market to begin a serious, consistent move higher. If I had to guess, I don't think we will get there, but that's just a guess or hunch.
I pointed out this weekend that the financials were not bouncing as strongly as the overall market and that could be a warning sign, and as I look at the XLF chart, it looks like a very clear bear flag is being formed there and perhaps a right shoulder on the head and shoulder pattern. Perhaps it is just consolidating sideways, but I will continue to watch this and the stocks that go with them (BAC, GS, MS) very closely. Goldman cleared a little resistance today (barely) but MS and BAC both continue to look bearish to me.
The big story today seemed to be the U.S. dollar falling to new lows and gold moving above $1000. Oil responded in kind and moved up about 4% today, but still is basically in the same range it's been in for a while now, much like the overall market. Gold looks quite overbought to me in the short-term, but it is always possible for it to move higher still. Over the longer-term, it wouldn't be surprising at all. Right now, I am about a third of the way through Ron Paul's new book called "End the Fed" and I would recommend it to anyone that wants a strong understanding of how the Fed (and the government) operate hand in hand with each other. The dollar has been devalued for over 100 years now and it doesn't look like it is going to change in the next 100 years either. But I digress...
This market has been so choppy that I believe it is going to take a while before we get some smoother trade - individual stocks need to smooth out as well as the indices. Not many of the stocks I had on my watchlist from this weekend did anything today and I continue to find fewer stocks that are showing high Balance of Power (BOP in Telechart) levels that show accumulation. So as boring as it is, cash remains where I am at. It is certainly possible we are still in the process of forming a meaningful top here, but it isn't certain. If it happens, there will be plenty of time to short and I plan on doing that if we breakdown. If I start seeing more setups from the long side, then I am going to assume we are going to move higher overall. Unfortunately, I still don't see much short or long right now, so the market remains a mystery. Maybe my scans tonight will give me some clues. Take care and good luck Wednesday.
Sunday, September 6, 2009
If you aren't convinced by me that the market is messed up right now, look at the experts. IBD is a paper I read and believe in - they are great at what they do. But over the past two or three weeks, they have gone from labeling the market in a rally, then in a correction (8/17), then back in a rally (8/21) and now putting the rally back under pressure since Tuesday. This is not meant to disparage them - believe me, they know what they're doing. The point is that even the experts are having trouble figuring the past month or so of market action out. Something just isn't right out there.
I will be paying special attention to the financials this week because as I go over in the video, they look much more bearish than the overall market does when considering the bounce of the past two days. Perhaps that is a clue that we are more likely to head south soon than north. Nothing would surprise me however and until I see some more normal trading conditions, I will likely tread carefully with this market and trade lightly. It sounds boring, but I think it is the best advice. At least football starts this week. Take care and good luck this week.
Friday, September 4, 2009
Technically, we are now above the short-term moving averages on both the S&P and Nasdaq and the possibility of a head and shoulder top setting up here looks less likely that it did a few days ago. Without getting lower than we did to test some important support levels, the setups just doesn't look that promising if you are a bear. It is still possible, but looks more likely on the S&P than the Nasdaq. The sharpness of the bounce of the past two days also takes away the possibility of a bear flag forming here, at least from where I sit. I don't know if this means it is an "all-clear" again for the bulls, however. If you look at the XLF for instance, it does look like a bear flag is being formed here, and I don't know if we really take off without the financials. Two stocks I would watch on the short side are GS and MS, as both are bellwethers and both are forming bear flags here as well.
In terms of individual stocks, ELGX poked above its downtrend line today and I would have probably started a position if it wasn't for the lack of volume in the move. Perhaps if it gets above $5 volume will come in, but I would have liked to have seen more today. The biotechs continue to move as JAZZ was up big today but I still wouldn't hold any of these overnight and being back at work, daytrading isn't going to work for me. BEXP looks like it would have been a very good buy a few days ago as it pulled back to its 20 day moving average.
More than anything, I just think this bounce shows how uncertain things are out there. There are bullish and bearish signs out there and when you consider that we've gone basically nowhere the past two months, it remains tricky out there. My mantra remains the same - daytraders are probably loving this market but it remains much more difficult for swing traders or position traders. Hopefully we'll get some consistent movement one way or the other, but right now, it just isn't happening. Take care and enjoy the weekend.
Thursday, September 3, 2009
Technically, I've been mentioning that an ideal scenario would be a further pullback to the areas of the 50 day moving averages on the indices, but rarely do things work out ideally in the market, and perhaps we're seeing that now. Today could be the start of an oversold bounce or it could be the start of a bear flag being formed. It is too early to tell. I kind of think the lack of further pullback will likely lead to more selling soon, but that's just a guess. If we do bounce higher in this area, it would still set up a possible right shoulder across the board (S&P, Nasdaq, Small Caps, XLF) and that is something I am going to continue to watch. Right now, I am more than anything neutral in the very short-term and will wait to see where this bounce goes.
In terms of individual stocks, a few setups that I've shown recently (CRY, EGOV) showed a little life today and I still do have my eyes on a few long setups (TAM, CRM, AM, ELGX). To be honest, with starting back to work and the time it takes to get back into a routine, I haven't had too many opportunities during the day to put trades on, but I will keep watching I guess. With a few exceptions (DRIV and BKE on breakdowns) I am not finding many short setups.
We'll see what tomorrow brings and if the bulls can keep the bounce going - on a longer-term picture all we are doing is still moving sideways and that makes putting on anything beside very short-term trades hard to do with confidence, at least for me. With the long weekend ahead, tomorrow may be slow so I don't know that I'll be doing much. Good luck.
Wednesday, September 2, 2009
I guess today could be interpreted as both bullish and bearish depending on how you look at things. It is positive I guess that we didn't get further selling and follow-through from yesterday's nasty session. At the same time, it is disconcerting that the bulls couldn't push this thing any higher than it was after the beatdown they took yesterday. I am still looking at either the August lows, the June highs, or the 50 day moving average as the likely area we see at least some sort of bounce. We could drift down there over a week or so or fall sharply to that area. I don't know which one it will be.
Both of the "bounce" setups I posted last night (WATG and KONG) did reverse and close higher today - I just have to see if they get follow-through to the upside. Meanwhile, the other setups I showed last night (RDN, AM) leaked lower today and are just barely holding support. I am still watching these as possibilities on the long side. I am hesistant to short at this moment unless we just form a bear flag right here on the indices. If that happens over the next week or so, then I would abandon any short-term bullishness I have left. I still think a further decline followed by a short-term bounce of significance is more likely.
That's about it - a slow day doesn't leave me with much to write about. Good luck Thursday.
Tuesday, September 1, 2009
On the indices, we are setting up a possibility similar to what we saw in June when a head and shoulders pattern set up but then later failed. If we do pullback further over the rest of this week, perhaps to the August spike lows or even to the 50 day moving average, and then bounce back up from there, a head will have appeared to form on the daily charts. Then we just have to watch that bounce and see how it forms. I thought of this today looking at the indices but when the Worden Report mentioned it as well tonight, it gives a little more credence to this idea. Will a setup like this be too obvious much like it turned out to be back in June? Will too many people think another H&S setup is too obvious to work after being misled in June and buy, only to be tricked again by Mr. Market? Who will outthink who? Ah, so many questions - it should be an interesting two months.
Based on the lack of overwhelming breakdowns (again, I saw some but just not as many I expected), I am going to lean a little bullish for a bounce soon that I may try to play from the long side. I will reevaluate as we go and if the scenario plays out just watch the bounce very carefully for signs of weakness or strength. If we are putting in a major top here, it will take time and you have to remember that the short setups will come in that case. Be patient for them because as I said earlier, aggressively shorting here may not be the best idea. Good luck Wednesday.
Technically, today SHOULD be a significant day for a number of reasons. The two month uptrend lines were broken today on both major indices, and the market closed well below their 20 day moving averages. That has happened only once since the beginning of July. Given that we also saw similar technical breakdowns in the financials and energy today, again this SHOULD be a meaningful session, likely signally a correction is in store. I bold-faced the word "should" simply because with this market, you just never know.
Based on the charts, I would expect the market to pullback at least to their 50 day moving averages where they may bounce(around 965 on S&P and 1920 on Nasdaq). If we get to those levels, we will be oversold enough to get a bounce going. The question then will be whether that pullback is worth buying or if it is better to wait for a bounce to get short from. As always, I will try to let the individual charts lead they way, and since I haven't seen many nice long setups recently, I am leaning to a more severe pullback. Therefore, I am in short mode, looking for setups over the next few weeks now that it looks like we finally have seen a breakdown. I don't think heavily shorting at this exact moment is very smart, but if the selling continues over the next few days, a bounce would likely be a good opportunity to get short.
This remains a tricky market, but today was good in that it could at least get a tradeable move going over the next few weeks rather than the chop we've seen in August. I have been waiting for a move like this, a sign if you will, and I just hope the market isn't teasing us like it has over the past month. The bears certainly seem to be in control after today, and because of that, it pays to hold off on any buys and start tightening up your short watchlist. From the video this weekend, GMCR, STEC, CTRN and SHLD all broke nicely today. It's too late for those, but BKE and DDRX are two that look like possibilities if the selling continues tomorrow. I'm still keeping my eye on that head and shoulder setup in GS as well. Just be sure to take profits quickly because I guess we get a reflex bounce toward the end of the week.
If I find any other interesting short setups in my scans, I'll share later. Until then, good luck and take care.