Tuesday, January 19, 2010

State of the Market - 1/19/10

A strong day today on Wall Street, as stocks started the day basically flat but quickly moved higher during the first 45 minutes of trading. They consolidated a bit, then started moving higher again around noon. After making new intraday highs, they moved sideways from there until the final hour, when they tried to break to new highs again. Both the S&P and Nasdaq closed at their highs for the day. Volume was lower than Friday's high options volume but looks to be lower than Wednesday and Thursday's totals as well.

Technically, it was good to see the bulls provide support again at the 20 day moving averages for the Nasdaq and S&P - I talked about the importance of this in this weekend's video. I would feel a lot more at ease about this market if these rising wedge patterns were busted through powerfully to the upside - got to watch 1150 on the S&P (right where we closed) and 2326 on the Nasdaq. Perhaps the election results tonight will provide a catalyst for a move like that, but I also worry that that outcome is too predictable and the news could be sold. We'll see.

Sector-wise, financials were able to shake off the poor earnings report from Citigroup and continue to form a bullish handle on a cup pattern (XLF). A breakout here would obviously be good for the overall market. Oil bounced off its lows and an oversold condition and is certainly in a technical position where it could bounce a bit. That would be good for the overall market as well. Both OIH and XLE are consolidating in a bullish manner. Gold (GLD) is forming a pennant around its 50 day moving average - it's hard to know yet if this is bullish or bearish. Overall, most sectors look neutral to bullish from what I can see.

I made three trades this morning, entering CHINA at $2.72, APWR at $16.57, and FEED at $5.55. CHINA just looked good on the daily chart and I figured it was a good low-risk chance to get back in. I was expecting more however from the bounce. APWR was bouncing off its 50 day moving average and I planned a stop below to limit my risk there. I chased FEED a bit and paid for it - it was strong early on and showed good volume, so I anticipated a breakout given the overall market running too. I didn't get the breakout yet but at least it closed off its lows.

I was also stopped out of my hedge in QID at $18.61, ending that position at just slightly over breakeven. Not a big deal at all - just a test position. I also started a long position in ABAT near the end of the session at $4.20 - a pullback play here that I hope to see some momentum come back into soon.

From my watchlist, I really didn't see too many major breakouts today which in the face of a nice day on the overall markets is a bit confusing. HEAT was a nice play from the video but there weren't too many more pullbacks that had great moves. I still have a somewhat suspicious feeling about this market, as if something bad is about to happen, but I have to stay bullish until the charts clearly tell me otherwise. Perhaps the market is just consolidating underneath the surface and the momentum will pick up soon with the small caps I follow. Seeing some strong bounces off the pullbacks I see (some of which I entered today) would give me much more confidence in a significant move higher from here.

Stocks I will be watching for tomorrow for various reasons include SEED, CYD, CTFO, EGI, CALI, NAK, OWW, LIWA, GEOI, BEXP, CYOU, and CSIQ. Good luck Wednesday.

2 comments:

Anonymous said...

Feed.. great potential..

Doctor Stock said...

Some good stocks with potential... unfortunately, this just reinforces the fact that when the overall market momentum is headed in a particular direction, it drags most stocks with it... even the good ones!