Friday, January 8, 2010

State of the Market - 1/8/10

We saw a very boring, anti-climactic day today on Wall Street, as a disappointing jobs number failed to inspire much action by the bulls or bears today, and the markets basically moved sideways after some early vacillation. From lunchtime on, the S&P traded in about a three point range until around 3:40, when the market bounced into the close a bit. We did see a reversal of the pattern of the past two days, with the Nasdaq outperforming the S&P, unlike Wednesday and Thursday. Volume was lower as can be expected.

Technically, the picture remains the same - the S&P is right at the top of an uptrend channel and the Nasdaq is consolidating, just barely finishing above resistance. Financials pulled back a bit which is to be expected, and the oil sector is looking good to me after being quite overbought earlier in the week. XLE looks like it is consolidating instead of pulling back which is typically good news. Another day or so of rest would set it up nicely.

With the momentum names moving early, I did enter two positions this morning - NANO at $11.95 and RINO at $31.45ish. I was watching CAGC as well (posted on Twitter) but it just moved too fast and I didn't get in, going with RINO instead. I was also stopped out of my ERY hedge at $9.81, breaking even there with just the slightest of gains (a total of $11 - wow). NANO acted pretty well intraday, but RINO could never get any more momentum going after the first push and I will likely be back out of that soon.

I did start small positions in two stocks near the end of the day - KONG at $13.26 and CHINA at $2.70. I like the setups in the daily charts, which look poised to move higher. I am anticipating a bit, however, and that can get me in trouble, so we'll see.

Going through my scans, I do see quite a few other nice setups on the long side and I will be putting those in a video this weekend. Based on most of the individual charts I see, it looks like the market wants to go higher from here. There were many extended momentum stocks just a few days ago, but very few if any of them have crashed down to earth, instead just pulling back somewhat quietly. That is bullish action so that's what I am looking for next week.

At the same time, I did see some interesting tweets on Twitter today dealing with sentiment...

TheKirkReport

RT @sentimentrader: Heading for lowest equity p/c since 9/16. 3rd time for 2 straight sub-.50 readings - others were 7/13/07 & 10/15/09


I found that tweet interesting and just wanted to point that out and keep it in the back of my mindand perhaps yours. Don't ever get too comfortable in your opinion as a trader - it's when things look easiest that the market ruins your best laid plans.

It doesn't have to happen, but all signs point to further gains in a lot of stocks. We'll see what next week brings us. Take care and enjoy the weekend.

1 comment:

positiontrader said...

KONG looks really good. Will try to get in on Monday if I get a decent entry. Thanks!