Tuesday, August 31, 2010

State of the Stock Market - 8/31/10

We saw another day of volatile action today on Wall Street, but unfortunately the trend of going nowhere continued as the markets ended the day flat.   The day started out poorly with the S&P and Nasdaq once again testing the bottom levels of their current range, but those held once again and stocks bounced sharply mid-morning.   They reached their highs soon after, moving sideways through lunch, falling back after lunch, and bouncing slightly into the close.   The Nasdaq closed slightly lower and the S&P was flat overall, with volume coming in higher than yesterday's totals.  

Technically, we just keep forming this range here and what is interesting to me is that we are either testing the top or bottom of the range almost every single day for the last two weeks, and as that happens, that range becomes stronger and stronger.   It seems like it will take a lot of effort for the bulls to get us over 1067-1069 and 2155-2160, and it will take a lot of effort for the bears to get us below 1040 and 2100.  

One thing to watch over the next few days is that the 9 day moving average has moved below the top of this range and could provide an early clue as whether we will breakout or breakdown from this range.   For the Nasdaq, it is currently around 2144 and for the S&P, it is currently around 1060.   A move above this level for me would mean a breakout above the top of this range is likely.   Another test and failure of this moving average would mean we are much more likely to breakdown from this range.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Since we haven't really gone anywhere the past week or so, there really isn't much to do as a swing trader.   I would rather wait for the breakout or breakdown to come rather than guess which one will occur.   So for me, cash is good at this moment and I'll be ready to go when the range is broken.   I am still expecting lower prices and am leaning that way, but we'll see what happens.   Take care and good luck Wednesday.

Monday, August 30, 2010

State of the Stock Market - 8/30/10

Not a very good day today on Wall Street, as former support continued to act as resistance and stocks fell from the opening bell and stairstepped their way lower throughout the session.  Volume looks extremely light and it looks like the summer trading doldrums are here for at least a few more days.

Technically, we continue to establish a new trading range here, with the key being this range remains under the support from previous weeks.   I discussed this in the weekend video - until the market gets above these former support levels (again, 1067-1069 on the S&P and 2155-2160 on the Nasdaq) there is not much reason in my opinion to get bullish.   The 9 day moving average continued to hold stocks down today as well.  If a breakout above these levels comes soon, then it could potentially be bullish, but right now the past week looks like a choppy, bearish consolidation pattern to me.  

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

I personally would not mind another day or two of low-volume, slower action within this range, and perhaps one more test of the upper levels, as I am starting to see some shorts setup in my scans today.  If the market can move back into overbought territory this week without breaking out, I will be looking to act on some of those shorts.   IF we happen to get above this range, I will reevaluate things, but remember, there is several layers of resistance above 1067 and 2155 as well, so it's not like things will be easy for the bulls.  

We may get a positive bounceback tomorrow with end of month window dressing, but the longer we stay in this area without moving higher, the more likely it is in my opinion that the market breaks last week's lows and tests its July lows.   That's what I am expecting as of now, but if things change, so will I.   Good luck Tuesday.  

Sunday, August 29, 2010

Stock Market Video - Market Outlook and A List of Stocks to Watch - 8/29/10

Hi, traders - here are some videos for the upcoming week.   Part one takes a look at the overall markets.  My breadth numbers gave a "do not short" signal Friday, so I am respecting that.   The next few days should be key as the market is sitting right below heavy resistance and could breakout soon.   If it doesn't, however, I will start looking at putting shorts on later in the week.  

In part two, since my signal is telling me "do not short", I show you some of the better looking charts in the market right now.   I am not buying anything yet and even if we do breakout, I expect further resistance to come in and for the market to pullback later in the week, so I will wait.   It never hurts though having a watchlist ready to go, and that's what this is for you. 

Hope you find the videos helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.   Have a great weekend and good luck next week.

To see the video in HD, please click "720p" and "Full Screen" on the video bar - HD will be available after processing.  

Friday, August 27, 2010

State of the Stock Market - 8/27/10

On the surface, it looked like a pretty active and eventful day on Wall Street today, as stocks fought off a weak open, tested support at the bottom of this week's trading range and rose sharply in the morning, and then steadily higher in the afternoon.   The overall picture, however, didn't change much for me today even with the gains, as the main two indices closed right below key resistance and the possibility of them just consolidating before heading lower remains strong in my opinion.

The numbers to watch right now are as follows.   2155-2160 are the former support levels for the Nasdaq that were broken Monday, but based on the past three days, this area has now turned into resistance.  The declining 9 day moving average is also right in this area and I have discussed several times this week how the 9 day can act as a blanket on a downtrending market.   Oh yeah, a downtrend line is forming from the August highs and is also sitting in this area.  The situation is pretty much the same with the S&P - only the numbers change.  1067-1069 is the area that is very important here, and the 9 day is sitting right there as well, as well as the downtrend line.   The market closed right below these numbers today (2153 and 1064) and until it closes above those, I have to think we are just seeing a reflex bounce here.   If we gap above those Monday and hold the gains, I would then change my opinion, although then the 50 day is there as potential resistance as well.
 S&P 500
 Charts from Telechart, Courtesy of Worden Brothers, Inc.

I remain in cash as I was away from my computer most of today, but based on the intraday action this week, I don't think I missed much.   This week defines what "chop" is in the market - we've been all over the place but went nowhere - and although I'm sure day-traders had fun, for swing traders such as myself, it's a tough environment.   In hindsight, I am not upset about closing out my shorts on Tuesday as I know I would have been stopped out much higher later in the week.   I am not even upset about my longs that were stopped prematurely on Tuesday and Wednesday, because I would have been out of most on Thursday. 

Next week should be interesting as we hopefully will see some increase in trading volume as August ends.   Although I am still leaning bearish, I am not locked into any outlook - if we see a breakout that holds, then I would consider longs again.   Right now, as long as we're under resistance, I think looking for shorts makes more sense however.   Good luck next week - I'll see you this weekend at some point with a video.

Thursday, August 26, 2010

State of the Stock Market - 8/26/10

Quite the day on Wall Street today, as stocks opened up slightly to start the session, but when they couldn't get much traction going, they started selling off hard.  The selloff wasn't as brutal as the one we saw Tuesday morning, but it was still bearish, and stocks closed with losses.   Volume looks to be lower. 

I'm not going to write a ton today because I talked about key technical levels to watch yesterday, and those levels held very strong today on the upside move.   We'll have to see if yesterday's lows become a new support area.   Until the markets are at least over their short-term moving averages, I won't be looking at any longs.   Trader Stewie made a nice tweet yesterday when he said, "There is a time when it's too late to short and too soon to buy. I feel we are in this zone right now."   I really think that is true right now.   The bulls proved how very weak they are today, but we are still quite beaten down and reflex bounces can emerge from anywhere.   The past three days have been very difficult and I am sure quite a few have been chopped up. 

I am in cash and will likely remain that way until at least Monday.   If we bounce, I am looking it as a shorting opportunity, nothing more.   It would take some serious buying to convince me that the damage done over the past two weeks can just disappear.  If that happens, fine, but as we enter a historically bearish time of the year, I think we are not done moving lower.   Plan accordingly.   Take care.

Wednesday, August 25, 2010

State of the Stock Market - 8/25/10

 A volatile day today on Wall Street, but a positive one for the bulls, as the trading was very similar to yesterday with the exception of the final two hours.   The bears followed through on the late swoon Tuesday by pushing stocks lower in the first half hour of trading, but like Tuesday, the bulls did bounce back and close the opening gap by lunchtime.   Stocks drifted lower for the first part of the afternoon, then bounced again.   This bounce, however, was much stronger than yesterday's, and instead of fading into the close, the bulls were able to push stocks higher in the final hour and finished with gains.   Volume looks like it will be a good bit lower than yesterday.

Technically, what happened today in the afternoon what was I expected to happen yesterday afternoon, with the bulls taking charge a bit and putting bullish tails on virtually all the indices and ETFs.  The Russell 2000, which I showed yesterday holding its July lows, never broke yesterday's lows today and looks alright.  Financials did undercut yesterday's and their July lows, but closed way above and that is positive.   The S&P and Nasdaq both also undercut yesterday's lows and finished positive for the session.   Overall, the potential is definitely there for a bounce given these bullish tails, but it is not a certainty.

 Russell 2000

The reason a strong bounce is not a given is because there is a lot of overhead resistance for the indices to now deal with, and that is what I will be paying attention to over the next few days.   My eyes will be closely watching the 9 day moving average, which acted like a blanket the previous two weeks on any bounce attempts we saw.   I am also watching the 2155-2160 area on the Nasdaq as that former key support could easily become key resistance. 

Charts from Telechart, Courtesy of Worden Brothers, Inc.

I was stopped out of my position in PWER this morning at $9.43, giving me a 2% loss.  That proved to be the low for the day, which was frustrating.   I do believe that getting stopped out and immediately watching your stock move back up is one of the hardest things to deal with psychologically as a trader.  

For my trading, the situation the past two days was quite frustrating, but also one of those ones you really can't do anything about.   I was a day early with my timing in terms of a potential bounce and when I got stopped out of all of my long positions so quickly, I was in no state to hop right back onto the horse and try to ride some longs again - I did not trust the bounce the second time.   The sell off late yesterday put too much doubt into my mind about a bounce really occurring and being worth playing, so today I did nothing.   I will probably do nothing the rest of this week to be honest.   My timing was off by about 24 hours and looking back, I probably would have traded the same way again if the situation arose exactly the same way. My idea and thought (cover shorts and go long) was correct, but I just acted on that thought a bit too early.  

You are always going to make mistakes as a trader and one way I know I have grown personally over the past year or so is that those mistakes don't bother me anymore.   It still sucks to make them and miss out on moves, but I accept them and move on, all the while hopefully learning something from them.   If you can't accept mistakes and let them eat at you, you will never grow as a trader and never reach your full potential.  

I start back at my full-time job tomorrow and with meetings all day, my trading will change a bit over the next few months.   For any of you that pay attention to my tweets on Twitter, there won't be too many during the day anymore.  As for my trading, I am 100% in cash right now and will stay that way likely for the rest of this week.   Today was certainly bullish but I don't think it guarantees anything.   A relief bounce here could last 3 days or 3 hours and you just have to watch carefully over the next few days for clues as to which of those two it will be.   I think a lot of traders are expecting a nice bounce which is one reason I am not totally convinced it will happen.   We'll see I guess.   Take care and good luck Thursday.

Tuesday, August 24, 2010

State of the Stock Market - 8/24/10

A wild day on Wall Street today, as stocks gapped below key support to open the session and sold off hard for the first half hour of trading.   From there, however, the market bounced hard all the way into lunchtime.   From 11:40 until 2:40, the market pulled back again, but then another soft bounce took place into the final hour.   Once again, though, the bulls showed how weak they are, as the bears took control again at 3:35 and sold the market back off into the close.   Volume should be heavier than yesterday.

Technically, a lot of the indices I follow are at different technical stages right now.   The Russell 2000 for instance bounced off its July lows this morning nicely and still is oversold, so a bounce materializing there looks somewhat promising.   Financials are very close to their July lows but have not officially tested them.  The Nasdaq on the other hand gapped below the key support around 2155-2160 (mentioned numerous times over the past few days) and has quite a ways to go before challenging its July lows. The S&P tested its mid-July lows around 1056 but could not close above that level and still has a ways to go before testing its July lows.  So overall, a mixed bag - we could bounce here, but given the weak close, perhaps the morning bounce was about all we are going to see from the bulls.   How's that for taking a stand, huh? 
S&P 500
Russell 2000

If you follow me on Twitter, you know that I made quite a few trades today.   Going into the day, I was quite happy to see futures down so much as I was (and have been) heavily short the past week or so.   I also knew that in this summer market, where breakdowns were "good" and breakouts were "bad", it doesn't pay to hang around a trade too long, so when I saw the early action, I decided to take profits on all of my shorts.   I covered LVS for a 7.3% gain, AAPL for a 4.25% gain, and AMZN for a 2.2% overnight gain.   Those are still not the type of gains I aim for on trades, but in this market, I'll take it.   My main account is up about 7% over the past week as well and I can't complain about that.  

At that point, after using a few scans from Telechart that showed the market quite stretched and individual stocks quite oversold, I decided to put some longs on with tight stops.   I entered PWER at $9.63, IDT at $15.32, and IDSA at $13.65.   Using Telechart, I was able to simply pull up my main momentum scan (for the strongest stocks over the past six months), sort them by RSI (2), and then found these three that were all stretched and in the case of IDT and PWER, very close to support near their 50 day moving averages.   IDT did not work out, as I was stopped out at $14.94 for a 2.6% loss.   I was also stopped out of IDSA late at $13.39 for a 2% loss.   I guess I would have been better just stepping aside after covering my shorts but you're always going to make mistakes as a trader. 

I'm not sure exactly where we go from here - around 3:00 I really expected a further bounce tomorrow, but that was a very, very weak close and I am not so sure now.   With one long position and no shorts, I am leaning slightly long, but that's strictly a guess.  My PWER trade has a stop in place and my risk is limited.  A move even lower than today with some real panicky selling coming in would not shock me and if it happens, I'll just be in cash and feeling regret that I covered too quickly.   The market is always trying to trick traders, and with that close, there is a good chance that it tricked me early in today's session.  We'll find out tomorrow.    Good luck Wednesday. 

Monday, August 23, 2010

State of the Stock Market - 8/23/10

What started out as a positive session turned into a very bearish one today on Wall Street, as stocks rose early for about 20 minutes before falling hard and giving up all of their gains and then some.   Around 11:00, they found a bottom, but the bounce was very weak and very slow and ended as the final hour started, with stocks falling again into the close.   I don't have the final volume totals but it looks close to Friday's levels.

Technically, the 9 day moving average proved to be important as both the S&P and Nasdaq climbed up to that level almost exactly before reversing lower.   Right now, the markets are below all of the moving averages I use and until they get above them, I can't even think about getting long.   We're still forming a range here, particularly on the Nasdaq, and with the moving averages forming the top of the range for the S&P, I think it is going to be much harder for the bulls to break us out of the range than it will be for the bears to take us lower.    

I think the Nasdaq holds the key to this market over the next few weeks - the 2155-2160 level is of utmost importance for the bulls right now.   This number corresponds with the July 20 low and has been tested now four times in the last two weeks if you count today.   There was a subtle difference today, however - the previous three times, the market bounced right off that number and closed a good bit above it.   Today it closed at its lows.   That's why I am expecting a breakdown below that level soon.   The more something gets tested, the more likely it is to eventually break, and I think we're getting near that point.  

We are still in the midst of summer trading however, and because of that, I do worry of another whipsaw on a break through the lows shown in the above chart.   I said Friday that this is a market full of weak bulls AND weak bears.   Today certainly proved the weak bulls part.   The bears have another opportunity here but have to advantage of it.  

I made one move early in today's session, covering BIDU at $80.41 for a 4.75% gain.   I almost covered my LVS short pre-market as it looked to be opening above my tightened stop loss level, but I held to see what the open would bring and because of the fade, I still have both AAPL and LVS short and will continue to hold them, although my stop losses will be tightened to breakeven after today.   AAPL in particular looks poor here as it started to breakdown from a bear flag.  In hindsight, I should have kept BIDU but I was expecting a bounce around the 8/12 low.   I did start a short position in AMZN near the close today at $126.75 - forming a bearish wedge here and if the Nasdaq breaks down, I think this will follow.  

 All Charts from Telechart, Courtesy of Worden Brothers, Inc.

Good luck tomorrow - hopefully you have playing defense since August 11 and haven't been hurt too badly with this choppy move lower.  My numbers are still bearish and until we get above the moving averages, there is no need to try and be a hero on the long side.   We should be able to tell tomorrow if the bears are stronger and ready to take over the market or if they are just as weak as the bulls.   If so, we're in for more chop.   Take care.

Friday, August 20, 2010

State of the Stock Market - 8/20/10

It was the tail of two markets today on Wall Street, as from the open to 11:30, stocks sold off and in the case of the S&P and Russell 2000, broke their lows from earlier this week.  From 11:30 on, stocks rose slowly and steadily, taking back most of their earlier losses and in the case of the Nasdaq, finishing positive for the session.   Volume was lower than yesterday.

Technically, I said yesterday that Monday's lows were the key, and those did hold across the board today on a closing basis.   That could be good news for the bulls, but they haven't shown any real strength over the last few weeks either, so more than anything, I think it means we are going to chop around a bit longer before getting a real move of significance.   The bears had their chance yesterday and today to do something big, and just couldn't do so.   The bulls had a chance Tuesday and Wednesday to move this market higher and squeeze a lot of shorts, but couldn't.   What we're looking at is a market filled with weak bulls and weak bears, and when you have that, you have (say it with me now....) a choppy market.  

Surprisingly to me, I am still in all of my shorts (AAPL, BIDU, LVS) after today.   I tightened the stops when I saw the market open lower but none were hit yet.   That may happen early next week, and if it does, I will not be upset.   As I look at my main account, it is pretty much the same as it was three to four weeks ago, and my last fifteen trades have all been very small gains or very small losses.   This remains a market that is very difficult to make large amounts of money in - the opportunities are there but they are few and far between and you have to pick just the right stock to do so.  

Longer-term, I still think we head lower barring any rescue from the Fed or Washington, but short-term, I am not sure.   We've carved ourselves about a 100 point range on the S&P and 200 point range on the Nasdaq this summer, and over the past week, it looks like we are carving out a very small sideways range as well.   If the market breaks above its 50 day moving averages and the highs of this week, the bulls could run into September.   If today's lows are broken convincingly, then the bears could take us down to at least the summer lows and perhaps much further given seasonality.   If you're not invested right now, all you can really do is wait for one of those two things to happen, and pray we don't just get a giant whipsaw when it happens.  Oh yeah, you're pretty smart too not being invested.  

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

I won't be around this weekend because my family is heading out of town so I don't know that there will be a video up, but this summary is longer than normal so maybe that will take care of the outlook for next week.   Enjoy the weekend and good luck Monday.

Thursday, August 19, 2010

State of the Stock Market - 8/19/10

Not a good day today on Wall Street, as a bad jobless claims number started the market out on the wrong foot, and from the open, stocks were not very strong.   The morning featured a steady and systematic sell off until a little before lunchtime.   Stocks moved sideways then for most of the afternoon, but did try to break out and bounce a bit during the final hour of trading.   Unfortunately for the bulls, the sold back off into the close and finished slightly off their intraday lows and with large losses.   Volume was much heavier.  

Technically, so far, the week has been playing out relatively close to what I described in this past weekend's video.  We had a choppy bounce Monday, Tuesday, and Wednesday before some real selling came in today.  However, much like the bulls could breakout Tuesday and Wednesday, the bears could not bust through Monday's lows today at 1069 for the S&P and 2155 for the Nasdaq.   If they can't take them out tomorrow, then my guess is that we just chop around a bit more next week and really go nowhere.   If those lows are taken out tomorrow, then I think there is a very good chance the June lows will be tested quickly.

Although the indices haven't broken Monday's lows, the financials did today and look to be leading this market lower - down over 2% today.   I pointed this chart out in last night's summary and right now it certainly does not look good.  The Russell 2000 also outperformed to the downside today with a 2.5% loss and that is not a bullish sign either. 

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

I didn't make any trades today because I am pretty much as short as I feel comfortable being with AAPL, BIDU, and LVS.   I tightened my stops in these positions right now because I don't feel like holding on much longer if this market decides it just wants to chop around some more.   I am looking for immediate follow-through to the downside here and without it, I will likely cover and take small gains. 

Tomorrow is options expiration but lately those have been snoozefests - we'll see if tomorrow is different.  I am hoping we can get a trend going soon, even if it is a downtrend, but we are still in the summer so it will tougher.   With all of the economic news coming out looking bad, I am not quite sure what the bulls have to hang their hats on longer term beside the gov't intervening with more stimulus, but maybe they have some trick up their sleeve.   Sure looks like we are going lower, however.  Be careful.   Good luck Friday.

Wednesday, August 18, 2010

State of the Stock Market - 8/18/10

Sorry for the late post, but we had friends in today from out of town and spend the day enjoying each others' company and watching our kids act crazy.   We had some positives and negatives today on Wall Street - the day started out very poorly with selling carrying over from late in Tuesday's session, but the bulls were able to bounce back and take stocks up to challenge yesterday's highs from Tuesday by the afternoon.   Once again, however, we saw a weaker close which left stocks in the middle of their daily range.   Volume was lower.

Technically, we are building a little two day range here and basically today's highs are important to watch as well as Tuesday's lows.   A move above or below will likely determine the next move for the market.   I am just going to show the charts below and you can draw your own conclusions.  

Charts from Telechart, Courtesy of Worden Brothers, Inc.

One thing that wouldn't surprise me is for the market to break out tomorrow above today's highs (and in the process making shorts cover) and then reversing hard in the afternoon right back down (to screw with those buying the "breakout").   That would certainly be frustrating, but isn't that what the market is best at doing.   Tomorrow also in another Permanent Opens Market Operations Day (POMO for short - please check out this article from Zero Hedge for more information) so I will be interested to see if we get another ramp up out of nowhere. 

Right now, I still have all three of my shorts in place (AAPL, BIDU, LVS) and BIDU and AAPL in particular still look weak to me here.   If the market falls, I think they will work nicely.   I posted a chart on Twitter today of why I am shorting LVS, and I am sensing it will pullback nicely as well IF the market does likewise.   That's the problem.   I have a sneaking suspicion tomorrow will bring some volatile trading that will frustrate not just me as a bear, but those out there that are bullish as well.   I hope I am wrong, but that's what my gut is telling me.   Based on the charts, I still think we are working off last Thursday's sell off in a choppy manner that will eventually resolve itself to the downside.   I just don't know if the charts will be correct this time.   Take care and best of luck Thursday.

Tuesday, August 17, 2010

State of the Stock Market - 8/17/10

What started as a very positive day on Wall Street ended with a lot of questions, as stocks opened with gains, consolidated nicely, and then really took off into lunch.  By 11:30, stocks were up well over 1% across the board and after a brief consolidation through lunch, they tried to break out again in the afternoon.  At this point, however, technicals took over and stocks quickly ran out of steam, falling slowly at first and then a little quicker in the final hour to close in the middle of their range.   Volume appears to be close to yesterday and overall not very impressive. 

Technically, I talked about a bounce this weekend and so far, it is playing out like I expected.  The S&P was able to climb above its 50 day moving average today with ease, but hit resistance around its 9 and 20 day moving averages (near 1098).   The Nasdaq got as high as its 50 day moving average but also hit resistance at that point and sold off - this was also mentioned as a good possibility in the video.   If the market climbs above today's highs, then I will have to reevaluate my outlook, but with the late fade, I still think the benefit of doubt has to be given to the bears based on last Thursday's breakdown.  

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Although the market was up nicely for most of today, I still really had no interest in going long at this point.   One of my two main breadth numbers did turn bullish today, but the other remains in bearish territory, so I am sitting out and am still of the opinion this is simply an oversold bounce like I talked about this weekend.   Some of the stocks I mentioned yesterday did have good sessions today (NANO, EDR, HXL, EBIX, RDWR) but with the exception of NANO, volume was not that impressive on any of the others.   Then you also have stocks like SOLR and INFA - two stocks that posted super breakouts yesterday.   You would expect good follow-through for both with the market up well over 1%, right?   Well, think again - INFA reversed well off its highs and finished lower for the session while SOLR was down over 7% on a downgrade.   These are two prime examples that it remains a very difficult market.

I did reshort BIDU near the close at $84.58.  My stop is in place and if I stuck to my original plan when I shorted it last Thursday, I still would have my original position.   The last three days for BIDU look like a weak bounce to me and the fact that it could barely finish positive on a great overall day for the market was telling.   I still have my AAPL short and also added a short in LVS at the end of the session at $29.83.   As you can see in the chart below, it is at the top of a long time channel and breakouts have been very poor in this market, so I thought it was a good candidate.   If we keep bouncing tomorrow, I will likely be out of these, but I accept that possibility - actually, in the back of my mind, I kind of expect it the way this market has been this summer.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Overall, the bulls haven't really proved much to me so far this week and I was not impressed by the late action today.   I am not saying we are going to rollover - there is a good chance this whole week will be choppy - but I think we will head lower before heading much higher than we are today.   Good luck Wednesday.

Monday, August 16, 2010

State of the Stock Market - 8/16/10

A pretty slow day today on Wall Street, as stocks chopped around in another low-volume trading session.   Stocks started out lower today but immediately started rising, making the action look quite positive.   However, a little after lunchtime, stocks weakened and fell slowly and steadily into the close.   The Nasdaq was still able to finish with gains, while the S&P was basically flat, but both were off their earlier highs.   Volume as I said looks to be running lower.

Technically, I don't think today was bad for the bears at all - we were a little oversold going into the week and with all of the talk I saw about the Hindenberg Omen and crashes and what not, a bounce was to be expected.   That bounce, as of now however, is very weak - the bulls can't be very happy with today's performance.   As I said this weekend, I still think there is a chance we bounce a bit more, but with resistance above now and not below, I think it will take a MAJOR effort by the bulls to get this market rallying again.  Numbers I will be watching over the next few days are the 2220-2227 area on the Nasdaq and the 1087-1095 area on the S&P.  If these areas are reached, I will look hard at getting short. 

I was stopped out of my BIDU position today at $85.06 for a 1.2% loss.   I moved my stop up there and really shouldn't have done so.   I am still in my AAPL short however.   If we chop around for a few more days and don't go anywhere, I think there will be quite a few good short possibilities, but I came into the week not planning on doing much the first few days and I will stick with that plan.   If we miraculously rally here much higher than I expect, I do have a watchlist ready - IDT, EBIX, PWER, EDR, RDWR, CMG, NANO, FSYS, and SXCI all look pretty good as potential longs - but I don't expect a rally to materialize here and can't get comfortable going long with all my numbers on a sell/short signal.  

Good luck Tuesday - I'll share candidates as they become available, but I would rather wait a few more days for better setups.  Take care. 

Saturday, August 14, 2010

Stock Market Video - Market Outlook and A Look at Why This Market Has Been Tough - 8/14/10

Hi, traders - here are some videos for the upcoming week.   Part one takes a look at the overall market and the technical breakdown this past week.   While I expect some chop early this week or a potential bounce due to oversold conditions, I still think Wednesday's sell-off was very significant so any bounce should be shorted in my opinion.   It would take a major effort for the bulls to bounce back at this exact point, although in a still thin trading environment, who knows?

In part two, I don't go over any setups, because I really don't see any for the next few days.  It's a little late to short here (wait for a bounce or sideways action) and I don't like trying to call a bottom, so I see no reason to go long.   I do look at a few stocks that show exactly why this market has been difficult for technical traders for the past few months.   I think these stocks illustrate perfectly the problems that I know I have had and I believe others have also experienced this summer.

Hope you find the videos helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.   Have a great weekend and good luck next week.

To see the video in HD, please click "720p" and "Full Screen" on the video bar - HD will be available after processing.  

Friday, August 13, 2010

State of the Stock Market - 8/12/10

I've got to run - hence the early post - but there really isn't much to talk about today.   As of 2:37, the day was a big snoozefest, with stocks chopping around near yesterday's lows and with volume running very low.   Typical summer trading overall, but not a session that the bulls can be particularly happy with in my opinion.  They could still get a push into the close if people decide to cover into the weekend, but if yesterday's "reversal" was going to be something meaningful, you would really think the bulls would have been able to push this thing higher right off the bat today, right?

I am still under the belief that we may bounce a bit early next week but ultimately head lower over the next two to three weeks.   I have no way of knowing how long we'll pullback for, but Wednesday was an important day and I don't think we'll bounce back from it as if nothing happened.  I'll be back Sunday with more thoughts - until then, enjoy yourself and have a great weekend.    

Thursday, August 12, 2010

State of the Stock Market - 8/12/10

A rather interesting day today on Wall Street, with stocks gapping down hard at the open, bouncing just as hard after that, and then going into a holding pattern.   As lunchtime approached, the market could not muster the strength to bust through the resistance of yesterday's afternoon lows and instead drifted back down through much of the afternoon.  Around 2:30, another sharp bounce took stocks back to their highs for the day, but once again could not get through and fell back down.  Volume appears slightly lower than yesterday's heavy selling.  

Technically, we are getting oversold and the action this morning seemed a little panicky to me, so it is possibly we get a bounce soon or just thrash back and forth for a while.   I still have a hard time believing that yesterday's action (which was so bearish technically) can just be done away with immediately, so I am not looking at today as a bottom or anything like that, but some very choppy consolidation wouldn't surprise.   If a real bottom was going to be formed today, (which in my opinion would take some MAJOR strength from the bulls), wouldn't the bulls have been able to close things positive? 

In terms of upside resistance, the S&P got close but was not able to get above its 50 day moving average around 1087.   I think there is a good chance that is taken back on a bounce, but above that, I will be watching 1105ish as the short-term moving averages will be coming into that area soon.  The lagging Nasdaq is still quite a bit below its 50 day around 2230, and I think any bounce we get will have a hard time climbing above that level, as yesterday's highs are also close by and should act as resistance.   To the downside, if today's lows are broken next week, then I think the market will have a meeting with the July lows soon after. 

One thing I found interesting when looking at the daily charts of the indices was that for the first time in for as long as I can remember, I saw two visible, large gaps on back to back days (on the Nasdaq).   I'm sure there were back to back gaps along the way but from what I could see all were filled immediately intraday. I went back and visually looked over the Nasdaq and S&P from late 2007 and I could not pick any days out where there were two consecutive gap downs that were not filled (although my eyes could certainly have missed it if it happened).   I'm not sure how to interpret this - is it a sign of how nasty things are right now, or is it a sign of selling exhaustion?   Will those gaps now have to be filled?   These are all things I am considering.
Charts from Telechart, Courtesy of Worden Brothers, Inc.

In terms of individual stocks, although I am short I have to be honest and say that just visually, a lot of stocks look good here.   There were a lot of bullish reversals put in (which can be expected given the partial market reversal) and if it weren't for the appearance of the overall markets along with my numbers being bearish, I would be considering some names like IDT, IDSA, ISLN, IGTE, HXL, CMG, and RDWR for long positions.   As it is, I am going to wait and see what tomorrow brings before getting more aggressive on the short side or turning around and going long (highly unlikely).  

I made no moves today - I thought of covering both AAPL and BIDU at the open today but decided to hold for further selling over the course of the next week or so.  I may not get that, but I think it is worth taking the chance, and at worst, my losses will be 2% or under on each if the stops are hit.   I will not hesitate to add more shorts as well if the opportunities present themselves.
Overall, we remain in a very volatile market that is hard to trade on anything longer than an intraday time frame, and the past two days were a prime example of that.   I remain bearish as I think yesterday's breakdown was very meaningful, but anymore, not much surprises me.   I'll hold onto my shorts here and look to add more if we chop around further and stay below key resistance - that's what I am looking for and as such, I think it is the smart play for now.   Good luck Friday - it should be interesting.

Wednesday, August 11, 2010

State of the Stock Market - 8/11/10

We saw a very poor session today on Wall Street, as stocks gapped down to start trading and continued to sell off for the first hour and a half of the session.   Around 11:00, stocks leveled off, but no real bounces took place the rest of the day - it was just a sideways move that had stocks closing near their lows for the day.   I don't know as of now if volume will be heavier - it looks like it will be at least close to yesterday's totals.

Technically, I've been warning of this potential bearish wedge pattern for a few days now and we sliced right through that today.   The S&P barely held its 50 day moving average, but the Nasdaq cut through its 50 day with ease and the look of the indices is certainly a bearish one.  I've been waiting for a move to take place - a lot of traders have - and after today, it looks like that move will be lower.   In addition, the main two breadth indicators I follow gave sell or short signals today, and that is significant as well.  

Since my indicators gave me the signal, I had to follow it today so I did short AAPL this afternoon at $250.35 and BIDU at $84.21.   Both are fairly large positions but my stops are in place (a little bit larger than usual because I'm sure this market will gyrate over the next week and not make things easy on the bears either).   I did not short at the start of the day because I wanted to see how things played out, but with the lack of any sort of bounce taking place along with my numbers giving me the green light, I went ahead and followed the plan.  I was stopped out of my LIWA position in my IRA at $8.55 for a 5% loss.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Hopefully you weren't too hurt from today's move lower.   I've been somewhat cautious for over a week now for many reasons (which is why I was mainly in cash the past week) and I guess today proved those feeling correct.   Based on what I see, I believe today will mark the start of another move lower.   I don't know how much lower we will head - we'll evaluate as it happens.   Notice how for the first time in a while, no dip buyers showed up today.   Not good.  Bottom line for me is that the tide has turned for the time being and as such, you have to adjust your strategies.   Good luck Thursday.

Tuesday, August 10, 2010

State of the Stock Market - 8/10/10

A volatile Fed day today on Wall Street, as stocks started the day much lower, but then bounced slightly and moved sideways through lunch and into the actual decision around 2:15.   After the Fed released their statement, things got very choppy as they typically do, with stocks bouncing sharply but then giving back about half of those gains during the final hour of trading.   Overall, stocks finished with losses but in the middle of their intraday range.  Volume was heavier than yesterday's putrid totals, giving the indices another distribution day.   By my count, that makes six for the Nasdaq and S&P in the last month, always a worrisome sign.

Although there was a lot of intraday movement today, very little changed with the overall technical picture of the markets.   Except for the Dow, which continues to lead, the indices are still below their June highs and are also forming bearish rising wedges.   The bottom trendline of that wedge held once again today and until we get either a breakout above or breakdown below these resistance levels, we are in a choppy, tight range and that's all you can really say.   Numbers to watch for the Nasdaq to the upside are 2307 and then 2341, with downside support now being put in at today's lows (2277).   For the S&P, the numbers to watch to the upside are 1131 and then around 1145, which is the top of this rising wedge pattern.   I've talked several times over the past few days how I think a breakout could hit resistance quickly in that area.   To the downside, today's lows (1087) need to hold.

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

I was away from my computer today for most of the day, mainly on purpose because I knew this was not a day where a lot of money could be made easily.   My breadth numbers are still bullish, and with the exception of ABR, I do not see any breakdowns on my long watchlist today that are worrisome.  It's just that I don't see any stocks breaking out and holding their breakouts as well, which makes things tough.   I am hopeful that we are setting up for a big move one way or the other on the markets that will be tradeable - on the surface, that sure looks to be the case.   However, in this ultra-low volume summer environment, I also understand that we could continue to just chop sideways for the next few weeks with some false breakouts and breakdowns thrown in for fun.   That would frustrate everyone, including me, but the market will do what it wants to do.  Be careful out there - it is not an easy market by any stretch.   Good luck Wednesday.

Monday, August 9, 2010

State of the Stock Market - 8/9/10

An up day on Wall Street, with stocks slowly climbing throughout the day, but if the market makes gains but no one is trading, does it matter?   The reason I say that is that today's session was one of the lightest volume days of the year.   I don't have the final totals yet, but it was a very slow day, and I illustrate this fact just to remind you that we are in a very thin trading environment right now and it is hard to trust moves and patterns in an environment like that.  

Technically, the Dow moved slightly past its resistance levels from June, but could not close above them.   The S&P and Nasdaq continue to stay below their resistance levels as well but are very close.   The numbers to watch (and I think everyone is watching them) are 1131 for the S&P and 2341 for the Nasdaq.   The Nasdaq still has resistance at 2307 and that is more of an important level for the Naz this week.   I get the sense that a lot of traders are expecting a breakout here and it will be interesting to see if it holds in this ultra-thin August environment.  

I pointed out last night in the video that a breakout followed by a reversal would not be surprising here, and I still hold that view.   If you look at both main indices, a bearish wedge can no doubt be seen on their daily charts, with resistance being possible around 1140 and 2355 on the S&P and Nasdaq respectively.   The 1140 number in particular is one I am watching because sticking with the theme of screwing as many traders as possible, a breakout above 1131 would like bring in many buyers and a false breakout and reversal at the top of this wedging pattern would certainly frustrate many.   This obviously isn't a guarantee, but I think it is certainly a possibility this week.  

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

I made no moves today and remain mostly in cash.   There were stocks moving higher today (EBIX and CNAM were posted last night and both were up more than 5% today) and those that didn't basically just consolidated another day.   I still have those on my watchlist and will continue to look for long possibilities - I am just not jumping into a bunch of stuff here willy-nilly, that's all.   My numbers remain bullish and if the market breaks out and holds it, that will be a very good sign for the rest of the summer into fall.   For some reason, however, I just sense that in this low-volume environment, it's more likely that we get more chop rather than a nice, smooth breakout that takes us much higher.   We'll see what happens.   Stay agile and stay careful, as it still is a tricky market.   Good luck Tuesday.

Sunday, August 8, 2010

Stock Market Video - Market Outlook and Setups for the Week Ahead - 8/8/10

Hi, traders - here are some videos for the upcoming week.   Part one takes a look at the overall market - the big caps are leading and the small caps are lagging - not what I look for in a perfect market but it is what it is.   The setups look like potential breakouts - the question I have is whether those breakouts will reverse like so many individual ones have done recently.   We shall see this week - it's the middle of August so trading will likely be even choppier than normal.

In part two, I go over some setups - if you are going long, I think the key is to anticipate breakouts and then sell into them.  Until the market proves that breakouts will follow-through, I am done buying them, as hard as that is to do.   I still see many individual stocks acting "weird" and will take this into consideration as I watch these setups this week.  As always, check earnings dates before buying anything.

Hope you find the videos helpful and informative.   As always, feel free to email me with questions or comments.... and I encourage you to check out the promotion for four free online trading seminars being run by one of my sponsors - no credit card required.   Might be worth a look over the next few days - click here for more information and to sign up.

To see the video in HD, please click "720p" and "Full Screen" on the video bar - HD will be available after processing.  

Friday, August 6, 2010

State of the Stock Market - 8/6/10

A volatile day today on Wall Street, as stocks started the day very poorly thanks to a very poor jobs number (thank heavens we had that wonderful stimulus package to help get us back on track - I can't wait for stimulus #2).   Stocks bounced right off the opening gap day, but then rolled right back over and sold off rather hard for the first few hours of trading, hitting a bottom a little after 11:00.   From there, they moved sideways through lunch into the afternoon.  Around 3:00, a rally into the close commenced, allowing the market to finish well off of its lows.   Overall, a bullish day but also a volatile one in which lots of people likely got chopped to bits. 

Technically, the market bounced off of its 20 day moving averages today and have established a steep uptrend line from the lows in late June.   As long as today's lows hold, you must still look long if you are insistent on playing this market.   However, I made no trades this week after Monday's session and to be honest, I don't think I missed a whole lot.   I still see a lot of setups that are not working the way they should and that continues to have me hesitant.   AONE was the prime example of a failed breakout this week - looked really good Wednesday but now, who knows?   I will have a better graps of things this weekend when I go through my scans, and I will share what I find then.   I have no reason to be bearish here and I am not - I am just stating facts that although the market is holding up very well, it has not been easy to play small-cap growth stocks over the past few weeks.   It is frustrating. 

Have a good weekend - I got an email today that one of the sponsors for this site is running a promotion for four free online trading seminars - no credit card required.   Might be worth a look over the next few days - click here for more information and to sign up.   Take care and enjoy the next few days.

Wednesday, August 4, 2010

State of the Stock Market - 8/4/10

I wasn't really watching the stock market too closely today but on the surface it appeared to be a positive day.  The S&P and Dow continue to lead while the Nasdaq continues to lag and has yet to make a higher high.  Resistance for the S&P is at 1131 while the Nasdaq has both 2307 and then 2341 to deal with over the next few sessions.   A breakout is certainly possible here although my readings are getting just slightly overbought.  Friday's jobs number could have a big impact on things.

Although things look decent overall, to tell you the truth, I am just not that interested in doing a whole lot right now.   My trades earlier this week have affected my outlook on things greatly.   It is not that I am mad or anything - frankly, I haven't really thought twice about my decisions to enter those trades.   Perhaps it was because overall I didn't gain or lose anything.   I have had no regrets about any of the trades and would make them again.

What those trades have done to me, however, is put me in a state of questioning this particular market at this particular time more than I normally would.   I sense that we are in an even more "random" market setting than normal.    There could be many reasons - summer volume is low, HFT, earnings season, whatever.   As I go through my scans, I see setups that looked great fail, and I see stocks that looks very iffy go up.   I see some earnings plays follow-through nicely, and I see others that appeared to post good earnings as well just reverse hard and tank.  I can't for the life of me figure out exactly what is making some of those go up and some of those do the exact opposite.   I can honestly say that right now, when I look at a chart, I feel I have no reasonable expectation for what will happen next.  

Normally, if you see a chart that looks bullish, you would expect at some point it moves higher.   Right now, I can't say I expect that.   There are a few charts that look good to me right now from a traditional technical standpoint for various reasons - MNTA, SPRD, SHOO, NZ, SWIR, AONE, CNAM are ones on my watchlist at this moment.  But I really don't have much interest in playing any of them because I get the sense that, again, the outcomes are just completely random.   (Actually, I should share that I am seeing a brand new technical pattern emerge in many stocks - I'll call it the breakout failure reversal pattern where stocks breakout, reverse lower hard on heavier volume, and then just rise right back up to new highs.)  

Sometimes I get in a mindset where I just lose interest in the market for various reasons and I think I am in one of those "funks" now.  I am not complaining - just sharing my thoughts and observations.   I have no reason to think we won't keep moving higher from here, but something doesn't seem right to me.   Take it for what it's worth (probably not a whole lot).  Good luck Thursday. 

Tuesday, August 3, 2010

State of the Stock Market - 8/3/10

Commentary may be a little lacking this week - my wife had to go out of state for a few days to see an ill family member and as such, I am with my four and one year old sons all alone for the next few days.   Therefore, most of my time will be with other mattters, as I am sure any reader that has young kids will understand.  

I was stopped out of my UCTT and ISLN positions today early on - UCTT was flat overall and I made a small profit (I think 2% or so) in ISLN.   I also went into SOLF pre-market at $11.60 as an earnings play - I was pretty happy as it ran up to $12.80 around 9:10, but when the market opened it tanked and I was stopped out at $11.55, giving me a very small loss.   Fun stuff as always.   Besides LIWA in my IRA, I am back to total cash and likely won't trade too much this week.   I don't see a whole lot that interests me after the way so many stocks acted poorly yesterday.   Individual stocks are showing a lot of chop the past two days which makes trading them extremely difficult.   There is one particular stock I like but it has earnings next week so I may pass.

Overall, it seemed like a boring day but not a bad one - more of a consolidation type.  The numbers are still bullish for me and my bias therefore will stay that way, but if we continue to rally, I am suspecting it will be a difficult one to trade with lots of headfakes and confusion.  What else is new, right?  Good luck Wednesday.

Monday, August 2, 2010

State of the Stock Market - 8/2/10

A very good day on the surface for Wall Street today, but a confusing one for yours truly as many stocks did not act the way they should on a day with such large gains for the overall market.   Most of the action took place in the first half hour of trading, as stocks gapped up, and after a very brief pullback off the open, shot up again.   They drifted sideways until lunchtime, when they fell slowly, but a little before 1:00, they bounced back up slowly and steadily, going to new highs around 2:30.  The market pulled back into the close but still finished with large gains.   Volume, however, was pathetic unless there was a major push during the final minutes and I certainly didn't sense that.

Technically, the action looks very positive for the major indices.  The S&P (by closing above 1120) has made a higher high and has stairstepped its way higher nicely since July 1.  It faces a little resistance at 1131, but besides that, it does has some room to run if it wants to do so.   The Nasdaq has yet to make a higher high and needs to close above 2307 to do so.  I never like to see the Nasdaq and Russell 2000 lag the S&P, but that is what is happening now.   Financials (as shown in the weekend video) staged a move over $15 and above the neckline on an inverse head and shoulders pattern and that is certainly a positive for the market.

For my trading, it was just a weird day.  I went in fully long with UCTT, ISLN, IGTE, and CSR as my positions.  Normally, I'd expect to be very happy being fully long with positions that all recently released very positive earnings reports (a catalyst) before the market went up over 2% in that session, but I ended up being stopped out of nearly all of my positions and am basically where I was at the start of last week.   My positions, along with many others I followed today, simply faded their gap opens even when the market did not, and many put bearish looking reversals or false breakouts in today.  I was stopped out of IGTE at $17.57 and made a measly 1% on that trade.   Late in the session, I was stopped out of CSR at $5.68 for a 1.6% loss.  It hit a high of $5.86 around 10:00 and looked good, but simply gave it all back and more, just like the others.

I made one trade in my IRA today - LIWA (a copper play) at $9.89 overall.  With FCX breaking out, I thought it would work and I like the chart - it has been going sideways for a while and has some support underneath with the moving averages.   Just like the others, however, it didn't act well in the face of an overwhelmingly positive market, which is worrisome.

I fought the urge to take profits at the open today because the overall market looked very good from a technical perspective and there were so many stocks in my weekend scans that looked bullish that I thought there was no reason to act hastily and take profits too early.  Of course, the market had other ideas.  I honestly don't know what to think for the next few days, as the overall market looks like it definitely wants to continue higher, but in terms of individual stocks, I just don't see many I am interested in after today's action.  It's not because those stocks are extended either - very few are.  I was just very disappointed with the way many small caps stocks acted today and I take that as a potential warning sign for the next few days. 

We'll see what happens tomorrow - I am very close to be stopped out of my two other positions and kind of expect to be anyway after the way they acted today.   If that happens, I'll move on and not worry about it - not much else to do.  I'll be frustrated but who hasn't (consistently) felt that way the past three or four months. I have a few setups I am watching but not nearly as many as I had going into today.   It's hard to say "I am hesitant" after a day when the market was up so much, but that's how I feel.  My gut is telling me that today wasn't nearly as strong of a day as it appears to be on the surface.  I hope I am wrong.  Good luck tomorrow. 

Sunday, August 1, 2010

Stock Market Video - Market Outlook and Many Setups for Next Week - 8/1/10

Hi, traders - here are some videos for the upcoming week.   Part one takes a look at the overall market - I've been clamoring for a pullback and this week we got one, and one that on the surface looks very bullish.  All of my indicators are bullish so I have to play the market that way.   I just hope the market doesn't throw us another curve ball like it has done so often recently and I discuss this in the video.

In part two, I go over the charts I am watching, including the stocks I went into on Thursday and Friday.   There are many good looking setups and for the most part, stocks that have broken out on earnings have not given much back, which is always a good sign.   Hopefully these stocks will continue to act well.

Hope you find the videos helpful and informative.   As always, feel free to email me with questions or comments. To see the video in HD, please click "720p" and "Full Screen" on the video bar - HD will be available after processing.