Monday, October 18, 2010

State of the Stock Market - 10/18/10

More gains today on Wall Street, as stocks started the day flat but quickly in the morning hours.   They pulled back into lunchtime, but we're able to move higher again into the afternoon and ended up finishing at their highs for the day and with decent-sized gains.   Volume appears to be lower than Friday.

Technically, earnings are going to be the main story for the next few days but we are quite stretched here in the short-term, particularly on the Nasdaq.   The big boys in tech (AAPL, GOOG, BIDU, AMZN) have all run a great deal recently (particularly AAPL and GOOG) and it will be interesting to see if we get a "sell the news" reaction to AAPL's earnings tomorrow.   I think a gap up tomorrow would be an excellent opportunity to take some profits in tech if we get one, but who knows?   Maybe a gap and crap is too obvious.   Either way, I am a little hesitant to get aggressive here with the market so extended short-term.   At the same time, I don't know if I would have guts to step in front of this train on the short-side, even with a gap tomorrow.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

We saw a couple of decent winners today from last night's video - CELM was up 7% today and TSTC was up 9%.   I was not able to get in either as I can't trade intraday now.   I was specifically hoping for one or two more days of rest for CELM and then entering on the pullback but that obviously didn't work out.   I was stopped out of my IDSA position today at $15.36 and $15.45 as it broke its 9 day moving average.   It never could get going the way I had hoped.   I am still in ALGN and started a position in HEAT today at $6.87 near the end of trading.   For now, that's enough long exposure for me over the next few days, at least until we get these big earnings reports out of the way.

Good luck tomorrow - I think it will be a pretty crazy day, but sometimes those setups don't turn out that way.   Obviously the market continues to be very strong - I just think it is getting a little too hot for the very short-term and therefore will play things a little more cautiously here on the long side.   Take care.

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