Tuesday, November 30, 2010

State of the Stock Market - 11/30/10 - "Support Holds Again, But Still Going Nowhere"

Maybe a shorter post today because our power was out at work today so I was completely disconnected from following the intraday action and don't really have a good feel for what happened.   The market was obviously down with the Nasdaq leading the way, and we saw no follow-through to yesterday's reversal off the morning lows.  At the same time, it wasn't like the bears killed it today - stocks once again bounced off their lows with the S&P testing that key 1173 area once again and holding.   In my opinion, this remains a market full of weak bears and weak bulls, and until one shows some ability to control trading for more than a day, we will continue to chop around going nowhere. 

There are a few bullish charts I see right now which should give some hope to those going long right now. Both gold and silver were up today, and in the face of a weak market and another positive session for the dollar, that is nice for the bulls to see. 

Chart from Telechart, Courtesy of Worden Brothers, Inc.

With the dollar very much extended, I continue to think we're more likely to see the next move go up rather than down.   It's not certain - just more likely - and I don't necessarily see a big move anyway.   I continue to believe we will see a choppy, frustrating rest of the year overall.   For the bears, I would look to short some below 1174 on the S&P, as a break of that level could really crack things open, but I am not anticipating that move.   I'll wait for it.  

Be careful out there right now - we have a market that isn't really going anywhere.   Having a strong opinion one way or the other could get you in big trouble at this juncture, so keep an open mind and react when the market starts moving again.   Above 1200 on the S&P and you go long.  Below 1173 and you go short.  In the meantime, doing nothing is probably best.   Take care and good luck Wednesday.  

** Still no official "U.S. Mail" response from Scottrade today - the fifteenth business day since they told me I would be contacted in seven to ten business days.   Are there any customer service awards that I can nominate them for?

Monday, November 29, 2010

State of the Stock Market - 11/29/10 - "Still Going Nowhere"

A good day overall today on Wall Street, as the bulls fought back from some heavy early selling to post only modest losses and in some cases, little loss at all.   The day started with a gap down and some continued selling from that gap for about the first hour of trading.   From there, stocks moved sideways until a bit after 2:00, when they bounced back into the close and finished near their highs for the day.   Volume looks to be heavier than Wednesday's totals. 

Technically, there was some key action today on the S&P, as it tested key support at 1173 (recent lows) and also at its 50 day moving average.   Since it bounced strongly off of that support, it passed the test with flying colors.   However, they are still below their short-term moving averages and follow-through will be the key.

The Nasdaq and Russell 2000 also bounced off of their lows but the technical action was more significant on the small caps, as they tested their 20 day moving average again and passed.  The Nasdaq overall is a mess - not really bearish, not really bullish - just a mess.

Commodities were fairly strong today across the board with the dollar getting quite extended here and overbought (at least according to UUP).   This bodes well for further bullish action over the next few days - the rise in the dollar has coincided strongly with the recent overall market pullback.   Perhaps the bulls need the dollar to sell off before taking back control of things overall.  

 Charts from Telechart, Courtesy of Worden Brothers, Inc.

I made no trades today and until this Scottrade mess gets resolved, I won't be trading.  That doesn't mean you can't.   I didn't see a ton of great setups this weekend but one from the weekend video (CPE) was up nicely.   I see some that look like they want to pop (CVGI, CCME, and SM stand out to me right now), so if you're looking for longs, there are some ideas. 

If I had to pick a side going into tomorrow's session, I would side with the bulls simply because the dollar looks tired, but really, what matters right now is seeing some follow-through.   In the past nine trading sessions, we've seen four moves of over 1.4%, and that's not counting today's big intraday reversal.   The problem is that two of those moves have been positive, and two have been negative - in the grand scheme of things, we've gone nowhere.

My basic outlook in the weekend video was that I expected more chop over the next few weeks, perhaps even into the new year, and for now I stand by that.   Until one side can put a few strong days together in a row instead of this back and forth crap, I think cash remains a pretty good option, at least for swing traders like me.  The numbers I follow are neutral, so I guess I am as well. Good luck Tuesday.

** If you're wondering about Scottrade, I have still not received their "official" response via U.S. mail yet - today was the fourteenth business day since the original email was sent and received.   I guess the part of their email response that said "You will receive a written response via U.S. Mail directly from our Compliance Department in approximately seven to ten business days" was a typo or something on their part.  Yep, great customer service there at Scottrade.  

Sunday, November 28, 2010

Stock Market Video - Technical Outlook and Setups for Post-Thanksgiving Week - 11/29/10

Hi, traders.   I hope everyone had a great Thanksgiving and is enjoying the weekend.   We had a choppy week last week, which is pretty typical of holiday trading, but it leaves the market in a questionable position.   Neither the bears nor bulls seem very strong right now, so trying to figure out which way we go from here is hard.   Keep an open mind - personally, I am leaning for more chop through the end of the year.  I discuss why in part one of the video.

In part two, I go over some potential setups for the week ahead, although one reason I am expecting more chop is that I just don't see that many quality setups out there right now.   Not too much excites me.   This may be partly subconscious because I can't trade until this Scottrade mess gets worked out and I decide which brokerage I want to move to so be aware of that. 

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 Thanksgiving week and good luck.

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

Friday, November 26, 2010

Update on the Scottrade Fiasco

Just updating those who emailed about the ongoing situation with Scottrade.   I talked directly to someone in their compliance department this morning, trying to find out what exactly happened and what they would do to resolve the situation.  The first response I received was that the person on the phone will need to do a little research and that he will call me back.   Fine - that seemed perfectly reasonable.

When I received a phone call back, all the person could tell me was that there was someone who was assigned to the case and that I will be receiving Scottrade's "official response" via U.S. mail next week.  He said he could not answer any other questions in relation to the case because someone else was handling it.

I didn't have much of a problem with this response overall - OK, I understand someone is working on the case and you (the person on the phone) really doesn't have any information.  Fine - although I will point out that in the original email, they stated that I would receive a formal written response via U.S. mail in seven to ten business days.   Today will be the thirteenth business day and if I get it late next week, we will be going on sixteen-seventeen business days.   I don't know how that is acceptable.

I ended my conversation by asking this simple question: Does Scottrade have an official policy for letting customers know when a trade is reversed?  He first gave me some crap about how each trade is different and how they let the branches know, and then the branches let the customers know (which I now personally know is not true) and he doesn't know for sure how long this takes.   I pressed him again and repeated the original question, "Does Scottrade have an official company policy for letting customers know when a trade is reversed?"  He could not give me an answer.

If you are a Scottrade customer, this would worry me.   I am unfortunately still a Scottrade customer until I figure out what to do from here, so it worries me immensely.   That they can reverse a trade and then not immediately contact the customer via email or phone is extremely worrisome - such that I wouldn't want to put any money at risk until I knew there was an official policy.  I never even fathomed something like this could happen until it happened to me.  Maybe I was naive - I don't know.   I'm done trading until this gets worked out - at least if I am in cash, I know they can't do anything to my account.  Right now, that's the only safety measure I guess I have.

Thanks for the emails and comments - I'll keep those of you interested up to date as this progresses.   Those that don't care - I apologize for the rant, but let's be honest, this week has been nothing but chop and from a swing-trading perspective, very difficult to trade.   Take care and enjoy the long weekend.

Wednesday, November 24, 2010

State of the Stock Market - 11/23/10 - "I Am Through With Scottrade"

No market talk today because I am about as blown away as I could possibly be with the brokerage firm I use, and I wanted to share my experience so as to hopefully prevent others from getting involved with the same sort of problem I experienced today.  

A few weeks ago, I posted about some weird stop-loss activity in my IRA.   I was stopped out of two positions in BORN and ASTI but only in opposite accounts, and only at the lows of the day.   I emailed Scottrade to inquire about the situation and they said they will be in contact soon.   I never heard back from there and I guess really didn't think much about it - I just figured that there wasn't anything that could be done and I was out of luck for the time being.  

I got home today and had a message from my local Scottrade branch explaining how they were just made aware (some two weeks after the incident) of some questionable trades and he wanted to follow-up on this issue.   The message also informed me that one of the trades was actually reversed.   I said, "What?"

You see, Scottrade never told me the trade was reversed.  No phone call.  No email.  Nothing.  On November 8, I was stopped out of ASTI at $4.37.   On the same day, they put the original position back into my account at $4.37.   IF I was made aware of this, I wouldn't have a problem.   Unfortunately, that's where the problem comes in to play.  

Somehow I was supposed to know that this happened I guess.   Somehow I was supposed to log into my account every day (which is not something I do anyway because I don't trade my IRA very often) and check to see if the position was reversed.  I never asked for it to be reversed - I simply wanted some details about the bid-ask at the time of the trade and what the original stop-loss orders were.  I wanted an explanation.  Because I am stupid I guess, (I really don't know what to think right now), I didn't and I am now a proud owner of ASTI at its current price of $3.40, after "rebuying" it unknowingly at $4.37.

If you follow my blog, you know that I don't mess around with losses too much.  I don't hold stocks longer that they need to be held - I keep my stops and let them work.  Often times my stops are too tight if anything.   Now I am sitting on a position that is 22% underwater.  Actually, I did sell it today at $3.39, so I am taking a loss of 22%.  Thanks Scottrade!  

The best part in talking to the broker when I called him back was that he said he's never seen something like this really happen, and that he doesn't know why the compliance officer didn't contact me or him at the local branch.   I asked him if anything could be done, but (without saying it directly) he said I am basically out of my money.   I can "draft a letter" (his words) and send it to the compliance department and perhaps something can be done.   That gives me a lot of confidence, because Scottrade's compliance departement has been so on the ball through this whole thing. 

I guess I should count my blessings that they didn't reverse all of my trades over the past few weeks, because then I would be sitting on potentially even bigger losses.   Perhaps this is something that happens a lot and I am getting worked up over nothing.   However, I am pretty ticked off right now, not because of the lost money, but because I had no control over the lossed money.   If I lose money on my own accord, I can handle it.   If someone else screws up and costs me money, I have a bit more difficulty handling it.   I guess I better check in to all my accounts on Friday to make sure nothing else was reversed without my knowledge. 

I guess I will now start the process of looking for a new brokerage for my main account and my wife and mine's IRA.   If any readers have recommendations, feel free to share.   This was kind of a rant (I wonder if you can tell) so if it is a bit incoherent, I apologize.   If you feel inclined, please share this story with others, because I don't want anyone else to have the problems I just went through.   Disappointed doesn't begin to describe how I feel about the Scottrade brand. 

I do hope you all have a great Thanksgiving - short session Friday, so be careful - it will likely be choppy.   Take care.

Tuesday, November 23, 2010

State of the Stock Market - 11/22/10 - "Bearish Action"

After a relatively bullish day yesterday where stocks came well off their intraday lows and finished flat to slightly higher, today saw a very bearish follow-up on Wall Street.  Stock gapped down to start the session, sold off further until lunchtime, and then moved basically sideways until the close, coming off of their lows only slightly.  I don't have the final volume totals, but overall it looks like volume was slow.

Although we didn't break to new lows today, the action certainly was bearish and although it is a holiday week, the market could see further selling from here.   The S&P is closing in on what should be heavy support around 1173, but the Nasdaq still has room to fall before it gets close to testing its 50 day moving average around 2450.  It really is hard to predict what will happen the next few days because trade is going to be very light, but the overall picture for the market continues to be iffy at best. 

The worst chart out there right now for the bulls is the U.S. dollar.   A breakout today preceded by a very natural and controlled pullback is not good news for further increases in commodities and likely the market in general. 

Chart from Telechart, Courtesy of Worden Brothers, Inc.

I have yet to go short as I think this week will remain difficult to trade (other than intraday) but overall my signals remain bearish and are actually starting to deteriorate further.  They held in there late last week and yesterday, but today was different.  I am considering starting some short positions soon - I just have to decide if I want to do it in the trading environment that will be the next two days.   Good luck and more importantly, be careful - it's a tricky market.  

Monday, November 22, 2010

State of the Stock Market - 11/21/10 - "Typical Holiday Volatility"

A volatile day today on Wall Street, as stocks started the day lower, sold off through lunch, and then bounced back into the close to finish mixed.  The Nasdaq was up while the S&P was slightly lower.   It is certainly good to see stocks bounce off of their earlier lows, but overall the action was choppy and difficult to trade from a swing trading perspective.   I described this in the weekend video and days like today are the main reason I will remain in mostly cash over the next week.  

Thanksgiving week usually has a positive bias, and I would guess we'll see some upside this week.  How much is unknown - I don't know if we'll be challenging new highs anytime soon, but if you're trading, I would focus on that side for this week.  I would keep my time frame short however - the volatility could chop you up if you're not careful.

Good luck Tuesday - given the holiday week, posts might be a little short this week - there isn't that much to talk about.  Hope you understand.  

Sunday, November 21, 2010

Stock Market Video - Technical Outlook and Setups for a Holiday Week - November 21, 2010

Hi, traders - it's a holiday week, which means trading will likely be slow and could very well have an upside bias.   The videos for the week go over the technical outlook, but overall the market is quite a mess right now - it's hard to tell what side has control of things.   I will likely be staying mostly in cash this week, but if you are looking for some short-term trade candidates, I included some in the second part of the video.  

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 Thanksgiving week and good luck.

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


Friday, November 19, 2010

State of the Stock Market - 11/18/10 - "No Change"

Not much happened today on Wall Street in terms of the overall picture - stocks did bounce back from some early selling which is a big positive, but the overall gains were very light and I don't think today can qualify as "follow-through" for yesterday's big rally.   We really have a mixed picture right now and it might take a few more days until we get a little clarity about where the market heads from here.

I remain in cash - I saw a lot of ugly charts last night that told me it is best to stay on the sidelines right now.  The charts weren't necessarily bullish or bearish - they were just all over the place.  Hopefully we'll get some patterns to form next week and have a little more confidence about which direction this market wants to go.   I will be back this weekend with a video - until then, enjoy the next few days away from Wall Street.   Take care.

Thursday, November 18, 2010

State of the Stock Market - 11/18/10 - "Overdue Bounce"

A big day today on Wall Street, as stocks finally bounced back from their recent beatdown and oversold conditions to put in a strong session with large gains.   Most of the intraday action took place during the first hour of trading, and from there stocks just moved sideways or slightly lower in the case of the Nasdaq.   Volume looks heavier but was not heavier than Monday's totals.

Technically, today wasn't a surprise, although I have to admit that after yesterday's lackluster performance and so many news "question marks", I fully expected more weakness.   Now we have to see if today was the start of higher prices once again, or if it was just a relief bounce that will lead to further selling.   Both the S&P and Nasdaq bounced right back into their short-term moving averages and that is an interesting stopping point for today's action.   If we see follow-through tomorrow to today's bounce, then I think bulls have reason for optimism.  However, if the markets pause or move back down, then I think today will look more like just a relief bounce and nothing else.   Basically, it's too early to tell.
 S&P 500

Commodities were strong today but gold was not as strong as I would expect, and the dollar looks to be having a completely normal pullback here, which is not good for the bulls.   This recent selling hit commodities hard, and they need to bounce stronger than this if the overall rally is going to continue.
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Today's action didn't affect me one way or the other as I remain in cash.   I debated whether to put some shorts on last night, but since my signal did not officially turn bearish, I waited.   I am glad I did, but the signal did turn bearish today so I am now torn.   You may ask how it would turn bearish on a day where the market was up so much and it's a good question.   Basically, the scans are saying that today's action (although nice) was not strong enough to overcome the strength of the selling we've seen over the past ten sessions.  

We'll see what happens tomorrow, but I may add some test shorts after-hours just to follow what the signals are telling me.  If we get further follow-through tomorrow to the upside, then I think there is good reason to be optimistic and I would get out of any shorts, but until that happens, the burden of proof still lies with the bulls in my opinion.   Today's action just didn't totally do it for me - I remain neutral to slightly bearish overall (although am willing to change with proof).  Good luck Friday.

Wednesday, November 17, 2010

State of the Stock Market - 11/17/10 - "Very Weak Action"

A poor showing today on Wall Street for stocks, as oversold conditions hardly mattered and a weak opening bounce could not hold, sending stocks to a day of basically flat action.   Volume was lower, but the fact that the market couldn't bounce after such a beatdown yesterday is telling.   Again, the character of this market seems to have changed and you must respect that right now - dip buyers continue to be nowhere to be found. 

The main breadth signal I follow has not officially turned bearish, but it's about as close as you can be and barring an huge move tomorrow from the bulls, it will turn bearish then.  When it looks like a correction and smells like a correction, then that's probably what it is, and that looks to be the case here.   It may last a few more days or it may last a few months - I don't know.  We do remain oversold but that alone should not be a reason to buy stocks.   The bulls continue to show little strength and until they regroup and take control, I would recommend cash as the best position.  

In regards to the whole "oversold/overbought" thing that so many talk about, remember that this year, we have had a number of moves where stocks basically went straight up with no consolidation (March through mid-April, September to last week) or went down with no consolidation (6/21-6/30, 5/12-5/24, the Flash Crash).   Particularly in the up moves, overbought conditions have seemed to relieve themselves only intraday, where stocks would sell off briefly before bouncing right back up into the close.   The market stayed overbought for a long time but continued higher, in part due to these intraday relief "selloffs" - that was all the bears could muster.  We could see the same thing here, but to the downside, where stocks attempt to bounce intraday but sell off and finish near their lows, still staying oversold but in some ways relieving that oversold condition intraday.   Maybe today is all the type of positive action the bulls can muster right now.

One of the main reasons I would be surprised if this correction didn't last longer is that we are back to a very uncertain news environment.   Uncertainty is not something the market likes, and until the China situation or the EU bailout situation gets resolved in some manner, the question to consider is whether the bulls are willing to come back to the plate and start buying stocks in this type of environment?   That's the question, and I don't think the answer is "yes".   Do you feel comfortable buying stocks right now?  That's why defense remains the name of the game in my opinion.

Overall, we are still in a technical position where a bounce could occur, but the longer it takes to develop, the better the chance is of that bounce failing in my opinion.   I will be looking to start adding shorts soon, as my signals are bearish and I have to follow them.   Good luck Thursday - be careful out there.

Tuesday, November 16, 2010

State of the Stock Market - 11/16/10 - "Caution Pays Off"

Not a good day today on Wall Street at all, as the negative intraday action of the past three days finally played itself out in a more powerful way and pushed stocks down past key support.   The day started out with a gap down, and dip buyers were nowhere to be found throughout the morning hours, as stocks fell steadily until the lunch hour started.   From there, stocks found some support, but it wasn't like they bounced back - they simply moved sideways instead.   Volume looks to be much heavier.  The action was certainly bearish and the market looks to be moving into correction mode.  

Technically, I've said for the past two days that things could really break open if Friday's lows were broken, and that's what we saw today.   We were a bit oversold going into the session, but that really didn't matter.   We are even more oversold today, but again, that may not matter either tomorrow or the rest of this week.   I said this weekend that a break of the 20 day moving average would likely lead to at least a test of the 50 day moving average, and that looks to be what we're going to get soon (although the indices still have more to fall for that to happen).  

S&P 500
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Hopefully you have been in cash these past two days and weren't hurt today - my stops did their job last Thursday and Friday and got me out of all positions before this breakdown today.   Now we have to try and figure out what the next move as a trader should be.   While I would not encourage going fully long until we get some indication that the bulls have taken back control of this market, I do think we will probably see a relief bounce soon.  

We are indeed oversold on various measures.   The McClellan oscillator is down around -300, which is certainly in a territory where stocks usually bounce.   A custom indicator I use with Telechart based on the number of stocks with extreme RSI (2) measurements is also at very stretched levels.   The dollar continues to move higher and is overbought and due for a pullback (which would help the market).  With support via the 50 day moving average not that far away on the major indices, a bounce is likely - not certain, but I would say likely. 
 McClellan Oscillator
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Do you want to try and play the bounce?  That's the real question.   I think I won't know that answer until I go through my scans and see the damage done to individual stocks today.   If I don't see a ton of damage, I may look to put some small positions on around the 50 day if we get there.  My breadth signals have almost turned bearish but haven't officially done so, so I know I am not shorting yet.   More than likely, I will remain in cash until we get some confirmation from the bulls that they are ready to go again.

Overall, the past five to six days have been pretty bad for this market, and it does look like this market has changed its character.   With the market rising so much from September to early November, a pullback or correction is certainly normal - that doesn't mean you don't protect yourself from it.   It is possible this will be a great buying opportunity, but I think it's too early to tell, so remain careful and cautious.   I am not a raging bear here, but I realize that this correction could continue for as long as it wants and I will respect it.   Take care and good luck Wednesday.

Monday, November 15, 2010

State of the Stock Market - 11/15/10 - "Caution is Warranted"

We saw a flat day today on Wall Street, at least according to the closing numbers.   However, under the surface it was quite a negative day given the circumstances, with stocks not being able to hold a bounce even after selling off a good amount last week.   Stocks did start slightly higher, but although they rose a bit throughout the first half of the session, the action was choppy and at no point did it seem real buyers were coming in to push the market up.   Around 2:00, stocks began to fade and fade they did, all the way into the close, with all of the indices finishing at their lows for the day.   Volume as of now looks to be lower.

If you watched my weekend video, you know I preached caution this week, and I believe that holds true even more after today.   The bulls had a nice chance to push this market back up after getting hit last week, and they just couldn't do it.   Any bounces we saw intraday last week were quickly sold off as well, usually the next day.   This all marks a subtle change in character for this market, one that bears watching (no pun intended.)

Technically, the lows from Friday remain of utmost importance, and if those levels of 2506 and 1194 on the Nasdaq and S&P are broken, then I continue to believe this market will fall further, probably down to the 50 day moving averages on the main indices.  Those two indices remain perched right on their 20 day moving averages for now but couldn't bounce today. Yes, we are short-term oversold, but overbought/oversold hasn't mattered that much for a while now, so I don't know why now would be different.   Don't just assume we are going to bounce because we're "oversold".  If more selling comes in tomorrow, then I think you could see the market really crack in the short-term.  

The numbers I follow breadth-wise continue to deteriorate and if we see any more heavy selling this week, I believe they will turn fully bearish.   Right now, the bulls need to make a stand and push this market back up - otherwise this pullback becomes a little more serious.   I remain neutral overall but with further selling, I will start to look at some short positions - not yet however.   Overall, caution is very much warranted here and I said in yesterday's video, there really isn't a whole lot to do here other than stay in cash and wait to see if the bulls put up a stand.   Don't be a hero.  Good luck Tuesday.

Sunday, November 14, 2010

Stock Market Video - Technical Outlook for Week Ahead - November 14, 2010

Hi, traders - here's the video for the week ahead.   I am refraining from a "setup" video this week because I am completely neutral on this market at this point and think cash is best, at least until we get some confirmation that the bulls are ready to reestablish control of this market.   We are a little too oversold to be shorting, but dip buyers have gotten hurt the past three days, so you have to be careful.   I discuss these topics in the video.

There is a part two of this weekend's video - it goes over the breadth signals I follow and what they are showing in conjunction with the overall market.  (You Tube seems to be having difficulty with this video - I will check back on it later today and hopefully it will be working correctly.)

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, November 12, 2010

State of the Stock Market - 11/12/10 - "Definitely Worrisome"

Not a good day today on Wall Street, not by any stretch.   Yes, stocks bounced off their lows again today - that is a positive.   However, the selling we've seen continues to be heavier than any we've seen for the whole rally since September and perhaps there has been a change of character in this market.   Dip buyers from Wednesday were not treated very kindly yesterday.   Dip buyers from yesterday were not treated very kindly today.   We'll have to wait until Monday to see if today's dip buyers, I guess.   I know I have tried to put some money to work in each of the past two days and have not faired very well.   The only solace I see today is that volume does not appear to be heavier, sparing us more distribution.

Technically, barring a miracle here as I write this (3:38), the major indices are all going to close below their nine day moving average for the first time since late August.  I think that's pretty meaningful.  After today, both the 9 day and 20 day moving averages are starting to slope downward, another subtle change for this rally.   Yes, they did get a little support at the 20 day, but the 9 day has acted as such strong support for so long that I do think it is meaningful.

It's Friday, so I'll keep this short, but I expect some chop next week.   I would not short at this point but I am not dip buying either - I want to see what happens next week.  My signals are neutral, and my stops have put me back in 100% cash and I am fine with that, because for the first time in a long time, the market seems to be having some difficulty.   Tops take time so if we are topping here, there may be a lot of back and forth action over the next week or two that I want no part of at all.   Enjoy the weekend - I think we all could use the rest.

Thursday, November 11, 2010

State of the Stock Market - 11/10/10 - "A Little Worrisome"

Not a very good day today on Wall Street, as poor earnings from Cisco pushed the Nasdaq down at the open and the rest of the market followed suit.   There was good news in the fact that dip buyers once again came in to push stocks up off their opening lows.   That push, however, lost some steam in the afternoon and although stocks finished well off their lows, they still finished with losses, losses that came on heavier volume (at least on the Nasdaq). 

Technically, things are starting to get a bit dicey, but the bulls did hold on overall once again today.   We've now had two distribution days in the last three sessions on the Nasdaq and that is never something you want to see.   Some distribution is normal in an uptrend, especially in one as strong as this one has been.   You don't like to see the distribution pocketed so closely however - any more and I would start to get more bearish or at least neutral instead of bullish.

The 9 day moving averages held once again so as I have been preaching, the trend remains up.   At the same time, I think we've had four to five days of pullback now, and I want to see the bulls push this back up soon.  Otherwise, perhaps this pullback lasts longer and turns into more of a intermediate-term consolidation.   As of now, I am still bullish and actually bought a few things today (KH and SHZ).   I won't hold them long however if we see much more selling.

In terms of individual stocks, there were some moving today like MMYT and HTHT, two stocks I tweeted about a few days ago as potentially putting in bottoms.   I actually entered MMYT on Tuesday but was stopped out that day - kicking myself today.  I continue to deal poorly with trying to trade without total access to the market all day (because of my full-time job).   There have been some really big winners posted here (either on the videos or on Twitter) the past few weeks, but I've seemed to get into the ones that haven't worked, like ASTI (which I was stopped out of above $4 today).   PUDA (mentioned in last week's video) is now up over 50% from when I showed it.  Alas, I could not get in it and didn't benefit - hopefully someone did.  

Overall, I would say to remain cautiously bullish here.   The dollar has put in quite the bounce here but is moving up into resistance and a pullback there will likely push the market back up.   Be careful with what you do and respect your stops, but things still look all right - the bears still haven't taken control of this market.   Good luck Friday.

Wednesday, November 10, 2010

State of the Stock Market - 11/10/10 - "9 Day Holds Again"

A good day today on Wall Street - stocks tried to follow-through on yesterday's selling but once again, the bears couldn't do much.   Stocks found a bottom about an hour into the session, finding support once again at their 9 day moving average, and from there bounced back to take back all of the losses.   Stocks finished the day with decent sized gains and closed at their highs for the session.   Volume was lower than yesterday's totals.

Technically, the beat goes on and I will repeat myself for the umpteenth time - the 9 day moving average is acting like a floor for this market and until it is broken, keep riding the trend.   That's all there really is to say.   It was nice to see the market bounce back once again and perhaps this pullback is over.   We'll have to see over the next few days.

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

As for me, I am back in cash after having my stops hit in BORN and ASTI.   I have not had a fun few days - getting whipsawed around never is fun.   This is the only thing I don't like about the market right now - I see a lot of very volatile patterns being formed the past two or three days, particularly in the small caps.   When you aren't at your computer all day, it makes handling the positions very tough.

At the same time, I do see many nice flag patterns being formed here, so I am certainly hopeful of further upside over the next few weeks.   If I have time tonight, I'll try and share some of those.   Take care and good luck

Tuesday, November 9, 2010

State of the Stock Market - 11/8/10 - "Reversals"

I am exhausted right now from my full-time job so I am not going to write a whole lot today, but there are a lot of things I didn't like about today's action on Wall Street.   I said yesterday that some healthy consolidation like we saw Friday and Monday would be excellent for the overall trend, I get the sense looking through individual charts that there was a little more damage done today than will show up on the final numbers.  

Technically, the trend is still up and as I have said ad nauseum, until we break some short-term moving averages to the downside, there isn't much to do other than look for longs.   We remain above those moving averages as of today's close, so that's good.   What I don't like, however, is the action I see in individual stocks.  

I saw a lot of nice setups and breakout yesterday - I shared some on Twitter after the close yesterday.   Most of those charts, however, reversed very hard today, much harder than the overall market.   BORN gave all of its gains from yesterday back today - not good (I am still in this but my stop may soon be hit).   HEAT had a nice opening thirty minutes, but reversed hard as well and gave all of those gains and some from yesterday back (I was stopped out of this after moving my stop loss up early on).   After nice early moves, gold and gold stocks got killed (I was stopped out of both AAU and REE today).  Maybe my outlook is being skewed because almost all the stocks I was holding got hit.  

What we have to see is if today was just a natural sell-off in extended areas (like the metals) or if it was a potential top in those areas that could have ramifications for the overall market.   Nothing has changed in terms of the trend remaining bullish, but if we get some follow-through to the upside tomorrow with the U.S. dollar and to the downside with the metals, then perhaps we need to worry more.   I would keep a careful eye on those two areas right now - gold and the dollar.   They could be the tell.   Good luck Wednesday.

Monday, November 8, 2010

State of the Stock Market - 11/8/10 - "Keep It Coming"

A very positive session today on Wall Street, even though the market finished basically flat.   Stocks opened lower and there was some selling seen in the first half-hour of trading, but that quickly subsided and stocks spent the rest of the session taking back those losses.   Most of the afternoon was choppy, but by the end of the session, the losses were gone and stocks finished basically flat for the day.  Volume looks to be EXTREMELY low. 

Technically, days like today are perfect and exactly what you want to see after the big move we had last week (hence the title "keep it coming").   A quick look through my scans is already showing a few more setups than I saw yesterday.   Further consolidation like we have seen today and Friday (let's say two or three more sessions) would be absolutely perfect in terms of keeping this rally moving higher.   Hopefully we can get that further consolidation. 

I made one trade today near the open, adding BORN at $15.15 to my regular account (after starting positions in my IRA accounts on Friday).   That seems to have worked out well, at least so far.  I also entered HEAT late in the session, but only as a starter position based on being a little late. It wasn't a perfect day, however, because I made some careless mistakes, mainly because of poor time management on my part.  Either that, or I was played with.

I started the BORN and ASTI positions I have in my IRAs on Friday and set trailing stops immediately after entering.   Due to a busy weekend and a busy morning at work, I was not able to check those stops right at the open of trading today - I just assumed they were fine because they were not hit Friday.   For some reason, however, when I opened up my trading screen around 9:31, I saw that I had a market order to sell ASTI.   I said to myself, "what?"  I couldn't cancel it either.  I for some reason sold out at $4.37, which just happened to be the low of the day.   I went into my other IRA and saw that I had also sold out of BORN at $14.66, coincidentally also the low of the day.  

I really don't know what happened here - I had both positions in both my wife's and my IRA and set the stops basically the same way.  I was only "stopped out" of the BORN position in my IRA, and only the ASTI position in my wife's IRA.  The whole thing is very weird and I really am at a loss for what happened.  Unfortunately, I don't know anything I can do about it, so I have to assume the trailing stop from Friday was too close and triggered at the open.   Sucks for me because both had nice moves today.

Hopefully you were able to catch some movers from this weekend's video - BORN (+14%), HEAT (+10%), SOHU (+8%), ASTI (+8%) - all nice moves.   With a little more rest, we will see more patterns set up nicely over the next few days and I will try to share as I see them.  All in all, today was another positive session and until we see some real selling come into this market, there is no reason to be doing anything other than going long.  Good luck Tuesday.

Saturday, November 6, 2010

Stock Market Video - Technical Outlook, Long Setups, and Earnings Setups - Week of November 8, 2010

Hi, traders - another strong week on Wall Street.  The video discusses the move this week and why you should always respect the trend until its broken.  I also review the breadth indicators I follow and show how the bullish signal has returned for the overall market. 

In part two, I go over some bullish setups that you should watch this week.  There are a ton of strong stocks out there right now, but most are quite extended, so it's hard to find low-risk opportunities at this juncture.  A few days of rest would likely set up many more bullish patterns.

Part three deals with stocks releasing earnings this week.  Several of the charts I like right now (that are not extended) have their earnings in the next few days so I did not include them on part two.   A lot of China names report this week and with good reports, who knows - maybe they run hard. 

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, November 5, 2010

State of the Stock Market - 11/5/10 - "Bullish Consolidation"

Another positive day today on Wall Street, as stocks gave virtually nothing back from yesterday's super day when they had every opportunity to do so.  Stocks started the day flat as a positive employment report boosted futures from their morning lows, but after trying to move a bit higher early on, stocks pulled back slightly and just basically chopped around for the rest of the session.   The Nasdaq traded in a ten point range all session, and the S&P traded in a six point range.   All in all, a positive session.   Sign me up for three or four just like this next week if you can - that would be a nice setup to allow higher prices as we go from here.

I'll be back this weekend with the normal video along with some setups to watch - we had some real nice movers from last week's video (PUDA - up 35%, CPE - up 15%, CAGC - up 14%, CGNX - up 10%).   Unfortunately, I was not able to get in any of these stocks - I really do need to fine-tune my procedures for trading while away from the market - but I am long four stocks right now after today.  I will add others as I see fit, although I would prefer a few more days of rest before adding any more long positions.   We had a few breakdowns on the list (MMYT, HTHT) but if you played those stocks, hopefully you followed the stop loss advice given on the video - that would have prevented any big loss.

Enjoy the next few days off and get ready for what should be an interesting week.  Take care.

Thursday, November 4, 2010

State of the Stock Market - 11/4/10 - "Bullish As Can Be"

A banner day today for Wall Street, as traders gave a resounding "yes" to the Fed's plan to print our way out of our economic problems and pushed stocks higher from the get go.   Stocks gapped up and either moved sideways from there, giving little back (the Nasdaq) or moved slowly and steadily higher from the opening gap, finishing near their highs for the session (the S&P).   Volume looks substantially higher today.

Technically, everything looks quite good as you would expect on a day like today.   A quick look at the major indices and sectors will tell you the following....

Nasdaq - New High for Year
S&P - New High for Year
Russell - Clear breakout from range
Gold - New High for Year
Financials - Broke out of long-term range
Transports - New High for Year
Semis - New High for Year
U.S. Dollar - New Low for Year

Across the board, there is really nothing you can say that is bad.   We are quite extended in the short-term and perhaps could pullback tomorrow with poor economic news, but today's breakout should establish some higher support levels for the market to bounce off of in the event of a pullback. 
 Chart from Telechart, Courtesy of Worden Brothers, Inc.

The breadth indicators I follow, which were flashing warning signs for the past several weeks and went ever so slightly bearish last week, turned back to bullish after today's powerful session and so that is another plus.   We were at a point two weeks ago where the market was either going to pullback in a strong manner or work its overbought condition off with sideways action, and since then, there was enough sideways action for the market to set up again now for a new move higher.   Who knows how long it will last, but you must respect it and play it until the trend ends.   The numbers are still extended but not nearly as much as two weeks ago so there is certainly room for the market to move up from here.

I entered two positions this morning, both small, and both in commodity sectors.   I saw a lot of other ones but it is very hard for me to enter many trades due to work conditions so I am still mostly in cash.   I still haven't adjusted well to being an "end of day" trader - it is tough for me to do.   It is something I really need to work on improving.   My guess is that most stocks are too extended at this point to enter, but if I see any, I'll try to share (I wish I shared some last night). 

All in all, today was super-positive and should lead to higher prices.   We do have some more news tomorrow and perhaps it will cause a violent swing down but I expect dip buyers will come in at the former resistance levels we just past.   A few weeks ago, I thought there was a good chance the market was topping out, but I can't say that anymore so just go with it.   Good luck Friday.

Wednesday, November 3, 2010

State of the Stock Market - 11/2/10 - "So Much for the News"

One of the biggest news days in a long while on Wall Street turned out to be a flop today in terms of movement, as stocks moved around intraday but really went nowhere overall.   Stocks started the day slightly higher, then moved lower with small losses into the 2:00 hour when the Fed released their "decision".  From there, stocks dropped sharply but then rose just as sharply, finally chopping around in the final hour to finish with very slight gains.   Volume looks like it will be heavier. 

Technically, today looks like a "nothing" day, meaning that nothing really changed.   The Nasdaq is still right around its May highs and remains in a very interesting technical position, having risen very sharply into important resistance.   The S&P and Russell remain in sideways-type consolidation patterns and overall look bullish, although the S&P does appear to be wedging higher a bit.  All in all, since we never saw that breakdown that was certainly a possibility during the past two weeks, I have to think the market can move higher from here on a breakout.   We'll see if it comes.

Friday is the jobs number so we aren't done with data this week - perhaps that is the reason the overall reaction to the election and the Fed QE2 decision was so muted overall.   Maybe traders are just trying to figure this all themselves, because there are a lot of potential ramifications from the decisions made last night and today.   I think (or at least hope) that we will get some closure by Monday as to which way the market wants to move from here, but it may take longer than that.   If it's up, I am fine with that.   If it's down, I'm fine with that too - I am just trying to be ready either way.   In the meantime, stay small and stay nimble.  Good luck Thursday. 

Tuesday, November 2, 2010

State of the Stock Market - 11/2/10 - "Interesting Setup"

We had a nice up day today on Wall Street, as stocks put in decent gains on lighter volume.   The intraday action was pretty muted, however, as the gains took place mainly on the opening gap and stocks moved sideways from there.   Overall, the gains on the day put us in a very interesting technical position, at least on the Nasdaq. 

As you can see below, the Nasdaq has moved to within two points of its highs from earlier in 2010.   It is amazing how markets can get to key positions at certain points, isn't it?  (This "certain" point is of course likely the biggest news day tomorrow that we have seen all year).  I have no idea what to expect from the market tomorrow but we certainly have come a long way and we certainly could go a lot further if the market likes the results of the election tomorrow and the Fed's future course for QE2.   Will they like it is the question?   I do like the setup of the Russell 2000 much more than the Nasdaq - if the Nasdaq wasn't so extended, I would be much more bullish overall.

Russell 2000
Charts from Telechart, Courtesy of Worden Brothers, Inc.

A "sell the news" reaction is certainly a good possibility tomorrow, but it almost seems to obvious for me.   The main breadth number I follow has turned back to neutral after spending four days in slightly bearish territory.   Basically, the way to look at this is that the opportunity was there for the bears to get a pullback going, but by just having the market move sideways for four, the bulls maintained control of things.   With a positive breadth day tomorrow, the signal will likely turn fully bullish once again.

I remain in cash because I think tomorrow is simply going to be crazy and especially since I can't trade intraday, I want no parts in some major whipsaw action one way or the other.   If you're trading, both CGNX (10%) and CAGC (8%) put in very nice days today and were highlighted in this weekend's video.   We also saw a few breakdowns in names like MMYT and HTHT, so you do have to be careful in what you choose right now. 

Best of luck tomorrow if you're making moves - I will be sitting back and just observing.   It should be quite the interesting few days.   Take care. 

Monday, November 1, 2010

State of the Stock Market - 11/1/10 - "Broken Record"

Another choppy day today on Wall Street, as stocks moved all over the place but in the end went absolutely nowhere.   Yes, I am aware that I've said the same thing for over a week now, but it's true.   We really are going nowhere right now on the overall market.   Stocks started much higher but sold off rather quickly, finishing near their lows for the session.   At the same time, short-term support still held (although it doesn't look like the 9 day MA will hold on the Russell) and the bears didn't take total control when they had another opportunity to do so.   Where does that leave us?   Who knows?

I am totally in cash right now and although my signals remain ever so slightly bearish, I really don't feel too comfortable doing much right now.   There have been a lot of newsworthy weeks over the past two years that have affected trading, but this week will rank right up there with them.   I still believe there is much more downside risk here than upside potential, but the market will do whatever it wants to do, so again, who knows?   I will continue to look at some inverse ETFs this week, but only when the indicators I follow give me a more convincing signal.  

I really don't have much else to say right now - this is not a week to be making huge moves in the market.   I don't link to other articles that much, but I thought one written by Leigh Drogen this morning was very insightful and is worth sharing....

"The key this week will be to keep your head about you while all others lose theirs.  And in the event that you are wrong, walk away and say good game, next week starts fresh and things will likely be a bit calmer.  I will be raising all of my stops to protect great gains from last week, and won’t be sad to see more positions taken out of my hands by the natural order of profit taking.  This week is going to be about playing the game the right way, as they would say in baseball, good solid fundamental move runners over and play good defense baseball.  This is not the week to swing for the fences with two strikes, we have made a lot of money in the last few months and have a good lead on the market this quarter, there’s no need to take a great deal of risk by letting stops slide and big red P&L days pile up."
I couldn't say it better myself - be careful out there this week.   There will likely be some major swings and it is all dependent on not only what the news is, but also how the market reacts to it.   I think a sell-the-news event is a good possibility, but it's not certain.   Be ready for anything.   Good luck.