Sunday, February 28, 2010

Stock Market Video - Weekend Watchlist - 2/28/10

Hi, traders. It's been a while since I have done a video, but I wanted to share the setups I'll be watching this week. I am bullish overall and am only looking at that side of the market as of now. If volume comes in early on these plays, I will look to get long, although I remain 100% in cash as of now. Take care and best of luck this week.



If you click "full-screen" and "720p" in the above videos, they will be much more detailed. YouTube takes a little time to process the videos fully to get them at the highest quality so if there is a delay or the quality is lower at first, I apologize - it will be in HD when fully processed.

Friday, February 26, 2010

State of the Market - 2/26/10

A very boring and non-distinct day today on Wall Street, as stocks started flat, sold off slightly right around 10:00, but then bounced up and moved sideways for the rest of the session. I watched things for about five minutes this morning and my quote screen was so inactive that I kind of knew it was going to be a slow day and shut it down at that point. Volume looks to be lower.

Nothing really changed today from my outlook yesterday - I am still more bullish than anything due to the setups we are seeing. From the stocks I posted yesterday, BEBE and SMCI had decent moves today but that was really it - the setups are still there as not much moved. I didn't see many others after a thorough look through my scans but maybe a day like today will give me more.

I am off to watch the rest of this great U.S. hockey game - looks like it will be a rematch Sunday with Canada. Should be fun. Have a great weekend.

Thursday, February 25, 2010

State of the Market - 2/25/10

Another crazy day today on Wall Street, as stocks followed up a very strong day yesterday by crapping the bed at the open. The market opened sharply lower today and below their short-term moving averages, but the selling did not intensify as the day progressed. Instead, stocks moved sideways in a fairly tight range through the lunch hour and into the early afternoon. Right around 2:00, they took off to the upside and were able to regain much of their earlier losses. The Nasdaq and S&P were close to going positive and did finish near their highs for the day. Volume looks to be slightly higher than yesterday.

Technically, we are still kind of chopping around here below the 50 day moving average but the action of the past two session has me leaning more bullish than bearish as of now. I said late last week that if the market can just rest near its 50 day moving average for a few days, it could set itself up for further gains. It hasn't been what I would call a "quiet" rest, but the patterns look bullish overall as of now. We've worked off most of the overbought condition and I see a lot of flags on the indices, albeit choppy ones. I will be watching 1108 and 1112 on the S&P and 2234 and 2251 on the Nasdaq closely, as moves above those levels will set up a potential move to new highs for the market.

Sector-wise, things also look more bullish than bearish to me right now. SMH, XLF, IYR, Transports - all look like they are resting here for a move higher. Gold and oil have pulled back a bit and also look like they could move higher. One sector to pay special attention to is retail, as RTH broke to new highs today and is outperforming the overall market. I didn't watch things to carefully today but I would guess there was some sort of news that pushed this higher. I have to go through those sectors tonight looking for possible setups.

I am still 100% in cash, as even though a few days ago I said I would look at getting short if the market broke below Monday's lows, I thought better of it given the massive gap we saw today. I will be looking for potential longs now only - seems to make more sense to me. After a cursory look at my scans, here are some names I think might be worth watching, although I'll have to do more work tonight.

PRAA, BEBE, KLIC, SFN, WINN, SMCI, CPSL, NFP, MERC, RDWR, PODD, PCLN, MED, AEZ

That's about it for now - with this market, since the setups look more bullish, it probably means we'll crash tomorrow, but I gotta go with what I see. I am not loading the boat here, but things look better than they have recently in my opinion. Trade accordingly. Good luck Friday.

Wednesday, February 24, 2010

State of the Market - 2/24/10

A day after selling off on heavier volume, the market did their best to confuse most traders, climbing higher in a choppy session. Stocks started higher and rose for the first half hour of trading, but quickly gave all of those gains back. The gap open did hold in the morning, however, and stocks went right back up to slightly new highs before lunch. Although the morning was very volatile, stocks didn't do a whole lot in the afternoon, just basically moving sideways and closing near the morning highs. I don't have volume totals but it looks close to yesterday.

Technically, we are still in no-man's land, as neither the bears or bulls want to take control right now. Yesterday, things looked bad and it seemed further selling was a good possibility. After today, who knows? Neither the S&P or Nasdaq reclaimed their 50 day moving averages today, so perhaps that is a small clue that bears watching. The financials, however, reclaimed their 50 day, so I say again, "who knows?" Volume of course was lower there just to confuse things even more.

As you may guess, I did nothing today and remain in cash. I just don't see any real advantage for either the bears or bulls here and when that's the case, I don't like to force things. There are a lot of conflicting signs right now - for instance, why was the recent China strength (TSTC, CAAS, CAGC) sold off so hard today with the market? This seems to be a confused market to me (or perhaps I am just the one confused). Either way, I'll wait to get some confirmation of where we head from here before getting aggressive. Perhaps we will form a little bull flag - if that happens, I'll get long. Maybe today was just a quick head fake for the bears before we head lower. If that happens, I'll get short. Right now, waiting to see what outcome occurs makes sense to me. Take care and good luck Wendesday - time to finish watching this hockey team. Go USA!

** I also wanted to share a special webinar being held for new traders this Friday - it is totally free to sign up and might be worth checking out. Click here for more information.

Tuesday, February 23, 2010

A Look at the Big Boys....Draw Your Own Conclusions

Will we rally from here? Take a look at these and see what you think. By the way, I did find some setups to watch for tomorrow and will try to share later.

GS
JPM
AMZN
AAPL
GOOG
All Charts from Telechart, Courtesy of Worden Brothers, Inc.

State of the Market - 2/23/10

A rough day today on Wall Street, as stocks started flat but fell off a cliff around 10:00 when the Consumer Confidence number came out. After a sharp drop, they drifted lower into the lunch hour, where the Nasdaq tried to bounce back (the S&P didn't join in until around 2:00). That bounce didn't amount to much, however, and stocks fell back into the close, ending near their lows for the day. Volume will be higher on the Nasdaq but doesn't yet look higher on the S&P.

Technically, this certainly wasn't a surprise today, with the market being overbought and fighting against important resistance. The drop today left the indices in an interesting technical position, sitting right above or near their short term 9 and 20 day moving averages. (2210-2215 area on the Nasdaq and 1094-1095 on the S&P).

As long as these levels hold, I would tend to lean more to this just being a rest for the recent run-up. We could move sideways a bit the next few days, form a flag, and then move higher. At the same time, if we drop below these levels tomorrow, I think the odds favor further selling and perhaps a test of the recent levels. So tomorrow could be an important day for the short-term direction of this market. Maybe it will get me back and interested.

There was a little more damage today (perhaps not as noticeable) when you look at the sector ETFs. Financials (XLF) gave back their 50 day moving average today with ease and on heavier volume - not good. Semiconductors (SMH) broke through their short-term moving averages with ease. Both XLE and OIH did likewise. RTH, IYR, and the transports held up fairly well so perhaps it's not all that bad.

I am still in cash but if we get further selling tomorrow I may look to get a little short. To be honest, I have slacked a bit the past week with my scans as I try to get my basement done and just in general had a loss of confidence, so perhaps tonight I can get through and see if any setups are out there for the taking. Overall, I would say it is still too early to know for sure where we head from here, but the bears have an opportunity after today - let's see what they can do with it tomorrow. Good luck Wednesday.

Monday, February 22, 2010

State of the Market - 2/22/10

Sorry for the late post - had some family commitments to take care of this afternoon. Not that it really matters - we saw a very boring day today on Wall Street as stocks traded in tight intraday ranges and went basically nowhere overall. Volume was lower and really the technical picture hasn't changed much at all from what I have wrote the past two posts. We are overbought and grinding higher on low volume, all the while hanging out right above or right below key resistance at the 50 day moving average. Logic says we pull back here, but logic doesn't work so well in this market, so who knows? I am still in cash so I guess it doesn't matter too much to me.

The only interesting development today was the outperformance of the financials, which made a solid move above their 50 day moving average, albeit on pathetic volume. Perhaps this is a clue that the market wants to go higher. Ideally, we would see another few days like today which would let the market work off the overbought condition and let some charts setup. However, when I see charts like CAGC and TSTC continue to extend their recent gains with very little rest, maybe rest doesn't matter either. We are in a stock picker's market - you have your CAGC and TSTC, but other China stocks like CSIQ and VISN that look like death now, so who really knows?

To be honest, I am kind of uninterested in the market right now and don't plan on doing much until my scans start showing me more possible plays. I haven't had many for about a week now - nothing is showing up - and when that happens, the worst thing to do is try and force things. Hopefully soon we'll get some nice setups - again, a rest here would be perfect - and if that happens, I'll do my best to be ready. Until then, however, I sit and wait, boring as that is. Take care and good luck Tuesday.

Friday, February 19, 2010

State of the Market - 2/19/10

What looked yesterday evening to be quite the crazy session turned into a boring one today on Wall Street, as another options expiration day came and went with very little action intraday. News last night that the Fed raised the discount rate caused futures to tumble, but the market showed little actual reaction to the news. There was some selling early on but the bulls righted the ship quickly and stocks rose back up into the lunch hour. From there, they chopped sideways and ended the day with slight gains. Volume may end up slightly higher due to options but as of 3:56 it seems like it might still be lower than yesterday.

Nothing really changed at all today from what I wrote yesterday - we have most of the market sitting right at or above key 50 day moving averages and volume continues to lag to the upside. The one major bright spot is that the Russell 2K continues to lead, but there are a lot of question marks as well. We're overbought and a pullback could occur but with this market we could just as easily grind higher on low volume for another week or so.

I am still in cash and quite content for now. Ideally, we would see the market rest here for three or four days, which would allow individual charts to setup some consolidation patterns. We all know how "ideal" the market acts, so I am expecting nothing of the sort. Since I don't see many nice setups here, it means doing nothing might be the best idea early next week as well. Enjoy the weekend - I know I will.

Thursday, February 18, 2010

State of the Market - 2/18/10

I have to leave soon so this will be quick, but we saw no rest today on Wall Street, as stocks moved sideways for much of the session but climbed a good deal higher around 2:00 and ended another session with impressive gains. The Nasdaq looks like it will close several points above its 50 day moving average while the S&P will likely close right (and I mean right) at it. Same deal with most sectors - financials and semiconductors are right at their 50 days, while a few others (IYR, RTH) are slightly above theirs.

I did nothing once again today as I don't see many attractive setups on the long side. In addition, volume was once again very low today and that has me hesitating here. I am having a really hard time putting the rational part of my brain aside and just buying whatever - this was the problem in 2009 as well. For some reason, I just can't do it. We are now also quite overbought on the metrics I use and so I have to just wait patiently for the market to rest a bit and for some setups to form. I am completely aware that this probably won't happen and we'll continue to grind higher on very light volume much like we did in 2009. For some reason, however, I just can't chase here.

Good luck tomorrow - maybe I'll find some long setups in my scans tonight. I am not bearish here and am not shorting, but I can't get overly bullish here for the reasons stated above. Maybe someone can convince me differently and "straighten" me out. Take care.

Wednesday, February 17, 2010

State of the Market - 2/17/10

A relatively slow day today but a positive one nonetheless, as stock started slightly higher, pulled back to flat before lunch, and then climbed steadily back in the afternoon, closing with gains for the second straight day (fourth on Nasdaq). The intraday action was not all that exciting as stocks moved mostly sideways, but I guess you can't complain anytime you see the market move higher. Volume however looks to be very low once again.

Technically, we are at an interesting point as the Nasdaq, the S&P, and many other sector ETFs are right at or right below their 50 day moving averages. For the Nasdaq, the number is 2229, and we closed at 2226 today. The S&P is a bit below its 50 day moving average (1108) at 1099 but also has some lateral resistance around 1104 to deal with. We're looking at the longest period of time spent underneath these averages since the bottom last March, so regaining them might be harder than July and November of 2009. Both mid and small caps climbed above their 50 days today which is good in the sense that they continue to outperform.

Sector-wise, IYR, SMH, XLF, and XLE are all right below or right at their respective 50 day moving averages as well. OIH, USO, RTH, and GLD are all slightly above their 50 day moving averages. With the exception of SMH, all of these have ridden up to these important technical levels on lower volume (in some cases, much lower). Typically that is not a good sign. In my year-end review, I said I am going to try not to pay as much attention to volume but old habits die slowly.

I didn't make any moves today in my accounts and remain in cash. CAAS looked OK early on but I passed as I wasn't overly impressed with the early action. CAGC (posted on Twitter yesterday) had another monster session today but I expect it to pullback soon. Too bad I missed it. I did see a few bad things today - a few sharp reversals in stocks like SEED and CSIQ which makes me think it pays to be cautious here. SEED rose $0.60 in about 15 minutes this morning, only to give every cent back during the rest of the session, closing at its lows. it sure seems like some games were played there.

I am hesitant to do much of anything right now - some of it may be a lack of confidence, but a lot of it has to do with our technical position. We are still not really that overbought, but I don't know if the two major indices and all of the sectors mentioned earlier will be able to overcome their key moving averages without an increase in volume. Do they really have the firepower to do so is a question I am asking myself. A slow few days here underneath this resistance would be nice to see in my opinion - let's rest and regroup, and then move higher. A lot of the recent runners also need time to rest as they are quite overextended. Maybe that is what has me a bit worried - looking at charts like CAGC (two gap up in a row).

We'll see what happens I guess, but I will likely remain mostly in cash for the next few days. I'll keep looking for long setups, and I don't plan on getting short, but for some reason I think agressively buying here is not the right plan. It's not the right time. I don't know why - just a gut feeling. Of course, the way I have been going, that probably means you should all go out and buy everything in sight. Whatever happens, best of luck Thursday.

Tuesday, February 16, 2010

A Few Setups To Watch

Just a few setups I'll be watching tomorrow - to get into any of these, I would need to see a big spike in volume early on. While I think the bulls gained the upper hand today, I am not anxious to just buy whatever as I still expect some games to be played. Some of these could easily reverse as they are at key resistance levels.

CFSG
SEED
ATLS
CAAS
CYD
All Charts from Telechart, Courtesy of Worden Brothers, Inc.

State of the Market - 2/16/10

We had a very good day today on Wall Street, as stocks started higher and continued to move higher throughout the session. They chopped around a bit for the first half hour of trading and it looked like the gap might be sold off, but they did right themselves quickly and broke to new highs for the day a little after 10:00. From there, it was a quick move up, followed by a short pullback and then further gains into the lunch hour. The market moved sideways for most of the afternoon until the final hour, when they moved higher into the close with a new wave of buying. Volume looks to be much, much lower - that is the only worrisome thing I can see about today. Perhaps the volume totals will surge in the final half hour and this will change, but it bears watching.


Technically, the things I had been waiting for before turning bullish have happened, so I do have to reassess my outlook. Financials finally broke above key resistance around $14. Gold and commodities have broken to the upside as well and look like they want to move higher. The market is now above resistance levels from November-December of 2009 and looks poised to move higher. Next levels to watch are the 1105-1108 on the S&P and the 2227 level on the Nasdaq - this is where the 50 day moving averages will come into play and could act as resistance.


The dollar had a big move lower today and that is really what drove the move higher. UUP should have some strong support around $23.25 so keep your eye on that level as a possible place where the market as a whole could pullback (on a dollar bounce). All in all, however, things look quite good for the bulls right now. We aren't really even overbought based on the measurements I use. Hopefully all of this good news is not a bad thing.


I made one trade today, entering FAZ at $20.16 early in the session. On the surface, it wasn't a big deal - I intended to make this trade with a very tight stop below the low of the day at that time and felt it was worth a shot. Unfortunately, I messed up the order and with it my plan for this trade. I don't know how I did that - I intended to set a hard stop at $19.86, but I guess I put that in as a trailing stop instead, which was never filled. Stupid on my part. So my loss was much more than I intended it to be, as I sold out later at $19.33 (4% loss). I had planned for my maximum original loss to be 1.5%. Again, just careless and stupid.


To make it worse, I hesitated and eventually passed on some long trades that would have worked very well in hindsight. Early on, I did post on Twitter the names CSIQ and CAGC (check my feed out if you want), but I didn't want to chase them with the morning gap. Again, not real smart on my part because both had very nice sessions today. I had a plan going into this week that I wrote about this weekend, but did not really follow it when push came to shove. I think the expectation of a gap and fade open affected me and ended up hurting me. From my watchlist, NOA and FINL also had decent days, but there were some stocks that didn't do anything either. I do wish I had more really nice long setups but I don't right now.


We'll see what happens from here, but I am definitely not going to fight this market on the short side right now as the technical obstacles overcome today are significant. Going long seems to be the right play but I am going to be careful about that as well, because we know how this market likes to trick people. Everything seem great now, but a turn is always possible. As long setups show up (hopefully), I will play them as I see fit, as I am 100% cash right now. I gotta get some confidence back as well before I get agressive, as I don't have a ton at this moment. Good luck Wednesday.

Sunday, February 14, 2010

Some Thoughts for the Upcoming Week

I am dead tired after working all weekend painting and doing trim work in the basement as that project comes to a conclusion (just waiting for the carpet) so no video this weekend. I just got through my scans and here are some thoughts for the week ahead.

Bullish Thoughts....
I see some of the old Chinese momentum names starting to form possible bottoms - they are moving higher and look to be rounding out rather than just forming bear flags from which to break down. Example - TSTC has put in quite a run the past two weeks (mostly on heavy volume) and now looks like it wants to form a cup pattern. Other examples - CAGC, HEAT.


The Russell 2000 has outperformed the other indices recently and is the index that looks most like it wants to keep rallying here. It has not formed a bear flag like the others. I always like to see the small caps outperform.


Semiconductors (SMH) has also been a little stronger than the rest of the market and it looks like a possible bottom has been put in place.

The dollar tried to break to new highs Friday but couldn't. If it pulls back further, it would be bullish for stocks.

Watchlist for longs: NOA, VCBI, PCYC, PEIX, CAGC, TCBI, ANN, HUM, CSIQ, ZSTN, FINL, SUTR, RXII, AHD

Bearish Thoughts...

All of the other indices I see still are forming bear flags - S&P, Nasdaq, Dow, NYSE, Transports, Retail, gold, OIH, XLE, and most importantly financials. The charts look like they want to go lower.

After numerous chances to do so this week, the financials could not climb above key resistance, even with the market putting in several days of large gains. This is certainly a negative divergence.

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

I don't see a ton of really attractive setups - some are OK but none have me super excited.

Watchlist for Shorts - HXM, SWN, CSIQ, GES, PWRD, GT, OII, UA, OIS, AMZN, DAN, SNA, SNDK, MA, AMSC, MSTR, PNC

Predictions for next week....

If I had to guess, I would say we move higher from here because it seems to be the one that seems the least obvious, and that's just how this market is. I am 100% cash, so I really don't care what way we go - I would just like us to get going already so things would get a bit easier in terms of swing trading. I will keep an eye on things but can't say I will be heavily invested one way or the other. Keep your eye on those financials and go from there I guess.

Good luck this week.

Friday, February 12, 2010

State of the Market - 2/12/10

Another short post today as I am going out with my wife soon for an evening away from the kids (yeah!). The market started off really poorly this morning, frustrating I'm sure many bulls that joined the party yesterday, but it was able to right itself and finished well off its lows and near its highs for the day. Volume appears to be a little heavier than yesterday.

Based on what the charts look like, I would expect the market to fall from here, as there are still many, many bear flags out there, including on both the S&P and Nasdaq. There is also the fact that the financials have not yet broken above key resistance, a point I've harped on recently but one I feel is quite important. Many more setups are showing on the short side than the long side, another bearish development. However, with the market refusing to sell off hard this week, it is hard to trust the idea that the bears have total control of this market. Shorts have not worked well at all and days like today where stocks finish well off their lows give some credence to the idea that an odd-looking bottom is being formed here. It's really a tough call.

I am in cash, so I really don't care which way we go from here, but I don't have a great feeling either way as to which way it will be. I just hope we don't keep chopping around like we have for the past week, as it has been very difficult to trade these back and forth moves. I will take a close look at my scans this weekend and hopefully get some clues as to the market's next move. I'll try to put a video together for that this weekend. Take care and enjoy the next few days.

Thursday, February 11, 2010

State of the Market - 2/11/10

Sorry, no post today - I'll try to get something out tomorrow morning. We are at the painting stage of the basement remodel/finish and I was doing the ceiling today - using a power sprayer for the first time. It was messy but easier than I thought. Anyway, the market did move higher today and over the numbers I have been mentioning, but I guess I am not convinced. The market zoomed right to those numbers and then just drifted higher for the rest of the day, closing slightly over them, but not in what I would call a powerful manner. Nothing can be easy in this market. Another negative about today is that the financials could not close above their heavy resistance and I find that disconcerting on such a nice day for the overall market. For some reason, I am doubting this is a real rally.

I am in cash (you can check out my trades on Twitter today - I was posting throughout the day) and am willing to do whatever here. The short side is very tough right now but I am still seeing many more setups on that side than on the long side. I really don't know what to do right now so maybe that means I should take it easy a bit. We'll see. Take care and see you tomorrow.

Wednesday, February 10, 2010

Setups to Watch for Tomorrow

Just trying to be fully prepared for whatever the market has in store for us next, so here are the longs I'll keep an eye on this week, along with some new shorts to watch. I am still seeing quite a few more short setups than longs for what it's worth.

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

State of the Market - 2/10/09

What looked like it was going to be an interesting day turned into a snoozer on Wall Street, as stocks moved lower early, bounced back, but could not get through key resistance and did virtually nothing in the afternoon. Stocks started the day flat, but soon began selling off. They formed a mini-bear flag in the first half hour and then broke down from there, falling about twenty points on the Nasdaq in about a half hour. Things looked bad, but they got some support near yesterday's lows and moved higher from there through lunch into the early afternoon,. After some fighting, stocks could not hold above some key resistance from yesterday and fell back into the close, ending the day with small losses and in the middle of their intraday range. Trade seemed very slow from lunchtime on and volume attests to that, coming in quite a bit lower than yesterday.

Technically, the 1070-1073 levels on the S&P and 2150-2155 levels on the Nasdaq seem to be quite important right now, as stocks meandered right around or below these numbers all afternoon. Coincidentally, the 9 day moving averages that I mention so much are right around 2160 and 1075 for both indices, and as I stated yesterday, a move above those would get me more bullish than I am now (not very much by the way). As of now, the two main indices both still have the appearance of bear flags, and that is not good.

Financials also had an interesting session as XLF climbed just above key resistance at $14.00, reaching a high of $14.06 before falling back down below these levels. Coincidentally, the 9 day moving average here is around $14.03. If these levels are overtaken, I think we could see a big short covering bounce, but today was disappointing in that respect for the bulls as they closed below once again. There is a bear flag forming here as well. Gold (GLD) also remains below the key resistance I've been talking about around $106. I've stated this several times but it bears repeating - until these two ETFs climb above these levels, I have to remain bearish, as I don't see any significant rally occuring as long as they are under resistance. If they climb above, I'll change my opinion and outlook.

Four Key Charts
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I did make some trades today, and if you follow me on Twitter, you can see all of them and other thoughts I had (as I was off work today due to more snow here on the East Coast). I don't want to be super agressive right now, but based on the morning action, I did take on some small short positions. I shorted PWRD at $38.39, DAN at $10.11, and EJ at $16.61. These all acted well until of course the market reversed and now I may be out of these soon. I actually was surprised I wasn't stopped out of some today. We'll see what happens with these tomorrow, but I won't hesistate to run if the market gets past those levels mentioned earlier. Until that happens, however, most evidence points to playing the short side. I thought long and hard about taking down some FAZ as well with financials so close to resistance, but I didn't feel like holding it overnight without a big cushion was smart.

I hate to say this (because I'll probably jinx myself and we'll just keep going nowhere) but I think we are getting very close to a point where the market has to do something one way or the other. The technicals are at interesting junctures and I don't know how much longer we can just go nowhere without a big move up or down. The charts still seem to point to more of a chance of a move lower, but we all know how much the market likes to confuse people, so I am trying to be ready for anything. I would advise the same - look for shorts selectively but be ready to run at a moment's notice. Take care and good luck Thursday.

Tuesday, February 9, 2010

State of the Market - 2/9/10

We saw another volatile and unpredictable day today on Wall Street, as stock rose on overseas bailout hopes following a very bearish session yesterday. Futures were up pre-market and stocks did open well to the upside. After a short pullback, they tried to break to new highs around 10:15 but couldn't and fell sharply from there. They righted themselves, however, and a very sharp move from 11:30 to 12:15 did take stocks to new highs and large overall gains. There was a sharp drop from there and stocks just moved sideways for the rest of the session, finishing with large gains but off their intraday highs. Volume appears to be coming in heavier than yesterday but not very heavy overall.


We are at an interesting technical juncture because once again, we reversed a bit when running into the 9 day moving average on both the Nasdaq and S&P - I mentioned the levels yesterday in the post (2165 and 1073). From a strictly visual perspective, the charts look bearish and much like they did last Wednesday, especially on the Nasdaq. As I stated yesterday, however, I am trying to pay more attention to the overall action rather than just the look of one or two charts. On that end, the action is mixed - if we didn't have a negative day yesterday, I might put more credence in a true bottom being put in here. Seeing that the market couldn't close at its highs and with volume not being overwhelming, I don't see today as a superior showing by the bulls - good, yes, but not awesome. As it is, I will wait until those short-term moving averages are overcome before seriously looking to go long. IF that happens, my outlook will change but as of now, I am definitely still leaning bearish.


S&P 500

Nasdaq


Sector-wise, most ETFs still look bearish to me. The dollar was down big today so oil and gold had nice sessions, but GLD is still fighting heavy resistance around $106. If it closes above that, I would get more bullish. Financials (XLF) simply look to be forming a bear flag here as they continue to get support at their 200 day MA but cannot climb back above heavy resistance at $14.00. I will be watching these levels carefully.


Gold

Financials

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

I was stopped out of my BCS short today at $17.27, giving me the slightest of losses. I did not cover early in the session because I did not believe the pop it had was genuine, and that was proven to be right as it fell straight down from its opening highs. It popped straight back up however in a gigantic "V" move and that is what got me out. I also shorted a little AAPL mid-morning at $195.12 as the market looked like it was going lower at that point. It (the market) of course didn't but AAPL also couldn't overcome its 9 day moving average around $197, so I am still in this. This is the only position I have right now, although I am contemplating very seriously adding a few more shorts here.


I know you probably won't hear this many other places as most commentators always seem to know exactly what is going to happen next in the market, but I'll be honest and say I am finding this market over the past two weeks to be extremely difficult to trade. We have seen so many swings one way or the other (and most have come on back to back days) that finding a good setup and riding it for more than a few hours has been virtually impossible. Just the past four days, we've seen a very nasty sell off Thursday, followed by a bullish reversal that on the surface made Thursday's selloff look like a potential panic move. That supposed bullish reversal was followed yesterday by a quick pop followed by another big sell off that seemed to point to further selling. Of course, we saw the exact opposite today and popped big time to the upside, but still couldn't close at the highs for the day. If you could predict all of this movement and play it to your benefit, you are simply a much better trader than me.


When the market is as volatile and unpredictable as it is right now (as well as being very news driven), it is not really smart to be super agressive with your trading, and that's what I am trying to do here. With the exception of last Thursday, I have stayed mostly in cash and after today's moves, remain mostly in cash. I continue to watch some short setups as I think we still have more downside, but these short-covering spikes we keep seeing make that plan very difficult to execute, at least for more than a few hours. I plan on picking my spots carefully and hope that things get a little calmer soon, (regardless of which direction the market goes) so some trades can last for a few days rather than a few hours. Good luck tomorrow and be careful out there.


** A few new short candidates to add to the list - CNQR, ATI, MOT, CRR, HMIN, WATG

Monday, February 8, 2010

A Few Short Setups for Tomorrow

I didn't go through everything yet, but here are a few stocks that I will be watching tomorrow for possible short entries. Check for earnings dates and such - always important. I didn't realize NYX reports tomorrow so I would have been out of it anyway.

AAPL, PWRD, YGE, REV
ALK, TSL, IDXX, EJ
Charts from Telechart, Courtesy of Worden Brothers, Inc.


State of the Market - 2/8/10

We saw absolutely no follow-through today on Wall Street to the supposed bottom put in on Friday's reversal, as stocks started lower, tried to bounce back, but could not do so. Highs were hit around lunchtime, but from there stocks simply fell in an orderly manner, closing at their lows for the day and with decent losses. Volume appears to be lower but that is the only consolation out there for bulls.


Technically....well, technically, I am trying not to put too much stock into the way the charts "look" right now because they are a mess. The reversal on Friday more than likely stopped out quite a few shorts (like me) because on the surface, it did look bullish, but we saw absolutely no follow-through today from the bulls. After today's session, from what I see, Friday was most likely nothing more than some short covering before the weekend. Potential reversal bars are not actually negated until they are broken to the downside, but today was not a good showing at all and I am leaning more bearish after today's action. If we somehow bounce again, I would expect 2165 and 1080 to act as resistance on the Nasdaq and S&P respectively and if we happen to get to those levels (around the 9 day moving average), I would look to short. I doubt we get there, however. I still think we see the 200 day moving averages over the next few weeks and perhaps even lower than that.


I think we are in an environment where you just kind of have to pay attention more to how the market is acting rather than just looking strictly at the appearance of the charts (perhaps that's always the way it should be). Two Fridays ago the market sold off hard on what looked like great GDP and earnings news. All three of the bounces we saw last week were on lower volume and appeared to be weak. Thursday's selloff was the largest in quite a while and on very heavy volume. Friday's reversal came on less than climactic volume and it seemed to me that many, many traders expected that to be a short-term bottom. Today we saw no follow-through and more selling. All of these observations add up for me to a market that is still very bearish and more likely to head lower than higher (regardless of how the charts look). These observations were more important in the grand scheme of things than the reversal bar we saw Friday. I just wish I saw this insight Friday and stuck by it.


As for my trading, I was stopped out of my NYX short this morning at $23.41 - my stop was run and it immediately reversed lower. I had a 2.3% loss on that one. I was not able to be at my computer for the open so I had a trailing stop set. I am still holding BCS short and it is looking fine - I am up about 4% as of now. I didn't short anything today although I wish I was still in some positions I had on Friday like FAZ and SRS - those look very nice. I will be looking hard tonight to find some nice setups on the short side because that's where my focus is after today.


Today's action makes Friday's reversal look like a blip overall, one that likely threw off a lot of traders (because that's what the market and the institutions that run it like to do to traders). I guess it's still possible we bottom somewhere around here, but I would need to see clear signs of that happening, and right now I don't see any at all. I am certainly not going to guess and try and pick a bottom - give me evidence of one and then we can talk. Until then, I have to stay bearish and look to play that side only, and I see a few out there that look pretty good. Ideally, a few quiet days would help these short setups even more, but who knows if we'll get that. Take care and good luck tomorrow.

Quick Monday Thoughts

Nineteen inches of snow Friday night here in Pittsburgh pretty much dominated my entire weekend, so I did not get much chance to go through my scans or do anything stock-related. As the week starts, here are some quick thoughts.
  • I still tend to think Friday was nothing more than a lot of short covering before the weekend. If it was a true, panic-driven bottom, I think volume would have come in much higher than it did. We could certainly bounce further, but I think there is just as likely a chance we reverse today and close down again. I would describe myself as completely market neutral right now. I hear a lot of people thinking Friday was a big bottom however - something to think about.
  • Futures are slightly lower as of now. If Friday was true buying and the start of something very meaningful, I would expect that momentum to continue at least into the open today. I am surprised we are not gapping up, especially considering how bullish Mondays have been for so long, but perhaps that goes back to the previous point that Friday could have just been a one-day thing.
  • Some key levels to watch in some key sectors that might give a clue as to whether Friday's bounce will continue - 1073-1075 on gold needs to be taken back. If it's not, I doubt we move much higher. Same with $14.00 on XLF - if this is taken back in a convincing manner then I would turn more bullish and consider a bottom here more seriously.
  • The dollar is extended and the negative correlation between it and the overall market is certainly back - a pullback would be good for the dip buyers on Friday.
  • I am still in my NYX and BCS short positions as of now and managing those two may be all I do for a few days. The reversal messed up a lot of setups on the short side and I would rather wait a few days before trying those again. Not too many longs that look great either - the few I would consider include CROX, MR, XTEX PUDA, VISN, and XTEX. If Friday was meaningful to the bulls, I think it might take a while to fix the damage done in the previous sessions. Individual charts are very choppy right now.
Good luck today and throughout this week. Congratulations New Orleans - you deserve it.

Friday, February 5, 2010

State of the Market - 2/6/10

Oh, what a fun day today on Wall Street...not. In one of the most volatile days we've seen in a long time (at least from what I can remember) stocks put in several swings of more than 1% and were all over the place. The tone was set in the pre-market, where futures were a good deal lower until the jobs number came out at 8:30. They moved up off of that news and opened slightly higher. They quickly fell from there, bounced right up to new highs around 10:20, and then fell further after that quick spike. Lows were reached a little before 2:00, and from there stocks started a slow and steady climb upward. Things really got wild when the final hour started, as the Nasdaq moved almost 30 points higher in about 15 minutes before calming down and surprisingly going basically nowhere for the last forty minutes of trading. The market didn't end far from where it started when it was all said and done. Volume as of now does not look to be heavier than yesterday's level but I will have to wait for the final totals.


Technically, I really don't have a clue. Perhaps today we saw some sort of selling climax but volume was not even heavier than yesterday, so I find that somewhat hard to believe. The Nasdaq and S&P (along with pretty much every sector) put in very strong bullish tails today but could not climb above Monday's lows as well (actually the Nasdaq closed one point above). We may have seen a selling climax in commodities however based on the volume seen in USO, which was the heaviest I've seen in a long time. Climax or not, the problem that I see is that even if today was a climax, charts are so messed up right now that there is nothing out there to buy. Maybe I'll find something good this weekend but I do see a ton of stocks that are all over the place in just the last week, and those are typically not ones I want to trade.


As you may guess, I had a tough day - not in terms of losing money but in terms of being whipsawed a lot and showing no progress for good positions. Around lunchtime, my main account was up about 2% for the day and by the close that had all disappeared. Funny thing is that I had a thought to just cover everything midday but after thinking about it, I felt another sell off into the close was more likely. I was just a bit wrong on that one, huh?


Going into the day, I was short REV, NYX, and COH, and also had positions in FAZ and SRS. Around lunchtime, I was quite happy with the way things were looking. I was stopped out of my SRS position early on at $8.24 (1% gain) as I moved my stop up but wasn't too upset about it. I also went short BCS this morning at $17.29, which also moved lower nicely. However, that quick spike at 3:00 took me out of most of my positions with very little gains. FAZ was sold at $21.49 for a 9% gain. REV was covered at $15.43 (high of the day) for a 2.7% loss. COH was covered at $34.17 for a 2% gain. For some reason, I kept BCS and NYX but both are very close to my stop loss levels and I wouldn't be surprised to see them gap above those Monday.


Right now, this market is so volatile that after today, I think it is just too difficult to swing trade much. With my full-time job, it is impossible to watch quotes all day long, and yet that seems like what you really have to do to be successful right now. Day traders do have to be loving it. I meanwhile have to learn to adjust - setting stops and trying to let positions develop is not the best strategy right now. I was taking profits really quick at the beginning of the year (rarely holding more than a day) and maybe that's what I have to stick to. I would really like to be able to get catch some 15-20% moves in stocks, but I don't know if they are out there unless you time things absolutely perfectly. I may have to be happy with grinding out 5-10% gains or less and just focus on keeping my losses tight.


It's the weekend so I think I am done for today. After today's wild action, I honestly haven't a clue as to where we open up Monday - I wouldn't be surprised by a 100 point gain or a 100 point loss. When I don't have a feel for things, I find it best to sit things out, and until we settle down a bit, that's what I plan to do. Again, today was simply too volatile for my taste - with my job, I am simply not nimble enough to play this market right now and I need the break after the whipsaws seen today. Take care and enjoy the weekend.

Thursday, February 4, 2010

State of the Market - 2/4/10

Well, I've been looking for a clear sign as to where we go from here, and we certainly got that today, as stocks started weak and stayed weak, falling sharply up until lunchtime where they flattened out a bit. They moved sideways for most of the rest of the afternoon until the closing hour. They fell further at that point and closed at their lows for the day with very large losses. Volume was heavier than yesterday but does not appear to be as heavy as last week.


Technically, the recent lows were broken with ease today and it certainly looks like we are going to test the 200 day moving averages on both the Nasdaq and S&P around 1017 and 2018. There are two levels of support at those levels so I would expect a bounce, but it could be a sharp fall down to those levels over the next few days. The Nasdaq also sliced through a six month ascending channel and that should be meaningful as well.


Chart from Telechart, Courtesy of Worden Brothers, Inc.


In hindsight, I guess the weak volume did matter on Monday and Tuesday, and to take back what I said Tuesday, maybe we are in a different market. I had serious doubts after Tuesday thanks to all my bad memories from 2009, but now that the bears have taken full control of things, I have to go back to my previous thesis. This is not a healthy market and we are in full-fledged correction mode.

Sector-wise, there was a ton of damage across the board as well. Financials broke key support around $14 and although they do have some support close by, it looks like these have officially broken. Leading names in the group like JPM look like death as well. Oil and gold were both destroyed, and look like they will go much lower, with gold slicing through extremely key support with amazing ease. Retail, real estate, semis - you name it, it was blasted today.

As for my trading, I went back into two short positions this morning via FAZ (@ $19.65) and SRS (@$8.13) as I saw the market tanking. I know in my year-end review I said that I was going to try and stay away from the inverse funds - some of you have pointed this out - but these positions are for the IRAs and there is no other way to go short in them. I am trying to avoid them in my personal account. I have my short in COH and that does look like it wants to go lower. I added two more shorts at the end of the day - REV @ $15.06 and NYX @$22.95. I want to see some immediate downside follow-through however so I won't hold these long if they reverse higher.

Today stunk in a way because I would have been sitting very pretty if I didn't mistime my short trades from earlier in the week. I had the right idea in terms of shorting but just simply did it too early (boy, it would have been nice having those FAZ and SRS positions today from my original levels on Tuesday). I guess I could have held the losses a bit longer to see if they reversed back down like they did today, but that's usually a recipe for disaster. I believe getting stopped out of those positions affected me and made me a little gunshy to get short again, which obviously was a mistake. Not much to do however now however except hopefully learn from it and move on - that's basically the life of a trader, because even if most don't admit, you are always going to make mistakes in this game.

Tomorrow should be interesting - I believe the jobs number should be out and although we could always bounce on a surprise number, I think there is just as good a chance any number gets sold off hard (remember last Friday's GDP number???). Playing defense and shorting when possible is the name of the game for now until we get down to those 200 day moving averages. If and when that happens, I might change that outlook, but we're not there yet, so it doesn't matter. Good luck and be careful out there.

Wednesday, February 3, 2010

State of the Market - 2/3/10

Today was a pretty slow day on Wall Street and because of that, I don't have a whole lot to say. Stocks started out lower, bounced quickly, but fell right back down to new lows by lunchtime. They righted themselves, however, and were able to take back much of the earlier losses by the close. Overall, it was a very choppy day and it looks like volume was lower as well.

Technically, not much really happened today - it was bullish to see stocks close off somewhat off their lows but given the low volume of the previous two days, you have to ask if they are running out of steam in the short-term. I see a lot of bearish setups in the sectors I follow - XLF, RTH, USO, XLE - all look like they want to head lower. Maybe they will - it's is probably too early to tell.

After going through my scans last night, there really isn't much that I am interested in at this juncture on either side of the market. There are a few longs that look good like XTEX and CROX, but I also saw a lot of longs hit some resistance around their 9 day moving averages off their oversold bounces that started Monday. Most of the patterns I see are sharp, "V" shaped ones and those are typically not my favorite. There are a few shorts that look good but after being burned earlier this week I am a little gunshy.

I am still in my COH short from $35 and right now that's it. I made an awful trade last night - entering SOLR after-hours at $7 based on its earnings release. It faded mightily from there, and I exited this morning at $6.46, giving me a large 8% loss. I try to avoid those type of losses whenever possible, but sometimes you'll have them. They suck and I am hopeful I can at least take a lesson from it - earnings plays normally work well but it is risky buying after-hours.

Overall, I think we are still in "no-man's land" right here as the market could very easily test its 50 day moving averages soon but at the same time could easily lose steam here and continue selling off. To be completely honest, I don't have a good feel for which one of those outcomes it will be so all I can do is wait and see. I think that's probably the right outlook for now. Good luck Thursday.

** On second thought, after looking through my scans, those short setups are popping up again so I guess I have to lean a little more bearish. I just know what trouble that got me into earlier this week so I am hesistant. I'll post some charts on Twitter later.

Tuesday, February 2, 2010

State of the Market - 2/2/10

We saw another up session today on Wall Street, as stocks did nothing for the first half hour of trading but took off around 10:00. From there, they stairstepped their way higher in a slow and deliberate manner, closing near their highs for the day and with solid overall gains. The slow and deliberate nature of the trade makes me think a lot of the move was short covering, but volume does appear to be higher than yesterday - just not as heavy as last week.

Technically, the S&P did get above its 9 day moving average today with relative ease and now looks poised to challenge its 50 day moving average around 1115. The Nasdaq is lagging a bit but also sold off harder last week. Watch 2200 and 2228 as resistance levels. Disregarding volume, the price action has been good the past two days.

Sector-wise, commodities continued to lead the way today, with oil up big once again and USO did trade heavier volume at least. Gold wasn't quite as strong today but it was still up. These moves were in response to the second consecutive move lower in the U.S. dollar, which is pulling back off of overbought conditions. Financials were up but seems to have stalled around its 50 day moving average - we'll see if it can bust through. Commercial real estate (IYR) broke above a bear flag it was forming and also got above its 50 day moving average. Semiconductors look more like a dead-cat bounce to me based on volume but we'll see.

I did not have a very fun day at all, as I was stopped out of two short positions almost immediately after entering them and also out of a short position started Friday. I exited my TSL short pre-market at $23.29 as it looked to be running and was going to open above my stop anyway. It got above its short-term 9 day moving average as well so I got out with a 4% loss. I then entered SRS at $8.00 and FAZ at $19.17, both based on their closeness to key resistance on the daily charts. Well, both broke my stops (SRS at $7.89 and FAZ at $18.74) and I was out with losses of 1.6% and 2.6% respectively. Bottom-line for my trading is that I got caught Friday shorting too late and have paid for it the past two days. I knew we were oversold, but the reaction to positive news Friday was so bad and bearish that I really felt we were in for even further selling, even with the oversold conditions. Then I became too inflexible in my outlook by trying to short again today.

As of last week, I did think this selloff was "different" than the ones we saw in 2009, and that it would not have a quick bounce back up to the former highs. I know I wasn't the only one. However, I am questioning that thought now. The phenomenon we saw so many times in 2009 started with (after heavy selling) a very low volume up day, followed by another very low volume up day, and so on. The heavy volume sell-offs followed by very weak volume advances brought in technical traders that saw good short setups and got them "sucked" into short positions. Then, when the bounce didn't fail quickly, those shorts were forced to cover, which pushed stocks up even further (albeit again on lower volume), which added more shorts, and the process continued until stocks were right back up near their highs.

Could we see that again? I think it is certainly more possible after today. Many of the shorts I was watching that looked good (RVI, ANF, DSW, JCG, JPM, LL to name a few) no longer look that way, as they got above resistance today and cancelled the bear flags that were forming. A lot of the momentum names seem to be moving a little now - names like TSTC, HPJ, NEP, CAAS, and HEAT may be putting in little bottoms after selling off for so long. I saw these names last night but clearly didn't give them enough respect. The market always like to frustrate as many traders as it can and I think we're seeing that here - I didn't read too many traders that were buying Friday's selloff hand over foot.

Overall, it doesn't look like much has changed so far from the 2009 market. Whenever things look obvious, it pays to do the exact opposite. I had a ton of short setups in my scans last Thursday and Friday and virtually no long setups that looked good - just a ton of nasty looking charts. Logic says that means lower prices are on the way, but logic once again has been proven wrong the past two days. If I could get rid of that "logical" part of my brain, I would be doing great for quite a while now.

We'll see where we go from here, but nothing would surprise me - even another straight shot up toward 1150 (we've certainly seen it happen before). I still think much of the past two days' gains were simply short covering, but I have to respect the action so I will likely be taking a few days off to get my head straight. I have my COH short still in play but that's it. I think it's probably a little late to buy the dip after two straight days of 1% gains, but shorting these bounces too quickly has proven to get you hurt going back to 2009. If we get back up to that 50 day moving average area, I will be tempted to go short again, but I have to let the individual charts guide me there. But again, I think I will stop for a few days and then go from there. It's usually the best thing to do when you are on a losing streak, albeit a short one. Take care and good luck Wednesday.

Monday, February 1, 2010

State of the Market - 2/1/10

We saw a bounce back session today on Wall Street, as stocks started the day higher and stayed that way, chopping their way higher to close at their highs for the day and with decent sized gains. Volume however was quite low - actually it was pathetic. On the S&P, volume looks like it will come in barely half of what we saw Friday, although I don't have the final totals. That takes a great deal of shine off the gains put in today. One of the things I talked about in my 2009 year in review is that I shouldn't put so much emphasis on volume, but when you look at how heavy volume has been the past two weeks on the selling and how pathetically light it was today across the board, it is hard not to focus on it.

Technically, the market was quite oversold so a bounce today was not surprising. I would say however that in the grand scheme of the last two weeks, the bounce was not all that impressive. It will take several days of gains and heavier upside volume for me to be convinced that all is well again and that it is safe to go back in the waters on the long side. I will be watching the 1095-1100 area on the S&P and the 2200-2205 area on the Nasdaq as potential resistance levels in the short-term as that is where the 9 day moving average is moving down to.

Sector-wise, commodities were the big winner today as oil and gold both put in nice bounces. I highlighted both gold and oil in the weekend video as being at key technical levels and at least for today, the bulls took control. That will all change, however, with a break of the recent lows. Outside of commodities, most sectors were indeed up but the action was not super impressive and came on much lower volume. The overall patterns in sectors like financials and commerical real estate continues to look bearish on the daily charts.

I entered one short from the weekend video this morning - COH at $34.99. I was also stopped out of one short from Friday - GOL at $12.70 for a 2.6% loss. I still have my TSL short but remain mostly in cash. Almost all of the shorts I highlighted in the video this weekend still look to have nice setups and some actually are in a less risky position to short now than they were at the start of the day.

I did find it interesting (and bearish) that as I took a quick look at my scans, very few momentum-type names moved higher today more than a percent or two outside of commodity stocks. With the market being up a decent amount, I would expect to see some big movers - perhaps after a more thorough look through my scans I will see more, but I doubt it.

I think the one hope bulls have right now is that oil and gold showed some strength today and were at key technical levels. If they bounce more, then perhaps this pullback will be just like the ones we saw in 2009 and today was the start of a steady path to new highs, albeit on lower volume. Somehow I doubt, but the chance exists. However, if oil and gold don't keep bouncing and break Friday's lows, then I think things get much worse for the overall market as well and we move toward those 200 day moving averages I showed in the weekend video. I will continue to look at shorts only for now but will likely still remain mostly in cash. Take care and good luck Tuesday.