Thursday, September 30, 2010

State of the Stock Market - 9/30/10

We saw a down day today on Wall Street, made all the more negative by how the intraday action played out.   Stocks started the day positive and gapped up, but those gains were almost immediately faded and stocks sold off the rest of the morning until lunchtime.   They did climb slowly back from 12:00 to 3:00, but faded once again in the final hour and closed in the bottom half of their intraday range.   Volume looks to be heavier, giving the indices a distribution day.

Technically, both the S&P and Nasdaq put reversal bars in today, but the S&P's is more significant because the morning gap up took the S&P above the important 1150 area.  Obviously when you look at the chart below, the breakout could not hold.   Both indices got support at their 9 day moving averages once again, which is positive. 
 S&P 500

On Twitter the past few evenings, I have pointed out that the breadth indicators I follow (from Pradeep over at Stockbee) have flashed some warning signs the past few evenings.    These warnings were flashed briefly in early March 2010 and they didn't amount to anything at that point.   However, a little later in the end of April, those warning signs flashed again and it did matter, as the market topped out soon after.   What happened then that acted as a good signal of the trend change (along with the breadth signals) was a break of the 9 day moving average.   From March 1 to April 26, the 9 day always acted as support for the market, with the Nasdaq not closing below it at any point during that run.   April 27 was the day that changed things - a heavier volume close below the 9 day that eventually led to much more selling and at that time a proof of a top being in place.

I am not saying we are topping here, but given the signals I am getting, it is something I am watching for closely.  I saw many of the big-cap leaders of this current run (AAPL, VMW, NFLX, APKT, ARUN, MELI) move lower on heavier volume today and in some cases through short-term moving averages.  Perhaps that is no big deal, but again, it's something I am watching.   At the very least, it could be signaling the market wants to pullback a bit and is getting tired.

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

Overall, I would remain cautiously bullish but put a very heavy emphasis on the "cautious" part.   If you are heavily long, you may want to tighten your stops here just in case we are slowly topping here.   Of course, this could just be a consolidation so I would wait for further confirmation before making any major moves.  For me, that confirmation would come on a heavier volume break of the 9 day moving average.   Good luck Friday.

Wednesday, September 29, 2010

State of the Stock Market - 9/29/10

A pretty boring day on Wall Street today, and to be honest, it's one of those days where I don't feel I have much to write about.   The market was down slightly but overall the market looks to be consolidating here, which is not a bad thing.   Further sideways action would allow new buy points to emerge on quality stocks.   Right now, there are very few if any of those safe buy points as most leaders are still extended.  

I posted on Twitter last night that a few breadth indicators were flashing warning signs that perhaps we've gone far enough (without a decent consolidation) and that still holds true.  However, this does not mean we are topping out here - it is simply too early to say that.   It is possible that we do, but if we just move sideways for a week or two, then those signals won't matter.   I will continue to wait for a clear signal that stocks want to move lower before doing anything other than looking for potential longs to enter.   Last night, I tried to get into HTHT after-hours but was unable to do so.   It was up 5% today and was shown in last night's post.

As we consolidate, there isn't a whole lot to do right now.   Just keep your eyes on the leading stocks and watch for quiet pullbacks from which to get long.   If this market does want to top anytime soon, it will give us signs with some heavier volume selling and negative breadth.   Again, sometimes you have to wait.   Good luck Thursday.

Tuesday, September 28, 2010

State of the Stock Market - 9/29/10

Another bullish day on Wall Street today, as stocks saw some early follow-through to yesterday's selling but quickly reversed that and ended up positive.   A bottom was put in today a little after 10:00, and stocks worked their way higher throughout the day in a steady manner.   The bounceback was impressive, with the Nasdaq climbing almost forty points off of its morning low and the S&P moving almost twenty points off its low.   Volume appears higher. 

Technically, the market continues to act in a bullish manner, even with the divergences out there.   Today was another example of the importance of using a 9 or 10 day moving average on your charts - both major indices bounced right off those levels this morning.  The markets are still below Friday's highs but that could be just a matter of time given today's action.   We're not really overbought short-term either so a breakout could work again here.   The Russell 2000 and financials continue to underperform drastically as neither has broken through their resistance levels yet, but it hasn't mattered much to the other two indices - maybe it won't ever matter.

S&P 500, Nasdaq
Russell 2000 and XLF

I didn't make any trades today but hopefully some of you were able to catch some of the move in CGNX today.  This was highlighted in the weekend video and was up a nice 16% on higher guidance.   This is one of those plays that not being around a computer intraday makes almost impossible to play.   I did put a limit order in on BIDU last night to short at $108, but that wasn't filled (although it did gap and reverse like I wrote about last night). 

Instead of writing much more, I figured I would just share a few charts to wrap up here that are worth watching.   I have others (KNDI, FVE, VPG, AHD) but they are very, very thin.  The action today was bullish so it looks like the market wants to keep moving higher - no need to fight it.   Good luck Wednesday.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Monday, September 27, 2010

State of the Stock Market - 9/28/10

A quiet day for most of the session today on Wall Street, as stocks were down just slightly in the morning but didn't go anywhere sideways through lunch and into the early afternoon.  Around 2:00, however, the action picked up a bit and stocks moved briefly positive for the session.   They could not keep the rally going however and had a somewhat nasty selloff in the final hour of trading.   The selling wasn't drastic and no damage was done, but the drop was quick in that final hour and stocks did close at their lows for the day.   Volume appears to be lower.  

Technically, nothing really changed today - the overall market remains quite bullish and a pullback/consolidation would be completely normal here.   As long as we remain above the former resistance levels broken last Monday, I would remain bullish.   A break of those levels might make me rethink things, but as I said in this weekend's video, there is no point in anticipating a breakdown occuring - wait for the evidence. 

As I take a quick look through my scans, I don't notice much damage at all to individual stocks.  ISLN had a nasty break today on heavier volume (no news as well) and INFN sold off hard as well on heavier volume after some parabolic action last week.   That's really all I see however.   If I see more breakdowns like this over the next few days, I would get more worried, but again, let's wait until we see the evidence. 

BIDU and LVS were two stocks up large today and I do expect BIDU in particular to reverse soon, much like INFN did today.  It is getting parabolic (two gaps in a row is a good signal) and if it gaps up again tomorrow, I would look to perhaps short a break of tomorrow's potential gap.   Since I am unable to trade intraday anymore, this won't be a trade I will be able to pay much attention to, but I am putting it out there as one to watch. 

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Not much else to say today - it was a slow day overall and more days like this will be constructive.   There is still a lack of nice bases at this juncture because the market has run so much, and it takes time for new, safer buy points to emerge.   Patience is a virtue and you need it right now.   Take care and good luck Tuesday.

Saturday, September 25, 2010

Stock Market Video - Technical Outlook and Setups for the Week Ahead - 9/26/10

Hi, traders. After pulling back for three days this week, the market took off again on Friday and really looks like it wants to go higher. We've have gone quite a ways in a short period of time, and there are a few worrisome divergences out there, but overall things look bullish and there is no reason to guess when this rally is going to stop.

Part two goes over the few technical setups I see right now.   Unless you got in early, it's been a tough ride to play because so few stocks have rested and allowed secondary buy points.   I've included the few that are resting right now but some don't have the fundamentals I would like to see.

Here are the results from the charts posted last Monday morning - pretty good overall.  Hopefully you caught some of the winners (at least better than I did.)

Stock 9/17/2010 9/24/2010 Gain/Loss
JASO 7.32 8.31 13.52%
NXTM 16.49 18.59 12.73%
MMR 14.57 16.35 12.22%
REXX 11.26 11.91 5.77%
VMED 21.7 22.74 4.79%
ZUMZ 20.01 20.64 3.15%
WLL 92.78 95.28 2.69%
CVGI 10.06 10.3 2.39%
CRM 116.74 119.34 2.23%
RES 19.62 19.94 1.63%
IDSA 13.69 13.55 -1.02%

I hope you find this week's videos helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.   I also wanted to point out that the trading software I use and recommend (Telechart) is having a special sale on their Platinum service (intraday real-time streaming quotes) from now until October 4th.   For this limited time period, they are offering four months free on a twelve month subscription(a 50% bonus) or 10 months free on a two year subscription(a 71% bonus).  Click on the picture below for more information about this tremendous value.

Have a great Sunday 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, September 24, 2010

State of the Stock Market - 9/24/10

Up, up, and away.   That's what we say today on Wall Street, as stocks shot up hard in the first half hour of trading and gave nothing back the rest of the way, closing with gains of over 2%.   Most of the action did take place early and there was only a slight upward trend the rest of the way, but nonetheless the action continues to be bullish and stocks keep moving higher.  Volume appears to be higher, particularly on the S&P.

Technically, we just keep chugging higher.   The three day pullback was enough I guess on the S&P and Nasdaq, but unless you were buying yesterday, entries were hard to find today.  I mentioned yesterday that I just didn't see many setups even after the three-day pullback and that many of the big boys (AAPL, BIDU, NFLX, etc) were still very extended.   There were two stocks on my list last night (ARMH and REXX) that had great sessions today but besides that, I don't know what I would have been buying today (and ARMH was a huge gap that I wouldn't likely have chased anyway).   The market keeps moving higher but it's very hard right now to find good buy points - if you bought back back in early September, you're sitting pretty.  Otherwise, the market hasn't given too many chances to hop aboard this seemingly runaway train.

The Russell 2000 and financials remain under their June and July highs and that remains a negative divergence, but both outperformed today so maybe they will just be in catch-up mode.   One other positive from today is that the semiconductors seem to be ramping up here as well.  I am frankly amazed that the Nasdaq has run so far with the semis underperforming on a relative basis, but it is what it is.  Who knows how high we head if these start moving too?

Chart from Telechart, Courtesy of Worden Brothers, Inc.

I'll be back this weekend with some more thoughts, but right now the market just keeps moving higher.   I continue to see a ton of leading stocks that are very, very, very overextended (MIPS, SOL, AMZN, INFA, BIDU, HS, INFN, NFLX, AAPL - take your pick) but it just doesn't seem to matter.   Amazing.  Take care and enjoy the weekend.

Thursday, September 23, 2010

State of the Stock Market - 9/23/10

Not a great day today on Wall Street, as although further pullback is completely normal after the run the market had for the past few weeks, the intraday action was certainly not bullish.  Stocks started the day lower and right at key support on the S&P, but immediately bounced off of that level as dip buyers came in.   As the market turned slightly positive by lunchtime, things looked very bullish.   Stocks drifted lower after lunch but then around 2:00, the selling picked up a little steam and stocks gave back all of their earlier gains, finishing near their lows for the day.   Volume does appear to be lower however.

Technically, the Nasdaq remains in fine shape overall after the past three days as it is still above its 9 day moving average and former resistance around 2305.   The S&P however did close below its July highs and just slightly below its 9 day moving average.  Nothing major to worry about yet, but I want to see the S&P hold in here over the next few sessions.
S&P 500
Charts from Telechart, Courtesy of Worden Brothers, Inc.

While the S&P and Nasdaq are hanging in there OK, I do see a few worrisome signs from the Russell 2000 and financials.  Perhaps it is nothing, but there are potential negative divergences here as neither broke out this week and are leading to the downside the past few days.

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

I don't see too many breakdowns today as I run quickly through my scans so I guess everything remains relatively positive for the market.   At the same time, however, I just don't see any long setups emerging either, which is very weird.  I would expect after a three decent days of consolidation/pullback in this market that some nice flag-type formations would be there to trade, but I don't see them.   Actually I see a lot of stocks continue to wedge their way higher (CRM, AKAM, and LVS for example) or continue to extend themselves to perhaps dangerous levels (BIDU, EDU, NFLX, INFN, AMZN, and AAPL for example).

Because of what I see in my scans, I am going to remain in cash for the time being as there just isn't anything that interests me.   I was stopped out of my CVGI position today around $9.90 as it broke its 50 day moving average and my long watchlist remains small.   Perhaps with a few more days of sideways action the market will give us more setups, but for now, they are missing, at least from what I see.  Again, that is odd.

There is nothing obvious that says we are doing anything more than pulling back a bit here, and therefore there is no reason to be bearish at this juncture.  Things can change in a hurry, however, so be on alert.  Good luck Friday.

Wednesday, September 22, 2010

State of the Stock Market - 9/22/10

Not a bad day at all today on Wall Street, as stocks sold off a little following yesterday's reversal off the Fed release.   When a market runs as far and as fast as this market has the past few weeks, pullback are normal and healthy and so far, that looks exactly like what we have today.   Support levels held just fine on the S&P and Nasdaq and even though volume was heavier, it looks like ADBE will be a reason for the increase on the Nasdaq.  

I don't have much to say today - really we are at a point where there isn't much to do other than let the market digest its recent gains, which will allow new buy points to emerge on some of the leading stocks from the recent run-up.   Perhaps the past two days were the start of that digestion - let's at least hope so.   The Nasdaq has a good bit more room to pullback (all the way to 2305-2310 would be just fine as the 9 day MA starts to move into that area) while the S&P doesn't have quite the same room but has some nonetheless.   The 9 day MA is moving up into the 1125 area and that's where I would watch.  

I get the sense that most traders are looking to buy this pullback and based on the way the leaders have acted recently, it makes sense to have that outlook.   That's my only worry right now - does the market have some big surprise in for all of us that will take us down much further than a "normal" pullback?  There is no evidence of that happening, so until I see something different, I remain bullish and am looking to buy.  

As I find good pullback setups, I will share some, but for now remain mostly in cash and remaining patient.   Good luck Thursday.

Tuesday, September 21, 2010

State of the Stock Market - 9/21/10

A volatile day today on Wall Street (as Fed days usually are), as stocks rose sharply when the announcement came but then fell just as sharply and ended the day basically where it started.  Outside of the final two hours, the action was quite slow and probably not worth commenting on.   Actually, since it usually takes a day or two to get the true reaction from the market in regards to Fed days, maybe even the final two hours aren't worth analyzing too heavily.  We'll have to see how the market responds the rest of this week.

Technically, nothing has changed - we are very extended and ripe for a pullback.   The former resistance that was broken yesterday should theoretically act as support, so watch 1130 on the S&P and 2305 on the Nasdaq as key areas.  A lighter volume pullback to this area would be absolutely ideal and should be buyable, especially if it was slow and lasted several days.   What is ideal rarely happens, however, so be on guard.   Anything is possible after the sharp run-up we've seen.   The only reason I would not buy a pullback was if volume was very heavy on the selling and those support levels just mentioned were sliced through like warm butter.   Then I would reconsider, but up until this point, the move has been very bullish and there is no need to think it is over.   Heck, we may not even pullback given the way the past week has gone.  

I made my first trade in a while today, entering CVGI at $10.51 at the open.   This was one of the few stocks I watched that was not extended and also flashed a pocket pivot buy on 9/17.   Fundamentals are decent and the chart looks like it could be forming a potential bottom of a base here.   This one trade might not seem like a big deal, but to me it is, because it was my first as what I now have to be - an end-of-day trader.  

It is tough to just set an order and not know if it is filled or not.  It is extra tough to not know that you have a stop loss in place if your order was filled to protect yourself on the downside.   I've traded that way for so long that not doing it is more than difficult psychologically.   I know, however, that this is something I have to do and in the long run, (assuming my adjustment goes OK) it will probably make me a better overall trader.  One of my weaknesses is letting intraday noise get to me too much and affect my positions and trading EOD makes it hard to let that happen.   We'll see how it goes. 

Overall, I still think a pullback is coming sooner or later, and you must be prepared for it.   Don't chase stocks that are overextended.  If you see stocks that look like they may be going parabolic (VHC, MIPS, and RVBD come to mind), don't be afraid to take profits.   There are stocks out there that are still basing, but not that many.  Patience is a virtue in trading, and unless you are already long from a few weeks ago, it is probably wise to demonstrate patience at this point.    Good luck Wednesday.

Monday, September 20, 2010

State of the Stock Market - 9/20/10

Another up day on Wall Street today, as economists declared the recession "over" and stocks took that news and ran with it.   The day started only slightly higher, but stocks had a sharp move up for the first hour of trading.   They moved sideways through lunch and into the early afternoon, but had another move up around 2:00 and finished near their highs and with large gains.  

Technically, we remain obviously overbought on most indicators (the Nasdaq 100 is now up 12 out of the last 13 days) but that hasn't mattered much so I don't know why it is worth talking about.  We are just ramping here - probably caused by a combination of solid buying as well as short covering (especially on a day like today) and if you're fighting it, you're simply wrong.  

I put some charts out this morning to watch and most did very well.   RES (+5%), CRM (+5%), MMR (+9%), NXTM (+6%), WLL (+4%), and CVGI (+4%) all had nice moves higher while the only short candidate I put out, RDCM (-5%) went down nicely.   Hopefully you were able to play some of these.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

I still don't know that I would be buying at this juncture, but that's up to the individual to decide.   When (or if...) we pullback, the June and August highs should act as strong support now that they have been overtaken and would act as a logical area to get long or to add to long positions.  It is looking more and more like we're in the middle of a February-March type move where stocks just don't rest.   The risk with this type of move is it could setup a blow-off type move and a very nasty sell off after that, but it's too early to predict that.   I will continue to stick by my belief that it would be healthy for the market to rest and stair-step its way higher (for the longer-term health of this rally) but right now that's certainly not in the cards. 

I am a little frustrated right now in that my signals were correct back on September 1 and since then, I have been solely looking on the long side of the market.   However, that's been my problem - I've just looked and haven't really acted.   I've been in cash the whole time and have missed many moves in stocks, most of which I have shared here in the weekend videos.  Some of the reason is circumstance - I did start back to work at my full-time job in late August and don't have access to the market now during the day, which is totally different from what I have been used to doing for the past four or five years.   I honestly haven't adjusted well - becoming an EOD trader immediately is difficult, no question.   I am still trying to figure out the best way to adjust to this change and hopefully will find that best way soon.   I am very uncomfortable though and this is making it tough for me to trade.

Some of the reason is psychological, however - I saw the signal turning on September 1 and 2 very clearly and discussed it here, but I didn't take it.   I didn't follow my system for whatever reason.   I believe that because I saw so many whipsaws in the previous few months, I just didn't trust it this time.   That lack of trust cost me some gains, no doubt.   Trading is not just about finding charts and executing trades - it's mostly about dealing with your own feelings, opinions, doubts, etc. and managing them correctly.   Hopefully, this will be a lesson for me to learn from in the future, because that's all you really can do when you make a mistake - learn from it.

I have no idea where we go from here so I won't guess.   We are very extended and set up for a sharp pullback, but until it comes, it's not worth doing anything about.   If we are up again tomorrow, I may think about putting an inverse ETF on, but more than likely will do what I've done for the past two weeks - sit back and wait for better and safer buying points to emerge.  Good luck and be careful. 

No Video, But Here are Some Setups

I had a busy weekend and did not have time to put a video together.   I am still a little iffy on buying at this particular point but we'll see what happens - here are the setups I would watch.

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

Friday, September 17, 2010

State of the Stock Market - 9/17/10

I am going away for the weekend so no commentary today, but all you have to do is read every post for this week - they all basically say the same thing.  The Nasdaq 100 was up for the eighth straight day today and the Nasdaq itself broke slightly above lateral resistance.   Both are extremely overbought.   The S&P meanwhile tried to move above resistance but finished weak.  

We're in an interesting position here and we won't know until next week where we go from here.  We're either looking at a run like Feb-Mar 2010, or another pullback at the top of this range.   I remain in cash at this point but am willing to buy if we rest.   If I sound like a broken record, that's because basically I am.  Good luck next week and enjoy the weekend.

Thursday, September 16, 2010

State of the Stock Market - 9/16/10

A slow and choppy day today on Wall Street, with stocks moving slightly lower in the morning and then recovering in the afternoon to finish basically flat for the session.  Volume looks like it was ridiculously low today compared to the past few sessions but I don't have the final totals. 

Technically, the charts are diverging here a bit as both the S&P and Russell 2000 have consolidated slightly the past few sessions and look good to me.   I have been harping on the need for the market to digest their recent move higher if this rally is going to last a while, and I think those two indices have done that for the most part here.   That's not to say further consolidation would hurt, but who knows if we'll get it.  The last three session have worked off some of the overbought condition in these two indices.   A breakout is a real possibility soon based on the way the charts look.  

S&P 500
Russell 2000

On the other hand, the Nasdaq and particularly the Nasdaq 100 (up 11 out of the past 12 sessions after today) continue to extremely overbought and the consolidation seen on the other two indices has not been seen in the same manner here.   It is possible we're entering a phase like we saw back in February and March where the market ran higher without any rest, but even then, eventually the 9 day moving average came in and offered support.   Right now, that's where I would be looking to buy - let the 9 day at least catch up to price a bit so you aren't caught in a quick downturn or sharp pullback.   

Nasdaq 100
Charts from Telechart, Courtesy of Worden Brothers, Inc.

In terms of individual stocks, I see some ones that interest me (I'd say about six) but I also still see a lot wedging higher.   I put two charts of leading stocks below.   You can figure out which one looks better and which one I would worry about.   I am seeing a bit more of these extended stocks rest over the past two or three days which is good - hopefully there will be more and we can find some safer buy points.  

Charts from Telechart, Courtesy of Worden Brothers, Inc.
Tomorrow is options expiration and lately those sessions have been quiet.   A quiet day tomorrow would be very good for the market in my opinion.   If the S&P and Russell continue to consolidate and the Nasdaq takes at least a short break, the market is definitely set up for higher prices.   Let's see if it happens.  Good luck Friday.

Wednesday, September 15, 2010

State of the Stock Market - 9/15/10

I really don't have much to say that I haven't said the past few days, so today's wrap will be short.   The major indices were up slightly today but overall didn't do a whole lot.   They are still underneath key resistance from early August and mid-June.   Sideways action like we saw back in late July that would allow to work off the overbought condition would be great, but who knows if we'll get more.   The past two days have felt somewhat like consolidation to me, so maybe that's what we're seeing now. 

The market overall continues to be very bullish.   There is no reason to think we are going to crash right back down and that's why I am not shorting anything here even though we are overbought (although I do see some interesting setups).   I am simply going to wait for the market to show me some long setups that are not overextended and then go from there.   I just don't see too many right now.  I still see however quite a few stocks wedging higher and riding their upper trendlines.   These look to me like they need consolidation badly.

If you're long already, I don't think there is any reason to sell out and go to cash or anything like that.   We could pullback, but so far this rally has good breadth and stocks are acting very well.  They just need rest, that's all.   Good luck Thursday.

Tuesday, September 14, 2010

State of the Stock Market - 9/14/10

A choppy day today on Wall Street, as stocks started the day lower, quickly bounced up, but could not get through key resistance and pulled back into the close.   The Nasdaq was up slightly while the S&P was down just slightly - overall a flat day.   Volume was up slightly.   Another three or four days like today would be absolutely perfect. 

Technically, the major indices are RIGHT at resistance and we are at a very interesting juncture here.  Back in July, the market rose up to this level and then moved sideways for about a week in bullish fashion.   The rise up was different then, as the indices had two short pullbacks as they rose, as opposed to this straight shot up we've seen for the past week or so.   Some sideways action like we saw back then would be the best possible outcome right now for this market.   I don't know if we will get it, and even if it does happen, it doesn't mean we will continue to move higher (see early August), but it would help.   I still see too many stocks that are very extended and wedging higher.   This is not a time I feel comfortable going long and I will continue to sit tight waiting for some better entry points. 

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

There really isn't much else to say that I didn't say this weekend or yesterday.   If I see more stocks act like ISLN, NFLX, APKR, and especially CRM have the past few days, I wouldn't be hesitant to buy stocks even with the market overbought.   Those stocks have moved slightly sideways and could be forming bear flags.  Meanwhile, if I keep seeing more stocks like MSB, MIPS, AMZN, INFA, LULU, and FFIV, which have just kept moving higher without any rest, putting themselves in a very extended position, I will continue to wait for a pullback.   Good luck Wednesday.

Monday, September 13, 2010

State of the Stock Market - 9/13/10

So much for consolidation.  Another great day today on Wall Street, as stocks started higher from the get-go and gave little back throughout the session.   The S&P pulled back midday but still was able to climb in the final hour to close near its highs for the day.   The Nasdaq, meanwhile, led the way with gains of almost 2% after breaking to new intraday highs in the final hour of trading.   Volume was heavier across the board.

Technically, after today the major indices have now clearly broken above their declining tops lines from April and also took back their 200 day moving averages.   Both the S&P and Nasdaq are now approaching more resistance from their June and August highs around 1130 and 2310 respectively.  It is going to be interesting to see what happens here, as we are very extended.   The McClellan Oscillator closed around +242 today and is right in the area it was back in mid-June when the market pulled back and the beginning of August when the market pulled back.

 Charts from Telechart Courtesy of Worden Brothers, Inc.

There were some nice movers as you may expect from this weekend's video - SPRD (+10%), SVN (+3%), NBIX (+6%), CMED (+4%), QLIK (+9%), and HXL (+5%).   If you caught one, congrats - I hope the videos are helping.  

As for me, I am sticking by my guns here and waiting for a pullback - I could be very wrong (as I have already been wrong for the past two days in terms of waiting) but I continue to believe chasing is not smart here.  I showed in the video many of what I would consider "bearish" charts in that they are wedging up and right near the upper channel lines on their daily charts.   These charts don't look much different after today.   There is very little out there worth buying at this point in terms of proper buy points, so I am staying on the sideline for now.   If I was long, I would probably tighten my stops a bit depending on my gains. 

FFIV and Others
FOSL and Others
RES and Others
 Charts from Telechart Courtesy of Worden Brothers, Inc.

We'll see what tomorrow bring - it is possible we could be setting up for a Feb-Apr type move where we just keep grinding higher without any rest.   We've been in a range now for about four months and since we're at the top of that range, I think the chances are just as good that the range continues.   I am not bearish longer-term - actually I am hopeful we can continue to rally.   However, if this rally is to be a long-term one and we are to break out of this range, these recent gains needs digested and stocks need to pullback to setup new buy points.   That's my opinion, and for now, I'm sticking to it.   Good luck tomorrow.

Saturday, September 11, 2010

Stock Market Video - Market Outlook and Stocks Consolidating Nicely - 9/11/10

Hi, traders - part one of this weekend's video focuses on the overall market as usual.  The big picture still looks bullish overall, but I still believe some consolidation this week would do a lot of good for the longer-term potential of this rally.   I see a lot of bigger-cap leaders right at the top of their longer-term patterns and in some cases are wedging higher, which is not normally good.   I take this as a potential warning sign in the very short-term (again, we need some rest).  

In part two, I show you the stocks that are consolidating nicely as well as some potential pocket pivot plays from Friday.   I am keeping track of these to see how my scans measure up in terms of identifying them correctly.   There were three or four that I believe qualify from Friday and they are shown in the video along with others. 

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, September 10, 2010

State of the Stock Market - 9/10/10

We saw another up session today on Wall Street, but with volume coming in low once again, nothing really important happened.   Hopefully trading volume will increase in earnest starting next week. 

I maintain my belief that the market needs to consolidate if it is going to rally strong through September, but right now we are grinding just slightly higher instead of consolidating.   Perhaps this is one of those times we rest as we move slightly higher (happened a lot back in '09) but we'll just have to see.   The numbers and the market overall remain bullish and so you should be looking for longs.   Ideally, however, we would see some rest.   I don't like seeing the type of action I have in leading stocks like JKS and RDCM the past few days, where they went parabolic and then reversed very hard.   I mentioned both of those this week as potential warning signs but as of now they are the only two I see that give me pause.  

Meanwhile, the individual stocks I am watching are for the most part pulling back very nicely.  So much so, in fact, that I am wondering if I need to just ignore what the overall market is doing and focus solely on them.   The problem right now is that I don't see enough really nice charts to get rid of this feeling that we need to rest before moving higher.  I only have 8 or so stocks on my potential buy watchlist and that is not a traditionally large number.   Meanwhile, I see a lot of stocks extended and no where near any reasonable buy points and perhaps that is what is really getting at me.  

Overall, the market remains bullish and I am looking for longs, but a light pullback would help to lengthen this rally significantly in my opinion.   I'll be back this weekend with the video - until then, take care and enjoy yourself.  

Thursday, September 9, 2010

State of the Stock Market - 9/9/10 - Fine Tuning Pocket Pivots

We saw another up day today on Wall Street, but it was not a very bullish day, as stocks started higher and faded quickly from there.   The opening gap took the S&P and Nasdaq above their declining tops line but the fade took them both back down to those lines by the close.   Volume looks to be lighter which is not what I would want to see.

Overall, I am still of the belief that further pullback here would be a good thing, and I cringed when I saw the market gap up today.   After going through my scans last night, I was shocked that I really just didn't see many that interested me.   They just weren't there.   I saw some stocks that were beginning to look parabolic like JKS (which was done 9% today off Wednesday's reversal), NZ (down 6% today, and ARMH from today.   I took all of this as a sign that stocks needed more rest and therefore I remain in cash. 

Right now, I have seven stocks on my watchlist.   If you viewed my weekend video, you may be able to figure out which they are.   Some have formed nice flag patterns the past few days and I am interested in entering, but I would really like a few more days of rest so their 9 day moving averages could catch up to the price.   My numbers are still bullish and the follow-through day from last week is still doing well, so there is no reason to be bearish - I just want to see some consolidation.

I wanted to share a few observations/thoughts/changes that have been emailed to me or commented on in respect to the pocket pivots video from earlier this week.   I did state in that video that this will be a process of fine-tuning and that's what I've been trying to do here over the past few days.   I thought the best way to update what has been discussed is by making a short video, so here it is.   Changes to the scans are below.  I am optimistic because recent recommendations from Kacher matched up with the Telechart indicators pretty well.   

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

New 9 Day Moving Average Scan: C1 > (XAVGC9 * .98) AND C1 < (XAVGC9 * 1.01)
New "Uptrend Scan" -  XAVGC9 > AVGC50 or XAVGC9 > AVGC20

For PP Indicator - Add Indicator (Percent True) and put this in the box: (C > C1 AND V > ABS(C1 < C2) * V1 AND V > ABS(C2 < C3) * V2 AND V > ABS(C3 < C4) * V3 AND V > ABS(C4 < C5) * V4 AND V > ABS(C5 < C6) * V5 AND V > ABS(C6 < C7) * V6 AND V > ABS(C7 < C8) * V7 AND V > ABS(C8 < C8) * V8 AND V > ABS(C9 < C10) * V9 AND V > ABS(C10 < C11) * V10) AND (C1 > (XAVGC9 * .98) AND C1 < (XAVGC9 * 1.02))

Wednesday, September 8, 2010

State of the Stock Market - 9/8/10

Following a pullback yesterday, we had a nice bounceback session today on Wall Street, with stocks starting the day slightly higher and moving up from there until around 11:00.   At that point, they basically just chopped sideways, but didn't give much back overall and ended with decent sized gains.   Volume looks like it will be higher on both indices which is nice to see.

Technically, both the Nasdaq and S&P are still under key resistance but look to be forming very bullish flag patterns here and that is exactly what I had hoped would happen this week.   Ideally, the next two days would be quiet (and they may be due to Rosh Hashanah) with slightly lower prices.   I would love for the market to be slightly oversold short-term going into next week - I think it greatly increases the chances of a true, more intermediate-term move higher occurring.   Support levels from yesterday haven't really changed - Tuesday's lows are now the closest support but a pullback lower would not necessarily be a bad thing.

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

I am still in cash but am looking closely at long candidates as the market is painting an overall bullish picture.   If tomorrow is slow, I may wait, but depending on the stock, I may look to put a few positions on at the end of either of the next two days.   After putting three posts together yesterday, I don't have much else to say right now - things looks good overall - so I will end here.   Take care and good luck Thursday.

Tuesday, September 7, 2010

Some Further Notes on Pocket Pivots

Some further notes and thoughts to consider about the "Pocket Pivots"....
  • The authors say that these work best with thinner stocks (under 750,000 shares or less than $30 million dollar volume) but also say these will fail and fall much quicker.   
  • However, they later discuss use the PP technique to find entries in bigger, leading stocks like BIDU, AAPL, etc. so perhaps a volume requirement is up to the individual trader.
  • Must focus on fundamentally strong stocks (not a revelation).
  • Avoid wide and loose bases - try to find bases that are forming with tight patterns.
  • Compare stock to overall market and look for stocks outperforming market
  • Prior to a PP buy, you really need to see tighter prices and some consolidation
  • Stocks should be above 50 day MA (pretty easy to add this in Telechart as PCF)
  • Volume should be preferably drying up before the PP occurs.
  • They say if volume is choppy overall, you can increase the threshold to 11-15 days instead of 10.
  • Stocks that regain their 50 day MA on the PP breakout work well.
Things to avoid when looking for Pocket Pivots.....
  • If the stock dips and then immediately bounces back (forming a "V" pattern), it will be more likely to fail as a PP.
  • Don't buy if they are too extended from the 10 or 50 day moving averages (no specific threshold but 2% or more above those MAs is probably a starting points)
  • If the pattern is wedging upward on lower volume, stay away and ignore potential PP's
  • Never buy a PP in an overall downtrend - always wait for the upswing.
Once again, for more information along with specific examples, check out the book "How to Trade Like an O'Neil Disciple" written by Gil Morales and Chris Kacher.

Stock Market Video - Using Telechart to Find Pocket Pivot Buy Points

Hi traders.  I wanted to share an educational video on how to set up a "Pocket Pivot" scan in Telechart.   If you are reading the book "Trade Like an O'Neil Disciple" along with me, you'll know what I am talking about.  If not, you'll have to check out the book and video to understand the idea a bit more.   The basic idea is to buy stocks before they breakout by looking for stocks moving up on volume heavier than the largest downside volume day of the past ten sessions.   There are other factors however that go into buying a "pocket pivot" - one idea involves the position of the stock in relation to its 10 day moving average.   In a market where breakouts have been iffy at best for a while, I thought this technique was worth checking out.

As always, feel free to email me with questions or comments - I enjoy hearing from my readers.  I hope you find the video educational and helpful.   If you don't have Telechart, you can check it out for 30 days free.

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

Pocket Pivot Scan - C > C1 AND V > ABS(C1 < C2) * V1 AND V > ABS(C2 < C3) * V2 AND V > ABS(C3 < C4) * V3 AND V > ABS(C4 < C5) * V4 AND V > ABS(C5 < C6) * V5 AND V > ABS(C6 < C7) * V6 AND V > ABS(C7 < C8) * V7 AND V > ABS(C8 < C9) * V8 AND V > ABS(C9 < C10) * V9 AND V > ABS(C10 < C11) * V10

9 Day Moving Average Scan - C > (XAVGC9 * .98) AND C < (XAVGC9 * 1.02)

Volume Requirement - AVGV10 >= 10000   (Can be changed to suit individual needs - 10000 equals over 1 million shares, 5000 would equal 500,000 shares)

State of the Stock Market - 9/7/10

With the market quite extended and at key resistance, a pullback was to be expected, and that's what we got today on Wall Street.   Stocks started the day only slightly lower but sold off further in the first half hour of trading.   They moved sideways from there through lunch and into the afternoon, but fell a bit further after 2:00 and finished near their lows for the day.   Volume, however, looks to be a good bit lower so that is a positive(at least on the S&P).

Technically, no real damage was done from what I can see today and as I discussed in yesterday's video, a pullback here is normal and very healthy.   A gap up and further gains were probably the worst thing that could have happened today in terms of this rally lasting a long time.   Today's pullback (which could go a few more days) will allow the market to catch its breath and regain the necessary strength it will need to climb over its declining tops from April.  

Key support now rests around 1080 for the S&P where both the 50 day and 9 day moving averages are converging.   For the Nasdaq, the 50 day is a bit above 2200 and that level holding would be very bullish.   It may not happen, however, and a pullback to the short-term moving averages around 2185 would likely still be OK in the grand scheme of things.   Much further than that and maybe the outlook changes a bit.   As of now, I am still bullish and will look to enter long opportunities as they present themselves over the next few days.
 S&P 500
 Charts from Telechart, Courtesy of Worden Brothers, Inc.

That's about it for now - no damage done today and the numbers remain bullish.   Buy opportunities may present themselves over the next few days.   Good luck Tuesday.

Monday, September 6, 2010

Stock Market Video - Market Outlook and A List of Stocks and IPOs to Watch - 9/6/10

Hi, traders. Part one looks at the overall market, and the past week was certainly a bullish one. My signals are on buy and though we've seen them turn before this summer and then immediately turn back, I have to follow them and therefore am looking to buy. However, I need to see some consolidation first due to the technical position of the indices. This is all explained in part one.

Part two deals with some of the stocks shown this past week on the blog that made nice moves, along with ones to watch this week.   These stocks need rest, but if they get that and the market continues to move higher, I think they have big potential.. 

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, September 3, 2010

State of the Stock Market - 9/3/10

Another very bullish session today on Wall Street, as a positive jobs report caused stocks to gap up to open trading.   That enthusiasm did not last, as stocks quickly and sharply pulled back, but managed to grind their way back starting around 11:00, and ended up finishing near their highs for the day and with large overall gains for the third straight session.   Volume however looks like it will come in lower again and well below average.

Technically, we are at a very interesting point right now.   My numbers are all bullish so let me make it clear - I am not a perma-bear or anything like that at this moment.   I have to go with what my numbers say so if I was trading heavily here, I would be long and only long.  That being said, the major indices are short-term overbought and are now right at key resistance from the declining tops line from back in April.   Check out the charts below for a clearer picture.
S&P 500
Charts from Telechart, Courtesy of Worden Brothers, Inc.

As I quickly look through my scans today, I see a few worrisome signs in the short-term.   I posted several setups this weekend and during the week that I considered worthy of watching and so far, several have acted very well.   SVN, for instance, had a big move today and is a stock I would have likely entered if my work situations were different right now and I was able to follow things intraday.   However, I also see some stocks from my main watchlist (LFL, PWER, NANO, FIRE, IGTE, CTCM, ACTG) that had either weak breakout attempts today that reversed or just reversals intraday that they did not bounce back from.  This tells me stocks are getting a bit tired here and perhaps caution is warranted in the very short-term.  

I remain in cash and basically will look for a pullback here as a buying opportunity.   There is now support (or what should be support) below around the 50 day moving average for the indices, and as long as that holds, I think you buy.   I just wouldn't chase at this juncture.   Who knows - maybe everyone is looking for a pullback and the market keeps grinding higher - we've seen that story before - but I would rather wait.   Enjoy the Labor Day weekend and I'll be back Sunday or Monday with the market outlook video. 

Thursday, September 2, 2010

State of the Stock Market - 9/2/10

A pretty good day today on Wall Street, as stocks saw some decent follow-through from yesterday's major gains and closed at the top of their intraday ranges.  The trade was a little choppy, but the trend was up throughout the entire session.   Volume, however, is coming in a good bit lower than yesterday's totals.

Technically, the S&P took back its 50 day moving average today which is important, but the Nasdaq closed right at that level so it will be interesting to see if we back off a bit here.   A pullback isn't a bad thing, but I will be watching to see if the S&P can now hold its 50 day as support.   If we continue to move higher tomorrow, both the S&P and Nasdaq will be testing their declining top lines from the April top (shown below) and that should be an interesting juncture.   A break above those could signal a longer-term trend change in this market.
S&P 500
Charts from Telechart, Courtesy of Worden Brothers, Inc.

If you see the volume bars above for the S&P and think they look different from yesterday, you are correct.   Telechart must have had a discrepancy for volume yesterday - today's charts show the correct totals from yesterday, but I think today's are off.   For me, it does take some of the shine off of yesterday's gains - I was under the assumption they came on much, much heavier volume - but the market still did follow-through via the Nasdaq, and with my numbers almost totally bullish, I will continue to look on the long side only.

I posted some of the setups I am watching right now last night and AHD was up a quick 10%.  I did not take it however - I remain in cash.   I am working with a different schedule this year at my full-time job - I can't check on the market intraday as I did before, and I am getting home with only ten minutes of so of trading left, which makes putting on trades at the end of the day more difficult - it's harder to get a good feel for the day's action.   Therefore, I am in a state of adjustment right now - trying to learn to become more of an EOD trader.   It is not an easy adjustment, and until I feel more comfortable with things, I may not be as aggressive as I might normally.

I have started reading a new and very good (so far) book that will hopefully help me in the endeavor - Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market (Wiley Trading).   My head is spinning a bit as I soak in some new ideas and think about my current weaknesses as a trader, so that is keeping me a little hesistant as well.   I do recommend this book to any swing traders that use or know of the CANSLIM method - so far, it has provided me many valuable insights and I am less than half way through the book. 

We'll have to see if the jobs number tomorrow morning affect trading at all - right now, the past two days have been very good for the bulls and I would say they are back in control.   Let's hope they don't give it up as easily as they have before these past few months.   Good luck Friday.

Wednesday, September 1, 2010

Setups to Watch If Today Ends Up Meaning Something

As I mentioned earlier, I am still 100% in cash, but today's action has me at least getting ready to get long as opportunities present themselves.   Here are some I am watching....

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