Sunday, October 31, 2010

Stock Market Video - Halloween Edition - 10/31/10

Hi, traders - happy halloween!  I have become quite the broken record the past few weeks with my commentary but that's because it's true - the trend remains up and until the short-term moving averages are broken decisively, you must respect the trend.   There is one big event this week, however, that could change things, and I discuss that in part one of the video series. 

In part two, I go over some bullish setups that you should watch this week. I am still quite cautious on the bullish side, but until we break down, you must focus on that side only.   IF we break down this week, I showed the ETFs that I will be focusing on as targets.

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.  


Thursday, October 28, 2010

State of the Stock Market - 10/28/10

It's my birthday and I will be taking my two boys trick or treating in a few hours, so today's commentary will be short.   Really, we saw more of the same today overall - a market that is moving a lot intraday but not really going anywhere overall.  I said last week that with the breadth signals I follow flashing warning signs, we likely will either top out here or have a choppy consolidation period that lets those signals work themselves out a bit.   So far, the market has not yet cracked, so the trend remains up. 

I overall remain neutral.   If the market has a big selloff on heavier volume, I think it could be enough to get a good pullback going.   If the market has a big move higher on heavier volume, I think it will be a sign that the market has more tread left for further gains.   Right now, however, nothing is really going on - the Nasdaq is slightly higher than it was two weeks ago and the S&P is at about the same spot.

I made one trade last night after-hours, entering IRBT at $20.90 as an earnings trade.   When it opened around $22, I was impressed and set my stop at $20.85, figuring that if it fell that far after opening so well, it wasn't worth holding as an earnings trade (it is my experience that the best earnings trades rarely sell off intraday).   I was stopped out in the morning, but got a poor fill at $20.65 (Thanks Scottrade!) so I took a small loss there.   I saw quite a few nice setups last night but none did anything today.   I remain in cash.

Good luck out there - we need a big move one way or the other to tell us where the market wants to head next but neither the bulls or bears seem strong enough to get that done.   The Worden Report keeps talking about a "holding pattern" until the election, and perhaps that's what we're seeing.   Take care.

Wednesday, October 27, 2010

State of the Stock Market - 10/27/10

Another choppy day today on Wall Street, as stocks started the day lower and stayed lower for much of the session, but they did bounce back into the close to finish near their highs for the day.   The Nasdaq outperformed the S&P all day today, finishing with gains on the day.   The S&P finished basically flat.  

Technically, once again no real damage was done today and the market remains in an uptrend, albeit one that is chopping around right now and not going anywhere.   The S&P tested its 9 day once again today and was below it a good bit, but ended up closing above it so the beat goes on.  My breadth numbers continue to flash their warning signs (my main one does look like it will turn bearish today, but just slightly so) and I continue to look for a breakdown soon, but until it comes, you have to respect the trend.    I would really like to see a heavier volume day soon with lots of breakouts to counteract these bearish signals.


If you read yesterday's summary, you may remember me mentioning one particular stock that I was watching after-hours for the earnings reaction.  Well, that stock was SIMG, and I did put a quick tweet out about it around 4:30 or so.  At that time, I knew it had blown out its earnings ($0.18 vs $0.05 est) and was actually halted for trading.   I didn't know where it would open, but I was hoping to get in if possible.   When it did open trading after-hours, it opened around $5 and just moved higher from there.   I waited and that was my mistake.   Buying a stock that is up a huge amount after-hours is one of the hardest things to do, simply because the after-hours tend to be very volatile, but often times it is the right move.  Sometimes, I will wait until after the conference call to see if the stock holds its earnings pop when all of the news is out.   SIMG held on pretty well and when the after-hours session closed around 8:00, it was trading at $5.45-5.50.   I put a limit order in around 7:45 at the bid ($5.40) and went away.  I was not filled.   I let five cents get in the way of a very nice pop today, which is just plain stupid on my part.  

As it is, I would certainly keep this stock on any watchlist that you have to see if it will consolidate and rest a bit, allowing for a potential second buy opportunity over the next few weeks.  It has a catalyst that could push it much higher from here as we move forward, although the last quarter's earnings were also good and it didn't do much off of its earnings pop, so we'll have to see.  There should be many others like SIMG over the next few weeks and I will try to keep you informed as I see them - tomorrow in particular is a very big after-hours session with lots of reports coming, so be alert.   I went over some of these possibilities in this weekend's video. 

Overall, I am watching some stocks here on the long side as the market continues to hold up.  Two stocks that I tried to enter late today were ZSTN and SMTX, but for some reason Scottrade won't let me put online orders in for those stocks (I have to call my local branch) so I am probably out of luck because I don't have the ability to call my local branch at all times - thanks Scottrade.   Anyway, keep your eyes open here for a possible breakdown but until it comes respect the trend, which remains up.   Good luck Thursday. 

Tuesday, October 26, 2010

State of the Stock Market - 10/26/10

It was opposite day today on Wall Street, as stocks did the exact opposite of what they did yesterday.   The day started on a bad note, with stocks slightly gapping lower and sliding further for the first five minutes or so of trading.   The bottom, however, was put it right there, and stocks bounced back from there to almost turn positive by 10:30.   The rest of the session was mainly chop, as stocks moved sideways in a pretty tight consolidation, but did finish near their highs for the day.  Volume looks to be about the same as yesterday. 

Technically, the trend remains up as the 9 day moving average was once again touched and held easily.   I repeat, until this breaks convincingly, there isn't a whole lot to do other than respect the trend and ride it as you can.   I said in the weekend video that unless we break hard, I expect some sideways consolidation and that's basically what we're getting right now.   It's not the best to trade, but there are some areas that can work if you watch closely.   

My powder remains dry and I am waiting until some good earnings setups show up this week before using it.   MIPS was one big mover today that reported last night, but I didn't like the chart going into the report so I passed.   It was up 30% today.   Most of the reports I am waiting for come Thursday, but I will keep my eye out today and tomorrow as well.   In fact, there is one company that just reported that I am debating about entering right now.   I'll let you via Twitter if I pull the trigger.  

That's about it for today.   The market moved a lot the past two days but went nowhere, and I would not be surprised to see that continue for a few more days.   Good luck Wednesday.

Monday, October 25, 2010

State of the Stock Market - 10/25/10

The market finished with gains today on Wall Street, but from a purely technical perspective, the action was not very bullish, as stocks reversed their earlier gains and put in bearish reversal bars all over the place.   The action was very positive at the start of trading today, with stocks gapping up and moving higher for the first half hour or so of trading.   They pulled back quite a bit from there, however, and moved mostly sideways for the rest of the morning and into the afternoon, getting some support from the opening gap.   The final hour was not bullish though - stocks fell to lows for the day and ended up well off their highs.   Volume looks to be heavier than Friday's very low totals.

Technically, the market looks tired here after the intraday action.  The Nasdaq has a POTENTIAL island top set-up in place today after the gap-up, but it only matters if there is follow-through to the downside, starting with a gap down tomorrow.   The gap on the S&P was much less pronounced but nonetheless the reversal bar is in place there as well.   The trend in my opinion is still up until the short-term moving averages I've been harping on for a while are broken convincingly, but today may be another warning sign that caution may be smart here.
 S&P 500
 Nasdaq
 Charts from Telechart,  Courtesy of Worden Brothers, Inc.

My numbers are still neutral overall and the main breadth indicator I showed the past two days has yet to turn bearish.   However, I continue to watch for a sharp deterioration in these numbers and if I see, I will look to put some short positions on, most likely through index ETFs.   Right now, the market seems to be just kind of hanging out - not selling off, but not moving convincingly higher.   If we don't get heavy selling over the next few days, I continue to expect more choppy consolidation until the market decides what it wants to do.   Those choppy, sideways moves are the worst so be careful right now.

I didn't make any moves today and remain totally in cash, but we did see some nice movers from this weekend's video.   AAU was up a nice 13% today, and TSTC moved up another 4%.   There were some movers from the earnings video (RDWR - 7%, VISN - 7%), but since those report later this week, I would hesitate to enter before the news comes out.   That video was mainly to show stocks worth watching ON the news being released.  

We'll see if any earnings reports tonight or tomorrow morning affect things, but overall my outlook is cautious.   The trend certainly hasn't ended yet and could just continue chugging along, but don't be caught hanging on too long when it does change, because the warning signs continue to be out there.  Good luck Tuesday.

Saturday, October 23, 2010

Stock Market Videos - Technical Outlook, Long Setups, and Earnings Setups for Week of October 25, 2010

Hi, traders.   The beat goes on for this market - it was a volatile week but overall the trend remains up and until the short-term moving averages are broken with authority, there is no point in fighting the trend.   I do discuss some warnings signs in the video, but right now I expect some sideways action for a few more days before the market potentially turns upward again.

In part two, I go over some bullish setups that you should watch this week. There are some interesting China names out there right now, and with the Shanghai index moving so much the past few days, those are ones I will be paying close attention to this week.

Part three looks at stocks that report this week and have also consolidated or been neglected for a while now.  IF (and that's a big if) earnings are better than expected, these stocks typically can run a good bit and are worth paying attention to this week.

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.  



Thursday, October 21, 2010

State of the Stock Market - 10/21/10

A volatile day today on Wall Street, as stocks started the day higher, fell from around 11:00 to 2:00, but then bounced into the close and finished very close to where it started overall.   The early move higher did take the S&P and retail sector to new highs, but those highs did not last long.  Volume appears to be heavier than yesterday on the Nasdaq but flat on the S&P.

Technically, this remains a very news-driven market and as such, it is hard to look at the technical picture without taking it with a grain of salt.   Things are very volatile and will remain that way as long as these earnings reports continue to come (and we have another large wave tonight).   I would not be stuck to any one outlook right now as really, anything can happen.   We have yet to breakdown and the trend remains up, but there are a few worrisome signs out there that have me cautious.

As you know, I've been talking about the breadth indicators I use (via Stockbee) and how they've been flashing warning signs for a few weeks now.   Those warning signs remain, but another one turned neutral this week after being bullish since the beginning of September.   It did the same thing back in mid-March, but never went bearish and eventually the market went higher for almost another month before topping out.   Perhaps it will do the same thing now.   That's really what I am watching for - further deterioration here on this signal would have me looking to get short, but I will wait for it.  I am not going to anticipate it.  

 

I am back to 100% cash after selling my ALGN position for a small overall gain near the end of the session today.   With earnings coming out after-hours and some less-than stellar action intraday, I had no desire to hold through earnings.   I guess I am lucky, because it is trading down about 15% from its close right now.   The key reports I was watching today are mixed - AMZN and INFA look to be down while RVBD, SNDK, and CMG are up.   Probably another day of volatile trading is in store overall for tomorrow.  

I will update you if my signals change, but as of now they are neutral and so I remain in cash.   I would not be surprised of some chop here that eventually leads to higher prices, but a lot of signals are pointing to a top potentially forming here, so be very careful.   Good luck Friday.

Wednesday, October 20, 2010

State of the Stock Market - 10/20/10

A bounceback session today on Wall Street, as stocks took back a good bit of the losses they put in yesterday.    The overall action looked bullish, but in some ways, it wasn't as bullish as it may seem.   Stocks rose nicely throughout the morning, but drifted lower in the afternoon (particularly on the Nasdaq) and finished off their highs.   Volume also appears to be a good bit lower than the high levels seen yesterday.   Neither of these things is great, but at the same time, I guess it's good that we saw no follow-through to yesterday's nasty selling.

Technically, there isn't a whole lot you can put stock in right now just because of how much news is out there.   Everything that looked so bad yesterday looks much better today.  Will it look better tomorrow, or will we sell off again on poor earnings news?  I wish I knew the answer, but no one does and that why treading lightly here is still probably smart.    The dollar has driven trade the past two days (up big yesterday and down just as big today) so that is one chart to follow closely.  

It's very possible the action we saw yesterday was similar to the action we saw on October 4.   That turned out to be a false breakdown and the next day the market was up a large amount, taking back all of the previous day's losses.   I don't know if this fits - the losses were larger yesterday and volume patterns are the exact opposite (heavier yesterday and lighter today) - but it's possible.   Really, it's hard to predict the day to day movings of this market with so much earnings news out there, so you just have to be careful and protect yourself on both sides.   Honor your stops but don't be afraid to put positions on if they really look good.   The trend was challenged yesterday but not yet officially broken. 

I only have one position right now (ALGN) and a lot of individual charts are messy after the past two days.   I did see NFLX put in a pocket pivot today into their earnings report after-hours and based on the early reaction, it looks like that pocket pivot was prophetic, as it is up nicely as of now.  I have discussed this idea of buying pocket pivots before earnings in a previous post.   We'll see if it lasts tomorrow - that is one I would have considered but didn't get home in time to act on it.   I don't expect to be doing a whole lot the next few days - I think stocks need to consolidate here a bit and perhaps form some pennant-type formations that hopefully they can run from.  

Overall, I am market neutral here just because my breadth numbers continue to flash warning signs but the market continues to hold up overall.  If we would have seen further selling today, my signals would have likely turned bearish.   As it is now, they are neutral, so I am too.   Using my Seinfeld analogy from last week, it is entirely possible the engine is starting to sputter and make noises right now, but until the car stops, you have to keep driving.   Be careful out there - news-driven markets are tough.   Good luck Thursday.

Tuesday, October 19, 2010

State of the Stock Market - 10/19/10

Due to time constraints, I can't write too much today.   It was a busy day on Wall Street - certainly not a good one with large losses across the board.   No one was spared from a beatdown today - oil, gold, and tech were all killed.   That being said, I think it is too early to say if this is the end of this rally for good or just a well-needed pullback.   I said yesterday that we were very extended so a sell-off like today was not unexpected.   We'll have to see if we get follow-through tomorrow - if we do and break below the 20 day moving averages on more heavy volume, I expect the 50 day moving averages to be tested soon after.  

I was quickly stopped out of my HEAT position from yesterday and right now only hold ALGN.   Since it reports Thursday, I will likely be out of that soon as a precautionary measure unless it bounces tomorrow and gives me a cushion.   Overall, I would be very careful right now - a cursory look at my scans shows quite a bit of damage on individual stocks so I would not be buying the dip yet, especially with more news via earnings reports coming the rest of this week. 

Sorry for the brevity today - I have things to do.  Overall, be very careful - today could be the first shot across the bow for the bears.   Pay attention to it.   Good luck Wednesday.

Monday, October 18, 2010

State of the Stock Market - 10/18/10

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

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

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

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

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

Sunday, October 17, 2010

Stock Market Video - Market Outlook and A List of Stocks to Watch - 10/17/10

Hi, traders.   Part one of this weekend's videos looks at the overall market.  Things continue to go well for the indices and you have to ride the trend until it ends.   A heavier volume sell off would have me concerned, but until short-term support is broken, I would stay long.

In part two, I go over some bullish setups that you should watch this week. There are some interesting China names out there right now, and with the Shanghai index moving so much the past few days, those are ones I will be paying close attention to this week.
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, October 15, 2010

State of the Stock Market - 10/15/10

Another positive day for the stock market today, as stocks either rose in a strong manner off of earnings (Nasdaq) or consolidated nicely and bounced back from an early morning fade (S&P and Russell 2000).  Overall the action continues to be very bullish so even though my breadth numbers continue to be at stretched levels, it just doesn't matter much in the big picture.   We haven't run out of gas yet and until we do, just keep chugging along with the bulls. 

I'll be back later this weekend with the typical setups and outlook via video but for now, there is much else to say.   Take care and enjoy the weekend.

Thursday, October 14, 2010

State of the Stock Market - 10/14/10

Not a bad day at all today on Wall Street, as even though the market was down, the action intraday was bullish and we avoided a major sell-off.    The day started off flat and when stocks couldn't really get moving after an hour or so of trading, they started selling off.    The selling was relatively calm as stocks stairstepped their way lower, hitting their low of the day as the final hour of trading started.   From there, they bounced sharply back into the close, taking back about half of their earlier losses and finishing in the middle of their range.  Volume looks to be a good bit lower. 

Technically, today was good in that we still haven't seen any major selling come in to this market.   We were set up for it based on yesterday's close, but as long as the selling isn't heavy, there is no reason to get bearish yet.   I still think we will start selling off at some point in the near future and have a very significant pullback, but the near future could be three days or three weeks.   Using my Seinfeld analogy from yesterday, I still firmly believe we are to the left of the "E" on this current run, but I have no clue when we run completely out of gas.  As such, I'll stay focused on the long side until the market tells me not to do so.

I made no moves today and still hold IDSA and ALGN.   I thought hard about IDT but I thought I would wait to see how these pocket pivot earnings moves play out from a predictive viewpoint, and really volume wasn't as heavy as I liked today going into earnings.   It will probably be up 20% tomorrow knowing my luck.   I didn't see a ton of setups in my scans last night and that may be telling me the market needs to rest a bit before I look to get long any further than I already am.  

Not much else to say right now - the earnings season has been relatively calm up to this point.   More of the big boys are going to report soon, starting GOOG after-hours today, so as always, be careful.   Good luck Friday. 

Wednesday, October 13, 2010

State of the Stock Market - 10/13/10

Another bullish session today on Wall Street, as positive earnings news pushed stocks higher from the get-go and they continued to rise throughout most of the rest of the session.   Around 2:15, they hit a high point and faded into the close, finishing in the middle of their range, but overall it was another day of gains.   Volume looks to be heavier. 

I am not going to spend much time today talking about the technicals of this market.  Gold continues to take off.   The two major indices continue to chug higher.   Financials faded their gap up in a big way - perhaps a sign.   I am also curious why retail has not broken out yet, especially on a day like today.   My breadth numbers are majorly stretched.  With earnings now in play, all of this may matter and it may not matter.  Who knows?

Instead, I am going to take a different perspective today when analyzing where the market is.  This may be odd, but I am going to compare our current market to an episode of Seinfeld, still one of the best TV shows of all time.   If you ever watched the episode where Jerry tried to buy a new car with Elaine's help via Putty, you also know that Kramer went for a test drive with one of the salesman with the sole purpose of seeing how far they could drive without filling up for gas.   They got to the "E"on the gas gauge, then moved to the left off the "E", and then moved even further to the left of the "E" before eventually running out of gas and coming to a halt at the side of the road.   They had no way of knowing exactly when the car was finally going to clunk out from a completely empty gas tank, but they knew it was coming.   The further they went, the more they expected it to stop, but until it actually stopped, they were simply waiting for it to occur.   It was a mystery.   I really think that is where we are at right now.



The market has moved a great deal and has yet to really "stop for gas", so to speak.   My breadth numbers continue to get stretched and point to a correction coming soon.   I just don't know when.   This move could last much longer that we think just because the market can always do whatever it wants to do.   So much like Kramer and his companion, we have to be expecting a pullback (perhaps a sharp one) but also refrain from trying to predict when it happens (if that makes sense.)

I added a bit to my ALGN position today at $20.40 but overall that action wasn't the greatest breakout.   I was hoping for more, but the heavy volume yesterday was a good sign of a pending move.   We'll see if it follows-through.  I am still in IDSA but have tightened my stops on both positions.   I am hesitant to add to positions any further here or start new ones - we'll just have to see how it goes.   For instance, IDT is a stock that I believe will flash a pocket pivot today, a day before earnings, which as I discussed last night can be a sign of a positive breakout.   I just don't know if I want to add that risk right now with where the market is.   I have to think about it to be honest. 

Good luck tomorrow - it should continue to be interesting.   Stay long but be sitting right by the door ready to exit at a moment's notice because I think that's the only thing you can really do right now.   Take care.

Tuesday, October 12, 2010

Update Pocket Pivot Scan for Telechart

I've been slowly working on fine-tuning the "Pocket Pivot" scans for Telechart that I have shared a few weeks ago (please see here and here) and thought I would share for any traders (if there are any) interested in the changes.   I in no way expect this to be perfect, but it seems like there is some discretion with using this method anyway so I don't think there will ever be a "perfect" scan to find every setup.

I added a few criteria to reduce the number of stocks that were coming up in the scan on a nightly basis.   I did not want to reduce it too much however, so I had to play around with a number of combinations.   Here is the overall combined scan to use in Telechart - copy and paste the formula into a PCF and then create an easy scan using the newly created PCF and using "common stocks" as the main search list.

(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) AND (C1 > (XAVGC10 * .98) AND C1 < (XAVGC10 * 1.02)) AND (AVGV10 >= 1000) AND (XAVGC9 > XAVGC20)  AND (H - C <= (H - L) * .50) AND (C>5) AND (C>XAVGC9) AND (C<MAXH10.1) AND (C<MAXC65.10)

Breaking the above scan down goes as follows...

Main volume criteria - (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)

Near (within 2%) 9 Day Moving Average (yesterday) - C1 > (XAVGC10 * .98) AND C1 < (XAVGC10 * 1.02)

10 Day Volume Criteria (Above 100K shares) -  AVGV10 >= 1000

Short-Term Uptrend (9 day above 20 day) - XAVGC9 > XAVGC20

Close in Upper Half of Daily Range -  H - C <= (H - L) * .50

Price Criteria (Above $5 and above 9 day MA) -  (C>5) AND (C>XAVGC9)
  
In Short-term Consolidation (10 Days) - C<MAXH10.1

Not Extended or Already Broken Out - C<MAXC65.10

I'm sure there are other ways to set this up, but from what I can see, I think this will work out alright.  I am not getting a bunch of stocks that already broke out of large bases and are extended.   I am also avoiding for the most part stocks that are wedging higher.   If there was a better earnings criteria in Telechart, the scan would be super.  Here are some of the charts that have shown up in the updated scan (second panel shows indicator).


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


One thing I will be paying attention to this earnings season is the predictability of positive earnings breakouts based on Pocket Pivots occuring a day or two before the earnings release (or in some cases the day of the release itself).   In their book, Morales and Kacher describe this phenomenon and believe it makes the typically stupid idea of buying before earnings not nearly as risky as usual.   As such, I will be loading a list of companies reporting earnings each week into a watchlist in my Telechart scans to see if any show Pocket Pivots and study how they perform.   We'll see how it works.

As always, good luck with this and please let me know if you have any questions.   I'll try to help if I can, although I am in no way an expert at this, rather just someone trying to put together a new strategy.   Take care.

State of the Stock Market - 10/12/10

Not a bad session today on Wall Street, as stocks fought back from a weak open to close slightly higher and continued to find support at a key short-term moving average.   The day started poorly, but after about twenty minutes, stocks found a bottom and bounced strongly.  They moved sideways in a very tight range from 11:00 to 2:00, but as the final two hours of trading started, stocks started moving up again and closed with gains.   Volume looks higher on the Nasdaq and close to yesterday's totals on the S&P.

Technically, stocks keep chugging along and keep getting support at their 9 day moving average, and as long as this occurs, there is no reason to fight it.  My only worry right now is that the indices seem to be wedging up a bit again, but it doesn't mean anything until we see the breakdown.   In fact, retail continues to consolidate in a very bullish manner and as one of the leading sectors right now, a breakout here could lead to further ramping on the overall market.  

S&P 500
Nasdaq
Russell 2000
Retail
Charts from Telechart, Courtesy of Worden Brothers, Inc.

This is not to say I don't have my worries about this market.   The breadth numbers I follow continue to flash many warning signs - the numbers continue to get stretched past levels from which corrections typically occur.  It is important to recognize these warning signs, but not let them totally control your thinking.   They can continue to be stretched further and further - they simply are saying that the market has moved enough that a correction is likely soon.  They do not say when exactly it will occur.

Personally, I continue to believe that we will see a major, heavier volume, one-day selloff at some point that takes us through the short-term moving averages and that that move will be the signal that this rally is over for the time being.   However, that move hasn't occurred and until it does (I repeat) there is no reason to fight the market.   Stay long, take some profits when you get them, and keep your stops in place to protect yourself when/if that big move occurs. 

I started a small position in ALGN today at the end of the session ($19.93) due to the higher volume it showed today.   I have noticed that this higher volume has recently led to breakouts and I am hopeful it will occur here, although there are obviously no guarantees.   It also classifies (I believe) as a pocket pivot candidate and as such I decided to enter.   I continue to hold IDSA but that's it for now.   With the warning signs flashing, I don't want to get too aggressive, but I also don't want to fight the market.   It's a delicate balance that I am doing the best I can to make. 

That's about it for today - with earnings coming in now, it should be an interesting few weeks.   I am expecting a pullback at some point, but it may be from five percent higher than we are now, so again, don't fight the move until it proves to be over.   That's the best advice I can give.   Take care and good luck.

Monday, October 11, 2010

State of the Stock Market - 10/11/10

Wow, you can't get much slower of a day than we saw today on Wall Street.   The market was open on this Columbus Day holiday, but perhaps it should have taken the lead of the Post Office and banks across the country and just shut it down for the day.  Volume was low and stocks ended the day as flat as flat can be.   Nothing meaningful happened and because of that, there really isn't much to comment on today.

From last night's video, LDK was up 15% today, so hopefully you were able to catch that move (although it gapped up so it was hard to do).   I still hold my IDSA but it had a somewhat disappointing session.   Earnings will start in earnest soon and I expect the volatility will pick up soon as well.  Be careful out there - I am not opposed to taking longs right now, but it is going to be a tough market to trade for about the next two weeks.   Take care and good luck Tuesday.

Saturday, October 9, 2010

Stock Market Video - Market Outlook and Bullish Stock Setups - 10/9/10

Hi, traders.   In part one, I take a quick look at the overall technical picture (quick because earnings this week will likely make technicals unimportant).   I also look at the big-cap growth leaders and how they have acted recently - most have behaved well after having big moves up and that bodes well overall for the market.   Just like last week, if we break through the short-term moving averages on heavier volume, I would watch out, but until it happens, you have to stay long.

In part two, I go over some bullish setups that you should watch this week.   Hopefully you were able to catch NOR from last week - up 20% in the last three days.   Right now, I am not going to be very aggressive on the long side due to the earnings season starting, but if a setup is there that I really like, I will consider taking it.   I am long IDSA as of now.

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, October 8, 2010

State of the Stock Market - 10/8/10

We had an up session today on Wall Street, as stocks fought off a flat open and climbed slowly throughout the session.  They finished near their highs for the day and it looks like those gains will come on higher volume.   It seems like expectations of further "quantitative easing" by the Fed took precedence over a weak jobs report.

Over the past two days, we've seen the market fight off the major selling seen on Wednesday in many important leaders and continue to consolidate (in the case of the Nasdaq) or continue to rise (in the case of the S&P and Russell 2000).   Based on the action, I was wrong in expecting a big move lower soon.   It may still happen, and I said I was watching for it, not necessarily predicting it, but that was my hunch and it was wrong.   Does that mean we are in the clear?   Maybe, maybe not.  I like seeing the Russell 2000 outperform the other indices the past few days - perhaps money is going to rotate into smaller caps now, which would be a major plus.   Retail, a leading sector, also continues to consolidate bullishly and that is a plus as well.

As I said yesterday, earnings are now going to take center stage and for the next two weeks, technicals likely won't matter much.  I won't be trading a ton during that time period, at least until the big boys report and the market has digested them.   It is just a personal preference of mine.   I won't stop completely - for instance, I added a bit to my IDSA position today on the move up - but I am going to be much more selective.   I would advise the same - with the amount of news that is going to be moving the markets soon, it will become very difficult to predict which way we move from day to day.  

Enjoy the weekend - the market has responded pretty well the past two days but earnings now become the main variable.   Who knows what they will be and more importantly, who knows how the market will react?   We'll find out soon.   Take care.

Thursday, October 7, 2010

State of the Stock Market - 10/7/10

The overall market did a whole lot of nothing today - both major indices chopped mostly sideways today and ended up basically flat.   The S&P and Nasdaq both remain above their 9 day moving averages and therefore you still have to respect the bullish trend somewhat.   Volume was lower.

This will be a short post because my outlook from yesterday basically remains the same.   With gold putting in a potential reversal (at least based on volume today) along with the dollar remaining very oversold, I think there is a lot more risk to the long side here than the short side.   I am still bothered by the number of leaders that broke down yesterday - way more damage than I wanted to see.   Maybe that won't mean anything, but usually it does.   I am still long IDSA but remain otherwise in cash waiting to see where we go from here.   I would remain cautious on the long side.

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

I also remain mostly in cash because we are starting into another earnings season.   That is good in one way because opportunities will present themselves if you watch carefully - smaller companies will post major surprises and begin long moves upward based on that earnings catalyst.   However, the first few weeks (when the big boys report) tends to just be extremely volatile and also extremely unpredictable, and for that reason, I don't get too involved.   Just a personal preference of mine - if I see a setup that I really like, other earnings reports won't prevent me from taking a position, but I am much more careful in what I choose during this time. 

I believe we also have a jobs number to deal with tomorrow, so there is plenty of gasoline to throw on a potential bullish or bearish fire.   Sometimes these days that you expect to be big one way or the other turn out to be duds, but I don't expect that tomorrow.   As such, be careful out there and make sure you honor your stops.  Good luck Friday.

Wednesday, October 6, 2010

State of the Stock Market - 10/6/10 (Be Careful Right Now)

I have an engagement tonight so today's post will be short - no charts.   We saw a choppy session today on Wall Street, and one where the Nasdaq drastically underperformed the rest of the indices.   Volume was lower.  

I ended my post yesterday with the following sentence - "I have a feeling we could see some very high volatility this week (as we already have the past two days) so do be careful out there."  I didn't realize it would be so true today.   I was bullish after yesterday's performance (who wouldn't be) but as I look at my scans today, I am very much neutral to slightly bearish.   Yes, that's a quick turnaround, but it is what it is.

I see a lot of bearish moves today in leading stocks.   My long watchlist (not buy list, just stocks that I keep my eye on for one reason or the other) was at 246 today.   As of 3:53, 75 of those 246 had down moves of 3% or more today.   Most came on heavier volume.   When I see stocks like CRM (which luckily I was stopped out of at $109.40 today) completely fall apart today, I begin to get worried.   The damage I see on individual stocks is much worse that the overall market numbers will make it seem.  

Here's the list to check out - MELI, ACOM, INFA, EBIX, NTAP, CTXS, RHT, FIRE, APKT, OPNT, ISLN, VMW, RVBD, VMW, FFIX, RAX.    There are more but looking at these should give an idea of what I am talking about.   Today looks like major distribution in these names (the real leaders of this past rally) and that is not good.   

I talked about gold yesterday and its parabolic move - it gapped up slightly today again as the dollar fell further.  One of these days (perhaps very soon) this move will reverse and it will not be pretty over a short-term time period.   If it happens, I think the market will get hit as well.

I am still long IDSA but as of now, that's it.   With what I see going on today, I am most likely going to sit back and do nothing the next few days.   I am a LOT more bearish than I was yesterday and I would be very careful here.   Perhaps we will just see a rotation occur right now out of tech and into commodities, but it's not like commodities aren't extended - they very much are.  I hope I am wrong, but I will not be surprised to see some major selling come into this market very soon.   We'll see the rest of this week.  Take care and good luck Thursday - be careful.

Tuesday, October 5, 2010

State of the Stock Market - 10/5/10

A great day today on Wall Street, as stocks started the day higher and did nothing but continue to move higher throughout the session in very bullish fashion.  The move was steady without any pullback and although it flattened toward the end of the session, stocks still closed with large gains of 2% across the board, with the Russell 2000 leading the way (a very good sign).  Volume also looks to be heavier (another good sign). 

Technically, both the S&P and Nasdaq broke to new highs out of what now looks to be a consolidation pattern of the past two weeks.   The Nasdaq closed right at its highs from last Thursday, so it technically has a bit more work to do, but following on yesterday's breakdown, the action today was obviously very positive.   Even better was seeing the small caps break to new recent highs as well - they have been lagging for a while now so if they can get moving, it can give this rally another boost.  

I said yesterday that I was not nearly as bearish as I thought I would be after yesterday's selling, and maybe my hunch was right for once.   Yesterday could have been the fakeout people were waiting for before getting back in long.  As of now, it certainly looks like the dip buyers have come off the sidelines and the market is poised to move higher.   One thing I would keep my eye on however is gold.   It is getting a little parabolic after gapping up today.   Perhaps this is a breakaway gap but it certainly needs some rest.   In turn, the dollar is very, very oversold and beaten down.   A reversal on either of these two could trigger some quick selling so watch for it.
Gold
Chart from Telechart, Courtesy of Worden Brothers, Inc.

I am long with IDSA and CRM but didn't add anything today.   Unfortunately for me those names didn't do a whole lot but I am willing to be patient, especially if the market wants to run more here.   I have my eyes on a few other names and will share as I go, but several names from this weekend's video (XTEX, ACOM, LVS to name a few) have been movers and hopefully you've caught one. 

Today was certainly very bullish and it looks like we are set up nicely for higher prices.   The only thing I would worry about is the gold/dollar issue and also the amount of news coming out this week.   I have a feeling we could see some very high volatility this week (as we already have the past two days) so do be careful out there.   Take care and good luck Wednesday.

Monday, October 4, 2010

State of the Stock Market - 10/4/10

A down day today on Wall Street, as stocks slid steadily lower through the morning hours.   They hit a bottom intraday around lunchtime and then managed a slow, weak bounce into the close, taking the indices slightly off their lows for the day.  The losses were large but volume as of now looks to be lower.   If it is, that takes a lot of the sting off the losses.

Technically, if you follow me you know I've been looking at a break of the 9 day moving average as significant on the indices.   Today we got it, but as I look at the charts, I don't know if it will end up being that significant.   What I was watching for was a major breakdown where the 9 day was sliced through with ease along with possibly the 20 day, much like we saw on April 27.   That was not what we saw today.   Volume wasn't heavy either.   The Russell 2000 continues to look bearish overall compared to the other indices, but one positive today is that retail outperformed on a relative basis and got support right at its 9 day.   For a sector that has run so much not to get taken to the woodshed on a day like today is good news for the market. 
S&P 500
 Retail
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I also did not see too many breakdowns today (VMW, MELI, CMED, and AKAM were the only really bad ones I see) and actually saw some stocks mentioned last night like ACOM and LVS move higher today.   I would take that as a positive as well - I expected more overall damage to individual stocks with the market being down almost one percent but I don't that much.

More than anything, I think we are still in a consolidation phase until proven otherwise, although it is possible we are just dripping lower and will continue to do so without a one-day shock move.   Really, as long as 1125 and 2300 hold on the S&P and Nasdaq respectively, I would remain neutral to slightly bullish.  I actually bought some CRM today near the close at $111.86 as such, although I remain mostly in cash.   IDSA took a hit today but got support at its 9 day and my stop was not hit, so I hold that as well.

Overall, I am not nearly as bearish after the selloff today as I thought I would be.   I was expecting worse I guess and therefore my short-term outlook changed somewhat.   We could still sell off further, and again, if those support areas are broken, then all bets are off.   But with a market that ran as fast as this one did recently, a pullback is normal and healthy and perhaps that's just what we are seeing here.   We should know more tomorrow - do we bounce back a bit or continue to sell off.   Good luck Tuesday.

Saturday, October 2, 2010

Stock Market Video - Market Outlook and A List of Stocks to Watch - 10/1/10

Hi, traders.   Part one of this week's video goes over the market and the two possible scenarios I see playing out right now.   I would remain slightly bullish to neutral until we actually see the signal I discuss in the video that would alert us that the market is done short-term.

In part two, I go over the bullish stocks coming up in my scans.   Not all the stocks mentioned are buy candidates at this moment, but some are consolidating rather nicely after huge runs instead of selling off hard, which is a big positive for the overall market.   That's the type of action you want to see - big run-up that don't give back their gains when resting.

Part three goes over the leaders that I see flashing a few "warning signs" right now and what those might mean to the overall market.   If we see more leaders flashing these signs, it could mean trouble.

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.   (And if you're wondering if you're hearing extra things as you watch the videos, yes, those are my two little boys in the background.   If you're a parent, you know bedtime is one of the best times of the day, but also one of the craziest. ) 

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




Friday, October 1, 2010

State of the Stock Market - 10/1/10

We had another somewhat bearish day today on Wall Street, as for the second day in a row, stocks opened higher but could not add to or maintain those gains and closed in the bottom half of their intraday range.  Volume looks to be lower today.

Technically, the market continues to hold above its 9 day moving average and as long as it does, you need to give the benefit of the doubt to the bulls.   There are basically two possibilities happening right now in terms of this market - we are either simply consolidating the huge run-up or we are slowly topping with stocks being distributed underneath the surface.   I do see some toppy action in leading stocks (NFLX is a prime example from today) but until the market overall breaks down, I don't think you can make any moves.  Anticipating can get you into trouble.   Let's just see what the market wants to do next week - it will tell us.

I made one small trade at the end of the session today, entering IDSA at $15.55.   I have been watching this stock for a long while now and posted in many times on the blog, but not being able to trade intraday, I missed the breakout Wednesday.   We'll see where it goes from here but it can move fast with its low float and strong fundamentals.  

Have a good weekend - there isn't much else to say for today.   I'll be back this weekend with a video and some setups on both sides of the market - right now, you need to be prepared for the next move, whichever way it goes.   Hopefully we can find some more winners like NANO, REXX, CGNX, and SYNT (all highlighted in last week's video).   Take care and enjoy the next few days.