Wednesday, January 26, 2011

State of the Stock Market - 1/26/11 - "Sell Signal Cancelled on Nasdaq"

Choppy session today on Wall Street as stocks were up but the gains were only large on the Nasdaq (and most of the action there took place in the first hour of trading).   Volume looks like it will be heavier.  The close above Friday's high on the Nasdaq (when the sell signal was given) was broken today to the upside, and in my system, that nullifies the original signal.  I am now on "lookout" mode, which means you can begin to look for longs again, although a full "buy" signal has not been given so caution is still warranted.

It remains a difficult market to trade for more than a few hours as I continue to see weird things.   Solar, for instance, was one of the leading groups for the first three weeks of 2011.   It held up well last week when the market sold off, and showed major strength Monday.  From there, however, it has tanked, even today when the market was up across the board.   I also continue to see very little from my long scans the past three days even though (once again) the market was up.   I believe that there could be a rotation going on here from smaller-cap names to bigger-caps, at least that's what my scans have showed the past three days.   The names I like to follow have not performed well this week.

I was stopped out of my three inverse positions today with some losses - (QID with a 3.4% loss, TZA with a 4.2% loss, and SMN with a 2.9% loss).   This will happen as no system is perfect (certainly mine fits into that category).   I have to follow it however and so I am not upset.   I did enter one long position at the end of the session today based on volume but that is it - my account remains mostly in cash and I think that remains a prudent choice until I see more individual stocks act better.  

I think it was last Friday when I said I would be "shocked" if the Nasdaq moved to new highs this week.   If we get a big day tomorrow, I will officially be "shocked" I guess.   The divergence/fight between the Dow and Nasdaq for control of this market seems to have been won by the Dow.   I have no idea how long its run can last, but for now, it seems like it will so there is no point in fighting it.   Good luck Friday.

7 comments:

Mike said...

what is the long position to you took today?

Mac said...

I decided at the start of the year to not share my positions until I sell them. Sorry Mike. I give away a lot of free info here and want to keep these to myself, although it is a stock I believe I have mentioned in the past two weeks.

D Wills said...

I went long in WTI today. It looks good breaking out of an 8 week base if anyone's looking to go long. I'd love to hear your opinion on the name as well Mac.

Mac said...

I believe WTI did come up in my scans - however I passed just because I wanted to see volume heavier on a move like this. It could work as a lot of oil stocks were on the move today.

Mike said...

Mac

I was curious if the reason you don't share current positions is because you are concerned getting out might be harder with more people in the trade?

Its a great blog regardless and the weekend watchlists have helped me a lot!

Mac said...

I don't think my blog is that important Mike that I can affect the movement of stocks - I am not trading large enough positions anyway. Mainly it's just a matter of choice - I will share after I close them (win or lose).

Anonymous said...

hi mac
its mini-me fr hongkong, heres my old chart

http://i237.photobucket.com/albums/ff92/tigerprotector/dow12mthsinverted5-fingers11jan11.png

im thinking of the next resistance of dow at b/w 1208x~ early 121xx, the huge resistance of double bottom of 2007&2008. timeline is at around 1st to 2nd week of feb.

by that time at mid feb, i also think of a short term bottom of shanghai-a. peak of dow + bottom of shanghai-a imo.