Monday, February 28, 2011

State of the Stock Market - 2/28/2011 - "Too Obvious???"

We saw a mostly positive session today on Wall Street, as the S&P and Dow closed higher and managed to close somewhere near their highs for the session.   These gains look like they will come on very low volume once again, although I don't have the final numbers.   The Nasdaq and Russell 2000 were much weaker, closing well off of their highs and in both cases looking very tired in the short-term.

Everything I see right now has me thinking that this market is going to roll over again and we are going to see some more selling soon.  My signals are all on "sell".  We have seen a very heavy volume selloff with a very light volume bounce into short-term resistance.   This totally looks like a dead-cat relief bounce that will fail.   Couple that with the amount of short setups I am seeing that look very similar and again, it seems like everything is pointing toward more selling soon.

My only concern (and perhaps I am just being paranoid) is that all of these setups seem SO textbook that I am wondering if it is too obvious for the market to rollover here.   Let me be clear - there is really very little reason to be bullish right now. I see almost no nice long candidates and those few that do try to move higher have often reversed on any strength.   The action is simply not very good out there.  

I made two trades today and both ended up being day-trades.   I entered OSTK at $15.13 on an earnings trade but it reversed hard in the afternoon and I ended up being stopped at $15.21.   I also entered ZAGG early at $9.13 but that didn't see any movement and I was stopped at $9.04.   I did exit my position in BW at $43.59 for a 12.2% gain.  It may run further but I thought it was smart to take the profits here.  

Right now I am mainly in cash with only one small long position.   I think cash remains smart here.   Again, call it a hunch or call it me paranoid, but I would not be surprised to see some major fakeouts this week.   Everything does look bearish and that is typically when this 2-year old bull market has screwed with traders, so I am going to be extra careful on the short side.   Good luck Tuesday.

Saturday, February 26, 2011

Stock Market Video - Technical Outlook Heading into March 2011

Hi, traders - hope you're having a great weekend.   The video this week takes a look at the overall market, along with my "big boys" watchlist in Telechart, which is where I am really seeing some weakness in individual stocks.   I discuss what to expect this week and show some setups on both sides of the market to watch (shorts included for the first time in a long time).

Hope you find the video helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.

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

Friday, February 25, 2011

State of the Stock Market - 2/25/11 - "Less Impressive Than It Seems"

Interesting day on Wall Street today - we saw a nice bounce which I think many traders (myself included) were sort of expecting.   At the same time, the bounce came on what looks like MASSIVELY low volume (at least on the S&P) and a quick look at my scans shows individual stocks all over the map, which is kind of weird to see on a day where both the Nasdaq and S&P were up over 1%.   I am really not sure what to make of the action in terms of the overall market other than to say I think it could be at least a week or two before we get near the highs of last week or the lows of this week.   I am still guessing we are going to chop for a while here while the market makes up its mind about where it wants to go from here.

Going into the day, I was long three stocks (CROX, BW, and HOGS) and still had my position in QID.   I ended up closing that quickly at $10.37 (split-adjusted) for a 0.45% gain.  You would figure being long on a day like today would be good, but HOGS was the only stock that I can say acted "well" today and even that wasn't very explosive.  

BW was an earnings play I entered yesterday at $38.75.  It had some immediate follow-through to yesterday's earnings gap, but soon sold off and finished the day flat.  CROX gapped up and then immediately sold off.   I saw other earnings plays do the same thing today - CRM and DECK are two examples that stand out.   I posted both CROX and BOOM last night on Twitter as possible setups - I ended up picking the wrong one, being stopped out of CROX at $18.38 for a gain of 0.25%.   Hopefully someone was able to get into BOOM and didn't pass like I did.

I will discuss this more over the weekend, but I do think that there will be more to this pullback over the next few weeks that what we saw Tuesday and Wednesday.   Take a look at this list of names - CRM, LVS, BIDU, VMW, AAPL, CMG, LULU, GOOG, AMZN, NFLX, DECK - all bigger cap stocks with strong earnings.   Do these look like charts that are going to take this market right back to new highs?   Most look like short setups to me. 

Right now, this market is very difficult to trade from an intermediate-term perspective so keeping positions light and cash heavy is smart.  I have two longs but both are small and I do have most of my account in cash, ready to prowl when better setups (perhaps on the short side) present themselves.  Enjoy the weekend.

Thursday, February 24, 2011

State of the Stock Market - 2/24/11 - "Choppy Action"

We saw a really, really, really choppy day today on Wall Street - stocks started the morning higher, gave all of those gains back in a big way from 10:00 to 2:00, but then bounced into the close (before of course giving some of that bounce back at the end of the session).   It was positive to see the Nasdaq hold above yesterday's low and above the 50 day moving average again, but given the selling we have seen the past two days, the bounce could have been much better.   Volume looks like it will be lower.  

I talked yesterday how it is going to take some time for us traders to really know what the market wants to do from here - go south even further or firm up and continue to upward trend.   We may over the next week or two see a lot of sessions like we saw today, where the market is chopping all around.  It makes it tough to swing trade, and I continue to believe cash is the best option here until things settle.  

That being said (and what I discussed dealt with the market as a whole), I still have my short position in QID going and also entered three longs today, two of which are earnings plays - one this morning and one just now after-hours.   The morning entry was up 20% today as it beat estimates handily and I am hopeful of further follow-through.  I am up about 6% in that position as of now.   The after-hours trade was posted on Twitter.  These earnings trades continue to work well overall and are really the only trade I am comfortable with making with the market as it is.  The other long was a pocket pivot that is only a small position. 

So why I am talking about cash but then going out and starting a few positions?  I really don't know - sometimes you see trades that you think will work and you disregard the overall market.  Do as I say, not as I do I guess, right???

Good luck tomorrow - I kind of expect another attempt at a bounce by the bulls here but that is strictly a guess.   Maybe that's why I have a few long positions.  If we see a break of today's lows, however, all bets are off - things will really ugly really quickly.   Take care.

Wednesday, February 23, 2011

A Few Risky Names to Watch Right Now


With that out of way, I noticed a few micro-cap oils popped today and I thought back to 2008 when the same exact thing happened when oil was running toward and past $100 and was all over the news (sound familiar??).

I'm kicking myself for not thinking about this earlier and having these on my watchlists, but they are worth keeping on the list now.  These may fall right back down tomorrow, but they also have a chance to be starting major momentum moves due to their low-floats and shorts piling in and then having to cover.  I certainly wouldn't chase here, but watch them and see what they do.   Charts below speak for themselves.

 MXC 2008
MXC's 2008 Move
MXC Today
 PDO 2008
PDO's 2008 Move
 PDO Today
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Back then, these moves corresponded with a bear market bounce after the first major move lower of that awful bear market.  Today, we look to be perhaps just starting a major correction, so the chances of these moving the same way are certainly not as good.  Watch them however - you never know.   BDCO and ROYL are two others.

State of the Stock Market - 2/23/11 - "More Very Weak Action"

We saw another down session today on Wall Street, as there was immediate follow-through to yesterday's heavy, heavy selling.  Futures were higher pre-market, but they faded as the opening bell drew near and from the open, stocks fell hard through the morning and into the early afternoon.  Around 1:00, stocks did start to bounce, but the bounce faded a bit late and stocks finished only slightly off of their lows.  Volume looks like it will be heavier on the Nasdaq for the second straight day, which will turn my other secondary indicator to a sell signal as well.   All in all, not a very good day.

The past two days were undeniably bad and since my signal are on sell, that is where my bias lies.  However, I am mainly in cash except for a small position in QID and will remain there for the rest of this week.   We are a little stretched to the downside, so I don't know about shorting at this point (short-term).   In fact, I would not be surprised to see a little bounce soon but we'll have to watch closely to see the quality of that bounce.   I also have to take a look at individual stocks closely to get clues as to whether the past few days are just a shakeout or the start of something much worse. 

Overall, be wary of anyone saying that today was the "bottom" and it's straight up from here.  Be just as wary of anyone that is saying this market is going to crash and a new bear market has officially started.   It is just too early to tell.  Both of the most recent "corrections" we had in November and January (however brief they were) were not two-day events.   There was a quick sell-off followed by a week or two of choppy trades and headfakes before the trend ended up resuming itself.  

We could see the very same thing here, but the past two days were much worse that the selloffs we saw the previous two times, so it is also possible the market is indeed setting itself up for a much more meaningful correction.  If that happens, it will likely take time as well with lots of headfakes as well. 

Cash and caution are the words that are most important right now.   There is no reason to be a hero and be super-aggressive when it makes no sense to do so.   Hopefully you've been heeding the warnings given here the past few weeks and kept your stops tight and haven't been hurt too bad from the past two days.   My account is actually close to new highs for the year so I am perfectly content to sit on my hands for a few days.   I would advise you to do the same.   Take care and good luck Thursday.

Tuesday, February 22, 2011

State of the Stock Market - 2/22/11 - "Long Overdue"

The divergences finally came home to roost today on Wall Street, as stocks were taken to the woodshed and posted major losses.   I have been discussing this possibility for a few weeks now but had no way of knowing exactly when it would take place.   Today was the day I guess. The day started with a gap down and a sharp bounce, but when that bounce rolled over around 11:00, it was straight down.   Volume was heavier today giving the indices an obvious distribution day.

Technically, it's never good to see a gap-down below short-term support in the market, and it's even worse when secondary support is broken the same day.   That's what we saw on the Nasdaq today.  My main signal did flash a "sell" today, and one out of two of my secondary signals did the same (waiting on one more distribution day for the other signal to turn).   Although they are not 100% accurate (nothing is), I will respect them.  The S&P faired a bit better as it closed near support and right at a key long-term trendline, but it still wasn't very good.

Sector-wise, financials had a very bearish looking breakdown today and that does not bode well for the overall market either.   Commodity names are looking a little extreme/toppy to me as well here - SLV and XLE are two names that are strong but getting almost parabolic recently.   Watch these for a potential reversal (XLE may have actually put one in today).

Charts from Telechart, Courtesy of Worden Brothers, Inc.

Since I had the day off of work, I posted many of my thoughts and trades on Twitter today.  As a review, I was stopped out of all three oil positions today, but was able to make what gains I could at the same time.  I was out of HDY at $5.90 for a 15.5% gain, out of RES at $18.98 for a 3% gain, and out of BRNC at $8.16 for a 1% gain.   I was also stopped out of RRGB later at $23.76 for a 5.4% gain.

I did enter two short positions today via inverse ETFs and discussed both at one point on Twitter.  I tried to enter one individual short (LVS) but could not borrow any shares.  I saw many big cap stocks today flashing sell signals or showing short setups.  I shared some of these names on Twitter (CRM, VMW, BAC, LVS, AMZN) today.  This is worrisome from a longer-term perspective.  

Today was obviously bad but the key now is figuring out if it is going to be any different than January 28 or not.   That too was an awful day with the indices down about 2.5% on very heavy volume, and of course the market did nothing but go up from that point on for the next two to three weeks.  

As I showed this weekend, there remain a lot of negative divergences out there.   The rally has continued to narrow throughout this month.  Normally, this would lead one to think that a top in this area is a likely event.   Unfortunately, however, with all of the cheap money that has flooded this market since 2009, we aren't dealing with a normal market anymore. 

All in all, it's impossible to know whether this is the beginning of a major top or just a long overdue pullback in a market that was very extended.   We very well may be up 2% tomorrow.  So what's the correct play? 

Personally, I would always rather be safe than sorry, so I am respecting the strong possibility of further downside from here.  The action today was worse from a statistical perspective than January 28 (% loss, selling pressure ratio).  Remember that you can always get back in if today proves to be nothing (as I did starting on February 8).   However, if you hold on and we do correct significantly, you are not only going to give back hard-earned gains, but in many cases, those gains are going to turn into losses.   I would rather be cautious and miss a few points to the upside - I am fine with that. "Do no harm" is the motto you should be taking right now.

Good luck Wednesday - in my opinion, caution is the name of the game and I would not try to be a hero right now.  Shorting may work but I would be very, very careful trying buy these dips.  Actually, I just wouldn't even try.  If this was indeed a one-day event, there will be time to get back in.   Take care.

Saturday, February 19, 2011

Stock Market Video - Outlook for President's Day Week - 2/19/2011

Here's the video traders for the upcoming week - nice and early.   I look at the overall market and the divergences that continue to develop.   "Narrowing" is a good word to describe things and I show why in the video.   I also update earnings plays from this week and share setups I am watching.

Hope you find the video helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.

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

Friday, February 18, 2011

State of the Stock Market - 2/18/11 - "Weaker, But Trend Remains Up"

We saw a rather slow options expiration today on Wall Street, as stocks started the day flat, climbed in the morning, but gave most of those gains back in the afternoon session.  A late bounce allowed the S&P and Nasdaq to finish in the middle of their range, but the action was somewhat weak overall.   Volume appears to be higher but that is likely due to the options expiration.

Technically, I have discussed many times over the past week that we are quite extended.   Last night, one momentum indicator I follow hit a level that it hasn't hit since early November.   It also hit this level in mid-October, late April, and early March.   Two of those four times it meant nothing.  The other two times it meant a sharp correction.   It's impossible to say which one it means this time, but it bears watching.

Surprisingly, I remain in four long positions today, as although I was tempted to take profits on a few and also didn't like the way some gave back their earlier gains, I held tight.  There really wasn't a reason to sell any, so I didn't.  One of my positions was an earnings play I posted on Twitter last night and I am hoping for more follow-through.  The other three are all in the same sector and just broke out yesterday, so it's not like they've been up five days in a row or something.  This may be a mistake, but it can be a mistake to get rid of positions too early before they make bigger gains.  I'll basically let my stops work for me and move them up as they (hopefully) go higher.

Certainly this run has lasted a long time and we're LONG overdue for a significant correction, but until it actually manifests itself, it may be a mistake to try and anticipate it.   As I've been saying this week, it makes sense to keep your stops on long positions tight and perhaps reduce your size on new positions, but the trend for now remains up - you have to play it.   I'll be back at some point over this three day weekend with a video.   Take care and enjoy the break.

Thursday, February 17, 2011

State of the Stock Market - 2/17/11 - "Individual Stocks Act Better"

We saw another positive session today on Wall Street, although just slightly, as stocks slowly climbed higher throughout the session.   Volume will come in lighter, but under the surface there were certainly some major movers with earnings-related plays and that continues to be a them of this recent move (WTW and TDSC are two that stand out from what I can see.)

Technically, we continue to move higher and that is all you can really say.  What is kind of weird (and maybe it isn't - just something I noticed) is that the moves for the past week or so have not been very big at all.  Looking back at the September to mid-November stage of this rally, we had a fairly smooth ride overall but within that moves there were many days with the market up over a percent.   From December to mid-January, the intraday action seemed to slow down, even though the market moved higher.   Now, from late January till now, the moves seem to be getting even slower but the market keeps going higher.  I don't know if this is a sign of complacency or what - I just find it interesting.

I had a fairly busy day making moves.   I closed my LDK position this morning at $14.37 for a 12.5% gain (entered twice - 2/10 at $12.55 and 2/11 at $13.01).  Solar is a little extended here so I took my profits although this could certainly move higher.   I entered two stocks last night which I showed in the late post - TSLA and HDY.   One was a nice mover today (HDY, although I don't like how it closed) and one was not.  I was stopped out of TSLA at $24.33 for a 1.78% loss.  I would normally have given it more room, but when it fell early and then bounced all the way back to be up at one point, I set my stop below the morning lows and left it there.

I entered two other stocks today as well, both of which were in last night's post.  I didn't really like the action of one of those two late, but it is what it is.  Both are in the oil sector and with crude being oversold, I am hoping for a bounce in these names.  I am also trying to get into one earnings play after-hours but don't know if my limit order will be hit or not.   There were many nice breakouts today when I went through my scans so perhaps that is a good sign for the market, even though we continue to be a little stretched. 

Overall, we continue to defy gravity as this market just doesn't want to rest, so although I continue to believe a nasty little pullback is coming soon, as long as setups are working, you should probably still take them as they emerge.  I do see a lot of nice setups right now so I assume that means good things going forward.  Certainly keep your stops tight and take some profits when you have them due to how far we've gone, but just because we've gone up a lot doesn't mean individual stocks can't go up a little more.  I'll try to share some setups later on Twitter if I have time.   Good luck Friday.

Wednesday, February 16, 2011

If You're Looking for Setups, Here You Go....

Someone asked me to share the you go. 

All Charts from Telechart Courtesy of Worden Brothers, Inc.

State of the Stock Market - 2/16/11 - "So Much for the Pullback"

One day was all we got for the pullback I guess, as today Wall Street put in another positive session.  The Nasdaq and S&P were both up decent amounts and both finished at new highs for the year again today.  Volume was heavier as well.   Like my title says, "so much for the pullback." 

Technically, I do still believe we have a sharp, one or two day pullback coming soon but I've been wrong for this week on that matter so my thoughts probably aren't that important right now.  This market continues to defy gravity and as long as it does, you want to be at least somewhat long in terms of positions.   There is nothing wrong with taking profits as you go and moving your stops up as your stocks move higher, but there is certainly no reason to be shorting right now.   I will continue to watch short-term support and much like the move from September to mid-November and from December to mid-January, as long as it holds, you should remain bullish.  

I made a few trades today - one early and two late.   I was stopped out of my QLIK position today at $25.49 for a gain of 5%.  This position was entered at $24.19 last Thursday.   I really set my stop too tight on this but I am not that upset.   After seeing it gap up, I decided to tighten it and it ended up being hit.   I also entered two stocks at the end of the session based on pocket pivot signals - one was earnings-based and one was news-related, but both had hopefully the start of bigger moves today.  I am still holding the LDK position and will look for others, although I am still not super aggressive here.

I will try to share some ideas later tonight on Twitter as my time allows, so look for those charts if you're interested.   Who knows how long this current move will last, but as of today it seems like it wants to last longer, so there is no reason to fight it.  Good luck Thursday.

Tuesday, February 15, 2011

State of the Market - 2/15/11 - "Better Than Expected"

We saw a pullback today on Wall Street, but overall it was a very well contained one with losses being very modest.   I frankly expected worse.  Volume looks like it will be higher which will add a distribution day to the count, but there really wasn't much heavy duty selling going on from what I can tell.   It could have been much, much worse and in that respect, the bulls should be happy.

I was stopped out of one position today (REDF) at $7.28 for a 1% loss.   I entered this on Thursday at $7.33.   It never saw any follow-through whatsoever.   I continue to hold my two long positions (LDK and QLIK) but am moving the stops up on both.  There were a few earnings/news-related plays today that caught my eye and that I will monitor over the next few days(CVV, NSIT, YOKU, JRN), but overall I don't see that much that has me excited on the long side.   I think it is probably better to let the market come in a bit more (even if it is for only one more session) and then look at getting long.

I don't have much else to say - perhaps the market will consolidate quietly for the next few days and allow setups to emerge.   If that happens, I will be ready to go.  Overall, however, I think there is more risk than reward at this particular point and therefore, I can't see myself getting too aggressive right now.   As long as short-term support holds, the bulls remain in control, even if they still could use some rest, and that's what I hope they get.   Good luck Wednesday.

Monday, February 14, 2011

State of the Stock Market - 2/15/10 - "Looking for a Pullback"

Another up session today on Wall Street - both the S&P and Nasdaq were up a small amount in choppy overall trade.   This makes it 9 out of the last 11 sessions for both indices, with the two negative sessions coming in at losses of 0.27% and 0.28% for the S&P and 0.06% and 0.29% for the Nasdaq.   Volume looks like it will come in a good bit lower today.

I'll try to keep this short since it's Valentines Day.  This weekend, I discussed several of the issues I am seeing in this current market and why I am expecting a pullback soon.   My guess is that this pullback will be sharp, quick, and surprise many.   I don't think it will necessarily end this bull market - I just think it is wise to protect what you have if you're a short-term trader. 

We are extended in a number of ways and there are divergences between this most recent run and the runs we saw from September to November and December to January.  I discussed these in the video.  Volume was extremely weak.   None of this matters I guess until it does matter.   I do believe, however, it makes sense to pay attention to these signals.   I would continue to remain focused on short-term trades and lighter positions than normal.

I was stopped out of one of my positions today (RP at $28.29) for a small loss.  I entered this on Friday at $28.53.   When it gapped up today I moved my stop up, but to be honest, based on the intraday action, I think my stop and some others were run.   Oh well - it happens.  I have tightened my stops on my other three positions and will keep those in place.   Again, I don't think this is the time to give your positions a whole lot of room to go against you, but that's just my opinion.

There are still stocks that are working out there but it seems like they are becoming fewer and farther between as we go higher.   Basically, at this juncture, I just don't see much that is worth entering on the long side so I think caution is warranted.   I'm not saying to short or anything like that - I am just saying to be careful.  You don't want to be caught in a nasty one or two day selloff, especially if you enter late.   Perhaps (hopefully) the market can just consolidate for a week or two on slower trade to setup more nice chart patterns, but given what I see, I don't sense that will happen.  Good luck Tuesday.

Saturday, February 12, 2011

Stock Market Video - Weekend Summary with Indices, Earnings Plays, and Long Setups - 2/11/11

Hi, traders - You tube is letting me post longer videos so I put everything together this week as one.   Hopefully it is not TOO long.  Part one looks at the indices, part two looks at recent earnings plays, and part three looks at setups for the week ahead.

Hope you find the video helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.

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

Friday, February 11, 2011

State of the Stock Market - 2/11/10 - "Low Volume, But We Keep Going Up"

Nice session today on Wall Street - for the second straight day, the bulls fought back from some early selling and closed the market well off its lows for the day.  Unlike yesterday, the indices across the board put in gains today, and both the S&P and Nasdaq closed at new highs for the year.  Volume was not that impressive and I do believe that will catch up with the market at some point, but I don't know when that will be, so for now, things remain bullish.

I was stopped out of one long position today - I entered CHGS on Monday at $3.24 but this one never really got going.  My stop today was at $3.23, but I got a less than desirable fill at $3.20 and ended up with a small 1.9% loss on the trade.  I entered one long position at the end of today's trading as well - it flashed a pocket pivot although it is not yet above its 50 day moving average.  I am hoping to see some follow-through Monday.   That gives me four current long positions, one of which I entered after-hours yesterday and added to today. 

There were some nice movers today off of my watchlist, but I did not add any other positions.   SSW was shared on Twitter Wednesday and staged a nice breakout today from that cup with handle pattern.   SIMG moved up a bit but volume was not as strong as I would like to see.   A few others had small moves but nothing major. 

Really, the place where the action seems to be right now (and I regret missing many of these) is earnings plays.   Take a look at SFLY, GMCR(stopped out of that too early), JDSU, MERC, TNDM, NFLX, BIDU - all earnings setups and all have had tremendous follow-through.   This is what you want to see when you play one of these - get in early and hope for a major momentum run.  I haven't seen too many this week (after-hours that is) but I am keeping my eyes open. 

Good luck Monday and enjoy the weekend.  The market is a bit overextended and I still feel we are going to get a good sized pullback sometime soon, but until it happens, ride the trend, and the trend is certainly higher.  

Thursday, February 10, 2011

State of the Stock Market - 2/10/11 - "Flat Market, But Excellent Action"

We saw a very nice session today on Wall Street - the market may have closed flat, but the intraday action was bullish as stocks fought their way back from a very poor open on the back of a weak earnings release from Cisco.  Short-term support was tested (and held) early on and from there, stocks moved up (the rest of the morning) and sideways (the rest of the afternoon) to close with only the slightest of gains.  Volume appears to be lighter on the S&P but heavier on the Nasdaq.  

I have been expecting a pullback the past few days, but I do like the way the bulls stepped up to the plate early in today's session.   Right now, both the Russell and the Nasdaq appear to be forming little bull flags, and although from a longer-term time frame I would really like to see a meaningful pullback/correction at some point, today's action makes it seem like the market does want to move higher from here.   Hopefully that's how it plays out. 

One other factor that has me more bullish than I have been early in the week is that a quick look at my scans showed many more stocks that stood out as potentially nice setups.   I actually entered two long positions at the end of the session today (shared one of those on Twitter) and am looking at several others.   I am still holding my previous long position although it was down almost 5% today and I don't know if it will play out how I was hoping.  My main reason for not being overly bullish this week was the way individual stocks were acting.   If these setups I am seeing today start working well, then I would obviously get more bullish. 

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

Good luck Friday - with all of the stuff going on in Egypt, news may drive trading tomorrow and that makes for unpredictable trading, but today was a bullish session and I would lean to seeing higher prices soon.   We'll see if it works out that way.  Take care. 

Wednesday, February 9, 2011

State of the Stock Market - 2/9/11 - "Healthy Action"

We saw a healthy consolidation day today on Wall Street, as stocks finally took a breather from their recent seven-day run and finished with small losses.   The intraday action was choppy and overall looks just like rest.   A few more days exactly like today would be excellent for the overall health of this market.   Volume was heavier however so today does count as a distribution day although it didn't "feel" like one to me.

I remained in cash today but was stopped out of one of my two positions.   I entered HSFT on Monday at $32.56, but it saw little follow-through and reversed lower today, stopping me out at $32.15 for a 1.3% loss.   My other position was up over 5% today but to be honest didn't breakout really the way I had hoped it would so we'll see what happens there.   My stop is in place and I should get out pretty close to break even at worse. 

On the individual stock front, once again we saw some stocks act very well today like OCZ and TNAV, but others that I was watching acted poorly.   FMCN, QLIK, FTEK, GGAL, MTL, BZH, HSFT, and TSLA showed me enough today that I no longer have them on my buy candidate list.   It remains a stock picker's market.

Overall, I will stick by my premise that we're in a tough market where some things are working and some things aren't, and because of that, I would remain small and quick in terms of position size and timing.   A little pullback here into the short-term moving averages would likely set up some stocks as potential buys but as of now, there remain only a few that look promising on a nightly basis.   My signal remains on a buy, but it is a weak one so be careful and cautious.   Good luck Thursday.

Tuesday, February 8, 2011

State of the Stock Market - 2/8/10 - "Lack of Sellers - Not a Glut of Buyers"

We saw another positive session today on Wall Street - stocks started flat but went pretty much straight up from there to finish near their highs for the session.  The gains were similar to yesterday - not that large and came on unimpressive volume once again.   I continue to sense a lack of strong momentum right now - it's like we're moving higher because there is simply a lack of sellers, not a glut of buyers if that makes sense.   Today's gains mean the Nasdaq and S&P have now been up 6 of the last 7 sessions (with the one down session being an extremely small loss).  

My signals are on "buy", but it is what I would call a "weak buy" as the secondary indicators haven't confirmed the primary indicator.  With the lack of volume on this move along with the somewhat extended short-term position of the indices, a pullback is likely here soon.  It doesn't have to happen, but it is not something that should be a surprise to anyone.   I would tighten stops on long positions if you have gains in general and keep your time frames shorter than normal. 

I posted some stocks last night on Twitter and of those shown, both AVL and MCP had nice sessions today, up 13% and 8% respectively.  Maybe someone out there was able to get into one of those.  Really, however, that was it.   Some stocks are still potentially ones to watch like BRNC, FMCN, and QLIK, but you have to weigh the risks of entering a position with the market extended versus the potential rewards right now.

I remain in mostly cash with only two long positions from yesterday, both of which were basically flat today.  I continue to see some stocks working and some aren't working.   There however doesn't seem to be a whole lot of rhyme or reason as to why right now.   Overall, I do believe it remains a market where gains can be made, but they certainly aren't easy to make, and those are the type of markets you have to be careful with.   Staying with smaller positions and shorter time frames is probably a good idea until we either get a decent pullback where some charts can reset themselves a bit or individual stocks simply start acting better overall.   Good luck Wednesday. 

Monday, February 7, 2011

State of the Stock Market - "Time for a Little Rest??"

We saw a good (but not great) day on Wall Street today, as stocks spent most of the morning session climbing higher but then let some of those gains disappear as the session came to a close.   Volume appears that it will come in lower.  This along with the afternoon fade is significant mainly because it coincides with a breakout attempt to new highs for both the Russell 2000 and the Nasdaq.  Ideally, we would see a lot of strength today that gave a sense of strong buying coming into the market.   We were indeed up, but I don't know that I can say I get that sense of strong buying from the action overall.  

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

I did make two long entries today early in the session - both were on the watchlist published Sunday.   However, I once again saw several breakout attempts fade (much like the market today) including one of my positions, and this is a bit troublesome.  This has occurred after breakouts as well.  It's not every stock, but names today like UCTT, CALX, EV, BIDU, MGIC, GMCR, HSFT, EXPR, and XXIA were weaker than I would hope for on a strong overall day.   In my long watchlist, I also don't see very many "explosive" moves - the highest percentage move out of all 176 stocks in the list currently was 8% today, and only 15 were up more than 4%.  Again, given the overall action, those number "should" be higher.

Basically, we have a market where some things are working but from my perspective, there isn't a whole lot of rhyme or reason to why some work and some don't.  I used the analogy last week of shooting fish - in early January, it seemed like lots of stocks were working and trading was like shooting fish in a barrel.  Now, it is more like shooting fish in a swimming pool - there are still chances to make money in this market, but it has become much harder.  Personally, I would much rather being heavily involved with the market when it is easier to make money.   I expect some of the whipsaw action to continue.

Overall, I have a slightly bullish bias but will likely keep a large chunk of my account in cash until individual stocks start acting better as a whole.  We are now up five out of six days (and the down day was a 0.06% loss) on the Nasdaq since breaking down two Fridays ago so I would suspect some rest or perhaps a quick pullback soon.  We'll see I guess.   Good luck Tuesday. 

Sunday, February 6, 2011

Setups for the Week Ahead - Super Bowl Edition

Here they are....I don't know whether the market will move higher from here but I think it is a good possibility.   There is no reason to short anything - cash and carefully selected longs are the best choice here.  Go Steelers!

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

Friday, February 4, 2011

State of the Stock Market - 2/4/10 - "Uninspired"

A slighty positive session today on Wall Street, but really it was kind of a snoozer, as volume was low and trading seemed uninspired at best.  The lows for the Nasdaq and S&P were put in quickly this morning and from there, stocks bounced slowly to finish near their highs for the day.  

Technically, the Nasdaq finished just slightly above important resistance and therefore did close at new highs for the year.  That is positive, but I really don't like seeing volume as low as it was.   There just didn't seem to be much enthusiasm today from the bulls.  Something about this market still just doesn't feel quite right to me - I don't exactly know what it is.   I am not saying this market can't go higher - actually, I think it probably will.  I guess I just think it is a tricky time to trade right now.   There are "fish" out there, but they're more in a really big swimming pool rather than a barrel if that makes sense.   It is not an "easy" market.

One thing that has made things tricky for me this past week is that there definitely seems to be some rotation going on in this market from smaller-cap companies to bigger-cap ones.   Perhaps this is one reason why I keep saying that I see very few exciting setups in my scans.   Stocks like LULU, CMG, NFLX, and GMCR acted well today.   Names like REDF, DQ, and CBPO (names I've had on my lists recently) acted poorly today.  We'll see next week if this continues to play out but it is definitely something I am going to take into consideration for the near future.   The Russell 2000 is the only major index that I follow that has not gotten past its January resistance, and that is meaningful.

Overall, if you have setups you like, there is no reason not to take them - just be careful.  I am seeing a lot of breakouts that are not following-through like they did at the start of the year.   I am seeing a good bit of reversals in stocks that had nice moves the day before.   I would shorten my time frame in general and shrink my position size in most cases but that's just me.   I remain in cash right now and really am not complaining.

I don't know if I will have a post up this weekend - my Steelers are going to be a little busy Sunday, and since I don't exactly have the best feeling about the outcome, I don't know how much my mind will be on stocks.   Take care and enjoy your weekends. 

Thursday, February 3, 2011

State of the Stock Market - 2/2/10 - "Support Tested and Held"

A good day today on Wall Street - the gains were not large but after some early selling, the indices fought back and continue to give nothing away after Tuesday's big up session.   Important as well was that short-term support was tested early on and held, which is another feather in the bulls' cap today.   Volume does look like it will come in weaker.

I said yesterday that stocks were perhaps biding time until the employment report came out (although I had my days mixed up - thought yesterday was Thursday???) and today's action is consistent with that idea.   The past two days reek of consolidation and that is typically a positive.   I remain neutral overall but a breakout tomorrow would certainly lead me to believe the market wants to start another move higher and I will not fight it. 

I did enter one long position last night after-hours (GMCR at $37.48) based on its earnings release.   It acted well in the after-hours session, but saw very little follow-through today and I ended up being stopped out right at $37.48.   Maybe this one keeps moving higher, but I've stated this many times - the best earnings plays take off right from the get-go.   This one certainly did not do that. 

Besides GMCR, I still don't see much on the long side worth talking about.  I mentioned the rare earth stocks as being strong yesterday (REE, SHZ, XING) but as a group they don't look quite so hot after today.   No follow-through there at all.  BORN was one I continued to watch but it had a big breakdown today.  EXPR finally moved higher but it doesn't look like volume will come in even a little above average.  BSDM was another watchlist candidate for me but it finished very weak. 

All of that withstanding, a cursory look at my scans has given me a few candidates that I will be watching tomorrow in case this market wants to start another move higher.   I have to do a bit more research to see which ones are best, but maybe I'll share some later on Twitter.  Overall, I don't think I've missed much at all being in cash most of this week, but if the market starts to trend again, I'll be waiting to jump back on.   Good luck Friday.

Wednesday, February 2, 2011

State of the Stock Market - 2/2/10 - "Boring, But Not Bad"

We saw a whole lot of nothing today on Wall Street, as stocks took a breather from their frenetic, up and down action of the past two weeks.   The S&P traded in about a five point range all day while the Nasdaq traded in a ten point range, with both ending up with very, very slight losses for the session.   Volume appears lighter as well.  Perhaps traders are waiting for tomorrow's employment report and wanted to keep things light before it.

Very little changed today from a technical perspective with this market - the Nasdaq is still below key resistance around 2763 while the S&P is still near new highs for the year.   Today was positive in that no major selling came in and that is a good sign.  Back in April of 2010, both sharp bounces up during that top were met with immediate selling that eventually led to the deep correction.  We didn't see that today.  A few days of rest up here would give the market a much better shot at busting out and starting another significant leg up.  Obviously another sharp move lower would lead to me think a top is in place, but I can't predict if we'll see that or not.

My two secondary signals turned neutral today and while my main one remains on a sell, I would describe myself as very much neutral here.   I remain in cash and am willing to do whatever the market tells me to do - take some shorts or enter some longs.  I have no preference.  

There were some movers in the rare earth group today - names like SHZ, REE (which I was stopped out of last week), and XING - but volume was only slightly higher.   I saw a few other names (STEC, CBPO) that somewhat interest me, although volume in both was only slightly higher.  ARX had a nice IPO breakout today but again, volume was not very impressive given the move.  Overall, I continue to see a lack of tremendous setups and that is one big reason I am neutral.   If I see more setups, I would feel much better about the potential of this market going forward.  

 Charts from Telechart, Courtesy of Worden Brothers, Inc.

Good luck tomorrow - I would like to make some moves at some point this week but I don't like forcing things and that's still what I feel I would be doing here.   Maybe Friday's action will be some clarity.   Take care.

Tuesday, February 1, 2011

State of the Stock Market - 2/1/10 - "Roller-Coaster Ride"

We saw a very positive session today on Wall Street, as stocks climbed throughout the morning and although they plateaued in the afternoon, there were strong gains across the board.   Volume looks a good bit heavier on the Nasdaq, while it .  All in all, a very bullish session and it looks like maybe Friday's extremely bearish action was just another head-fake...maybe.   Honestly, this market is throwing me for a loop the past two weeks as we've gone down, up, down and now back up but really have gone nowhere.

Technically, the S&P went to a new high today for the year but that high came on lower volume (that has decreased each of the past two sessions).   The Nasdaq meanwhile is still below its year to date highs and has some major resistance to deal with around 2766 and 2763.  It should be interesting to see if it can get above those levels and keep moving.  The Russell is in a similar position to the Nasdaq in that it is below its January highs, although it did get above Friday's high today.  By the way, the comparison I have made the past two days to April of 2010 is still valid on the Nasdaq.  If we get a big down session tomorrow, it would stay in line with what happened then.

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

As I look through my bullish scans today, I continue to see less nice setups than I should considering the bounce we've seen the past two days.   The only setup I really regret missing (that I honestly can say I may have played if I looked closer - I don't count ones I know I would have never touched or had a chance with) is HSFT.  It had a nice move today of 10% and acted like I hoped it would when I bought it last week.   My stop was hit Friday due to the overall bearish action.  

Really, besides that, I still don't see many nice setups.  BIDU had a nice breakout but gapping up made entry difficult.  LULU had a move today but I certainly didn't like the way it sold off for a straight week after announcing great earnings. It's weird to be honest, but they just aren't really there.  That's why I again am not quite sure what to make of this move today - it is just another headfake to screw those buying today or yesterday or the start of another significant grind higher that will surprise more traders?  

Overall, all of my signals remain on "sell" based mainly on what happened Friday, but that doesn't mean the market can't go higher from here.  I remain in cash and will continue to let the market tell me what it wants to do.   Throughout 2009 and 2010, traders saw many instances of heavy volume selloffs take place, followed by weak volume rallies.   Most times, those rallies continued longer than most thought they would, and that could happen here.  I am certainly not discounting further gains over the next few weeks.

Basically, I would keep my options open here.   If the Nasdaq gets to new highs soon and the short-term moving averages start to expand upward, then I would start looking for longs.  If we see any more days like Friday, then I would go short as I don't know if this market can continue to bounce back from those days like nothing happened.   I may be wrong, but I really don't think I've missed much from a swing trading perspective this week.   Day trading - yeah, that's a different story - but for what I attempt to do, this market has not presented many opportunities the past week or so.   Really, that's what I want to see more than anything - nice individual setups present themselves.  Hopefully more will soon.  Take care and good luck Wednesday.