Friday, March 25, 2011

State of the Stock Market - 3/25/11 - "Lots of Questions"

The title says a lot today - this market (for me at least) has a lot of question marks.   We saw a slightly positive session today on Wall Street, but after starting the day flat and then climbing to nice gains by midday, the major indices gave almost all of those gains back by the close.   The Nasdaq was able to clear its 50 day moving average today on the morning run, but will end up closing right at it.   Volume was lower today - it has decreased every up day for the past seven sessions (not counting last Friday's options expiration session).

Although I thought of buying a few things both yesterday and today, I couldn't seem to pull the trigger and remain in cash.   There have been stocks working on an individual basis the past two days (COOL, SGI, IMAX, VIVO, SRZ, KNOT, RNOW) but I have a problem buying stocks if the market is extended and if the market has lots of question marks about it.   It is a weakness I have as a trader and something I need to work through, but it took control the past two sessions.

The move up this week has been fast and furious, but under the surface it has been much less impressive.   We still have not seen a major breadth thrust for the past week, and in my opinion, none of this week's sessions would classify as a follow-through day.   I personally think it is a very "iffy" time to be getting aggressively long here. 

I'll repeat what I said yesterday - I am not shorting this bounce and will look for longs until thing change, but I am also not in a rush.  Ideally, the market would pullback a bit next week and allow some of the recent movers from this week to set up in brief consolidation patterns from which they can move higher.   We'll see if that happens.   Take care, enjoy the weekend, and I'll be back at some point with the video. 


Anonymous said...

Mac, just curious, what percentages do you use in terms of getting into positions ?

I've typically used:

20% (feeler)
40% (big enough to make a profit)
40% (large/complete position)

The S&P-500 is hitting resistance on the upper downtrend line from the top. I picked up some SSO small at $52.00 for something to do.

The SSO looks like a reverse H&S on the hourly with a measured move to approx. $57.66

Stop @ $50.99

Figured I'd risk a dollar to make $5-$6.

Anonymous said...

Mac, always good summary. Read your blog everyday. Thank you so much!

Anonymous said...

it will take couple days to test dow 1127x~1128x next week but i doubt it could stay above it over 5 trading days (tue/wed next week to mid of april 1st week).
however, like what mac said, im doing intraday long and nil short. and i still waiting a good position for overnight long as the top divs on min chart lesser my confidence.

Anonymous said...

Mac, I am a first time visitor. Nice Blog. Last Thursday could have been a FTD. Great moves by many "leaders":
If we get a rally, these are potential leaders of the rally.
Telechart is a great charting tool. Have you tried IBD's new MarketSmith? It is awesome! Thanks.

Mac said...

First Anon - I typically enter stocks all at once, which may seem weird but as an end-of-the-day trader, I don't have many opportunities to catch breakouts perfectly. I sometimes take smaller positions and will add to positions that are working as they "work" but I never believed in the whole "percentage" of overall trades, because a stock could turn in a day and then those % don't really matter.

Second Anon - thanks.

Third Anon - IBD may have classified Thursday as a FTD - I don't know. However, if they did, I would label it a "very questionable" FTD due to a gain of only 1.4% and volume below the 50 day MA. Some of those stocks you mentioned are acting well (OPEN,BIDU,TZOO, RHAT) but they have gone for so long that these are late-stage bases IMO and those can sometimes be big trouble.