Tuesday, May 31, 2011

Interesting Session and Interesting Position for Market

Interesting day today with lots of things going on in this market and lots of thoughts running through my head.   Where to begin?

It was obviously a strong day numbers wise and the gains came on heavier volume.  Percentage-wise, they came in just below (1.37% on Naz, 1.44% on Russell) what typically needed for a follow-through day (around 1.5%), so I don't know if we can call this a true follow-through day or not.   Maybe it's a follow-through day "lite".   Breath in terms of 4% breakouts was good at a +181 number, but that's doesn't blow me away.  Then again, that's the best number we've seen since April 20. 

The action wasn't typical of a FTD - gap up is fine, but you don't want to see the market selling off that gap hard like we saw in the morning.  Then at 1:00, it was a straight shot-up (with a brief pause from 2-3) with volume massively increasing in the final half hour of trading.   I say this because when I checked volume around 3:45 (20 minutes delayed mind you) it looked like it was going to be weak.   Then I check at 4:20 and this huge volume bar came out of nowhere.  Weird.  Maybe it was the institutions making late day buys.

On a good FTD, you want to get the feeling that stocks are just getting accumulated on an overwhelming basis, and I don't know if I can say I felt that way today.

My main signal gave a "buy" today and my secondary signals are neutral, so I have to respect that and will look to go with longs as they appear.   The problem is that I am not finding a ton of great looking setups out there, and hardly any momo names (although since I don't trade biotech I am missing some charts in that sector).   I did enter TSM long after-hours and right now have one long and two short positions (ARUN and BEXP).  That goes against my rules but both shorts look OK and the stops are tight. 

We are quite overbought via my Telechart indicator and another up day will put us into rare territory (see below).   This isn't a guarantee that we will soon sell-off, but it is something to pay attention to at the very least.  A day or two of rest would be beneficial for a longer-term run.

Overall, today was good and could be the start of something, especially with our dollar looking once again like nothing more than green toilet paper.   If today was truly a signal that we're starting a new rally, then we'll see it over the rest of this week.  Respect the action but realize that we are once again at the top of a four-month range and could stay here for a longer period of time.   Let's hope not.   Good luck Tuesday.

Stocks to watch - QPSA, REDF, KLIC, SRZ, TSM, CYOU, FTNT, ROVI, SCSS, NVMI, FN, SONC, SIFY, QTWW (long side).   

Saturday, May 28, 2011

Stock Market Video - Technical Outlook and Setups for Memorial Day Weekend - 5/28/11

Hi, traders - here's the video you need to get prepared for the Memorial Day week of trading.   There are a few key "tells" that I will be watching this week that I discuss in the video, and although I remain bearish, we could rally further, especially with the dollar crapping out on Friday.   Overall, until proven otherwise, this remains a market where a short-term time frame works best.   The video includes some setups to watch as well on both the long and short side of the market.  

I 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.  If you like the videos, please take a moment to leave a review on Investimonials.   

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

Tuesday, May 24, 2011

No Panicky-Type Selling Means No Bounce Attempt

If you read my post last night, you know I was expecting a bounce soon, perhaps today.  That obviously didn't occur and when I saw the market open a few points higher, I scrapped my plan of covering shorts and buying a dip for a few day swing trade and instead just held them.  I actually added a short in DKS today instead.   What I was looking for (further selling from which the market could bounce from intraday) did not occur so I changed my plan.

We're still at levels where a bounce can occur but I think the problem this week is we have not had that really heavy day of selling (intraday).  Yes, we were obviously down a lot on Monday, but basically that was a gap and then a sideways move - there was no intraday selling.   Today we saw some at the end of the session (it was a nasty close) and maybe that will carry through until tomorrow.   For me to cover my shorts and perhaps try a long swing trade, I would need to see the market show at least a little panic selling and I don't think we've had any yet.  I am waiting and watching.

Right now, I am content with what I have and will only make moves if that slightly panicky move intraday occurs.   I am kicking myself today a bit as I passed on making a anticipatory buy in silver yesterday even though I've been tweeting and writing about it for a few days now.   Oh well.  There are a few movers on the long side each day but they are few and far between and best left to day traders.   I really saw nothing worth watching on the long side in my scans tonight so if I go long, it would likely be with ETFs.

Based on today's action, stay patient and defensive.   If you are riding shorts, keep riding them until the market presents an obvious opportunity to unload them.   Hopefully you're not carrying any long-term long positions.   Tomorrow should be interesting.   Good luck.

Monday, May 23, 2011

Expecting a Bounce Soon

For various reasons, I am expecting a bounce attempt soon.  Note I am not saying a bottom, as I think this correction could last longer than the brief ones we've seen in March and April.  We might be at the start of a move like last summer where we got a choppy correction that took the market down about 18% from top to bottom.   I can't see a correction deeper than that because honestly, I don't think the government will allow it. A deeper correction (basically a new big bear market) is in my opinion dependent on a true bottom occuring in the U.S. dollar, and again, I believe the government and Fed will make any and every effort to prevent that from happening.

Short-term, here's what I see....

#1)  The dollar has had a nice run but is now coming up against important resistance levels.

#2)  An oversold/overbought indicator using RSI(2) I developed using Telechart was showing a reading below -2500 today.   No indicator is perfect, but this has worked pretty well over the past nine or so months in determining spots were bounces occur.

Charts from Telechart, Courtesy of Worden Brothers, Inc.

#3)  Commodities have stabilized somewhat even with the dollar rising.   Gold has been higher each of the past two sessions.  Silver has had four flat sessions.  Oil seems to be holding support around $96.   I am expecting a bounce attempt in these names as well.  Not a bottom - let's be clear - but a bounce will not surprise.

I still have two shorts but if I am lucky to have a chance to cover tomorrow morning on a move lower I will.   I will likely then look to put on a few longs, most likely via ETFs as I don't see many individual charts worth much right now.   In my opinion, if it occurs this will be a short-term bounce only (2-4 days) so play it accordingly and respect your stops, because if we don't bounce soon, then perhaps we are indeed entering bear market times again and things will get really, really ugly.  Good luck Tuesday.

Saturday, May 21, 2011

Stock Market Video - Technical Outlook and Setups for Week of May 23, 2011

Hi, traders - it was a choppy week this week on Wall Street, but last weekend I said a break of the trading range would be key and we did see that this week.   The bearish signs remain out there and so until we get some consistent positive action, defense remains the name of the gain.   If you want to trade the long side, I would only do so in smaller positions and with very short time frames.   Actually, I am more short-term in my focus overall simply because the market continues to be very choppy.  We should probably get used to that as the summer trading period approaches.

The video takes a look at the overall market, a breakdown in a key sector, and what's next this week for commodities.   It also shows some long and short setups to watch. 

I 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.  If you like the videos, please take a moment to leave a review on Investimonials.   

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

Friday, May 20, 2011

Today SHOULD Be An Important Day....Should Be....

Today SHOULD be an important day on Wall Street because we are at some key levels and both a breakout and a rollover are equally strong possibilities.   The two charts below illustrate the point we are at here very well.  

Nasdaq 100
U.S. Dollar

I also see almost an equal number of short setups in my scans versus long setups.   This is somewhat rare but it again illustrates that the market is at a key point here that will likely determine its direction for the next few weeks. 

A Few Potential Longs
A Few Potential Shorts
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I believe today is also options expiration for the market.  So what does all of this mean?  I hope I am wrong, but maybe nothing.   Going into today's session, Europe is flat, Asia was flat, and if my memory serves me correctly, most options sessions recently have been rather boring.  The past two months gave us gains of 0.29% in March and 0.16% in April, and then the real action took place the following Monday (up 1.83% and down 1.06% respectively).  So although I don't want this to happen, I have a feeling today might be a "blah" day with the real action (and therefore the real move) occurring Monday, possibly with a gap.  It certainly makes swing trading more difficult, but that's what Mr. Market likes to do.

I am short here with two positions but that's it and may get out of those today if the market doesn't fall here.  My signals remain bearish and the technical patterns look bearish too, so that's why I am leaning that way. We've seen this story before, however, so keep your mindset open.   I have the day off work today and will be around until 12:00, so if you have any questions, feel free to tweet me.   Good luck today.

Wednesday, May 18, 2011

Tough Day at the Market

Although my account finished at highs for the year today, it was a tough one for me.   If you follow me on Twitter, you probably know why.  

Last night, I posted a video about why I expected the market to put in a one or two day bounce here and some plays that could work in the very short-term.   There were quite a few that worked well from that video (QIHU - 5.5%, SREV - 5.9%, ACOM - 4.5%, AVL - 3.3%, PWER - 2.8%, LULU - 3.3%) and since I entered ACOM yesterday at $38.90, I can't complain too much I guess. 

This morning, however, I opened my twitter account and saw a tweet about the earning release for SODA. 

The beat stood out to me and I knew the chart, so immediately I knew that this was a good earnings opportunity - I could sense it.  I immediately put a limit order in the pre-market around $46.20.  For some reason, it didn't get filled, but after raising it, I got filled at $46.70.  As it acted well during the rest of the pre-market, I was pleased and planned on setting my stop around $46.25 which was the most recent high.  

SODA opened super-strong, shooting up to over $49 in the first few minutes of trading.  Nice.   Then over the next ten minutes, it gave all of that pop back, falling as low as $46.65.  In my experience, this is not good action.  

After stabilizing and trying to bounce right back up, the stock rolled over a bit and what turned out to be the low of the session was made about fifteen minutes later at $46.63.  Unfortunately, my stop was hit along the way at $46.70 and I was out for the day.  Sucks for me, because the chart below says it all.   Hopefully some of you were able to benefit and got in when I tweeted it this morning.

Chart from Telechart, Courtesy of Worden Brothers, Inc.

You may be asking "why was your stop at $46.70 instead of $46.25?".   Good question, and in answering I am hoping I can store away a lesson from this missed opportunity.  Basic problem - I deviated from my plan.   I added to the position at $48.22 as I really had a feeling that this was going to be a big winner.   I added a position that was just as large as the first.   This is called "greed" and it got the best of me. 

By adding to this position at the point I did (when the stock was falling intraday), my risk went up and therefore my tolerance for risk went down.   I fully expected a bounce back and for the stock to be strong, so when it hit the $46.70 level the first time and then recovered, I thought the run would take place and I moved my overall stop to right below that $46.70 level, figuring that if that was broken, then the trade really wasn't going to work.   Obviously I was wrong in this instance. 

With my full-time job, I have very few windows to keep tabs on the market during the day.  I have a break from about 9:30-9:45 that I can watch the market and manage positions if I need to and I can check it at lunch.   This affects my trading a bit because I have to use hard stops.   Perhaps if I was at my computer I could have just mentally stopped that area and go from there.   Oh well. 

I am sharing this experience to illustrate a key point in trading - have a plan and stick with it.   If you don't have a plan or deviate from the plan you establish, you can get yourself in trouble.  Your plans might sometimes not work, but they will likely do better than decisions you make off the cuff without proper thought put into them.  My plan was to put a stop at $46.25 and let it go from there.   If I followed the plan, I would be looking at a 15% one-day gain.  This is easy to say but sometimes harder to do, and today is a good example that even experienced traders like myself can make these mistakes.  

Maybe some other time I'll share my tough trade in REDF from 4/12/2011 - stopped out too early and then it doubled.   I am up 34% so far for the year and I can't complain too much, but it's usually one or two big trades that really can make your year as a trader, and now I feel like I've missed two of them.  Live and learn I guess.

Good luck Thursday -  the Nasdaq ran right into the levels I discussed yesterday around the short-term moving averages and volume was pathetic today (especially when you take out DELL's volume).   I will be looking to add some shorts back on soon unless the market can take out these levels tomorrow.  SLV, GLD, and USO all got rejected by their 9 day moving averages today as well so that's not bullish.   Remain careful and look to take profits soon on any longs you took today.   Take care.

Tuesday, May 17, 2011

Expecting a Bounce Attempt Soon, But Likely Just a Shorting Opportunity

Hi traders.   It's been a nasty few days on Wall Street which is something I discussed last Wednesday in this video.  I was able to play a few of the short setups mentioned in that video (OPEN, BEXP) but not as many as I had hoped.   I ended up being a day early on BIDU and passed on SOHU which I am still kicking myself over.  Shorting is always harder to do successfully than going long, but here is a quick look at how those setups have performed based on today's closing prices. 

SOHU 92.34 83.54 9.53%
OPEN 96.49 87.45 9.37%
GEOI 25.16 22.81 9.34%
LVS 44.1 41.33 6.28%
TDSC 38.88 36.46 6.22%
CHK 30.92 29.09 5.92%
BIDU 138.9 131.81 5.10%
DE 91.29 86.96 4.74%
PCLN 520.99 504.4 3.18%
WMB 30.84 29.89 3.08%
FCX 48.27 46.83 2.98%
APC 74.67 72.55 2.84%
LUFK 83 80.82 2.63%
BEXP 28.11 27.45 2.35%
NFLX 240.67 236.94 1.55%
BHP 95.07 93.85 1.28%
DECK 89.29 88.36 1.04%
RAX 41.32 41.12 0.48%
BK 28.34 28.41 -0.25%

At the current juncture, I am thinking we are dealing with a market that is likely too late to get short with, but not strong enough to go long with, and when you have those markets, the best move is to basically sit out.   I have one position right now (ACOM) but have either closed my short positions over the past few days or been stopped out of my other positions.   Going forward, I do expect the market to try to bounce here a bit, but I don't expect it to be a big deal.   Although the indices don't look quite as bad as you would expect, so many leaders have been hurt the past week or two (with many looking like they have put in topping patterns) that I expect any bounces we get to simply be shorting opportunities.   All of my signals in bearish territory and if you are not yet out of longer-term long positions, I would seriously consider getting out if the market does see a bounce soon.

In the short-term, I am not opposed to trying to play select stocks for a quick bounce with the market, but realize that if you play these, the odds of success are not great and therefore you must use tight stops and take profits quickly.  I've included a short video on a few potential setups, but again, only on short-term time frames.   If I play any of these, it won't be more than one or two.  Longer-term, I will be looking to short any bounces we see in the oil sector and the former bigger cap leaders that broke down recently.   Good luck Wednesday and the rest of this week.

Saturday, May 14, 2011

Stock Market Video - Making Sense of a Volatile Week - 5/14/11

Hi, traders.  In this video, I try to make sense of this past week, which was very volatile and difficult to trade for more than a few hours at a time.   When you get markets like this, it is best to reduce your trading and wait for breakouts, which is what I am going to do.   I do go over the stocks holding up best right now for possibilities down the road and also the stocks that could be played as shorts if the market breaks down.  Good luck next week.

I 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.  If you like the videos, please take a moment to leave a review on Investimonials.   

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

Thursday, May 12, 2011

State of the Stock Market - "Adapting to a Volatile Market" - 5/12/11

What we have here folks is a really, really tough market.   It has been since Bin Laden was captured and today was a prime example of the volatility and how it is making swing trading rather difficult.  We saw some major selling yesterday on heavier volume, giving the market its fourth distribution day in its last seven sessions.   This, along with major technical breakdowns in many leading stocks, certainly seemed to be pointing to a topping market.   We saw some more major selling early in today's session, but that didn't last long and the Nasdaq rallied about 45 points off of its morning lows.  In fact, it seems like every session now involves intraday moves of 40-50 points on the Nasdaq. This type of volatility is great for daytraders but is very difficult for swing traders, short or long (and I should know because I've done both the past two weeks.)

Going forward, anytime you have range-bound trading going on (and pretty clear boundaries high and low have been established the past two weeks on the Nasdaq) you need to change your strategies a bit.   Ideally, I would love to start positions and hold them for weeks, even months at a time, and allow them to develop into gains of 20% or higher.   I don't think that's possible right now.   I know my account has been going sideways for two weeks now as whatever gains I get in stocks quickly disappear the next day as the market reverses and instead of nice sized gains I have been getting a good amount of small losses.   I know personally I need to shift into "take profits quicker" mode and I will aim to do that until this range is broken.

I would also warn about overtrading in an environment like this.   I say this because I can admit that I have been guilty of this the past two weeks.   I was tempted to take a few potential longs at the end of today's session but I passed.   We could easily be down again tomorrow.   Setups are out there but very few are seeing any follow-through more than an hour or two.   Your account can easily be chopped to bits if you take every setup you see, so it's best right now to take a step back and trade less while the market figures out what it wants to do.  

I went into today with four short positions (DECK, RAX, OPEN, and BEXP) but was stopped out of two of them by midday (DECK for small loss, RAX for small gain).   I added to my long position in REDF as it showed some strength today but it didn't exactly close strong so we'll have to see about that one too.   Because so much of this market is being controlled by commodities (which just had historic moves) and the dollar, I'm beginning to think this volatility will unfortunately continue for a while. 

I am not dismissing any outcome from here but given the number of ugly, messy charts out there along with the overall volatility (which is typical of topping patterns) I would still guess the market is lower in a month or two than it is today.   Looking out that far ahead doesn't affect my trading too much however, and in the immediate time frame, I think caution remains key, at least until this range is broken.   Good luck Friday.

Wednesday, May 11, 2011

Stock Market Video - "Lots of Bearish Signs..." - 5/11/11

Quick video tonight on this market and what today's action means.   I talked about the dollar last night as a key (along with XLE on Monday as a potential "tell") and both played key roles in today's move lower.   I am open to the bulls straightening this thing out, but they certainly appear to be very weak here.  Caution remains key.

Tuesday, May 10, 2011

Bulls Back in Control - For How Long, Only the Dollar Knows

I am still carrying one short (DECK) but after today's performance, the bulls deserves respect.   I did not think they would get past Friday's highs on the Nasdaq after the terrible intraday action last Thursday and Friday, but I was wrong.  In hindsight, I underestimated the potential bounce in oil, gold, and silver, which in my opinion has been the impetus for the market to rally the past two days.   Those areas still look like dead-cat bounces to me and with the dollar not giving back much of its gains from last week, I think the market could fall back again as soon as these three areas start falling again.  

Although I maintain a relatively long list of short candidates right now (BEXP, BIDU, CHK, LVS, NOV, OPEN, TDSC, SOHU...), I am going to play the long side as setups make themselves available.   Here are some I think are worth watching for tomorrow...

Charts from Telechart, Courtesy of Worden Brothers, Inc.

A few earnings names to watch tomorrow include ASYS and PKT to the upside and REE/AVL to the downside as MCP reported an awful number.   Good luck Wednesday.

Monday, May 9, 2011

Two Charts That Could Be Tells for This Market

If we get above Friday's highs on the S&P and Nasdaq, I will respect the action and stop looking for shorts.   I was stopped out of shorts in NFLX and BIDU today for small losses of around 2.5%, which basically cancelled out the nice action in CYOU (which I am long).

Two charts are really key for me now - both oil related (see below).  I've seen this story a bunch of times before (selling off on heavy volume and recovering on putrid volume) but the damage recently was worse than the previous selloffs followed by quick recoveries so I think the action here will be an important tell for the overall market.

I continue to look for some shorts here and see some candidates, but after getting stopped today, I will likely be a little more patient and wait for some downside confirmation.  There weren't a lot of nice stocks in my scans tonight so I am hesitant on the long side.  
Earnings names to watch tomorrow - RAX and OPNT to the downside, SLH, FTK, and CPE to the upside.  

Lesson for the day - going against your rules can hurt.   I sold ACOM on Friday for a 13% gain.  It did not give me a sell signal (which for me is a break of the 9 day MA) but I wanted to raise some cash in light of what looked like a very weak market and so I broke my rule and sold it early.   Today it was up 6% and perhaps can move higher from here.   That's what I get for breaking my rule and not showing patience.   I guess I deserve it.

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

Good luck Tuesday.

Saturday, May 7, 2011

Stock Market Video - "Why Defense is the Name of the Game Right Now" - 5/8/11

Hi, traders. I tried to keep this video shorter this week but don't think I necessarily succeeded sorry. :) This morning I already saw traders on Twitter putting out their watchlists for the week ahead and I thought it would be a good idea to instead present the case for no watchlists right now with this video. By "no watchlists", I mean that we are in a market that has sent numerous signals that it is weakening and that you should protect yourself - not be chasing longs all over the place.   In my opinion, playing the long side is dangerous now and that's why this video has no long watchlist - just facts about what this market is doing and why defense is the name of the game right now.

I am not saying we can't rally from here (and if we do break Friday's high I'll be ready) but the overwhelming evidence points to a weak market and that evidence certainly needs to be respected.  

I 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.  If you like the videos, please take a moment to leave a review on Investimonials.   

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

Friday, May 6, 2011

State of the Stock Market - 5/6/11 - "Toppy"

Following a reversal Monday and heavy selling Tuesday and Wednesday, this market has had every possibility to bounce.   It tried Thursday and failed mightily, with the Nasdaq closing about thirty points off of its intraday high (and that was only because of a late bounce).  Today, with positive news via the jobs number, the market ran hard in the morning and then once again gave it all back.  At its lows, the Nasdaq gave back another forty points off of its intraday high today.   This is not really what you want to see if you are a bull.   In the grand scheme of things, all today likely did was relieve some oversold conditions on the market as a whole.

I was quite optimistic going into today.   I added two long positions early in the session (CYOU at $41 and DANG at $22.50 - surprisingly I am still in both as both acted well today).   However, by the end of the session, I was out of the other two long positions I had (ACOM and AXTI) and put a short on in NFLX around $231 and another in DECK around $88.  

Maybe we do bounce from here and maybe this week was just a shakeout, but most signs continue to point to a top being formed here.   Weak intraday action from the overall market.   Long-time leaders that are weak and look quite toppy (BIDU, NFLX, OPEN, DECK, SOHU, MCP, PNRA top my list - no pun intended).  How about PCLN, a long time leader, selling off on a blow-out quarter??  Parabolic runs by some commodity sectors followed by monstrous sell-offs.   This is not typically action seen in just small, short pullbacks.  

There is still some support below with the 50-day MAs for the major indices as I discussed yesterday, but I raised cash today and if you haven't done so already, I would recommend doing the same thing.  If the market stabilizes, you can always get back in, but right now, again, most signs are pointing to a correction here, the length and severity of which is unknown.  I didn't even talk about the Greece rumors and such.  Be careful.  

Don't know if I'll do a video this weekend or not, but either way I hope you have a great weekend and good luck next week.

Thursday, May 5, 2011

State of the Stock Market - 5/5/10 - "Tomorrow Will Be Big.."

Today was an interesting day on Wall Street, and by interesting I mean extremely volatile and somewhat confusing.   You had the early morning gap down after three straight days of selling which looked very, very bad at the time.   Then you saw the impressive bounce off of the gap where the Nasdaq turned positive and kept running, and it looked like perhaps this "correction" could be brief and over.   That didn't work, as the late afternoon brought a massively sharp drop where the Nasdaq gave up all of its gains and I started to see talk of "flash crash" on Twitter.   The market bounced a bit into the close to take back some of the losses, but still, it was no doubt a bad day. 

My signals are all either neutral (the main signal and the one secondary signal) or bearish (the other secondary signal) but both neutrals would likely turn with another bad day tomorrow.  We've had three straight distribution days on the S&P and Nasdaq (although today's volume was slightly less, I'm still counting it as a DD) and I really can't remember when I've seen that before.  

Commodities have been killed the past three days - unfortunately for me I was not able to time a silver short and didn't partake in any of the fun the past week in that area.   I would expect a sharp reflex bounce soon but in general, this in no way looks like just a normal, healthy pullback.  

Who knows where we go from here, but nothing would surprise me.   All the major indices remain above their 50 day moving averages and that's obviously a plus.   Trendlines are forming in that same area on all three indices and so support SHOULD be very strong in those areas.   We are also quite oversold in the short-term right now so any further selling has the potential to lead to a powerful reversal up. 

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

So all in all, tomorrow should be a big day.   Of course, we have a major news event with the jobs number being released at 8:30.   If my memory is correct, recent releases really haven't caused major rallies or major selloffs, but the potential is there for this one.   I could see a gap down on a bad number and then a reversal higher on a test of those 50 day moving averages.   Perhaps however that it too easy.  

Be careful overall.   I have three long positions right (no clue how they haven't been stopped out yet) and will hold them until the stops are hit, but besides that won't likely do much tomorrow.   I covered my only short today (CHK for a 6.5% gain) and really won't look on that side of things tomorrow because I think it's too late and too dangerous to short at this point.  Cash isn't a bad option at all right now.  Good luck Friday.

***  I do want to thank those of you that took the time to email me or leave comments about my "questionnaire" the other day.   I appreciate both the comments and the time you spent responding.  To be honest, I wish more readers would have responded, but it is what it is, and the number of responses is probably quite telling in itself too.  I have a lot of thinking to do, but as I said, things will definitely be changing one way or the other over the next few months. 

Tuesday, May 3, 2011

State of the Stock Market - 5/3/11 - "At a Crossroads..."

We saw a pretty nasty day today on Wall Street, with leaders getting hit left and right and although the market closed off of its lows for session, it seems like there was more damage under the surface of the market than the closing numbers will really show.

A few random thoughts here...

#1)  About a third of my main watchlist was down over 4% today.  This is not the list I follow going into each session for possible buys, but it is the list I use to compile the strongest stocks in the market and go through each night looking for setups.   That type of number is not a good one for the overall health of this market going forward.   This was also the worst breadth day we've seen since March 10.

#2)  A number of leading stocks (BIDU, HMIN, MELI, OPEN, SOHU, SINA, LULU) were hit hard today and broke short-term moving averages.  I never like seeing this and it usually indicates the market at least wants to pause or consolidate a bit.

#3)  I can't remember seeing more stocks that have taken off for one reason or the other (mainly earnings related) so quickly give their gains back and in such a strong manner.   Maybe I am biased because I still hold ACOM (and have seen my 25% gain shrink to 10%) but when you see names like NTGR, PPO, VOCS and others give gains back so quickly at the first sign of market weakness (and it's not like the market was down 2-3% either of the past two days) it is worrisome.  

I posted on Twitter mid-day that I thought the 2840 level was going to be key for the Nasdaq to defend and technically it did so.   However, the action in individual stocks is certainly bothersome enough that I would take a neutral stance on this market.   Today was the first sign of distribution we've seen in a while, and maybe this move is just a shakeout.   A move below 2800 on the Nasdaq, however, and all bets are off.  Be careful right now. 

I titled this post "at a crossroads" because I though it was appropriate for the market but also for this blog.   Over the past few months, I have been actively debating and questioning whether the work I put into this thing is worth what I am getting out of it.  I really don't know what is going to happen, but my guess is that things will change in some way over the next few months for Chartswingtrader.com.  

If you read this blog daily and have time to answer the following questions, please email me or leave comments on this page - I really would like some feedback to help me answer some questions I am having going forward.   Please be honest as well - my feelings really won't be hurt.   I would rather know what people really think than be told what people think I want to hear.   Thank you - I appreciate your time.

#1)  Do you find Chartswingtrader.com to be a useful website in your stock trading?  Is it part of your daily trading routine?

#2)  What do you find most useful on the website?

#3)  What do you find least useful?  What could you "do without"?

#4)  If you could make any changes to the website, what would they be?   How could the website be improved?

#5)  Would you consider paying a small fee each month ($10-20) or a bigger yearly fee ($75-$100??) for more specific guidance, ideas and advice on trading and the markets in general? 

#6)  Would your trading be affected at all if the daily summaries on Chartswingtrader.com ended?   Would your trading be affected if the weekend videos ended?

Good luck Wednesday - again, caution is very much warranted here.

Sunday, May 1, 2011

Stock Market Video - Technical Outlook and Setups for First Week of May

Hi, traders - here's the second video for the weekend.  In it I take a look at the overall market and what eventually could cause the market to pullback more significantly.   For now, however, the bulls remain fully in control.   I also show setups that do not have earnings this week and could be played on breakout moves with heavier volume.

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.  If you like the videos, please take a moment to leave a review on Investimonials.