Wednesday, September 28, 2011

Mid-Week Thoughts - Right Idea, But Timing Was Off A Bit - 9/28/11

The title tonight is referring to my weekend video where I shared my belief that we would likely see some window dressing into the month's end followed by a resumption of the heavy selling we saw late last week.   I was right with my idea, although my timing was not right.   I expected to start looking for shorts on Thursday or perhaps Friday, but the gains we saw Monday and Tuesday were much, much heavier than I expected.   Given that they were so quick and sharp, it actually made me feel more secure in the idea that we were going to selloff soon.   I added four short positions (QID, BIDU, AKAM, and APKT) yesterday near the close and all of them turned out fairly well after today's nasty afternoon selloff.  

Although I do believe we are going to break the August lows within the next month or so and have a harsh selloff upon that event, I am not certain that it will be this week.   This remains a market that is very difficult to swing trade as this week's volatility continues to show.   It would not shock me if tomorrrow we are back up 2-3%.   I would not take that action as bullish, but rather simply a statement that this market is still psychotic and not ready to do much other than chop most traders up into bits.  

I considered adding another short or two today but since I am almost fully invested on the short side as of now, I settled for adding a bit to the QID position and not doing anything else.   I do see some short setups out there and will put the charts below that are worth watching, but beware.   Since we put in a reversal Tuesday and a nasty selloff today, it is riskier to short at this juncture.   It's very possible we fall off a cliff here and if we do, it's all good.   I would put stops above today's highs on any shorts you may enter and go from there - that way you protect yourself in the case the market decides it wants to continue to screw with us all.   These charts are also posted under the assumption that we don't have a massive gap tomorrow, which nowadays is a very big assumption. 

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Be careful out there.   I haven't even gone through my long scans for about the last week because I know there is nothing out there worth buying, but shorting is never easy, especially in a super volatile market.  

Sunday, September 25, 2011

Stock Market Video - Gameplan for Early This Week and Late This Week - 9/25/11

Hi, traders - here's the gameplan for what should be another crazy week ahead of us.  We obviously had some very nasty action last week and although we saw a little bounce Friday, I think there is little doubt that the bear market is back on and you need to trade accordingly.   All of the charts that were holding up well are now destroyed, and there just isn't much to do on the long side here at all, unless you day-trade and want to catch some falling knives intraday for some quick gains.  In the video, I discuss what I am doing early in the week (pretty much nothing) and then later in the week, which is where some potentially nice swing trades could emerge.   I share the ten or so stocks I will be watching closely this week as I do think we'll see a little bounce early as the month comes to a close.  October however is historically unkind to Wall Street, and I don't think this year will be any different.   This is all discussed in the video.

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 and feel free to retweet the links to your friends.  I would appreciate it.

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Thursday, September 22, 2011

So How Bad Was Today?

Well, to answer the title of this post, it was pretty, pretty bad.   The Buy/Sell Difference measured by 4% breakouts and breakdowns was -1208 today.   Yesterday it was -800.  The cumulative difference of the past four sessions is -2311.   Looking back over my numbers since late 2007, I could find only two other instances of a day of -800 followed by a day over -1000.  Those dates were September 15 and 17, 2008, and a stretch from October 2 to October 8 or so in 2008.   Since then, we've theoretically have not seen as bad a two-day breadth move as we saw the past two sessions.

 Chart from TC2000, Courtesy of Worden Brothers, Inc.

I think it is safe to assume that the bear market that started right around July 27 has now regained its strength.  I've been saying for a while that I believed we were indeed in a bear market and that the August lows would eventually be broken, but I'm not going to lie and say I didn't have my doubts about this idea last week as the bulls kept pushing things higher.  The market went just high enough over key resistance levels (2600 on the Nasdaq as well as the 50 day moving average) and there were just enough stocks moving higher that I am pretty sure I wasn't the only long-term bear that was questioning things just a bit.   Funny how the market can do that - pull people in just enough to cut their heads off.

This isn't to say that things will be as easy as pick a stock to short and go from there.   Unfortunately, I think this market will continue to make things difficult for anyone but day traders for a while.   My guess of what happens over the next few days is that we likely test the August lows either tomorrow or Monday, and will likely break through them briefly before a reflex bounce rips the face off of the bears and takes us back into the short-term moving averages.  We are very, very oversold so a relief bounce (even it's just a day or so) can happen at any time. That is strictly a guess, but in this market, what else is there to do but guess?

If you are like me and cannot day-trade, I don't have much to tell you in terms of a game plan here other than don't do anything.   Frankly, I am becoming rather disinterested in trading right now as it is virtually impossible to do anything but day-trade and with a full-time job, that's not possible for me.  The constant gap up and gap downs make starting positions at the open impossible, and the overall volatile trendless market (if that makes sense) makes holding positions overnight with stops and such pointless.  My account goes up, then gives it back, then goes up again, then gives it back.   It's gone sideways for a while now and I am actually happy I've started back up with my full-time job because I can't trade as much.  It's probably a blessing.

I am in cash here and will likely be for a while, but if you're looking for ideas, I would generally say look to short any market moves into the 9 or 20 day EMAs.   We could be up 3% tomorrow or down another 4% and it would not shock me.   Heck, we could be down 4% early and close up 3% and it would not shock me.   It's that type of market.  As I said on Twitter earlier, "We're back to having absolutely no long setups worth anything after today but also being way too late to do anything short. Great."   What a great market indeed (yes, that was sarcastic).

Wednesday, September 21, 2011

Mid-Week Outlook - "Big Breakdown - Will It Continue?" - 9/21/11

Although it was very volatile, today was a nasty session on Wall Street.   The Fed decision came and went and by the time the market closed, the Nasdaq was down sixty points, most of which came after the decision was announced around 2:15.   When you look at today's action as well as yesterday's nasty afternoon reversal, things certainly look very bad for the bulls here.   Key technical levels were broken on all indices and my main signal went back to a "sell" (for what it's worth because it's been flopping back and forth around like a fish out of water for the past month or so.)   Certainly caution is very warranted here.

 Chart from TC2000, Courtesy of Worden Brothers, Inc.

I went into today with two shorts, but hold only one right now.   I am getting very frustrated with this market as an end-of-the day swing trader because it is virtually impossible to string together a series of good trades right now with this volatility.   BEXP broke above key levels today and stopped me out early, but then fell straight down later.   I was also whipsawed in a gold trade (DGP) today as a "breakout" above moving averages was quickly reversed.   It is what it is I guess and I don't want to complain, but I really wish we could get a reasonable trend going that would be easier to swing trade.   Perhaps today is the start of one. 

I do have my doubts about that last statement however (short-term).  This is the kind of market that although today was very bearish, I would not be at all surprised if we were up 50-60 points on the Nasdaq tomorrow.   There doesn't seem to be any rhyme or reason to anything that is going on day to day.  I see a lot of potential short setups here (COH, DKS, NE, CTSH, RAX, the aforementioned BEXP, DRC to name a few) but we are also a good bit oversold by my main measurement here so I am hesistant to get aggressive right now.   There is also the well-known phenomenon of  the post-Fed day often being different from the initial reaction to the Fed moves, so we have that to worry about tomorrow as well.

I think we're at a point where we are going to just fall off a cliff here and chasing shorts will finally work (chasing anything hasn't worked for over a month) or more whipsaws are coming and the market will frustrate all of us for another week or two.   I don't think we'll see a mild, slow decline here if it happens.   If you're OK with the possibility of getting whipsawed here, then go for the shorts.   It looks like a high risk-high reward setup at this point.  Personally, I am so frustrated anymore that I don't know if I can go for it or not.  I may just sit with my one short and wait for a better risk/reward.

Good luck tomorrow - the only thing that would surprise me is if Thursday is a quiet day.   Be ready to go on the short side but keep your stops in place because it is still "that" type of market.  

Monday, September 19, 2011

Stock Market Video - "Stocks to Watch If Market Can Rest a Little Here" - 9/19/11

Hi, traders - here's a short video looking briefly at today's action (which was overall quite bullish) and some stocks that may be worth watching if (again, this is a big "if") the market can rest a few more days this week.   I tried to stay away from the obvious stocks being talked up all over Twitter, so perhaps some of these are ones not yet on your radar. 

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 and feel free to retweet the links to your friends.  I would appreciate it.

To see the videos in HD, please click the circular button on the video bar.

Sunday, September 18, 2011

Quick Thoughts for the Week Ahead - 9/18/11

Hi traders - sorry for the late post and sorry for the lack of a video this weekend.  I was away all weekend for a family outing and didn't get back until about an hour ago.  Needless to say, I have some work to catch up on before tomorrow starts.

After being mostly right the past few weeks with the day to day swings of this choppy market, I was certainly not correct with my mid-week assessment on Wednesday.  The market posted gains both Thursday and Friday and I took a few small losses in some shorts I put on during Thursday's pre-market session.   I still have one of those shorts (LVS) but am in cash otherwise.

Although my outlook has remained bearish over the longer-term for a while now, I will say that this market is putting up a good fight (especially with the Nasdaq getting over 2600) and I am open to changing my outlook if the market tells me to do so.   There are some charts that are acting well, but not enough yet to get me excited.   My main signal did turn back to bullish this week (it's been back and forth all month much like the market) but there has still not be a real breadth thrust that would convince me that we're starting up a meaningful rally here.

As for this week, I see no edge in buying the market after it has been up five days in a row, so I won't even share potential long setups here.   There is only one stock I would consider after last week's market move, and I think a lot of others are watching it too, so I don't know if I would play a breakout or not.   Basically, I am in a wait and see mode.   IF (and that's a big if) the market gets a little pullback over the next two or three days that allows the slight overbought conditions to be worked off a bit, then I would look to buy.   Perhaps a nice little flag can be formed off of last week's move.   For the bulls, this would be the ideal scenario and I will watch for this this week.   I am not expecting it, but will keep my eyes open.

If the market doesn't pullback calmly and instead has another sharp selloff (and as I write this the futures are indicating a bad open on Monday), then I expect just further chop through the rest of this month.   This is the bulls' best opportunity to get something going, and if they can prevent any major selling this week, they have a chance.  

As always, I'm sure it will be an interesting week and it should be an important one for the longer-term direction of this market.   Watch to see if the bulls can keep most of the gains they got last week.   If they can, maybe we can get a bullish move after all.   If they give too much back, then those August lows still loom in my opinion.   Good luck.

Wednesday, September 14, 2011

Stock Market Video - Mid-Week Update - "Do You Really Want to Be Buying Here??" - 9/17/11

Hi, traders - here's the mid-week video.  Sunday's post discussed the reasons I was not bearish going into the week and the action has certainly played out that way with the market putting in three straight positive sessions. So why am I back to being bearish in the short-term?   Well, I discuss it in the video, but there are technical reasons to be very cautious here along with some divergences on the main indices.   There is also the simply "two in a row" idea I discussed on Sunday.   I share some potential short setups in the video as well as the levels and type of action that would have me reconsider my outlook for the rest of the 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 and feel free to retweet the links to your friends.  I would appreciate it.

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


Sunday, September 11, 2011

Outlook for the Week Ahead - Pay Attention to the "Two in a Row" Concept Here - 9/11/11

Hi traders - no video tonight but here are some written thoughts going into the week ahead.

Let me start by clearly expressing three key points I've been making for the past month on all of my videos.  These are of course my opinions, but if you've watched my videos for the past month or so, they shouldn't come as a surprise to you - I've stated them many times....

  • We are in a bear market and much closer to the beginning of it than the end.  
  • We will eventually break the August lows and could fall much lower than those levels.
  • The sharp and historic decline at the beginning of August was so dramatic that it will take the market some time to become normal again and choppy trade is the most likely result(which I think we've seen a lot of recently).
  • Until the Nasdaq gets above 2600, there is no reason to think anything bullish longer than a few days.

So what about the week ahead?  Well, I did express some caution on Wednesday's video in terms of chasing longs and Thursday and Friday showed why - we had two nasty sessions in a row.  Right now, I see a lot of bearish chatter on twitter.  You would expect us to fall big then on Monday and for me to be advocating putting shorts on here then, correct?

Not so fast.  One general idea I have when trading is the "in a row" concept as a warning sign for what I may want to do in the short-term.   By "in a row", I mean how many days has an individual stock been up or down in a row.  This often affects my trading, although the actual number in terms of days in a row can changed depending on the market.   This is obviously not a novel concept - I know that.

I would say the typical number I use in the "in a row" concept is three. I never feel comfortable buying a stock that has been up three days in a row and I never feel comfortable shorting a stock that is down three days in a row.  Most times, this uncomfortable feeling keeps me out of making moves in these stocks, even if they continue to move up or down in the same direction without me.

In a bull market that is strong and consistent, I may feel comfortable enough to move that number up to four days or even five, although that is very rare.   In a strong bear market, maybe that number will move to four, but that rarely happens.   In a choppy market like this one, that number usually declines to two.  That's where I believe we are still at and is why I titled this post as I did.

For the past month, I think it can be argued that very few trades have become more profitable when held for more than two days.   If you would have entered a trade (as I did Monday going long) and excited two days later, you would have caught most if not all of the gains available in those trades.   In some cases, two days was actually too long and some gains disappeared when held longer.   This is for individual stocks, not necessarily the market as a whole.

Relating it to this week, we've now been down for two days on the overall market and most stocks in my scans have also been down two straight days.  Because of this, my "in a row" belief means I won't be shorting tomorrow. I don't see too many stocks that interest me on the short-side because many have been down two (and in some cases more) days in a row and are likely just setting up for whipsaws that would stop me out.   If you're already short from Thursday or Friday, I would be tightening my stops if we get a lower open tomorrow morning.

Unlike last weekend, however, (when I saw many nice long setups forming), I see little to nothing that looks good on the long side.  The top three stocks on my watchlist (HNSN, MDW, CLSN) are all under $5.   There is just not much out there to trade at this particular juncture - the setups that might be worth a short-term swing trade are just not there.   If you have to trade, I would focus only on ETFs this week and if you have to trade Monday, I would look for a potential reversal back up for a day or two.

I've really been cutting back on my trading the past two weeks and based on what I see, I won't be doing much this week.   Again, I believe that eventually the August lows will be broken and we'll get a second move lower in this bear market.   My gut tells me that the market may chop a few more folks up before doing that however, so I will continue to wait for bounces to short from rather than chase the downside here.   I may be wrong, but it won't be the first (or the last) time for that.

Good luck this week - the past four weeks have been very whippy and I see no reason to expect this one to be any different.   Be careful and be patient.   Whereas I've seen a slight edge for one side or the other entering each of the past two weeks, I really don't see any edge here for either side whatsoever.   

Wednesday, September 7, 2011

Stock Market Video - Mid-Week Update - "Focus Still Very Short-Term" - 9/7/11

Hi, traders - here's the mid-week video.  So far, the bullish charts I pointed out this weekend have played out fairly well, as we bounced off the gap down Monday and continued to rally today in an impressive manner.   Where do we go now is the key however, and that is a much tougher question to answer.   I am keeping everything very short-term and am expecting more chop overall.   I discuss some key levels in the video that may signal a trend change and also some setups of interest, but buying at this particular point involves trusting Mr. Market, and I don't know if I can do that right now.

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 and feel free to retweet the links to your friends.  I would appreciate it.

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

Sunday, September 4, 2011

Stock Market Video - "Reasons to Be Cautiously Optimistic (As Strange as That Seems) - 9/4/11

Hi traders.   Here's the video for the upcoming holiday week.   Thursday and Friday were certainly bearish days with negative technical action all over the place.   However, I do see some reason to be CAUTIOUSLY optimistic going into this week, and it has to do with some of the individual charts I saw in my scans.   None of this will matter if the market doesn't hold right where it is (an absolute must), but check out the video for the stocks that are giving me this cautiously optimistic outlook.

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 and feel free to retweet the links to your friends.  I would appreciate it.

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