Monday, January 31, 2011

State of the Stock Market - 1/31/10 - "Still Choppy and Difficult"

After a major beatdown Friday, stocks bounced back today on Wall Street, finishing with gains across the board.   The intraday action was choppy, but it was good to see no more further selling come in (at least not yet).  The biggest problem with the action was volume - it was very low compared to Friday's totals and to just the average volume in general.  There didn't seem to be much conviction behind today's buying.

Technically, on Friday I compared the setup we are looking at right now to the one seen back in April of 2010, and today the comparison continued to line up almost perfectly.   This may not mean anything at all, but the weak volume today along with the choppy nature of the past two weeks does suggest (to me at least) that a top is likely being formed here. 
April 2010
 Now
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Actually, this choppy action is more bearish than a nasty week or so selloff because significant tops take time and that appears to be what's happening here.   If I were a hard-core bull, I would actually be hoping for a quick, sharp, panicky selloff as I believe those are easier to come back from quickly than a longer-term formation where stocks are distributed slowly.

I made no trades today and will likely remain in cash tomorrow.   If we bounce again, I may consider putting a few inverse positions on to follow the "sell" signal given off Friday, but I still feel (based on the random, ugly action I continue to see in individual stocks) that we're in a difficult swing-trading environment.   Cash is boring, but sometimes it's smart as well.   If you absolutely must trade, keep things small and short-term.  Good luck Tuesday - if I don't post tomorrow, it may be because I don't have power as we are supposed to get hit here in Western Pennsylvania with some ice tomorrow morning.  Hopefully we'll make it through OK.   Take care.

Sunday, January 30, 2011

Weekend Summary - 1/30/11 - "When in Doubt, Stay Out"

Hi traders - I just completed going over my scans with a fine tooth comb and while I was doing that I kept thinking, "what am I going to talk about or do a video about this weekend? There really isn't anything here worth discussing."  Guess what - although it's probably boring, that's what I am going with.

If you read Friday's summary, you know where we are at overall with this market.  There was a sell signal Friday and certainly on the surface it looks like this market is topping out.  How big of a top and how long the process will take are the unknowns right now, and believe me, they are BIG unknowns.  

Normally, I would go short right now, but I am not going to do so.  I am going to stay in cash.  I didn't see many great setups last week and that should have been a sign to stay away, but I did not take it as one.   I traded the few I saw and ended up getting whipsawed like pretty much every trader last week, bear and bull alike.  This week, guess what - I see even fewer setups.  

Virtually nothing interests me on the long side here, not after Friday's action and the number of failed breakouts I saw.   There are a lot of ugly chart with indistinguishable, random patterns to them that (I'll be honest) I have no way of interpreting well.   On the bearish side, I see some stocks that have broken down, but not as many as I would expect.   The only thing I would consider shorting right now is perhaps the XLF (financials) but I have a sneaking suspicion it is still too early to get short anything.

Perhaps I will be wrong - it certainly won't be the first time.   Perhaps this will be a great week filled with lots of money-makers.   For me, however, I think the best thing to do at this point is sit back and do nothing.   Wait for this market to figure out what it wants to do.  My gut tells me the bulls are not going to just lay down and die here, even after Friday's damage, but I also don't expect new highs anytime soon.  Tops take time and sap a lot of energy out of traders.  That is why I think cash remains the best bet.  

I know most pay sites feel that since you are paying for information, they need to put "something" out there in terms of stocks to watch and so on.   Since this website is completely free, I don't have to do that.  Sometimes making no moves is the best move, and that's where I believe we are at today.   Things may change quickly - my scans may be completely different tomorrow and if they are I will let you know - but for now, that's my story and I'm sticking to it.   Take care and good luck next week.

Friday, January 28, 2011

State of the Stock Market - 1/28/10 - "Schizophrenic"

Wow, what an ugly day and what a crazy market we have right now.   Obviously the action we saw was just about as bad as you can get, with the Nasdaq closing down 2.5% and all indices ending at the lows for the session.   What makes the action even worse is that many individual stocks acted very well early on, pulling in traders that thought the bulls were back in control of things (yours truly included).   I see nasty reversals and ugly charts all over the place, and my main signal (along with my two secondary signals) went back to bearish today.  This is a schizophrenic market where neither the bulls nor bears seemed to want control.  If you are willing to believe it, however, the market certainly said today that lower prices are in store.

Right now, the action of the past two weeks is looking eerily similar to the last significant top we had back in April of 2010.   I am in no way calling for another crash like we saw then, but the setup looks very similar - a selloff followed by a quick bounce, then one really bad session once the indices got back near their highs.   If we see a gap up on Monday, it may be just a little too eerie for my taste.  

April 2010
 Now
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I am in cash after a wild day of having all of my stops hit.  That CCME position I started yesterday (entered at $21.08) and was up at least 10% in??  No more - stopped at $21.05.   I entered REE yesterday at $13.07 - stopped today at $12.79.   I entered HSFT Wednesday at $29.98 - out today at $29.61.   I also entered BORN today at $14.22 on the early move higher.   That didn't last - out at $13.89.   I was quite happy yesterday and was almost at new highs for the year, but today fixed that pretty quickly.  Oh well - not really anything I could have done about it.  

Last week was a "screw the bulls" week on Wall Street.  This week was a "screw everyone" week.   If anyone bought the dip Monday, sold yesterday and went short early this morning, congratulations - you are perfect.   Unfortunately, I don't think many had that gameplan.   All you can do from here is look at what the market is doing, and certainly based on today's action, it looks like early this week was just a head fake to screw the bears.   Who knows - we may get another head fake/screw job early next week like we saw back in April 2010.  I have to go through my scans to decide if I want to enter any inverse ETFs yet or not, but since my signal is back to bearish, I will either do that or be in cash.   Hopefully next week will be a bit easier to trade.  Good luck and enjoy the weekend. 

Thursday, January 27, 2011

State of the Stock Market - 1/27/11 - "Action is Certainly Better"

Positive day today for the Nasdaq, flat day for the S&P - that was the story today on Wall Street.  The Nasdaq started its move around 11:00 this morning, based for most of the afternoon before attempting a breakout during the final hour of trading.  This was quickly reversed however as it approached the 2766 levels that coincide with last week's highs, and the Nasdaq did close about 10 points off of its intraday high.   The S&P was a choppy mess.  Volume on both indices looks like it will come in a good bit lower.

I made two entries today based on what the market has shown me the past three sessions and both entries worked out OK so far.  I did attempt to get into CCME last night after-hours but my order was either too late or my limit at $19.89 just didn't hit.   Either way, I had to pay up a bit this morning and entered just a bit higher than $21.   I owned this stock earlier this year and was stopped out during the (brief) correction phase last week, but I felt it was definitely worth going back into today.  So far so good.   My other position was only up about 5% from the open but I knew it would likely make my buy scans tonight so I went into early.   The position I entered last night was flat today and we'll see if it works out.

I have to go because we have a family outing tonight but overall the market has certainly responded well from last week's beatdown.  My signals have reversed and although I do not have a full-out "buy" signal yet, I would definitely lean to that side of the market, and as you can see with my trades, that's what I've done.  I am by no means a "raging bull" here as I don't really see that many setups I like and we are extended a bit, but it is what it is - the market has improved.  If you're looking for a setup or two, here are two to consider for tomorrow.   Good luck. 

DMRC
 EXPR
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Wednesday, January 26, 2011

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

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

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

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

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

Tuesday, January 25, 2011

State of the Stock Market - 1/24/11- "Confusing Action"

We are in a tough, choppy market environment right now, and this was illustrated perfectly with today's action on Wall Street.  After putting in a nice session yesterday, stocks started the day lower.  From there, however, there wasn't much follow-through from the bears to the downside and stocks just chopped back and forth until the final hour, when some short-covering pushed stocks up to their highs for the session.   The indices finished flat overall but it was a positive session in that stocks did not get hit hard at all when they very well could have been.   Volume appears

Technically, it's hard to get a read on which way we go next as neither the bears nor bulls seem to be interested in taking control this week.   My signals remain on "sell" but a move above last Friday's high on the Nasdaq would likely have these changing to at least a "lookout" signal on the long side.  

There are a lot of divergences out there right now, and I don't know whether to view them positively or negatively.   I discussed yesterday how the Dow and S&P were moving higher (or at least resting) with the Nasdaq and small caps not confirming.   That continues - for how long, I have no idea but it is not something you see that often.   Commodities via oil, gold, and silver have been crushed this week (along with the dollar), but the S&P along with XLE and OIH have barely budged.   That doesn't make much sense either.   It's been a weird few days here and it's hard to make sense of things overall.

I did add two small short positions today via ETFs but if we move higher tomorrow, I will likely be out of them quickly with small losses.   I am not overly bearish because I know this market likes to screw with people, but I have to follow my system at least somewhat. I remain mostly in cash and that's probably a good thing overall.   The two long candidates I was watching from afar today (PWER and SODA) put in frustrating sessions today in that they looked strong early but then faded late and closed weakly.   Does that make sense?   Breakout when the market sucks early on and then give it all back when the market rallies in the afternoon?  Solar stocks (which looked great yesterday) were absolutely crushed today.  Like I said before, it's a tough market right now. 

Since that is the case, it probably pays to remain cautious overall.  I need further evidence of strength from the bulls before committing any money to the long side, but my stops are tight on short positions because the bears look weak too.   Sometimes the market doesn't give many opportunities to make money, and maybe this week is one of those times.   Good luck Wednesday.

Monday, January 24, 2011

State of the Stock Market - 1/23/11- "Nice Bounce But Volume Weak"

An interesting day today on Wall Street, as stocks bounced back from last week's drubbing with a solid up session.  The climb was steady throughout the morning, but tapered off during the afternoon, with both the Nasdaq and S&P maintaining their gains but moving sideways into the close.   Volume appears to be lower than Friday's totals, but I do not have the final totals.  

Technically, we have quite an interesting setup overall with a two-faced market.   The Dow (which to be honest I never really look at) continues to chug higher and higher and looks rather extended at this point.  Meanwhile, the Nasdaq and Russell did bounce today but that does not cover up the damage done to these indices last week.   The main question to consider right now is this - is the Dow strong enough to carry the other indices back up with it, or will the Dow eventually succumb to some selling pressure like the Nasdaq and take the overall market down further? 

Dow
Nasdaq
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Personally, I think there is much more risk going long here than going short.   Perhaps cash is the best bet overall.   I did take a small inverse ETF position today since my main signal turned bearish Friday but that was the limit to how aggressive I wanted to be at this point.   Today's bounce was on weaker volume and was not unexpected given the three days of selling seen last week on the Nasdaq.   If the Nasdaq sees bullish follow-through tomorrow and climbs above Friday's high, I would think twice about my outlook, but as of now, I do think cash or selective shorting remains the best bet. 

Good luck Tuesday - there were a few movers out there today (solar in particular as I mismanage my JKS position) and I do have my eye on two particular stocks right now in case the bulls surprise me and push us right back up to new highs, but I'll wait for that to happen rather than anticipate it.   I think that is a much safer bet than buying these dips and hoping for the best, especially with a lot of earnings coming out this week.  Take care.

Sunday, January 23, 2011

Stock Market Video - Setting Stops in a Volatile Market

Hi, traders. I think the overall market is kind of in "no-man's land" right now - maybe a little late to short aggressively but too early to buy every dip - so I did two videos on managing stop levels this week instead.  I have received some emails on this topic so I hope the video helps you out.  One basic idea I use constantly is to ask the question "what will make this chart look bad?" and use that as my stop loss level (in some cases). The other is to use the nine-day MA as a trailing level to place stops (in most cases).

Part one deals with the two losses and two breakeven positions I have had so far this year.  Part two deals with three gains I have had, although I now realize I did not include MGIC (15% gain).   Sorry for missing that one, but it was a short-term trade and I did explain the rationale on the blog this past week.

I do have a few nice looking charts that I will be watching this week in case the market decides to right itself, but overall I expect a little chop before the market decides what it really wants to do.   Those weeks are always difficult (and don't forget the deluge of earnings the market will be hit with this week) so treading lightly might be your best bet.  As I said Friday, my signals are bearish so that is overall the most important thing in my mind at this juncture.

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, January 21, 2011

State of the Stock Market - 1/21/11- "Weak As Can Be"

You may ask why my title is "weak as can be" when both the Dow and S&P were up slightly today on Wall Street.   It's pretty simple, actually.   When today's "bounce" is the best you can do with the market oversold and down for two straight sessions, it tells you that we are looking at a very weak market.   This doesn't even take into account the extremely weak session on the Nasdaq, which put highs in at the open and fell hard from there through the rest of the session.   Right now, the bulls are extremely weak and it certainly looks like we are at the beginning of a correction.  Who knows how severe it will be or how long it will last, but you need to protect yourself right now - that's the bottom line.

My main signal turned issued a "sell" signal today, so based on that, it is time to look for shorts.   I will be doing that very thing this weekend, and will likely begin with some ETFs, although many are oversold and I don't like chasing to the downside, so I may wait.   A close above today's high on the Nasdaq would put that "sell" signal into question, but to be honest, that scenario wouldn't surprise me.  A bounce early next week would not be unexpected, but with all the damage that has been done this week, that would likely just be a nice shorting opportunity.

I remain in cash for now.   Hopefully you are as well.   Enjoy the weekend.

Thursday, January 20, 2011

State of the Stock Market - 1/20/11 - "Caution Was Warranted Tuesday, Wasn't It?"

We saw some downside follow-through to yesterday's bearish session today on Wall Street, as stocks fell swiftly until lunchtime.   There was a bounce at that point which took up most of the afternoon, with the S&P breaking the morning highs, but the Nasdaq could not do the same.  The final hour brought a bit more selling and stocks ended up finishing in the middle of their ranges but with losses once again, particularly on the Nasdaq.  Small caps were very poor as well, with the Russell finishing over 1% lower.  Volume looks like it will be heavier and that gives the Nasdaq another distribution day.

I preached slight caution on Tuesday and severe caution yesterday.   Today, both of the my secondary indicators are moving to a sell signal and my main indicator is just about to give a sell signal today.  The market did bounce a bit off of their lows, but beware of anyone who says the past two days are "just a dip".   Maybe they will be right, but even worse than the damage done the past two days to the overall market is the damage done to individual stocks.   We could bounce a bit tomorrow or into next week because we are quite oversold in the short-term, but I think it will take a good bit of time to repair the damage done this week.   I would be VERY surprised (shocked actually) if the market gets above Tuesday's highs next week.  I don't know if this is a meaningful top, but I think we're certainly looking at some sort of one right now.

My guess going forward is that we either continue to fall from here or just chop around for a week or so.   Either way, I don't think buying this particular dip is a smart strategy.   Cash remains the best play.  Sometimes it's best to just sit back and watch where the chips fall and I think that's the idea here.

I was stopped out of my remaining three long positions today (all for gains) and now am totally in cash.   I sold JKS at $27.56 (entered January 5) for a 27.6% gain.   I sold CCME at $19.91 (entered January 7) for a 13.5% gain.   I sold IL (entered January 4) at $20.75 for a 4.4% gain.   All in all, I am pretty happy with those trades.   My exits from JKS and CCME may prove to be too early, but I can always reenter those names.   I still think caution is key right now with the overall market looking so weak. 

I did not short anything today but will look to perhaps do so soon if the main signal goes to a sell.   Once that signal is shown, I will look at some ETFs and go from there - I don't like shorting individual stocks as much because it is more difficult.   My system will put in a stop above the high of the signal day and go from there.  

Good luck Friday - I will likely be taking the day off as there probably isn't a lot to do at this particular juncture.  Take care.

Wednesday, January 19, 2011

State of the Stock Market - 1/19/11 - "Caution/Cash Signal Flashed"

Yesterday I discussed how my gut was telling me this market was setting itself up for a quick, sharp pullback soon.   Well, my gut turned out to be correct today, as that is exactly what we saw on Wall Street.   Both the Nasdaq and S&P put their highs in at the open, slid steadily from there, and closed at their lows with major losses.  Volume was also heavier, giving the indices another distribution day.   We were probably overdue for a day like this, but that doesn't mean it doesn't matter.   Today was not a good one in any way, shape, or form. 

Adding to the negative action today was the damage done in many individual stocks today.  Here's a list - I don't have time to post them all but copy and paste into a watchlist in Telechart and you can see the carnage.   When names like IDT and BOOM (both of which flashed recent buy signals) act so poorly after their signals, that is a major warning sign for traders to pay attention to.    Please do so.

MDT, LNG, IDT, CVGI, MHR, PCX, REDF, VHC, FTEK, MBI, BOOM, APKT, PUDA, NCT, RVBD, DQ.

I was able to avoid too much damage today overall as I have been tightening my stops recently to protect any gains I have had over the past two weeks.   Two stops were hit today - BOOM at $21.81, giving me a 2.9% loss.  I entered this stock yesterday morning.  IDT was also stopped at $26.36, giving me a very slight gain of 0.5%.   I entered this stock a week ago on the 12th.   I am still holding my other three positions but stops are in place on all of them in case this market is topping here.   Hopefully your stops limited the damage done today as well. 

My system will flash a "caution" signal today, which means overall, cash is the best option right now.   Based on my system, it will take a move above today's high in order for me to look at going long again.   I will manage the positions I have but I would hesitate doing anything else until we see if today was just a one-day bump in the road.   There is no "sell" signal yet, so I am not shorting, but if we see downside follow-through tomorrow, I will begin to look at some inverse ETFs.   If you're looking at an individual sector to focus one, I would look at gold, which has shown many sell signals over the past few months and looks very, very, very toppy here.
Gold
 Nasdaq
 Charts from Telechart, Courtesy of Worden Brothers, Inc.

Good luck Thursday - hopefully you've been paying attention and weren't hurt much today.  We've had a great run so far in 2011, but now is the time to pause and see if today was the first shot across the bow for the bears.   Tomorrow should be interesting. 

** Oh yeah, if you are doubting my signals, how about GGAL?   That's the only stock I posted yesterday as a potential long candidate.   Today - up 6.5%.   Not bad.

Tuesday, January 18, 2011

State of the Stock Market - 1/18/10 - "Good Action But Be Careful"

Good action overall today on Wall Street, as stocks put a bottom in early on in the session and bounced from there.   The Steve Jobs news caused AAPL and the Nasdaq in particular to fall early, but the recovery was impressive, with the Nasdaq finishing up 10 points even with AAPL closing lower by 2%.   Volume looks like it will be heavier.

Technically, we remain in a very strong uptrend, but my gut is telling me we are getting to a point that a quick, sharp selloff could be coming soon.   My gut has been wrong many times so who knows, but I do think we are a bit extended and could use some rest soon.  Basically, I don't know if I would be entering into many new longs at this juncture.   If we get a few days of consolidation, then I think we're back to buy mode but right now, I think being a bit cautious is smart.

Although the market acted very well today (the Nasdaq in particular), I also don't like the way some of the stocks I have been watching acted today and as such, it's another reason for me to be a bit more cautious at this juncture with the overall market.   Names like TDSC, WYNN, BOOM, SCSS, VIP, and YOKU did not act well today and that is a small warning sign to me.  

All of my signals remain on "buy", but I took profits in one position this afternoon (sold MGIC at $8.33 for a 15% gain after entering at the end of Thursday's session - mentioned this chart here and here.)  I entered one new position this morning off of a "Breakout Candidate" signal from Friday, but it reversed and closed flat and I don't know that I will be holding it much longer.

There is one name that appeared on all three of my long scans today (and that's a good sign) so I may look at that name but overall (besides solar stocks, of which I am already long) there really wasn't anything else of interest in the scans.  That is also a bit worrisome.

GGAL
Chart from Telechart, Courtesy of Worden Brothers, Inc.

Overall, I still have five long positions, but my stops are set so if we do see a pullback, I will only be taking a small loss on one of them.   There is only one position right now that I am really willing to let pullback a lot, as I am up 33% in this name and bought it off of a bottoming pattern, not a breakout pattern.   One of the reasons I sold MGIC today is that it has already had such a big move from November to now that I think a reversal is much more of a possibility in this name so it was simply more of a short-term trade.   If we see another big move up tomorrow, I may look to take some profits on other names I have.

Thank you to those readers that sent emails or left comments about this weekend's post.   I don't know where I will be going from here, but it is something I am just going to think about as time goes on because I have some conflicting feelings so we'll see what happens.   Take care and good luck Tuesday - it'll be interesting to see if this market does rest or just keeps chugging into higher ground.

Sunday, January 16, 2011

Long Setups from My Scans for the Week of January 18. 2010

Hi, traders.  No video today but here are candidates worthy of being watched closely this week.  I have been spending recent weeks trying to fine tune and streamline my main buying scans in Telechart.   I am down to three main ones I use.   They are not perfect, as I still visually go through and eliminate many charts from the scans each night, but they seem to be working well as a group so far this year.   Here they are...

Main Buy Scan - None of Interest from Friday

Breakout Candidates Scan - Main idea is that these stocks should breakout soon (meaning the next day) and are buy candidates when the signal is shown. 

BOOM
 MYRG
 USG
 XXIA


Pocket Pivot Scan - I have tweaked this scan as time goes on and these are the stocks I would be interested in from Friday's results.

DNDN
 OTEX
 TDSC



Other Candidates - Basically, these are candidates that have shown up in scans before and that I keep on my watchlist.   They are candidates strictly on their patterns.

EXPR
 MOTR
 PUDA
 XRS
All Charts from Telechart, Courtesy of Worden Brothers, Inc.

If you're interested in the scans, you have to be a Telechart user and also have to email me and perhaps I can give you a bit more information.   Frankly, with the amount of free information and stock picks that are given out on this blog every week, I get very little feedback and I am growing weary of continuing to post as much as I do and share as much as I do(for instance, this post took about an hour of my time), especially considering the success of some candidates I have shared over the past month.  This is an issue I really have to think about over the next few weeks - is this worth continuing and are people benefiting?






Check out the links and then check out where the stocks are now - some major gains that were shared here (for free) over the past month.

Here are the 5-day growth results from last weekend's video candidates as well.   Small caps first...
  • JAZZ - 13.11%
  • MHR - 10.85%
  • SPRD - 8.46%
  • KH - 7.47%
  • TDSC - 4.23%
  • QEP - 3.58%
  • SVN - 2.57%
  • EXPR - 0.95%
  • MAPP - 0.84%
  • VRGY - (0.30%)
  • RITT - (17.99%)  (never went above $8 which was the long trigger)
 Now the big caps....
  • RAX - 11.49%
  • IDT - 9.76%
  • NFLX - 6.79%
  • EZPW - 6.43%
  • BEXP - 5.66%
  • MBI - 4.98%
  • DECK - 4.39%
  • RHT - 0.33%
  • FOSL - (2.24%)
  • CREE - (4.31%)  (should have been out at open Thursday)
Enjoy your Sunday and Monday, and good luck in the upcoming week ahead.  As always, if you have questions or comments, please feel free to email me or share them on the blog.

Thursday, January 13, 2011

State of the Stock Market - 1/12/10 - "Potential Consolidation"

Not a great day today on Wall Street, as though the losses were not heavy, the intraday action was somewhat bearish.   The market started the session flat but did move higher in the morning until lunchtime.   From there, we saw a steady decline into the close, and only a late rally in the last fifteen minutes prevented stocks from closing at their lows for the session.   Volume looks like it will be heavier on the Nasdaq giving it a distribution day.   One came off the running total today, so it would take a few more before real worry should start.

Technically, no damage was done today and some consolidation after a nice day yesterday is normal.   However, I did not like the intraday action of the past two days and as such, I am watching things a bit closer on the indices for potentials signs of a correction.  So far, I don't see any, so I remain long.   I think that remains the best strategy until clear signs of weakness develop.

After today's session, I hold five long positions, as I was stopped out of one (LULU) this morning at $71.37, giving me a 1.37% loss.   I entered this after-hours on Tuesday, but it didn't follow through much yesterday after gapping up and when it broke yesterday's low, I was out.   This still may move higher, but the best earnings-related plays take off right away, so I don't have a problem with the stop being hit.

My other positions all look pretty good, with one up over 9% today and the others consolidating well.   One position I have been posting about for a week or so now (IDT) sold off after seeing some early follow-through, and I didn't like that action.   I want to see some buying tomorrow or I will likely be out.   Others that I think are worth watching right now include BORN (posted here on Monday) and the stocks posted below.

BORN
 EXPR
 HTHT
 KH
 MGIC
 MMYT
Charts from Telechart, Courtesy of Worden Brothers, Inc.

Overall, we'll have to watch if the afternoon selloff today means anything, but it may just be intraday consolidation.   No real warnings signs are presenting themselves yet, so it pays to stay long until they do.  Good luck Friday.

Wednesday, January 12, 2011

State of the Stock Market - 1/12/10 - "Bulls Show Up Again"

Another positive session today on Wall Street, as stocks started up and moved higher (after a very brief dip early) throughout the morning.  From about 11:00 through most of the afternoon, stocks traded in a tight range until the final hour, where a bit of selling came into the market.  The bulls however righted the ship rather quickly and pushed stocks back up into the close, finishing with nice gains and at their highs for the session.  Volume will come in slightly higher than yesterday.

Technically, the market is a little extended now and could see some pullback tomorrow or Friday, but at the risk of sounding like a broken record, until support is broken and the bears give clear signals that they are ready to take over, you should stay long and continue to ride the trend.  Maybe volume could have been a little higher today, but besides that, there are no signs that the market wants to quit just yet.  Someday, yes, we will have a significant pullback/correction, but I have no idea when that will be and neither do you.   You can look for it, but predicting it can get you in trouble.  

There were some strong individual movers today as you might expect.   I posted IDT last night on Twitter and have talked about this for the past few weeks as one to watch, and it finally did pop today.  Based on volume, this would qualify as a pocket pivot buy point.  LULU held up well after gapping up last night after raising earnings guidance but at the same time did not see a lot of intraday follow-through, so we'll have to see how this acts the next few days.   I have my stop in place on this position and will let it do its work.

IDT
 LIWA
 TIE
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I am up to six total positions after today (added one more today and one more after-hours last night) and have stops set on all of them.   My main account is up a little over 10% so far this year, and although in the past I would have sold several of these names already, I am doing my best to exercise patience and let gains develop in the names I have.   It is tough for me to do, but I know it's something I need to work on if I am going to be as successful as I want to be this year. 

Overall, today was a good session and the market remains in an uptrend.  Right now, being a bit extended, we could see some selling soon, but as long as support holds like it has since the beginning of November, the market is buyable.   If things change, I'll let you know.  Until then, be patient and ride the trend.

Tuesday, January 11, 2011

State of the Stock Market - 1/8/10 - "Not Bad Overall"

We saw a positive session today on Wall Street, but it wasn't a perfect session.  Stocks started higher but really couldn't get much momentum going and around 1:00, stocks gave most of their gains away in about one hour before bouncing back into the close.  Volume appears to be lower.

Overall, today was a little "iffy" just because after the intraday pullbacks we saw the past two sessions, I expected a bit more from the bulls.  That doesn't mean it's time to panic or anything like that - the trend is still up and positive.   I did see a few individual charts that I didn't like the action in today (DECK, MOTR, PWER) but at the same time, MBI was up 11% and RAX was up 6% (both shown in the weekend video) so it wasn't all bad.   My four long positions remain intact and I continue to look for other positions as they present themselves.   I am actually looking at a stock right now after-hours based on earnings news but I have to decide if buying the gap is worth it. 

That's it for today - overall, the trend remains up and staying patient remains key.   Not too many warning signs but I will let you know if they pop up.  Good luck Wednesday.  

Monday, January 10, 2011

State of the Stock Market - 1/10/10 - "Beat Goes On"

We saw another positive session today on Wall Street despite some small losses in the Dow and S&P, as stocks fought back (once again) from a weak start and rose throughout the rest of the session to finish with gains on the Nasdaq and Russell 2000.  Volume looks like it will be slightly lower but the intraday action was bullish nonetheless.   Bears continue to be weak overall and until they step up and can prove they are capable of taking this market lower, stay with the trend which is obviously up.

Technically, support was tested (once again) on both the S&P and Nasdaq but held (once again) and as such, the trend remains in tact.   As I said in the video last night, I have no idea how long this move will last, but it really doesn't matter in the long run.  As traders, we have no way of knowing for sure what will happen tomorrow, next week or next month.   We just have to take the information in front of us and try to move with the market.   Right now, the market is moving higher and there is no reason to be doing anything other than riding it here.

These intraday "selloffs" we've seen the past two days could actually be very constructive, as the market could be digesting gains while at the same time moving higher (if that makes any sense).   In the 2010 move from April to May, we saw a lot of action like we saw the past two days where stocks opened lower but then rallied to take back most of the losses and in some cases finish positive.   Back then, overbought readings were popping up everywhere, but those intraday moves acted as the pullbacks and were what allowed the market to continue to move higher without much "on the surface" consolidation.  Perhaps we're seeing the same thing here.

The only bearish aspect I see right now is that gold continues to look very weak and its chart looks like a potential short (if you're inclined).  It flashed a sell signal last Tuesday and has yet to bounce back at all.   It is forming a clear bear flag and needs to rally soon if it doesn't want to see lower prices.

GLD

In terms of individual stocks, there were further gains today in several stocks highlighted here over the past week.   REDF (which was highlighted here) is now up 26% over the past four sessions.  Unfortunately, I did not enter this stock, but one current position of mine was up another 8% today (in addition to 16% gains last week) after being highlighted in the "Top 11 Stocks of 2011" video last week.   From yesterday's video, there were some decent moves today - JAZZ (+8%), KH(+4%), SPRD(+4%), NFLX(+4%), DECK(+3%) - while only SVN was what I would consider a "sell", moving lower 4%.  

I continue to hold my four long positions and will look to add as my buy scans reveal candidates.   Right now, I am fighting the urge to take profits on a few positions as I think this is my biggest weakness as a trader - not being patient enough when positions are entered properly and not following my own sell rules.   When the market wants to move lower, it will likely tell us, but now things remain bullish overall so I wouldn't fight it, especially when there are a lot of nice-looking charts out there.  Good luck Tuesday.

Sunday, January 9, 2011

Stock Market Video - Long Setups for the Week of January 10, 2010

Hi, traders.  This market may top tomorrow.   It may top in two weeks.  It may top in two months.   I have no idea when it will top, but as of now, it looks like it wants to keep going higher, and as such, you should be continuing to look for longs until that caution signal pops up.   The two videos below share some ideas for long plays this week.

Part one deals with long setups that have had a period of consolidation and would be buy candidates on a move of 3-4% or higher on heavier volume.  My scans showed a LOT of stocks that are in consolidation patterns where they have not had any big moves over the past three or four weeks.   This should bode well for further upside in the overall market, but we'll have to see.  This video deals with larger stocks that are more well-known.
Part two goes over some smaller-cap type names that are worth watching.  These are typically the ones I pay more attention to and trade more often because they can move fast.  You also have to watch them more carefully as well.

Last week's "top 11 stocks for 2011" had some nice winners so far but also a few losers.  Only two of those losers flashed potential buy signals (MKSI and ES), and with prudent stop loss levels, the losses would have been reduced significantly in most cases.  There was really no reason to enter the others (LEDS, EXPR, LIWA) so really there should be no losses there.  Here are their performances for the past week (sorted by 5 day percent growth in Telechart)...

JKS - +16.90%
YOKU - +11.11%
AOSL - +10.68%
CCME - +10.35%
GMXR - +8.7%
REDF - +5.29%
ES - -2.87%
MKSI - -3.47%
LEDS - -3.99%
EXPR - -4.47%
LIWA - -6.14%

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, January 7, 2011

State of the Stock Market - 1/7/10 - "Bulls Show Up Again"

We saw a lower finish today on Wall Street, but all in all, it was a positive session based on another intraday comeback by the bulls.   The session opened flat, but stocks sold off in the morning, temporarily breaking key support.   During lunchtime, it appeared that the bulls finally might be giving up the reins a bit, but the dip buyers soon came back in and pushed the market up for the rest of the session.   The late push allowed stocks to close well off their lows and in the middle of their intraday range.   Volume was about even on the S&P and slightly lower on the Nasdaq.

Overall, this market continues to be very resilient and although the bulls very well may crack soon, until they do, fighting the move higher is silly.   My signals remain bullish as the market avoided any more distribution this week after Tuesday and continues to hold support.   One of my longs was down 2.5% today, but it held support nicely and my other two longs were up 4% and 2%, which is nice to see on a day like today.   I do wish I was a bit more aggressive earlier in the week, but I'll take what I can get.   I am trying to enter one order after-hours today but my internet has been off and on for the past day so I don't know if I'll get it or not.

I'll be back this weekend with some watchlist candidates for next week.  Until then, take care and enjoy the next few days. 

Thursday, January 6, 2011

State of the Stock Market - 1/6/10 - "Choppy"

We saw a choppy and rather boring session today on Wall Street, as stocks started the day slightly higher but moved slightly lower from there.   The Nasdaq outperformed with small gains, while the S&P ended up with small losses.   The only real negative that I see from today's action is that the Russell 2000 led to the downside with a loss of 0.7%.   The small cap index has been very volatile this week as a whole - hopefully that doesn't mean anything bad.   As of now, volume looks like it will come in heavier on the Nasdaq but lower on the S&P. 

Technically, not much changed today - the indices continue to hold support and all signals remain on "buy".   I have no idea how much longer this move lasts, but if I learned anything from 2010, it's that moves can last much longer than you think, so until we get some clear signs that the bears are ready to take charge, I will be simply riding the move higher.   When my signals change, I will tell you, but for now, there is nothing else to do but be patient.  

The dollar put in another strong session today and appears to be breaking out here.  This has obviously affected commodities.   Various "caution" (XLE, SLV, GLD) or "sell" signals (USO, OIH) have occurred in the past three days so be alert if you have longs in this area.   Commodities suffering is one point of worry for the overall market, but I guess it's possible money will rotate to other areas.  We'll have to see.

Dollar
Chart from Telechart, Courtesy of Worden Brothers, Inc.

I did not add any new long positions today - I remain in three positions, all of which acted well for me today with gains of 3-4% each.  I shared REDF as a setup to watch last night and it was up a quick 8.5% today, although it didn't close as nicely as I would like to see.   For now, I passed on that one.   I also passed on YOKU due to a difficult entry yesterday (gap and fade), but this has also moved about 15% this week.   That was mentioned in the "Top 11 Stocks for 2011" video this past weekend. 

I believe the new jobs report comes out tomorrow and that could drive trading.  Overall, I get the feeling that a lot of traders are like me right now - kind of expecting a pullback soon - but until it happens, there isn't much to do other than try to be patient and ride the longs higher.  Good luck Friday. 

Wednesday, January 5, 2011

State of the Stock Market - 1/5/10 - "Bulls Step Up"

A positive day today on Wall Street, as the bulls fought back against a weak futures market before the open and managed to close the day with nice-sized gains.   After yesterday's somewhat bearish session, waking up to future down big was not a good sight for bulls.   However, positive employment news gave futures a bit of a boost, and when the market did open, the lows were quickly put it at the start of trading.   There was a steady climb higher during the morning hours, and although it tapered a bit in the afternoon, stocks still closed near their highs for the session.   Volume looks like it will come in higher as well.

Technically, today could have been significant if we saw more distribution today, but we didn't and so all signals remain bullish.   Support continues to hold on the major indices and all you should be doing right now is riding your longs higher until we get evidence that things have changed.   I have no idea how much further this market can move, but I really don't care either.   It will give us clues as to when it is ready to rest, but based on today's action, it doesn't appear it is ready to do so yet.

I talked about gold as a trouble spot yesterday and on a positive note, both gold and silver put in bullish reversals today.   We'll have to see upside follow-through before getting bullish here, but at least we didn't see more selling today.   Perhaps yesterday's breakdown will be like the others we've seen since November - quick but not long.

GLD
I added one more long position today at the end of trade, and there were quite a few stocks acting well.  PCLN had a great breakout today on heavier volume.   MMYT, SCOK, ACOM, and BODY (a new IPO I didn't see until today) also put nice moves in today.   For tomorrow, if you're looking for a stock to watch, here's one I think looks good.   It's thin so be careful, but is resting very nicely. 

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

Overall, the signals remain bullish - therefore, you should too.   I will let you know when things change.   Take care, and good luck Thursday.

Tuesday, January 4, 2011

State of the Stock Market - 1/4/10 - "No Follow-Through, No Major Selling"

We saw some selling today on Wall Street, but it is was not major selling and it is hard to tell yet whether the action was simply some consolidation after yesterday's pop to start the new year or the start of a more serious pullback.   Stocks sold off from the get-go and by lunchtime, the Nasdaq was down almost forty points from its opening high.  They did rebound a bit to take back some of the losses and close in the middle of their intraday range.   Indecisive is probably the best way to describe the action, as the bulls couldn't do much but the bears didn't take control either.   Volume looks like it will be heavier and that will give the market a distribution day.

Technically, both major indices did hold support today and in the case of the Nasdaq, also closed yesterday's gap.  My main signal remains bullish, but another distribution day soon could turn one of the two secondary signals to bearish.   In addition, the action in small caps and gold were very disconcerting today and gives traders reason to pause a bit here.   Gold flashed both a caution and sell signal today and looks quite bearish here, although to be fair, we've seen several breakdowns like today since October with gold and none has led to much further selling.

GLD

I took two long positions early this morning based on the breakouts I saw in my scans last night, and still hold those.   Stops are in place as always and I'll find out tomorrow if they are hit or not.   I don't like the action I am seeing today in names like CMG, ZQK, GMXR, TRGL, and most importantly, LULU.   For a leading stock to have a breakdown like that one did bears watching - it is certainly not a good sign for the bulls. 

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

Overall, there is no reason to sell anything yet if you have been riding the trend up since early December, but based on a few things, you may want to tighten some stops to protects profits just in case we see some follow-through to the downside.   Heavier volume selling tomorrow would likely have my signal putting me in cash, but we can't anticipate that - we just have to wait for it.   Good luck Wednesday. 

Monday, January 3, 2011

State of the Stock Market - 1/3/11 - "Quite a Happy New Year"

We saw a great start to the new year today on Wall Street, as stocks gapped up to start the day and although they faded slightly throughout the afternoon, they still closed with very nice gains.  Volume will be heavier which is another positive.  Small caps led the way, outperforming the Nasdaq and S&P, and financials led the sector-action with a gain of over 2%.   The overall action was more impressive when you consider commodities faded late and did not participate much in the rally.  

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

Signal-wise, the main signal turned bullish December 1 and remains bullish today.  A down day today would have turned the main signal to "caution", but that didn't happen, so it's a moot point.  Continue to ride your longs if you have them. Both secondary signals I use are also bullish, as we saw some solid breadth action and a large number of breakouts.   The numbers I follow are getting "up there" in a few cases, so I wouldn't be surprised to see a quick correction soon, but it's certainly not a given. 

In terms of individual stocks, there was some nice action in more well-known momentum names today like RVBD, LULU, APKT - all look good.   I also liked the action in some smaller China names like CCME and HTHT, although their moves weren't explosive.   GMXR was the big early winner from my "top 11 stocks for 2011" video on Saturday - up 10% today on very nice volume. 

We'll see if we get some follow-through tomorrow, but today was an impressive start to the year.   That does NOT mean we are going to keep going up forever - at the start of 2009, the Nasdaq was up 3% (1/2/09) to start the trading year, but went into a correction four days later on 1/6/09.   Last year, the Nasdaq was up 1.6% to start the year (1/4/10) but started a correction about two weeks later on 1/20/10.   We'll have to watch and see if the market can make this move last longer than those two.   Take care and good luck Tuesday.

Main Signal:  Bullish   Secondary Signals:  Both Bullish

Saturday, January 1, 2011

Stock Market Video - Top 11 Trading Ideas for 2011

Hi, traders. Here's my top 11 long ideas for the new year. Not all are buy candidates yet - in fact, my signal is very close to turning to a "caution" signal - but they are worth keeping on your watchlists.

Just an FYI - in terms of timing and commentary, I am going to use a slightly different method this year.   Basically, it contains four signals and these are the ones you'll hear me talk about this year...

1) Buy signal - self-explanatory - look to buy stocks or ETFs (which is what I am going to try and mainly stick to this year because of my full-time job).

2)  Sell signal - look to short stocks or ETFs.  Going long inverse ETFs is possible as well in IRAs where shorting is not allowed.

3)  Lookout signal - if you are short, go to cash.   Wait for a buy signal and then look to go long.

4)  Caution signal - if you are long, go to cash.   Wait for a sell signal and then look to short.

I will also use technical levels in association with those signal days that can reverse the signals, sometimes immediately.   I will explain that as the year progresses.

Is the system I have perfect??  Heck no - there is no such thing as a perfect system.   No matter how much research you do and how much computing power you have, there is no "black box" for market timing.   I do believe, however, it will keep me in the market (for the most part) when it makes sense to be in, and keep me out (for the most part) when it makes sense to stay out.   I just have to have the discipline to follow the signals as they are given. 

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