Monday, June 27, 2011

Stock Market Video - Potential Long Setups Here (Wait for Confirmation)

Hi traders - it seems like this market still can't make up its mind in terms of what it wants to do and today was another example.   After a nasty sell-off Friday, the Nasdaq took those losses right back today and now looks poised to potentially break above some key levels I highlighted in yesterday's video.   I am still going to wait for some confirmation before going long and I wouldn't be surprised at all to see the market back down 30-40 points tomorrow, but you always have to be ready, so here you go.   The video has a list of stocks holding up better than others and that deserve your attention here.   The short setups I shared last night also still deserve your attention, so don't forget those - short-term direction is still up in the air.

Feel free to pop the video out for better size and quality.   Good luck Tuesday.




Sunday, June 26, 2011

Stock Market Video - Technical Outlook and Setups for Week of June 27, 2011

Hi, traders - here's a look at the week that was and the week that is ahead of us.  Certainly this week was very tough to trade as the markets went all over the place but went absolutely nowhere (if that makes sense).   I know personally I have been guilty of fighting this market and trying to anticipate trades, but it is very easy to do in this market that teases bears and bulls alike on a daily (or sometimes hourly basis).   Bottom-line for me right now is that we remain in a downtrend and until the markets get above some key levels I discuss in the video, there is no reason to do anything other than sit in cash or selectively short stocks.   There are some other ominous signs out there that worry me as well and I discuss those in the video as well.   Final part of the video shares some potential short setups. 

I will be going on a family trip this week for two days and therefore may not be trading or posting much.   Not that that matters in a market like this, but just thought you should know.  

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, June 23, 2011

Tough Swing Trading Conditions Remain, But Bulls Still Have a Chance

In my last post, I discussed how the follow-through day on Monday gave the bulls the opportunity to move this market higher if they chose, but that the indices also had some overhead resistance to deal with and that could make things tricky.  "Tricky" is certainly a good word to describe the past two sessions.  Yesterday we saw some nice consolidation early in the session, but the final hour action was very poor.   Today we saw an awful open which took the Nasdaq below the lows of Monday and in my mind made the follow-through day "dead" so to speak, but then the market rallied hard and closed up for the session.  So where do we go from here?

To be honest, I don't know.  Based on the bounce back today, I will give the bulls the benefit of the doubt here, and if they can get the Nasdaq about the 2700 level, then I think we're looking at a rally.   Who knows how long it will last, but it might be worth playing.   There are a few setups that I see which might be worth playing, but I saw the same thing Monday and that didn't work out well. 

Nasdaq

This is a really tough swing-trading market right now because the volatility and news are setting up whipsaws all over the place for both shorts and longs.  I went into Wednesday with four long positions - I was stopped out of three yesterday and one more today.   I was in ZAGG from $12.60 on Tuesday but got stopped yesterday at $13.40.  When it gapped up, it immediately gave it all back in the first half hour of trading and looked very toppy.  It of course righted itself and then went much higher, but unless you are willing to give stocks a lot of room to move around right now, swing trading is still tough.   I am guessing I am not the only trader to have been whipsawed around mightily the past two sessions.

Here are some of the charts I will be watching tomorrow, but I am playing things very close to the vest here.  Ideally, we would see a day or two of quiet trade which would allow some of these charts to set up just a bit better.  The chances of that actually happening however seem small.  The market is still in a position where it needs to prove itself to me, and I'll wait for it to do that.  No reason to be aggressively anything right now - there will be plenty of time.   I am going to limit myself to only one or two names and only add more if I see profits in the first ones.  

 EZPW
 FIRE
 SATS
 SCSS
 TITN
 UA
 AXTI, GLUU, BLTI, IPGP
NQ, BODY, FLT, CIGX
All Charts from Telechart, Courtesy of Worden Brothers, Inc.

Good luck Friday - it's been a crazy week and I for one will not be sad to see it come to an end.   Take care.

Wednesday, June 22, 2011

Is This Follow-Through Day Going to Be Different?

We saw an obviously great session yesterday on Wall Street, with stocks starting the day slightly higher, but it was onward and upward from there.   The morning session was extremely strong, and although there was some consolidation in the afternoon, stocks did manage to close near their highs for the session.  The 2.1% gain along with the heavier volume gave the Nasdaq a follow-through and put the market (at least for now) into rally mode.   It is too early to tell if this will simply be another fake-out like May 31 was, but there are some differences between that day and this one.

On the plus side, breadth was very impressive yesterday as you may guess.   It was the heaviest buy/sell ratio in the indicators I use since Novemeber 2010.   A new trend is not made in one day and there is still some work to do to get the breadth thrust that would signify the market wants to really move higher, but at least it's a start.

(I am having trouble uploading pictures the way I normally do so you may have to click on the picture to see it better - sorry for any inconvenience.)

Buy/Sell Pressure

Technically, the Nasdaq and Russell led yesterday which is exactly what you want to see, but there is some resistance overhead for all the major indices.   Although it would be great to see immediate follow-through to yesterday's action, a little rest would not be a bad thing as well.   As long as the market doesn't give it all back like it did on June 1, then you need to respect this rally and realize it has a chance.  It's not guaranteed to work, but nothing is on Wall Street.
Nasdaq
Russell 2000
S&P 500

The positive about yesterday is that the action was very strong %-wise, especially when you compare it to May 31, where we were up only 1.4%.  Historically, that is not a large enough gain to really qualify for a follow-through day.   We have also had a much larger correction than we did then, so that may help get this rally going.

I did enter some longs yesterday but none were large positions as I think it's smart to make the market prove itself here.  There are some stocks setting up here that are worth watching, but not a ton because the market has been hit hard over the past month.  If this rally does move forward, it will likely be a slower-developing one in terms of leaders.

ZAGG, RRGB, VHC, CCIX
YOKU, FIO, SREV, HDY
BBRG, BLTI, CGNX, LAD
All charts from Telechart, Courtesy of Worden Brothers, Inc.

Overall, yesterday was very positive and the opportunity is now there for the bulls to move this market back up.  We may see a little "sell the news" action today on the Greek vote from yesterday but as long as the selling is light, then it is not a big deal.   If it's 10:30 and were down thirty points on the Nasdaq, then I'll start having flashbacks to June 1 and likely be out of my long positions.   We'll see - either way, good luck.

Sunday, June 19, 2011

Happy Father's Day

Hi, traders, and happy Father's Day to all the dads out there.   I'll be golfing tomorrow for the first time in about three years (bad back doesn't allow me to do it often plus it's just frustrating) so I won't be trading to start the week, but based on Friday's action, I think stepping away was the right thing to do (although I do see JVA was up another 10% or so without me - nice).  

If I can summarize this market in a few sentences, it is this.   The market is long overdue for a meaningful bounce and in a technical position to do so.   However, just because it is in a position to do so doesn't mean it has to happen.   Until every single intraday bounce doesn't get sold, there is no reason to expect this market to move higher.   The intraday action continues to be awful and dip buyers have yet to be rewarded.   Remain cautious.  

In my opinion, barring a crash, the easy money on the short side has already been made for this period of the correction.  Trying to short here will be difficult unless the market moves sideways for a week or so longer just because of where we are technically.   At the same time, as long as the Greek crisis hangs over the heads of all the world markets, it doesn't look like there are going to be any institutions willing to step out and buy stocks and start a tradeable bounce. 

When add the Fed meeting this week to the Greek mess and a lack of positive catalyst out there, it does not look like an easy recipe for profits on either side of the market.  Therefore, I think I will likely remain in cash and just continue to clear my head a bit.   In hind sight, I really wish I had just kept the shorts I started back in mid-May and rode them down, but I did NOT expect this correction to actually be as smooth as it has been to the downside.   I expected a choppy one with lots of reflex bounces to mess with shorts, and really, we haven't see that at all.  Live and learn I guess.

Good luck if you're trading heavily right now, but after fighting this market for a while and not really winning, I am fine with taking it easy until things settle down.   Take care.

Thursday, June 16, 2011

Stepping Away for The Time Being

After another frustration-filled session today, I am stepping away for a few days.   For the past two weeks, I've been grinding my account down slowly and even though I am still doing fine for the year with gains around 35%, that's about 10% off of my highs and I am now getting too frustrated to trade effectively.   I entered today with two short positions (DECK and ACOM).   Both were stopped out at the exact highs of the session, to the penny ($80.91 and $37.15) before heading lower the rest of the session.

I entered JVA long as a swing trade this morning at $13.45.  After watching it pullback intraday and then rally back to the highs for the session around $14, I tightened the stop to around breakeven.  I was stopped out there, only to watch it move back up the rest of the session, finishing at its highs for the day. 

Add this to the troubles I've had the past week, and I think I need to do something.  Analyzing the whole situation, perhaps I setting my stops too tight.  Perhaps I have picked the wrong stocks or the wrong side of the market.  Perhaps I am just getting a run of bad luck.   There is a good chance that I've overtraded instead of stepping back and staying in cash. Whatever the reason, I know "it" is affecting my trading, so I think it is wise to step away for a few days, just to clear my head and regroup.     

As I mentioned Tuesday, losing streaks are part of this business and how you handle them is very important.   If you're stuck in one, obviously something is not right with what you're doing, and often times the best thing to do is just take a break.   The market is certainly in an interesting position here with options tomorrow and all sorts of intraday swings the past few sessions, but if a big move occurs, it will have to happen without me.   I'll be back early next week with some thoughts, but I'm going to skip the video this weekend as well.   I think everyone will survive without it.

When I write these "ranting" posts, I know they don't have anything to do with the overall market and what's happening out there, but I do think they're important.   I certainly don't know it all and there are a lot of traders out there much better than me, but I would like to think I do have some idea of what I am doing.  One thing that bothers me however when I read other blogs is that very few if any talk about their actual trades and the psychological aspect of trading.   They just give advice and that's it.   To be honest, that (finding stocks, doing the analysis) is the easy part.   It's everything else that's really hard (like dealing with losing streaks), and I hope sharing these experiences do help some readers out there.   Good luck tomorrow and enjoy the Father's Day weekend.   Take care.

Wednesday, June 15, 2011

Stock Market Video - Market Really At A Key Point Here

Quick video looking at this market.  Today was obviously very bad but what worries me more is the big breakout of the dollar today along with the fact that thanks to yesterday's bounce, the market is no longer oversold.  I think there is a more room to fall here and that is not a good thing.  Be very, very careful out there. 




Tuesday, June 14, 2011

Now What...

Well, we finally got that big relief bounce so many (including me) have been waiting for today on Wall Street, as stocks gapped up, move nicely for the first hour and a half of trading, and then grinded their way through the rest of the session for further gains.   There was a late pullback that took a bit of the shine off the day and volume did come in lower, but overall the bulls showed nicely today.   Since this was certainly overdue and expected, however, we now have to look at where we head from here.

Technically, the markets are not that far from the short-term level I prefer to use both on the upside and downside (the 9 day EMA) and that is what I am going to be watching closely tomorrow.   For the Nasdaq, 2690 is a key level for me, and for the S&P, 1290 is the level to watch.   That being said, bear market bounces are usually very quick and sharp so I would not be surprised at all to see a bounce move further than the 9 day EMAs.

If we do get above those first levels of resistance, there is enough overhead resistance close by that I seriously doubt this market will be on the move for more than a few days.   Today was a nice move but is likely nothing more than that, so don't fall in love with anything on the long side here.   Playing a bounce is fine, but that's all we are likely looking at here - just a bounce.   Take your profits when you get them and honor your stops to the downside.  This is still a very dangerous and bearish market.  Today didn't change that.

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

Personally speaking, I have been in quite the groove over the past week or so, but it's not exactly the type of groove you want to be in as a trader.  Losing streaks happen to everyone in this business (although few will ever admit it or discuss it personally) but they suck nonetheless, especially the one I am having currently.  I say that because if you look at the stocks I have been in over the past few days, they are good stocks.   Many of them moved today.  I am just inevitably timing them a a day wrong, getting stopped out by a few cents, or just choosing the wrong one.  

Chart shows my actual trades along with the gains I would have had 
with better timing (and maybe a bit better luck too).

I am in one of those streaks that no matter what I do, it seems to be the wrong thing.   Today I had SWI and IRWD on my watchlist before the open, but I passed on both because volume was not very heavy early on and went with VHC and SQNS instead (which both had strong volume early).   It was a simple decision that had merit, but it was obviously the wrong one in both cases.   How about getting stopped at the lows on ORS last Friday (shared it here), then seeing it move up 78%!!  Not the easiest thing to take, but that's really all you can do.   Maybe some of you are having better luck with the ideas I've shared recently because many are working.

When you have a losing streak, you can do several things that can help a bit.   One is to trade less (although I haven't done a great job of that personally).   It also makes sense to trade in smaller size than normal (which is something I have done this week).  Analyze your methods and ask yourself if you are in tune with the market.   Most importantly I believe, you must have confidence in yourself and in your ability.  This is a very hard thing to do as the human ego is a fragile thing.  However, if you can make money consistently and have done it in the past, you don't just lose that ability overnight.  A rough patch is hopefully something you can learn from, grow from, and when it is over, you will come out of it as a better trader (at least that's what I hope for.)   Look no further than Dirk Nowitzki.  He was 1-12 in the first half of game six Sunday night, yet he came out and made clutch shots in the fourth quarter to win the title and MVP.   That's the type of attitude you need to have to be successful not only in trading or basketball, but life in general I guess. 

OK, enough of my pity party - overall you do need to be careful here.   Today was likely nothing more than a long overdue bounce that in the grand scheme of things wasn't even that strong.  If we get further strength from here with little to no heavy selling over the next week or so, then maybe we have something bigger.   All evidence points to this still being a bear-market type of environment, so trade accordingly.  Good luck Wednesday. 

Sunday, June 12, 2011

Stock Market Video - Technical Outlook and Setups for Week of June 12, 2011

Hi, traders.  Here's your look at the week ahead on Wall Street.   Obviously the past week was tough as many traders (including me) expected a bounce at some point that just never came.   We're getting to some key levels from which a bounce should occur, and I go over those levels in the video.   When we do bounce, I think it will be strong but short, and since we have so much bearish evidence from a longer-term perspective, any meaningful relief bounce is probably a good chance to get short. 

In the video, I also go over a list of stocks that are holding up best in this market.   You always want to do your due diligence on all stocks, and those that hold up best when the market is selling off are typically the ones that will lead the market higher when it bounces.

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, June 9, 2011

Having Some Flashbacks to 2008

An old adage in trading says that "bull markets open weak and close strong, while bear markets open strong and close weak."  If the past week or two of trading is any indication, we must then be in a bear market, because the awful intraday action continued today.  I'm having some flashbacks to 2008 when the market always seemed extremely oversold but at the same time always seemed to go lower.  Although we were very oversold once again going into today's session, the "bounce" we saw was never very strong in terms of intraday movement and after grinding their way higher in a very laborious manner all session, stocks gave back almost half their gains in the last half hour or so of trading.  Again, not very bullish action.  

We may bounce a bit tomorrow and maybe because everyone is looking for a panicky type intraday sell-off from which to try some short-term longs from, we'll grind our way higher for a few days just like we did today.   Nothing would surprise me right now.   I continue to believe that any "bounces" are just opportunities to short, and anytime we get near the 9 day moving averages on the indices, that's where I would look to go back to the short side.   Right now, I remain mostly in cash except for two small long positions I entered today (ZAGG and OME).   I think shorting here is still somewhat dangerous.

The weird thing about this market is that although the action continues to look bad, I also continue to see some decent charts in my scans.  Not a ton, but more than I would expect.   I'm sharing some tonight just in case the market surprises everyone and grinds its way a bit higher from here over the next few days.

VHC
SREV
RRGB
ORS
KV-A
KKD
ACHN
All Charts from Telechart, Courtesy of Worden Brothers, Inc.

If you plan on playing any long positions, trade smaller than normal positions and please keep your stops in place (and probably pretty tight).  I don't see many short setups here but any moves into short-term moving averages on individual stocks may work well as possibilities.  I just don't see many of those right now.  Good luck Friday.

Tuesday, June 7, 2011

Why I Hate Gap Ups in Extreme Oversold Conditions

Hi, traders - another crazy day on Wall Street.  Last night, I wrote about the strong possibility of a bounce in this market due to oversold levels from which bounces typically occur.   I tried to clarify it by writing, "We should see a relief bounce soon but maybe only after another intraday selloff.   I would be looking to cover some shorts if we happen to get a morning selloff tomorrow."   That selloff never came - in fact, we had a gap up to open - and you saw the true strength of the "bounce" by the action in the final hour. 

Although I was watching the market, I did nothing today.  I was hoping for a gap down or at least some early morning selling from which to potentially enter some long ETFs, but that never came.   I really, really, really didn't like seeing the market open higher.   A slightly higher open in extremely oversold conditions usually is just an invite for traders to take profits while they can and they certainly did that by the end of today's session.  Every single bounce attempt today was sold hard, especially in the final hour.

The other reason I don't like slightly higher opens in oversold conditions is that they usually serve no purpose other than to relieve some of those oversold conditions ever so slightly that it allows the market to resume its selling.   You can see below that that is exactly what happened today.   We are now in a position where although we are still oversold, we may see the selling really accelerate here.   Anytime the market is oversold and the indices STILL close at their lows, you are looking at a recipe for trouble.



Besides a long position in TSM which I am riding with a stop, I am in cash and perfectly content.   I am still frustrated as positions I get stopped from continue to move without me (SODA from today is the latest example).   However, it is what it is.  I do think it is still too late to short here, but any sort of bounce we get should be looked at as an opportunity to do so, especially if the markets can get up near their short-term moving averages.

There is nothing wrong with sitting the market out for the time being, and right now that's probably the best play, at least for me.   I don't think we're ready for a playable bounce yet based on today's action, but the big gains on shorts have already taken place.   Sit tight and wait - that's all you can do.  If we get one more nasty selloff, maybe we could see a nice bounce, but that's a big "if".  Good luck Wednesday.

Monday, June 6, 2011

Extremely Bearish Action But Also Extremely Oversold

Well, this weekend I discussed the 2700 number on the Nasdaq and how we are getting to levels where an oversold bounce could certainly occur.   After today's bearish action, we are certainly there.   The chart below shows the indicator I use to track the overbought/oversold levels and since it has worked well recently, I am watching it closely here.   I am tempted to take a position here in QLD or SSO but may wait until tomorrow.

Nasdaq

My Oversold Indicator
Chart from Telechart, Courtesy of Worden Brothers, Inc.

We are as oversold as we've been since March 16, when the market had a big selloff and then bounced back to put in a decent two to three week rally.   I don't think the same thing will happen here in terms of length, but we could definitely see a relief bounce that lasts several days.   I don't think it will amount to much more than that.  Longer-term, the market is obviously in correction mode and there is no reason to be trading the long side for anything other than a one or two day trade.

Personally, I am quite frustrated because I have not traded well this week.   Scratch that - I guess I should say I haven't managed positions well this week.   At various points over the past five days, I've been short BEXP, ARUN, DECK, AG, and APKT - all good short setups.   If you look at the charts of these five today, you would expect me to be quite happy.  For various reasons however, I was stopped out of them prematurely and didn't get any of the benefits of today's drop.   One (DECK) was completely my fault when I placed a market order instead of a stop as I was rushing.  Dumb unintentional mistake but one that cost me perhaps a 10% move.  

Getting stopped on the other shorts just kind of happened.  I use the 9 day moving average as stop level for most shorts (just like I do for longs) as it usually works well, but for the other four shorts, that level was broken and I was stopped out.   Not much I can do about it - not being able to follow positions minute by minute makes using stop orders important, but sometimes you get unlucky so to speak. 

Hopefully you have had some better luck this week but it's been a tough market, no doubt.  I ended my video yesterday saying my outlook was short-term bullish, but longer-term bearish and I think that remains true today, although I would add the words "very cautiously" to the bullish part.   We should see a relief bounce soon but maybe only after another intraday selloff.   I would be looking to cover some shorts if we happen to get a morning selloff tomorrow.  Good luck Tuesday.

Sunday, June 5, 2011

Stock Market Video - Technical Outlook for Week Ahead - June 5, 2011

Hi, traders - here's the look at the week ahead.   In the video I go over what I expect early this week and longer-term for the summer and why.   A key indicator I use is getting to a point where a bounce usually occurs, so that's what I am looking for early in the week.  Longer-term, I have a completely different outlook.   Video includes some setups so check them out.

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.




Wednesday, June 1, 2011

Welcome to the Summer of 2010....I Mean 2011

When I wrote yesterday's post, I don't know if I made the feelings I had about the move yesterday perfectly clear, but I tried.  In my gut, I felt it wouldn't amount to anything and was likely a trap, but at the same time, I knew I've had that feeling before over the past two years just to see the market keep moving anyway so I respected what I saw and went with it.  By "went with it", I mean I got a list of longs ready and bought one long position last night.

Based on today's action, I should have trusted my gut.   It was awful out there any way you cut it, much more severe from a negative perspective than yesterday's up move was from a positive perspective.   Example - buying/selling pressure ratio was +181 yesterday.  Today, it was -374.  My main signal is back on a "sell" and you rarely see that happen (well, except in very choppy markets...hmmm).  Any sort of follow-through day or follow-through day "lite" is dead in my opinion.   Lots of charts were damaged and the indices look poor once again.   We've heard this story before.

I was short two positions going into today (BEXP and ARUN) and long one position (TSM).  The short positions allowed me to make some decent gains.   I got into REDF early on at $11.14 but could not manage it perfectly and ended up being stopped out at $11.12.  This was a casualty of having to work and not being able to track the market all the time - I simply couldn't be there when it started breaking down.

I added a few shorts at the end of today's session (DECK and APKT) and may add more yet, as I have many setups that look good (HP, SOHU, CYD, PCLN, SGY, AG).  Note - I did short AG after-hours. I think we have further downside from here but will keep my stops in place in case the market surprises us all once again.   Longs are pretty much out of the question for me here for the next few days until we get to oversold levels from which I think we can bounce.

I titled my post today the way I did because I think we are looking at a few month period ahead of us that is going to be very similar to the three month period we saw last summer.   We had a correction, but if you take out the "flash crash" move, it was slow, choppy, and very difficult to trade.   We had sharp selloffs that made things look very bad, and then the market would bounce out of nowhere for three, four, or five days.   Just when it looked like things were OK and that the market was going to start a meaningful rally (above short-term moving averages, FTD, etc), it would tank again.   Up, down, up, down - not the recipe for easy profits.

Unfortunately, I think that's what we're in store for here, and because of that, you have to adjust.   I've been taking profits a lot quicker recently and have had success with it.   I think overbought and oversold type indicators will work well to time potential trades and I will continue to share those as we go.   It's not going to be an easy summer, but it is what it is and you have to make the best of it.  Buy the dips and sell the rips has been working for a few months now - might work for a few more. Good luck Thursday.