Tuesday, January 31, 2012

Trade Was "Different" Today - Setups Included for Wednesday

 Kind of a different day today on Wall Street - for the first time in a while, we saw a nice open that was met with selling and it seemed to me (from what I could tell checking in at lunchtime) that there was some distribution going on today.  I know we had some selling off the highs last Thursday, but that came after a big session the day before and a slightly overbought market so it was a little bit more easily explained.   Today's selling came after two days of light selling that was consolidation-like in nature.   The market did bounce back but I was expecting a nice day today and we didn't really get that. 

It is possible that with the run-up we had over the past month that we are just putting in a choppy consolidation right now that will eventually lead to higher prices.  The S&P and Nasdaq are still holding short-term support (just barely however on S&P) but are kind of getting to a point this week that if they don't get going, then the nice, smooth January move we had recently is over and we are in for some more choppy trade or consolidation.   I'm still bullish but as always ready to switch if necessary.

Here are the setups I will be watching tomorrow, although I have my full number of positions as of now so any new ones will likely be taken as day-trades like REE was today (in hindsight, not a great move to not hold that longer). I was stopped out of two positions the past two days but I replaced those with new positions late in the day.   My stops on all positions have been tightened a bit. 

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

I also wanted to share a special free webinar tonight from TC2000 that you may be interested in watching.   The information is below.  You can download the TC2000 software right here and sign up for a free 14-day trial if you're interested in checking out the software.

How do you know how many stocks are participating in the current market movement? It’s called “breadth analytics” and it helps you figure out how strong a market move is. You can combine this with momentum indicators to zero in on key market turns. 

Register now for tonight's free live webinar. Julia Ormond and Michael Thompson will show you how breadth indicators contribute to a better understanding of underlying market conditions and how momentum can be used for timing and direction. Webinar content will be presented for 45 minutes with an optional 15 minutes of Q&A to follow.
You'll learn:
  • How breadth indicators can tell you when the broad market is rolling in either direction, including the percentage of stocks above their 40- and 200-day moving averages and the Advance/Decline.
  • How individual stocks are responding to market direction using momentum indicators like TSV and MACD – looking for confirmation of our original findings.
Hope you can make it!
Worden Brothers

Sunday, January 29, 2012

Stocks Market Videos - Outlook for the Week Ahead and Knowing When to Sell Winners

Hi traders - here are two videos for you this Sunday.  The first video looks at the overall market for the week ahead and some stocks that are worth adding to your watchlist to see if they set up later in the week. I posted specific setups for Monday on this site yesterday so please check them out. I am watching one key level on the overall market and discuss that in the video.

The second video is an educational one (I wish I had more time to do more of these but I just can't on a free site like this).   It deals with the hardest part of trading in my opinion - knowing when to sell.  Although I have started out the year well (up about 10% right now), I have also violated my selling rules several times this year that cost me bigger gains in several stocks.  I discuss these examples and why both patience and rules are important when selling.  My main sell rule is discussed as well and with the examples provided, it is easy to see why it works well in trending markets like the current one.

Saturday, January 28, 2012

Saturday Morning Stock Setups for Next Week

Here are the top setups I see going into next week.   I will share others that need a bit of work tomorrow in video form as well as look at the overall markets.  Basically, the beat goes on for this rally, as Friday turned into another bullish day where support held and stocks finished well off of their lows.  I have no idea how long this rally lasts - at some point we will have a pullback or small correction - but I plan on just riding it as long as it wants me to do so. 

I will say that I did hit some extreme numbers in my scans again on Friday that gives me a little pause here in terms of starting new positions.  However, I already have six positions and that is usually as many as I want to manage at one time anyway.   If we are up again big on Monday, I will likely take some profits on positions, but as I said Thursday night (and have painfully learned this year in a few cases) patience is a virtue that is sometimes a must as a swing trader.  Everytime we've hit extreme numbers over the past week or two, the market has had a relatively calm day that has allowed those number to dip to non-extreme levels.   Hopefully that can happen again and we can avoid a big 3-5% shakeout. 

Hopefully you benefited this past week from all of the setups shared - starting from last weekend, there were some big-time movers and big-time profit opportunities.

According to ThinkorSwim, none of the charts below report earnings this week, but as always, I will be watching the after-hours session for potential movers this week as many smaller-caps will start reporting now.   TPX was a good earnings play for me this week, but I stupidly passed on NFLX and ELX after-hours and both would have produced at least 10% gains.   Hope the setups below help you next week.   If these setups have helped you at all, please take a few moments to review my site here or twitter feed here.  See you Sunday.

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

Thursday, January 26, 2012

Down Day, But Stay Bullish Until Support Levels Are Broken

We did see some selling today on Wall Street along with some heavier volume, but considering the move up we've had, I don't think that's that big of a deal.   Support via the nine day EMAs still did hold today and although I wouldn't mind the market putting in a very quiet session tomorrow to rest further, it is possible days like this are all we may get in terms of rest.   It's been since December 30 that the Nasdaq closed below its nine day EMA and December 19 since the S&P did the same.   As long the nine day continues to hold on a closing basis, I have to remain bullish. 

S&P 500

Patience is one of my weaknesses as a trader but I am working on it as best I can.  I held all my longs today and was only stopped on one (RDC).   I actually had a nice day via YNDX, OCZ, and EFII and will continue to hold them as long as the market doesn't break these levels.   If that happens (a breakdown), then I may go into more of a cash mode, but I don't want to predict when that happens.   This may very well be the type of slow, deliberate rally that we all were clamoring for over the past year and I don't want to miss it by being impatient and selling positions too quickly.   I have already made that mistake several times this year.   Of course, now that I write this, the market probably will tank tomorrow, right??

Here are a few names I am watching for tomorrow, although I don't really want to take many more positions on as I am almost full.   In addition to the charts below, I think TLB, ASIA, NTCT, INSM, and CISG are forming very nice flags but in these cases, I think a few more days of rest would help tremendously.   I also like VNET as a potential breakout play.  

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

Good luck Friday - let's see if the market can brush off today's selling and either rest or move higher into the weekend.  If things change, I will be ready but for now, let's give the bulls the benefit of the doubt - they've earned it.

Tuesday, January 24, 2012

Preparing for What Should Be One Crazy Day

Tonight I'm sharing some potential long setups for tomorrow as this market continues to act very bullish.   Today's dip was bought and every time my numbers get to levels that indicate a shakeout/pullback is close by, we have a slower day that allows those number to drift back to reasonable levels.   That's good and why I am still bullish.   However, tomorrow could be one of the craziest days we've had in a while.   We will likely start off with a big gap off the AAPL earnings, but the Fed comes later and that will likely cause fireworks as well.  I have no clue how everything will play out but just be ready for anything.   I will have no problem going to cash again or adding more longs - use discipline and common sense when considering any setup right now and make sure you use stops.
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Saturday, January 21, 2012

Looking Ahead at A News-Filled and Earnings-Filled Week - 1/21/12

Hi traders - here's an overall look at the markets to get you ready for a very busy week ahead.   We saw a little intraday selling on Friday but stocks finished strong and a boring, slow day is a good, good thing sometimes on Wall Street (like when you've been up nine out of the last ten sessions on the Nasdaq).   Some of my indicators were reaching extremes Thursday and that is one reason I took a lot of profits that day, but I liked how those same indicators calmly pulled back because of Friday's action.   When they continue to get more and more extreme is when you have to worry about a major, sharp shakeout or reversal, but we may be able to avoid that. 

Both the Nasdaq and S&P continue to climb slowly but steadily and there is very little to complain about from a bull's perspective right now.   It would not be a bad thing for the market to pull back a bit here, but as long as the nine day moving average holds (like it did last Friday) then things are still fine.   Since we've been riding that moving average higher for about a month now (since December 22), a break of it on a closing basis would be a major warning signal to me and likely put me totally in cash.
 S&P 500

Here are the main setups I am watching into Monday.   Before getting aggressively long again, I would ideally like to see another day or two early this week like we saw Friday that would allow the market to rest a bit (as we are a bit overbought) but that may not happen.   If I see setups trigger, I will take them - that's my basic outlook until the market shows us it is not a good time to go long.

Charts from TC2000, Courtesy of Worden Brothers, Inc.

There are other names I am watching but they are thinner (STRI, CCIH), more volatile (SKUL, VNET, BORN, AUMN, DATE, PACB, SONC) or need more rest right now (EGHT, AMSC) so I am not going to post their charts.   This is a huge week of earnings and I will be watching the pre-market and after-hours periods very closely looking for earnings plays.   Two stocks that were in my scans this weekend (ISSI and SRDX) have beautiful charts but because they report this week, I will pass until after their reports.   Here is an older post about trading earnings breakout.   Tomorrow I plan on putting a list of companies that report this week into TC2000 and pick charts that look like they are worth watching closely following their reports.   Here's a list from Finviz with stocks over $5 and 100K volume that report next week (although sometimes their info is spotty.) Always be ready.  

Good luck this week - along with the deluge of earnings, we also have the State of the Union address (Tuesday), a Fed meeting (Wednesday), and GDP (Friday).  If you can think of a bigger news week when you combine the earnings reports coming out, I'd like to know about it - it will likely be crazy.   Things look bullish overall and hopefully they will stay that way, but the news could definitely affect that outlook.   Take care.