Wednesday, March 21, 2012

MId-Week Market Update - Still Long But a Few Worrisome Signs

We saw a mixed market today on Wall Street - choppy trade most of the session but a dip late put the S&P slightly in the red while the Nasdaq finished slightly positive.   There was no real damage done that I see and as long as the indices continue to hold their nine day EMAs, then I will continue to be bullish.   However, I am on watch for signs of weakness here and will trade accordingly.

One reason I am watching carefully for signs of weakness is that I saw a few stocks that had failed breakout attempts or finished well off of their highs for the session.   Names like FOSL, SWHC, YELP, ALLT, LNKD, FRAN and ZNGA all were strong early but faded.   Maybe it's nothing, but I never like seeing breakout attempts fail as it is a sign of a weakening or stalling market.   That three of those names were recent IPOs (the hottest of all groups right now in this market) makes me pause.


The two stocks that stood out to me were LNKD and ZNGA, but that's probably because I had positions in both entering today.   I was surprised LNKD couldn't hold $100 when it broke above that big round number around lunchtime.  Today's gap could have been a breakaway gap but now I'm sensing this gap will have to be filled over the next few weeks.   That stock just doesn't seem to want to be a big-time leader yet.   ZNGA may have sold off on acquisition news but regardless of the cause, this is now two times in three weeks that the stock has put in nasty intraday reversals.  Again, it seems like it just doesn't want to prosper and be a leader yet.

Here are the setups I am watching for tomorrow.   Since I still see setups out there, I am still preparing to take them, but this week has been a struggle for my account just like the past two weeks were.  It feels like I am just spinning my wheels as I make some good money on a few trades but then get whipsawed on a series of others. I am not losing money overall, but I am not making much either - account is going sideways.   It is what it is - a big part of it is not being able to watch the market all day and not being able to monitor my positions until it is sometimes too late.  This week it seems like gains have disappeared very quickly.  Seems like a better day-trading market right now than anything else because follow-through from day to day is iffy (CHS is an example - another stock I am holding for now). 

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

Overall, as long as short-term support holds, then I will remain focused on the long side of the market.   However, if I see any signs of weakness in other IPOs like INVN, KORS, or JIVE or see more failed breakouts, then I will have to reassess.  For me, the health of these IPO stocks is a big tell for the overall market because they've been so strong.  If you start seeing them breakdown, then watch out.  Good luck Thursday.


Anonymous said...

I would agree with your "worrisome" comment. I sold everything on Monday at the close, just to lock in profits.

I noticed as well that the weekly AD line (derived from TC2000's NSDA and NSDD indices) is at its closest to the zero crossover since mid-November last year.
Might be nothing, we'll see soon enough, I expect.

Thanks for the great work.


Kevin said...

Your account and my account are acting the same way :) Up one day, down the next. Staying steady, but sure not growing.