Sunday, June 24, 2012

Stock Market Video - "Tough to Call After Thursday" - Week of June 24, 2012

Hi traders - here's the video for the upcoming week.  Things were looking good going into Thursday's session - the market had some strong sessions and then consolidated nicely on Wednesday.  Then a Mack truck ran through the market destroying technical patterns and throwing a big wrench into things.  Because of that, I am neutral here.  We may see a little battle back and forth between the bulls and bears until something is settled.  

In the video, I do go over what to look for on the major indexes and also the charts that make me at least a little hopeful for the week ahead.

I hope you find the video helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.  If you like the videos, please take a moment to leave a review on Investimonials and feel free to retweet the links to your friends.  I would appreciate it.  You can also review my Twitter feed here. 

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

Tuesday, June 19, 2012

Very Positive Action, But Extreme Levels Mean Caution is Warranted

The action of the past three days has been great - no argument there whatsoever.  We've have a few IBD-type follow-through days.  Individual stocks have had nice moves that for the most part have held up well.  All of my timing numbers have turned positive (first time since beginning of May) with the one exception of the main breadth signal, which should turn to a buy soon assuming we don't have any massive selling.  I am bullish and hopeful this rally can continue for the rest of this summer.

HOWEVER, now is most likely not the time to be aggressively buying stocks.  Based on my indicators, you're late to the party and there is a good chance you will get yourself in trouble if you chase things here.   I have two charts for you to check out tonight.  The first is the McClellan Oscillator (T2106 in TC2000).  We closed at +321, a level that has only been approached four other times over the last two years.

Yes, overbought can become more overbought and we could indeed keep squeezing higher over the next few days, but when I looked at those extreme levels above and matched it up to a daily Nasdaq chart, I found that a quick, sharp pullback came three out of four of those times the following session.  The only time a pullback did not immediately occur was about one year ago on July 1 when the market had two calm sessions, one more squeeze higher, and then rolled over hard for a week.

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

Once again, I am not trying to rain on the bulls' parade here - just giving a word of warning.  Some rest here is normal and healthy and I will be looking to buy a pullback as long as it is not some crazy massive selloff.  Lots of individual charts are showing potential as well but need rest too.  I am in cash right now after playing the long side the past two days and will wait for the market to present a less-risky buy point for me to restart positions.   Hopefully by the beginning of next week, we'll indeed be looking at that opportunity.

Saturday, June 16, 2012

Stock Market Video - Setups for the Week Ahead - "Cautiously Bullish"

After four days of trading best described as awful, filled with whipsaws, reversals, and rumor-induced spikes out of nowhere, I was not very optimistic heading into Friday's options expiration session.  Not in a bullish-bearish way mind you - I just didn't expect the market to act well for either the bulls or the bears.  I expected more whipsaws and reversals, maybe even more than the previous four days, especially with the big Greece vote looming on Sunday.   Boy was I wrong.

This is usually how it works on Wall Street - confuse the most people as possible.   Friday's action started slow but the market actually put in a great session.  The S&P broke above and cleared with ease an inverse head and shoulders pattern and both the Nasdaq and Russell 2000 made major progress in doing the same next week.  In addition, many individual names acted very well and triggered potential buys. A really nice day overall indeed.  Volume was heavier but that was likely due to options expiration.

Russell 2000
 S&P 500
Charts from TC2000, Courtesy of Worden Brothers, Inc.

I am kicking myself for not watching things that much Friday, but honestly looking back, it was the kind of day that was actually very difficult to buy from my perspective.   It was a super smooth move up with very few consolidations and pullbacks, particularly on individual setups.   Given the week we had already experienced, it was very difficult to chase moves intraday given how many whipsaws we saw throughout the week, but that's exactly what you had to do if you wanted in today.   Certainly tough to do and it's the reason I am in cash here.   Not that that's the right play, but it is what it is for me.

The big question for me from here is whether this is a huge bull trap.   Everyone sees the inverse head and shoulders pattern.  Everyone is now expecting central banks around the world to come again and "save the day" for the market with more "liquidity".   Is this too obvious right now?  Is a breakout above the key levels above just going to be sold into, screwing all of those who got in late?   I think it's a possibility.   I mentioned on Twitter today that I could see the market gapping up 2% or so on Monday and then immediately selling off from there, much like we saw this past Monday.

The video below shares some of the setups I am going to watch early next week on the long side.  There were already some names that triggered on Friday that I missed or just sat there and watched them go without me (PVA, MGAM,YELP, VNTV, POST) but there are still a good amount that look like they could go too.  This is reason to be bullish on this market as well.  Again, let's just hope this all isn't a big bull trap.

Finally, for those of you that are TC2000 users (and especially for those that are not because you don't know what you're missing), Worden is running a sale until next Tuesday on its Platinum service where you can get four months free for a year's subscription and ten months free for a two year subscription.  A great deal on a great service.  If you are new to Worden, they do offer free 14-day trial periods in which you can try out the service.   More information can be found here

Sunday, June 10, 2012

Stock Market Outlook for Week Ahead - Cautiously Bullish - 6/10/12

We saw a lot of volatile trading this week on Wall Street with a nasty reversal on Thursday, but overall the action was quite positive.   Some consolidation may need to occur first, but it's possible that we could be forming a bottom here.  Of course, since there is so much news still out there (see Spain this weekend) and since no one exactly knows what the news will be AND how the market will react to it, I also think there is a good chance that we see a market that's sole purpose is to screw around with people.  We saw it all last summer and I am thinking it may happen again.   We'll have to see.

Technically, there is still some overhead resistance to deal with on all of the major indices and again, some backing and filling would be preferable here in my opinion to allow individual stocks to set up better.   If we pause a bit, then can rocket through the levels shown below, I would feel much better about this summer. 

 Russell 2000
Charts from TC2000, Courtesy of Worden Brothers, Inc.

I tried to do a video but the software on wasn't uploading it so I'll just post them here.  I did see some setups in my scans this weekend. This doesn't mean anything until they actually trigger and act well, but at least I am on alert for some potential movers this week.  All of my trading remains very short-term focused until I see smoother and better trading on the overall markets.   If we start to drift back, I will just go with TZA as a short play.  PLEASE CHECK EARNINGS DATES ON THESE AND ALL SETUPS!!!

Charts from TC2000, Courtesy of Worden Brothers, Inc.

Good luck next week. 

Sunday, June 3, 2012

No Man's Land

Going into this week, I was pretty neutral.  The market was forming a bear flag and I saw many stocks with bear flags, but I also sensed that a rally would surprise most so I was not going to be surprised if it happened.   Turns out we saw both of these last week.  Tuesday's action was just strong enough to pull people in - the market got over its nine day EMA and volume was even a bit heavier than the Friday before.   This action however turned out to be a major bull trap as the next three days were about as nasty as you can get.  Except for Friday, the intraday action was all over the place and it made trading very difficult.  

Monday's Nasdaq
 Current Nasdaq
 Charts from TC2000, Courtesy of Worden Brothers, Inc.

Going into this week, I am in cash after trying a few longs (stupidly) at various points in the past week and am fine with that.  I do believe we are in no man's land right now, meaning it is far too late to get aggressively short here but too early to go long because of how "heavy" this market feels.  The worst part of this market is that we seem to be back to being dominated by news.  Spain, Italy, Greece, France, Germany, Antarctica....when will this all end?   That's the problem I guess - no one knows when this will end and when there will be a little bit more certainty about what is going to happen across the Atlantic.  

To me, this seems to be a market that could drop 4-5% in a day on some panic (think August 2011) but could also squeeze shorts for a 3-4% move up on the slightest mention of government intervention or QE3.   Good luck trying to game that correctly. 

Some markets junctures are just too hard to trade and this seems like one of those times.   I will be watching from the sidelines this week, perhaps waiting for a panicky sell-off from which to try some longs.   I just don't know that will see that, however.   For the time being, cash is good for me and over the more intermediate-term, any bounces we see look to be shorting opportunities and nothing else.   It's going to take a while for the market to fix all of the damage done recently, and we are also entering the summer, where volatility will pick up.   Because of that, it's not going to get any easier.  

Be very picky and very patient here - otherwise you can really get yourself into trouble.  Good luck this week.