Sunday, March 24, 2013

A Messy But Constructive Week

After an extremely volatile week where the market gapped up or down each and every day and followed those gaps up with several reversals, we have a slightly shortened holiday week of trading ahead of us that will hopefully present better opportunities to make money than last week's mess did.  I stayed out of it for the most part, making only a few trades and staying mostly in cash.  My market timing score was bouncing around all week and when that happens, it usually means the money making opportunities are few and far between.   

A Real Mess - Nasdaq Intraday

When you look at the major indexes, even with the Cyprus situation, this looks like a consolidation period.  Last week was very volatile, but in the end, the action seems constructive.  The twenty day EMA has yet to be broken on either the S&P or Nasdaq, and until it does, the bulls look like they have the edge from a technical perspective.  A close below that twenty day (which sits right around 3220 as of now on the Nasdaq and around 1542 on S&P) would certainly change the outlook.  On the flip side, any potential breakout attempt from the bulls must take us above 3259 and 1563 respectively, preferably in a convincing manner on heavier volume.  No more of this "let's take us just above the breakout level and then sit there doing nothing" like we've seen a lot this year. 

S&P 500

Some names I am watching this week on the long side are shown below.  I only have one long position and will likely sell that on any strength.  As has been my plan the past few weeks, if I am lucky to get any of these setups to work, I will likely take profits on them rather quickly.  I still don't see this to be a swing trader's market.  I keep hoping things will change, but up to this point (at least for me), taking quicker profits and selling into breakouts is the only way to make some money, rather than giving positions room to move higher and then inevitably just watch them give the gains back late in the same session or during the following session. 

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

Good luck in the week ahead.  Although it sometimes seems impossible that volume can get any lower than it is, it's certainly a good possibility later in the week with the holiday, so be careful for whipsaws, reversals, and other random algorithmic fun.  Take care.

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