Saturday, October 26, 2013

Stock Market Video - Outlook and Setup for Week of October 28, 2013 - A Few Warning Signs

Hi traders.   This week was an interesting one as the overall markets held up very well but the action underneath the surface was much more challenging to play.  I continue to see some things that bother me going forward and am beginning to wonder if this market is not slyly being distributed by instiutions.  I talk about why I am feeling this in the video and go over the charts that are worrying me right now.

Saturday, October 19, 2013

Stock Market Video - Outlook and Setups for Week of October 21, 2013 - "Rest Time?"

Hi traders. We saw a very strong week on Wall Street this week with leaders reestablishing themselves and a few earnings reports acting extremely well. These are all great signs going forward. In the meantime, however, the market is overbought and could really use some rest. Hopefully it comes although that's not guaranteed. If it happens, a lot of the leading names should set up buyable flags and the party can continue over the next few weeks.   All of these ideas are explained in the video below. 

Saturday, October 12, 2013

Stock Market Video - Outlook and Setups for Columbus Day Week - "Tricky, Tricky Market"

Hi traders.   Volatility was crazy this week as Idiotville, DC continues to hold the market by its balls.  The recovery of the past two sessions was quite impressive, but there are also a lot of warning signs out there, particularly with how former leaders acted, so it's going to be tricky going forward.  My main concern is that action of the (former?) leaders like LNKD, TSLA, FB, NFLX, NQ and others this week versus the action of the overall market.   I also saw much less quality in my long scans this weekend than I have for the past four or five weekend which is a concern to me.  I discuss these issues in the video.

For example, my "Terrific Twenty" for the week is shown below.  The fundamentals and quality of these stocks is much worse than that of previous weeks when the names mentioned above were populating the list.  However, the chart patterns of many of those names aren't worthy of being put in a list of the top twenty stocks for the week ahead and so they are absent and this list as a whole is lacking.  Maybe this won't matter, but I think it is important.

Good luck in the week ahead.   I think this market is very tricky at the current juncture and neither a big move back down or a giant squeeze higher would surprise me going forward.  I don't like that feeling as a trader because I don't feel like I have an edge, so I may remain mostly in cash until things settle down and the issues holding this market hostage at this moment are resolved.   

Monday, October 7, 2013

Thoughts About Today, Idiotville D.C., and What Tomorrow May Bring

Going into today session, both the Nasdaq and S&P had finished either at the top of their intraday range or well off the lows after heavy selling in the morning for the previous seven sessions.  We saw repeated strong attempts by the bears to bring this market down, and nothing they did seemed to be able to stick.  The repeated stands put up by the bulls over the past week in the face of no positive news coming from our nation's capital was or at least appeared to be very bullish.   Today was different.

Seeing a decent sized gap lower this morning was nothing new.   Seeing bulls respond by buying the dip at the open and pushing the market well off the opening lows was also nothing new.  The reaction however we saw from 10:30 on was new.  It was a lot different from anything we have seen over the past seven sessions.   There was no more bounce.   There was no more closing near highs.  What we did see was a selloff into the close.  We saw a close at the lows of the session for the first time since Wednesday, September 25 by my count.  We saw the S&P close below its fifty day moving average.   We saw the Russell 2000 close below its twenty day moving average for the first time in over a month (September 6 to be exact).  We saw the Nasdaq come perilously close to doing the same.  

To summarize, today seemed to be a character change for this market.   This is only a guess on my part, but it felt like the bulls, after defending key levels so many times over the past seven sessions on the expectation that Washington would come to an agreement and make everything better, got tired.   They just couldn't do it.  They were worn out.  That bears watching (no pun intended).

I hope to heck I am wrong because I would like nothing more than to get back on margin fully long and have stocks run into the end of the year with me on the train.  Unfortunately, I am getting the sense that we are in for a rough week or two coming up and that cash might be a good option right now.   Wall Street has been trained over the past few years to expect the news that it wants to hear - you need not go past the most recent Fed announcement when many feared a taper and what we all got instead was more QE. 

Did Wall Street expect this mess in Washington to be fixed relatively quickly, even if they realized that there may be some posturing on both sides?   I know I did.  I've been trained too.  Maybe I am the only one.  This situation however seems a little different.   There is no deadline where a deal has to be done by a certain date, unless you throw the government shutdown together with the debt ceiling issue.   This uncertainty could go on for a while because of that.   Both sides seem to be dug in pretty well.   What exactly is going to be the catalyst to get a deal done?   Right now, one catalyst that stands out in my mind is a big move lower on Wall Street.  That may force their hand a bit.  This idea was discussed very nicely in an article I read today by Reformed Broker, although it was put out before trading today and didn't have the benefit of seeing today's action.

I am still very hopeful for a year-end rally from which I can get crazy long and ride a wave higher.   There are still a good deal of stocks holding up very well even with the action over the past week.  Some cracks are starting to show however.

LNKD has been one of the true leading stocks for 2013.  It closed below its fifty day moving average today on heavier volume.

NQ has everything you could ask for in a stock - great fundamentals, great relative strength, and a breakout from a historically bullish high, tight flag pattern.  It looks poised to break below its key $20 breakout area tomorrow morning off of a secondary after-hours.

On September 26 and 27, TSLA made all-time highs on lower volume.  Last Wednesday and Thursday saw it slice through its short-term moving averages on extremely heavy volume and recover slightly the past two days on much lighter volume

Again, I hope I am wrong but I sense that the next week or so - perhaps the rest of the month of October - may be a difficult one.  Maybe I am biased because I had a rough day trading today, getting stopped out of most of my long positions.   Perhaps that is telling me something too.   I am mainly in cash here except for two shorts I put on today.  I am ready and willing to get long if the market tells me to do so, but my watchlist for tomorrow is rather barren compared to what it has looked like over the past few weeks.  

Be careful here.  This mess in Washington could go for longer than most think, and it may take Wall Street sending a clear message of dissatisfaction through selling shares to get them working toward some sort of agreement.   The bulls gave it their best fight and perhaps they have some fight left, but based on today's action, I think they are simply worn out.   Trade accordingly. 

Saturday, October 5, 2013

Stock Market Video - Outlook and Setup for Week of October 7, 2013 - "Uncertainty..."

Hi traders.  We had an interesting week on Wall Street, with lots of volatility and a high level of uncertainty going forward.   For various reasons, I am still leaning bullish and explain why in the video, but also have a clear signal that I am looking for that would change my outlook and plan going forward.   I also go through my "Terrific Twenty" for the week and other setups that look promising if the market cooperates in the week ahead.