Sunday, January 27, 2013

Stock Market Outlook for Week Ahead - Questioning Things But Not Fighting It

Good evening traders.  We're looking at a market where the S&P has now closed positive for eight straight sessions.  The Dow has closed positive for eleven out of the past twelve sessions.  A pullback certainly looks like it should be in the cards, but who knows?  This market just keeps chugging along, although I continue to believe that the market is not quite as strong underneath the surface as it might appear. 

My view is likely skewed because I have had an awful start to the year and just can't seem to catch a break, let alone get a winning streak going. I have been heavily long almost every day this year and just can't catch any winners.  I've caught a lot of whipsaws and a lot of stocks that breakout but then give it all back (CLSN, THLD, ARNA, CBEY, OREX, NSM, DGI, HMST, PAG, BLOX, BRLI, RFP, ACCL for example).  Some of it has been bad luck, at least I hope so.  For instance, I went into SWI early on Friday as the chart was showing heavy volume early on in the session.   As I put the stop order into my phone, I guess I accidentally put it as a limit or market order and it was immediately sold.   Then it moved almost 4% higher from there.   That's how my luck has gone so far in 2013.  

I think what has made this market "weird" from my perspective is that we have yet to have any really big, powerful session except for the gap-up to start the year.  For instance, the 4% breakout/breakdown ratio I follow and use (from Pradeep over at Stockbee) has been positive for eighteen straight sessions now.  I can only find a stretch in my data that has a max of sixteen positive days in a row, so we are in uncharted waters in this regard.  The weird part of this streak is that if you remove the opening session of the year, we have yet to have one +200 day.   Not one.  That's odd but perhaps it explains why I see a lot of individual stocks not acting as strong as they should and why on days where the Nasdaq is up twenty, I see half or more of my watchlist trading down on my quote screen.   Advance/Decline numbers have been rather weird many times this year as well.

No Really "Powerful" Sessions Yet

One other observation I have made over the past few weeks as I try to understand why my particular trades aren't working in a market as "bullish" as this one is that I have not noticed many of the traders I follow on Twitter talking about big, winning trades.  I have heard lots of talk about how the market is very bullish, but I haven't seen a lot of specific names being mentioned or put forward as big winners from this early period of the year.  By big winners, I am talking about positions that would give 8% gains or higher.  That is rare as human nature leads people to share successes, but maybe it's just me. 

Here are some more potential setups for the week ahead, but as I have stated before, be aware that the markets are in a position where a sharp pullback can come at any time and really hurt those who are late to the party.  Ideally, we would see a few days of sideways action here but that rarely happens anymore.  As setups trigger, I am going to keep giving it the "old college try" and entering them, hoping that the strategies I have used and been successful with in the past start working better than they have this year for me, but we'll have to see.  I continue to sense that something is just not right with this market rally - that is it not quite as impressive under the surface as most would have you believe - but I am not trying to fight it.  My overall market score remains bullish and I am staying long until that changes.  I'm just hoping I get some good luck for once this year.  Speaking of which, good luck in the week ahead. 
ENOC
 GNMK
 MGM
 MM
 OCN
 TUMI
 POL
 VLCCF
 ZUMZ
Charts from TC2000, Courtesy of Worden Brothers, Inc.

Tuesday, January 22, 2013

Another Bullish Session, But My Gut is Making Me Cautious

We saw another positive session today on Wall Street, which makes four out of five sessions for the S&P 500 and eight out of nine sessions for the Dow.  There were some nice movers on an individual basis and my overall market score remains positive.  I do see a few things that worry me short-term however so I am cautiously on alert.

A breadth ratio I track on a daily basis looks at the number of stocks making 4% moves higher and 4% moves lower on heavier volume.  We are now at fifteen straight days of positive breadth for this market.   That is rare.   I went back and found the stretch ending April 8, 2011 as the last stretch with a longer streak of positive breadth days (sixteen).  A decent little pullback soon followed that stretch back in 2011. 

I also see a few other indicators/measurements that I use at levels that typically indicate a pullback is around the corner.  The T2108 from Worden measures the % of stocks above their 40 day moving averages.  When you get above 80, it's only a matter of time before stocks pullback.  We've been above that 80 level for a good period of time, so it's something to watch. 

T2108

I still see some decent long setups and did start a position in WLT today, but I am going to be a little more cautious here with long positions due to some of the things I am seeing.  I am not saying we're going to start a big correction or anything, but I think it may be a little riskier to jump into new longs over the next few days, and I've been whipsawed out of enough positions already this year that I have no desire to have it happen again. 

AVG
HALO
NSM
TASR
 WLT
 Z
 Charts from TC2000, Courtesy of Worden Brothers, Inc.

I also see some names on the short side that are getting a little climactic in the short-term (names like KKD and RIMM) and if either of those names would see a gap up tomorrow, I will add them to my watchlist, but on the short side only. 

Good luck Wednesday.  If you use TC2000, make sure to follow me as I try to share charts each night in TC2000 due to the ease of their comment feature.  My user name is ChartSwingTrader.  If you want to see some of the charts on my watchlist on a nightly basis, please check out this feature.   If you don't use TC2000, you don't know what you're missing and you can always try it out for free for 14 days to see if you like it.  

Tuesday, January 15, 2013

More Setups for the Rest of This Week

Hi traders.  Market continues to act a little weird as you have the might one AAPL getting taken to the woodshed but everything else continues to act pretty well.  The market has yet to break down below short-term support but at the same time, there seems to be very little explosive action and at points the market has seemed "tired".  We'll see what happens but my market timing score is still quite positive at +4 and as long as it in good shape, I will continue to look for longs that trigger.  I am holding three longs right now and wanted to add more today, but just didn't see any of interest and didn't want to force things.  

Here are quite a few names that look interesting for tomorrow.  Good luck. 

BC - Almost entered today.
CJES - Right at long-term resistance.
BRLI - Still waiting
DHI - Interesting position here.
EDU - Probably my favorite one.
GWRE - Still waiting
HLSS - At a key level
LNKD - Probably could use more rest.
KGC - Gold stock
LOCK - Needs volume
MPWR - At a key level.
MAR - Nice flag.
RF - Nice cup with handle.
WHZ - Nice flag
Charts from TC2000, Courtesy of Worden Brothers, Inc.

Sunday, January 13, 2013

Ten Setups for the Trading Week Ahead

Hi traders.  Don't have much to say technically this week about the overall market because my views might be skewed by my luck for the first full week of trading in 2013.  I've been long throughout, even on margin here and there, and just can't seem to get any winners.  The charts I have entered look good, but it seems like I have picked ones that like to screw around and stop me out rather than breaking out and following through.  I'm already down 2% for the year and a little frustrated.  Sometimes you will have these stretches as a trader where nothing seems to go right - it's part of the game. 

If you follow me on Twitter, you know I have mentioned several times that the positive overall picture the indexes gave last week didn't seem to totally match up to what was going on under the surface.  Something just seemed off.  Maybe it was just the stocks I was watching, but with a watchlist of twenty or so stocks going into each day last week, I continued to see a market that was up overall but half (or more) of my quote screen was red.   All of my market scores remain positive and so my trading outlook is bullish, but I am on alert for more "weird" action under the surface as warning signs.  We're entering the heart of earnings season so perhaps this is why the action felt weird and (unfortunately) may continue to feel weird. 

Here's ten setups that I will be watching during the week ahead. With my luck so far, you may want to stay away but the charts below are the best ones in my scans over the weekend.  I was going to include BLOX in this list as the chart looks good but I've already been stopped twice on this stupid stock and it has replaced FIO as my official "devil" stock for 2013. Maybe I'll get some better luck this week.   Take care.
ALJ
 AVG
 BRLI
 EVER
 GWRE
 GRPN
 OREX
 POL
 GNRC
 XNPT
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Tuesday, January 8, 2013

So Far, A "Perfect" Pullback...Hopefully Not Too "Perfect"

After the great action from the first week of 2013, I along with many others was hoping for a nice, calm pullback that would allow the market to digest those big gains and also allow more individual setups to develop.   When I took a look at the charts of the indexes after today's session, I really couldn't ask for anything more. 

Nasdaq
 S&P 500
Russell 2000

The pullbacks on the three indexes above have come on lower volume than the big up volume we saw on the gap up last Wednesday.  The pullbacks have been very calm in nature with very little given back price-wise.  The nine day exponential moving average (a very important short-term level that I watch religiously) has now been allowed to catch up to price and did act as support today.   We're now looking at nice (albeit a bit short) bull flags being formed across the board.  Based on these charts, the market certainly looks like it wants to go higher.   

The only thing I worry about right now is that whenever something looks "perfect" on Wall Street, a wrench is usually thrown into the picture soon after.  I hope we don't see that but it wouldn't surprise me.  Perhaps a sharp move lower that that nine day EMA would get some people (like me) a little flustered and work as a shake-out.   Maybe a surprise gap-down would do it.  I am not saying it will happen, but don't be shocked if we see something like that.   I hope we can avoid it and the market just moves up out of these bull flags smoothly, but we'll see.  If a smooth move up takes place from here without any shenanigans or shake-outs, I think it will speak well of the potential upside present in 2013.  

Some setups for Wednesday and the rest of the week are below.   I am still holding some longs but I haven't had much luck getting any big winners so far this year.   It seems like the ones I pass on are the ones that are moving.   ARNA was the example from today - had it on my list but since I tried it several times in late 2012 and never got anywhere, I passed.  I also got stopped out of SNTA early in the session as I moved my stop level to breakeven, only to see it climb all the way back and close at its highs.   That was frustrating.   Trading is just that from time to time. 

ALJ
 AVG
 AZZ
 RPRX
 FEIC
 SNTS
 WAGE
 GNRC
 TIVO
Charts from TC2000, Courtesy of Worden Brothers, Inc.

Good luck Wednesday.   Maybe this "perfect" pullback will lead to a "perfect" move higher.