10/29/2009 - Market Update

Very strong rally today across all sectors, and it looks like a higher swing low from the dip on 10/2.  However, the market is not out of the woods yet - the $SPX must break the 20 EMA at around 1069 tomorrow and close above it in order to prove to me that the uptrend will continue.  If it does not by the end of the day, I am willing to dump 1/3 of the long positions that I've been holding since the uptrend started or hedge myself with some inverse ETFs.  The reason being that the Russell index is still below the 50 EMA.

10/28/2009 - Market Update - Danger

The market has shown its ugly face over the past week, and even though this is a great buying opportunity, there are some developments today that suggests the uptrend may be coming to an end.

1.  Major indices have broken the 50 EMA.  Russell 2000 was hit the hardest.

 2.  VIX has exploded to the upside and held above the 50 EMA on a long white candlestick.

One should stay long until the downtrend is confirmed.  The moving averages are turning fast, so the market must rebound within the next couple of days in order for the uptrend to stay in tact.

RDN Radian Group (RDN)

This analysis for RDN is done for a fellow blogger who shorted at 6.23. 

I think shorting this is still a bit too premature, as you'd be guessing right now, since the 20/50 didn't technically cross yet.  Also, the timing could have been a little bit better.  Remember the rule on the side bar:

Sell into strength in downtrends, buy into weakness in uptrends.

You instead shorted into weakness in a downtrend, which isn't so bad, but you're putting yourself at a disadvantage with little breathing room.  There's a couple things you could do and they're both up to you.

1.  Cover asap and take your loss.
2.  Wait for the 20/50 cross, and add to your short position once the price hits the 50 EMA.  If the price breaks through the 50 EMA, cover everything.  If the 50 holds, then you're good to go. 

China Green Agriculture (CGA) - BUY

Relatively new stock with little resistance showing strong uptrend on huge breakout volume.  Expect this to go higher.  Great buy.

Barrick Gold (ABX) - Possible Major Breakout

10/13/2009 - Market Update

The market continued to defy the masses and the media as it continued to rally.  When grandmas and grandpas are all crying for the market to tank, then you can be rest assured that the market will continue higher.  This is exactly how retail investors are left our of rallies and end up buying at the very top.  Do you ever look at charts and wonder - gosh, only if I had bought at that price!  Guess what, you are living through the phase when stocks are now around that price.  Intel just reported their earnings with higher profits AND revenue.  Futures up 75 points.

The chart below shows that the SPX is currently at resistance.  If tomorrow closes higher and breaks through, the market will continue its run.  Once again, stay long and do not short into this market.

Alcoa (AA) - Update

I overlooked the multi year resistance at ~15.00.  It may take a few tries to break this.  Entry modified to 20 EMA.

10/7/2009 - Market Update and Alcoa (AA)

Market closed flat today as it was waiting for Alcoa's earning announcement, although Dow did fall up to 50 points on a couple occasions out of fear, which presented itself as a bear trap.  Vix also dropped below the 20 EMA.  I have to say that break on the VIX did look very promising a couple days ago - but notice the 20 EMA never crossed the 50.  Alcoa beat nicely, and ended up after hours at $15 even.  I am going to initiate a buy on Alcoa at $15, with a short-term price target for 16.50.  Not much more to say other than stay long, and do not initiate new short positions.  (Unless you're shorting a short ETF).

SPDR Gold Trust (GLD) - MAJOR BREAKOUT

Gold will continue to go higher as the US dollar continues to lose value.  I believe this is also one of the reasons why the reason why the market is moving up.  Check out that breakout over the ascending triangle - that's HUGE.

10/6/2009 - Market Update

SPX broke through 20 EMA at 1044 on higher volume than yesterday with a very strong close without a selloff.  60 Min chart shows SPX breaking through the recent down channel, and then backtesting and the channel held as support - very bullish.  SPX may try to move up back into the bottom trendline on the bearish rising wedge - will see what happens.  Hold onto longs, initiate new longs if the stock of your choice is near the 50 or 20 EMA.  Do not short and hope for the market to fall - the market is still in a very strong uptrend.

10/5/2009 - Market Update

Market showed some strength today after being down 7 out of the last 8 trading days, but considering all technical points, this was a weak rally.

• Sell-off volume last week was in excess of 4 billion shares traded for the S&P 500.  The rally today only had $3.5B.
• SPX hit higher lows since August, but the MACD reached lower lows, and is now below the 0 line.
  
• SPX could not penetrate the 20 EMA - it didn't even touch.
• The SPX has fallen out of a rising bearish wedge (don't foget).
  

Until the SPX can close above the 20 EMA, I still wouldn't enter in new long or short positions.  I expect tomorrow to also be a light trading day as most are waiting for Alcoa's earnings announcement on Wednesday. 

Technical Analysis Tools

For those of you that are wondering what platform I'm using to create these charts, it's the thinkdesktop by thinkorswim.  You can download the standalone trading platform here.  It's absolutely free to use, and all you have to do is register (without actually opening an account).  The quotes are live streams on the charts only, and if you want the live stream for individual stock quotes, futures, and everything else, then you need to open an account with a $500 balance. 

For fundamental analysis I use Financial Visualizations, and stockta.com offers one of the best screeners.

10/2/2009 - Market Update

The market took a nose dive on Friday morning after the unemployment numbers were released, and these numbers were bad no matter how you tried to look at them.  The national unemployment now officially stands at 9.8%, although I do believe it's somewhat higher than that.  Conditions have been so bad in some parts of the country that dead bodies are piling up in morgues because the family cannot dish out $695 for cremation at the very minimum, if not a full scale burial.  Can you guess in which city that is happening?  I'll give you a hint, it's not New York.

The market showed strong support at around SPX 1020, and prices didn't quite hit the 50 EMA. Likewise, many stocks almost hit their 50 EMA (some did), and bounced back shortly after the first 30 min of trading. 

Take a look at the SPX chart below - I've drawn a channel starting mid August, and this is the 3rd time the market is hitting that bottom trendline.  What happens on Monday and Tuesday will hold little importance, as the market is anticipating Alcoa's earnings release.  I still would not recommend entering any new positions right now until it is clear where the market is heading.  That is, in order for the market to stay bullish, the SPX must break out of the 20 EMA 1044.  If the SPX bounces off the 20 EMA and cannot break, then that is extremely bearish, and you do not want to be a bag holder in long positions at that point.(Also, as a general rule, it's a bad idea to enter in new positions on a stock right before the earnings). 

The market has been down 6 out of the last 7 trading days, and some stocks have already broken the 50 EMA and are now showing extreme negativity  (X, BAC).  Watch the 1014-1020 area extremely closely, as it has tremendous support - once it becomes broken, it'll serve again as very strong resistance.  Be extra careful the next few trading days, and remember, do not become attached to any single stock, and you don't always have to be "in the market".  Sometimes the best play is to stay cash (or be very well hedged).

 

10/1/2009 - Market Update

The market moved BIG today as expected (yesterday's market review).  A lot of important technicals have also occurred, so listen up very carefully.

The market has broken out of the bearish rising wedge to the downside (as one would expect), and we're resting right above support at around the 1027  - 1028 area. 


If the market continues to fall tomorrow, then it is likely to test the 50 EMA at around 1014.  The next support area after that is 980.  If the 980 holds, then the 20 EMA should still stay above the 50, and the market would still be considered in an uptrend.  However, if 980 fails to hold, then heavy shorting should be a safe play. 

There are signs that the market could roll over and start a down leg -

MACD < 0
DPO at 0
ADX about to cross
VIX broke above 50 EMA again on a 10% up move.

However, the 20/50 EMAs on the SPX have not confirmed anything.

So, here are the logical decisions you should have made:

• Do not initiate new long positions until it is proven that the supports mentioned above will hold.
• Hold long positions if you have been riding them out for the past few months.
• Exit long positions positions if recently purchased at the 20 or 50 EMA and the stock has now fallen below.
  
• Hold all short positions.
• If your stock dropped >=10% today, SELL IT.  DO NOT HOLD.  DO NOT CONTEMPLATE.  I DON'T CARE IF YOU THINK IT'LL BOUNCE SOON.