Monday, August 16, 2010
5 New Trades Are Up
Just scroll down to the bottom of the list. There's some nice looking charts there.
The Wrap
Today, the Q's and IWM outperformed-Tech was up. The S&P just eeked out a positive return and the Dow just missed a positive return. Breadth was pretty even today. You know there's only 1 person I read with any sense of regularity and that is Don Worden's nightly commentary on TeleChart (it's that software I use and recommend-there's links at the top of the site). Tonight Don said the market didn't do much, but it's improving. Hopefully it improves right into a nice bounce.
The IWM actually put in a bullish engulfing day today, while the index it tracks, the Russell 2000 closed up but just missed the bullish engulfing reversal pattern. This suggests to me that traders are more optimistic, but it's not a sure thing as this is an ETF with approximated gains.
The Q's failed to do the same, but volume was up in the ETF today, a positive day, actually the most bullish price/volume relationship.
The Dow 30 is a picture perfect loss of momentum as illustrated by the range of the body of each successive candle. A doji, like today's is often found at reversal points.
This is the beauty of candlestick charting, it gives you so much more information at a glance then any other representation of price. Note the similar pattern just below the red trend line and look what happened after. Note that the Doji day began the reversal, and today was a Doji day as well.
Interestingly, the S&P-500 put in a hammer candle today, known as a reversal candle with the phrase, "Hammering out a bottom" while the SPY looked quite different, but it's full body closing above the ATR for the day can only be interpreted positively, unless you look at the volume being down.
As 3C suggested, the dollar was down today, although on very light volume, which fits perfectly with my notion of a possible bounce. There wasn't a hard sell-off in the dollar, just a pullback on low volume. Remember, the dollar typically trades inversely against the market, oil and certain commodities, as well as multi national corporations.
Tonight, I can not turn to 3C as I'm getting mixed readings. I don't consider a signal valid unless it confirms on all 3 versions and I have no confirmation tonight. My assumption is the pattern will continue tomorrow with a gap down that is bought and this market only has a few days left in my opinion to make it's move.
Markets correct in two ways, one is through price, like pullbacks, the other is through time. Recently the last few days, it has been more time then pullback. My other assumption is that the market is accumulating on the cheap, on the gaps down and selling the highs so it doesn't launch yet. There will be a certain amount of accumulation that needs to take place at a specific target range and when they are done, that is when you see a move. However, news is sporadic today, but in general, we have to assume news will be biased toward the negative, so if this market doesn't get launching soon, it will eventually hit a bad news day with a flood of sellers. I don't know if this bounce is that important for smart money to absorb all of that supply and still try to take the market higher, so I think if it happens, it's in the next day or two. We have enough reversal signals in place, the market is taking bad news in stride so far, tomorrow seems like an ideal day.
With the Fed buying treasuries, I found this story to be interesting (remember I said the truth usually comes out a few weeks later) well this could have some correlation to the Fed's buying.
http://finance.yahoo.com/news/China-reduces-holdings-of-apf-290032879.html?x=0&sec=topStories&pos=7&asset=&ccode=
Tomorrow morning we have a bevy of announcements coming, perhaps there's something in there that sparks the market. All before the bell we have: Housing Starts, Building Permits, PPI, Core PPI, Industrial Production, and Capacity Utilization. Any one of those coming in above consensus could be excuse enough to get the spark flowing.
I must tell you again though so there's no misunderstanding, the market is in a bearish place, judging by history, if it's true, as Mark Twain said, "it doesn't repeat, it rhymes" then we are in a very bearish place. A bounce here is for short term trades only and really you can sit it out if you choose to and wait for it to start to reverse, at which point, we will have a plethora of short items to sort through. Many stocks on my watchlists are just several percent away from being the types of setups that you really couldn't ask for more. This bounce, if it happens, which I'm inclined to believe it will, will be a gift from the market, I'm salivating just looking at the prospects-high probability, low risk, long term trend trades.
As I have posted, one of my favorite trades for a bounce will be DBO, certainly if the dollar continues down, it will only help DBO. This chart seems to indicate someone with deep pockets is thinking the same.
I'm going to check my scans again tonight and see if any new candidates are on the radar screen, if so they will be posted.
Tomorrow should be back to business as usual, today I had some unexpected interruptions, I apologize for any inconvenience.
To remind you of where this market really stands, I leave you with this chart....
The IWM actually put in a bullish engulfing day today, while the index it tracks, the Russell 2000 closed up but just missed the bullish engulfing reversal pattern. This suggests to me that traders are more optimistic, but it's not a sure thing as this is an ETF with approximated gains.
The Q's failed to do the same, but volume was up in the ETF today, a positive day, actually the most bullish price/volume relationship.
The Dow 30 is a picture perfect loss of momentum as illustrated by the range of the body of each successive candle. A doji, like today's is often found at reversal points.
Interestingly, the S&P-500 put in a hammer candle today, known as a reversal candle with the phrase, "Hammering out a bottom" while the SPY looked quite different, but it's full body closing above the ATR for the day can only be interpreted positively, unless you look at the volume being down.
As 3C suggested, the dollar was down today, although on very light volume, which fits perfectly with my notion of a possible bounce. There wasn't a hard sell-off in the dollar, just a pullback on low volume. Remember, the dollar typically trades inversely against the market, oil and certain commodities, as well as multi national corporations.
Tonight, I can not turn to 3C as I'm getting mixed readings. I don't consider a signal valid unless it confirms on all 3 versions and I have no confirmation tonight. My assumption is the pattern will continue tomorrow with a gap down that is bought and this market only has a few days left in my opinion to make it's move.
Markets correct in two ways, one is through price, like pullbacks, the other is through time. Recently the last few days, it has been more time then pullback. My other assumption is that the market is accumulating on the cheap, on the gaps down and selling the highs so it doesn't launch yet. There will be a certain amount of accumulation that needs to take place at a specific target range and when they are done, that is when you see a move. However, news is sporadic today, but in general, we have to assume news will be biased toward the negative, so if this market doesn't get launching soon, it will eventually hit a bad news day with a flood of sellers. I don't know if this bounce is that important for smart money to absorb all of that supply and still try to take the market higher, so I think if it happens, it's in the next day or two. We have enough reversal signals in place, the market is taking bad news in stride so far, tomorrow seems like an ideal day.
With the Fed buying treasuries, I found this story to be interesting (remember I said the truth usually comes out a few weeks later) well this could have some correlation to the Fed's buying.
http://finance.yahoo.com/news/China-reduces-holdings-of-apf-290032879.html?x=0&sec=topStories&pos=7&asset=&ccode=
Tomorrow morning we have a bevy of announcements coming, perhaps there's something in there that sparks the market. All before the bell we have: Housing Starts, Building Permits, PPI, Core PPI, Industrial Production, and Capacity Utilization. Any one of those coming in above consensus could be excuse enough to get the spark flowing.
I must tell you again though so there's no misunderstanding, the market is in a bearish place, judging by history, if it's true, as Mark Twain said, "it doesn't repeat, it rhymes" then we are in a very bearish place. A bounce here is for short term trades only and really you can sit it out if you choose to and wait for it to start to reverse, at which point, we will have a plethora of short items to sort through. Many stocks on my watchlists are just several percent away from being the types of setups that you really couldn't ask for more. This bounce, if it happens, which I'm inclined to believe it will, will be a gift from the market, I'm salivating just looking at the prospects-high probability, low risk, long term trend trades.
As I have posted, one of my favorite trades for a bounce will be DBO, certainly if the dollar continues down, it will only help DBO. This chart seems to indicate someone with deep pockets is thinking the same.
I'm going to check my scans again tonight and see if any new candidates are on the radar screen, if so they will be posted.
Tomorrow should be back to business as usual, today I had some unexpected interruptions, I apologize for any inconvenience.
To remind you of where this market really stands, I leave you with this chart....
Final update
My minor emergency requires that I am away from my computer until after market close. So far, there's nothing unusual about today, it's almost a mirror image of the last several days, gap down, buying and then distribution into highs with a little buying here and there near the lows. It should be decided after 3 pm, it'll either do as it has done and give up some of the day's gains or it will put together a strong late afternoon advance. They are not tipping their hand yet, except to say they keep accumulating at the gap down, they may have accumulated more then they've sold, I can't tell yet. The market is in a good lace for a bounce, but until we see it, I'd still have that short portfolio in place. Interestingly, the 5 min chart is stronger then the 1 minute, maybe they are accumulating more on those gaps down?
I'll answer your email when I get back, my apologies for the inconvenience.
I'll answer your email when I get back, my apologies for the inconvenience.
Update
Right now, it's more of the same, drop it down, buy and then ...? I don't know that we'll see any real action until the afternoon, 3C is confirmed the little rollover and may be starting the next roll up, it's too early.
WTR did trigger short today.
I have had a minor emergency come up today so if I'm a little slow on the emails please forgive me.
WTR did trigger short today.
I have had a minor emergency come up today so if I'm a little slow on the emails please forgive me.
