Day Trading – The Bullz And Bearz

US Economy Shrank As Unemployment Rises

July 31st, 2009

GDP contracted at a slightly lower pace than expected last quarter. The final number was about 1%, but the fact still remains that the economy is shrinking and more and more people are losing their jobs. In addition, delinquencies on mortgages and credit cards are on the rise again – not good at all. This early morning “perfect storm” sent the futures much lower. This has been a quick reversal of profits from yesterday’s early morning gap up. Here are the S&P levels to watch today in the markets. 980 is the next logical level to stop the free-fall today. Back later with more updates…hold strong before entering long positions.

Perfect Retracement & Shooting Star Candle

July 30th, 2009

Wow! What a reversal at the end of the day – pretty much closing the gap from this mornings jump. All in all, the S&P 500 put together a great shooting star pattern RIGHT at the 38% fib retracement level in BLUE. From here there is a lot of open air below the market right now and momentum indicators are suggesting it’s time for a sharp pull-back. This is exactly the type of trading signal convergence we are looking for right now. GDP tomorrow is expected to be poor so let’s see how far down we go. Make no mistake we are going to make money off this next move…just like all the others.

Next Stop 1,000 On The S&P 500

July 30th, 2009

As I’ve said before, a break above 985 would mean more bullishness to come short term and that’s what we got today. Clearly we are headed to 1,000 on the S&P 500 before any real major resistance comes into play. All in all it’s been a great day for member’s longs which are up more than 4% across the board. Busy today so I’ll be back later with more updates.

DOW Jones Momentum Indicators Over-Bought

July 30th, 2009

Morning traders! Fair warning, it’s going to be crazy these next two days with all the economic and earnings news. Jobless Claims today showed a decline in continuing claims which sent the futures higher early on this morning. Friday we have preliminary second quarter GDP, Core PCE, and Chicago PMI. We are also loaded with earnings announcements over the next two days from Colgate, Cummins Engine, CIGNA, Eastman Kodak, Goodyear Tire, International Paper, Kellogg, MasterCard, and Sony. As you can see it’s going to be a little volatile around these parts.

I wanted to point out this chart of the DOW Jones this morning which shows both RSI and Stochastics for the daily. Clearly both indicators are over-bought and signaling an end to this huge momentum. So, once again if want to get long I suggest waiting for more favorable risk/reward levels. Let’s see where the day takes us!

ERY Trade Analysis – Trendline Support

July 29th, 2009

Markets are falling fairly hard today as the major indexes are down more than 1% right now. We really haven’t seen this type of downside movement in over two weeks, for some of us who still have some short positions, it’s working out pretty good.

On the energy side, I’ve said time and again that OIL would roll over short term and it’s doing just that. ERY is one way you all can play this slide. Notice that after it broke out of the back in June, it’s retraced the SAME exact trendline now finding support. Amazing how this stuff works huh people?

Oil Reaching Critical 50% Retracement Level – Markets Heading Lower

July 29th, 2009

As I have said over and over, OIL is reaching a critical 50% retracement level of the big fall from last year. Any true technical analyst would tell you that this level is just another great place to make a short trade. Typically after reaching this retracement level (BLUE CIRCLE) the markets will continue lower. Will this happen to OIL? Maybe not to the extent we think, but lower levels are sure to come – $55 or so is a good target right now.

As for the S&P 500, here are the intra-day support and resistance levels. Look for the markets to have a little bounce after reaching the 955 level. Keep an eye on these levels today…they’ve been right on before and this time is no exception.

CL below is just good looking short trade I ran across. Notice the HUGE wedge pattern it’s forming. Staying below the current resistance trendline would mean a likely move down to $68 or so. A break above this pattern would be very strong right now.

Moving Average Cross On S&P, Oil & Gold Fall

July 28th, 2009

After an initial scare this morning and another rally to resistance, the markets have shown pretty good selling pressure. On the intra-day chart below of the S&P you can see that the moving averages have crossed (BLUE) for the first time since this two week bull run began. Like I said earlier this morning 955 should be no problem at this point.

GOLD and OIL have both been tanking today as I thought they would. Remember last night I mentioned OIH reaching a strong resistance level? Well, it’s moved right away from it today falling more than 3%.

IBM & Sprint Nextel Announce Company Purchases

July 28th, 2009

This morning both IBM and Sprint Nextel announced agreements to purchase up other industry companies. Honestly, all the mergers and acquisitions news this morning reminds me of those 2007 days when there seemed to be a new announcement every morning. As for the markets, like I said yesterday, I think we are quickly headed back to 955 today or tomorrow. Right now we are trading in the upper range of resistance and likely headed down today.

In the FOREX markets, the EUR/USD is still on the verge of a breakout as the dollar weakens. It’s critical thought that this pair break above the black resistance line before you jump in long. Any day now, any day.

Resistance Targets Hold – Oil Completes It’s Retracement

July 27th, 2009

Mid-day things are starting to move lower. I was happy to see that the S&P resistance level I talked about this morning around 895 wonderfully. See in the chart below how clearly it moved higher up to that level and then quickly fell back down (BLUE CIRCLE). From here we should be making the trip back down to 955 over the next few days.

OIH has completed it’s move higher to just below 110 which is a HUGE resistance level. The quick move from the bottom of this range at 87 should be followed by a similarly quick move lower to $100 at the very least. Take you pick on how to trade this one…OIH, DIG, DUG, etc.

A New Week – Will This Rally Continue Even Higher?

July 27th, 2009

I spent a lot of time looking at the charts of the indexes this weekend – as I usually do anyways. But what got me thinking more than ever is what I read in a new technical analysis book I started reading. The author is a very well known hedge fund trader – more than likely not known to the general public but definitely known around the trading circles.

He says in his opening chapters time and time again, to always look at the markets as giving you signals each and every day for it’s next move. You cannot wish or dream the market into this direction or that direction. But if your completely unbiased, then you will see the early signals and be able to jump along for the ride. Of course the problem for every is the “unbiased” part. I mean we all have feelings and emotions and let’s face it; we are dealing with real money here.

So long story short, I tried to do just this over the weekend. Here’s what I found using the daily chart of the NASDAQ.

1) Clearly the markets are showing strong signs of strength. 10 days of straight up movement is not weakness by any means.

2) Technically we should have made it this far up in the rally based of Fibonacci retracement levels. Where the NASDAQ is right now is right under the 50% retacement level. This has always been the highest probability level and since the bottom it would have been logical to think that a move up here was realistic.

3) Short term we are going parabolic. The faster we shoot up, the faster we are going to fall back down. If we are truly in the beginning of a long term bull market (which I don’t think we are) then we need to see a more normal trend starting to form - not this moon-shot.

4) Finally, I’m glad that members and I have some long positions to start making money in this market when it rallies. I would have liked to see a strong pull-back last week to jump into more positions, but at this point it’s worth waiting. I have a long list of stocks I want to go long, but patience will be key. I’ll wait for the 3-4% correction first and get much better pricing.

Take from this what you will. It’s always hard to be part of the group that thinks we are over-bought. But I was part of this same group at the top of the market in 2007 and holding strong to my thinking them made me a lot of money. Here are the S&P 500 intra-day support and resistance levels. Watch the 985 level as pretty major resistance today if we continue this rally.

Options Trading Keeps Me In The Green – Some Short Ideas

July 24th, 2009

Thanks to another member out there, I was reminded that although it’s been crazy during this market rally, my OPTION WRITER portfolio has done amazingly well. Not only did we have over a 4.5% return last month, but all of our SHORT PUT positions that are below the current market price have been extremely profitable for this month’s income. Honestly, I have to say that over the last 2-3 months, my options trading continues to be the backbone of my success. I’m still amazed at why so many people don’t use this strategy to write/sell options for monthly income, but I guess they have to make up their own minds. Anyways, thanks to Eric D. for bringing me back down.

Here are some shorts to think about. The green area is where I think these will be headed very soon.

ASH

CAT

GRA

ICE

Things Are Looking Up…Or Down For The Markets

July 24th, 2009

I think we will all be glad when this week is over. The crazy, irrational-ness that is the market is lighting fires all around the trading world. I spoke with a couple guys from THE STREET (aka 60 Wall) last night and they all have the same feeling as I do. Namely that the short term is looking like a 2-4% correction before the thrust gains more strength. As of right now – LIKE I WARNED LAST NIGHT -  we are seeing some selling pressure and will likely head to this area in BLUE below.

On another more sobering note, members and I took a nice little bath on this short that jumped 13% this morning following company earnings. While you NEVER can escape these kind of surprises, you have to take them with a grain of salt and move on. Many of you probably am wondering why I have talking about such a bad trade. The reason is that I am continuing to try and provide HONEST insight and STRAIGHT-FORWARD analysis. I would hope more people than not RESPECT that I show both my gains and losses here for you all…

I Sound Mad, But I’m Just Trying To Warn You All

July 23rd, 2009

Markets Rally Huge And Break Major Resistance

July 23rd, 2009

Honestly, I never thought this would happen as fast as it did. Good thing members and I entered some selective long trades the other day, so we are at least enjoying SOME of this upside move in those trades. Other than that its really been a bad day for bearish guys like me. To see things continue higher and higher without consideration is alarming to say the least. However, I feel more confident after looking at the chart of the NASDAQ which is clearly at a very strong inflection point. The major BLUE line above it is the 50% retracement level going back almost a DECADE – i.e. BIG TIME IMPORTANT. However I’ll let you be the judge of where this roller-coaster is going tomorrow. Trading video tonight to re-cap the madness!

Ford, Ebay, Sprint Rally Early On Earnings – Thinkin’ Inverse

July 23rd, 2009

More of the same earnings news coming from all areas. That’s what you get during the heart of earnings season. I’m getting a lot of emails asking how I keep track of all the earnings, and the simple answer is that I DON’T! I’m a technical analyst and therefore pay little attention to every single companies earnings, and P/E, cash-flow, etc. I could care less. Now of course know in general who is beating and who is posting losses, but as I’ve said before – it all depending on how much analysts cut estimates. You cannot just take all these “earnings beat estimates” at face value. So, stick to the charts okay folks.

Now, futures again rallied this morning to around 955 before pulling back. I think anything higher this morning is just ridiculous and the over-bought train is coming to an end – at least short term. As members already know, we have a very good plan to make some money during this short term correction. Our trades are only going to be held for a couple days, but they are going to make some quick money and take advantage of this extremely over-bought situation we have in front of us.

I’m not giving these trades out of course, so here is the chart of the NASDAQ to think about support and resistance levels today…

Apple Gains On MAC Price Cuts, Oil & Stocks Start The Correction

July 22nd, 2009

Wednesday, oh Wednesday…not much to speak about really. The main stories today surrounded APPLE, OIL, and the BANKS. Apple came out earlier this morning with some news that the price cuts for the MAC pc’s were boosting sales in that area which sent AAPL up nearly 3.5% today. On the whole, if you look at the chart – which is what you are supposed to be doing – you can see that AAPL has reach a VERY strong resistance level going back all the way to 2007. My opinion, this baby is heading lower over the next month or so. Sorry Mac fans out there, but this is strictly business – nothing personal.

As for OIL, you can see that the nice little run it’s had is coming quickly to an end. Now, whether we see a meaningful correction is still unknown. But this area in GREEN below on the Oil Index is very alarming for longs. This is why I suggested DUG as a good long trade today.

Now the S&P. Clearly this whole 955 region has been tough – notice the sideways trading here. If we break below 952 – which is where we found support today – then I think 935-ish is going to come very very fast. As I’ve said for a week now, waiting for a better entry point is worth it. If you want to get long, just wait a day or two and get in at a much lower price.

DUG Looks Like An Interesting Long Trade

July 22nd, 2009

Afternoon everyone! Been and interesting day to start following some more bank earnings news in the markets. Still things are relatively calm here as everyone (including myself) is predicting a fairly decent pull back in the markets. After skimming through some charts, OIL still looks short term toppy to me. Therefore, DUG is an interesting long play in the works. Have fun with the chart.

Solar And Oil Stocks Rally

July 21st, 2009

End Of The Day Rally Closes Above Prior Highs

July 21st, 2009

Well, that was an interesting close huh? Though the actual percentage gain on the day was small (less than 0.50%) the markets managed to close above the prior highs from early June. The needed big volume to do this, and well, they got it for the most part. Clearly the bullz are in complete control right now shown by the 7 days of continued buying. However, since members and I entered some longs today, we are enjoying some of this upside movement already! I’ll be back after another coaching session with a trading video. I know all of you have been dying to see one – per all the email requests.

952 Holding As Strong Support Level In Markets

July 21st, 2009

Seems like we are running out of steam short term here. The quick jump up we saw earlier this morning was quickly muted around the 952 level on the S&P (in BLUE below). From here we should now really start moving back down to the 930 area and then 910 after that. Members and I entered a couple long trades this morning in areas that haven’t seen such a huge run up in prices. Both are doing great already and poised for very significant gains over the next couple of weeks.