Day Trading – The Bullz And Bearz

Bullish Candlestick Support Levels

May 11th, 2010

Yesterday morning we saw a very big and important bullish candlestick pattern. Mostly it was the excitement over the European Union’s nearly $1 trillion rescue program to support debt-burdened countries – but that has since faded after just 1 day of trading. Futures are lower this morning on the sobering news, but this won’t last long. The markets need to see an out-right failure before the continue to crash. My bets are placed on the mid-point of the white candle as the first major area of support. From there the market’s should rally today – maybe not to a positive close, but at least bounce off it.

SPX Retracement Back To Support Break?

May 6th, 2010

We’ve been pretty spot on recently with the indexes – and as such our members have continued to enjoy lucrative profits from the turn and volatility of the markets. Our May options which expire in less than 15 days are looking great!

Given that the indexes have gone through a pretty good three day selling spree, the next technical step would be a retracement back to the neckline shown below. From there it will be up to the bulls to keep the market moving higher.

Getting Close To The End Of Earnings

May 4th, 2010

We are getting close to the end of earning season folks. Today Merck (MRK.N) is expected to report that its earnings rose by 1 cent per share to 75 cents along with other major companies to announce results which include News Corp (NWSA.O), MasterCard and NYSE Euronext. Should be an interesting day once again for these titan’s of industry.

Per the SPX intra-day chart, the violent swings continue. If the past couple of weeks is anything to go by, then today’s sell off could bring us right back down to support.

50% Fibonacci Retracement Level

April 29th, 2010

For me the strongest fibonacci retracement level is the 50% levels. It’s kinda of like no-man’s land. When markets rise and fall back to that level and it holds – I see things as “half full” in a sense. So today, since pre-market futures are higher, the markets will be testing the 50% retracement level on the intra-day chart. I’d look for stocks to fail after it reaches this area below. Enjoy the trading day all!

Long Term Stock Market Chart Analysis

April 27th, 2010

Long term stock market analysis is always great when you are getting unclear about short term directions and trading opportunities. Take a look as we compare and contrast the 2003-04 market bottom to the current market bottom for all the major indexes.

Greece And Ireland Deficits Rise Again

April 22nd, 2010

Greece and Ireland – it looks like a terrible situation just got a whole lot worse. Both Greece and Ireland had much larger budget deficits last year than expected and the Greek data may be revised further due to its unreliability, the European Union’s statistics office said, sending the Euro lower earlier this morning. A possible continued short on the FXE is a great idea short term.

The Greek government has said it wants to bring the deficit down to 5.6 percent of GDP in 2011, 2.8 percent of GDP in 2012 and 2 percent by 2013 from 8.7 percent of GDP in 2010. This is EXTREMELY hard to do when the Gov’t debt makes up over 95% of GDP. So if they reduce GDP then how are they going to pay for the increasing debt structure? You tell me? Doesn’t add up and you all KNOW that other countries are going to get sucked in!

iShares FXI China Index ETF

April 20th, 2010

Figured I’d start the morning off different with the iShares FXI China Index EFT instead of the SPX. This is actually a great example of a security following the broken trendline – and also retracing back up to the underside of the breakout. Notice how obedient it has been over the last 9 months. A small bounce may be in store soon but nothing too dramatic here traders.

iShares U.S. Broker-Dealer Index IAI

April 16th, 2010

The iShares U.S. Broker-Dealer Index (IAI) had a major breakout yesterday and continues the trend today. After strong earnings from JPM and BAC, this looks like a strong rally ahead of us. If you notice, the $29 level is the breakout point and an eventualy move back down there to re-test it would be very healthy!

I Hate Tax Day 2010!!!

April 15th, 2010

I hate this day more than any other! Tax day is such a ridiculous and ungodly day for me! Not because I don’t have my returns together…but because I realize how much I pay in taxes. Their probably won’t be many posts today due to my anger.

This year I paid an effective tax rate of 53.4%! That includes federal income tax, capital gains tax (clearly), as well as Virginia income tax. All together 53.4%. Makes me sick to my stomach…

So every time I make one single dollar ($1), MORE THAN HALF is going to other people besides myself. On top of that, we have already heard that only 50% of American’s end up paying taxes. So to the other person out there who I just paid for in some way, shape, or form – YOU’RE WELCOME!

Buying The Dips, Selling The Rips

April 14th, 2010

The last 50 days of trading have been crazy. Every single dip gets bought up just a quick as it was sold off. Check out the SPX intra-day chart for the last month and notice that every dip stopped quickly from falling before the bulls came rushing back in. Today we will probably continue higher after INTC’s great earnings last night.

Alcoa AA Earnings Disappoint – Futures Lower

April 13th, 2010

Our notion of buy the rumor, sell the news is holding true this morning as Alcoa AA earnings were a big disappointment. What has now become an unexciting start to the U.S. first-quarter corporate earnings season, Alcoa saw its first quarter loss narrow to $201 million from $497 million in the same period a year ago. But the earnings statement failed to excite — personally I believe that the large scale cost-cutting efforts buy major companies have been exhausted. Now profits have to come from actual growth!

Here is the chart of AA. MACD bearish cross is the first thing to notice here traders.

Reminder: Markets Do Go Both UP and DOWN

April 9th, 2010

People can forget this quickly; but markets actually do go both UP and DOWN traders. Granted, the market has not yet exhibited any significant signs of weakness or an impending pullback, but we would humbly like to remind you all once again that markets do indeed still go both ways. Sometimes, as is presently the case, markets can persist in a trend for a surprising length of time, but the retracement will eventually come, often when the least number of market participants expect it. Notice the trend of sharp pull-backs after seemingly long bull runs on the SPX.

What’s Behind The VIX’s Big Fall?

April 8th, 2010

The steady decline in the CBOE Volatility Index (VIX) over the course of the market’s rally from the March 2009 bottom has been by more than 58%. But this pales in comparison to the decline in the implied volatility (IV) of many options on industry-specific exchange-traded funds (ETFs) and individual equities.

Why has the pricing of equity options taken a bigger hit over this period than that for index options as represented by the VIX? Really I think that the concern about a sudden market crash or Armageddon type event is really out of the market. Since index options in general, and S&P 500 Index (SPX) options in particular, are predominant among those used to hedge portfolios against such dire eventualities, these options and hence the VIX, which is a measure of their volatility are always “juiced” due to excess demand for crash protection. Still, we generally have the opinion that the VIX will stay low for a couple years.

iShares Dow Jones US Real Estate NYSE: IYR

April 6th, 2010

A recent look at the IYR (iShares Dow Jones US Real Estate ETF) and you can see why it’s so alarming. Not only has it been in a huge push on the intermediate term but it’s showing a clear bearish divergence with MACD. Notice that even though MACD has already started falling, the ETF continues to head higher.

IAI iShares Dow Jones Broker-Dealer ETF

April 5th, 2010

We highlighted the IAI iShares Dow Jones Broker-Dealer ETF a couple weeks ago, saying that it would come down off it’s highs. Well, it has and now it’s trading within a pretty tight range here. Internally the indicators we watch are still showing that it could move lower before finding support.

SPX Double Top Chart Pattern

April 2nd, 2010

Did we see a double top on the SPX intra-day chart yesterday? Possibly! We rallied early and fast at then got stopped dead in our tracks at the recent highs. See the chart below.

Could this failure to breakout be the beginning. The confirmation would actually come if we CLOSE – not trade – below around 1,160. To me that would be a great sign for the bears.

Russell 2000 Index ETF (IWM) Looks Weak

March 31st, 2010

Futures are as we expected fairly flat this morning ahead of the release of ADP’s estimate of private-sector employment. Most economists polled by MarketWatch expect the ADP report to show that 40,000 jobs were created in March. Whether that happens or not, the big thing will be if the market likes the number or not. Per the indexes, the Russell 2000 (RUT) seems like it’s the weakest right now and like headed back down to it’s Fibonacci support level.

Are Greece Fears Behind Us?

March 29th, 2010

Probably not but most of the major world markets rose on EURO strength in the wake of the announcement of a eurozone aid plan for Greece. The 16-country common currency has been the main beneficiary of the deal announced at an EU summit last week, with stocks gains more modest and Greek borrowing rates slow to show a rapid improvement.

For the indexes the hard push today with be beyond 1,170 if possible on the SPX. Upper resistance levels are close together and strong making it a hard sell for the bulls.

MACD Cross Trend Change Confirmation

March 26th, 2010

MACD Bearish and Bullish Cross signals can be very good confirmation tools. I generally don’t use MACD as the basis for swing trading, but again their ability to confirm a trend change is powerful. Notice below on the SPX daily that the cross near mid-February signaled this recent rally. Now the bearish cross that occurred yesterday could spell trouble for the bulls.

Long Of The Day – GOOG Google

March 25th, 2010

Seems the recent pull back in GOOG which we told everyone about a week ago has finally reached support. In addition, the volume spike here suggest it’s probably a good entry point.