Day Trading – The Bullz And Bearz

Greece Gets Bailout From EU – Not Good!

February 10th, 2010

Round 2 begins. Today the Greece bailout by the EU is sending the stock market futures higher. Basically the second straight day of gains, as hopes grew that the European Union will provide a rescue package for Greece.

SO LET ME GET THIS STRAIGHT! We used to only bailout companies and now we are bailing out ENTIRE COUNTRIES! Mark my words everyone – and listen clearly here – California will be next for a bailout. After that you CANNOT keep putting bad money on bad money. Eventually the house of cards WILL fall.

Has The Trend Change Already Happened?

February 8th, 2010

Now that another “lower low” has been formed in each of the major indices, we firmly believe that stocks are positioned to make another leg down within the 2-3 months. While short term indicator’s point to a minor rally here, the trend change is nearly complete. Looking at the daily charts of the DOW JONES, the next logical support level isn’t until 9,300.

Job Losses Post WWII Are Bigger Than Ever

February 5th, 2010

Job losses during the Great Recession have been huge and they’re about to get bigger. The labor department is also expected to release figures showing that the jobs shed during the recession are over 8 million. Check out this chart we pulled down showing Post WWII Recessions.

The new data will help illustrate the scope of the jobs crisis. Analysts think the economy might generate 1 million to 2 million jobs this year. And they say it will take at least three to four years for the job market to return to anything like normal. That takes us all the way out to 2014 before we see significant job growth.

Double Money in 11 Years?

February 4th, 2010

Historically speaking – YES! If you look at the long run average of the S&P 500 the after-inflation return of the including dividends is about 6.6% a year. Historically, that number has been about 7%, but thanks to recent economy and 2008 losses it’s come down significantly.

So effectively an investor could doubled their money in real terms every 11 years. Of course, that’s an average and the intra-year returns could be wildly different.

And The Blood Letting Starts

February 4th, 2010

Crude Oil Rally Stopped Dead?

February 3rd, 2010

Crude oil’s rally was stopped dead today on the recent stockpile news. The rallied which sent crude to a 2-week high at 77.41 after the US reported strong rise in pending home sales – has now lost some steam. Energy prices are now pulling back as they naturally would onon profit-taking. Moreover, API’s report showing higher-than-expected stock-builds damped sentiment.

API reported crude oil inventory rose +4.7 mmb in the week ended January 29 after dropping -1.8 mmb in the previous week. Gasoline and distillate stockpiles drew as refiners reduced production.

/ES and /NQ Short Term Forecast – Bullish

February 1st, 2010

The /ES and /NQ stock futures are on the rise early this morning after ending January last week with a month’s loss. There is a lot of economic news and earnings to get through today – namely the ISM, personal spending and income and Exxon earnings to name a few. All in all we still think a move back near 1,030 over the next two weeks is highly probable.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners, ended a four-day advance, dropping 0.1 percent this morning as treasuries fell for the first time in three days. A weak dollar could help drive and inflate equity prices short term here.

Short Term Market Forecast

January 28th, 2010

Our short term stock forecast has two very distinct parts. First, we believe the last week’s sell off we a little out of the ordinary in nature and strength (which is a very good thing for this inflated market) but still has brought us into an over-sold condition. As such we seen the S&P climbing quickly back near the 1,130 level in the next week or so. See intra-day chart below.

Now we all know that State of the Union addresses tend to spur market sentiment for the bulls – all the great rhetoric and speaking gets us all giddy inside. But the truth of the matter is that NOTHING is going right fundamentally. Yes maybe somethings are showing improvement but only because the government is pumping debt in left and right. This is NOT fundamental growth.

In addition, sentiment indicators show that over 85% of all investors are still bullish on the economy and markets – this is a big problem. We all know we should trade away from the herd mentality. With that we offer this opinion: The markets will move back to 1,130 area before hitting a brick wall and starting the slow and painful correction that could last throughout the rest of the year.

Option Buyers Sentiment Indicator

January 25th, 2010

Option buyer sentiment signals lower prices to come as traders are speculating the S&P 500 Index will fall as much as 3 percent. Wagers that the COBE VIX Index will jump 46 percent to 32.5 were the most-active contract, data compiled by Bloomberg data. A surge to that level may herald a decline to about 1082 for the S&P 500 over the next two months or so.

Above is the most update option buyer sentiment index as of now. It clearly shows how bullish (i.e. foolish) people are right now trading.

Goldman Sachs GS Earnings Report

January 21st, 2010

Before the open Goldman Sachs GS will announce earnings. Futures are lower right now given that investors will be braced for fourth-quarter numbers from a number of other companies including American Express, Xerox, Capital One and UnitedHealth Group. For now though, here is a look at GS on a technical picutre for those option traders looking to make a buck off of earnings.

Option Buyer Sentiment Indicators

January 19th, 2010

Optimism is running high and most analysts expect a full recovery. Listen any business news station (CNBC, FOX, Bloomberg, etc.) and you’ll see that 90% of their guests are bullish. Over 80% of all newsletter writers are also bullish. Last week call purchases were extremely high, hitting levels we haven’t seen in many months. The VIX is at the same level it was in September 2007 and fear has been replaced by greed. Low option implied volatilities mean that speculators are not buying puts and institutions are not buying them to hedge. These conditions can persist for a period of time, but they turn quickly.

The Option Buyer Sentiment Chart is it’s traditional measure of option sentiment shows the CBOE put call ratio is continuing to fall as traders ignore the need to buy downside insurance. Basically in English for those who don’t speak chart – it means traders are not worrying about the downside when the they should be. The 14 day moving average of the CBOE equity only put call ratio has risen once again above the bullish extreme and is one of the highest readings seen in years. Again the signs are all around us that this is turning out to be the exact time to exit this bear market rally.

Crude Oil USO and The Strong Dollar

January 15th, 2010

Crude oil prices are falling this afternoon on a very strong move in the USD. Investors often buy commodities during this time of the year such as oil as a hedge against inflation when the dollar weakens and then clearly sell when it when the dollar strengthens. Some analysts we have read reports on expect growth in demand from developing countries such as China will help make up for slower economic recovery here at home.

Per the USO chart above you can all see that it’s still due for more downside in the coming week or so before hitting major support.

Alcoa Earnings Sends Markets Lower

January 12th, 2010

Stock market futures are falling this morning after Alcoa Inc. disappointed Wall Street as it kicked off earnings season yesterday after the closing bell. As one of the first companies in the S&P500 index to report quarterly results, Alcoa’s earnings are often seen as a very good barometer for how companies will fare during the earnings season – clearly the bar has been set lower. Alcoa said it earned a measly 1 cent a share excluding one-time items and special charges. Analysts expected earnings of 6 cents per share.

Per the stock chart of Alcoa, moving lower to the from the trendline breakout is likely to happen today.

Earnings Season, Gold, Heineken

January 11th, 2010

Stock futures are higher this morning on the eve of fourth-quarter earnings season as confidence continues to grow that the economy at large will stay on the mend. Gold futures also rose to their strongest intraday level in more than a month, as a decline in the U.S. dollar and strong Chinese trade data boosted the appeal of the precious metal. For now here are the updated S&P levels for you day traders out there…

Also today HEIA Heineken agreed to buy Femsa Cerveza for $5.5 Billion which only added to the consolidation by in the brewing industry.

Will This Breakout Fail…YES!

January 7th, 2010

This Thursday morning the stock market futures pointed to a lower open across the board. There is a lot of new coming out today about retailers and expectations for their December sales reports. One of the first to report, Costco Wholesale Corp., beat forecasts but said some of its gain was due to gasoline sales and the weak dollar – not good of course. We would have to see what the other big name come in at later on too – Wal-Mart, Target, etc. Here is a look at the RTH – the retail holder ETF for the last couple years.

Futures Lower On Jobs Expectations

January 6th, 2010

The /ES and /NQ are trading lower this morning as traders are bracing for a private report on jobs that is a precursor to the closely watched non-farm payrolls report coming out later this Friday. The ADP employment data is expected to show that private employers cut 73,000 jobs in December. Currently, expectations are that the unemployment rate will rise to 10.1% from 10% in November. Also on the long watch list this morning the ISM non-manufacturing index due at 10:00 a.m. EST. Busy day around here everyone…keep on your toes!

Here is the latest on the SPX support and resistance levels. Yesterday we pretty much bounce and rallied right in my range.

SPX Trying To Breakout On Daily Chart

January 5th, 2010

The SPX is trying very hard to form a clean breakout on the daily chart. However, even with yesterday’s big leap higher we only got back to basically square one. Now, given that a full-blown recovery is priced in, any bad news out there whatsoever should send the indexes on a major decline – at least short term. Trading volumes are still likely to be light this week and Members and I are still holding our portfolio of great shorts at this stage and I am patiently waiting for signs that this rally has run out of steam. For now, here are today’s updated support and resistance levels.

2010 Starting With A Bang?

January 4th, 2010

The 2010 stock market is going to start on a higher note today as stock futures pointed to a strong debut. The Federal Reserve’s top two officials hinted that interest rates would stay at ultra-low levels for months to come. After a year that saw the Dow Jones Industrial Average climb 19% on a recovery in the economy and a stabilization of the financial sector, futures on the Dow industrials rose 60 points.

The gains came as Federal Reserve Chairman Ben Bernanke said in a speech Sunday that regulatory and supervisory policies, rather than monetary policy, were to blame for a rapid increase in U.S. house prices in the early parts of last decade.

Per the chart of the SPX below, it clearly broke support last week before the New Year – and fell RIGHT TO MY SUPPORT TARGET! Amazing isn’t it folks! The next lower targets are below on the chart.

Happy New Year 2010!!!

January 1st, 2010

I personally would like to wish all my readers, traders, members from across the world a HEALTHY and WEALTHY New Year 2010 ! It’s been another great year for us and we look forward to all the 2010 will bring! Be safe!

Drop In Jobless Claims Sends Markets Higher

December 31st, 2009

Jobless claims and the number of newly laid-off workers filing claims benefits dropped unexpectedly last week, another indication that the job market may be healing as the economy slowly recovers.

The Labor Department said Thursday that new claims for unemployment insurance fell by 22,000 to a seasonally adjusted 432,000, the lowest since July 2008. That was much better than the rise to 460,000 that Wall Street economists expected.