Wednesday, October 28, 2009

About that Time...

I've been getting itchy to find a solid point to jump into this market. After getting burned over and over again, I've held back to observe the 'pros' and see if I can learn something. Well this recent over-the-top action in the indices is looking ripe for action.

To work with my busy schedule, I've zoomed out to daily charts to look for patterns, but will zoom in for details. It looks like the Dollar might finally get a second chance, as UUP has broken it's falling wedge trend and stayed there with increasing volume. It's already close to resistance, and I'll be watching it and the S&P for further confirmation tomorrow and dip-buying opportunities. But it appears that the 6-month trend has been broken, and a new one must form. Now that trend might still go in the same direction, but I have an itchy-trigger finger that thinks it sees opportunity.

NASA took 2 days and continuous launch-time pushbacks to get Ares 1-X off the ground. I heard several engineers were quoted saying something to the likes of, "just push the button and light it up already!" Likewise, I've held off getting back into the markets for fear of being too late on a trend. It's time to fly.


Thursday, October 15, 2009

More Extensive Research

As I sit in my makeshift lab, the sun long gone and the children in bed, I have come to the conclusion that the most reasonable explanation for this insane (an inane!) increase in our beloved Stock Market is inversely related to the falling Dollar. But I AM biased: I stay emotionally bearish because I don't see or hear about any of the true problems getting fixed. All it seems is that the people with the ability are using this crisis as an opportunity to amass as much wealth and power toward themselves as fast as they can, while the chance is still there.

Whatever, there's nothing I can do as a debt-laden, middle-class serf. So I shall accept the situation and adapt by trying to ignore my emotions and rolling with the flow.

For charting & trading, I'm watching UUP, which tracks the Dollar Index (see DXY). And I've noticed that we are rather close to a strong low that was established almost 2 years ago, back when Countrywide and Lehman were names to be reckoned with.

Notice the long, orange support line extending from early 2008 to today.

Same chart zoomed-in to the present. There's that orange support line, and the Aftermarket trading just hit it! This should mean higher Index futures tomorrow morning.

Here's SPY, which follows the S&P 500. Looks like we have room for another gap-up in the morning. Last time we hit this resistance, you can see that we went flat for a week before bouncing back to the lower support. I don't see why we can't do that again.

This chart got a little busy, hence the extra colors. I anticipate that we'll keep the uptrend until the second week of December. That might also correspond with UUP hitting around 21.85, which could happen since SPY:UUP doesn't move with a 1:1 relationship.

In the short-term, I see a very bullish opening tomorrow, with a possible doji day. Next week will be flat, followed by some consolidation down to about 1050 S&P. And then the final push to the finish line in December. After that, who knows? Also to note, UUP is showing a falling wedge, while SPY has a rising wedge. This rally has shown me that such patterns are almost useless, so make of it what you will.

On the other hand, I just do all this to try and get a big picture of the whole Market and its direction. For actual trading (simulated for now), I'm usually only looking at small-priced stocks with decent volume, scanning for breakout formations and positive trends. They are mostly moving independent of the S&P, and I'm using them purely for technical trading practice.

Monday, October 12, 2009

Watching and Waiting

Here's what I'll be watching tomorrow and the next few days to see how they play out. I'm all cash right now.

AIS (1.06-1.25 CHANNEL [CH])
CFW (1.15-1.16 CH)
FLOW (2.73-2.91 CH)
HILL (2.01-2.38 CH)
MNI (3.11 SP)
LVLT (1.22-1.58 SM)
SYMX (1.12-1.36 SM)
TPI (3.65 SP)

It's late, so I'll have to fill in the rest tomorrow.

Thursday, October 08, 2009

Still Bearish at 30,000 ft

Good rally today, but this SPY chart feeds my pessimism. Looks like S&P resistance is around 1070, low support around 970. But I'll respect a breakout.

I'm still overall Bearish. Pro's on Bloomberg are saying with confidence, "the Recession IS over!" What bothers me is that volume has been falling since the beginning of the year, and long before this recovery started...until now. Volume is climbing on negative movement in this recent downward push.

It's hard not to get emotional, as there's still that feeling that the fundamentals haven't improved yet. I must give credit to the Feds for trying to lubricate the Markets again, but I think the effort is fading. The commercial real estate shoe to drop is looming, and it appears that foreclosure and short-sale buying is meager. Meanwhile, the Dollar is falling which I theorize is partially to blame for the rise in all Dollar-denominated products: stocks, bonds, oil, gold, McDonalds....

Which reminds me, it's Monopoly time at the Golden Arches. Here's to Crack Fries!

Tuesday, October 06, 2009

Situation Normal

I've closed out all positions and am now in cash. My brother is winning our trading game with a nice win in FAZ a few days ago before pulling out just in time. That dropoff in AONE killed me yesterday, and I've made a little back today with a quick trade in FAZ, and by pulling out of everything else before it fell off.

Around 11:30 today, I had a feeling that the S&P was getting tired, and that's when I setup the FAZ trade. I considered tweeting it to GreenFaucet and StockTwits, but Zero Hedge had just posted a commentary on how the S&P is headed higher today and tomorrow. Those guys know a bit more that I do, so I decided to keep my opinions to myself for the time being. There was also the thought that some other Direxion ETF might have been better, like a Russel 3x Bear, but there really wasn't much time to check it out and compare.

Right now, I'm clueless on market direction: both Bears and Bulls seem to be getting more passionate about their opinions. I'm still hearing bullishness on this market, but it doesn't feel right! So, for another reality check, here's a weekly S&P:

Roubini's been out there saying that we have to drop now to recover from all the gains made since March. But this chart shows that what just happened WAS a recovery from the October plummet. And now the S&P can go back on the track of steady declines like we've been doing since 2007. But there's good support at 1015, and I see light resistance at 1090, and 50% retracement at 1122. If we break above these levels before the end of the year, my inner Bear might finally go hibernate this winter.

Monday, October 05, 2009

A123, Back to Step 1

AONE just lost half of a week's gains in one friggin' day. I didn't see it coming, and only a stop would have saved my (play money) losses. I didn't have any stops in place because I didn't anticipate a drop like this, and I wasn't watching the Markets today.. still had to take care of that day job, ya know.

I haven't found any news yet to explain why the drop. And since this stock is still only 2 weeks old, all the indicators are in new territory. I'll try to be watching at the opening bell tomorrow morning.

Sunday, October 04, 2009

First of all, hats-off to India for discovering water on the Moon a week before LRO does. At first I thought NASA slipped-up to play some politics... trying to influence the Administration's decision for the future of the Space Program. But, now that I know India made the discovery, I will forgo any further political commentary.

I jumped on a few of the stocks I was watching, and I have a few in play money that I'm using in a game with my brother out in Cali. Here's the list of stocks I'm riding, most are about 3%-5% of equity as I see which way they'll go, while I'm riding big on others:

NGD (short)

I had jumped on a couple of others, but they broke down and I got off. Most of these are small-price stocks who aren't necessarily moving with the Indices, they seem to have their own rhythm, and must be watched individually.

Meanwhile, what's the S&P going to do?

Looks kinda like anybody's game tomorrow. We're right in the middle of a channel that also defines 100%-78.6% Fib retracement using the March lows to September's highs. RSI is already bouncing off support, and we're already respecting an upward channel that also goes back to March.

After looking at this chart, I feel that we're still in a short-term bearish move for a few more weeks. But, the first few days of this week are geared-up to see positive action as the S&P takes a breather from the losses last week. I see Monday's range of activity between 1020-1050 for the S&P. The direction the Market wants to take beyond that should be more clear within a few days on this same chart.

Until then, I'll be checking on Gold, Oil, and currencies to look for correlations.