Above are the charts of the NASDAQ, SPY and TRAN. We got the call for a rally in commodities and the downtrend in the market in the beginning of last week, followed by the nice bounce on friday almost perfectly. Where this bounce has brought is that, we are now sticking our heads up against against the same line which was providing support (for the past few weeks) SPY. Now it has turned resistance.
The charts are not suggesting one way or another to us here, decisively. We are slightly favoring the bulls with odds of 60-40. Our thinking is this, the NASDAQ is butting against the 200d. As seen from the chart in the past, the NASDAQ has always managed to penetrate the 200d, before turning back down. We believe NASDAQ could see the 2450 level. The TRAN has some more space to travel upwards. The first area of resistance is around 5150. Why we are unsure of the overall picture given we have upside wiggle room in these indices, is because the SPY seems to be missing this upside space. The SPY is against lots of resistances and it is entirely reasonable to assume we sell off hard after touching the ascending trendline. But somehow that trendline in our view, is kind of "artificial" or "too visible". It has had too many hits now that it has become so obvious. Previously, we called for that trendline to be broken on the downside, since it was too obvious. We figure, what the heck, why can't it be broken on the upside then? Bottomline, slightly bullish, but we will not prefer to play unless we have confirmation that the trendline is broken. If it does break, we could see 1320 on the SPX.
37 comments:
Monday will very important...I will go on the record and say it will be a down day.
The low volume on Friday was the lowest since 12/26/07, 12/24, 11/23and 10/08.
Mimi, it was, but remember this is august. Volumes are real light, especially going into last 2 weeks of august, since this is the end of the summer vacations and the weather in NY, this time around is just fabulous.
Yes, there is a chance of a selloff since SPY is hitting against the trendline, but as always, markets have a mind of their own. I am looking at september 2nd as the more likely turn date as of now. Good luck to your trading.
If you look at the volume last August it was the highest on record..$DJI
I have read in several places that 9/2 might be the turn date and continue down through 10/20.
hmm, I did not know that. btw Mimi, If you don't mind can you point me to how they arrive at the turn date. I generally count for fibonacci numbers. I am curious how other people do it?
I read so many blogs in the last couple of days but I think it was on stocktock.com
thanks mimi, I also read that blog. Those guys are quite good.
Wonderful call mimi. I hope you are profitting from your conviction!
You must start writing a blog, if you have not already done so. Let me know the link. I will bookmark it.
Me? A blog? I justed started trading a few months ago. I have never traded a "put" or a "call"..if I knew how I would have bought tons of "puts" in IWM.
Thanks for the compliment..I read everything I can get my hands on and try to be open minded.
haha mimi, I started trading 7 months back too. There is a first time for everything.
I am think about taking some classes..the art in trading... :)
Did you buy/sell anything?
haha, you are funny.
On a more serious note, what I did was read some technical analysis books and try and apply it to charts regularly, almost every one I saw. I still learn new things as I go along. But I think reading a TA book is very helpful. There are lots of good ones out there.
As for positions:-
1) FXI which I bought last week (<5%)
2) AGU since it hit the 200d. (<5%)
3) SRS started a small position today I will build it up as time goes along. (2%)
4) UNG (20%) -- This has been the big ouch for me. I am letting it be since the COT reports are showing extreme behavior.
I am a visual person so I like to see it and try it..reading it will not help my brain wrap around it.
I have UAUA (doing pretty good), I think oil will get down close to 100, and SKF I bought and sold last week for a good profit and then bought again..but I think I bought it a bit early this time.
AGU? I will never touch any commodities ever again after the hit I took on MOS.
I think SDS is a good choice.
You are right, charts are highly visual things and in the end, patterns are what the eye sees.
It is true, commodities took a bad beating. But, I still think the bull market in them is not over. They just ran away too fast. AGU was one stock which stayed in its 2 yr channel, unlike CF and MOS. Agu is currently making another iteration. So, I bought into it.
Only thing I wish is US stocks gave some dividends. The dividends are measly.
I day traded LCC, UAUA for a while the last 2 weeks, but now oil seems to be looking to rebound. So, I am out of those. I bought energy CHK, SWN, SLV last week and took profits in those on friday. If not for my UNG position, I would be a really really happy person.
I sold my SRS just now, for a nice intra day scalp trade. I don't like the volume on this decline, plus the fact that the selling is in all the sectors. Something is diverging here. I am out until I get further confirmation.
I wonder if there will be a short term bounce tomorrow?
Hey Mimi, I cannot figure it out. I am thinking more on the lines of - we break some key supports and approach 1260 and then go up, just to get people on the wrong foot. The charts, don't look like rolling over just yet. If you look at the QQQQ, it still looks nice. I can imagine it selling off. Look at GE, it is nice and resting on the 50d.
I am looking at getting back into energy names, CHK, SWN. Miners like SWC also look nice. Good luck to you mimi
www.informedtrades.com
Great site!
Mimi,
your index calls are on the spot. What do you think will happen tomorrow?
Also thanks for the sites. You should write the daily commentary atleast
your so cute...
Thank you for the vote of confidence but again I am so new to this. I wish I can find someone trustworthy that can mentor me.
I see that you were asking questions on stocktock.com about natural gas?
The Treasury yields ended lower today and from what I understand that means that there is fear in the market..going into bonds as a safe haven?
If may depend on oil and the dollar. I cant get a good read on where oil is heading. I have some UAUA and I hope oil comes down but with the hurricane who knows?
I think it maybe a down day..I only wish I knew how to buy "puts"!
I do think the fall will start next week but not sure on the 2nd maybe the 3rd.
One possible way to trade this market. It is not exactly how I am in it right now, but I may slowly move this way. Right now I'm avoiding financials and real estate and staying with defensive plays like health care (RXL).
1/5 SKF - ultra short financials
4/5 MVV - ultra long diversified mid-cap
The recent FED report noted the continued weakness in the credit markets and the number of banks in danger, so short the weakness with SKF. MVV provides diversification with one click. Both SKF and MVV provide leverage with the 2x ultra. MVV has limited exposure in financials (about 11% and you are hedged against that with SKF) plus MVV is made up of about 25% in energy and materials. When oil goes up, commodities and materials in general tend to go up and the market in general tends to go down, so MVV has a built in hedge in that respect.
Whatchathink?
Good ideas Mimi & Hil.
I will write about spy today and why I have more conviction that the bull case is not over. Essentially, it is beginning to form a small descending triangle, these are usually bullish. If you see it carefully, you will notice it.
I bought some more natural gas after seeing the weekly chart had a topping candle right at the bottom. I have profited since and brought down my cost average by taking some profits. Morally speaking though, I feel a bit guilty that it is going up on hurricane news. I would rather, it go up on oversold conditions etc. which is also more sustainable.
@hil - healthcare may well be what the market money is chasing right now. They look kind of extended to me. I cannot convince myself on most of the charts. MVV is new to me, let me read the chart. I still like commodities and metals for a bounce still. I bought some ACH looking to play it.
On other plays- SRS, has a breakout from a descending wedge which is bullish, Ofcourse, it will take sometime for it to get traction, somewhere around 86-87 would be a nice entry to start building a position upto 120-130 in the new few months.
I am glad I bought FXI last week, my conviction was on the spot and am nicely in the money now.
Good luck to you all.
@mimi - "your so cute..." I am blushing already hahaha
@mimi - immo oil will keep drifting higher. USO will hit 102 atleast in the next month or so. UAUA needs to consolidate, it has had a huge/huge run, has gone up 3 times. UAUA needs consolidation.
In the longer time frame, I guess oil may sell off again. I am thinking we should see 105 by the end of the year atleast, I don't know when yet.
@hil - I can make a case for MVV to go upto 70, @200d. seems a decent strategy.
IMO, short/mid term direction of oil is uncertain. Once the hurricane is past, then the Russia/Georgia situation is left, ???? I would not put much money for or against energy except in very short-term trades as a result. Your UNG trade should work this week with the hurricane. It is turning more to the East toward Mobile, AL, and I've got to drive South through Alabama on Monday as it is supposed to be coming up the Mobile bay. Yikes.
Health care is usually a defensive play like consumer staples (e.g., PG or the ultra UGE). It is down today probably due to some bad news on some diabetes drugs. So while the market is up and RXL is down, I'm buying. I'm not worried about holding J&J, Amgen, Pfizer, etc.. I've just sold out 80% of my LTL that I bought on Monday and was looking for a place to go with my money. (LTL is incredibly low volume. At the moment the volume is only 800 shares. Those are all the ones I sold. Isn't that crazy? But it is running up again, so maybe my other sell order will fill.)
On MVV you shouldn't bother with a chart for two reasons. First, it is an ultra so the chart is distorted. Second, it is an ETF. You can do a chart either on the non-ultra index it tracks or on some of the major underlying components. Since MVV is a diversified ETF, I think you'll have to go with the latter. Buying it is pretty much like buying a mid-cap index mutual fund that has been 2x leveraged. A chart of the Nasdaq will work for MVV about as well as anything.
it would have been a down day if it wasnt for the durable goods report...
I have SKF- very little though.
I like SRS but maybe 82?
The CPI comes out tomorrow and I think the weekly jobs report?
Maybe tomorrow I will get my down day?
LTL seems a dangerously thin volume ETF to trade. Well, if you have the patience, it is probably worth it.
I am waiting for the market to tell me which way it is going to move, until then quick short strikes. I'll take whatever gains I get. SRS will be a good short, should the market go down. 82 seems kind of deep to me. Who knows Mimi, you are indeed getting a lot of calls right. 80 region is the triple bottom, so 82 is definitely possible.
Looking at the triangle formation, it is possible that you get your small down day tomorrow mimi, but if there is a breakout of that triangle on the upside, you need to watch out.
btw hil, that is one adventurous drive you are taking. Have a good trip and take care
I just finish watching the weather channel and the hurricane is not as strong as we first thought. That may bring oil down..help my UAUA and SKF might go up if we have a down day.
I read somewhere that Thursday before labor day is a down day.
What are your thoughts on the dollar? I am reading so many conflicting blogs.
dollar in the long term is not looking good. The dollar is extended in the short term, intermediate term - probably bullish until the year end. I will write about it tomorrow. Good night
Low volume on LTL isn't dangerous. It is just an ETF of telecommunications stocks. It is nothing more than owning a mutual fund of AT&T, Verizon, etc., except that it is an ultra. I made a nice profit off of it, buying it Monday, selling it Wednesday, but my mistake, once again, was a lack of patience. If I had sold it today instead of yesterday, my profits would have quadrupled. I keep telling myself to take profits in thirds as a stock rises as Cramer recommends, but I'm hard of hearing, especially in my left ear and I don't use my hearing aid very often. :)
I listen to Cramer...when he tells you to buy...you sell. If he tells you to sell...you buy.
Cramer's researched picks aren't that bad. Those who have tracked them suggest that he runs about 2% ahead of the market over time. The lightning round is probably another story. The 2%, however, would be if one bought and held a certain period of time and operated by the type of trading rules Cramer tries to get people to go by. Research first. Buy in portions or layers. Continue to do research, etc. Those who follow Cramer picks in a week or less time frame often wrongly assume he must be a contrarian indicator. That is because many of the Cramer devotees run out and buy whatever he recommends, which Cramer, of course, doesn't want them to do. The stock runs up 3%, 5%, or 7%. Some smart shorts then move in and short the snot out of it and within 24 or 48 hours, it is right back where it started and some poor schmuck is sitting there with a Cramer pick at a 4% or 5% loss and it is only 1 day old. He concludes, "Cramer is an idiot." Wrong conclusion. He didn't listen to a word Cramer said except for the stock symbol and he ran out and bought it. It is his own fault. That is why Cramer, more and more, is saying, "Here is a stock you might want to buy in the near future if . . . (and then he lays out some conditions . . . e.g. if it pulls back to a certain level; if they give a good earnings report; if the Baltic index goes up; etc.)." That way he is trying to slow down the people who don't listen the education and only listen for the "picks."
Hurricane could be a monster. Will DBC go up or down? Whatcha you'all think? Will strategic reserves be opened? How will the market as a whole react on Tuesday? The DOW in particular, since it has some energy components in it like Chevron and Exxon? Will Mimi start a blog if the hurricane means all her picks are perfect? Whatchathink?
haha, those are indeed great questions with a lot of money on them. Only Gustav and Mimi would know.
Chart wise I think the dollar will start turning down next week for consolidation before another leg up. $CRB looks like it could go upto the 420 region before another leg down.s
Gustav's winds keeps dropping. Drop baby drop. Better for Gustav's winds to drop and my DBC and Clarke's UNG to drop together than for there to be carnage on the Gulf coast. After being close to a few hurricanes in Florida and one in Houston, I don't wish even a Category 1 it on anybody. I wore out a chain saw until it literally died cutting up fallen trees. The worst one was a huge pine about 12 inches thick that crushed a car owned by a widow from church who lived alone with her Down syndrome son.
well looks like your words are being heard. Nat gas is not seeing any action.
My DBC got hit by the dive in commodities and MOO did too due to the fertilizer component. I'm away from the computer all day every day this week lecturing, so I can't do anything except during lunch. Pre-set orders, though, worked fairly well. My DDM and over half my RXL sold in the rally for profits. I bought more MOO at lunch, so I finished green for the day. Mutuals were up nicely thanks to the bonds, so a nice day. It is tough working with preset stops, though, especially on a crazy day like today with so much volatility. If I could have been at the computer all day, wow, what a nice day it could have been.
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