MARKET WRAP UP 06/14/10
On the back of rallies on Thursday and Friday, the bulls came out running strong this morning with a gap higher of about 1%. However, as the trading session progressed we saw the familiar chop and whipsaw type of action come back into play. Just when traders with a holding period of longer than a few hours thought it was safe to come out and play, all of the earlier gains were faded into the closing bell as the S&P 500 finished off 0.18% to close at 1089.
As the updated and annotated daily chart of the S&P 500 illustrates, the market yet again rejected the 1100-1105 resistance area, which was previous support in early to mid May (eee below).
That resistance area coincides with the still rising 200 day moving average. Today marked the third time we have been rejected at that widely monitored reference point within the past few weeks. Thus, although we have recaptured the 20 day moving average, the 200 day m.a. and the resistance trend line dating back to early May are the most pressing obstacles that the bulls need to overcome. Moreover, we are short term very overbought, according to arguably the most reliable algorithm over the past eighteen months: The PPT.
Thus, if you consider yourself a swing trader seeking to take advantage of intermediate term moves in the market, some more patience is required here. While there are many stocks I am monitoring for long swing trades, it is important to remember that the broad market remains unhealthy. We are still operating well below a declining 50 day moving average, for example. Beyond that, some key stocks are looking like good short selling opportunities, such as $FCX, which has rallied back to resistance on tepid volume. What I am looking for now is an orderly, benign consolidation period where we work off our overbought condition, allowing me to go long. If that never happens, then cash and some select inverse ETFs is my strategy.
As I have said before, the wild price swings that we have seen during this correction, combined with the exuberant but short lived rallies, have elicited raw emotions from traders. While both bulls and bears are loudly blowing their vuvuzelas during the trading session, just like the rabid fans at the World Cup are doing, you must block out all of the noise out and focus your attention solely on what is happening on the field.
NOTE: The PPT magic being shown to piker third tier toilet blogs. (LOL at the David Blaine spoof)
[youtube:http://www.youtube.com/watch?v=wTqsV3q7rRU&feature=channel 450 300]
hey pro,
i remember when u first posted this chart with the potential diamond forming at the top, and has it ever been money! i dont care which way we break, but i am hoping that we dont slop around a small range for ever.
thanks for the post
I agree 100% but hey, if it happens then we can’t force trades if they’re not there.
DId you like the video? lol
Is that guy related to M. Le Fly?
Swings on hold here, that video is a riot!
Video is piss in my pants orange soda funny. Thanks for the laughs and insight.
Lots of noise going on is right but a quick scan of the charts shows you nothing but beauty setups on the long side. As usual I defer to the charts and ignore the noise.
It was funny all the whining on the poor close but really we could use some more consolidation. it would be great to get some lame days and be able to enter runaway names like VMW, CMG, NFLX, CREE and VECO with a decent risk reward.
I expect to be taking more positions over the next few days market permitting
Chess,
Perhaps you can enlighten me as I am just beginning to trade stocks and not Mutual funds. But why are you putting crm, lulu. kog and deck at the head of the list today. I’m looking more at akam, and sxci because of the tighter basing pattern, whereas you seem to be looking at a kind of quasi W formation.
Please don’t take this as a criticism, I’m trying to learn and trying to look at the potential buys through you eyes.
both fine names and on my list of scans, however the former names are higher beta and have seen heavy buying volume when their patterns got sloppy, and are tightening up–still not a slam dunk by any means as market is in a tough spot here
lets go Spain