_______
MARKET WRAP UP 08/05/10
Today was probably the closest thing that you will see to an “intentional walk” in the stock market. In baseball, an intentional walk–or base on balls–is a tactic used by managers to avoid pitching strikes to a good hitter, or to gain some other advantage from having another man on base (ironically). In the stock market, as we saw today with the S&P 500 closing down 0.13% to 1125, the price action was more or less in a holding pattern in front of tomorrow morning’s employment report. As you know, I am not an advocate of trading based on news. In fact, I often seek to avoid doing so. Instead, I prefer to look for advantageous situations where price and volume indicate that I have an edge. However, I believe it is crucial to note the reaction to the news. We could just as easily selloff tomorrow from a supposedly good jobs report, as we could rally after a “bad number.”
Beyond the employment report, the price action has also been indicating that traders have essentially hit the pause button until they decide which way they want to lean. While it is true that we have maintained a steady uptrend since early July, it is also worth noting that the overhead resistance from late June has caused considerable choppiness over the past few days. As the updated and annotated daily chart of the S&P 500 illustrates below, we have essentially flatlined ever since the big gap up we saw on Monday.
_______
_______
The good news from the past few days of consolidation is that it has given some of my top holdings a chance to rest and build sound bases. Two of my favorite plays right now, $BX and $GNK, are pretty good examples of this, as their updated daily charts illustrate below.
_______
______
_______
In conclusion, the past few days of quiet consolidation do not guarantee that this has marked a bull flag after Monday’s rally. However, the bears have been unable to hold any gap down this week, and each pullback has actually been a healthy sign of a lack of complacency amongst the bulls. Anecdotally, I am seeing an awful lot of cautious bulls, rather than raging ones. After the vicious trap in late June, the caution is completely understandable. However, the lack of complacency might very well be the lighter fluid that propels us higher out of this broad, multi-month trading range for good.
_______
TOTAL PORTFOLIO:
EQUITIES: 40%
- LONG: 40% ($GNK $LSCC $RDWR $BX $CMI $SWSI)
CASH: 60%
I am quietly raging at least for 1 day.
THS missed today, but fell down to the 200 DMA on high volume. I am going to watch it tomorrow to see if there is going to be a bounce. Do you think that is a good strategy, or avoid it because of the miss. They also raised estimates for the year on the conference call.
I would watch to see how it reacts to the 200 day. If strong volume emerges from the buyers, you can play it for a bounce, I think.
Thanks. It is also at the 50% fib retracement from the last low to high.
I’ll be the designated “Contrarian Indicator”…
The YEN seems to be weakening a bit…MACD/Stoch are luring me in.
Yes…I know
and Barnum was right
USUALLY , the night before NFP everything is down to a crawl, but right now it SEEMS to be pointing in my direction.
Small positions, counting on hitting targets overnight.
This market wants to go higher
and I’m a die-hard bear.
I have to go on what I see
Over all, transport traffic is on steroids last couple days, tons and mega tons of raw materials travelling down the road…we went from DEAD…TO “GET OUT OF MY WAY”…in last couple of days.
Puppet Masters at work here.
….and as a rule, I’m out of everything a few minutes before NFP
If you play this, buy pre-News spike on US/JPY…Generally good for 30 to 40 pips and then returns to or below previous price.
Works like a charm….he who hesitates?
Watches in disbelief
On BX you have a nice little “camoflage” buy. Lower close but close > open. Positive for a move up out of the pattern.
I’ll be watching, checkbook in hand:)
Good stuff, Phil. Thanks.
Canucks may want to take a look at this chart of the $TSX (courtesy trader_ca):
http://chart.ly/ba7xwq
Waiting a few more days may be a more prudent action right now.
Quite a sticky predicament, isn’t it? I’ve been finding interesting looks in mid-day futures market trading – didn’t mind yesterday’s Russell 2K consolidation, but today’s market action was ridiculous and in the red by too much for my liking.
Guess we’ll see tomorrow @ 8:30 ET – good luck bro!
good post, I see you’re as committed as I am to the outcome of this chop 🙂
Bought some UWM since it’s on sale today (hope the sale ends soon). Now have some DAG, UWM, and mostly cash.