Turbulence in the Cloud

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MARKET WRAP UP 01/19/11

In what proved to be the first real victory for the bears in weeks, the S&P 500 finished down 1.01% to 1281. After AAPL earnings last night, the market was in a “sell the news” mood today, and the regular dip-buyers appear to be losing a bit of their luster. Moreover, after the bell today I see that FFIV, as well as the entire cloud-computing space trading in sympathy, is causing some real turbulence. At the same time, a consequence of such a powerful uptrend is that we should have sturdy support zones not too far below, in the event the bears can actually follow-through on today’s selling. Thus, becoming an aggressive bear here is a tricky proposition.

A real test of mettle in the coming days will be whether that 1276-1277 on the S&P, which had previously acted as resistance to start the year, will now turn into bonafide support. Indeed, if that does happen, then this selling will be yet another vicious trap to suck in eager bears. However, if the bulls cannot adequately defend that zone, then extreme caution is urged with any potential and existing longs, as a deeper broad market correction would become a distinct reality.

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Plenty of excellent sites out there include more macro commentary in their links, namely Downtown Josh Brown and Abnormal Returns. I thought I’d share a “Traders Only” collection. Here are the traders that I have been reading of late (click on links):

• @HCPG crew with some Market Talk
• “The Goat,” @gtotoy, with his $SPY read going forward
• Maribeth gives her daily watchlist and market posture
• @Position_Trader’s thorough list of actionable setups
• @daytrend, Vic’s intraday market stats
• @zortrades with his money stock of the day
• @traderstewie on keeping a trading log

There are plenty of other key sources that I check everyday, so be sure to look on the right hand side of your screen for my “Recommended Links.”

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MARKET WRAP UP 01/18/11

The power of the prevailing trend saw Mr. Market flex his muscles again today, as the S&P 500 brushed aside negative AAPL and C news to finish up 0.14% to 1295. While the market still has a laid back feel to it, rather than awesome momentum, it was another impressive day for the bulls nonetheless. Just when it seemed as though AAPL was on the cusp of pulling technology down, the Nasdaq Composite actually led the charge higher today.

After hours, I see that we have a mixed bag of earnings results and reactions, with IBM and WDC moving higher, while CREE is getting sold hard. AAPL is being whipped around, although the bulls look to have the edge. As we progress throughout earnings season, particularly in light of the broad market run we have seen, it is crucial to keep a close eye on all positions. Just as the market was dynamic enough to turn on a dime last September, it could just as easily take us back to the dark side with the same abruptness.

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This bloody symmetrical triangle on the 5 minute SPY chart has such a bloody sharp and pointy apex that you’d have to reckon a bloke like Larry Kudlow uses it as a blade to cut his bloody cocaine! *belch*

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[youtube:http://www.youtube.com/watch?v=cryMVK1PwuQ 550 412] ___________

The SPY has printed seven consecutive green weekly candles for the first time since March of 2009. Moreover, as you can see in the chart below, the SPY is above its monthly upper Bollinger Band for the first time in nearly three and a half years. Both of those two facts scream “extended,” and “short-term correction is near.” At the same time, there are still plenty of enticing long setups. How do you reconcile this apparently contradictory evidence?

You forget about marriage. This is not the time to get married to any one stock and dig your heels in for the big buy and hold, even longer-term swing trade. Instead, if you want to stay involved on the long side, consider dating and having a bevy of one-night stands, via shorter-term swing trades for a few days. Despite the increasingly accepted conventional wisdom that POMO and Ben Bernanke cannot possibly let this market fall again, the game is the game. The more things seem to change, the more they stay the same. Try not to get lulled into thinking that you have a bunch of friendly angels at the Federal Reserve smiling over your shoulder, making sure that you perpetually make money on the long side.

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