______________

MARKET WRAP UP 09/29/10

In another day of consolidation just below the significant 1150 level, the S&P 500 finished down 0.26% to 1144. While breadth was far from inspiring, even the most ardent bear could not deny the underlying strength seen in many individual issues, as well as broadly in the energy sector. The argument could be made that the weakness in the broad indices masked the true strength seen today, as we saw many breakouts and pockets of momentum continue to flourish.

At the same time, we are coming up on the end of the third quarter, and have a slew of economic data that will be released to close out this week. As usual, the actual data itself is not as important as the reaction to it by the market. Regardless, the amount of variables at play creates an abundance of known unknowns. The bulls have dominated the month of September, and they have earned the benefit of the doubt at this point, as the S&P 500 continues to operate above all major moving averages. Thus, my portfolio remains net long.

The bears may very well be on the cusp of a major reversal, as the market has been unable to stay above 1150 long enough to drink a cup of coffee. However, the assortment of potentially bearish hanging man candles printed yesterday saw no real confirmation to the downside today, given the benign pullback. Therefore, we are simply going to need to see more evidence of a change in trend before a bearish bias can be assumed.

______________

______________

______________

______________

______________

______________

Comments »

_____________

MARKET WRAP UP 09/28/10

Throughout the month of September, aggressive bulls have been, by far, the type of traders who have been rewarded the best by Mr. Market. Thus, when we saw a sharp selloff this morning, including some flash crashy action in $AAPL, it should have come as no surprise to see the bulls come in to buy the dip. With the S&P 500 closing the session up 0.49% to 1147, those aggressive dip-buyers are going to need to be disappointed at least a few times before they throw in the towel if the market rolls over.

Despite the reversal higher today, the bulls still must contend with the serious resistance at 1150. Thus, the tension continues to build at this juncture. As I noted throughout the day, we printed several hanging man candlesticks across the leading indices, sectors and stocks. However, that fact alone is not reason enough to turn bearish. As sloppy as today was, we are still digesting the gains made during last Friday’s rally.

The temptation on a day like today is to overtrade. With all of the progress they have made over the past month, the bulls still have the short term initiative. Rather than extrapolate too much from today’s action, I elected to simply hold my positions and make no changes to my portfolio, until there is a market move with more staying power than that which we saw today.

_____________

_____________

_____________

_____________

_____________

_____________

Comments »

[youtube:http://www.youtube.com/watch?v=SzoXxDUZock&feature=related 450 300]r

______________

MARKET WRAP UP 09/27/10

The bulls continue to need more than one shot to knock out the bears with a break above the important 1150 price level on the S&P 500. After Friday’s compelling rally, the market gave back some of the gains in a rather dull session today, as the S&P closed down 0.57% to 1142. Continuing with the broken record theme on volume, it was light once again. Breadth was slightly negative, but we saw plenty of individual strength.

As boring as today was, and as negative as the selling we saw in the final hour felt, the daily charts of the leading indices and sectors, seen below, indicate that no technical damage was done. In fact, the red candles printed today did not even pierce below the midpoint of the big green marubozu candles printed on Friday. Technically speaking, that fact indicates a lack of potency on the part of the bears, despite how extended some individual charts are.

Going forward, my strategy is to resist the urge to call a top to this market. If, indeed, we are in the early stages of a sustained uptrend, then days like today will prove to have been healthy consolidation days where swing traders should have been accumulating longs. Another aspect of uptrends is that the pullbacks are often characterized by much more sizzle than steak. The selling into today’s closing bell seemed an awful lot like we saw on Thursday. The tendency was to quickly call for a reversal in the market and press shorts. However, we know from Friday’s action that the bears were aggressively squeezed when they thought they had recaptured the initiative, and thus the uptrend continues.

An alternative scenario is that 1150 is too tough of a level to breach to the upside right now. If Robert Prechter’s Dow 1,000 forecast comes to fruition over the next several years, then I would imagine that 2010 is the year that we are ultimately rejected from the 1150 level on the S&P. Of course, a hedge fund manager like David Tepper thinks that The Fed will never let that collapse happen. With all of these forecasts and prognostications, it is easy to get lost in the noise.

Instead of making broad, blanket statements, a better approach is to focus on the price action, drown out the noise, and ride the momentum that the market has seen this month without automatically assuming that a fresh bull leg has commenced. To do this requires a day in, day out work ethic, analyzing a constantly changing, dynamic market. I recognize that the latter method requires more time, effort and daily homework.

Then again, that is what I am here for.
______________

______________

______________

______________

______________

______________

______________

TOTAL PORTFOLIO:

EQUITIES: 66%

• LONG: 58% ($ATPG $CSTR $GNK $HMIN $NANO $PAY $TIE $VMW)
• SHORT: 8% ($QID)

CASH: 34%

Comments »

____________

MARKET WRAP UP 09/24/10

The title of this post could easily have been written this past January, which should give you an idea that, for all of the talk about the imminence of big moves that are projected to happen in stocks, we are essentially dealing with a dead money market. Bulls and bears alike not only have their subjective biases, but in this case they can also point to bonafide underlying facts to support their respective theses. However, if you tune out all of the noise and short term swings, 2010 is shaping up to be a relatively flat year, and that seems entirely appropriate after the epic moves seen in 2008 (down) and 2009 (down, then up huge).

Regarding today, the bulls staged a bell to bell thrashing to close the S&P 500 up 2.12% to 1148. Breadth was potent, and there were virtually no intraday dips to even be bought. The rally was particularly damaging to the bear case, as they had a golden opportunity to press their shorts after yesterday’s weak finish below 1131. The bulls not only soundly recaptured 1131, but are again bumping up against 1150, which represents a significant mulit-year price level. While some of the leaders continue to have extended charts, such as $AAPL, we are seeing a bevy of other stocks breaking out from healthy bases. After three days in the red this week, any follow through to today’s rally should make it pretty obvious that this market is no longer oscillating, but is instead a trending one where all dips should be bought.

If it looks like an uptrend, walks like an uptrend, and trades like an uptrend, it probably is an uptrend.

____________

____________

____________

____________

____________

____________

Comments »

______________

MARKET WRAP UP 09/23/10

With the market well on its way to another day of benign consolidation, the bears summoned the intestinal fortitude to push stocks convincingly down during the final hour and twenty minutes of the trading session. After the bulls so valiantly defended the key 1131 level yesterday, they clearly lost it today as the S&P 500 closed down 0.83% to 1124. The recent underperforming areas of the market, which have made me reticent to categorize this rally as a sustained uptrend, looked awful today. Those weak sectors include the financials, transportation stocks, not to mention the huge gap down that we saw in the real estate stocks. Moreover, we saw an abundance of “gravestone doji” candles on many extended charts today, which usually indicates, at a minimum, a short term exhaustion in buying (A gravestone doji is simply a candle denoting indecision, with a clear high in price before making a low near both the open and close).

The key issue right now is whether the bears can successfully press their shorts after today’s breach of 1131. They now have the short-term initiative, and the bulls are back in the familiar role of trying to save the financials from becoming a falling knife that fatally stabs their dreams of a bonafide rally above 1200 on the S&P. The price action today also begs the question of whether Monday’s huge rally was actually a trap to lure in eager bulls. In my view, after the past few days of consolidation, the coming days should give some well-defined answers to whether the bulls or bears will dominate the next big market move.

Regardless, today’s price action forced me to take on some bearish hedges, namely going long the $QID (ultrashort $QQQQ) as a way to exploit any coming weakness in the extended technology names, including $AAPL. My trading philosophy aims to be in touch with what actually is, rather than what I would like to see. To be sure, a sustained rally into 2011 would be fun and relatively easy to trade. After today, however, we are back inside the multi-month trading range on the S&P, and must also contend with weakness in other major sectors and indices.

The bears did more than just growl today, and I am going to respect that fact.

______________

______________

______________

______________

______________

______________

Comments »

____________

MARKET WRAP UP 09/22/10

With the ball in their court today, the bears had every opportunity to inflict technical damage to this extended market. Instead, the resilient bulls properly defended the 1131 level on the S&P 500, with the key index closing down 0.48% to 1134. As you would expect to see during a benign consolidation day, many stocks took breathers, while the leaders continued to thrive, namely $AAPL, $NFLX, $FCX and $LVS. However, technically speaking, today did mark a distribution day for the Nasdaq Composite Index, as selling volume ticked up from yesterday. Nonetheless, the $AAPL bulls are making it awfully difficult for the bears to dig in their claws on the short side.

In addition to the weakness in non-Apple Computer technology, the financials led to the downside as well. Thus, despite not showing much conviction today, the bears may very well get a few more cracks at pushing down this market. Even if we do break 1131, though, the bulls have plenty of cushion below, including all of the major moving averages.

______________

______________

______________

______________

______________

______________

Comments »