Full-time stock trader. Follow me here and on 12631
Joined Apr 1, 2010
8,861 Blog Posts

Driving All Over the Place


The sheer size of the price candlesticks on the daily charts of the major averages point to increasingly violent indecision in this market, as bulls and bears alternate turns on a daily basis holding the initiative. I will flesh out what this means over the weekend in my Strategy Session for 12631 members, as well. The market resembles a sloppy, aggressive driver right now on the road–All over the place.

In the meantime, keep an eye on the small cap ETF on the 30-minute timeframe. Today’s bounce is still not negating the damage done of late.

To my eye, $112.11 above is the first major line in the sand.

With today’s squeeze, I am still staying off the short side in equities until next week.



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Will Bill Gross Help Janus Get a Few Octaves Higher?


I am not doing much in terms of new trades today, though natural gas is showing me something by flipped red to green even after yesterday’s rally.

As for Mr. Gross and his move to Janus, it is always interesting when technicals and news just-so-happen to align.

On the monthly chart, below, note the multi-year base breakout after the 2008 crash. A move over $16 would set in motion the breakout with room to move up just above $20.



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Five Stocks Bringing Home the Bacon Today


Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.



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Junk Getting Lower Approval Ratings


The action in the high yield corporate paper ETF, HYG, as well as the junk bond ETF, JNK, is enough to keep me from scooping up a bunch of longs for now in the equity market.

Even as the indices are bouncing, still within the context of an inside day discussed in my last post, junk and high yield corporate paper are hitting new correction lows. True, they are oversold now. But we have yet to see any type of commitment from buyers.

On the commodities front, natty, silver, coffee, and sugar are staging bounces worth watching.

What are you trading this morning?

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Hanging Out for an Inside Day


On many index and major sector/stock charts, we have the makings of an “inside day,” with price well within yesterday’s wide range.

I am not expecting much from today’s action, unless we see dip-buyers panic if we slide towards yesterday’s lows.

Leading issues such as AMZN NFLX PCLN TSLA remain uninspiring, though biotech winner GILD appears to be indomitable.

Three issues which have my interest on the long side if the market improves: FB PANW TWTR.

Overall, on inside days it is best to under-trade than overtrade.

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Excerpt from Last Sunday’s Strategy Session

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out) which I published for members and 12631 subscribers this past Sunday.

Equities Setting Up to Finally Crack 

Last week’s fresh highs on the S&P 500 and Nasdaq Composite were printed with increasingly weak underlying participation. 

As evidence, consider the New York Stock Exchange Advance / Decline Line (cumulative), or “NYAD.”

For reference, the NYAD captures the net difference between advancing and declining issues, as a type of breadth measure. It is usually compared to a major index, where a divergence from that average would be an early indication of a possible trend reversal.

Applied to the current market, note that NYAD clearly negatively diverged last week from the S&P and Nasdaq, with respect to advance-decliners well below recent highs. 

In addition, our ongoing analysis of the diverging small market capitalization stocks housed in the Russell 2000 Index has been fruitful insofar as understanding the underlying weakness in many parts of a market which, on its face, appears to be hitting fresh highs in unison.

This understanding has enabled traders to maintain modest expectations and not become frustrated by the illusion of “missing out.”

As evidence, consider the updated daily Russell chart. Note the weakness on Friday (yellow arrows), with sellers dominating the trading session from bell to bell, indicated with the large bearish “marubozu” candlestick. Moreover, the Russell still has not made fresh highs since the summer, clearly diverging from the senior indices, as price closed below all major daily chart moving averages.

A move over 1,180 and especially 1,213 would be what bulls want to see to negate any bearish divergences, while bears are pressing for an imminent breakdown. A close below 1,082 would confirm a multi-year topping pattern and presage a steep correction or bear market.

Another “tell” we have been tracking is Tesla, a bonafide marquee, momentum leader in the market for a while now. The weekly chart “shooting star” candlestick (yellow arrows) we have been following began to asset itself last week, as Tesla weakened further. True, the stock is still in an overall uptrend.

But this momentum leader is hardly leading while the Nasdaq and S&P made new highs last week.

Again, this type of analysis should serve to at least temper expectations of traders who may become frustrated by seeing the senior indices hit fresh highs, as the action underneath the surface remains subdued.

Please click here to continue reading

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