Looking at 875 SPX

875 is the top range of the mid-Jan to mid-Feb SPX consolidation area. So far, all indices have hit resistance areas but continue to push forward. Bad news is considered good news and good news is considered great news and the market rallies every chance that it gets. At this stage, the Nasdaq actually has a really good chance of reaching the 200-day MA, something that was quite unheard of a few months ago. The problem is that not all indices are following each other perfectly, so you are seeing divergences between the SPX, DJIA, and COMP.

It will take some seriously terrible news to bring this market down, and I think it would take a massive pre-market gap down, sustained with follow through, in order for a downtrend to emerge. The last breakaway gap down at the end of March actually failed, which was a signal to go long. Those gaps have a 1% failure rate, so it’s important to pay attention to them.

I didn’t want to hear any bullshit from anyone, so I just posted on my other blog and told just a few people of my long swing experiment. The experiment was to open large long positions before last Friday’s close, hours before I left for my trip. The purpose was to prove that TA still works and that it is not “dead” when it comes to swing trading. I’m up +8.7% as a result. Prior to leaving, I was down -2% for April. The decisions made last Friday had to meet several criteria:

1) The breakaway gap down fails and fills to the upside within 5 days, breaking the 1% probability. Check.
2) There needs to be a equal or greater-sized upside spike than the gap down spike. Check.
3) The market needs to be consolidating or flagging for a potential breakout. Check.
4) Individual names must be setting up in high probability consolidation patterns. Check.

This is the rare Rising 7 Method.

I know that the Ragin and I are in several names together, but I also added MI, HBAN, and SIRI to the overall mix, which includes TSL, JASO, FEED, and LDK, which was actually bought on 4/7. I still hold everything cause I got back well after the mkt closed. 875 will be an initial sell point. Some stocks, such as FEED, and SIRI did not breakout while I was away, which was frustrating. I’ll give them just a bit more time to cook in the microwave before deciding their fate. Another promising wave 1 symmetrical triangle? FIG. I’m not in it, but I will likely add it into the bunch.

Just a personal experiment for my own benefit since I never left so many positions open while at the complete mercy of the market. I did not want people following me on this, since I know there are people that just blindly follow other people without any good reason. It was just a test and yes, TA still works so don’t worry.

I got back really late last night and I am sick. I think I have the flu or something because I started getting symptoms on day 2 probably after my dumb ass left the AC on all night long leaving me freezing for many hours, or maybe it was on day 3 when I left the balcony door open all night long in 90+ degree heat leaving me soaking in sweat in the AM. Who knows.

My camera got jacked early Tuesday morning by some sneaky local. That really pissed me off because I had a lot of cool pics. I have to get pics from the others and post them as my own. No one will know the difference.

The Cozumel snorkeling was really irritating and scary because the instructor just told us what to do and then just told us to jump off the boat. Let’s not get started on the boat ride getting over there, goodness. No one got any live instruction. People were crying, getting sea sick, etc. You had to balance yourself with the flippers or else you’d flip over on your back and panic. The view was absolutely incredible though. The fish, coral…everything was amazing, as if you were flipping through a National Geographic.

Chitzen Itza was great, as a historical site to view for only 30 mins. Beyond 30 minutes, and you risked dehydrating in 100+ degree weather, not to mention the 5hr roundtrip on a bus. I knew I was dehydrated because I was obviously sweating profusely and after huting down a makeshift 7-11, I chugged down 2 liters of water in only a few minutes. The Mexican gov’t no longer allows people to go inside the temple. The entire site is now protected by the UN as it should be. It’s amazing how people long ago could build these structures without the technology or knowledge that we have.

I spent half a day at the Wet ‘N Wild water park. It was really nice, considering all the crap I went through at Chitzen Itza. Afterwards, I went golfing at the resort. I met an 8 ft. crocodile face to face while losing one of 8 balls on the course. It was the most difficult course I’ve ever been on. In case you want to say that I’m terrible, the group ahead of us lost all of their balls and had to quit. I don’t want to talk about this anymore.

People tried to sell me timeshares in three different instances. Do they think that I can be easily sold? People in Cancun will vigorously attempt to sell you anything and everything they possible can.If you want a souvenir, you have to bargain for it. For example, when I was at the “mall” in downtown Cancun, I bought 2 souvenirs for $2 each. The guy started off with $7 each. My general rule is that you should immediately take 50% off, if not more, from the orginal asking. I, however, always started with $1, because you never know if they will take it.

The resort itself is easily one of the very best. The place actually makes America look like a third world country. Now, if you go outside of the resort/hotel district, then America looks rich as hell. There are 2 Cancun’s: one that all the Americans talk about, and then there’s the one where all the locals live and no American wants to visit. It’s third world out there, with people living in shacks, seriously.

When I talked to the manager and several English-speaking employees, they confirmed that business has slowed down noticeably. To me, it didn’t look like the recession hit at all, but since 90% of the travelers are from the US, it’s obvious that Cancun would take a big hit. There are a lot of American companies doing business over there as well, so it seems like there’s no escape from the recession.

About the dollar and pesos. Initially, I got confused because they used the “$” for pesos too. If something cost ~$13.20 in pesos, it would be $1 USD. The price tags never said pesos or USD, so I found it absurd when a t-shirt would have costed me $66. Or how about $30 for a box of Advil?

Enough for now. I’ll post more when I get those pics.

Btw, I did go long before the vacation with FEED, TSL, JASO, SIRI, HBAN, & MI. LDK was added on 4/7. I did this primarily to see if I can just depend on technicals while I was away. It worked. Some of the picks have not broken out yet, but I expect them to do so in a few days.

Here are the results: the portfolio is up 8.7%, primarily due to the financials (MI & HBAN), and most solars (TSL & LDK). FEED current has a loss of 3.6% and JASO has a loss of 1.1%. No change in SIRI. I still hold all positions. I used a secondary, smaller portfolio that went long 90%.

Although a little late to the earnings trades (for example, getting shafted out of my RIMM trade at $48.62), I have put together a list of stock tickers that I will look to swing trade starting this week.  Tomorrow and Sunday night, I will be posting the balance sheet analyses of the tickers that have earnings for this week.  I will be following this pattern up until the time of Q1 Earnings coming to an end.  For now, review the tickers I have presented to you via Google Docs:

The markets were explosive based upon WFC alleged earnings outlook boost, saying they’ll produce a $0.55 EPS rather than a $0.23 EPS.  Interesting information, considering the fact that WFC is saying that the Wachovia buy out allowed them to push their outlook an extra $0.32.  Call it crazy, but it sets up REALLY interesting scenarios for Monday (like it wasn’t already interesting enough).  The earnings buzz that will be dispersed via internet throughout the 3-Day weekend will either do one of three things to the market on Monday:

If you have the consolidation blues, longfully awaiting your market to return to the good old swing trading,gunslinging days of old, then this post is for you.  It’s difficult to be sidelined and not get into anything, but because of the lack of market direction in the past week, it’s all a game of anticipatory trades and lustful desires for the market to trade with the side you have chosen for your portfolio.  My suggestion?  Stay cash until this consolidation storm blows over.

Not so fast.  I’ve outlined it before, and I’ll outline it again.  Understand that when people say that the sucky housing market has bottomed, I say nay.  Why?  Because of the amount of re-defaults that will plague the next round of foreclosures that will occur towards the end of April.  Read the US News article posted below to understand the seriousness of High Re-Default Rates:

http://www.usnews.com/blogs/the-home-front/2009/04/03/high-redefault-rates-obamas-loan-modification-nightmare.html

I could not say it better myself; too many incentives, not enough support.  Only time will tell how the Obama Plan plays out.  For now, I’m heavily considering SRS if the markets keep retreating from its current 848 high from the rally.  In my opinion, the indices don’t have enough of a market direction to get extremely short or extremely long either way.  If the market goes up tomorrow, a lot of wedge patterns hold and a couple of descending triangles stay within their pinching price levels.  If the market drops further, however, my $SPX support is currently at 800.21.  Check the chart:

$SPX  30 Day, 60 Minute

For all of you who are considering taking the SRS route, I have created three different charts that have different time spans and T.A. within each chart (I apologize for the last two charts, as they were created earlier this evening and were not available to be changed to a white chart background):

SRS  5 Day, 10 Minute w. RSI-%K Trading System

SRS  30 Day, 60 Minute w. Volume Analysis

SRS  6 Month, Daily

For tonight, I’ve also put up charts of potential breakdowns if the market gets ugly tomorrow.  These charts are seen below:

PCX  30 Day, 60 Minute

STLD  20 Day, 30 Minute

Another chart for all of you to look at is a 20 Day, 30 Minute chart of [[ENER]].  This ticker is setting itself up for either a huge pop or a big descending triangle pinch, only ending up in support ($13.05) failure.

For tomorrow, I will say everything I’ve been saying throughout the week:

1. VIX
2. Volume
3. Price Pattern Breakouts & Breakdowns

Keep your eyes open tomorrow, and good luck!

ZMoose