_______________________
@RaginCajun has been all over this one for a while. Even with the market weak today, Google is outperforming and continuing to threaten a major weekly breakout above $630.
_______________________
Yearly Archives: 2011
Euro Weakness in Your Face
___________________________
Despite the rally in equities over the past week, the Euro remains noticeably weak. The FXE, ETF for the Euro, as well as the important Japanese Yen and U.S. Dollar/Euro crosses all tell the same story–The Euro is consolidating near the lows of a chart in a downtrend. The weakness is continuing this morning, and while only price pays out money for stocks in the stock market, a weak Euro has been a fairly reliable proxy for global risk aversion for quite some time now. We are in the midst of holiday trading, where correlations can become temporarily untangled. However, after New Year’s it will be interesting to see if equity bulls can sustain an uptrend without the help of a Euro that turns around.
___________________________
___________________________
___________________________
Red Auerbach on Playing Defense
Even when playing defensively, you can still maintain an aggressive stance and control the action.
Comments »Engulf, Engulf, and Away!
In Japanese candlestick theory, the bullish engulfing candle is most viable as a reversal signal after a prior established downtrend. The candle usually follows a small-bodied day, where the bears appear to be close to running out of steam after clearly controlling the price action for quite some time on the given chart’s timeframe. The next candle then “engulfs” that prior candle, with a lower low but also a higher high, and a strong close above the high of the small candle.
As with all reversal candlestick patterns, confirmation is required. Moreover, a bullish engulfing candle on strong buy volume adds credibility to the reversal thesis, since it shows that there may have been both a selling climax with the brief lower low, followed by strong hands coming in to buy the bargain. Note that the bullish engulfing candle amounts to little more than a tease if the lows are quickly breached and the chart sinks further. If confirmed within a week or so via further upside, the idea is that you have at least a tradable bottom in place, with relatively easy stop-loss reference points.
Homeaway, Inc. has been one of many disappointing IPO’s in 2011. After being in a steep downtrend for many months, the stock printed a bullish engulfing candle on Tuesday on strong volume. These beaten-down IPO’s have been left for dead, and are the butt of many jokes amongst traders these days. With technicals and sentiment highly negative, now would be as good a time as any for a stock like AWAY to put in a bottom, with the bullish engulfing candle possibly representing a valuable clue. Let’s look for confirmation to the upside in the coming days.
___________________________
Stock #Market Recap 12/27/11 {Video}
Stare-at-Your-Screen Action
_________________________
The good news is that it looks like we are getting some light consolidation to start the holiday-shortened week, which is likely to help the bulls after the sharp reversal higher last week. As has been the case over the past several months, we get a false breakdown after some weak price action and negative sentiment, see a quick move higher, but then fail to see a sustained breakout. Perhaps this time will be different. Either way, some sideways action and an overall benign tape is fine by me at this point, as I am looking for charts to firm up even more before getting more involved with trades.
The bad news is that today is a rather boring session. As you can see below on the 5-minute chart of the SPY, all we have done since this morning’s open higher is essentially make lower highs with higher lows to consolidate sideways.
As an aside, to follow-up on my post last evening about the insurance stocks looking better, I believe VRSK is a name to keep on watch above $40.
_________________________
Comments »
