Emerging Support

I wrote this post at the end of September discussing the idea that the Russian market was headed straight toward its early-2009 highs and 2010 lows (the same price level, making it a key reference). Despite the dire outlook for bulls at the time, the preemption was that the Russian market would find demand for stock at those levels, at least for now. Since that post, we saw a marginal, false breakdown in early-October, followed by a weekly hammer and strong upside confirmation the following week. Indeed, price has memory, and the buyers stepped up to the plate despite the continuous negative headlines out of Europe.

At the risk of cherry-picking the Russian market, also note the Shanghai Composite in China and Bombay SENSEX in India have similarly found support at multi-year reference points. While plenty of noted bears have been, and currently are espousing pessimism concerning the emerging market economies, these important price levels are holding for now and they seem consistent with an intermediate-term bottom. I expect to see much turbulence going forward, but if these benchmark indices can hold the lows then there should be some good individual opportunities going forward.

_______________________

_______________________

_______________________

Comments »

Direct Vimeo Link Click Here

 

Comments »

NOTE: This is worth posting at the beginning of every earnings season. It is as much a reminder to myself as it is to you.

 

[youtube:http://www.youtube.com/watch?v=xPcql4FuCK0 450 300]r
_______________

With AA officially kicking off yet another earnings season last week, consider this a friendly reminder to check and then double-check your current portfolio holdings to see when they are scheduled to announce. As a relatively short term swing trader, I am almost always looking to significantly reduce or outright close a position into earnings. There are simply too many variables for me to have an edge.

Even if you have illegal inside information about what a particular firm’s earnings will precisely be (and would thus face the distinct possibility of winding up in a federal pound-me-in-the-ass prison, with no conjugal visits) there is still no way to know how the market will react. Stocks can just as easily sell-off on great earnings as they can on horrific ones, and vice-versa.

Technical analysis has its clear limitations in that it can only demonstrate what is currently known and knowable by the markets. To presume that charts can dictate everything into the future is pure folly. Trading IS gambling, as we are wagering on outcomes yet to be determined. Instead of running away from that fact, a better approach is to embrace sound risk management.

In sum, leave the heroic all-in bets on an earnings play to old men trying to recreate their youth as they imagine themselves as Steve McQueen in The Cincinnati Kid. For those of you who have seen that movie, they will likely face the same fate as McQueen’s character did in the end as well.

Comments »

 

 

 

 

Bulls taking a quick ride down today. A classy one below shows us how it’s done.

____________________

 

 

Comments »

_________________________

Price has memory. When you arrive back at the top of a multi-month trading range in a literal straight line, days like today should come as a surprise to exactly no one. The strong probability is that in the short-term supply will overwhelm demand, as is happening in the market as we speak. Again, you have to keep timeframes in perspective. Daytraders are trying to maneuver in and out of this market, while long-term buy and holders may very well be standing pat here as they believe we have put in a major market bottom.

For me, though, the case is that I am a swing trader looking for that elusive higher low, along with an abundance of individual charts that will firm up for better entries. We have already come in 20 points on the S&P 500 since the highs of Friday. The bulls cannot afford to let price slip too far away from them, even if a pullback was overdue and healthy by this point.

A prime example of the type of name that I am watching here is BSFT, which I discussed in a blog post this weekend. We know that the firm is growing at breakneck speed, and saw some impressive buy volume during the recent rally. However, that alone was not a reason to come in this morning and aggressively buy it. The idea is to look for a constructive consolidation. There is no guarantee that happens, but if this $36/$37 area can hold along with the broad market, then I like what I see.

As always, we are in earnings season. So, be cognizant of when all of your holdings and potential trades are reporting and prepare accordingly in order to mitigate risk.

_________________________

_________________________

Comments »

_________________________

Over the past two weeks, the financials were one of the surprising leaders to the upside. Today, they are coming in rather hard in the face of a reversal lower after Citigroup’s earnings. Looking at the daily chart of the ETF for the sector, XLF, you can see a strong prior downtrend perhaps culminating with a falling channel. The bulls were able to break up and out of the channel last week, but then comes the proverbial, “Now, what?” issue.

I will be watching the $12 level closely here, as it not only represents where we currently find the smoothing out 20 day moving average, but it is also where a retest of the resistance trendline would be. The bull case would be fortified with buyers arriving at $12 to hold the line for a classic “throwback” of a breakout and retest. Therefore, it becomes an important area to watch for a tip-off about the underlying bid to the broad market as well.

_________________________

Comments »