Just a quick heads up to let you all know what I’m keeping an eye on for tomorrow. Following that push above the 50 day moving averages in both the S&P and Dow, we have had two days of selling with today’s plunge putting the S&P and Dow back below support of their 50 day moving averages. The market remains somewhat bullish up here, but it’s critical that we hold the November upward trend line which I’ll be watching on the 30 min charts of the SPY, DIA and Q’s tomorrow. Below is a look at the 30 minute chart of the SPDR S&P500 ETF (SPY). You can see the trend line that was tested again today with a decent bounce in the last 30 minutes of trading to keep that level of support intact. Continue reading Upward Trend Line Off Nov Low Needs to Hold: A Look At SPY 30 Min Chart
All posts by Tate Dwinnell
Madoff Ponzi, Failed Auto Bailout Not Enough To Spook Market
Last week I discussed the resiliency of the market and the increasing ability to hold up or even rally in the face of bad news. That resiliency was on display again Friday morning as the indices sold off ahead of the open on news the Senate failed to pass the auto bailout and more details surrounding the Bernard Madoff 50 billion dollar ponzi scheme, but began rallying almost immediately and closed with a decent gain. Traders were probably pricing in to some degree that a short term resolution will come from the White House with a longer term plan implemented once the Obama administration takes control of the ship. My feeling is that once some kind of plan is officially announced, we’ll get a decent move up but just as we’ve seen from other government intervention, the rally will be fairly short lived as reality sinks in. Continue reading Madoff Ponzi, Failed Auto Bailout Not Enough To Spook Market
Much Of Bad News Priced In As Market Showing Increasing Strength
One of the key ingredients for me in trying to determine if a market rally is near after a sustained sell off is how the market reacts to bad news. That was the theme over the past week and I discussed it with my members a few times. On Monday traders came back from the Thanksgiving break and took profits in a big way resulting in a nearly 700 point plunge in the Dow. However, my sentiment changed over the course of the week as the market not only held up, but managed to rally following a flurry of bad news.
On Wednesday evening I commented to my members that my sentiment was changing a bit to the bullish side…
“Yesterday the market was not able to follow through on the sell side. In fact, as quickly as the market fell off a cliff at the end of the day on Monday, the market wiped away those losses very quickly yesterday morning. Most of the gains were wiped away late in the trading day, but the market rallied furiously on hopes that an auto bailout is on the horizon. As I mentioned to premium members last night, it was a positive day in that the bleeding had been stopped in its tracks and support levels in the Dow and S&P held up. However,it wasn’t until today that I decided to shift the portfolio from slightly bearish to slightly bullish. Why? Continue reading Much Of Bad News Priced In As Market Showing Increasing Strength
Did Geithner Rally Save the Indices?
Was the last second Geithner rally on Friday enough to save the indices from the abyss? That is the question I ponder this week. In last week’s report I discussed the developing triple bottom and the well defined support levels that had held for over a month on a few different occasions, setting up the potential for a market rally heading into a historically bullish time for the market….
But it all fell apart on Wednesday afternoon as buyers were nowhere to be found. My notes to premium members captured my change in sentiment.
(10:34:50 AM): That relief rally fell apart in a hurry and the Nasdaq
has taken out the lows of the correction now. I should have scaled
into a hedge up there.. still looking to add one but want to see some
sort of a bounce.
(10:35:48 AM): SPY and Q’s still have support of yesterday’s lows..
just barely.
Mark Cuban Charged With Insider Trading Mamma.com
Mark Cuban has always said he hates to lose and that passion for "not losing" has him in hot water with the SEC. The WSJ is reporting that Cuban sold his 6% stake in Mamma.com (now Copernic ticker CNIC) just one day ahead of a tip in 2004 that the company was prepared to dilute the shares through a private investment. The stock dropped 10%, saving Cuban 750K in losses.
Cuban discussed his purchase of Mamma.com a bit in a blog post at Blog Maverick in March of 2004.
More details emerging…
The SEC alleges that in June of 2004 Mamma.com invited Cuban to participate in the stock offering after he agreed to keep the info confidential, but Cuban knew the offering would be dilutive so within hours instructed his broker to sell his entire position.
Triple Bottom, Key Reversal Point to Potential Rally
I’ll start out the report this week with a member question because I think it’s a good lead in to what I want to focus on – the technicals. The question was basically what I thought about Jim Cramer’s prediction that the Dow would drop another 2000 points if GM wasn’t bailed out and his recommendation to sit on the sidelines and/or sell ahead of the news.
First of all Cramers prediction is just that.. a prediction with a bit of doomsday fear thrown in. Hey, it makes for a nice headline and gets people talking. The bottom line is that nobody knows what will happen with GM. Democrats are in favor of some kind of a bailout as many agree they’re “too big too fail”, with a GM bankruptcy leading to a major domino effect of unemployment. On the other hand, there are those that would like to see the capitalist system take care of it, rather than prolonging inevitable pain. As far as an investment strategy goes, it’s tough to disagree with an approach that recommends sitting on the sidelines until the dust clears and for many people that may be the smart way to play. Continue reading Triple Bottom, Key Reversal Point to Potential Rally
The Basics Of Stock Market Investing
In times like this, it’s always good to get back to the basics, so I thought I’d post a few basics of stock market investing for the self investor just starting out. Note that some of these go against the conventional wisdom of Wall St, such as the buy and hold mantra. It should now be crystal clear that Wall St never had your best interest.
1. Fire your broker/investment advisor
2. Fire your broker/investment advisor
3. Learn to manage your own money.. nobody has more of a vested interest in your money than you do.
4. Cut your losses quickly and move one! A stock or ETF has to double to make up for a 50% loss.
5. A 10% gain should almost never turn into a loss for you.. use trailing stops if you have to. Continue reading The Basics Of Stock Market Investing
With Obama In, Traders Sell The News; Friday’s Relief Rally Weak
With Barack Obama in as the next President and the uncertainty of the election now over, a new uncertainty has developed in the market with the Dow plunging nearly 1000 points in the two days following the election, setting us up for a possible retest of the lows of the correction in the coming days.
In my last report I warned that the market had come too far too fast with diminishing buy volume and to wait for opportunities on a pull back. The night of the election, I told my premium members:
“The moment of truth will soon arrive and by tomorrow morning I would imagine we’ll find out who the next Pres is. I expected a big market rally, but I never believed the market would rally as it has ahead of this election. Heck, the Nasdaq is now up 6 straight trading days. The S&P is up 18% in the same time and the Dow is up nearly 1500 points. Yes, there is some room to run and I suppose the market could be up again tomorrow for the 7th straight day in a row for the Nasdaq, but consider that buy volume continues to diminish across the board with big overhead resistance all the way up. As I mentioned over IM today, the VIX is also hitting some big support at the 50 dma around 45 indicating traders getting a bit too complacent. We could also be in for a “sell on the news” situation, particularly if Democrats get the 60 seat majority in the Senate, the threshold needed to overcome filibusters that the minority can use to block legislation. ” Continue reading With Obama In, Traders Sell The News; Friday’s Relief Rally Weak
Indices Break Out of October Downtrend, Showing Signs of Life Ahead of Election
The indices finally began to show some signs of life last week with a firm break of the October downtrend. While I have been increasingly bullish on this market, I did not expect the market to rally with such force as it did on Tuesday ahead of the GDP number, the Fed decision and the coming election.
On Monday night I said to members:
To be completely cliche, I’m still cautiously optimistic on this market as sell volume continues to dry up following minor
capitulation days on October 10th and October 16th. However, we must get going very soon with a big confirmation move up. The longer the indices probe the October lows, the more likely they are going to plunge further. The Nasdaq did close below the intraday low of the October 10 capitulation day today which is of concern but it may just find support at 1500 so keep an eye on that level tomorrow. We certainly aren’t out of the woods for another significant move lower, so be careful out there.
We sure did get going! The indices held the nearly 900 point move in the Dow on Tuesday and managed to tack on more gains throughout the week despite awful consumer sentiment numbers and a negative GDP (although better than expected). Certainly the easing TED spread and Libor rates have helped stabilize this market and provided a foundation for a rally, but shrugging aside bad news and rallying is certainly one important characteristic of a bottom.
Here are some points I made to my members on Thursday night regarding the current market:
– the character of this market appears to be changing ever so
slightly, becoming somewhat resilient in the face of bad news
– the indices have cleared the October downward trends, also bullish
– in the short term, the indices appear to be tiring a bit and may
need to take a bit of a rest heading into Tuesday election
– the Dow is ONLY 1100 points or so from major resistance of the 200
day moving moving average! That kind of move nearly happened in one
day this week.
– (i’ll add this note here now) regarding the election, I’d imagine the only way the market rallies big the morning after the election is if McCain pulls out the upset victory. On the flip side much of an Obama victory is probably already priced in so we could rally a bit just simply for the fact that the uncertainty of the election is over. However, I think in either case, any rally would be relatively short lived considering the move we already had last week.
Lets go ahead and take another look at the charts:
As you’ll see in all the charts below, the October downtrends have been taken out which is an important first step, but as you’ll also see we’ve come a bit too far too fast and volume diminished on the buy side as the week wore on. It’s quite possible that soon we will need to digest the big ramp up that began on Tuesday, retracing as much as half the move and testing what is a new support area of the Oct downtrend line.. in this case around 1600 in the Nasdaq. Note the overhead resistance points above around 1800, 1900 and 2000. I do think its a bit late to be adding long positions right here.. wait for a pull back. There will be plenty of opportunity, just wait for your price.
Same thing with the S&P.. technicals have improved but we’re getting overbought in the short term and need to come in some.
The Dow pushed above that October downtrend line as well and tacked on more gains heading into the weekend, but it does appear to be tiring and probably needs to come back and test new support at the trendline around 8700 or so. Keep in mind – one more more big move like we had on Tuesday and the Dow is already at major resistance of the 200 dma around 10250. It’s at that point that I exit and move almost entirely to cash again.
I will continue adding long exposure on healthy pull backs from current levels. This coming week is very important. We need to hold this rally reasonably well with healthy, lighter volume pull backs, keeping the potential for an end of year really alive. We are entering what is historically a good time of year for the market, so the bulls have some things working for them.. finally.
::: Model Portfolio :::
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::: Best/Worst Performers :::
– Top 10 Performing Industries For the Week –
1.Resorts & Casinos: 30.45%
2. Office Supplies: 25.80%
3. Gold: 25.00%
4. Agricultural Chemicals: 24.20%
5. Education & Training Services: 23.05%
6. Mortgage Investment: 19.55%
7. Residential Construction: 18.05%
8. Steel & Iron: 18.00%
9. Copper: 17.90%
10. Heavy Construction: 17.75%
– Top 10 Worst Performing Industries For the Week –
1. Health Care Plans: -11.55%
2. Meat Products: -7.90%
3. Research Services: -7.60%
4. Textile Manufacturing: -7.45%
5. Appliances: -6.50%
6. Internet Service Providers: -5.55%
7. Drugs Wholesale: -5.50%
8. Manufactured Housing: -4.75%
9. Air Services: -3.60%
10. Semis – Memory Chips: -3.05%
– Top 5 Best Performing ETFs For the Week –
1. Market Vectors Russia (RSX) 28.90%
2. Market Vectors Gold Miners (GDX) 24.65%
3. iShares South Korea (EWY) 23.45%
4. Mexico Fund (MXF) 23.30%
5. iShares South Africa (EZA) 21.70%
– Worst 5 Performing ETF’s –
1. Indonesia Fund (IF) -13.80%
2. US Oil Fund (USO) -4.60%
3. iShares Healthcare (IHF) -2.65%
4. China Fund (CHN) -2.60%
5. iShares Commodities (GSG) -2.15%
::: Upcoming Economic Reports (11/3/2008- 11/7/2008) :::
Monday: Construction Spending, ISM Index
Tuesday: Auto/Truck Sales, Factory Orders
Wednesday: Crude Inventories, ISM Services
Thursday: Productivity, Initial Claims
Friday: Average Workweek, Hourly Earnings, Nonfarm Payrolls, Unemployment Rate, Wholesale Inventories
::: Earnings I’m Watching This Week :::
Monday: Atlas Energy Resources (ATN), Automatic Data Processing (ADP), Comstock Resources (CRK), Forest Oil (FST), Iconix Brands (ICON), Mastercard (MA), Open Text (OTEX), Sun Hydraulics (SUNH), Taleo Corp (TLEO), Transact Tech (TACT),
Tuesday: American Medical Systems (AMMD), Jacobs Engineering (JEC), Petroquest (PQ), W&T Offshore (WTI)
Wednesday: Clean Harbors (CLHB), Cisco (CSCO), Cognizant Technology (CTSH), Corinthian Colleges (COCO), Enersys (ENS), FTI Consulting (FCN), Gafisa (GFA), LMIA Aerospace (LMIA), Partner Communications (PTNR), Quicksilver Gas (KGS), Solera Holdings (SLH), T Three Energy Services (TTES), Transocean (RIG), Ultra Petroleum (UPL)
Thursday: AirMedia (AMCN), AthenaHealth (ATHN), Bancocolombia (CIB), Capella Education (CPLA), Carrizo Oil & Gas (CRZO), China Digital TV (STV), Continental Resources (CLR), Darling International (DAR), Exide Technologies (XIDE), Ezcorp (EZPW), Fuel Systems Solutions (FSYS), FMC Technologies (FTI), Genoptix (GXDX), Gulfport Energy (GPOR), Hansen Natural (HANS), Innerworkings (INWK), IPG Photonics (IPGP), Lumber Liquidators (LL), NIC Inc (EGOV), Priceline.com (PCLN), SandRidge Energy (SD), Nasdaq Group (NDAQ), True Religion (TRLG)