Author Archive for Alexander
While on the daily the market has been moving according to its channel and retracements quite precisely and there have been great opportunities to play both the long and short side of things, the outlook for the bulls in the next few weeks is becoming less predictable (i.e. more risky), now that we have bumped up against some key resistance. I have begun to build up my short positions on Thurs. and Fri. of last week to play a potential correctional move and will look to add or pull out depending on the action of the next two days. Particularly crucial will be the movement of the dollar-oil duo (as both $OVX and realized volatility are showing signs of instability), as well as the banking index ($BIX) as it is about to invalidate its five-wave structure downward. Also it will be interesting to note if $TRAN can sustain its new highs since January and continue to confirm $INDU/Dow Theory. Below are a few charts taking a closer look at volatility and one considering the current value-to-growth relationship – more graphs can be found on my blog.
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Notice how perfectly SPY is moving up to the spot (and along the paths) that were plotted Jul 30. This may be a good point to take some profits. Though volume is notably decreasing, I would wait for at least some consolidation/confirmation to get in on the shorts. Like I said yesterday, there is some chance that we will power through this level.
After today’s reflation rally on lowest volume since Dec 26, in after-hours we pushed up to 100.60 on SPY along the upper path and hit against the ascending resistance a couple of times. Though it is expected that we hit the 38% retracement tomorrow off the 2007 top and consolidate somewhat, I would prepare well for a potential move higher. Specialists today bought the least amount of shorts in almost a month (while purchases were above average), which was confirmed by the tame $OEX put/call ratio of 1.07. In either case, I’ve put up an updated list of most active stocks for you to consider. The top 15 movers/ currently breaking out are highlighted in blue. The only one from this spreadsheet that I would currently consider shorting (from a purely technical standpoint) is GENZ – though DTG, STAR, STEC, SXCI, GSBC and a few others appear to be showing some signs of breakdown. I’ve combined the technical signals from barchart.com into a single number that shows how attractive a particular stock is, so you can sort any group by this (or any other) parameter. Let me know if this helps, or if you think there is a better site from which to retrieve the data.
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Hey guys, Here is an update of my 60min SPY chart – it looks like it has taken the upper path which I had from Jul 30, in large part as a reaction to the drop in the USD:
And a couple charts below:
Hey guys, We often talk on here about what the most overbought/oversold plays are, and I realize that sometimes it’s hard to find a site that will give this info in a thorough and yet concise manner. And since I don’t have much time today to do much of a write-up I wanted to at least give you a link to a spreadsheet that I use periodically to search out the top movers on price and volume. I hope that it will give you some more ideas going into this week. Here is the link: http://cid-73f12bf863f19bec.skydrive.live.com/self.aspx/.Public/Movers|_Jul3109.xls
If I get a chance I’ll also try to update the current post on my site.
Have a wonderful Sunday.
Hey guys, Here’s an update of a graph I put on my site a few hours ago. So far we’re moving along one of the marked paths, however, they and other price levels are meant just as general guidelines. It appears that we’re getting a similar pattern on 60min that we had just a few weeks ago on the daily. I’ve begun taking some small put positions and will wait for a bit of a pullback to possibly close and get in on some calls till the ~1010 (38% fib) S&P level.
Today the dollar strengthened into the open and resisted the market being pushed higher – the AUD/USD breakout from the bull flag a few hours before the open turned out to be a fakeout. We retested 97.35 on SPY on 60min, as I suggested yesterday and went back up toward the descending resistance of the symmetrical triangle (see graph). From what it appears, we may be in a possible formation of a right shoulder and a retest of the rally high of 98.64 (hit in pre-market of 7/27). Usually the market likes to retest any key levels that are hit in after-hours – hence I would not rule this scenario out before the market starts to pull back. Though we are at key resistance and a 50% Fib off the 2008 summer highs, the 38% Fib of the whole bear market (9400 on the Dow and 1008 on S&P) is still enticingly close for the bulls. But it’s also a dangerous level for the bears, for if we hit that, the gates will be open for the push to ~1200 and 11,000. That’s partly to what I would attribute the current tug of war.
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We are currently in the fifth wave of the rising wedge (graph below), which suggests that we may see a break through the upper band of the rising channel before getting at least a 38-50% retracement (in the coming days) of the recent upswing. (Note that in after-hours SPY went up .3% and closed at 98.40).
Today we saw the reflation rally that I mentioned before the open yesterday, with the indices compensating the lower dollar and with almost no strength of their own. They moved against both the VIX and the treasury bonds (TLT) (i.e. all were up), with the S&P and DJI coming up to some critical resistances (which if broken at the end of the week will suggest a character reversal in the market – see chart). As we are already balancing in a semi-neutral state after the massive rise of the previous week, with numerous bearish divergences, a correction is imminent. And today’s option data (if it is not a glitch carrying over from expiration) suggests that we may fall by a couple of percentage points (graphs below).
However, for the bears to regain control we’ll need to see a close below 910 (gap support) on SP500 in the next 3-4 days. That will be almost impossible to do if the AUD/USD chart from the last post does not stabilize/move back to its bear channel (or if the USD index does not hold off the initiated 5th wave down) – so it is important to watch not only for this movement but also for any kind of decoupling that may occur between the indices and the USD. Tomorrow will also be looking at AAPL, XLF, MS to see if they can extend today’s weakness (though AAPL did show some strength in after-hours)…Futures are flat, dollar still testing lows.
Guys, just wanted to give you heads up into the open. Though futures have been tame (picked up in the last 30min while I was writing on my site) and we are due for a pullback from a very overbought condition, the action of the AUD/USD and the USD index is leading me to believe that we may be in for a potential reflation rally to start off this week (Bloomberg has an article on it as well). We’ll have to see what changes at the open, but may need to wait for Bernanke’s comments on his ‘exit strategy’ plans first…
And the USD index below:
