Friday, February 1, 2013

EURO...en fuego!

Well so much for a EUR resistance area and pullback as highlighted with this post Watch your Euro.  It just doesnt seem to be happening as originally thought.

And that leads me to this post and chart...a weekly of the EURO now that it has cleared resistance at 1.34/1.35. It appears off to the races. Notice that momentum on the lower portion of the chart is also moving up nicely.

While the first real resistance area is around 1.42, a measured move from here on the inverse head and shoulders break UP is to 1.45. That move would pull US equities to new highs and a huge continuation of this bull market.

Wednesday, January 23, 2013

AAPL...dont say I didnt warn you.

I have been harping on AAPL's technical weakness for some time now, originally getting bearish up in the mid $600, and with the most recent post on November 8th "AAPL...the pain isnt over yet" suggesting support doesn't exist until the $460 area then a much lower gap zone for possible support, followed by the ultimate line in the sand of $400. Well, for those of you who have been trading with the trend (i.e. DOWN) then you will be rewarded with lower prices from a weak after hours earnings announcement at the worlds most loved company.

For some time now institutional selling has been relentless and every bounce has been sold. Todays collapse of 10% after hours, and the early weakness that is sure to follow tomorrow on the opening, may (I SAY MAY, Foghorn Leghorn) finally rid the stock of all those institutional sellers who werent smart enough to take my advice (or just the simple advice of the AAPL chart many, many dollars ago) to sell.

Price doesnt is fact!

Price action doesnt is fact!

Volume doesnt too is fact!

Charts paint a picture of the psychology of holders and traders. Plain and simple. Anyone who is keen enough to look at the simplest painting on a wall and have an opinion is also keen enough to see a weakening price, on a pick-up in volume, as institutional holders look for the exits. This alone - not the hope of a forecast, not the hope of higher sales or the hope of a new product launch, not the hope of an analyst upgrade - is reason enough to sell, and keep selling on bounces. The hope trade doesnt work and this may be the best example in recent history from such a beloved company.

At some point AAPL will bottom. To flush out any remaining weak holders, the stock needs panic selling. And with panic selling comes massive, MASSIVE volume to an important support level. I dont know if that day will be tomorrow or sometime in the near future, but if you are looking to buy, as I am for a powerful counter-trend swing trade, then look for the volume mentioned above at an important level. If you are into candles, then also look for a reversal candle around the same time.

Eventually - and reading the chart for hints of a psychological shift will give us clues - the stock price will make a double bottom or a higher low from which to build upon. At that time, AAPL will be provide more than a swing trade bounce and possibly allow for some long term holders to prosper handsomely. After all, this company is about innovation and making things that people want...for example, the iMac I am typing this post from.

As a quick side note, there have been some very good calls recently (breakouts in BAC and FRP, as well as a timely short in MSFT come to mind) as well as some not so good (SHCOMP is a thorn in my side. Hats off to Tom Demark for calling that bottom!). But as a swing trader trading with the trend (mostly), it is all about risk management. Let your winners run and cut your losses.

As always, comments welcome...and keep the personal emails coming. I dont mind talking outside this medium.

Tuesday, January 15, 2013

Watch your EURO...

The weekly chart of the EURO below shows some impressive strength from mid 2012 to now, rising from 1.20 to currentl levels near 1.33. But as it approaches some major resistance in the form of moving averages and its reaction high from early 2012, as well as its extended momentum gauge as shown on the bottom, it is more a time to be cautious than outright bullish for US equities. Since this is a weekly chart it is not an exact level for today, or this week, but an overall level from which the currency should pull back..and lead a drop in US equiities.

Monday, January 7, 2013

Well, this is a healthy rally…NOT!

90% up days on the NYSE and higher prices all around prevail. But for some reason I just cant get my head around a continuation of this rally.

What are the building blocks of a 5% move in the first week of trading?

Where is the euphoria coming from to have everyone buying stocks again?

From what I can tell this rally is suspect at best as seasonality typically helps the market early in the new year as well as beginning of each quarter when mutual funds put inflows to use. This rally is no surprise, but its not healthy. If you look at large well known companies like WMT, MCD, etc they are just not participating. But high short interest stocks out of China or crap like ZNGA and DRYS are rallying hard. Does this support a continuation of the recent rally?

SPY is +4.9% since 12/31 lows...the s&p500 high beta index is +7.4% over the same time. This data shows that this is a high beta rally where crap stocks are leading the charge.

Also, the ratio of s&p 500 stocks to s&p500 high beta index is at the same level from April 2, 2012 when the market made an intermediate term peak at SPY $142 before falling to $136 (4%) in 2 weeks.

Wednesday, January 2, 2013

F bombs...???

Ford has had a hell of a run recently.  Just a short while ago in mid December it was gesting $11 and now the stock is over $13. Look back into late October and the stock was just $10. So given the 20% gain over the past 2 weeks and 30% gain over the past 2 months, I view todays near doji as a blow off top.

Longs will be looking to lock in those tasty profits and I believe shorts will be all over the name on a high volume close below $13. If that occurs, look for a 38% - 50% retracement towards the $12 area where buyers will likely defend the name.

The stock has been in a bull market since the July/Aug lows so a short is definitely countertrend and not for the faint of heart. Given the recent strength, most people would be looking to enter from the long side so be nimble on a cover and use stops above according to your risk tolerance.

Monday, December 31, 2012

Thursday, December 27, 2012

Time to be careful!!!

President Obama comes back early from holiday and everyone "hopes" this means a deal is imminent. But the market is a psychological machine that currently has all this euphoria adding up to +3handles yesterday morning and -5handles on the day…because of that news? The early morning strength just didn’t  add up if youre not wearing the christmas-rose colored glasses.

Technically the broad market suffered some real damage last week. Friday 12/21 was the heaviest volume selloff in the SPY since the reversal bottom on 11/16. High volume is typically a sign of a reversal especially after a strong selloff (sep 14th to nov 16th selloff was 8%) or after a strong rally (nov 16th to dec 18th rally was ~8%). My take, looking through monetarily or psychologically unbiased glasses, is that the broad market is in trouble. Anyone in this business for a while knows the "hope" trade never works and reality is what you see...not what you think.

Having said all that on the day after christmas (sorry to be such a scrooge) it is clear to see i am leaning very bearish. The announcement of a fiscal cliff deal, in my view, will be one of the biggest "sell the news" events of the year. On the way down, 1400 will be good psychological support and the first battleground followed by 1370/80 and then the area surrounding the November lows near 1340/50. The only thing that will change that view is a high volume broad market rally over the September highs of 1452.