GOOG...look out

GOOG has been like AAPL...straight up from the summer. Until recently.

With the massive selloff from $770ish to $680ish over the past 3 weeks it appears the bubble has burst as people continue to look to big gainers for profit-taking. Taking a look at the chart, it seems the carnage is not over yet. Previous times GOOG fell hard on a pick-up in volume and then consolidated sideways, it then moved again lower before finding a bottom. Currently, the 100day sma sits below near $657 and the 200day near $633. Given how APL tested its 200day sma today, I would expect the pressure to also continue tin GOOG with $650 or lower to be tested sooner rather than later...

Something to keep an eye on in the coming days / weeks.

Shanghai Composite

The equity action in China continues to confuse - even Confucius is confounded.

The short term action, until yesterday, has been encouraging as the Shanghai Index moves off its lows. The double bottom and rally of +6% from the bullish engulfing in late September was the tell.  But as you can see from the recent action, yesterdays big distribution day took out the 50day sma just as momentum starts to roll over from overbought territory - see lower portion of the chart.

Conversely, a weekly chart of the Shanghai Composite shows encouraging longer term price action and more importantly oversold weekly momentum that is starting to turn up - chart not included. It needs to make a higher high and or move over a major moving average, but the foundation for such a bounce is forming.

So not only is Confucius confounded by this confusion but so are us mortals. Given the technical backdrop, expect the short term action to lead to lower prices and watch for both daily and weekly support levels, if/when tested, to  hold.

Why is this important you may ask? Because the direction of the Shanghai market may give important hints of risk on/off for trading in the US. STAY TUNED!

 

Turning tail...BE the bear!

mentioned on Monday in this post ...

As the internals of the broad market continue to deteriorate it is important for short term traders to stay thin and nimble. Swing trading opportunities (a few days to a few weeks in duration) are plentiful but use tight stops. When (not if) we get the first big down day - something that may not happen until after the election - that will likely be the sign of THE top and further downside will be highly probable. Until then, light volume selloffs or pullbacks to previous support areas are likely to be bought. A big distribution day on above average volume will be the canary in the coal mine for me. This is no time for the light volume and anemic action to put you to sleep...be aware and read the signs.

I believe we have seen THE top for the year and should be trending lower as the primary trend changes from bullish to bearish.

Earnings misses...OUCH!

IBM MSFT MCD GOOG CMG and others...poor earnings / guidance are all signs of the beginning of a topping process. Big volume in these names on the selloff action also. I mentioned this in Monday's post so please BEWARE!

Citi (symbol: C) watching closely

Citi is looking frothy up here as it taps its highs near $38 from March earlier this year. A few interesting things about the current stock price and why it feels poised to pull back 10% or so.

*The last time when Citi was this far above its 200day sma (approx 20%) the stock fell back to its 200day sma within 6 weeks, before falling significantly below.

*The first attempts at a double top usually fail...thats WHY they call them double tops.

*The volume spike highlighted on the lower volume chart is very similar to the volume spike that preceded the March top.

Watch todays action (as well as action in the next few days) for a potential Evening Star, Abandoned Baby Top or Doji candlestick formation as a sign for a reversal. Support on the way down starts near $36, then more formidable short term support near $34.

 

Place your bets...LVS & WYNN

LVS and WYNN are both poised to run here...especially after the strong performance of the broad market yesterday and this morning pre-opening. Yesterday WYNN closed over its high close of $115.69 from 9/19 and should soon push to $120+ while LVS has been acting well the past few days as the 50day sma is crossing over the 100day sma as the stock sits on the $45 pivot. A high volume push over sets up the stock for an extension back towards $48.

Todays potpourri: Falling behind...an AAPL a day...internal bleeding.

Wow, I didnt realize I havnt posted anything in a month. I've been very busy with personal issues but THAT is ridiculous. There have been some great swing trade opportunities recently, especially in the coal space - I will try my best to post more.

Until then, just looking at the last 2 posts from September it seems the SHCOMP is still struggling slightly below the level mentioned last month. On a short term basis is has made some improvements but for the longer term, although improving, it still has some work to do.

As for the Nat Gas call, that was spot on. Nat gas rallied hard (some 20%+ from my mention) and pulled a lot of sector stocks with it as well as helping the coal stocks rally as people think more about the industry switching form more expensive gas to cheaper coal. Can you say "pair trade"?


As an aside, from what I can tell about the recent action AAPL has found some serious institutional selling. Even on days when the broad market is rallying this stock is struggling to hold on. Watch major moving averages as inflection points - the stock recently fell hard after breaking its 50day sma, and similar to the last time it did this, it fell straight to its 100day sma where it is close to now. If institutional money doesnt start flowing back in, look for further price pressure. This is a favorite of mine and many others to trade short term and there are constantly multiple short term swings to play on both the upside and downside.


As the internals of the broad market continue to deteriorate it is important for short term traders to stay thin and nimble. Swing trading opportunities (a few days to a few weeks in duration) are plentiful but use tight stops. When (not if) we get the first big down day - something that may not happen until after the election - that will likely be the sign of THE top and further downside will be highly probable. Until then, light volume selloffs or pullbacks to previous support areas are likely to be bought. A big distribution day on above average volume will be the canary in the coal mine for me. This is no time for the light volume and anemic action to put you to sleep...be aware and read the signs.