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Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a ‘dead cat’ style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today’s high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside challenge for the index will be its 20-day MA. Note, yesterday’s close marked the turn to net bearish technicals. This is often a marker for a longer term decline.

Small Caps enjoyed a great day, returning 3% and posting what looks like a ‘bear trap’ in play. Again, I would like to see some consolidation of today’s gain, but Small Caps may be the one to deliver the ‘Santa Rally’ everyone is looking for.

The Semiconductor Index tagged breakout support at 659. A bullish engulfing pattern of Tuesday’s doji is also something to consider. It looks to be the index most likely to deliver an immediate follow through gain tomorrow.

For tomorrow. look to the Russell 2000 and Semiconductor Index to deliver upside or consolidate today’s gain.  Fundamental factors may distort this outlook, but these should level out over the coming days.

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Market Selling Intensifies

Courtesy of Declan.

It ended up a roller coaster ride with markets rallying, then suffering losses to return indices to their lows. Volume rose in confirmed distribution, and many indices now sit inside Fib retracement levels – a good place to launch a relief bounce.

The S&P finished just a few points above the 50% Fib level, with the 200-day MA near the 61.8% zone – and a more probable place for a bounce.


The Nasdaq closed at the 38.2% level, but just below its 50-day MA. The inverse hammer at oversold stochastics is a potential reversal play. Watch for an upside gap tomorrow.

The Russell 2000 is another index sitting at the 38.2% Fib level, and just below its 50-day MA. Like the Nasdaq, it’s primed for a bounce, but is also outperforming the Nasdaq in relative terms.

Not to be left out, but the Dow is on its 50% Fib retracement zone. Also note the clustering of distribution days from the recent high.

Finally, the Semiconductor Index is right back at its breakout level of 659. It’s questionable whether the support level will hold given selling in lead indices, but this was also be the first test of the breakout. A small bounce may emerge because of this.

For tomorrow, we are edging ever closer to a bounce play. My #sectorbreadth analysis has the S&P at 27% bullishness, which is not heavily oversold. The S&P is also 1.3% above its 200-day MA – not exactly swing low territory. So tomorrow may not be the day, but those taking the punt may find themselves rewarded in 6-months time.  

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Saudi crude oil target is $40, chart agrees.

Courtesy of Read the Ticker.

saudi-crude-oil-target-is-40-chart-agreesWhere will the most important commodity in the world halt is fall, the House of Saudi says $40.

In 1985 Saudi (OPEC) did a similar sell off to protect their market share when the UK North Sea oil came on line. World oil prices plunged 69%. Lets face it, oil above $100 with all the new supply on the market was just to high, and as the Saudi’s put it, $100 allowed a lot of inefficient producers to enter the market (ie US shale oil), and has allowed Russia to expand its energy complex. Therefore the current sell off is forecasting lower oil prices for many years to come, most likely between $30 to $50 for a year or two, then a little higher after that, it may be that $100 oil wont be seen again for 5 to 10 years.

Of course all the debt associated with oil exploration while oil was above $100 is going to smash risk markets around for the next 12 months. You can not mention debt blow ups, with out the risk of derivative blow ups either. This risk will make it hard for risk on markets to climb higher.

Click for popup. Clear your browser cache if image is not showing.
OIL

Here is a chart with Crude, US dollar (DXY) and Gold (GLD). When crude stop falling, the USD will start to fall as traders will take profits on that event. Thus anti USD trades (ie metals, forex) will begin to rise.

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GOLD



NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote…

..”I believe that uncontrolled basic emotions are the true and deadly enemy of the speculator. That hope, fear, and greed is always present, these emotions sit on the edge of the psyche, waiting on the sidelines, waiting to jump into the action.”..

Jesse Livermore


..”A market is the combined behavior of thousands of people responding to information, misinformation and whim”..

Kenneth Chang








Further Selling, But More Likely

Courtesy of Declan.

The S&P took another beating as it undercut its 50-day MA. The day finished with confirmed distribution without any clear late day surge by bulls. Tomorrow could offer more of the same, although there is the benefit of Fib retracements on which buyers can lean on.


The Nasdaq finished on breakout support. However, today’s candlestick finished with a bearish engulfing pattern (weakened, because traditionally it’s only viewed as bearish when overbought).

The one index which I thought could hang on was the Russell 2000. It broke below range support, and its 200-day MA, leaving Fib retracements as the next support levels to work with.

The Semiconductor Index is fast approaching breakout support. The rate of advance is looking a little quick for it to be a bullish retracement, so look for the next bounce to be sold.

Tuesday is another opportunity for buyers to make a stance. I would be looking for an afternoon buying surge, but keep any eye on Fib levels – at which tomorrow’s open will offer Fib level support for the S&P and Russell 2000.

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Further Selling, But More Likely

Courtesy of Declan.

The S&P took another beating as it undercut its 50-day MA. The day finished with confirmed distribution without any clear late day surge by bulls. Tomorrow could offer more of the same, although there is the benefit of Fib retracements on which buyers can lean on.


The Nasdaq finished on breakout support. However, today’s candlestick finished with a bearish engulfing pattern (weakened, because traditionally it’s only viewed as bearish when overbought).

The one index which I thought could hang on was the Russell 2000. It broke below range support, and its 200-day MA, leaving Fib retracements as the next support levels to work with.

The Semiconductor Index is fast approaching breakout support. The rate of advance is looking a little quick for it to be a bullish retracement, so look for the next bounce to be sold.

Tuesday is another opportunity for buyers to make a stance. I would be looking for an afternoon buying surge, but keep any eye on Fib levels – at which tomorrow’s open will offer Fib level support for the S&P and Russell 2000.

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Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





S&P Breakout Support Cleanly Cut

Courtesy of Declan.

There wasn’t much for bulls to work with by the time markets closed Friday. I was somewhat surprised to see the S&P give up 2,009 breakout support without too much of a struggle. It finished at its 50-day MA which is also near psychological support of 2,000. Volume also climbed in confirmed distribution. Monday offers another chance for a bounce, but there is growing supply overhead which has the potential to kill any sustained Santa Rally.


The Nasdaq also suffered losses, but it does at least have support levels to work with. The question is whether it can hang on in the face of broader selling from other markets.

Nasdaq breadth metrics are weakening from a swing high, but not from overbought conditions,which would be a better marker for a top.

The semiconductor index has suffered in sympathy, although its losses have the look of a ‘bull flag’. Watch for a potential breakout.

The Dow finished right on breakout support, which itself is a converged Fib level. With the S&P undercutting its breakout level it’s hard to see the Dow holding out, but while it’s there these levels can’t be ignored.

The Russell 2000 finished on trading range support. The index reached a major low in October, and is holding up better to the selling experienced by other indices. Another swoon lower could offer a second opportunity for long term buyers.

For Monday, look for rallies in the Dow and Russell 2000. Sellers have the best chance in the S&P, although the short-side is likely limited in the short term.

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Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





Late Selling Puts Pressure on Friday

Courtesy of Declan.

Thursday saw another attempt by bulls to make up the losses of the previous day, but bears didn’t wait until the next day to attack. Instead, an afternoon assault pushed markets back towards their lows, setting up a situation for further losses today (Friday).

Volume was light, and there is plenty of support nearby to work, but it doesn’t look good if you want to be a buyer for the longer term.  If that’s your goal, refer to my table below to identify market conditions best suited to do this.

As for markets, the S&P inverse hammer looks ugly. A test of 2,009 today or Monday doesn’t look unreasonable.


The Nasdaq has rewarded shorts who attacked the ‘bear flag’ breakdown quite handsomely.  More to follow today? The inside day looks like a bullish harami doji (one of the most reliable reversal patterns), but as the index is not oversold I would not rely on it to hold true Friday.

The Russell is range bound, and of all the indices it offers no real advantage to bull or bear.

For Friday, look for selling to continue. If markets rally, look to stand aside until they make it close to week’s highs, then attack again with short positions.  Any short will be negated if November swing highs are taken out.

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





Yesterday’s Recovery Wiped

Courtesy of Declan.

It looked a weak recovery, and today’s action quickly exposed the nature of yesterday’s buying. Volume was modest, as holiday trading continues to be a theme. Window dressing into end-of-year remains a bullish overhang, but there is no guarantee Santa will keep on delivering gifts.

For the S&P, look to Fib retracements and 2,009 breakout support. Buyers may attempt another run at the index then.


The Nasdaq has delivered nicely on the ‘bear flag’ breakdown. There is probably more to come from bears, with shorts likely to start covering at 4,610, down through the 50-day MA, to the first of the Fib retracements at 4,538.

The Russell 2000 finished with an inside day, a quite large inside day. However, the index is in effect range bound between 1,154 support and 1,191 resistance. Trading between these ranges is difficult given the noise of recent trading action.

Rallies can be shorted until there is a break of November highs. Measure risk accordingly.


Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





Late Recovery Comforts Bulls

Courtesy of Declan.

Not sure what to make of today. The recovery didn’t look like one based on merit and will be vulnerable to early morning weakness. The Russell 2000 went from trading range support to resistance as it finished with a bullish engulfing pattern. The strength of the pattern is weakened by the lack of oversold conditions. However, price action will always be dominant. A poor start will increase the probability for a retest of today’s low.


The S&P finished at its 20-day MA, but has so far struggled in prior attempts to challenge 2,073. There may be a short term day trade to 2,073, but if there is an open below 2,056, then a move to 2,034 looks more likely.

The Nasdaq clawed its way back to the ‘bear flag’ breakdown. Look for a challenge of 4,795, which may be the opportunity to run a new short play. Technicals show a MACD ‘sell’ trigger and a bearish cross in +DI / -DI.

For tomorrow, morning action will dictate action for the day. If there is a gap down, today’s gain stands a good chance of been erased. If markets can hold on for the first hour, then a challenge of recent highs looks more likely.


Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





Broad Selling

Courtesy of Declan.

Bears paid an early visit to Santa with a broad selling. The relative loss was minor, although volume climbed to register confirmed distribution. The Nasdaq delivered on the ‘bear flag’ breakdown, which will give shorts something to work with.  The index finished on its 20-day MA. but this hasn’t played as support in recent months.


The S&P may be creating a bearish ‘evening star’ with today’s loss following from Friday’s doji. The index finished at its 20-day MA, although this hasn’t provided much support in past tests this year. Further losses are likely.  First look for a test of 2,009, with follow through down to Fib levels.

The Russell 2000 suffered the largest loss of the day. This may morph into a bearish head-and-shoulder pattern, but for this to confirm a close below 1,155 is required.

Losses in the Semiconductor Index look bad, but damage was minor.

For tomorrow, look for expanding losses in markets. The Nasdaq was the most bearish heading into today, and remains the index best positioned for shorts to attack.

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





 
 
 

Phil's Favorites

The Coin of the Realm: How Inside Traders Are Rigging America

The Coin of the Realm: How Inside Traders Are Rigging America

Courtesy of Robert Reich

A few years ago, hedge fund Level Global Investors made $54 million selling Dell Computer stock based on insider information from a Dell employee. When charged with illegal insider trading, Global Investors’ co-founder Anthony Chiasson claimed he didn’t know where the tip came from.

Chiasson argued that few traders on Wall Street ever know where the inside tips they use come from because confidential information is, in his words, the “coin of the realm in securities markets.”

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Submitted by Tyler Durden.

A busy day for The White House phone lines... If Cuba is "good" socialism and Venezuela is "bad" socialism, what does that make America?

 

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Chart School

Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Chart o' the Day: Don't "Invest" in Stupid Sh*t

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Shares of Twitter were up 1.6 percent at $35.63.

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Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

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Sector Detector: Energy sector rains on bulls' parade, but skies may clear soon

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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Click here and sign in with your user name and password. 

 

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Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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