Last Friday saw a big swing in bulls favor as shorts were forced into covering and value players stepped in to buy the positive reaction to the swing low. Shorts look to have made a tentative return of the market as value buyers failed to follow through on Friday’s action. Volume climbed to register as distribution, but it was well down on Friday’s accumulation.
The Nasdaq fell back in a move which may see a retest of Friday’s breakout tomorrow. There was a bearish ‘cross’ in On-Balance-Volume after a respectable recovery to the 20-day MA. Relative performance against the S&P also ticked downwards.
The Russell 2000 moved back into ‘bear trap’ price congestion. The spike low should offer good support should prices continue lower. Note relative performance; this continues to improve and is near a ‘buy’ trigger (against rhe Nasdaq) despite today’s loss.
Wednesday will be about seeing the reaction of buyers when they appear (if they appear). Volume will need to rise if Friday’s low is to confirm as the swing low. The concern is that the last couple of weeks action will morph into a sideways consolidation from the current spike low. And if this was to occur, then the likely follow through would be down, not up.
Healthy Action in today’s markets as early selling was outdone by afternoon buying. The respectable close will help build confidence of buyers, at least until the November-December trading range is challenged.
For the S&P. 2,000 looms overhead, but until this is challenged there is little to add.
The Nasdaq closed near today’s highs as it sits on the verge of a new On-Balance-Volume ‘buy’ trigger.
The Russell 2000 had only a small gain, but it has the most work to do to rebuild confidence. On the positive front, it’s close to a ‘buy’ trigger in On-Balance-Volume.
Another index doing well is the Semiconductor Index. It registered nearly a 1% gain as it looks to recover 2016 losses. Supply doesn’t become a concern until 650 is reached.
Tomorrow is a chance for bulls to kick on and put further distance on the recent swing low.. Not much more to add until then. Buyers can now look with greater confidence to accumulate pull backs. Shorts will likely be waiting on a test of November-December swing lows.
Markets were setting up for a push lower, but Friday’s upside break from consolidations triggered a wave of buying (and short covering). The buying was accompanied with higher volume accumulation. Shorts were left squealing by Friday’s action, and new shorts will need to wait until Nov-Dec consolidations are tested before new positions are entered. Until then, short covering and long buyers rule the day.
The S&P has taken the first step of a rally to take it back to the supply zone of 2,000. Friday’s action was accompanied by a MACD trigger ‘buy’ and On-Balance-Volume ‘buy’ trigger.
The Nasdaq cleared its consolidation. Next up is a move to the 50-day MA and then 4,900. Of the technical indicators, only the MACD trigger ‘buy’ was on record as a positive signal.
Nasdaq breadth improved sufficiently to generate a ‘buy’ signal, with all four metrics in oversold territory.
The Russell 2000 may have done enough to create a sizable ‘bear trap’. Of the indices, it has the greatest potential for upside. Note the relative performance ‘buy’ trigger against the Nasdaq (and watch for one against the S&P too). Pullback opportunities may offer chances to catch the next upside swing. The 50-day MA/declining wedge resistance is the first upside target.
As a final note, breakouts were also noted in the Dow, Nasdaq 100 and Semiconductor Index:
Oh no another Gold Stock bottom caller!. Hang on! Well its gotta happen at some time!
A G7 country (Japan) has moves to negative interest rates (NIRP). Well having YEN under the bed earns more the YEN at the bank! Gold also protects you from bentral bankers nutters! Get the feeling that gold and silver will now creep onto more portfolios! Gold stocks will follow to some degree gold, may not be rock stars just yet but the environment is changing for this bruised sector! The last week of Jan 2016 price action in NEM was a good 'sign of strength' that looked like a 'change of behaviour' worth watching!
.."I have yet to find a man, in or out of Wall Street, who is able to make money in (markets) continuously or uninterruptedly. Like anyone else, I have good and bad periods."..
Richard D Wyckoff
…"The four most dangerous words in investing are 'This time it's different' "…
..“By failing to prepare, you are preparing to fail”..
…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”…
Martin Zweig (The inspiration behind a number of Martin Zweig’s methods came, from Jesse Livermore).
Novice Traders trade 5 to 10 times too big. They are taking 5 to 10% risks on a trade they should be taking 1 to 2 percent risks.
The consolidations developing in the market remained in play by the close of today’s business. Volume climbed in confirmed accumulation, which is a potential sign for an upside breakout from these consolidations. But with bearish lead-in trends, any upside breakouts will quickly run into supply issues from Christmas consolidations.
The S&P is shaping a pennant just above support from September/October swing lows. There is a weak ‘buy’ in the MACD and On-Balance-Volume.
The Nasdaq is holding 4,500 with a potentially bullish harami cross. If today’s accumulation does mark a shift towards bulls, then the Nasdaq is well placed to benefit on Friday.
The Russell 2000 is probably the best placed for bears to take advantage. The ‘bear flag’ remains below support and today’s close left it near lows.
The Dow is another index holding to a ‘bear flag’. I had tried two short positions here on intraday swing highs, but were stopped out. May be best to wait for a decisive break of 16,000 before going short side, as the target is a measured move down to low 14K. There is plenty of opportunity for profit either way.
For tomorrow. Bulls can look to the Nasdaq/Nasdaq 100. Bears should watch the Russell 2000 and Large Cap indices for opportunities.
The back and forth in the markets continued as yesterday’s gains were undone by today’s higher volume selling.
The concern with today’s action is that the consolidation in the S&P has the look of a bearish continuation wedge. And given the potential for a measured move, it opens up the possibility for a push down to 1,650s. A weak ‘buy’ signal in the MACD could trap more bulls.
The Nasdaq accelerated its relative performance down (against the S&P). Today’s 2%+ loss pushed prices back to last Wednesday’s trading range. Additional losses will push into the spike low. The ‘Golden Cross’ was also undone with a return of the 50-day MA below the 200-day MA.
The Russell 2000 experienced losses as part of a ‘bear flag’, but the losses were lighter than other indices – which improved its relative performance. The ‘bear flag’ remains contained by former support turned resistance. Together, lower prices look favoured in the short term, but a return above wedge support would confirm a ‘bull trap’. Note the ‘Death Cross’ between the 50-day and 200-day MA; confirmation of bearish change in long term trend.
The Dow was another index to flash a ‘bear flag’.
For tomorrow, watch for confirmation breakdown’s from the bearish wedge / flags. Markets could accelerate quickly lower if there are gap downs off the open. Long term buyers should be getting ready with another tranche of funds to take advantage of a new swing low (should it occur).
Monday’s close had all the look of a retest of last week’s spike low. And the Asian session only looked to confirm further weakness as the Chinese market continued its slump. However, bulls kicked off from the open and clawed back most of yesterday’s losses. In the end, markets are nicely placed for tomorrow, having undone the damage of yesterday.
The S&P still has a 100 point buffer before it gets to supply issues.
The Nasdaq registered an accumulation day. However it’s going to take more than one accumulation day to recover technical weakness. Relative performance has improved, but not enough to swing it to a position of leadership (still held by the S&P).
The Russell 2000 recovered to former support (turned resistance). The index has been in long standing relative underperformance, but it may be in a position to take the role of recovery leader. The index has suffered the biggest losses, having registered a 25% loss from all-time highs to last week lows, but now it may be beginning to change this story. Watch for a ‘bear trap’ if it’s able to regain support.
For tomorrow, look to the Russell 2000 to lead higher. Long time buyers can continue to look for opportunities, particularly for stocks part of Russell 2000.
Friday did enough to confirm Wednesday’s spike low as a potential Swing Low. Markets may look to rally back into the Oct-Dec trading range, but getting beyond that may prove more of a challenge. But until then, is plenty of room to support a low volume rally.
For the S&P, there is a thick level of support from 2,000 up to 2,025. Beyond that, things quieten with the 200-day MA, then a successive level of swing highs. Technicals remain in bears favour, although there was a ‘bull’ cross in On-Balance-Volume.
The Nasdaq is aiming for 4,900, but its first challenge is getting back to the 20-day MA.
Nasdaq breadth has fallen deep into swing low territory – comparable to 2011 – across all four metrics. A trade worthy low should be in place; weakness could be bought
The Russell 2000, the hardest hit of the indices, could form a ‘bear trap’ with a higher close on Monday. The index was the first to record a 25% loss from 2015 high to recent low. The relative performance of the index remains down, but it’s getting close to a bullish cross.
As a bonus, relative performance across different markets shows how far commodities have fallen. Historically, they look to have reached a level which could mark a bounce (1999 lows). Global stock markets remain closer to overbought conditions, despite the losses already experienced.
Another sign of a bottom is the spike high in the number of NYSE stocks making new 52-week lows. While further lows (and new spike highs) are possible, a decent trading low should be in place.
Initial jobless claims dropped notably last week (from 285 to 269k) but the overall trend (away from the noise) appears in tact. The smoother4-week average remains near 12-month highs and as Goldman notes weakness is widespread - "there is only limited evidence that the rise in claims is due to distress in the energy sector." Continuing claims dropped modestly to 2.239mm but, as Goldman adds, "the persistence of the recent move suggests more might be going on, and we are treating the increase as more than just noise."
And finally, here is Goldman explaining why it is time to be concerned...
“One day it started raining, and it didn’t quit for four months” ~ Forrest Gump
What’s especially frustrating right now, besides the fact that the S&P 500 is now in a 13.2% drawdown, is that we’re not seeing any sense of panic. While every bounce attempt is getting smaller in both size and duration, the market has yet to do the proverbial flush that we all seam to be waiting for. The “all clear” moment, if you will.
The last time stocks were selling off like this was the summer of 2011 when the S&P 500 fell 21.58% pea...
The following are the M&A deals, rumors and chatter circulating on Wall Street for Wednesday February 9, 2016:
Hearing Chatter of Potential Tencent Offer for LinkedIn
The Rumor: Shares of LinkedIn (NYSE: LNKD) rose Wednesday, following unconfirmed market chatter of a potential big from China's Tencent (OTC: TCEHY). The rumored offer, accordidng to "sources" is between $120 and $125 per share.
Spokespersons for LinkedIn and Tencent did not immediately respond to requests for comment.
LinkedIn closed at $101.76 on Wednesday, up $0.78.
Opera Confirms Buyout Offer from Chinese Group Including Qihuoo 360
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Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
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 email@example.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.
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