The move down in oil looks to be greater than would be expected for a continuation of the uptrend. Bernanke's comments about not printing money to pay the debt seems to have triggered a reversal in the dollar. Gold and oil have either made or are near making 3 days lows. See Marketclub for information on the 3 day trading signals for commodities.
I am now short 1/2 position in the DZZ with a stop below the Feb low in DZZ, with a view of gold retesting the 850 level or lower.
The TRIN is running strongly higher suggesting that the selling at day's end may be severe.
Wednesday, June 3, 2009
TRIN and Comments
The TRIN has been in an uptrend all morning which is consistent with the selling action we have seen. If it breaks down and begins to trend downward this afternoon, then we will probably see an afternoon rally with new rally highs today or tomorrow. Any new high should be a 5th wave. It remains to be seen if that 5th is completing wave (c) of b of B, i.e. wave b of a flat correction, or whether it is wave i of C. In either case, a strong pullback or correction should ensue.
If the TRIN continues higher this afternoon, then the pullback/correction is probably underway.
On Comments:
When I first started this blog in January 2008, I had trouble leaving responses to comments under the comments link for the posts. I don't know if I was doing something wrong, or if it was Google Blogger. Anyway, it works now, so I will respond to comments by leaving a comment under the comments link when I can be of help or explain something.
Comments are welcome. Constructive criticism is welcome. Insights are welcome.
If the TRIN continues higher this afternoon, then the pullback/correction is probably underway.
On Comments:
When I first started this blog in January 2008, I had trouble leaving responses to comments under the comments link for the posts. I don't know if I was doing something wrong, or if it was Google Blogger. Anyway, it works now, so I will respond to comments by leaving a comment under the comments link when I can be of help or explain something.
Comments are welcome. Constructive criticism is welcome. Insights are welcome.
Tuesday, June 2, 2009
Muted Action
Today's action was rather muted after yesterday's breakout, but the intraday pattern points to at least one more push higher before any significant correction appears. Wednesday's tend to finish flat, erasing morning losses or gains by the close to end with little change. Perhaps we will see a morning push higher followed by an afternoon selloff.
Today I was stopped out of short positions in STRA and APOL. The losses on each were less than 1% of my account although the initial risk was greater than 1%. More and more I see the benefit of sticking to a trade until I am taken out by the trailing stop or the position reaches expected target zones. So far this year I have taken early discretionary exits on a couple of positions. Those positions eventually went on to be profitable, and I would not have been stopped out. Last week I exited my long position in YHOO because it had not gone anywhere for some time, I was concerned about the market topping out, and I had a small profit. Well, of course, it is up 10% since then. If you are using a system that works, being stopped out is a good thing. It means capital is freed up to be used on new positions.
In that regard JNPR looks as though it may have completed 5 waves up. Look for a lower swing high with a minimum of two higher lows on either side of the intervening swing low and a break of the lower trendline for a short entry down with a target around 19.
The most important thing is to only take a position to begin that has a good reward to risk ratio, that has excellent upside or downside potential. Recently, a stock mentioned in IBD was nearing a buy point, but some analysis showed little potential upside so I passed on the trade.
If you did not go long this market, like me, at the recent May lows, be patient and wait for a good entry in either direction. It may take a few days, but it will come.
Today I was stopped out of short positions in STRA and APOL. The losses on each were less than 1% of my account although the initial risk was greater than 1%. More and more I see the benefit of sticking to a trade until I am taken out by the trailing stop or the position reaches expected target zones. So far this year I have taken early discretionary exits on a couple of positions. Those positions eventually went on to be profitable, and I would not have been stopped out. Last week I exited my long position in YHOO because it had not gone anywhere for some time, I was concerned about the market topping out, and I had a small profit. Well, of course, it is up 10% since then. If you are using a system that works, being stopped out is a good thing. It means capital is freed up to be used on new positions.
In that regard JNPR looks as though it may have completed 5 waves up. Look for a lower swing high with a minimum of two higher lows on either side of the intervening swing low and a break of the lower trendline for a short entry down with a target around 19.
The most important thing is to only take a position to begin that has a good reward to risk ratio, that has excellent upside or downside potential. Recently, a stock mentioned in IBD was nearing a buy point, but some analysis showed little potential upside so I passed on the trade.
If you did not go long this market, like me, at the recent May lows, be patient and wait for a good entry in either direction. It may take a few days, but it will come.
Qs At Fib Resistance
The Qs may be temporarily halted in their advance at the 38.2% retracement from the 2007 high. The exact level is 36.52. Yesterday's high was 36.50.
From another angle, we can see that the 50dema is near to crossing up the 200dema. Take some time to review past crosses of these two important moving averages. My general observation is that more than half the time, markets will correct strongly just as or just after the crossing of the 50 with the 200.
These are just a couple of more reasons to expect that the current breakout is not for real. If the Qs move above and hold above the 36.52, then we can conclude that 39.93 would be the next logical target.
Monday, June 1, 2009
Spotlight On Gold
Please see this discussion on gold at Decisionpoint Chart Spotlight. I think it points to the upcoming correction to below $850.00.
Triangle Or Flat?
Is the correction over? It depends on whether the correction was a triangle or is an expanded flat in progress. While today's action goes along way toward eliminating the flat, several points still seem to lean toward the flat interpretation: 1) Today's volume was average to below average for most indexes, not what you expect or want to see on a breakout, 2) The extent of the rally is still within the range for an expanded flat, 3) The SP500 closed just below resistance at its 200dema today, while the Dow is closing in on its 200dema and a trendline drawn along the April/May tops, and 4) The financials stalled out today at the underside of the broken uptrendline from the March lows.
If it was a triangle, for those of use who did not jump on board the index rally, we should see a pullback to at least the May highs, which could provide and entry point before the final leg up into July. If it is an expanded flat in progress, we will have an excellent entry just below the May lows. Time will tell which one it is, but I do think it is premature to call it one way or the other.
Today, I exited the DGP as gold stalled at its upper trendline. I took a new position in VRSN, which did not close that well. I am looking for a breakout in SNDK. Still long in ASIA, SOHU, TNDM, and the DXO.
If gold breaks down here, it could go to 850 or all the way to 600. If it breaks out above 1000 and holds, I will be looking to go long for a run up to 1400 using the DGP.
Volume Not Confirming Breakout So Far
While today's breakout is technically valid from the point of view of price, the current volume run rate is not confirming the breakout. Things may change by the end of the day, but right now I will hold out for a retracement/pullback/wave c for an entry in the indexes.
I was stopped out of TWM this morning and am close to being stopped out of QID.
TNDM and SOHU are moving up nicely. SNDK looks like it could break out in a 3rd of a 3rd wave with a target around 24 to 25.
Exited DGP near the open this morning. Still holding DXO which looks to have at least one more push higher. Oil may go to $75.
Will discuss breakout in more detail this pm.
I was stopped out of TWM this morning and am close to being stopped out of QID.
TNDM and SOHU are moving up nicely. SNDK looks like it could break out in a 3rd of a 3rd wave with a target around 24 to 25.
Exited DGP near the open this morning. Still holding DXO which looks to have at least one more push higher. Oil may go to $75.
Will discuss breakout in more detail this pm.
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