A RANGEBOUND MARKET DESERVES A STUDY OF WHICH LEVELS TO SELL AND WHERE TO PLACE THE BUYS
When we look back through each chapter of the market of 2012, marked by every passing week, we will remember last week as the warning signal of the sideways range that was to come and this week as the confirmation that we are now in it. It's a necessary component of every bull market to be able to absorb gains, while recalibrating the buyers and sellers in preparation for the next phase. The modus operandi over the next couple of months will be very short-term in nature. It will involve buying weakness and selling strength within the perceived range, if you are so inclined. My preference is to rotate assets into more aggressive names within the portfolio on weakness and take profits, where they are available, on strength. I am not in index ETF, short-term trading mode here. The range simply isn't wide enough and the potential for volatility still remains small. Here are some illustrations for your perusal: click chart to...
5 CHARTS THAT WILL CONVINCE YOUR KIDS TO CLEAN THEIR ROOM AND YOUR INLAWS TO VISIT ONLY ONCE PER YEAR
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8 REASONS WHY FEBRUARY 29th WAS THE MOST IMPORTANT DAY OF TRADING THUS FAR IN 2012
From a purely price action, macro variable perspective, today was the most important day of trading we have encountered thus far in 2012. It marks a point where the nature of the markets may change from docile and smiley faced to more aggressive and nefarious. We have entered a window in time and price where the price action will likely be much more choppy and less "trend friendly" if you will. Here are the reasons one by one, followed by illustrations: - AAPL was mentioned in a post last night. Today was the icing on the cake. Volume was substantial while the price ended right in the middle of its range. Volume today was the most for an up day since the enormous earnings gap up over a month ago. The price action screamed of distribution as the stock was essentially spinning while large sellers came into the picture distributing shares throughout the day. AAPL has crossed a key round number (500) by almost exactly 10%. The 10% number seems to be the "get everyone to believe" cushion following the obliteration of a key round number that everyone is watching. We eclipsed the $500 million market cap number as well...another key round number. And we have the generational trajectory that AAPL has now exceeded acting as gravity beneath the stock. AAPL is THE market leader. Therefore, it needs to be a prime consideration in any projection for a disruption in trend. - The Nasdaq Composite hit the generational trajectory point I mentioned last week on the dot today and proceeded to put in a high volume reversal. The chart is below. This is significant in that it shows that the Nasdaq is already recognizing this as a formidable opponent going forward. The recognition of this point as an opposing force creates a window. That window creates a disruption in trend that will cause the market to become choppy from this point forward. Again, I have illustrated these thoughts below to clarify my thinking. Are we going to tank back to the January lows? Absolutely not. I said choppy. Not an all out bear. It's going to become a more challenging environment into April and May. - The Nasdaq 100 hit a high of 2645 today. 5 points short of the 2650 point I mentioned in this weekend's chart review. This qualifies as a touch of the generational trajectory point. Just like the Nasdaq Composite, this touch now opens up a window for questionable antics on behalf of the market. The ease of trend and profitability will shape shift going forward. Illustrations provided in the chart below. - The CRB (commodity...
THE POPULAR CHICKS: WHY AAPL LOOKS BEARISH, SLV BULLISH & OIL A QUESTION MARK
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SOME INDICATIONS FROM THE HOUSING SECTOR THAT SHOULDN’T BE IGNORED
I'll start by saying that I continue to be impressed by the manner in which key indices are forming a tight consolidation right above or below key levels of resistance/support. In a bull market of this nature, these types of patterns have a strong tendency of resolving to the upside. I don't think this one will be any different. I continue to believe that one more push up will begin a choppy sideways consolidation into April/May, at which time some real downside volatility will become apparent. I am, however, not closing myself off to the possibility that the strength and power of this market is being greatly underestimated by the vast majority, myself included. I think the next push to the upside will give us some very real indications of what kind of monster we are dealing with here. There are subtle (or not so subtle depending on how you choose to look things) hints in the markets that there is something very real bubbling beneath the current economy. Particularly in the housing sector. As we all know, home prices and the numerous shocks created as a result of America's piggy banks being broken and raided by market forces has caused a good deal of the economic strife we are dealing with today. It is only natural to assume a housing sector that can actually stand on its own two feet would be a positive for the overall economy. And stand on its own two feet is all we can ask for. The days of double digit percentage returns in home prices are gone and won't be coming back anytime soon. However, a housing market that can work through excess inventory by creating a comfortable environment for would be home buyers to make a commitment is not that far out of reach. The key in creating that comfortable environment is the promise of increasing job creation and stability in the employment market. Nothing else will influence the market as graciously and generously as a sustainable uptick in job creation. Unfortunately, predicting job numbers going forward is no different than predicting stock prices. They do fluctuate. But there have been signs of promise recently. Take the 4 week average of jobless claims which is sitting at a 4 year low currently. And then we have my favorite, which is market action. What is the market telling us with respect to housing? Let's look at a few key components. Home Depot, Whirlpool and Bank of America. All companies that were shelled by the housing debacle. They are certainly singing a different tune now and it is convincing enough of a tune that...
CRUDE OIL NEEDS TO BE STUFFED BY THE BEARS THIS COMING WEEK OR ELSE……..
Those of you who have been following along for more than a couple weeks know that I was short crude oil via SCO coming into 2012. Technically, the trade was based on a generational trajectory point that had served as solid resistance for sometime now. I covered that short during January for what was essentially a break-even trade. At the time, I discussed the fact that the consolidation in crude oil was going on for too long. It has been my experience that when short-term trades fail to reward you after a several week period of time, it is best to move onto the next show. This "time stop" strategy turned out to be correct in this particular circumstance. Here is a long-term chart of crude oil showing the generational trajectory points that it has been contending with over the past few months. The second chart is a 9 day chart that provides a closer look at these significant technical points. click chart to...
WHEN RESISTANCE TURNS INTO SUPPORT: A LOVE STORY
I tweeted today that an important technical phenomenon was taking place in both the Dow and Nasdaq simultaneously. They are both hanging out around generational trajectory points and in both instances, the trajectory points have turned into support areas instead of acting as resistance. This is bullish over the near-term and gives a very strong indication that another push higher is coming. Especially when considering how technically sound the consolidation has been within the current uptrend. Here are the charts of the Nasdaq and Dow. click chart to...
THE NASDAQ IS GIVING AWAY A LOT OF DETAILS ABOUT HOW AND WHEN A MARKET TOP WILL FORM
Both the Dow and the Nasdaq are moving along some murky water in terms of generational resistance points. I continue to believe that we don't see them broken with any real conviction until the second half 2012. They are just too substantial to be taken out without a significant amount of sideways chop in order to build up some firepower. Here is a look at what are some very important generational resistance points for the Nasdaq and how they coincide so well with what I discussed regarding the Dow Jones Industrial Average last night. The first chart shows the origination points of the resistance in order to gauge their significance and the second shows how they are influencing the market over the short-term: click chart to...