Jan 31st: No prizes for guessing what Wednesday's financial news item will be. Google's splutter will add further pressure to the erratic action which followed Tuesday's Fed rate hike. Higher volume in all markets ranked as a distribution day; since the start of January the NASDAQ has logged 6 accumulation days and 4 distribution days; the S&P has experienced 4 accumulation days and 5 distribution days. Wednesday will probably add another distribution day to the markets given the broad losses in the futures markets. The aim of the game is to consolidate ones gains and hold off on any big purchases. Markets still have support levels to look too and much will depend on how Fibonacci retracements and the 50-day/200-day MAs perform as support. The secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] all gained, pushing them further towards overbought territory. Technically, the bearish divergences in the MACD remain dominant. If these are breached to the upside it will likely mark the end of the 2-month consolidation; if October lows of this indicator are lost it will be bye bye rally. The Russell
2000 is the only candle in the dark, but how long can it continue its ascent?
Target hit: HDY was a Subscriber pick for January 20th. The stock shot up on heavy demand to log a 59% gain but there is resistance at this level and I am happy to score this as a win based on my original price target.
Stop hit: Unfortunately, AIX will register as a stop hit even though it closed over $13 support on a light volume down day. If you are still holding I would use a new stop at $12.78 but for my purposes the trade is done. It featured as a Free Breakout play for December 20th, January 12th, and January 30th. The plays closed for a 14% gain, 5% gain, and a 7% loss. HLT was another stop hit although Tuesday's higher volume was a concern. The stock featured for December 30th and January 30th closing for a 4% gain, and a 4% loss. JNS gapped down after the UBS downgrade, but rallied for the remainder of the day. This could be a bear trap so watch for a second gap up Wednesday morning. For my purposes it is a stop hit given the break of the recent consolidation. The stock was a Subscriber feature for October 27th and November 23rd, and a Free Breakout feature for January 20th. The two Subscriber features closed for a 23% and 8% gain respectively, and the Breakout feature for a 5% loss. RVSN was a Subscriber feature for November 30th, and a Breakout play for January 26th; the former play closed for a 6% gain and the latter a 5% loss.
Jan 30th: Monday ended up as a day of rest. Swing traders are in the best position following the series of tight daily ranges across the markets. No market was able to follow through on Friday's gains and volume dropped across the board. Tuesday will be interesting. Secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] managed modest gains and drew ever closer to typical topping territory. If you bought last weeks bounce you will probably be thinking of selling on a loss of today's lows, and if you are not thinking that you can assume others are. Watch for a gap down on Tuesday's open. Also end-of-day volume to see if bears are taking greater control. The bearish divergences in the market MACD's are the biggest concern to intermediate and longer term holders.
Target hit: TRDO doesn't look like it will climb higher following its acquisition by West Corp for $26 a share (cash). It featured for Subscribers on September 27th and as a free Breakout play for November 17th, potentially closing for a 54% and 18% gain respectively. LUFK was a free Breakout play for December 8th and hit its target for a 31% gain. TRAD featured as a Breakout play for November 3rd and closed for a 60% gain.
Stop hit: LMIA was a Subscriber pick for January 12th and closed below its 200-day MA and stop price for a 17% loss.
Jan 28th: Friday's buying was the antidote to the previous Friday's selling but it was not all plain sailing; the S&P fell a few points short of reclaiming the prior's week losses, while the NASDAQ
100 has some work left to do. Running in the tech indices favor was the gap to new highs in the semiconductor index and solid gains in the NASDAQ. Volume dropped from Thursday's accumulation day, but it was above average - driven in part by short covering, and sideline money joining the buyer's fray. Last week belonged to the bulls, but next week could see the bears flex their wings. Why?
Bearish divergences in the MACD trigger line (covering the last two months) exist in all markets except the Russell
2000. Slow stochastics have dropped from overbought levels; a sign of weakening bullish strength in the tech markets [NASDAQ and NASDAQ
100] and large caps [Dow and S&P]. The semiconductor index may have closed on a 'shooting star'; much will depend on what happens Monday morning. The Russell
2000 has only a few points left to run before reaching its measured move target, but this is the only index not to show strong bearish signs.
The secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] are rolling in the bulls favor and it is now a case of waiting for overbought levels to complete a top in the market. The most vulnerable of the secondary indicators is the $NAA50; tops in this index kick in around 1,700 and Friday's close leaves it 100 points from this target. Next up is the $NASI, it closed Friday at 165, some 335 points from a top. The $BPCOMPQ sits 14 points from its top.
What does all this mean for the markets? We should see new highs as markets take their lead from the Russell
2000. Once the market completes a top it will take 3-4 months of correction to reset the tech secondary indicators to levels which favor strong buying; when these indicators bottomed in April 2005 my breakout picks for May returned an average of 16.6% (or put another way, 66% winners with a return of 28.4%)
Target hit: DKS hit its target price by closing below the August breakdown gap. The play closed for a 11% gain. WTZ was a subscriber pick from November 16th and was a consistent performer to bank a 60% gain.
Stop hit: none
Jan 25th: Mixed bag of action from the markets; the Russell
2000 held most of yesterdays gains and was unchanged on the day, but the NASDAQ
100 started to creak, feeling the pressure of Friday's sell off. The 'bearish engulfing pattern' in the NASDAQ
100 came at a time which does not suggest a strong reversal signal but is still a concern; Thursday's action will be interesting. Volume was higher in all markets, out shining yesterdays accumulation - will these lead to a sell off? Monday's lows will define this. As for the remaining markets; the NASDAQ rebounded off the 20-day MA but held the 50-day MA; the Dow was little changed as it flirted with 10,708 - but slow stochatics are now at levels which previously inspired a bounce; the S&P is playing with its 50-day MA; while the semiconductor index holds above the 20-day MA. Secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] are walking a tightrope, but for now, they stand on the bullish side of things. There is plenty of fear in the market, but I am not buying the end-of-the-world argument - yet! Its tricky times and if you have profits, take them - if you are looking to buy, then wait for a break of last week's highs.
Target hit: none
Stop hit: KOPN was whipped out after modest gains; the stock featured to Subscribers for January 19th. The play closed for a 6% loss.
Jan 24th :Swing traders will be long after Tuesday's close but are likely sweating a few as bulls couldn't hold the early gains into the close. The two days of what look to be insignificant action may be enough to trigger a snail-paced rally back to last Friday's highs; the real test will come on a move to Tuesday's lows - will this trigger a fresh wave of selling? Or will more buyers step up to the plate? In the bulls favor is a return to the bullish side of the fence in all three secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ], the breakout to new highs in the Russell
2000, and the higher accumulation volume in the NASDAQ, Dow, NASDAQ
100, and S&P. Bears will look to the meager gains of the last two days and the struggles of the NASDAQ
100 below the 50-day MA. Bulls take this, but it is a fine line. Aggressive players could do well with a longside play but one would need to have a twitchy trigger finger as any momentum selling could see quick losses.
Target hit: none
Stop hit: CHAR crashed through its stop after announcing a temporary suspension of its drilling. The stock featured for January 18th and as a Subscriber play for December 28th; the former play closed for a 11% loss, the latter for a 3% gain. HGT was a very long standing short play from October 19th which finally hit its stop price for a 9% loss.
Jan 23rd: Given Friday's shellshock it was unlikely any key moves were to occur in the markets Monday. A Dead Cat Bounce was the order of the day, but for swing traders, narrow trading ranges across the markets will allow for a decent low risk entry depending on the direction of the break from Monday's highs and lows. As for support: the NASDAQ and S&P are working the 50-day MA; the Dow is working major support (former 2005 resistance) at 10,700 - closing a fraction below this level after early gains above it; the Russell
2000 is clinging to its small bullish flag breakout; while the semiconductor index thrashes around the 20-day MA. Secondary tech indicators creaked a little more as the $BPCOMPQ crossed below its 5-day EMA leaving only the $NASI above this trigger line.
Target hit: CERS had exceeded its target as it trades almost $2 above my target price. Based on my price target it is considered a 24% gain. The stock featured for December 7th.
Stop hit: CYBX featured for December 15th and closed for a 13% loss. SVR gapped below Friday's close on heavy volume following a downgrade by Bear Stearns; the stock featured for October 31st, and January 6th closing for a 31% gain, and a 6% gain respectively.
Jan 21st: Bears stamped over the Bulls party, thrashing 2006 gains and leaving bull traps in all markets bar the Russell
2000 and semiconductor index. Unfortunately the semiconductor index was the biggest % loser from Friday's selling (of my watched indices) and it remains to be seen if it can hold the early January breakout. As has been the theme for the New Year, the Dow was the chief loser of the major indices, breaking below Fibonacci and 50-day MA support leaving the 200-day MA at 10,541, and October lows of 10,220, as the watch areas for future support. If you want to scrape the bottom of the barrel one could argue for 50-day support in the NASDAQ and S&P. The lower volume trading in the NASDAQ is a mixed blessing; fear selling, or complacency? Fibonacci support also comes to the rescue in the NASDAQ and the semiconductor index, but the NASDAQ
100 doesn't have much to look forward too other than January lows of 1,634 - some 40 points away from where it is now. Even with the Russell
2000 there was a bearish engulfing pattern left behind after Friday's close; a strong reversal signal.
Gold finished the week on a 'shooting star'; the last one to occur in December was followed with a couple of weeks of selling, watch for confirmation with a close below Friday's lows and a probable test of the 50-day MA (currently at $510). Silver looks to have completed a rising channel breakdown; note the bearish divergence in the MACD trigger line. A 4-year cycle top must be fast approaching in commodity prices (within a broader 20-35 year secular bull market). Joe Reed does show an interesting chart for gold which suggests the run in gold may not yet be done.
Not surprisingly, the tech secondary indicator $NAA50 crashed through its 5-day EMA trigger, lasting all of one day in a bullish state. The remaing two indicators; $BPCOMPQ and $NASI maintained their bullish readings but suffered losses Friday. The one indicator which did mark a fundamental change after Friday was the volatility index. Options will increase in price (allowing for both greater profitability - and losses), but we could be in for a rough few weeks ahead if rising volatility was to be followed with heavier selling. According to the point-n-figure chart, Friday's action qualified as a quadruple top breakout with a target of 33 (which is 5 points shy of resistance above which volatility marked the worst of the bear market from 2000 to April 2003). Buckle up, this could be rough.
Target hit: none
Stop hit: BK was a free feature for November 1st, and a Subscriber feature for September 23rd. The Subscriber feature closed for a 7% gain. The free feature for a less than 1% gain. CQB was a Subscriber pick for January 18th which failed to climb from its oversold level; it closed for a 3% loss.
Jan 19th: The opening gap in the tech indices [NASDAQ and NASDAQ
100] banked some distance between the eventual closing price and 20-day MA support. Just as yesterday's selling was not as bearish as it initially appeared, so was today's buying not as bullish as it looked to be; lower volume, and afternoon selling trimmed back gains logged in morning trading. However, secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] are again all bullish after the $NAA50 crossed above its 5-day EMA. Also working in the tech markets favor were solid gains in the semiconductor index. Even as the NASDAQ and NASDAQ
100 (the latter index in particular) struggled into Thursday's close, the semiconductor index was able to hold on to its gains and is well positioned to break to new highs. The Dow was less fortunate as it traded around the 20-day MA, missing out on the solid gains and new highs of the other markets; even the S&P held above 1,274 and 20-day MA support. Star of the day was once again the Russell
2000; the index ended the day at daily, monthly, and multi-year highs. Bulls are still in control.
Target hit: none
Stop hit: BKF didn't get off the ground and closed for an 8% loss. VCI was another oversold subscriber pick from January 13th to bite the dust for a 2% loss.
Jan 18th: Tech may have taken the headlines with weakness in Intel and Yahoo expressed as a day of distribution in the NASDAQ, NASDAQ
100, Dow, and S&P, but it was strength in the Russell
2000 and semiconductor index which will bode well for the future. Thursday will be interesting as AMD reported strong earnings but Ebay and Apple disappointed. Of the key indices only the Dow looks vulnerable with the 50-day MA (38% Fibonacci retracement) the last line of support. The NASDAQ found support at the 20-day MA as the NASDAQ
100 scratched Fibonacci retracements but still has room to fall to its 20-day MA. The S&P found support at the 20-day MA, closing the day on a neutral doji. Secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] were down on the day but not to the extent a reversal was signaled (other than Tuesday's $NAA50).
Target hit: none
Stop hit: AEM finally hit its raised stop although today's hammer does give reason to hold (with a stop on a loss of hammer's lows), but for my purposes it is a stop hit. The August 4th, November 17th, and December 22nd plays closed for a 60%, 43%, and a 14% gain. INNO was killed on lowered Q4 estimates, but the stock rallied into its stop for a 9% loss (it was down by over 50% on opening trading). The stock featured to Subscribers for December 23rd.
Jan 17th: Bears kicked off the week with selling and the Dow was the key casualty Disappointing earnings from Intel and Yahoo will pressure all markets Wednesday which will likely mean the failure of support as marked by Fibonacci retracements and the 20-day MA in the Dow. Action in the tech markets [NASDAQ and NASDAQ
100] will be intense and the eventual test of Fibonacci retracements (2,245-2,279), the 20-day MA (2,265) and the 50-day MA (2,243) in the NASDAQ, and Fibonacci (1,682-1,712), 20-day MA (1,699), 50-day MA (1,685) in the NASDAQ
100 will decide if we have the next step of a 2006 rally, or a belated, pessimists rollover. Unfortunately, the Dow is shaping up a bull trap and only 10,708 can save a confirmation of this pattern. The S&P and Russell
2000 are hanging on to their gains following small end-of-day rallies, and it will be important for these markets (the Russell
2000 in particular) to hold if an overall rout is not to follow. Of the secondary indicators [$NASI, $NAA50 and $BPCOMPQ] only the $NAA50 crossed below its 5-day EMA with the technical confirmation of this signal coming from the CCI; the remaining two secondary indicators held their prior bullish stance. Things look shakier than they did over the long weekend but bulls hold control.
Target hit: IDNX featured as a Subscriber play for December 7th and hit its target price for a 47% gain.
Stop hit: MCHX hit its newly revised stop, negating Friday's breakout. The stock featured as a Subscriber play for 74% gain. It also featured as a Breakout for November 2nd and January 17th, closing for a 36% gain and a 6% loss respectively. MWY ran as a Subscriber pick for today but its decline does not look done yet; it closed for a 6% loss - but it is holding the 200-day MA. BRP failed to hold a break of a 2-month consolidation closing below its 200-day MA; it featured for September 26th and closed for a 7% loss.
Jan 14th: A quiet close to a quiet week which will have nicely satisfied the bulls. The NASDAQ had the most interesting action as the 2,330 target many commentators were speculating as an upside target was handily met. Bulls will be looking at the tantalizing proposition of 2,850-3,000 (the next resistance level after 2,330). It looks far fetched, but there are enough skeptics out there (me included) to drive such a rally. However, I don't see enough room in the secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] as they stand now to fuel the current advance to this level, but if the next 3-4 month correction was to sharply reset these indicators to deeply oversold levels (e.g. a $NASI around -900, a $NAA50 in the 300s, and a $BPCOMPQ in the 30s) with a corresponding retracement in the NASDAQ to 2,000 or higher then I wouldn't be laughing. The NASDAQ
100 is not as well placed as the NASDAQ with 2,074 resistance still in play, and although the semiconductor index has performed admirably in recent weeks its long term chart shows plentiful resistance at 560, 642, 711, and 763. Look to latter semiconductor resistance to impinge upon the NASDAQ
100 more so than the NASDAQ.
Also helping the bulls was the Russell
2000 which pushed to new multi-year highs. With small caps leading the markets, bulls are safe from bearish advances. Although the CCI of the Russell
2000 (last indicator on the chart) is overbought and diverging to price there is little weakness in the other technical parameters to suggest this will turn sharply down. I am less concerned with the action in the large caps [Dow and S&P] as leadership comes in the shape of tech and small caps. The Dow bounced a few points above Fibonacci levels while the S&P closed on a small, but weak, bullish hammer.
Gold continued its charge, negating a potential double top at $542 and switching this former resistance level into support. Silver has yet to follow gold's lead as it fights its $9.27 double top. Silver stocks look better value (SIL in particular, but PAAS and SSRI should not be ignored), but some of the smaller mining stocks like CDE and HL could follow the strong lead of other stocks in this sector.
Target hit: none
Stop hit: OMCL featured for December 12th and January 5th. The stock suffered a series of small losses to push the stock below recent support. The former play closed for a modest 2% gain, the latter a 7% loss. For the bulls there was support at the 50-day MA.
Jan 12th: Markets sold off worldwide, but the impact on US markets was relatively light. The largest decline came in the semiconductor index with a 1.3% loss, but the best performing index over the last seven days is well above support. The tech markets [NASDAQ and NASDAQ
100] logged modest losses. Watch how newly defined Fibonacci retracements on my charts act as support. The Dow sits closest to December support and its Fibonacci retracements - it will be interesting to see how this index behaves at this important convergence of support; 10,910-10,940 is the support zone. The Russell
2000 has plenty of room to reach down to 688 support so further losses will be acceptable here. Likewise the S&P could drop another 11 points and remain bullish. Nothing to be concerned about for now.
Target hit: MCF was a Breakout feature for December 21st and closed for a 22% gain.
Stop hit: The VNT feature for today was whipped out for a 3% loss. The earlier November 23rd play closed for an 8% gain, and the October 31st Subscriber play closed for a 14% gain. AMZN featured as a Breakout for November 21st but failed to follow through on its initial bullish move. There may be merits on a close of the breakout gap at $42.50 but the future success of this play will be heavily dependent on what the NASDAQ does. The play closed for an 8% loss. CL featured for July 22nd, November 11th, December 14th, and as a Subscriber pick for December 2004. Each play closed for a 5% gain, 1% gain, 2% loss, and a 9% gain respectively. NVT was a short play for November 30th which rallied into its stop for a 11% loss.
Jan 11th: The seventh day of gains and for the tech markets [NASDAQ and NASDAQ
100] it was a further day of higher volume buying driven by strength in the semiconductor index. Its an elusive rally, triggered from what started as a consolidation breakdown and reversed to a December resistance breakout. When the breakout triggered the tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ] were at levels which don't normally signify strong rallies. The $NAA50 currently sits some 250 points from an area which has marked significant tops in the past (to put this in perspective the $NAA50 has moved up 400 points in 7 days). The $NASI has more room to move; although it sits 440 points from a major top (it moved almost 140 points in 7 days). The $BPCOMPQ has the greatest flexibility sitting 16 points away from a major top after it rose 3 points in 7 days. These figures shouldn't be viewed in black-and-white terms; a market top will likely be accompanied with a bearish divergence in each of these indicators - not a clear matching high-to-high, so once we see higher highs in the markets and lower highs in the secondary indicators [$NASI, $NAA50 and $BPCOMPQ] we will have a better idea that a top is in place. Whenever this top occurs it will likely mark a high for the year (early though this may sound), but whatever happens one shouldn't let any profits slip away as it could be a while before we see these levels return.
Target hit: GIGM featured for December 20th and cleanly sliced through its target for a 48% gain. For the record I will continue to hold my small position and is featured here. CMO was a Subscriber play for December 21st. The stock closed a shade over its 200-day MA but for my purposes is a successful play for a 31% gain. DEZ was a Subscriber play for November 17th and surpassed its price target for a maximum 67% gain but is registered as a 45% gain according to my stated price target.
Stop hit: BBBB featured as a free Breakout for October 19th and closed flat. CBST was a failed short play from December 20th and closed for a 10% loss. LYO was another failed short play from December 19th and closed for a 4% loss but a successful swing trade from November 15th for a 10% gain.
Jan 6th: Short term traders would have got exactly what they wanted with the tests of December highs. Intermediate and long term traders could have been satisfied with some resistance breaks (even if December highs were not breached). In addition, the $BPCOMPQ followed the $NAA50 by crossing above its 5-day EMA - although technical confirmation from the MACD is still needed. Volume in all markets dropped from yesterday's - not necessarily a bad thing, but in the light of a test of major resistance it would have been better to see this higher. 'Buy' triggers in on-balance-volume (a sign of accumulation) were apparent in the NASDAQ, Dow, NASDAQ
100, and S&P - but none of these markets have signaled a MACD 'buy'. All of these markets sit on the verge of new yearly highs so don't be surprised to see some weakness into the close of the week as the two days of gains are digested. Wednesday's trading completed the last day of the 'Santa rally' which gave the period a slight net positive (window dressing?).
The secondary tech indicators will be of key interest over the coming days. The increased bullishness of the $BPCOMPQ leaves just the $NASI with room for improvement. We have yet to see technical confirmation of a bullish turn in any of the three secondary indicators [$NASI, $NAA50 and $BPCOMPQ] and with the $NAA50 closer to overbought levels than the remaining two indicators it remains to be seen how much rally can be extracted from the next bullish phase of the market.
Target hit: none
Stop hit: AW from December 5th and a subscriber play from July 21st hit its stop on the morning gap down. The plays closed for a 5% loss and a 5% gain respectively.
Jan 5th: The big money traders returned as the NASDAQ, semiconductor index, and Russell
2000, created breakouts on higher volume. This is the form of leadership from which bull markets are made. There was little change in the tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ] with the $NASI holding off its 5-day EMA buy trigger. Large caps were little changed on the day, trading flat on lighter volume. Bulls are making a better fist of things than was attempted in December. Breakouts will have merit here although I am holding off the addition of fresh candidates until I return to Hawaii.
Target hit: LNXGF the penny gold stock hit its target for a 64% gain.
Stop hit: none
Jan 4th: The next few days worth of postings will be coming from a rather gloomy Australia; regular posting will resume from next Tuesday (Hawaii time). The Fed kicked off the last two days of the 'Santa rally', and the first day of the New Year with news it may soon stop interest rate hikes. The injection of demand reversed what had been a poor start for the markets, but the buying wasn't enough to break through December resistance. The 50-day MAs held as support with the NASDAQ, Dow, S&P, and Russell
2000 closing above their 20-day MAs with only the NASDAQ
100 shy of this intermediate term support level. There should be sufficient demand to see a move to December resistance which would satisfy short term traders. Intermediate and long term traders need to wait for the last 4 weeks of consolidation to break to the upside on heavy volume before joining the fray. Tuesday's action was a step in the right direction, but interestingly enough it did not bring big changes in the secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ], with only the $NAA50 crossing above its 5-day EMA trigger line, and the $NASI and $BPCOMPQ actually declining.
Stop hit: NDSN from December 15th, still looks bullish with a 'hammer' at 50-day MA. TRST from December 19th was a clear stop hit after a series of declines. CBCF was an oversold play for today which hit its tight stop, but it did close with the second of two dojis; still bullish. CYMI was another oversold play for December 30th which suffered from aggressive stop placement. HNZ clipped its stop by a few cents as resistance remains intact. It featured for December 22nd. MYD was a short play from September 23rd which has consistently rallied from the lows of October upto its stop price. The play missed its target by less than 50 cents. WITS hit its stop after a big intraday swing (ending on a bullish harami). It featured for December 12th.