May 31st: Bulls maintained their presence following Tuesday's selling. Relatively tight trading held the prior day's lows as markets enjoyed reasonably good breadth. Volume climbed from yesterday and was above average overall (=net accumulation). The strength of this buying will become apparent as the 20-day MAs of the various indices approach current prices. A break of this moving average would go a long way to confirming last week's lows as a bottom and set up bullish conditions for the next 2-3 months.
Nearby support in the Dow can be found at the head-and-shoulder neckline. In the S&P and Russell
2000 it is the 200-day MA. For the NASDAQ and NASDAQ
100 its a band of support between 2,100-2,200 and 1,550-1,630 respectively. Bullish conditions continue to improve and June should see a summer bottom in place.
Target hit: none
Stop hit: BWS broke through support from April 10th to hit its Breakout stop price. This followed a gap down through the 50-day MA. The Breakout play closed for a 9% loss and an earlier February 14th Subscriber play closed for a 13% gain. AMCC was a Subscriber pick from January 25th. The play racked up gains of 39% at its highs, but the stock shaped a rounding top to close for a 7% loss.
May 30th: Bears reaffirmed their recent dominance, but volume remained light - even if the day counted as a technical "distribution" day. The retest of last week's lows is in effect and this will help push the two secondary indicators: $NASI and $BPCOMPQ, towards oversold levels, but it will likely take new market lows to see both of these indicators at levels which traditionally are associated with key bottoms.
Worse case for the bulls would be a measured move down from last Friday's highs. This would put indices like the NASDAQ and NASDAQ
100 down at 1,960 and 1,410 respectively; the Russell
2000 at 640; the Dow at 10,600 and the S&P at 1,205. More likely support for the Dow is the 200-day MA at 10,854, especially given the picture perfect reversal off the 50-day MA Tuesday. The Russell
2000 and S&P still have to the 200-day MA to look too, although the S&P will have to get its finger out very soon if it is going to make a stand at this average.
The secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] will likely reverse before indices reach their measured move targets, in particular the $NAA50. Favoring a more protracted decline is the $BPCOMPQ, but the $NASI is not to far from a reversal zone.
Because of the days big losses there are no Breakout picks for review.
Target hit: none
Stop hit: EMFP was one of last week's breakouts (May 26th) but its second day of losses hit this for a 15% loss (but it did find support at the 50-day MA). IN was a Subscriber pick for May 9th. The play closed for a 6% loss. KNL took a similar route but did find support at the 200-day MA. The play closed for a 2% loss. PAYX was a setup for Tuesday but it didn't last 24 hours. The play closed for a 3% loss.
May 28th: Very little action into the long weekend. Tuesday will give a better idea as to how good this bounce really is. The Dow will carry the most interest technically as it closed right on 50-day MA resistance. Other indices, like the NASDAQ and NASDAQ
100, suffered on tired trading, unable to push the days action much beyond opening gap prices but remain away from typical resistance levels. The S&P may have the most room to run upside given it had a decent Friday and remains some 12 points away from closest resistance at the 20-day MA. The Russell
2000 was caught between the tech averages and the large caps as it managed modest gains on the day.
Secondary Tech Indicators [$NASI, $NAA50 and $BPCOMPQ] found some traction. The $NAA50 bottomed on Thursday while the $NASI and $BPCOMPQ attempted to put some measure of a bottom in place as both ticked up, although both remain some way from traditionally oversold levels. Volatility spent another day in pullback, but its prior gains looks to have knocked out the lull of recent months. Greater volatility usually favors the bears but it is not a straightforward correlation.
Target hit: none
Stop hit: none (the first time in quite a while!).
May 25th: Short covering likely accounted for the bulk of the day buying. A follow through day for yesterday won't happen until well into next week or potentially the week after next. Volume was substanially off from Wednesday, but markets were able to log decent gains. Wednesday's lows will now be a barometer for support once the initial enthusiasm from Thursday's buying wanes. The next rally (if this is it) will have shorts eager to take advantage of the "dead-cat-bounce" and bulls trapped after buying stock in 2006. For markets like the NASDAQ
100, S&P and Russell
2000 this resistance will likely appear at the 20-day MA. For the NASDAQ one should watch for resistance at the 200-day MA and the Dow watch for the 50-day MA.
Secondary Tech Indicators [$NASI, $NAA50 and $BPCOMPQ] were led by the bullish 5-day EMA "buy" trigger in the $NAA50. The $NASI declined, but the $BPCOMPQ was able to tick upwards. As things stand a bottom for the $NAA50 is in place, but it will take a little longer before one can say the same for the $NASI and $BPCOMPQ.
Target hit: none
Stop hit: DITC closed on a bullish doji above the 50-day MA, but the lows of the day undercut the stop price for a 12% loss. The stock featured for May 10th. CKNN closed on the second of two hammers, unfortunately Thursday's lows were under the stop price from the May 15th Subscriber play to close the position for an 11% loss.
May 24th: Bulls made a better stab at the markets, reminiscent of last Friday's buying when markets flashed thrusting candlestick patterns on higher volume. For indices like the S&P and Russell
2000 this buying occurred at the 200-day MA. For the Tech averages [NASDAQ and NASDAQ
100] there was less discernable support to count on, other than prior congestion in August of 2005 (TraderMike noted a close of a November price gap). The Dow again found support at 11,039 and bears are having a tough time shaking the bulls out of the tree in this one. Given Wednesday marked the second accumulation fay in four, interspaced with two days of lower volume declines, it certainly looks like bulls are retaking control of the market, even if the charts look worse for wear. Over the weekend I will post to Subscribers a trend I have noticed in my performance data which should bode well for the future. Fish for value, but don't overexpose capital - yet.
Tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ] spent another day in declines, although losses in the $NAA50 slowed from earlier declines. The latter indicator remains the only indicator at oversold levels.
Target hit: none
Stop hit: CC was a Breakout feature for December 20th, March 15th and May 8th. The three plays closed for a 23% gain, a 11% gain, and a 6% loss respectively. HPY followed a loss of near term support with a bigger stepped loss today. The decline was able to stall at the 50-day MA, but not before the May 3rd Breakout play closed for a 7% loss. The earlier March 22nd Subscriber play closed for a 10% gain. LVS dropped below its most reaction low and the 50-day MA to hit its raised stop price. The February 16th Subscriber play closed for a 17% gain while the April 5th play closed for a 3% gain. SKS hit its May 9th stop for an 8% loss, earlier plays in July and March closed flat. CRMT was a Subscriber Oversold pick from May 18th. The stock traded into another bullish hammer - closing above the 200-day MA, but the lows of the day undercut the original stop price for a 3% loss. PVH lost near term support as the company "issued average guidance". The March 22nd Subscriber play closed for a 11% loss. TG was a Subscriber pick for February 13th and closed for a 7% loss. Current holders should watch how Wednesday's lows hold as support as there is a reasonable chance for a bounce at this juncture. WZEN was a Subscriber breakout hit for a 9% loss, although the stock rallied into its stop price after an earlier gap below - further gains are possible given the close above the 50-day MA. WSTC suffered its sixth week of decline to hit its February 3rd stop price for a 6% loss. The stock had racked up quick gains of 15%, falling just short of its target price. Bulls can look to Wednesday's hammer at the 200-day MA after this decline as a reasonable long side entry, but for my purposes it is a stop hit exit.
May 23rd: Bears refuse to offer bulls a foothold as early morning gains reversed in late afternoon trading. The semiconductor index again took the brunt of the selling with the NASDAQ
100 not far behind. The S&P closed below the 200-day MA as morning gains were rejected, but the break was only a few points and with Monday's lows holding the S&P could still develop a challenge of 1,274 on Wednesday. For the Dow, 11,039 remained support and the Russell
2000 can look to the 200-day MA for support. All are short term entry points.
Early signs of bullish divergence can be found in slow stochastics and the Commodity Channel Index (CCI) of all indices. A bounce will come soon, the question will be how far will it go? Tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ] all declined, but bottoms in the $NASI and $BPCOMPQ are still some way off. Bulls will give it another go tomorrow and the best case scenario would be a gap down, making for an interesting buy. Time will tell.
Target hit: none
Stop hit: For the first time for the last few days, the number of failures has declined to a trickle: TLEO featured as a Breakout for May 10th but earnings disappointed to knock the play out for an 11% loss. GTRC broke below the 50-day MA, the May 1st Subscriber play closed for a 9% loss. RTEC was a Subscriber pick for May 5th. The play joined the general selling to close for a 10% loss.
May 22nd: It is hard to call a bottom, but the task can be made a little easier by watching the secondary tech indicators [(Nasdaq Summation Index) $NASI, (Nasdaq Stocks Above the 50-day MA) $NAA50 and (Nasdaq Bullish percents) $BPCOMPQ].
These indicators had peaked in February (or April in the case of the $BPCOMPQ) and went on to trade within narrow ranges; for the $BPCOMPQ it was 55 to 59; for the $NAA50 it was 1,240 to 1,650; and for the $NASI it was -23 to 225. Last week's meltdown knocked much of the stuffing from these indicators, bringing some near oversold conditions, but others still have plenty of room to fall. Best positioned is the $NAA50 at 683. Good bottoms for the $NAA50 come in the 250-650 range. Its current decline doesn't look done and the lower it gets, the stronger the bottom. Since the creation of the $NAA50, an absolute low of 92 was made during the 2002 NASDAQ bottom, will it make a new low? Unlikely, but Monday's close should be viewed as good news for the bulls. The October 2005 low of 629 should breeze by which means next support for this indicator comes in around 432 (April 2005 lows). The $NASI at -421 still has room to fall. During the bottom of 2002 this indicator reached -1,164, but its absolute low is -1,648. Anything below -1,000 is a good sign for an upcoming bullish reversal. I would like to see another 1 or 2 weeks of decline in this indicator to firm up a bottom. Finally, the $BPCOMPQ at 48 is neither overbought, nor oversold. Other than the surge to 77 in 2003-2004 this indicator tends to knock around a 35-55 range. At Monday's close it is still a long way from a bottom; it could take another 6 - 8 weeks of pain before we see a bottom here. As an overall opinion I am holding to my bearish stance and Cash is King status, but I am fishing for suitable oversold positions to take advantage of the next rally.
But what of the last couple weeks of declines? Some indices are in better shape than others. The semiconductor index made big gains on Friday and even bigger losses Monday. The selling looks overdone relative to what happened in the other indices and is the best value in Tech. For the S&P there was a second successful defense of the 200-day MA. Technical buyers will probably find the most interest in S&P stocks and with an up tick in slow stochastics at deeply oversold levels it should show value. All markets were able to reject Monday lows, closing nearer the day's highs than lows - another bullish indicator.
One pattern to watch for is a reversal head-and-shoulder pattern in the Dow. The index was able to find support at April lows of 11,039. If this bounces to 11,334 and subsequently reverses back to 11,039 it could be time to hold on to your hat; on a straight point loss it brings 10,408 into range, on a percentage loss basis look to 10,442.
Target hit: none
Stop hit: ACTS was cut loss after a big intraday swing ran into its stop price. The May 19th Breakout play closed for a 3% loss. EYE shaped a double top after its initial breakout. The April 12th play closed for a 7% loss. CMI clipped its stop after a series of declines. The May 11th Breakout play closed for a 9% loss. AGIL was an oversold Subscriber pick from May 17th which hit its stop price at the absolute low for Monday. The play was stopped out for a 6% loss. CF was a failed Subscriber breakout from May 3rd. The stock closed out for a 12% loss. WTS featured as a Subscriber pick for December 14th and as a Breakout for May 4th. The Breakout play closed for an 8% loss while the Subscriber pick closed for an 11% gain. RYI suffered from my aggressive stop placement. The stock featured as an oversold Subscriber pick for Monday but was stopped out on an intraday action. The stock closed strong creating an additional bullish hammer. Place stops on a loss of Monday's lows, but for my purposes the play was stopped out for a 5% loss.
May 20th: Tech averages were the key winners from Friday's buying. The NASDAQ and NASDAQ
100 closed on bullish piercing patterns helped by sizable gains in the semiconductor index. The latter index was able to retrace the last three days of losses, although a retest of 474 looks favored before further gains can develop, Overhead resistance at the 200-day MA will likely fuel supply selling on Monday in this index. Volatility had a very strong week and the lacklustre action in the 14-22 range from late 2004 looks set to end. An increase in volatility is typically associated with fear (selling), but buying opportunities will present themselves even if this price retreat develops into a more formal downtrend.
Large caps [Dow/S&P] were a mixed bag; the Dow churned on heavy volume, but the S&P was able to close with a positive test of the 200-day MA. The Dow darling of CNBC looks to have lost much of its lustre as buyers failed to bid up this index in line with the tech averages and S&P. Finally, the Russell
2000, which remains the laggard index of the group, was able to close on a bullish hammer. Given the proximity of the 200-day MA it is likely many will wait for a test of this important average before buying, so demand should pick up as bulls put an early stamp on small cap proceedings.
Given the relative position of market indices, upside bounce targets of the 200-day MA and/or 20-day MA are best bets. Expect short sellers to jump on the market at these averages. The 50-day MA is likely to be above the 20-day MA and may not be as strong a resistance area as the faster moving (20-day) average.
Target hit: none
Stop hit: KNSY hit it's raised stop of $29.87. The March 16th Subscriber play closed for a 14% gain and the April 25th Breakout play for a 1% gain. LTM was a Breakout play from March 17th. Friday morning selling forced the play out for a 7% loss. SHO suffered a large reversal from an earlier breakout. The May 4th play closed for an 8% loss. The December 6th Subscriber pick was able to finish with a 7% gain. WTI hit its stop from March 31th after building solid gains. The Breakout play closed for a 10% loss while the January 24th Subscriber play was able to post a 15% gain. CHRK was a Subscriber pick for Friday but unfortunately hit its stop price over the course of the day's trading (although finished on another bullish candlestick to remain an attractive 'buy'). It registers as a 4% loss. EGY was another energy play to bite the dust. The April 7th Subscriber pick closed for a 10% loss.
May 18th: Volatility was today's story as it closed a few points shy of January reaction high resistance. The spike in fear/volatility should stabilize at this juncture, allowing markets to snap back to mean (but 'mean' will differ according to the market in question). Bulls would be best served by a morning gap down which would provide a solid base for a rally into and above Thursday's close. Options expiration adds spice to the mix. Whenever this rally comes I would expect a retest of whatever low is made. This second bottom would mark the time to leverage more capital in the market, targeting breakouts and momentum plays.
As for upside targets on the next bounce; for the tech averages [NASDAQ and NASDAQ
100] look to the 200-day MA. For the Russell
2000, Dow and S&P it will be the 50-day MA. Of the latter index, all eyes will be the upcoming test of the 200-day MA. This important average was of little help to the NASDAQ and NASDAQ
100, will it provide any sustenance to the S&P? Friday will reveal all.
Target hit: none
Stop hit: FMER barely lasted a day as the company announced a new CEO - the market didn't take kindly to the news. The May 17th Breakout play closed for a 5% loss. HERO was a victim of the recent selling, suffering four down days in a row. The April 6th Breakout play closed below its 50-day MA for a 9% loss. KYE featured as a Breakout for April 18th. The loss of the 50-day and 200-day MA also lead to the loss of its stop price, ending for an 8% loss. It wasn't to be second time lucky for RHAT. The April 11th Breakout play closed for a 9% loss. ACN cut below support and the 200-day MA to hit its stop; this was a Subscriber oversold pick from May 16th. It closed for a 2% loss. APCC suffered a similar fate as it hit its stop price. The May 16th pick closed for a 3% loss. KOF reversed a breakout to close below the 50-day MA, leaving behind a bull trap. The May 9th Subscriber play closed for a 7% loss. MGAM sliced clean through support as the CFO announced his resignation. The May 1st Subscriber pick closed for a 11% loss. OPTC hit its tight stop, but the play still has merits if a break of the 200-day MA is used. For my purposes the May 17th Subscriber pick closed for a 7% loss.
May 17th: Another big day for the bears, especially in large cap indices [Dow/S&P] where markets were stung for huge losses. The tech averages [NASDAQ and NASDAQ
100] had their own share of woe as the NASDAQ followed the NASDAQ
100 below its 200-day MA. Volatility soared, but at 19.56 it is well below the 38 which had defined support in the bear market (or 90 which was resistance with a high of 99.35). How far will fear go? Everyone is looking for a bounce to sell, but nobody wants to be the first one to catch-the-knife. Losses in the Dow were similar to those in January which at the time finished at support; Wednesday's losses cut below this support but it should be enough to see a move back to 11,500. The Russell
2000 failed in its bullish harami cross as losses accelerated downwards, with the 200-day MA beckoning. Only the semiconductor index was able to contain its losses (to a degree) and its eighth day of losses should end Thursday. Futures are up as of 3:00am ET so watch for the morning gap and fill.
Volume climbed across the board, a change from the declining volume from the last few days. Could this be a sign of capitulation? Another big discount in the secondary tech indices [$NASI, $NAA50 and $BPCOMPQ] helped push these indicators further towards oversold levels; the $NAA50 is only some 120 points from an intermediate term bottom (it shed 125 points Wednesday, so this bottom could occur as early as Friday, but likely some time next week); the $BPCOMPQ and $NASI have more room to fall and is probable a month or two away from a bottom.
Target hit: none
Stop hit: AAUK hit its most recently raised stop price after a successful run started in July 29th 2005. The original Subscriber pick closed for a 60% gain. As for Breakout features; the November 1st play closed for a 37% gain, the December 22nd play for a 19% gain, the March 27th play for a 9% gain and the May 5th play for a 9% loss. NLY featured as a Subscriber pick for March 6th and a Breakout play for May 8th. The former play closed for a 9% gain and the latter an 8% loss. One point of note was Tuesday's 'golden cross' between the 50-day and 200-day MA. FUJIY was a Breakout feature for May 10th and sliced cleanly through its stop for a 4% loss. RSTO followed through to the downside after its earlier break of support. The April 10th Breakout play closed for a small 4% gain and the April 21st play for a 7% loss. The original February 27th Subscriber play closed for a 19% gain. ATVI was a Subscriber pick from May 8th. The stock failed to shine and closed for a 13% loss. BBX drifted outside of support to hit its stop price. The May 15th Subscriber pick closed for a 3% loss. CRY suffered its fourth day of selling to hit its stop price. The May 4th Subscriber pick cut below its 50-day MA for a 11% loss. LWSN was a longstanding Subscriber pick from December 30th. Although the stock managed gains of 14% at one point it eventually reversed to hit its stop for a 5% loss. MOGN also failed to set the world alight. The May 4th Subscriber pick reversed off the 200-day MA to close below its stop price for a 6% loss. SLE also fell by the wayside as the stock drifted into its May 8th stop price for a 5% loss. The March 2nd STTS crashed through its stop after pushing gains as high of 17% at one point, it eventually closed for a 9% loss. SYT reversed a May 11th Subscriber breakout to close below its 50-day MA for a 7% loss. TXI featured to Subscribers on February 7th. The stock never recovered from its big reversal day at the end of March and closed for an 8% loss. WIND was a recent oversold play which suffered for its loss of nearby support. The May 16th play closed for a 4% loss.
May 16th: Buyers look to be hesitant to jump in at support. The NASDAQ still held the 200-day MA, but closed lower for a sixth day in a row. Slow stochastics are deeply oversold and volume has declined over the last three days of trading. The NASDAQ
100 has enjoyed much the same trading action as the NASDAQ except for the important break of the 200-day MA. The Russell
2000 was able to reassert itself (in terms of relative strength) over the tech indices and Tuesday's doji qualifies as a bullish harami doji cross at oversold stochastics. Stops go on a loss of 730. Large caps [Dow/S&P] were little changed but these indices have also traded in lighter volume over the last three days. In general, there is a strong case for sellers exhaustion with reversal candlesticks and/or support nearby in all indices. But any bounce will likely be short term as it will be used as an opportunity for recent buyers to bail.
Target hit: none
Stop hit: BWLRF followed Monday's gap down with further weakness. The stock featured as a Subscriber pick for March 17th and a Breakout for April 4th. The Subscriber feature closed for a 18% gain and a 13% loss respectively. MWV was a Breakout play for April 7th and closed for a 7% loss after a close below the 50-day MA. NWD clipped its May 11th Subscriber play stop on the day lows. Tuesday's small doji is an alternative entry price, but for my purposes the play closed for a 6% loss.
May 15th: Disappointed not to see the semiconductor index make more of a stand at the 200-day MA, but the NASDAQ was able to take up the slack and looks well placed for a (dead-cat)-bounce. The NASDAQ not only found support at the 200-day MA, but also at the former channel support line. Finally, slow stochastics are oversold, another tick in its favor. The NASDAQ
100 should gain in sympathy, but it will have the 200-day MA to battle with as resistance (much like the semiconductor index), but also former support - now resistance - of the head-and-shoulder neckline. But like the NASDAQ, it has slow stochastics at oversold levels.
Large caps [Dow/S&P] will also benefit. The Dow managed a positive test of 11,334 March reaction highs, closing the day on a bullish thrusting pattern. Volume dropped - which weakens the case for demand, as does the MACD trigger 'sell'. Slow stochastics are in a limbo, so the bullish case may not be as strong as it looks for the tech indices. The S&P was able to climb above 1,294 support, but has considerable work to do to break the 20-day and 50-day MA resistance. Like the Dow it has to deal with a MACD trigger 'sell' and a slow stochastic which is neither bullish (above the mid-line) nor oversold (below 20). The index which could struggle the most from here is the Russell
2000. The index is now ranked as the laggard as it falls behind the tech averages. The index trades inside congestion from February/March but is far enough away from the 50-day MA for the latter average to provide stiff resistance. The 200-day MA remains the most likely place to see buyers return in force.
Target hit: none
Stop hit: Although bulls put up a better fight late in the day, it wasn't enough to help the following stocks; ABCO was a Breakout for February 9th. Having sheared support on Friday, it crashed through the 200-day MA on Monday. The play closed for an 8% loss. TESOF reversed its break of $22.80 resistance to cut below prior reaction lows. The April 11th Breakout play closed for a 2% loss. NGAS completed a bearish "three black crows" formation. The April 19th Subscriber play closed for a 14% loss. FRK was a Subscriber play for February 7th and April 20th. The stock was able to close on a bullish doji on support, at the 50-day MA - but did hit my suggested stop for a 3% gain and a 5% loss respectively. GFIG was a failed Subscriber breakout. The May 8th stock never got off the ground and was stopped for a 15% loss. IAG was stopped out on profit taking. The May 3rd Subscriber pick closed for a 10% loss. NOIZ was an oversold Subscriber pick from April 25th. After brief gains the stock cut below support of the earlier hammer for a 9% loss. NXY was another Subscriber pick to reverse a recent breakout. The May 10th play also closed for a 9% loss. GLT was a Subscriber pick for February 23rd. The stock broke below the 50-day MA for a 9% gain. QLTI hit a raised stop. The stock featured as a Subscriber pick for February 23rd and April 20th. The former play closed for a 6% gain and the latter a 4% loss. SMG met its fate after a month of sideways trading. The April 18th Subscriber play closed for a 3% loss.
May 14th: With the 200-day MA fast approaching for the NASDAQ one can expect the bulls to make more of a stand than they did at the end of last week. The NASDAQ
100 was less fortunate as it cut below its 200-day MA and support of the former head-and-shoulder reversal pattern. But even this index is due some relief as slow stochastics entered oversold territory (just as they did in the NASDAQ). The semiconductor index was able to stall right on the 200-day MA and buyers may look to take advantage of this support level on Monday. Where the pain was most felt was in the secondary tech indices [$NASI, $NAA50 and $BPCOMPQ]. All three indicators lost key support, but at least the $NAA50 at 977 is closer to an intermediate term buy zone (650 and below) than its prior overbought 1650 in February. The $NASI at -54.99 and the $BPCOMPQ at 55.60 have room to run to oversold levels in the -950s and 30s respectively.
The biggest hit was taken in the small caps [Russell
2000] as sellers failed to utilize support at the 50-day MA as it had done in the past. Wannabe buyers may let this drift back to the 200-day MA before getting excited (and pump some volume support into the index). Large caps [Dow/S&P] were little better, but at least these indices can still look to support; the 50-day MA in the Dow and the lows of the April bear trap (1,280) in the S&P. Unfortunately the 50-day MA was of little help to the S&P and it could be the same story for the Dow.
Volatility took another step towards January highs as the indicator pushed a counter break of resistance following its fake break of support. Fear is not done yet and volatility can be expected to remain an issue over the coming weeks.
Traders will be looking to short the next bounce, but short term buying opportunities look favored at this time (maybe enough for a week long rally or two). Semiconductor's look best positioned on a risk:reward basis to benefit.
Target hit: none
Stop hit: A second day of stop wipeouts has me busy. FDS compounded Thursday's selling with another drop on Friday. The stock hit its raised stop of $42.16 for a 3% loss. The stock featured as a Breakout for March 22nd. HNAB shed 13% on Friday to close below its 50-day MA. The stock hit its March 22nd stop for a 17% loss while the January 24th play closed for a 40% gain. NRG hit its May 8th (corrected) stop for a 4% loss while the March 1st Subscriber play closed for a 10% gain. SWS suffered a third day of heavier selling to hit its April 19th stop. The stock closed Friday below its 50-day MA. The December 19th Subscriber play closed for a 24% gain, while the January 30th Breakout play made a 12% gain and the April 19th play a 4% loss. TROW also finished the week below its 50-day MA. The April 3rd Breakout play closed for a 2% gain. TGB finally hit its raised stop after reporting earnings which failed to live up to the stock price. The stock featured as a Breakout for January 3rd, April 17th and May 9th. Each play closed for a 186% gain, 22% gain and a 14% loss respectively. TSP was a Breakout for February 7th and closed for a 7% loss, while the November 7th Subscriber play closed for a 10% gain. CEGE was a Subscriber pick for February 28th which fell to its stop after 6-weeks of declines (but should find support at the 200-day MA). The play closed for a 7% loss. GORX was a Subscriber pick from May 4th which failed to live up to its billing, it closed for a 8% loss. IONA featured to Subscribers for April 12th. The stock managed to find support at the 20-day MA, but not before hitting its stop for a 2% loss. MRDDF drifted into its stop from its consolidation breakout. The May 2nd Subscriber pick ended the week below the 20-day MA, registering a loss of 13%. NTWK dropped into its April 24th stop for a 12% loss. RADN's volatile action over the last couple of weeks whipped out its April 26th Subscriber play for a 12% loss.
May 11th: So much for the "ideal time to buy" and the 4-6 week rally in the tech markets [NASDAQ/NASDAQ
100]. These indices opened low and never looked back, breezing past the 50-day MA, last weeks lows and trendline support from November. The NASDAQ
100 is only a few points away from its 200-day MA and should this test (it missed out by 3 points Thursday) then expect likewise action in the remaining markets. The semiconductor index is similarly positioned some 4 points away from its 200-day MA. As markets stand now with respect to the 200-day MAs: the Dow's sits at 10,819, the NASDAQ's at 2,228, the S&P's at 1,256 and the Russell
2000's at 697. The 200-day MA will slowly rise to the meet the markets and when they eventually meet it will be a time for bulls to take another look at the markets, but at current valuations things look a little spicy.
Further bad news for the markets was the ever widening divergence between large caps [Dow/S&P] and tech indices [NASDAQ/NASDAQ
100]. The further these averages pull away from each other the less of a chance any rally in the large caps [Dow/S&P] will stick. Although the Dow closed at a short term support level its not exactly screaming "buy!" The S&P didn't help matters as it stumbled back inside the clutches of prior congestion. Adding to the struggles was the break of trendline support in the Russell
2000. Luckily, there is still a chance for the 50-day MA to provide a source of demand as it did in January and March. But even if such events were to transpire the index would have to overcome a fresh 'sell' in the MACD trigger, a bearish cross in the +DI/-DI line and more importantly, a loss of leadership against large caps [Dow/S&P]. With the markets currently aligned large caps > small caps > tech indices - the chances for a recovery look ever dimmer.
Secondary tech indices [$NASI, $NAA50 and $BPCOMPQ] took a dive of their own. The $BPCOMPQ lost 4 1/2-month support, the $NAA50 built on yesterday's loss of support and the $NASI dropped out of the consolidation triangle which was supposed to support the 4-6 week rally. It's good news to see these indicators drop as it helps reset the bullish demand with a good dose of fear. Unfortunately, there is plenty of downside potential before a reasonable buying opportunity presents itself. On a final note, volatility left behind a nasty bear trap - the kind of move which could produce a sizable spike in fear; a retracement to January highs (of the descending triangle) could be accompanied with a 5% drop in tech markets [NASDAQ/NASDAQ
Target hit: none
Stop hit: No shortage of stock stop outs. ARS was a Breakout feature for November 9th, February 22nd, March 27th and May 9th. The four plays closed for a 60% gain, 12% gain, 4% gain and a 5% loss respectively. ASHW was a clean slice through the stop price. The January 23rd Breakout play closed for a 8% gain and the March 27th play closed for a 5% loss. COSI had a volatile day as earnings disappointed. The stock was able to close right on the 200-day MA, but not before hitting its March 29th stop price for a 12% loss. GBN reversed a May 2nd breakout into a bull trap. The earlier March 31st Breakout closed for a modest 3% gain, the May 2nd play closed for a 14% loss. SBAC suffered its third day of heavier selling to hit its raised stop price. The stock featured on November 9th as a Subscriber play and as a Breakout play on January 25th, March 20th and May 3rd. The Subscriber pick closed for a 50% gain and the Breakout plays for 25% gain, 3% gain and a 6% loss. THK was a Breakout play for April 24th and closed for a 14% loss. ALTI was a Subscriber pick from April 6th. Thursday's sharp drop saw its stop price hit for a 7% loss. B hit its raised stop as near term lows were lost. The April 3rd Breakout play closed for a 10% gain while the May 3rd Subscriber play was hit with a 2% loss. BNE cut through its stop price as earnings disappointed. The March 20th Subscriber play closed for a 7% loss. CAMD had struggled over the last few days and Thursday's selling was the straw which broke the camel's back. The March 31st Subscriber pick closed for a 12% loss. MCDT hit its stop after 5-weeks of selling. The March 23rd Subscriber pick closed for an 8% loss after been up 10% at one point. ORCC featured as a Subscriber pick for May 9th. The stock managed an appearance on my Trade Ideas scan for Thursday and ended the day above its 50-day MA, but the initial play was stopped out for a 5% loss. PLXT joined the junk pile as its fifth day of selling led back to its April 11th stop price. The play closed for a 13% loss. SWWC was an oversold play from April 13th. The stock was another to disappoint on earnings, hitting its stop price for a 5% loss. MTK featured to Subscribers on March 31st. The Fund closed on the 200-day MA, but not before it hit its stop price for a 3% loss. TSM was a Subscriber pick from May 5th. The promising breakout reversed on four days of selling to hit its stop for a 6% loss. VLNC rolled over from a triangle breakout. The April 12th Subscriber play closed for a 12% loss.
May 10th: The Fed rate hike to 5.0% had a staggered affect on markets. Hardest hit were the tech indices [NASDAQ/NASDAQ
100], the semiconductor index in particular was stung with a break of 2-month trendline support and the 20-day MA and 50-day MA. Volume selling ranked as distribution in the NASDAQ, but the NASDAQ
100 declined on lighter volume. Bulls can look to the 50-day MA in both the NASDAQ and NASDAQ
100 for support, and given my earlier assertions about a 4-6 week rally this could be an ideal time to buy with a stop on a loss of last week's lows.
Next on the hit list was the Russell
2000. The last couple of days of sideways action above 779 support gave way to a modest decline. Support lies at the 20-day MA, a rising support line and 766, a former reaction high. Technically, there was a 'sell' trigger in the CCI and the MACD bearish divergence remains a concern.
Last up were the large caps [Dow/S&P] which weren't even grazed by the selling around them. The Dow shows strong technical strength while the S&P managed a positive test of 1,314 support. How long this situation can hold if tech markets continue to diverge from these indices remains to be seen.
Target hit: none
Stop hit: ECIL was a Subscriber pick for March 2nd and April 13th. The stock lost near term support and the 50-day MA. The former play closed for a 14% gain, the latter a 7% loss. FSS reversed from a breakout to leave behind a bull trap. A break of the 50-day MA soon followed. The April 19th Subscriber play closed for a 6% loss.
May 9th: Meanwhile, time passes... There was no great shakes in the equity indices as commodity markets hogged the interest. The semiconductor index continued to drip losses and closed the day at the 20-day MA. Monday's bullish 5-day EMA cross in the $BPCOMPQ was followed by Tuesday's bearish 5-day EMA cross in the Nasdaq stocks over their 50-day MA ($NAA50). Gains in the large cap indices [Dow/S&P] were greeted with light volume, while heavier volume churning afflicted tech markets [NASDAQ/NASDAQ
100]. Buyer beware.
Target hit: CNF was a Subscriber pick for February 27th. The stock hit its target price for a 20% gain.
Stop hit: BITS earnings injected a surge in volatility which reached down to hit the stop price. The April 18th Breakout play closed for a 16% loss. SUMT continued to slide after it released earnings; the April 17th Breakout play closed for a 3% loss, while the April 7th Subscriber pick closed for a 14% gain.
Errata: NRG stop should have read $46.66, not $47.66 as originally listed for May 8th.
May 8th: Other than the bullish cross of the 5-day EMA in the Nasdaq Composite Bullish Percent Index ($BPCOMPQ) there was little to add after Friday's gains. All markets consolidated gains, only the semiconductor index shed a few points shy of a test of resistance. Volume traded down in sympathy. Markets are left to await Fed comments.
Target hit: none
Stop hit: DXCM hit its stop after a break of near term lows following a lower volume high. The stock featured for Subscribers on March 6th and as a Breakout for March 15th, April 21st and May 5th. The Subscriber play closed for a 36% gain, while the Breakout plays closed for a 26% gain, 11% gain and a 4% loss respectively. IMMR hit its raised stop after crashing through consolidation support; the March 10th Breakout play closed for a 9% gain, while the April 13th Breakout play closed for a 7% loss. GNBT was a Subscriber pick from May 2nd. Late day losses pushed the stock to close below its 50-day MA. The play was hit with a 14% loss.
May 5th: The gap between the Dow/S&P and the NASDAQ/NASDAQ
100 widened, while the Russell
2000 maintained its leadership role with new closing highs. Given the % gains and new multi-year highs it was a relatively light volume day for both large cap indices [Dow/S&P]. But best news for the bulls was the break of the MACD bearish divergence in each of the large cap indices. There is still some chance of new bearish divergences developing but there should be sufficient upward momentum to prevent this from happening. The Tech averages NASDAQ/NASDAQ
100 were kinda of forgotten amongst the melee and both trade below April/January highs respectively. Volume fell in both of these indices as money rotated into the relative safety of large cap stocks. Speculators continued to fuel the small cap rally [Russell
2000] and trend traders will have been pleased with Friday's gains. The MACD "buy" trigger was additional confirmation, but unlike large cap indices it has yet to challenge it's newly forming MACD bearish divergence. Markets still hold to an end-phase rally and putting excessive amounts of capital to work in this environment remains a high risk proposition. Secondary Tech averages [$NASI, $NAA50 and $BPCOMPQ] were little changed from Thursday; the $BPCOMPQ stuck to its bearish cross of the 5-day EMA and break of 4-month trendline support, as the $NASI continued to make its picture perfect bounce off support. The net effect of the $NASI, $NAA50 and $BPCOMPQ indicators is bullish and long positions remain favored over the next 4-6 weeks, but this should be toe dipping buying, not wheelbarrow loads of stock.
Target hit: none
Stop hit: PTIE was a Subscriber pick for April 10th. The stock failed a breakout, reversing through its stop after it posted earnings. The play closed for an 8% loss.
May 4th: Markets were a side show to the Tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ]. A short term buying opportunity looks to be in place following the test of support in the $NASI and the bullish EMA cross in the $BPCOMPQ. Volatility broke from a bearish descending triangle on its way to a projected target of 9. This is a long way from post-September 11th 2001 highs of 99. Rising volatility does not directly translate into selling (volatility trended up from 1996 to 2000), but if this starts to spike as markets decline the results could be catastrophic. Because of the relative position of secondary indicators [$NASI, $NAA50 and $BPCOMPQ] any rally will quickly run into resistance, another reason to be cautious.
The NASDAQ and NASDAQ
100 closed above the 50-day MA, but below a down trending 20-day MA; prior downtrends in the 20-day MA from December and February were greeted with corrections which would not rule out a test of November support in the NASDAQ and 1,650 and/or the 200-day MA in the NASDAQ
100. In Techs favor was another good day for the semiconductor index, but even this is fast approaching resistance. The Dow cleared prior supply as it inched ever higher. The MACD has run into its bearish divergence, so expect a correction similar to that of March, as money rotates out of large caps into Tech markets. The S&P was unchanged, but the Russell
2000 demonstrated continued speculative interest as it logged another day of gains.
Trend traders will be sticking to the Russell
2000. Value players will be buying Tech [NASDAQ and NASDAQ
100]. The next rally will likely last 4-6 weeks.
Target hit: AFCO is to be bought for $28.50 a share by AMAT. The May 1st play registers as a 30% gain.
Stop hit: FL gapped down on disappointing earnings. The March 3rd Breakout play closed for a 5% loss after failing to make any headway. ALD continued another day of declines following earnings. The March 6th Subscriber play closed for a 2% loss. DF suffered the second day of heavier volume selling to run into its April 18th stop price. The Subscriber play closed for a 2% loss.
May 3rd: A day of no change as markets floundered within the bounds of recent congestion. There was very little to add to yesterdays comments other than the modest gain in the semiconductor index. This gain did not translate to the NASDAQ or NASDAQ
100, but it will be interestimg to see how this threesome get along over the next couple of days. Large caps [Dow and S&P] were dull and few speculators were willing to throw money at the Russell
2000. Given the relative strength of the markets with respect to each other, the tone of the market remains bearish. The NASDAQ (other than the semiconductor index which I mentioned on Tuesday) looks the best index for a bounce. November support is fast approaching.
Target hit: none
Stop hit: GEOI was a Subscriber pick for April 12th. The play closed for a 14% loss on heavier volume in the absence of company specific news.
May 2nd: The bulls did enough to cling on to support but were incapable of doing little else, only the Dow made some inroads towards consuming some of its troublesome supply above 11,370. The NASDAQ finished the day a few points below the 50-day MA (as it did yesterday) but it is still close enough to be considered at support. The NASDAQ
100 similarly toyed with the 50-day MA along with the semiconductor index. For the Tech averages the 50-day MA is an important price point. Bulls will need to step up to the plate, backed by volume, if this important psychological level is not to drift away. Buyers did make a better attempt at the Russell
2000 but the buying was not excessive. The S&P ended the day close to 1,314 resistance trading on lighter volume. Wednesday could be the day for this index to move, but it will need substantial volume for the move to stick.
The NASDAQ Bullish percent index [$BPCOMPQ] dropped below 4-month support to follow the earlier (bearish) cross of the +DI line below the -DI line. The NASDAQ Summation Index [$NASI] gives the bulls the best chance for a Tech bounce as it rests gains 4-month support as part of a consolidation triangle.
Target hit: none
Stop hit: PENN hit its stop in late morning weakness but it was an indication of continued bearish control after last weeks gap down. The stock featured as a Breakout for February 16th and April 20th. The former play closed for a 15% gain and the latter play for a 9% loss. The 50-day MA at $39.20 will be the next big test for the stock. ANX was a Subscriber play for April 3rd. The stock crashed through its 50-day MA on heavy volume to hit its stop for a 7% loss. BGP hit its stop but ended the day on a bullish hammer. The December 8th Subscriber play closed for a 10% gain. The February 2nd Subscriber play closed for a 6% loss. KEYW was a Subscriber feature for April 20th. The stock hit its initial stop based on the pattern breakout but held support of the 50-day MA. Current holders can use the 50-day MA as an area to place stops (and/or accumulate). The play closed for an 8% loss. KKD was a swing trade from March 30th; Tuesdays' gains ended the short breakdown for a 2% loss.
May 1st: The "Maria and Bernanke" show did its best to unsettle markets left vulnerable from last Friday's heavier volume selling. Volume dropped - which will be of some comfort to the bulls as the larger picture still holds to scrappy trading. The NASDAQ dipped below its 50-day MA, but support from November should provide some stability to its recent decline. The NASDAQ
100 crossed below its 50-day MA on its way to the 200-day MA. There is little room left for bulls to hide in this index and a full days work tomorrow will be needed to rescue it from further declines (i.e. a close above the 50-day MA). The semiconductor index has been flying under the radar of late, hugging the 20-day MA in a modest advance. If the Tech averages are to improve they will likely be looking to the semiconductor index to lead.
The Dow continued to reject rallies above 11,370 and with the MACD fast approaching its bearish divergence it won't be long before another decline takes hold. The problem for this index is the fast rising support levels (20-day MA, 50-day MA and October support trendline) which if were to fail could see a faster decline down to the 200-day MA currently at 10,784. The S&P fared little better as it enjoyed another non-descript day. The chief area to watch in this index is the MACD nestled against its 5-month bearish divergence - an upside break here could lead the index above 1,314. The Russell
2000 remained the index of choice for the trend traders and sits at a point (20-day MA) where buyers usually jump in; of course, further weakness would kill the only performing market at this current time. The sideline is still the best place to be if you are not prepared to be snappy with your trades.
Target hit: none
Stop hit: Monday's volatility in MCEL was enough to hit its raised stop. The February 24th and April 25th Breakout plays closed for a 6% loss and a 10% loss respectively. NAVG was a Breakout play for February 1st and April 20th and a Subscriber pick for December 6th. The stock suffered its sixth consecutive day of declines to hit its stop price. The Subscriber pick closed for an 11% gain and the Breakout plays for a 5% gain and a 7% loss respectively.
public list - please remember to vote!
Back to top