Dollar approaching resistance level

The dollar has had a very impressive run in the past few days, and is quickly approaching an important resistance level just below the 82 level. The MA(200) also lies at 81.73, further increasing the resistance in this area. A pullback or some consolidation around these levels, which should be positive for the equities, would not be surprising. That being said, this near term pullback or consolidation, if it happens, would just be healthy for  the dollar and the chart looks extremely bullish.

Take care and good luck!

S&P monthly analysis

Today having been the last trading day of the month, it seems as good a time as any to have a look at the S&P monthly chart. With the index having closed in red for the month, the chart has is beginning to look a little bearish. New highs for the year were made this month, but they were made on a negative MACD divergence as shown in the chart below. MA(50) has been a major obstacle for the bulls ever since the market fell below it in the first half of 2008, and for the chart to regain its bullish character, the index will have to close above the monthly MA(50). According to this chart, the next major support levels for the index are at 1170, 1150, 1131.

Take care and good luck!

Market thoughts and strategy

I am running short of time but I thought I would just jot down a few thoughts before the market open. Despite the major indices closing in red, yesterday was a bullish day. A successful test of the lows followed by a close above MA(50) on S&P.  Normally, reversal are hard to call but today's was relatively easy with there being many indicators pointing towards the reversal. Firstly, the market reversed at 1173.01 with the recent lows being 1173. Secondly, the financials were relatively strong throughout with GS leading the way. Thirdly and this according to me was the most important feature yesterday, the strength in crude oil. 

So, all good for the bulls yesterday but let's just step back and look at the larger picture. What changed yesterday? Nothing! Absolutely nothing. Let's not get carried away just because the market finished well off lows yesterday. The markets are still stuck between a range of 1173-1207. Today's action marks 1173 as the line in the sand, but if you are bullish, you don't want it to be tested repeatedly. Ideally, one should see bounce off support, not consolidation above it.

What's the strategy here? My strategy here remains the same as it has been for the past week or so. I have been saying that this is a stock picker's market. Until we don't break the above mentioned range on the S&P, just forget about the general indices. Yesterday, for example was a great day for playing oil stocks. Just go with the strength but don't get too greedy. Personally, I had a nice run in IO (still holding half). I posted this on twitter before getting in it, so hopefully some of you readers got into it too! 

To wrap it up, here is my strategy for these markets:

(1) Concentrate on momentum stocks until the S&P breaks out of the 1173-1207 range. Which side it breaks, I am not really concerned.

(2) Take profits quickly. At times, one fancies the odds of going for a home run, but these are not those times. 

(3) End each day with a sizable cash position. Between Europe, Korea and China, we are in a news dominated market with gap ups/downs being the norm for the past week or so. A healthy cash position acts as a hedge for the unexpected.

(4) Lastly, I am still not prepared to short the markets here. Reason? Look at the action yesterday!

Take care and good luck!

SPX 1173

The low of this pullback (at the end of the day today, it might turn out to be more than a pullback, but let's stick with pullback for now) from the highs made recently has been 1173 on 16th November. The intraday low today has been 1173.01. So, keep an eye on this level today. Also note that the S&P MA(50) is at 1177. A close above this will be disappointing for the bears and the market would continue in its current state of indecisiveness. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Take care and good luck!

Chart of the Day

Today's Chart of the Day is ALY. Nice uptrend over the last two months with bull flags all along. An energy sector stock, which has been one of the best performing sectors of late. Nice volume on Friday considering it was only half a day of trading. Strong support at 6.40.

Here are some other stocks I like for tomorrow.

Take care and good luck!

Watchlist

With no important support and resistance levels being broken on Friday, my market views and strategy remains the same. Here is the link from the post on Friday in case you missed it. Here are some charts I like heading into next week. They all are from the auto sector. I have commented on the charts itself.

I will be back later with Chart of the Day.

Take care and good luck!

Here's to taking risks in life

As you, the regular readers, of this blog know, I like to very strictly confine myself to my thoughts and opinions on stock markets and trading in this blog, and keep my personal life and opinions on anything and everything else (apart from stocks) out of these pages. If I might allow myself one slight digression just this one time, I find myself these days at the crossroads of life with some very important decisions to make. On one hand, there is the obvious path, the path that I have been trained for my entire adult life, the path I am told I am very good at, the part with the obvious ending. But as with all easy paths in life, there is a disclaimer attached. I do not like this path. The other path is full of risks and leads to the unknown, and quite possibly, failure. But I like this path. In my early 20s, I would have not been afraid to take some chances and take the second path. But as I am sure you readers know, as one gets older (am closer to 30 than to 25 now), one has other responsibilities and the equation is not so simple anymore. When you take risks, others are forced to take those risks with you whether they want to or not. Have I reached a decision? No. Not even close. But here are some quotes on taking risks in life that I found pretty inspirational. Actually, this wasn't as big a digression as I had thought it to be, as these quotes can be very well applied to trading to.

“Man cannot discover new oceans unless he has the courage to lose sight of the shore.” - Andre Gide

“Often the difference between a successful person and a failure is not one has better abilities or ideas, but the courage that one has to bet on one's ideas, to take a calculated risk - and to act.” - Andre Malraux

“You have to risk going too far to discover just how far you can really go.” - T.S. Eliot

“It's not because things are difficult that we dare not venture. It's because we dare not venture that they are difficult.” - Seneca 

“Yes, risk taking is inherently failure-prone. Otherwise, it would be called sure-thing-taking.” - Jim McMahon

“A ship is safe in harbor, but that's not what ships are for.” - William Shedd  

“The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.” - Michelangelo

I hope you readers will pardon me this little digression. Take care and good luck.

500 blog posts - Thanks for reading!

500 blogs posts! Wow! In less than 11 months. Double Wow! And that's where the self-congratulations end. Well, at least for now :). This blog started as a personal trading journal. But with time, thanks to you readers, it has become much more than that. I remember sometime during the first week of its existence, I was so pleased to have 50 readers in a day and that got me dreaming to how cool it would be have 100 readers a day. Simpler times. It would be fair to say that the blog has grown beyond my wildest dreams. All thanks to you readers. Special thanks to those who have patronized the blog from its very first month. I admit that on some days, especially bad trading days, I just don't feel like coming here and writing it all down, but then I feel I owe it to the regular readers to put something out there.

I would like to believe, and the results definitely say so, that the blog has helped me grow and improve as a trader. If nothing else, it forces me to do my homework everyday. Earlier I just used to think about the stocks that I was in, but now thanks to the daily reviews, I am forced to look at and consider the bigger picture out there. I hope the blog has been of some help to all you readers in some way too, even if its a very small way. I am nowhere close to becoming the trader I would like to be, and hopefully we all will continue to grow as traders together.

I don't know how long I will be able to keep this blog going because, well, life happens. But rest assured, I am gonna try my best to keep at it.

Thanks for reading! Trade To Learn....and maybe you can even Learn To Trade.

Chart of the Day

Today's Chart of the Day is WTI, an oil related stock. The stock has over 20% of its float short, making it a prime candidate for a short squeeze once it breaks through the resistance. I like it on a break of 16.63 with volume.

Take care and good luck!

The best sectors

Looking through the various sector charts, Consumer Discretionary and Energy sectors are setting up nicely and seem to be the best performing sectors out there. Their charts have many things in common. Both are not far away from their yearly highs. MA(20) has held up nicely as support in both the charts. The Consumer Discretionary ETF is at a particularly important level, having closed right at the multi-week resistance on Wednesday.

Here are my views on the overall markets.

Take care and good luck!

Market musings

Well, I had planned to stay away from the markets until the weekend, but I just can't get myself to do that. Damn these markets! Firstly, a very Happy Thanksgiving to all you readers. I hope you all have a great time with your family and loved ones. 

Yesterday saw quite a comeback by the bulls and momentum stocks, in particular, did exceedingly well. All the three stocks in the watchlist posted yesterday did rather well, particularly ATML, and I hope these lists are of some help to you readers. But looking at the larger picture, it is important not to get carried away by yesterday's action. The S&P closed below 1200, the immediate resistance level. Until 1207 is broken to the upside or 1173 to the downside, expect more choppy days ahead with gap ups and gap downs being the norm as we have seen in the past few days.

Like I had stated a few days before, I believe this is a stock picker's market. Until the levels mentioned in the previous paragraph are broken, one can just ignore the overall markets and concentrate on individual stocks. Momentum stocks are doing rather well with there being breakouts abound. I will be back with some tips on playing momentum stocks later in the day. Finally, I am not planning to short these markets, at least for now.

Keep an eye on the trendline shown in the 30 minute chart of S&P below. It had been acting rather well.

I will be back with a watchlist later in the day.

Have fun!

Watchlist

Here are some stocks I like here. All three had a relatively nice, stable performance yesterday. The important levels are marked on the charts itself.

Take care and good luck!

Important levels

The S&P has a short term bearish look to it. The most important level currently is 1173, which is the low of this pullback so far and has been further strengthened by the approach of MA(50). A fall to 1150 wouldn't be out of the question of this breaks, so watchout for this level. On the upside, 1200 is an obvious, perhaps a little too obvious in fact, resistance level but the level which the bulls need to reclaim to turn the tide is 1207.

With this being a holiday week and the market action being dominated a lot by news, I have decided to take a much needed mini break from trading and the blog. I will put up a watchlist of some stocks that I like here in a short while but after that, I will be taking the rest of the week off and will be back during the weekend.

Make it a great Thanksgiving! I hope you all are able to spend it in the company of your loved ones.

Take care and good luck!

Some thoughts about this week

I know the term is rather overused but I feel this is a stock pickers market. As far as the overall markets are concerned, I wont be completely bullish until 1207 is crossed. What worries me at the moment is the overwhelming bullish sentiment about Thanksgiving week, that the market just can't go down this week. But again, as long as the support holds, it doesn't really matter if you are in the right stocks. I think the markets are going to be choppy here, so its best to go with momentum stocks, not get too greedy, take profits quickly and losses even more quickly.

 

Take care and good luck!

S&P important levels

Below are the S&P and 15 minute and daily charts with the immediate important levels marked on them. Also, notice the trendline being formed which was earlier acting as resistance but is now acting as support.

Resistance - 1198.75, 1200, 1207,1227

Support - 1173, 1183, 1193

Here is the link to today's Chart of the Day.

Take care and good luck!

Chart of the Day

Let's make it Chart(s) of the day today with the charts being IRF and ATML. They are both very similar looking setups. Both these stocks gapped up recently and have consolidated nicely since then. After around a couple of weeks of trading, they are both close to testing the highs of the breakout move. Both the stocks were in a strong uptrend before the breakout move. Rather similar looking charts, aren't they? I happen to be in both of them. Been in ATML for past few days and took a position in IRF today, which happened to be in the watchlist posted over the weekend.

Take care and good luck!

The Stock With No Name

Those of you who read yesterday's post know that after some deliberation, I took a position in DMAN on Friday. Long story short, this stock had fooled me many times before but I liked the odds of a breakout this time, so went ahead and took a position. This time things were going to be different. 

 

Well, the stock failed again and I got stopped out for little over 1% loss. I must have played this stock at least 5 times before and have got stopped out all but once. I would love to hate the stock, trust me I want to, but I grudgingly have to give it the respect it deserves. I don't think any stock has fooled me more than this one, not even in my rookie trading days. For that, it deserves my respect.

But like a jilted lover whose numerous advances have advances have been callously spurned, I must bid farewell to this stock. I shall play this stock no more. I wanted to get this in writing, hence the post. Dear readers, if you ever find me playing this stock, feel free to hurl abuses at me. OK, just leave a comment. In fact, I am never going to mention the stock by its name again. Henceforth, if I have to mention this stock, it would be known as The Stock With No Name.

Take care and good luck!

 

Chart of the Day

Today's Chart of the Day is the stock that has probably frustrated me the most this year. I remember writing a post about it few weeks ago - Sixth time lucky?? Or was it seventh time lucky? I forget. Anyway, the stock has made numerous attempts (six or seven) to break out but has always failed. I must have played it as a breakout play at least four times and ended up getting stopped out. I guess overall I still must be in the green (barely) with the stock as once I played it as a ranging stock and got a decent bit out of it. But that's not the point.

The point is that I saw the stock setting up nicely again on Friday. I wanted to get in. But I froze. There, I admitted it, I froze. I thought of all the times it had fooled me previously. Knowing my history with this stock, was I willing to trust it again? This was the first thought that entered my mind. Then I thought, what was the worst that could happen? The stock fails to breakout again. And I get out with at the most a 2% loss. No big deal. Not unlike any other stock I would play. Plus things were going to be different this time. The sector was looking really good and the stock had a fake breakdown last week, which made me think that this time the move was for real. But hadn't I thought the same the last four times too?

Plus, I would be lying if I didn't admit that it was a little bit personal now. I am not too proud of this thought as I know I shouldn't have emotions tied up to any stocks, whether winners or losers, but hey, I am human! This stock owed me. How would I feel if it ran this time with me just waiting on the sidelines just because I was too much of a chicken to trust my own trading system? Here, I must point out that though, it was a bit personal with the stock and I had the feeling that I had a score to settle with it, I was very ready to admit defeat, tip my hat to the stock and walk away with the 2% loss if it was a failed move again. I still am.

All the above thought process must not have taken more than 30 seconds. Ladies and Gentlemen, I present to you DMAN. Needless to say, I got in it on Friday.

Here are some more setups I like for the week ahead.

Take care and good luck!

Watchlist

Running through my scans with some bourbon at hand (or in hand, whatever), I find that there are tons of stocks (OK, I exaggerate, make it dozens) setting up as we head into next week. So, here are ten charts that I like for next week with the important levels marked on them.

I will be back later with the Chart of the Day and a few thoughts for next week.

Take care and good luck!

Important day for the dollar

The dollar got rejected today right at the ascending trendline today only to find support at the MA(50). This also happens to be area of support from the double top formed in October. I had written a post earlier on why the MA(50) level is so important specifically for the dollar. So, will the MA(50) act as support tomorrow or will it get broken, starting a move down to MA(20)? That's what makes the action in dollar so important tomorrow in my opinion. And of course, a close above Tuesday's highs would be really bullish and would signal further downside in the overall markets.

Here is the link to today's Chart of the Day.

Take care and good luck!

Chart of the Day

Today's Chart of the Day is ST. The stock has been in a steady uptrend for the last three months now and more recently, has been consolidating nicely since the big move on Friday (which was accompanied by good volume). Today's close above Friday's high was important and this could be gearing for another big move up.

Here is the link to my analysis of today's action and some reasons why one should exercise caution here.

Take care and good luck!

Bullish but be cautious

What a difference a day makes! Quite a comeback by the bulls. Going into today, the markets were definitely oversold but there was nothing in the action yesterday, at least in my view, that foretold such an impressive rally by the bulls. In spite of the obvious strength of today's rally, I would recommend caution here. 

Firstly, a close above MA(20) on the S&P would have been nice but the index closed just below that. More importantly, have a look at the chart below. Today's rally met resistance exactly at 50% Fibonnaci level (taking the top as the highs made by the market last week and the bottom as the lows of Tuesday).

Let's zoom in a bit. Below is a 15 minute chart of the S&P. Today's rally met stiff resistance at 1200, so that will be the first level to watch out for tomorrow. But the more important level in my view is 1207. For the bulls to get their mojo back and the action of the last few days to seem like nothing but an ordinary pullback, it is important that the bulls regain control of 1207.

Just to make things clear, I am in no way advocating short positions here. I am myself long here. All I am saying is don't get carried away by the action of one day and keep in mind the market action from earlier this week. Its interesting to note that both the big moves of the week, up and down, came as gap down and gap up, which just makes exercising that little bit of caution even more necessary.

Take care and good luck!

Watchlist

With futures looking good and more importantly, China in the green as I write this, its time to be ready for tomorrow, so here is a watchlist of setups I like here. One thing common in all these setups is that they all held up pretty well during this move down. Also, most of them have bullish volume patterns. Also, the MA(20) held up nicely as support in pretty much all these patterns. Hmmm.....that makes it more than one thing common, but who is counting??!!

Take care and good luck!

Attack of the bears

It was one-way traffic on the Street today as the bears simply steam rolled the bulls. Usually, when the market gaps down above an important resistance or below an important support, the gap does not get filled, at least on the same day. That is exactly what happened today with the S&P gapping below the important MA(20) level and staying below it. If I was forced to pick any positive for the bulls today, it would be the comeback, if you can term it so, in the last 45 minutes or so of the trading session.

With today's action, the markets are well into oversold territory as shown in the McClellan Oscillator charts below. We will have to wait and see if this actually means anything to the markets with the kind of momentum bears have with them at the moment.

 

 

Even if we do get a bounce tomorrow, today's action calls for a change in strategy. Buying the dips, which has worked so well so far, is officially over and dead. Also, I have been playing mostly breakouts through this rally. Well, that's also over. Sure, we will still have breakouts in the market but if the trend of the overall markets is down or choppy, most of the breakouts would fail. IF I plan on going long, I would rather buy off support. I did not make any move today and am prepared to give the markets time to sort things over. The oversold market conditions meant that I was not comfortable going short and I was not going to try and call a bottom to the massacre out there.

Take care and good luck!

Not looking good

There are no two ways about it, today was not a good day for the bulls. For most of the day, it seemed like the market had recovered decently from the losses on Friday but the market gave it all back in the last one hour and the S&P finished negative. It certainly looks like MA(20) on the S&P will finally give way tomorrow - for the first time since 2nd September. The level currently stands at 1195.84. 

The dollar meanwhile closed a few cents above MA(50), the first time this has happened since 10th September. I had written a detailed post this weekend going into the importance of this level for the dollar.

So, what's the best way to play these markets? In my opinion, it is staying in cash. I admit it doesn't seem the most exciting of things to do but I believe its the right thing to do. There is a time to fight and there is a time to just sit back and observe and right now it is the time to sit back and observe and protect the gains from this rally. Let the bulls and the bears fight it out. We will just join forces with the winners later on. Doesn't that seem like an awesome way to fight? To avoid the damage and losses of the battle but still be there to enjoy the spoils of victory!

Take care and good luck!

GTE

Just took a small starting position in GTE. The stock has been consolidating for over a month now and today finally made a move above 7.95, the top of the consolidation range. I like the volume so far today and took a starting position at 7.94. I am looking for at least a close over 7.95, though a close over 8 would be ideal.

Take care and good luck!

Update: Got stopped out of it for little over 1% loss. It made a move till 8.09 and I should have moved my stop to breakeven but I guess I had just fallen in love with the volume. Still on the watchlist due to the impressive volume.

Chart of the Day

Today's Chart of the Day is PDE. A nice bounce from MA(20) on Friday. The relative strength shown on the kind of day that we had on Friday is encouraging. I particularly like the bullish volume pattern since the breakout. Watch out for a break of 33.75 on this one!



Let's have a look at the weekly chart now. You might call it a cup and handle pattern here although another week of "consolidation in the cup" would have been nice. But the important thing to note here is that the stock has a lot of room to run after a break of 34.75.



Here is the watchlist for next week.

Take care and good luck!