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A place for friends to gather and view stock market charts, discuss technical analysis and market outlook. What is your Principal Asset? How can it be developed? Each and all should do their own due dilligence and homework before investing. And by no means should you use anything I say or show here as a sole basis to buy or sell securities as everything is for educational experience only.

Saturday, October 4, 2008

Bailout passed - Bear martket resumes

I'm away for the weekend and do not have access to charting. The DOW was up 265 points and the bailout vote came. By the end of the day the Dow was down 137 points. Enough said.

The markets are WAY oversold, BUT the state of the economy is at best apathetic globally. I find it interesting that no one is picking a bottom here. Cramer called a bottom a couple of months ago and we are now below those levels.

Bottom line is there are no buyers in the market and until volume increases on a significantly UP day it is entirely too risky to be long.

Thursday, October 2, 2008

Blood in the Streets....

Not quite blood in the streets, but by far the Transportation sector got hit the hardest today. Basically they took the Reagan quote of "if it moves" and applied it to selling stock.
It's hard to say what to expect tomorrow as the monthly employment numbers come out prior to the open and the "It's not a Bailout" Bailout House vote is scheduled for noon.

Were the last two days nothing but a Bull trap? I guess (and that is pretty much as good as anyone else's opinion at this point) we will have to wait and see what the reaction is after the vote.

Wednesday, October 1, 2008

Bailouts & Policy change rumours boost Financials

Paulson, Bernanke and the boys and girls on Capitol Hill were playing with your head again today. First of all the "No Short" list was supposed to end at the close of today, but was rumored to be extended.
Secondly another rumor from across the Atlantic alleged that France was putting together a major bailout plan of their own for Europe which was immediately condemned by Germany and was later refuted by the French Finance minister as rubbish.
And if that wasn't enough excitement the Senate puts on their snow blade and pushes the Bailout bill to their floor tonight at 9:30 EST causing the roller-coaster of a day into a broad upswing to the close led by the financials and more specifically the Regional Banks. It appears that the Regionals will be the big beneficiaries of the bailout plan.

Anyway the charts below of BBT, WFC, JOSB, and for comparison ETFC depict the effect of the governmental intervention. But a word of caution.....This sector may mightily bounce, but they may fall even harder and father as those who have been trapped get the chance to hit the exits. Take profits quickly and definitely before earnings season begins in earnest.

Also Steel got hammered again today so here's a longterm look. Can you say "Global Slowdown"?

Tuesday, September 30, 2008

1/2 way house or bounce?

I had a hard time getting my back test software to yield data on specific days of percentage loss and the following day bounce. I did manage to get the Total retracement levels of the worst historical falls. Granted the 2007-2008 data may be incomplete it does give some perspective.

Solid Bounce that it nothing to get overly bullish about. Markets are still underneath short term moving averages. However, roughly 1/2 of yesterday's fall was recaptured as the Bernanke, Paulson , and the bailout boys work feverishly to come to terms and "Calm" the financial markets.

The SPY daily still in a Bear trend
QQQQ still well below day EMA...

Patience, patience, patience.....wait for the other half of the bounce and either get out or get neutral and set up for the barrage of BAD earnings coming in approximately 3 weeks.

The Devil (-666) & (-111) = Dow down 777...

I wonder what combination of our knowledgable leaders make up the -111 part of the selloff?
Bush, Paulson, Bernanke, Pelosi or was it the summation of the House's 1/3 + 2/3 = 1 failed bailout vote? Either way at this point it is more interesting to look at What did not get creamed:

Lockhead Martin and the long term chart is quite impressive. LMT is bouncing between longterm Fib lines and has recently bounced off the 200 day EMA.

IRBT or IRobot - This could be a niche defense play with a tight stop @ $14.49.

And a couple of bottom feeders of the economy Dollar Tree and Ross Stores both held up where other discounters could not. Another notable here would be COST or Costco.

And for comparison sake in the Short that got away category - CALM.
OUCH! I guess eggs in New England are out of favor in the Fall. Note the "Should have bought Puts here" oval. I just wanted to emphasize the importance of the making of Lower Highs. This one should have been EZ Picken's.....

Monday, September 29, 2008

Is AAPL crushed?

For the speculative at heart how about some AAPL Calls to play the bounce with a stop $99.99. If AAPL breaks $100 next stop is at least $80. In other words if the Call gets stopped out immediately replace with $80 Puts.

More later on the Events of the day and the lack of our Leadership.

Sunday, September 28, 2008

Quarter's End

It is a good practice to look at different charting time-frames so I have a calender reminder set to jog my memory to look at Quarterly & Yearly charts. It is interesting to see the moving average levels as well as the recent action. Take for instance the S&P 500.

By looking at this long term yearly graph it looks as though the S&P has made a double top and somewhat retraced this year. It is fairly easy to see the moving averages acting as major support.

Now let's take it down to a Monthly time frame and focus on that double top. Is this looking more like a cup and handle now? The bottom of the cup being the 200 month EMA and the handle tracing back to the Long term Fibonacci fan line. Most importantly we can see that resistance going higher will be met at the 50 month EMA - 1311.

It's pretty obvious that the Financials or XLF will tip us off to the overall direction of the market. Here's a 10-year Quarterly. See anything interesting. I thought the close on the 23.6% Fibonacci line as well as the high of the quarter just above the 38.2% fib and yet below the 50 EMA. The bailout may move the XLF higher, but I believe getting short the XLF above $24.50 using the 50 -EMA as a stop could be decent trade.

The consumer staple stocks are sporting a cup with handle. However it could be viewed as a failed breakout with that blowoff top of this quarter. Bottom line here is the 50 EMA is crossing the 200 EMA and XLP is worth watching a little closer. An Call entry point in the low $26 range with a stop closely below the 100% fib line of $25.92 may be a decent hedge to all the short plays to be put on after the bailout is announced.