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Monday, July 28, 2008
Sunday, July 27, 2008
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After a week that started with financial stocks rallying and commodities such as oil and gold finally pulling back, it looks like we may be going back to normal here - see our site, http"//www.greenroomstocks.com for more free stock market analysis!
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Put another stock market roller coaster ride of a week in the books. What started as a potentially strong week for stocks, particularly the struggling financial sector on a decent Bank of America report, and government bailout news for mortgage giants Fannie and Freddie. A sharp pullback in the previously gravity free commodities certainly didn’t hurt anything either. But around mid-day Wednesday that all changed. We saw a peak and rollover of the financials and with it went the market.
Friday, and I will preface this with the fact that Fridays of late have been pretty horrific – I forget the exact number but it was something to the effect of since the bear market has started we have lost around 19% on the S & P index, with 14% of the losses taking place on Fridays. So that said, although Fridays bounce back was low volume and otherwise pretty lackluster, it could have been much worse given the condition of the market on Thursday.
From where we’re sitting here it appears the market, and financial stock bounce that began last week and carried into the early part of this week, is over. Although oil and gold did not have particularly strong days to close out the week, other commodities such as coal did, and on all the technicals do suggest that we’re nearing the end of this pullback, at least for the time being. (Keep in mind the coming election and the fact that often times oil will go down into election season, which may trump the technical signals here.)
That said, two of the four major indexes that we track held pretty major support levels, so the early part of the week could very well see some chop before a full resumption of the downtrend occurs. The Dow is still holding that trendline that I’ve been yapping about for about a week now, as well as the 20 day simple moving average, while the Nasdaq composite is still holding onto the 10 day exponential. All share a mixed signal of being short term overbought but long term oversold, adding to our theory that we could see a bit of tug of war before the trend is resumed.
Let’s take a look at a few of these commodities and market indexes to try and get an overview of where we’re at:
The Dow on a daily chart is holding the trendline and the 20 as mentioned. We failed to break out of the January lows that were violated in late June and now acting as resistance.
We have stochastics rolling down from a short term overbought condition caused by last weeks’ rally. Friday saw a slight gain, but it was on very low volume, even for a summer Friday.
Looking at the dow again, this time on a weekly chart, we can see more of the same and a little different. Notice the inverse effect of the stochastics, crossing up from an oversold condition caused by the big drop since late May, at the 50 week simple moving average. The 2008 lows that were just mentioned as resistance are also converging with the 200 week simple moving average, making that area that much more powerful in terms of resistance.
The S & P by comparison, does not look as good as the Dow. Although we had actually broken out from the prior 2008 lows for a couple of days, Thursday sent it shooting down through and below, and Friday it failed to get above any support levels, so we are now looking at lots of resistance overhead. MACD and stochastics are also both pointing the way down on this chart.
The Nasdaq looks a little better than the other market averages, but by no means bullish. Volume Friday was again very low, we are still overbought on the daily chart, but are holding most support here.
The gold index bounced off its 100 day simple moving average on Wednesday and after a few retests looks like we have some solid support at the 917 level. We do also appear to have some resistance in the 935-940 range.
Oil has now pulled back to the same 100 ay simple moving average where gold found support. Stochastics on all time frames show a now oversold condition that may attract some new speculators who were afraid to buy in when it was so extended. Again, keep n mind that it is coming into election season.
We had a very nice week in terms of our portfolio stocks, watchlist stocks, and chatroom calls. We are down to only a few open positions after taking profits in a couple of longs and one short, also stopping out of a short at an even trade. Not bad for such a choppy, mixed up market. The volatility, while many continue to whine about it, continues to give us more than our fair share of great intraday and short term swing trades. Airlines, financials, and commodity plays have been trading in such big ranges that those able and willing to get on for the ride can and have made some phenomenal trades.
As mentioned this is most definitely a stock pickers market, which suits our fancy just fine. We are adding two new short plays to trigger and one long for Monday in the end of day portfolios, and have a few dozen of our favorite trading setups listed in the quick pix watchlists above. Enjoy the ride, and happy trading!
"Once we believe in ourselves, we can risk curiosity, wonder, spontaneous delight, or any experience that reveals the human spirit."
E E Cummings (1894 - 1962)
Wednesday, July 23, 2008
Stock Market Investment Analysis - Stay On The Right Side Of The Trade!
Market Outlook
A dog day of summer...
From yesterday's market outlook:
“We do have that 11,700 ceiling just above on the dow, and volume is still fairly small, so tomorrow could see a morning pop followed by an afternoon selloff.”
Wednesday was pretty much what we were expecting – a low volume drift upwards with very little momentum or conviction in either direction. Actually a pretty characteristic mid-summer day for a change.
In terms of the market averages all had positive days, but all have the look of a ball that’s thrown in the air that is starting to run out of momentum and start it’s descent back to earth. The Dow came to within 2.5 points (On 11,700) of our upside target, before turning tail and heading back down. The Russell and Nasdaq composite averages also came to within less than a percent of major moving average resistance before turning back down.
The VIX continued to drop, bouncing off support right before our downside target mentioned in yesterdays outlook and video. It has found support at this level about 6 times in the past two months, and each time has gone up for the next few days following the retest, so that would certainly be a logical scenario.
Financials are looking toppy once again, although there were still a number of very strong smaller regional financial banks. This may be just short covering, but the charts rarely lie and they do look strong on a few.
It was a very nice day for the majority of our portfolio stocks. The only dull spot was a loss on our BIG short trade, but our gain on SIL, which was stopped out with our raised stop in the last few minutes of trading, more than made up for it. A few of the newly triggered stocks look very good here, we are playing it safe and raising stops wherever applicable, as this is just not the market to be taking big chances in. WE are going to add one new short to the mix tonight, and will see how the market acts tomorrow.
Thursday should be telling – and could go a number of different ways. It is completely feasible to see another low volume, low conviction day where nothing moves much. As we have seen recently a major selloff is can occur at just about any time, and there are certainly no shortage of reasons for it. Now we are in overbought territory, and in a bear market that’s about all you need. That said if we can break out above the 2008 January lows on the Dow, we could see a big rally.
Whatever the case there are a number of very pretty charts out there both to the long and short side, although more so on the long side. This is still very much a stock pickers market, and we have been picking very well lately. Last nights watchlists contained 6 stocks that gained 5% or better in the long watchlist (2 of them over 12%), and 4 that lost over 5% on the short watchlist. There are again a number of nice setups that could produce some big winners tomorrow, and we will be in the chatroom for the play by play, which should be interesting.
Have a great evening.
Quote of the Day
"The foolish man seeks happiness in the distance, the wise grows it under his feet."
James Oppenheim
A dog day of summer...
From yesterday's market outlook:
“We do have that 11,700 ceiling just above on the dow, and volume is still fairly small, so tomorrow could see a morning pop followed by an afternoon selloff.”
Wednesday was pretty much what we were expecting – a low volume drift upwards with very little momentum or conviction in either direction. Actually a pretty characteristic mid-summer day for a change.
In terms of the market averages all had positive days, but all have the look of a ball that’s thrown in the air that is starting to run out of momentum and start it’s descent back to earth. The Dow came to within 2.5 points (On 11,700) of our upside target, before turning tail and heading back down. The Russell and Nasdaq composite averages also came to within less than a percent of major moving average resistance before turning back down.
The VIX continued to drop, bouncing off support right before our downside target mentioned in yesterdays outlook and video. It has found support at this level about 6 times in the past two months, and each time has gone up for the next few days following the retest, so that would certainly be a logical scenario.
Financials are looking toppy once again, although there were still a number of very strong smaller regional financial banks. This may be just short covering, but the charts rarely lie and they do look strong on a few.
It was a very nice day for the majority of our portfolio stocks. The only dull spot was a loss on our BIG short trade, but our gain on SIL, which was stopped out with our raised stop in the last few minutes of trading, more than made up for it. A few of the newly triggered stocks look very good here, we are playing it safe and raising stops wherever applicable, as this is just not the market to be taking big chances in. WE are going to add one new short to the mix tonight, and will see how the market acts tomorrow.
Thursday should be telling – and could go a number of different ways. It is completely feasible to see another low volume, low conviction day where nothing moves much. As we have seen recently a major selloff is can occur at just about any time, and there are certainly no shortage of reasons for it. Now we are in overbought territory, and in a bear market that’s about all you need. That said if we can break out above the 2008 January lows on the Dow, we could see a big rally.
Whatever the case there are a number of very pretty charts out there both to the long and short side, although more so on the long side. This is still very much a stock pickers market, and we have been picking very well lately. Last nights watchlists contained 6 stocks that gained 5% or better in the long watchlist (2 of them over 12%), and 4 that lost over 5% on the short watchlist. There are again a number of nice setups that could produce some big winners tomorrow, and we will be in the chatroom for the play by play, which should be interesting.
Have a great evening.
Quote of the Day
"The foolish man seeks happiness in the distance, the wise grows it under his feet."
James Oppenheim
Thursday, July 17, 2008
How can you possibly blame the short sellers for the financial stocks losing!?!?!
Just because they blamed the short sellers for the drop in financials, doesn’t mean that the pain is over. Short sellers didn’t make the stocks go down, they simply profited from it.
And since I'm on the subject, I’m going to vent a little. For some self-masochistic reason I had cnbc on for the majority of the day in the office (usually find cnn or sportscenter more entertaining and informative) and was really disgusted at how they blamed the short sellers for the demise in the financials.
Now I have caught a bit of flack from people over the past few months for being too bearish, and while we have had a bearish outlook on this market for quite some time now, and have voiced that here as I feel it our responsibility to call things as we see them, and for one reason only. We feel it our responsibility to help the individual investors, because the "experts" mislead for their own gains at every turn. We have been bearish on the financials for months, and we, as well as a number of our subscribers have made some excellent trades shorting these bank and broker stocks.
So back to the point. Big business doesn’t care about us, the little guy – they care about profit margins and the bottom line. Have you ever missed a payment on a loan and had the late fee lifted because they felt bad for your financial situation? Or had to take a pay cut and had the bank lower the interest rate to help you out? Surely you haven’t – it doesn’t happen! Why hasn’t it happened? Because the almighty dollar is a lot more important than any individual person to these companies. When looked at in a big picture, that is exactly where this whole sub-prime mess and credit crisis came from – financial institutions trying to make money on the backs of individuals who they knew would have trouble making payments down the road.
So if banks and financial intuitions can profit from the potential demise of individuals, why should we, the individuals, be penalized and demonized for profiting from the potential demise of these financial institutions? They see opportunity, act on it, and get paid handsomely, so why shouldn’t we be afforded the same opportunity? I have heard it said that many people look at shorting stock as un-American, but isn’t NOT being allowed to short stock, to see an opportunity, and have the guts, brains, and resources to act on it, by definition, un-American? Life liberty and the pursuit of happiness right? Not to say that money can buy happiness but watching my money slowly drain away while these cnbc ANAL-ysts tell me to buy and hold would certainly make me pretty unhappy. We didn’t make the financials go down, the financials made themselves go down (and the rest of the market with it) by using shady business practices and making risky investments. I for one have no sympathy, and do not appreciate being a scapegoat for the irresponsible business practices of greedy, mismanaged and misinformed companies.
And since I'm on the subject, I’m going to vent a little. For some self-masochistic reason I had cnbc on for the majority of the day in the office (usually find cnn or sportscenter more entertaining and informative) and was really disgusted at how they blamed the short sellers for the demise in the financials.
Now I have caught a bit of flack from people over the past few months for being too bearish, and while we have had a bearish outlook on this market for quite some time now, and have voiced that here as I feel it our responsibility to call things as we see them, and for one reason only. We feel it our responsibility to help the individual investors, because the "experts" mislead for their own gains at every turn. We have been bearish on the financials for months, and we, as well as a number of our subscribers have made some excellent trades shorting these bank and broker stocks.
So back to the point. Big business doesn’t care about us, the little guy – they care about profit margins and the bottom line. Have you ever missed a payment on a loan and had the late fee lifted because they felt bad for your financial situation? Or had to take a pay cut and had the bank lower the interest rate to help you out? Surely you haven’t – it doesn’t happen! Why hasn’t it happened? Because the almighty dollar is a lot more important than any individual person to these companies. When looked at in a big picture, that is exactly where this whole sub-prime mess and credit crisis came from – financial institutions trying to make money on the backs of individuals who they knew would have trouble making payments down the road.
So if banks and financial intuitions can profit from the potential demise of individuals, why should we, the individuals, be penalized and demonized for profiting from the potential demise of these financial institutions? They see opportunity, act on it, and get paid handsomely, so why shouldn’t we be afforded the same opportunity? I have heard it said that many people look at shorting stock as un-American, but isn’t NOT being allowed to short stock, to see an opportunity, and have the guts, brains, and resources to act on it, by definition, un-American? Life liberty and the pursuit of happiness right? Not to say that money can buy happiness but watching my money slowly drain away while these cnbc ANAL-ysts tell me to buy and hold would certainly make me pretty unhappy. We didn’t make the financials go down, the financials made themselves go down (and the rest of the market with it) by using shady business practices and making risky investments. I for one have no sympathy, and do not appreciate being a scapegoat for the irresponsible business practices of greedy, mismanaged and misinformed companies.
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