Before we get into the stock market commentary for the week, I'd like to share an absolutely hilarious stock market cartoon, with Beatles lyrics rewritten to capture the frustrations of many stock traders and investors in this tough market. Stop by our website, GreenRoomStocks.com, and let's all help each other's account from weeping gently.. enjoy! :)
Stock Market Commentary and Investment Analysis
Wall Street capped a volatile week with sharp gains Friday as oil prices tumbled and after Federal Reserve Chairman Ben Bernanke said inflation pressures are likely to moderate, and more rumors of Lehman Bros, this time that the company may be sold, and that seemed to resonate well with traders. The Dow rose 197.85, or 1.73 percent, to 11,628.06, near its highs of the session.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 14.48, or 1.13 percent, to 1,292.20, and the Nasdaq composite index rose 34.33, or 1.44 percent, to 2,414.71. However volume was frighteningly low across the board, part of which definitely has to be attributed to it being the last couple of weeks of summer, but still the anorexic volume of Fridays big move makes it pretty hard to buy into at this point, and with next week being the last week before Labor Day, it could get more volatile and potentially on even less volume.
The run-up Friday left stocks with mostly modest losses for the week that again saw a series of triple-digit moves in the Dow. The Dow is down 0.27 percent, the S&P 500 is off 0.46 percent and the technology-heavy Nasdaq is down 1.54 percent. The Russell 2000 index of smaller companies rose 12.35, or 1.70 percent, to 737.60. The Standard & Poor's 500 index finished down 6.00, or 0.46 percent, at 1,292.20. The Nasdaq composite index ended the week down 37.81, or 1.54 percent, at 2,414.71. The Russell 2000 index finished the week down 15.77, or 2.09 percent, at 737.60. Let’s take a look at a few charts:
As mentioned, the Dow made a 200 point move to the upside on Friday, bringing us right back to that all important line in the sand of the January lows and July double top. With volume as light as it has been, it is hard to imagine things going much further from here, and as we’ve seen time and time again anything is possible, so we are going to add one more long trade to the mix just in case. A weekly chart of the Dow is also attached, it gives a good gauge of the declining volume that has befallen the market here. Hopefully after labor day we see an end to this trend.
The Nasdaq gapped up Friday, and also put up a strong showing, gaining almost 1.5% on the day. However it was one of the lowest volume days of the year, and we have a convergence of the 10 and 200 day moving averages just above that have proven support and resistance points in the past, and again with volume as low as it’s been, it is hard to imagine pushing through without some more volume pouring in.
The S & P is above its January highs, but has a trendline that was defining the short term uptrend now laying just above. Also, you guessed it, volume was pathetically light on Friday.
Oil took another beating on Friday. Honestly, we thought we could see a slight pullback/consolidation on Friday, but the size of the drop was a bit surprising from where we were sitting. From the looks of things we could very well see a retest of last weeks lows, around $112 a barrel, but it is hard to imagine it going much lower here.
Gold also pulled back a little, but not nearly in the scope of oil. We also have some solid support coming in around $805, so look for a potential bounce in that area.
Financials rallied again, mostly behind the Lehman news, and some relatively favorable comments on Fannie and Freddie by Warren Buffet on Friday. However none of them held the days highs, and we are still not convinced that this bounce has much left to it. A heavy volume up day on Monday would change that thinking, but that is where we see it as of now.
In terms of our portfolio stocks Friday was mixed, as we have been playing pretty hedged, our longs did pretty well, and our shorts didn’t. However the shorts mostly underperformed the market, and still look pretty bearish on the daily and longer term timeframes. There are also a number of nice looking setups both long and short provided by the weeks volatility, and we have some pretty long watch lists, especially to the long side, for Monday. We are going to respect the bounce a little and add one new long play to the TBT list just in case it does have some momentum behind it, and will be in chat for the opening bell on Monday for the play by play. Happy trading!
Saturday, August 23, 2008
Wednesday, August 20, 2008
New Stock Investing Tips and Stock Market Commentary!
The market actually looked more bullish that we had envisioned it, but not bullish enough for us to change our thinking on where we are headed in the days/weeks to come. We started the day out with more selling, helped along by terrible showings from mortgage giants Fannie & Freddie, and although they both ended the day with 20%+ losses, the financial etf (XLF) ended the day positive, bouncing off the double bottom we mentioned yesterday. So things are once again looking pretty mixed up, and we are preparing ourselves for more chop, keeping things even long to short, which has been working out incredibly well for us over the past few weeks now, and today was a great day with us cashing out of both a long and a short position, both with gains of over 20% in less than a week. Let's take a look at a few charts:
A few stocks to watch and some great closed trades that paid for my vacation!
After a great vacation I'm back, and will be putting out the best technical analysis videos on the web out again. We will be putting even more out on the website, along with great stock picks and live chat, take a free two week test drive today!
Monday, July 28, 2008
How To Make Money In The Stock Market
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Sunday, July 27, 2008
Free Stock Market Analysis Video - Stock Market Video Blog
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
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