Philly Tape Reader

2010/5/7: Market Analysis

2010-05-09T19:15:00.000-07:00

Market ETF Analysis
5/7/2010
PhillyTapeReader
ccapewell@hotmail.com

The market made a historic long awaited correction last week and broke the uptrend we saw starting early February. There has been severe technical damage inflicted on the overall market last week as you will see in the charts below. Since this happened in a matter of 4 days, I believe we are in for a few weeks of choppy /volatile action as the market digests recent events.
Bears are in complete control .

Warning signs this correction was coming:

1. Higher volume long red bars followed by weak higher moves on less volume
2. Exuberance, "frothy" chatter on CNBC and all major media outlets
2. VIX 15-20 area historically low.
4. General complacency, very quite unanswered move higher

SPY (3-month-chart)

The place to go short was the break of 118 on the SPY. If you were like me, your finger was on the trigger but you hesitated because of the unanswered strength of the bulls. I was stopped out of my long positions last Tues 4/27 and have been in 100% cash ever since. It’s too late to go short right now, I will likely stay in cash for a while until dusts settles and patterns emerge.

The market is clearly broken. Notice the massive red volume bars on the SPY. In my opinion I think we need a major news item to stop this selling. Once this happens we can look for a bounce and probably re-short the market or go long GLD, UUP.SDS, DUG or QID after a few days of consolidation.

I don’t think it’s smart to try to catch this upcoming bounce. From a momentum perspective, there is really no trading range to manage risk. The ranges are way too volatile. I will probably wait for a trading range to establish and re-short in a week or 2 on the break of the bottom of the next range. If the market magically turns around, I will change bias to long and look for long set-ups.

Here’s what I expect in next few days/weeks:

1. Wild volatile trading ranges for the next week or two (good for day traders)
2. Rising wedge patterns on all long etfs.
3. Falling wedges on short-biased ETFS UUP, VXX, GLD ETFS
4. Tightening range toward top of rising wedges on long ETFS. When these apex’s get busted I may put on a few shorts.

GLD: If you have to be anywhere, right now, Gold is the place to be, I would buy after a few days of weakness in tandem with a market bounce. This massive cup pattern tells me long-term GLD goes to 135.

GLD target 135:
High of CUP = 119, low of cup = 104
119-104= 16. 16 plus 119 = 135

UUP (Dollar)
Look at the massive move in the dollar! The dollar seems to be overbought, but could continue to be overbought for quite some time. Any pullback in the dollar will add fuel to Gold and Gold miners (GDX). We should also see a bounce in the market. The RSI is registering at 71.5. Obviously traders have pushed this up in the wake of the Europe debt crisis. Look for a pullback, I’m guessing a flag develops.

DIG (Ultra-long Oil and Gas)
Very weak, I would play DUG on the break of the apex of a rising wedge which may form in the next few days/weeks. We are already below the 200-day, the 34-35 range should be resistance.

SMN (double short basic materials)
The massive volume coincides with the sharp downward moves we’ve seen in steel stocks. This ETF is extremely volatile and I would stay away until a tighter range is established to buy from.

GDX: (gold miners)
Out of any Stock based ETF, GDX is probably the strongest, although I would be careful based on the overall market weakness. This is a choppy ETF, recent volume doesn’t paint a clear picture. I’m guessing it will break out above 51 on any market strength due to the strength of gold. Gold stocks have been relatively strong lately.

XRT (Retail)
Major damage was inflicted on the retail sector last week. I would re-short on a bounce/rising wedge pattern

TAN (Solar).
Very weak sector. Look for a rising wedge.

BOTTOM LINE:
Short-term traders should have been stopped out of any longs 3-4 days ago. We could put in a bounce soon, or indexes will bleed further. It will be hard to turn this market around without a news event. Look to re-short the market (SDS, QID, short-XRT) after we see those rising wedges/continuation patterns in long based ETFS. You could also go long GLD, UUP on pull backs. There is nothing to do but sit on cash for now and let things unfold.

Current Positions/ New Adds

2009-08-27T14:07:00.001-07:00

I was basically flat today due to TSTR debacle. I Added STAR and C.

Current Positions:
AMX (Foreign Mobile phone Carrier - hold from breakout play)
Bought@ 27.04 08-21-09, Close 46.76

GLD (Weak dollar play - trend continue play)
Bought @ 93.55 08-24-09, Close 93.15

C (Financials - trend continue buy)
Bought @ 4.89 08-27-09, Close 5.06

INTC (Tech - new trend buy)
STAR (TECH Mobile Internet Tsunami Play - dip buy)
TSO (Refiners - new trend, bought on weakness)
WNR (Refiner - new trend bought on weakness)
MTH (Housing - breakout)

Intraday: Bought TSTR @ 1.42 stopped out @ 1.35

Changing things up

2009-08-23T20:53:00.000-07:00

I will be buying the following on tomorrows open:

GLD, TSO, INTC

I currently own:

AMX @ 27 10%

DUG / TNA UPDATE

2009-07-06T16:17:00.000-07:00

Did exactly what I predicted. You could have gone short today on the macd divergence & cross. If we get a gap down I would play these for a short term bounce in the market. I would by TNA if it gapped down. We'll probably bounce here and then head back down next week.

DUG

TNA:

Going Lower for a day or 2: Play with TZA

2009-06-30T19:53:00.000-07:00

I have a short term Bear bias. I have a few long set ups but will mostly be looking to catch some moves to the short side. Hope for a flat to slightly higher open and will put on a short etf on any sign of weakness with stop above recent high.

TNA: looks like its ready to die.

DUG Update:

Here and a little lower looks like the sweetspot. If we go a little lower, buy this thing on any type of revesal and put your stop below 18.11.

SETUPS

2009-06-29T19:37:00.000-07:00

I'm seeing a lot of nice continuation setups which makes me think there is another day or 2 of upside in this "window dressing climb the wall of worry rally". The energy sector short play still looks intact. Maybe we get upside tomorrow morning and then a reversal end of day.

Here are some setups I'm looking at:
a short

and a long

DUG

2009-06-28T21:52:00.000-07:00

I bet DUG makes another move very soon.

SETUPS

2009-06-28T21:30:00.000-07:00

Seems like we are going to head lower although there are some stocks that are bucking the trend.

a short

and some longs

short:

POSITION TRADE: BEC -1% (STILL OPEN)

2008-12-31T13:43:00.000-08:00

I took a position trade on this breakout play. I've been underwater ever since I bought. At least I have a very small position size on. I can't seem to win on these trades, but then again the current tape is lousy and I shouldn't even be in these trades until vol picks up. i will probably get hurt on this Friday by the looks of how this closed.

DAYTRADE: SOHU +1.5%

2008-12-31T13:20:00.000-08:00

This trade worked out but was very, very slow and boring. I should have traded oil, but my capital was tied up.
120% Buying power

DAYTRADE: SKF -1.3%

2008-12-23T13:43:00.000-08:00

This trade never really got going. I had to bail for a small loss as it looked like it was breaking down. Anyway, I was at about 110% buying power on this. Probably should have just stayed out of market today.

DAYTRADE: SMN + 4.12% SUCCESS!

2008-12-18T14:41:00.000-08:00

I used about 40% buying power on this and had a nice trade. Made back all losses from earlier today and went positive for the day. Notice how the trade held above the 5 EMA. I knew there was a 50% chance of the 5 ema breaking but also knew there might be a nice reward if it held. Since I had already taken profits it was easier to hold on 2nd half.

OVERNITE TRADE: XHB +1%

2008-12-18T14:28:00.000-08:00

I felt momentum waning in the overall market and was lucky to close at a slight gain.

OVERNITE TRADE: ESV -6% OUCH

2008-12-18T14:10:00.000-08:00

Its took me a while to realize what the hell was going on, I should have sold at the trendline break sooner but I thought it might bounce at the previous major low. To no avail it kept going. This was a sloppy trade and was a mistake. Good thing my position size wasn't huge.

OVERNITE TRADE: NVLS -3.6%

2008-12-18T13:51:00.000-08:00

This just never got going, took a loss today in the morning.

AUY +4%

2008-12-15T15:45:00.000-08:00

Again, I got lucky on a stop limit order at the open and bottom ticked the stock before it ran and sold at 5% gain. I was in it for about 40Min

BULLISH ACTION!

2008-12-13T17:57:00.001-08:00

It was impressive the markets came back again on Friday. I took the day off to settle my mind a bit, but next week I plan on betting big on the upside if we start to run.

Check out this back test on SSO.

Check the 5 minute chart for SSO

DAYTRADE: NYX -1.8%

2008-12-13T17:00:00.000-08:00

this had a lower probability of working as it was after 11am, but I thought the markets were going to run, turns out this is the exact time they failed before cliff diving 250 points.

so I'm glad I cut my losses. I had smaller share size on this one so it didn't sting that much.

DAYTRADE: GG -1.2%

2008-12-12T19:46:00.000-08:00

I used about 1/3 buying power on this one. I put a 2% trailing stop on it, and my losses were kept pretty small. Gold was strong this day, but it looks like I top ticked this one as momentum slowed. The red bar is usually a bad sign for momo, and I knew I lost on this one.

AUY: Overnite Hold +13%

2008-12-10T16:47:00.000-08:00

This trade worked out very well. Gold stocks showing strength with the breakdown of the dollar. I bet 1/4 of my account and landed a nice trade

Position Trade: VRGY + 3%

2008-12-10T13:55:00.000-08:00

OUT, Thursday

This trade was kind of annoying. I had to wait all day for this to move. anyway, my current strategy is slowly morphing out if day trading to 1/2 daytrade 1/2 position trade. depending how this opens, I will prob sell tommorow.

POSITION TRADE: AAPL +5%

2008-12-08T17:40:00.000-08:00

This worked out well. I got lucky and put a limit order in for 96.50 which hit right before the stock took off. The stock gapped up right past prior resistance.

Position trade: DIG +10%

2008-12-08T15:57:00.001-08:00

Sold some DIG today for a 10% gain

booyah. I can't trust this for another nite.

DIG position trade:

2008-12-05T13:39:00.000-08:00

Well so far so good on this one. Ran 2% after I bought. Closed at highs of day which is usually good for an over nite hold. A lot of this trade is me trying to get back for HIG which could end up backfiring. The market does seem like it wants to go higher on today's turnaround.

nice HAMMER on daily.

5Min

HIG Daytrade: Got screwed again, damn this sucks

2008-12-05T13:24:00.000-08:00

I am a moron for even being in this one on margin. I lost a good 3% of my portfolio. and the thing ran 40% after I got out. I would have made over $3K, instead I took a $300 loss like an idiot.

I was doomed from the start as emotions overcame discipline, I had no place for a stop and just tried to catch the momentum. I should have at least waited for an entry on the 1m. Dissapointing this name ran 40% after I got out. Oh well, there's been more and more of these close calls so I think I'm getting close to catching one.

Daytrade: GS

2008-12-04T16:41:00.000-08:00

Thought this would blast higher as this was the 3rd or 4th test. Bought at around 11m whihc is when volume starts to drop off, probably shouldn't have done that. Chart is a but coppy in hindsight.

any stopped out for about 1% loss

Day trade: QID

2008-12-02T15:23:00.000-08:00

I thought this one was going to take off. This isn't my normal ideal setup but I took it anyway. I saw big volume coming in and new it was going up for at least a few minutes. As soon as it printed that reveral stick over 84 I knew it was coming down. Anyway, glad I moved up my stop. Netted about 1.5% on the trade.

Daytrade: C

2008-11-28T10:12:00.000-08:00

#2 Trade (FSYS) Cancelled

2008-09-30T11:33:00.000-07:00

Due to poor price action, the pattern is broken and this is no longer a setup.

Removing from focus list.

Here is the chart

#3 TRADE --> THS (Over 30.35)

2008-09-28T17:11:00.000-07:00

I will look to buy THS over 30.35 . Solid uptrend and volume patterns.

here is the chart

stop close below 28

#2 TRADE (FSYS) Update

2008-09-28T16:49:00.000-07:00

FSYS printed a down day on higher volume. The gap down on higher volume is making me rethink whether the uptrand will hold.

The MACD still looks good and it is still in a bull flag formation so I will leave keep it live. The buy point has not been triggered yet

Here is the chart:

#2 trade: FSYS.

2008-09-25T17:57:00.000-07:00

For my 2nd trade I am stalking FSYS.

Here is the setup: Consolidation-esk pattern and a test of a rising 50-day. If volume comes into this stock on a move past 54, you should be golden. Looks like a big long flag.
Buy over 54.
look to sell under 50 day ma.

Closed CMG at 56.67 +15% profit !!

2008-09-12T17:47:00.000-07:00

Closed CMG at 56.67

check out the chart. Doesn't get any better than this ~15% in 4 days

BEFORE: sold @ 67

AFTER: Bought back at 56.67

#1 Trade CMG

2008-09-09T17:09:00.000-07:00

This market continues to get pounded short with early cycle movers like whirpool, HD, & Sears as well as homebuilders showing some strength. Maybe buy these on a dip to 20-day ema if a pattern shows up.

Commodity related stocks are getting destroyed. Maybe reshort these if they rip up to 20 day MA. I think these might bounce soon as the time to short was today or yesterday

I think we are headed lower and will stay short biased until that changes. This is mostly a day trading market, position trades may work if done right

Here is an idea from my watchlist: CMG
SELL STOP: <67>