Week of October 27th:
Wed p.m.-
Yesterday, markets rallied 880 points. Today, a 300 point rally reversed to close almost flat. This is a very bullish sign. The euphoria became excessive because we had rallied almost 20% in 2 days. So the late day reversal was a definite shakeout of the fast money, weak hands. I have a feeling US markets will gap up over 300 points on Thursday, opening right around todays highs. A classic shakeout move. I didn’t have to look at more than 1 or 2 charts to see this: POT & AAPL
It’s time to shift away from an ETF/macro strategy to a stock specific trading strat. Conversely, ETF trading should probably become more difficult as discretionary traders shift their focus to stocks. More importantly, I feel like we have entered nirvana for swing trading after 2 weeks of brutal counter-intuitive gaps that definitely crushed a lot of position/overnight traders. Experience reminds me that these environments will experience brutal shakeouts but will also be extremely rewarding if managed properly.
Excessive strength, usually parabolic moves, must be used to close positions, with bids placed at the prior breakout zone to re-establish as well as solidify/establish the technical trend. You and thousands of other professional traders will work collectively to run a classical stock market operation. This is market operations 101. Weak hands will destroy trends in the short term, requiring 2 or 3 days of “repair” from the damage. Review this reality with maestro.
Rising volume on most charts, especially coal stocks. Unbelievable strength in rails and coals. Indications of the market discounting a global economic rebound in 6 months? Highly likely. But near term, this rally, even though there is rising vol. across the board, is an oversold bounce to “test” recent technical breakdowns. It will take a lot more work to put in a long-term bottom, but we definately have a tradable one…
AGU- S1 complete, possible H in progress. Good volume. d-SAR triggered Long on Wed.
JPM- Channel remains $35 – $50, and appears ready to rally to top range
JRCC- Target $25-27
POT- > 81.50 breakout through d/t line.
MOS- Already through equivalent trendline as POT facing now.
AAPL- Fib. resistance levels: 107, 115, 118, 122, 130.50 Target = 122-123 (a.z.) to test recent breakdown
ABK will get to $4.50 on this move.
AGM- Great action 2nd low is in. $3.55 is b/o confirm. for a run back to $10
AMZN- Clear shot to 63.50
BAC- Target $29
BIDU- Target $253
BTU- Target $44.50 (resistance at $42.25)
EOG- trgt $82, $93
EP- look for 2x bottom confirm.
FNM/FRE- These look fishy, something is strange here….are these stocks to disappear or not?? Seems like someone may know something…FRE pushed through key t/l resistance.
GOOG- Range contraction at middle t/l of d/t channel. >370 is b/o target $400
GS- S2 complete to a very bizarre looking H&S reversal (load up)
MS- Exact same technical conditions as GS, same bizarre looking inverse H&S (load the boat)
ISRG- nailed expected downside target of $151 and closed gap. Too bad you saw it at $260 and only took 12 points off that short.
Monday-ETF:
DUG- Ready to go parabolic? Target $140
DXD- Breakout on Friday. Target $140, $145
EEV- Going to 220 – 250
QID- Breakout. Has a lot of room if market continues to fall.
SZK, SIJ- Breakout. (ultra short consumer goods, industrials). SIJ target 200, 280
SKF- Target $280. First resistance $210
SMN- 130, 170, 240
SRS- 225
TWM- 172, 225
DOG- 98, 109, 114
UYG- $5.90 – $6 support
DDM- $25, 14-15 support
DIG- $16.90, $10.80 support
STOCKS:
ABK- H&S very compelling. Don’t be late.
AGM- 2x bottom? Momentum rising, creating bullish divergence.
AMZN- Another panic buy at $35-$37
BIDU- In deep shit technically. See if there is a “save”.
CAT- Buy $25
CLF- 2x bottom?
CNX- Monitor situation
CRM- Massive support $21.50
It feels like the market was “saved” on Friday from an all out disaster. Based on correlation with yield curve, equities should probably rally start of week if rates continue to bounce after putting in 1-day reversal bars. Five year should go back to 3%, which will push stocks higher. Let’s see how Asia opens up tonight. If there is further panic selling in US, find longterm support levels in AG stocks.
Nasdaq closed BELOW it’s 30yr rising trendline. Last time this happened on a Friday, the following Monday stocks crashed. NDX looks like it’s in trouble whereas OEX and SPX didn’t suffer as severe technical breakdowns. Focus on long side should be on commodity stocks.
SPX support at 850. VIX signalling bottom near. Treasury yields put in significant upside reversal on Friday. This is very bullish for stocks.
NYSE new lows still not reading extreme but new highs are.
BKX working on bottom. 47 critical support.
CRB support at 236.
Week of October 20th: The week when SNL signalled a market bottom.
FRI:
a.m.-
Markets locked limit-down across the board. Overnight markets plunged between 9% – 12%. US markets opening down about 6%, so there’s some slack for further selling.
VIX 88
TRIN 22
Incredible readings!
THUR:
a.m. -
DUG- Target $130
DXD- Buy ~$79-80
SKF- Target $210, $285. Resistance $182. Support $132-$135, $126, $117
TWM- Target measures $190-200
SMN- Pennant w/$80 apex. Target measures $226 with Fib Proj.@ $244
SRS- Target measures $224
DEE- Double Short Commodity
DDM- Double Long Dow
DTO- Double Short Crude
Metals forming S2:
CLF ~$26.40
This LONG TERM chart of the Nasdaq makes Lou want to throw up
Airline index at t/l resistance, inside possible weekly bear flag, setting up for 20% drop. Look on short side. If these can’t rally with oil plunging, they’re toast.
Stocks (from Monday morning)-
STI: Sitting at major a.z. for low-risk buy, target 1 $51 (a.z) target 2 = $70 (upper secondary boundary)
ICE: Massive l/t H&S top but near term asc. tri. Breakout THROUGH $90. Targets 97, 99, 111. H&S target $31.
MA: Trading below secondary d/t line, setting up possible base to rally– alpha zone = $215
MON: Bear flag. Could spike to $89, then $94
CAT: 2x bottom 39-40. Volume qualifies. dSAR = $38 (currently Long)
AGU: Possible 2x bottom at $33 measured move = $64.
FSLR: Wedge at Fib Proj. measures to top of gap ~$40. Ideal SHORT ENTRY $155
PCU: Bear flag, rally to $17
PCX: Rally to $24
WLP: Consolidating below $24 (major breakdown). Short $44 stop $45.50 target <$20
ZION: Heavily shorted and sitting on a.z.
ABK: Buy $2.05 – $2.25 (r shoulder) NO SHAKEOUTS!! STRICTLY BUY ON WEAKNESS STRATEGY WITH PROFITS IN PARABOLIC MOVES WITH INTENT TO REACCUM. THIS IS A MASSIVE BOTTOM!!
AGM: Buy $3.90 risk .30
FIG: will run to $10 if resolves current contraction
USB: Bear flag at critical technical level.
NCC: At CRITICAL technical level. Major break in either direction pending!
OPY: Bull Flag on daily?
SIVB: Critical technical level. Could spike to $60 – $67. Major support $46. $53 = a.z
SLM: Looks like a SHORT for retest and possible new low. Or could breakout from bull flag for run to $15 (100d-EMA) - $20 (200d-EMA)
STSA: Low risk SHORT $12 target test of lows around $7.
STT: Struggling to recover secondary bands of primary d/t. Break below $38.80 will trigger cascade. Recovery of $46 will trigger squeeze to $56 or $64. Acc/Swing bearish
TROW: MASSIVE top completed. Measured move $30 (log) or $23 (arithmetic). Idea entry $48 or $43.50.
MS: Re-test $10?
RIMM: Range b/w $55 – $67.50. Possible med erm bottom but <$55 will see $50
AAPL: Buy $85-$86 SHORT ~$122 (a.z.)
AMZN: Short $60-$63 measure move = $29
BIDU: Monitor for upside breakout to $334 in long-term descending triangle with base at $201
CELG: Massive top? Monthly 2x ~ $70-79. 2008 high bull trap. Qrtly chart bearish. Use 24d-SMA for SHORT entry ~$60. Target 1 $32.50
CHK: Upside target $30 or downside trgt $8
EVR: At major a.z. Range is 12 – 18
CLF back to $45, FCX (if holds $30 will rally to $44), CNX back to $51, DE @ primary long term t/l will go back to $100, APA, X, AA, CAT, EP (’03 low $3.33), FCL (2x bottom b/o $25 BUY $19),
ETF’s -
QID: Making pennant. Boundary levels for Monday are $65.25 & $82.40
QLD: Basing b/w $29 & $43. T/L $39-$40, pSAR @ $40.75
SDS: Range boundaries for Monday are $92 & $106. Possible alpha zone ~$85. On 10/3, was $75 within pennant before b/o to $130. That was an identified move. Holding above $90 suggests follow thru upside.
SKF: Range boundaries are $114, $129, $150. $117-$123 MA convergence zone. Breakout above $151 with a target of $200. Heavy support ~$113.50, $115-$117
SSO: Range contraction. $28.50 & $37.25
UYG: Mon & Tue last 2 days inside pennant. Mon boundaries are $9.50 & $10.90. Tue boundaries $10 – $10.50. Upside $13, $14, $15 (a.z.)
URE: Defending and repelling new low. $11 could be low-risk long against new low if market does not break lower, first target $15, 17.
XHB: Low risk long entry. First beneficiary of liquidity flood and lower interest rates. GREAT CONTRARION LONG.
UNG: Could rally from $30 to $35. Nice contrarion long.
USO: Buy $49.50 – $50
The direction of the impending market break will be forecast in the bond market. Five year TSY yield index has been perfect in predicting stock market direction. If yields start to rise market will rally unless the selling is general liquidation of assets into gold.
Gold declines or rises with yields.
INDU: Most sector indexes look like this chart. Deeply oversold after cascade but forming pennant which could become a short-term 2x bottom and/or bull trap. This is a critical week for determining what the last 2 trading weeks of October will look like. A break lower from here could be catastrophic. However, the SNL jokes about throwing stocks away and how shitty the market is right now and why everyone should sell anything that can be sold is probably a good indicator that we’re very close to the bear market low. A downside break from pennant measures to 6000. 9495 and 9795 are heavy areas of resistance on the way up if there is an upside break.
Fib Levels for upside retrace: 8725, 9090/9100, 9450 (dSAR = 9525), 9800, 200d-EMA = 10107
Prior major S&R: 7400 (7197 ’02 low) – 9000 (9043 channel high ’02)
a.z. = 8700-8800 (ALL LEVELS TAKEN OUT WED.)
Deutsche BNK Energy Index (.DXE):Beautiful GANN fan lines using late ’02 lows on daily.
Bank Index massive 2x bottom in later stages. 55 seems to be strong support. Perhaps consider creating baskets to trade against BKX levels.
CRB heading for 240 (current 283). Do not bottom pick commodity stocks just yet. Daily chart looks very bearish.
Defense (DFX) deeply oversold but forming pennant. Watch for directional break for market direction.
Looks like asset managers took heavy damage past week. This was only pocket of strength but no more. There needs to be a “save” this week or risk another cascade sell-off. I think bearish interest could be at an extreme, so market could squeeze several times before taking to new lows. Watch WFC for leadership. Wells could be consolidating a neckline test with multiple MA convergence below prices $30 (a.z). Break above last weeks high could lead market into a surge higher. Good buy $27.
XL Capital owner margin called out of 80% ownership. Forced selling completed. Stock is cheap below $10. I doubt test of lows. Regionals continue to show accumulation. Monitor CBBO lvl2 & CRBC. CNS made a new low which should be followed by sharp surge higher.
Theme: Commodity stocks looking extremely attractive long term buys but are in clearly well defined multi-month downtrends, most stocks went through their secondary d/t lines so I suspect there will be a resolution one way or the other. Ultimately, as these secondary breaks are mostly false, I think prices will rally to recover those lines. But past weeks action puts all of them in tight pennant/wedge type patterns with some volume problems but generally qualified, hence “resolution” one way or the other.
EOG: 2nd line @ $73, wedge top @ $77, dSAR went L 10/17 w/ spike high to 77 close 69. Problems w/ volume qualifier here so likely upside breakout to massive alpha zone at $97-$100
Start accumulating positions:
FITB: 2x bottom on wkly?
FNM: logarithmic shows rising wedge on daily, prices currently at lower band. dSAR to Long $1.35. Breakout >$1.31. MA breakout 1.085 and 1.175. Upper band for week at $3.50 – $3.85 (rising wedge). Gap at $2.75
FRE: No gap so looks like FNM chart but instead an inverse H&S with a very steep downsloping n/l. dSAR reversed to L last week. Close = $1.15. MA’s @ $1.21 & $1.25
Daily: logarithmic illustrating cup & handle with dominant raff regress. channels, pitchfork and multiple positive divergences in momentum and money flow. Handle taking characteristics of FLAG consolidation with volume almost totally gone. Expect volatility burst. Long stock. To add some gearing to trade: Sell some puts and buy calls.
Prior Week Recap:
Range contraction continued, setting up possible consolidation of downside break earlier in the month. It appears more and more likely we will have a record breaking, history making Wall Street crash. Every country has implemented temp. stock market closures. If consolidation followed by upside breakout, then we could see a major continuation rally. However, going into Nov. elections, I expect market to make a new low before heading higher.
Let’s focus and make sure losses are contained this week on negative days. Losing $19k and $9k on Tues. & Wed. was unacceptable. So what if Monday was up $65k. Glad to have followed up on Thur. & Fri. with $24k and $12k, for a strong week.
10 more trading days in October.
To avg. $5k per day would result in a $140k month. Let’s get there without taking excessive or uneccessary risk. If I stopped trading for the rest of the month, I’m up $94k. But this is the time to press it because trading conditions will not remain like this after Thanksgiving. The market will be fruitful from now until Thanksgiving, then it’s quiet until late January to May.
Week of October 13th:
WED am:
INTC numbers fine. No reaction, maybe some relief. Market held up well after Monday’s monster. Lots of inside or outside days, some wide raning some compressed. In hindsight, it was a good reaction. Lots of technical b/o’s held up. NCC looking amazing on the chart. Gapped through t/l and could run to $5 really quick. Trading $3.26 afterhours. Up .16.
Sell AMZN SHORT into strength. Their chart says their earnings are going to be a bomb
BIDU support $236
Check APA intraday 15m 30 days. Is that a solid inv. H&S pattern?
CHK follow thru?
Sell FSLR SHORT if re-test of $155
CAT’s a buy at $45
Steel stocks could continue: AKS,
Financial’s focus on long side, geared with some big cap high beta tech (AAPL) when appropriate.
BAC target $30, $33.50
UYG target $15.
WFC target $38. Entry any weakness or $32 L
ZION > $41 or $35/6 L
ABK 2xbottom in progress. Target: $10-$11.40 – Continue trading as a core holding, flat a.m. and reaccum later.
MBI: 2nd shoulder in progress. No resistance until $10, 15, $16, $17.70
AEA (thin) but looks like it’s going to squeeze really hard. >$2.65 is a breakout.
AGM targets: $15, $21.40, $22.75 Continue trading as a core holding, take early profits and reaccum. First major resistance is $9
AIG: SAR = $3.27
CMA, BAC – 2x bottom l/t. Monitor for directional clues on broader sector and market.
MS: Areas of potential support $15.50, $12, $10
TUES pm:
Followed monster day with my most common error of forgetting the opening gap is the end of a trade put on in the last hour of trading from the prior day. Regardless of opinion on where the stock is heading later on in the week, that opinion is to be reserved for a new position, preferably put on later in the day. There is no excuse anymore for not hitting bids on the open.
RULE:
9:45-9:50am — All overnight positions closed in this area. Any positions beyond this time are for new positions.
12 – 1 — Some trades can be taken
3:15pm – close — Looking for any reason to establish overnight positions.
The rest of the day is just killing time in case something happens or to watch the tape as the day progresses to get a handle on afternoon direction. Tuesday, market did rally in last hour but slipped back as earnings are up. INTC had good numbers and as long as the stock isn’t gapping down, it’s a positive.
Wed’s are generally uneventful days. Plan to close any overnights and re-visit the market around 3:10
Overnight Targets:
AAPL- 123
POT- 115, 124 (SAR), 129/30, THEN to 160 (a.z.)
SDS- 94 to 85 (Fib support 107, 100)
Monday Morning:
Close out long positions, reverse position SDS, LONG SKF. HOWEVER, do not expect gap closing. More like partial retracement then rally to new highs. Looking at a 500-600 point 1 day rally. Calculate fib retrace levels on intraday. Buy size in UYG on retracement into gap.
SKF Fib support levels: 151, 137. MA convergence alpha zone $120
Short QID later with a target of 59.
Start accumulation: UYG, FNM, FRE, ABK, MBI, AGM, SLM (all closed gap, tested bottom w/ higher low), GROW,
Long QLD a.z. = 54-61, SSO target 40-42
FIG: unwind victim!!
FITB: CALLS
NOV: forced selling done. INCREDIBLE VALUE here. OIH’s could rally 50% (again, maybe wait until Tuesday)
BIDU- High BETA bounce, GOOG could test 400
CE: German chemical co..
ISRG: re-short $270 (?)
SQNM: At 200d-EMA
Regional Banks & Asset Mgr’s Expected to have HUGE % gains:
FITB, HBAN, EWBC, KEY, LM, GROW, MTB, NCC, NTRS, OPY, SIVB, STI, USB,
CRM (should go to new a.t. High), DE &/or CAT (infrastructure plays), GS, JPM, JRCC, MS (last chance under $10?), BBT, BK, BX, WFC
MA (150 is 2/3 retracement but still gap at $75)
C back to $23
DHIL: major oppty or something wrong?
Rally to be led by commodity & financial names. Big Cap tech will also show leadership.
CLF- at major alpha zone (25-30)
FCX
Futures up 29 handles.
Recap prior week- Tough week, amazing numbers on Friday. 1000 point snap back and u were downstairs. It’s ok, you were forgiven for karma errors on Tuesday and you will have a +$75,000 week this coming week. The market is going to bounce from this low we put in, but we probably head lower later in month. This is to be an oversold rally. There will probably be new lows in this downtrend.
During the prior down leg, the TRIN was constantly hitting 4.0 to 5.0. This time, during down leg, TRIN was constantly below 1.0, around 0.35 – 0.75. Bizarre.
INDU: 9750 (a.z). 9400 (50%), 9050 (38.2%)
Dow INDU Fib projections nailed these intraday extreme swing pivots. Lower boundary of d/t channel broken. Prices should and likely will recover this lower boundary and resume longer term downtrend. At a minimum, an attempt will be made.
Trend from 1990 to 2007 Top. A 9 Sigma move which equals the ’99 high projects a downside target for the Dow of 6900 by December or 6830 in November, hitting alpha zone (see monthly chart).
Short Term Target: 10500
Intermediate Term: 11850 (alpha zone)
200m-EMA = 8917
NDX upside 1900. Swing position in 2x Q’s.
OEX has tested 2002 low. Could bounce to 490-500
Oil index could have huge oversold rally. DIG, CNX, AGU, APA, EOG, EP wait until later in the week for all energy plays….
Small cap stocks put in confirmed 1 day reversal. Which ETF???
VAY: Value Line Arithmetic Index: Upside targets = 1750 then 1950
XBD: Broker/Dealer Index. 1-day reversal. Unlikely Monday’s gap will close soon. Find leaders. Could rally 50% or more in a few days.
BKX: Massive Double Bottom
On Friday, Marc was down $180,000 and in the last hour made a comeback of $320,000. That’s why I’m a trader. That is why I trade.
HANG SENG Target: 11,000 (c.p `14,000). Establish short china when bounce ending…a.z resistance at 20,500 & 24,000
- Barron’s discusses the bottoming process, saying ‘this could end up being one of history’s quintessential buying opportunities.’ Barron’s lists 25 picks in three categories. Big cash rich companies: XOM, MSFT, AAPL, INTC, DELL, EBAY, MOT, YHOO, ERTS, L. Smaller cash rich companies: NVDA, BRCM, NOVL, IACI, KBR, RNWK, NTE. Industrial Stocks on sale: CAT, CMI, DE HON, ITW, PCAR, TEX, UTX.
- Barron’s looks at master limited partnerships as an investment. MLP’s, which invest in sought-after assets such as oil fields and natural-gas processors look inexpensive and carry double-digit yields. Five MLP’s to look at are Enterprise Products Partners (EPD), Energy Transfer Partners (ETP) Boardwalk Pipeline Partners (BWP), Paso Pipeline (EPB), and OneOK Partners (OKS).
- Barron’s Commodity Corner says silver looks ready to rally. The ‘poor-man’s gold’ is off 46% from a mid-July high but it may take off in the wake of safe haven buying in gold as investors look for a cheap alternative.
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