Stocks for the Rest of Us
Archive for August, 2008
S&P 500 Oscillator still bullish
Aug 19th
The action feels horrible but the S&P 500 oscillator I follow is still bullish. As you can see on the weekly we’ve had a huge move off the lows and I think we may just be consolidating a little bit before another small leg up to around 80 or so before we really have to worry about being overbought. MACD is still bullish and the recent sell off has alleviated the short term overbought condition. I would continue to remain long with fairly tight stops. we’ve got some light trading going on out there so the action is going to be very volatile.
S&P 500 oscillator
XLE trade update
Aug 19th
I’m keepin a close eye on that XLE trade. I ALMOST got stopped out yesterday but it managed to hang in there and is showing some strength today. If we can get a strong close and some follow through tomorrow I’ll be adding to the position. The financial have once again proven that they can continuously find new lows regardless of what everyone thinks and as a result I think traders may seek comfort in the good old oil names of the first half.
CSCO short
Aug 15th
CSCO could be a good short here. There were a lot of buyers at 25 who want their money back and the stock is definitely looking extended at this point. I think you could short it here for a point or two with a stop at 26 or so. Once the overbought condition is cleared out, we’ll re-evaluate CSCO from the long side if the selling can be contained.
CSCO short
XLE trade still in play
Aug 15th
I added a little bit to my XLE position today as the $70 area has again proven to be pretty decent support. I think within the next couple of days this trade is either going to start producing a profit or I’ll get stopped out as traders make up their mind as to whether or not they want to be in financials or commodities. I’ve currently got my stop set at about 69.40, just under the previous lows of the last few days. The XLE chart looks like it’s holding up down here so I’ll continue to add until I get stopped out. One thing to keep in mind is that the longer a stock chops around in one spot the more people will be in the trade at that price. This will make a move in either direction more powerful as time goes on. If the stock starts to move up, those who got in at 70 will start adding to their positions and we shouldn’t have any real resistance until 78 or 80. However, if the stock starts to roll over there are a lot of people with stops set just under $70 so watch out for some serious selling should we break 69 or so.
S&P 500 climbs the wall of worry
Aug 14th
The broad market today continues to climb the wall of worry as inflation numbers come in a little hot. This is often the case in most bear market rallies and the action tends to feed on itself. This market rotation in and out of commodities and financials is frustrating unless you’re daytrading your posistions so the best strategy here is to simply reduce your exposure until a clear trend begins to emerge. Currently I do not see that happening quite yet but eventually some new leadership will push the market higher.
S&P 500 oscillator update
Aug 13th
The S&P 500 oscillator that I use is showing some slight signs of an overbought condition but it’s nothing that a few days of chopping around wouldn’t solve. Other then that it still looks pretty good and we’re only at about 60 on the oscillator.
S&P 500 oscillator
Bear market bounce is still in play
Aug 13th
The bear market rally is still in play. There’s nothing wrong with a little profit taking and this bounce coincides nicely with a bounce in the energy and commodities complex. I’m a little concerned with resistance here at the 50 day moving average but so far the indices are holding up and the lack of follow through on the down days coupled with low volume selling bodes well for more upside. As long as the selling is contained I think we can work our way higher. Having said that, the market still sucks, keep those stops tight and protect capital. MACD and MACD Historgram have yet to show signs of a bearish divergence but I feel like that may be coming soon and that will be the tell to get out.
S&P 500
Energy complex starting to bounce
Aug 13th
My long energy play is starting to pan out a bit on this mornings drawdown in gasoline supply. I think this could provide the base for a move higher and I’ll continue to add to my XLE position as it works its way up. The strength in energy appears to be dragging the entire commodities complex with it. If you’re upside down on any of your commodity plays I think you may get a chance to lighten up on those names over the next week or so as they bounce.
Market holds its ground…kinda
Aug 12th
The market appears to be just barely holding its ground after the bad news from JP Morgan. Two weeks ago this news probably would have sent the major averages down over 2%. Don’t forget, JP Morgan is perceived as one of the best run banks and the fact that they’re writing down another 1.5 billion out of no where is nothing to sneeze at. Assuming we don’t sell off too much more today this kind of action suggests that the market is looking for a reason to go higher and I continue to hold my long positions. We’re still in an established short term uptrend here with the lower end of the channel around 1280 or so and the 50 day moving average acting as a bit of resistance here. I’d like to see S&P 500 move up a bit higher and pull back to the 50 day moving average as support for another upside move. Having said all that, don’t forget to keep tight stops on all positions as this market has proven over and over again that it simply doesn’t care what anyone thinks.
XLE long position on energy bounce
Aug 11th
I took a long position in the XLE today as a play on an oversold energy market. On the daily chart the XLE looks like it has good support right around 70 and and the bullish divergence in MACD histogram bodes well for a shot at the long side. Furthermore, declining volume over the past few trading weeks suggests that the downside pressure is starting to weaken. This pattern is similar in just about all the major integrated oil companies but I especially like the chart setup in the XLE. I’m looking for a move up to 78 or 80 and I’ll be setting a stop just under $70.
XLE 8/11/08