Market Sentiment Looking Increasingly Bearish - 17 Nov 2011

Ironically, I was harping on and on about the market being bullish for the past few weeks. Somehow, the charts are showing more footprints of sellers than buyers in this current moment. Being nimble and flexible is the key to survival. Go to cash or start looking for short-selling setups.


Click on chart to enlarge - Visa Inc

Click on chart to enlarge - US Steel Group

Click on chart to enlarge - Bank of America

Market Updates - Odds with the bulls

Both Dow Jones and S&P500 are still stuck in a symmetrical triangle pattern with a breakout on the cards soon. The odds are favouring the bulls as Dow Jones had already moved above its 200day MA. It is at this point in time that we must be flexible and trade the breakout on either direction of the move. I am currently on the bull side as my interpretation is that a mini bull run is on the cards towards the end of the year. However, we must remember that the market is designed to fool investors and traders alike. Flexibility in jumping from either camp is absolutely crucial. Be nimble.

Dow Jones Index

S&P500

Direxion Financial Bull ETF (FAS)

As Bullish as it can gets

The charts are very bullish indeed. Look at the S&P index. It looks like its going to make a new high very soon as it bounce off the top of the Ichimoku Clouds and is now aiming to clear the 200 day MA in its second attempt. Will it succeed? A break of the 200day Ma could see the index moving higher in a powerful move.

Click on charts to enlarge (S&P500)

Click on charts to enlarge (United Steel)

Click on charts to enlarge (YGE)

Click on charts to enlarge (AIG)

Click on charts to enlarge (BAC)

Always trade with stop loss.

Possible Change in Trend

What a week it was! The major indices broke out of their descending triangle and went on a tremendous breathtaking rally before facing a near term resistance. Somehow, the trend looked like it is changing slowly from bearish to bullish. Stocks looks to be bottoming especially with a Right Angled Broadening formation spotted on the DJ Transportation Average. We'll have to be patient and wait for the breakout higher before placing any long bets. Nonetheless, the higher time frame bullish players are already moving in as the weekly charts of stocks are looking to form bullish reversals.

S&P500

Dow Jones Transportation Average

Bank of Ameria

Goldman Sachs

Capitulation... It Is Not

What looked like capitulation of the stock market on Tuesday 4 Oct 2011 might not be one after all. On Tuesday, stock prices reversed their intraday loss to finish green on extreme high volume. However, it might all comes to nothing when prices of bank stocks were stopped at their near term resistance on Friday.

We could be seeing lower prices to come. If you are a long only investor, you would be better of in a cash position.

BAC

JPM

S&P500 - Trapped in a descending triangle pattern. Bearish

BAC - Big Move Coming Soon

Dear Readers, we'll have a huge move coming soon for BAC as it is forming a symmetrical triangle overthe past 2 moinths. Question is: is it going to be up or down? The bulls have a strong case as the MACD is currently displaying a positive divergence. BAC has strong support at the $6 level and if this $6 mark is breached then all hell will break loose. Nonetheless, its still best to wait for the breakout to occur before initiating either a long or short position.

BAC

This downturn should serve as a good buying opportunity as the Baltic Dry Index is telling us a different story as it had already move higher out of its trading range. This spells good news for the economy. I have a post on the Baltic Dry Index here. For all we know, the August low could be the lows for this year!

Critical support - Make or Break

There was blood on Wall Street for the past 2 trading days. The question now on everyone's lips is whether if there will be another leg down; its a very high possibility there stocks will see further downside if we are to take out the lows back in Aug 2011. Let's check out the Dow Jones index and some other stocks on my watch list.

Dow Jones Index - The index broke down from its bearish wedge and is now at a very crucial support. If this support gives way, new lows will be imminent.

Bank of America

In the midst of doom and gloom, some stocks are holding out better than the rest. These stocks definitely have to be on our watch list, without a doubt.

Pharmacyclics, Inc (PCYC)

MITK

Market is range bound despite the Dow dropping more than 300 points on Friday

Dear readers, despite the Dow dropping almost 300 points on Friday, the market is still stuck in a range. If this range holds, then it should be bouncing off the bottom channel of the trading range next week. However, if we failed to hold this level and closed below the low of this range, then we could possibly see further downside for stocks. Friday was a good opportunity for range traders to initiate their short term position.

S&P500

General Electric - Range bound between $15 and $16.50. Time to buy the bottom of the trading range on Friday.

Century Aluminum - Range bound in an ascending triangle formation.

AIG - Looking surprising good and its in the midst of forming an ascending triangle amid all the doom and gloom in the market.

Financial stocks expecting more upside - BAC and Citigroup

We are beginning to see less and less sellers of beaten down financial stocks as indicated by the side way consolidation on the daily charts. Buyers are more and more willing to hold on to these stocks which they bought at fire-sale prices as they are less transcations between buyers and sellers as indicated by the dropping volume.

The odds are for the prices to move higher from here before the "real" resistance at the area between the 50day MA and just below the clouds. Please also see this post on bigger time-frame buyers coming into the picture.

Bank of America - Target price between $9.50 and $10. Stop loss for BAC at $7.95.

Citigroup

Relief rally is here as bigger time-frame buyers step in

Dear readers, the bounce is here as bigger time-frame buyers from the weekly time-frame stepped in to scoop up beaten down shares. In my opinion, this bounce should have some legs for at least one week or more. I have to admit that the low volume gain is very questionable since we are all trained to look for the huge volume normally associated with such a power move up. My hypothesis is that there are many investors who are still hoarding cash on the sidelines. If prices continue their uptrend, then these late buyers should be tempted to step in to buy. In other words, this rally should still have some way to go.

 BAC Weekly Chart - Bigger time frame buyers stepping in to support at $6-ish area. Closing above the $8.54 mark for this week is absolutely crucial for BAC bulls as that would mean more buyers coming in the following week, thus pushing prices higher up.

BAC Daily Chart - I would take some profits off the table at the 50day MA mark and trail a stop loss to protect the rest of my profit.

Trend traders are already starting to cover on some stocks such as Bank of America (BAC). Note the close above the Ichimoku Kijun line, which served as the stop loss for trend followers who are short. Once these group of traders are out and with the late longs in, I am expecting some sorts of reversal at these areas. I would suggest that all longs take some profit off the table when/if price action move nearer to the 50day MA or below the Ichimoku clouds which should serve as major resistance.

It's anyone's guess whether stocks will continue to move higher or retreat at these resistance area. For aggressive traders who want to place their short bets, the best entry point would be at the area where the last of bulls exhausted itself. However, if the market really wants to go higher and goes into a consolidation phase instead, the prudent trader would do well to reverse his shorts and go long.

Good luck!

Bulls preparing to overun Bears in the short term

Dear Readers, we could see potential upside for stocks in the short term with the bulls preparing to lead the charge to overrun the bears. Unmistakably, we are definitely seeing higher lows and lower high being formed on the charts, creating what looked like symmetrical triangles pattern on a broad based basis. This coil-like action could see stocks breaking out either in a thrust upwards or downwards. You can probably guess my bias from the title of my post.

S&P500

Bank of America (BAC) gap up on extremely high volume on news that Warren Buffet will invest in the company. This could possibly be a change in trend for BAC, Change in trend is the areas where investors want to get into the stock as this could possibly be the last time we see BAC under $7.

AIG

General Electric

Direxion Financial Bear 3X

In my opinion, bears are losing their ground. Having said that, we should always keep an OPEN mind at all times in the stock market.

Have a great weekend! Cheers!

Fear at its best

Banking stocks everywhere are on fire sale! Of course, what is keeping investors from buying now is the fear of the effect of the debt crisis and the implications on the economy. Brand names such as Citigroup, Goldman Sachs and Bank of America are at such fire sale prices that I am sure when we look back in a few years time, we will laugh ourselves silly that we do not pick up more of these stocks. 

The economy will recover, it always does. If there is any truth to this statement "Buy low, sell high", this is it. Check out the chart below for the above mentioned banking stocks.We will need to see if their support level will hold and whether it will turn out to be a double bottom formation.

Citigroup

Goldman Sachs 'The Shark'

Bank of America

Fear is really very powerful indeed. My understanding of how fear works in the stock market is that it create sharp sell-offs and equally sharp rallies as well when greed steps in. The stock market is truly one of the wonders of the world, IMHO.

Weekend Updates - 1 Sep 2011

Here's a look at the daily chart of the S&P500. It will be the third time since mid-June that the crucial 200day MA will be tested. Will the overall market bounce off or break the support? Financial stocks are still in the dumps but there might be signs that they have formed a bottom as long as the lows of the reversal candlestick patterns hold.

There have been lots of talks that the financial sector needs to wake up in order for the overall market to move higher. Personally, I subscribe to this idea. The next most important point is to determine if the market has factor in the debt crisis for the financial sector? As we all know, stocks do have the ability to forecast the future and perhaps the reason why this particular sector have been stuck in a trading range since the 2008 financial crash could be due to the ongoing reported debt crisis. If this is the case, if this crisis is already priced in (which i am assuming it is - see my point above), we should see the financial sector moving higher soon since markets are forward looking. Anyone agree with me? Let's see.

Financials(Weekly charts)

Stocks at important pivot point - AIG & Alcoa

American International Group (AIG) and Alcoa (AA) are two stocks i spotted which are at their crucial pivot point. At their pivot point, one can see the congested area of moving averages. AIG had formed what appears to be a double bottom formation. It looks more like a buy than a short sale potential in our case. The bias is also to the upside for Alcoa as the aluminum producer is trapped in a symmetrical triangle spanning a few months.

AIG

Alcoa

My bias is to the upside for the stock market currently.

Stocks looks ripe for further upside

Dear readers, no matter how bad the headlines may seemed at this moment, the charts are hinting at further upside for stocks as beaten down financial stocks are now bouncing off long term support with signs that longer term players are stepping in to purchase the stocks at these levels. These behaviors exhibited by the financials are very positive indication that the financial stocks have bottomed. Let's check out the weekly charts for stocks in this post (click on charts to enlarge).

Bank of America (weekly)

Citigroup (weekly)

Casino stocks are also breaking their immediate resistance level and are now free to move higher. The weekly  charts indicates that Las Vegas Sands (LVS) has broken out of the Ichimoku Clouds and is starting a new trend.

Solar stocks did not took part in any upside moves at all ever since the European debt crisis was reported in 2010. This sector is severely beaten down. We could see solar counters moving higher soon as oil prices looks to resume their uptrend and the fact that many of these solar stocks have bounced off long term support. It would be good risk to reward to initiate your long positions at these beaten down bargain prices.

Yingli Green Energy (weekly)

Renesola (weekly)

Do keep an eye on the financial stocks as i believe that we could see them finally waking up and leading the charge for the overall market in moving higher! Have a great week ahead.