Possible trend change in the making

The charts looked topish and leaders such as Apple Inc. and JP Morgan are breaking down. As Livermore said: "As the leader goes, so goes the entire market". Leaders are supposed to lead the market and if the trend of the market is down, the leaders stocks are supposed to lead the overall market lower. This is precisely why they are called "leaders".   The winds are changing and one should get defensive and tighten your stops or moved to cash position. Aggressive shorts-sellers are already in the thick of action! Let's take a look my watch list.

Apple Inc. (AAPL) - Broke below its 50day MA.

Alcoa (AA) - Head & Shoulder reversal formation forming. A break of the neckline will definitely see more selling. Topish looking chart. Definitely a short-selling candidate.  I have a post on AA too a few days back.

JP Morgan (JPM) - Broke and closed below the neckline of the double top formation. We might see more selling in coming week.Not looking good.

Citigroup (C) - Gap down on Thurs and broke the low of the hammer reversal candlestick and effectively rendering the reversal useless. Citigroup might look cheap now but as Jesse Livermore once said: "what's low does not mean it will not go lower" !

Bank of America (BAC) - Closed below $12 and dropped out of its consolidating trading range signaling weakness.If the selling is intensive, we might even see BAC retesting the $11 mark.

Direxion Financial Daily Bull (FAS) - Dropped out of its symmetrical formation. Not looking good..

Lastly, Dow Jones Index is consolidating for a breakout move. Check out this post on "Anatomy of a Short Sale". It is increasing looking like a late stage failure (as depicted in the post above) if the Dow do not move any higher or breakdown. My bias is now to the downside. Nonetheless, please wait for the market to show its hand before making your move! Traders would also be placing sell stops below the descending triangle.

Cash is king, for now!

Financials - Chart patterns still intact

I felt like a school kid waiting for my exam results, especially when it comes to waiting for the bank stocks to move. Chart patterns for FAS is intact while BAC held its $12 support on Tuesday. GS has a bullish engulfment candlestick pattern on its chart. While the overall market sentiment is already up huge over the past few months, the Financial sector is probably just waiting for its ferry at the harbour... and i thought i saw the ferry coming from a distance through the fog?

Energy stocks - Short-selling opportunity

Dear readers, I am seeing more and more short selling opportunity for stocks in the energy sectors. Below are two stocks on my short-sell watchlist. I will be averaging in my short entry with stop loss just above the red Kijun Ichimoku line.

Chesapeake Energy Corp broke out of its decending triangle last week on high volume and its a short opportunity now as it retest its resistance at the neckline.

Stone Energy Corp (SGY) is currently hugging the 50day MA and had closed below the 50day MA for 2 days. Any signs of weakness today towards the closing on Maday will see me initiating a short position on this stock.

Always trade with stop loss and the correct position sizing !

BAC - Technical Analysis

Which way, BAC? Symmetrical triangle forming on BAC's daily chart. If Wyckoff's method of technical analysis is correct, we should be moving up. Let's wait and see. I have put on a huge position with a tight stop loss. Good risk to reward ratio, in my opinion.

BAC - Technical Analysis

Is this the bottom for AIG ?

America International Group has been on a downward spiral ever since the start of 2011 and it has been one hell of a downtrend on hindsight as the stock had fallen from its high of $52 to its current $32. Its a freaking one hell of a drop in 4 freaking months. The question now is whether the bottom is already in for AIG? I said its very highly possible. One could go long here with a stop loss at $31.75. Next support for AIG is at $30.

Let's take a look at its hourly (60 min) chart. Stock is trying to have a go at breaking its downtrend line on the 60min chart. Do also note that the stock price has also made a higher low at the bottom channel of the symmetrical triangle. Breakout traders would normally wait for the the stock price to break upwards before piling in. If you are looking for confirmation, AIG is definitely "not there" yet.

AIG 60 minute chart (Click on chart to enlarge)

Let's take a look at its daily chart. Could this be the start of a consolidation? One could also be looking at a bounce trade with immediate resistance at AIG's 200day MA. Note that trading hours are still not over yet at time of post.

 

Lastly, let us take a macro view using the weekly chart. While the week is not over yet at time of posting, one could see that price action for AIG is now resting on the Ichimoku Cloud support at $32. This is a very strong and significant support for Ichimoko traders like me. This could be the area where AIG could bounce. Weekly charts are powerful. This is the chart which lead me to the deduction that AIG's bottom might be somewhere around this area! Could be... possibly... and again, do use stop loss.  =)

 Good luck and happy holidays to all !

Disclaimer: I have just nibble at some shares of AIG today for the long term. 

Mystery of the Banking sector & what the Dow Jones Index is possibly trying to tell us

Dear readers, the Dow Jones index showed remarkable strength on Wednesday when it gained 188pts on high volume. The market has shown its hand. What had looked like a double top formation brewing a just a few days ago was banished aside by the bullish market. At the moment, it is trying to tell us that the market wants to go higher and the catalyst could be the banks (ok, this is a huge COULD). While the banks are not moving higher yet, the wave of selling could be over.

If the Dow had wanted to drop further, the banks could be the sector to lead them down. What's an economy recovery without the banks? While i am initially hesitant to place my long bets on the financials, the overall market sentiment have somehow convinced me to take this trade. The financials had lagged the overall market big time and if they could wake up from their slumber, this could be their time to steal the limelight by leading the overall market even higher.

Let's take a look at the stock of the supposedly weaker Bank of America (BAC). One thing that i could detect from this stock chart is that selling has subsided for BAC. Note the lower volume and the narrower price spread as of today. Trading hours are still on and do note that we have to wait for the closing for confirmation as we are using the daily charts. If the Dow Jones want to go higher, the financial sector could be the missing puzzle in this mystery.

FAS - Financial barometer:  FAS is displaying strength at this moment as the stock had made a higher high after filling the gap yesterday. I was expecting this ETF to come back down after filling the gap but the price action of FAS showed strength and indicated that it wants to go higher at this moment. While it has yet to move back up the trend line which it fell through last week, perhaps things could be finally looking up for the financials. Is this their revival which all of us are waiting for?  I say: go place your bets now!

Always trade with stop loss!

Silver - Hanging man bearish reversal pattern spotted

I was stopped out of my short-silver trade the last two times round. And i here i am today taking the trade again the third time on the basis of a hanging man bearish reversal candlestick on high volume for Silver ETF (SLV). This will be a trade with a tight stop loss just below the low of the hanging man. While a hanging man pattern does not mean that it is a short, but it does appears on an uptrend increase the probability of that the trend might be changing. And remember, trading is a probability game. Could this be the top for Silver? Catching the top dollar has always been the most expensive!!

Remember to always trade with stop loss!

Financials are looking GOOD on weekly support !!

Financials are looking more and more like they have put in a bottom with the weekly charts looking good. If you are looking to make a contrarian bet that the Financials are at support, then this would be a good time to place your bet. The Dow Jones Index have shown surprising strength and we need to respect that the general market is indeed going higher at this rate. Do note that these are weekly charts. Weekly charts are powerful but takes time to form. Standing in the way of weekly traders would be suicidal. Holding time frame would be for a few months.

I have initiated a position in BAC on Thurs (31 Mar) and Friday (1 Apr). Will look to build up a position in FAS in coming week.


Bank of America (BAC) - Reversal candlestick pattern spotted on Ichimoko Kijun line support on weekly charts.

Goldman Sachs (GS) - A successful retest on the Ichimoko Clouds. It is sitting on top of the bottom channel of a symmetrical triangle formed over more than 2 years! The longer the time frame the greater is the relevance of  the breakout. We should wait for the breakout then buy or sell the breakout. However, I am anticipating a break upwards and this would put my stop loss at the blue circle indicated in below chart.

Financial Bull ETF (FAS) - Any weakness in this financial bull ETF should be bought as long as it stay within the triangle. I would expect a powerful thrust up or down once the price action managed to break out of this symmetrical triangle. This is a coiled spring!

My current trades (2)

Just shorted LVS at average of $43.62, at slightly just above Kjiun line of the Ichimoko Clouds.
Stop loss will be placed at just above high of prior day's high.
This is a relief rally to me. Investors/traders who can't get out in time during the high volume drop at first day of March 2011 would be itching to sell their holdings at this level. I kinda like attempt to fade the rally.
OF COS, hindsight is always 20/20. I will know if i am correct as time unfolds itself.

I had covered the LVS trade here last week (click here for elaborated explanation).

Las Vegas Sands - Possible Climax Top

It is a high possibility that we have already seen the climax top in November  2010 for Las Vegas Sands (LVS) for the mid-term. The stock is now rallying back to its 50MA area on high volume but its closing on Friday was on narrow price range. This has caught my attention and it is definitely a good probability for a low risk short-selling entry at around its resistance area.  (Click on chart to enlarge)

This stock is a good for a short-selling trade on my list now!!  Looking forward to next week!!