Interesting Chart Patterns To Monitor In Coming Days...

[MR]

Day NINE of Corrective Phase in US Stock Market

The US stock market continues to show weakness. After a decent June into July rally, August just has failed to performed well. As we move into August options expiration today the market continues to act weak and is trading defensively. The low today is holding on a 62% support. If it breaks I am now anticipating later in August, early September we could see the 2nd test of the DJ Industrial Average 10,000 to 9,800 key support range. The DJ Industrial needs to stay above 9,600 - 9,500 this fall for various lower risk buy setup scenarios to work.

For AGET users-- The US stock market could be in either a big complex weekly A-B-C range trading pattern, or it could be topping. I just do not currently know which scenario is going to win out. Therefore I tend to trade only the outer extreme range moves within this several month oscillation behavior. If the DJ Industrials trades to 10,000 - 9,800 range that might qualify as a lower RRR setup for bulls, for example. It would have to stay above 9,600 - 9,500 for perfect scenario though. (The weekly 5/35 Oscillator suggests it is an A-B-C behavior)

US Dollar -- Since I first reported August 12 the US Dollar two month decline might be bottoming, it has continued to perform well. I really do not have any new trading ideas for the US Dollar right now but will be watching to see if it ever trades below 8150 this month. If it does it should pullback and try again to base out around 81 to 80 area.

Stocks To Watch -- In the 8-12-2010 post I mentioned Cisco (CSCO) had gapped lower on earnings and gotten beat up that day. I mentioned Gap traders might be interested in trading the gap. That idea has so far worked perfectly as CSCO has inched back up and partially covered the gap. However, I would continue to watch for a place to short CSCO near-term, particularly once that gap is covered or enough time has passed to attract more sellers. I see 23 as a key area where that transition could occur.

Continue to track IBM, ISRG, CME for any reasonable rally's into strong resistance. They look vulnerable to Short sellers trying to control them. Bulls should be just a little afraid to over-committed Long those three stocks for the near-term. Two look like they are now in downtrends and one looks like it could be a top building. IBM Key Resistance -- 134, 133

(Friday, 20 Aug 2010, 2PM NYT)

[MR]

Day 14 Corrective Phase; is it nearing the end?

The US Stock market has been in a corrective phase for 14 days. Today it finished the week with a very positive bounce. Is this the beginning of the end of this corrective phase?

There is a good possibility that this corrective pullback phase could be winding down and more Bulls might be preparing next week to buy into the next dip before the Labor Day weekend. For that to happen we will watch to see DJ Industrial Average can hold 9941.70, 9887.32, 9832.93 on any mild pullbacks next week before Labor Day weekend. If this happens odds will improve supports can hold and more bullish tendencies will show up into early September trading action.

Critical bigger picture support calculations for the DJ Industrial Average come in around 9894, 9859. If for some reason we break below 9800 any time in September, then the next absolute support below that comes in around 9655-9615 area. For longer-term Bulls to win this battle now those areas must show they can hold.

[MR]

Wed, 1 Sept 2010, 11AM UPDATE -- Just a very quick follow-through update.... Is the first trading say of Sept. DJ Industrial is up +246. Very encouraging for discouraged market. 'Ideal' support holding. A 'mini' technical breakout occurred this morning. Means Bears more cautious, Bulls more interested. Staying above Dow 10,000 continues to be the key. Odds now favor more buying than selling in the near future.

(Disclosure: I bought 50 shares of Google (GOOG) today at a 75-80% support area, target $500.... because I believe the oversold condition will now hold and it was a 6/4,6/4 DMA breakout; stop loss below 80% support)

[MR]

Tuesday, 14 Sept, 2010 UPDATE-- Back on late August, when the Dow was hovering around 10,000, I said there was a "good possibility that this corrective pullback phase could be winding down" and "develop more bullish tendencies into later September trading action." A short time later, on the first trading day in September, the US stock market traded strongly higher and began to breakout in the rally we now are in. That day I updated those comments with the following comment: "odds now favor more buying than selling in the near future." I even said I was buying something.

The DJ Industrial Average has since risen several hundred points to the 10,550 area. The question now as the market approaches some minor resistance, what do we do next? Do we stay long? Do we raise our stops and take a little off the table? What now?

I think with Sept options expiration around the corner and no recent pullback odds favor a 'surprise' pullback could be eminent. If we do get a pullback over the next two weeks I think the odds, also, favor it will become a short-lived dip that rallies back up to a newer recent high.

We just haven't tested what I think is the stronger 10,624 (62%) resistance area. We even have a better target resistance area located around the 10,710 - 10,800 level. DJ Industrial Average observers should consider targeting those areas as a better place to worry about this bullish rally possibly running its course.

Maybe over the next six months the market will try to top out again. For now, I think their still is some time for the Bulls to make a little money too!

Bottom-line: I am not ready to lighten up, am staying Long to Net Long. If the US stock market dips I am prepared to buy a little more.

[MR]

Mon, 20 Sept 2010 UPDATE -- We are through options expiration with no problems and now I think the strong positives today, and the mini-breakout moves in the SPY, QQQQ, DIA today are signaling that test of Dow 11,000 is coming as soon as the end of this month or sometime in October. This is something many people would have predicted even a month ago!

Bottom-line: I am long since Dow 10,000 and continue to stay net Long to fully Long during this time. The Bears have reasons to stay cautious until maybe October, or until those higher resistance levels are tested.

PS -- During key election times be skeptical about news reports you hear like today saying the recession is over. After the election things have ways of correcting themselves back to hardcore realities.

[MR]

Friday, 24 Sept 2010, 10:55AM Update -- Looks like I was 'spot-on' with that previous comment where I said the Dow will hit 11,000 (target) before the end of the month or in Oct. The longer-term Bears are going to have to continue to stand aside as the Bulls continue to have an easy time making money this month. Maybe at the beginning of October is when the Bulls and Bears will switch and give the Bears a chance to make back some money?

Originally posted by MR
Mon, 20 Sept 2010 UPDATE -- We are through options expiration with no problems and now I think the strong positives today, and the mini-breakout moves in the SPY, QQQQ, DIA today are signaling that test of Dow 11,000 is coming as soon as the end of this month or sometime in October. This is something many people would have predicted even a month ago!

Bottom-line: I am long since Dow 10,000 and continue to stay net Long to fully Long during this time. The Bears have reasons to stay cautious until maybe October, or until those higher resistance levels are tested.

PS -- During key election times be skeptical about news reports you hear like today saying the recession is over. After the election things have ways of correcting themselves back to hardcore realities.

[MR]

Tuesday, 12 Oct 2010 Market Update-- Well, we recently finally hit Dow 11,000. Now what?

My observations and analysis suggests the US stock market still appears to have overall near-term bullish tendencies. If it stages any kind of a pullback this week, even a shallow dip, I am still interested in buying the quality buy setups for momentum trades even at this stage of the rally.

Many of the stocks reporting earnings first are currently pretty decent companies. I don't anticipate many of the first companies reporting earnings will disappoint this time. I am still willing to invest in the uptrend if a pullback develops during the week.

The market may very well continue to surprise people two months in a row.

[MR]

Monday, 18 Oct 2010 -- I bought a little Baidu (BIDU) because it looked like a completed internal wave 4 correction completing itself within a Major Wave 3 in progress. It is not as obvious because of the stock splitting 10 for 1 back in May. With Googles (GOOG) great response Friday on earnings it looks like the market is anticipating shortly BIDU will follow in Googles example when it reports earnings on the 21st this week. (caveat: be careful buying something before earnings. Do it at your own risk.)

[MR]

Friday, 12 Nov 2010 -- At some point you sense the Wall Street Institutional Trading Community will be wanting to lock in some of their yearly gains so they can be assured of their huge yearly end-of-the-year bonuses. I suspect today is the beginning of that move. Anticipate more weakness to come. It could only be a quick pullback or something that heads down to the 50 or 200 period MA area on the Daily DJ Industrial, for example. I will be watching to see if $INDU holds 10,868 area or goes down to the 10,690 area...

[MR]

Thursday, 18 Nov 2010 -- I see some aggressive short-term swing trades (minor internal wave 4 types) and would consider buying many of them on todays gap covering dips with stop losses below the lows established earlier this week. Would trail stops tight enough to protect quick profits as we move back up to test resent highs in many of those recently strong trending stocks that pullback this past week or so. Things will slow down again as we get closer to Thanksgiving so not being too greedy with these new ideas. Happy with quick profits for now. Still holding Long those longer-term trades taken early September. -MR

[MR]

Thursday, 2 December 2010-- Yesterday and today's positive action could be interpreted two ways:

(1) The Bulls are still in charge. The December 2010 US stock market "Santa Claus rally" has begun after a healthy November pullback.

(2) The overall US stock market should continue to improve during December; however, if newer highs are not maintained going into Christmas, start doubting further gains will continue into early 2011.

So far there are encouraging signs to technically justify staying bullish near to longer-term. Monitor to see how the Dow acts if it ever tests 11,600 to 11,750 resistance. Keep an eye on the Korean peninsula conflict. If it escalates that could be a problem.

My gut feeling is the market should maintain a positive net Long bias now with last weeks lows more capable of holding in December. I strongly suspect-- all things being equal-- if there is a meaningful pullback it would occur in January or February of 2011.

Good luck trading this month!

[MR]

Monday Morning, 20 December 2010 --

We are now beginning the last two weeks of trading for this year. Christmas is this Saturday, New Years Eve celebration Friday night. Based on a real lack of consistent market momentum showing up since early December, unless you are an aggressive short-term or day-trader, you might as well take a well needed vacation right now. Use this time to prepare for 2011 trading.

If we are lucky, we might have one or two active trading days left for this year, but, based on experience and probability, I strongly suspect there will not be any significant consistent Wave 3 follow-through action for the remainder of this year.

The only thing I see is continued internal group rotation out of strong 2010 stocks into possible cheaper 2011 value plays.

Overall things continue to hold well into the end of 2010. It has been a good year for Bulls.

As we get closer to the end of this year, we will try to get you one more better prediction what to start monitoring for at the beginning of January, 2011.

[MR]

January 2011 has arrived!

Someone emailed me earlier today asking what I think about the markets right now? Here is my reply to them...

As for the markets, still not fully committal on things going into the first trading day in 2011. Am still "scenario building" possibilities for 1st quarter, 2011.

It still "feels" like controlled bullishness going on right now but, technically, we are contained at a wide resistance range? Kind of an uncomfortable position to be in if you are buying new highs now?

The biggest concern I have right now as a longer-term investor is what to do if energy prices move too high too quickly this winter and spring. I hope and pray the big boys who establish large postions in the NY energy pits do not over expose themselves or push things too high this year because of their greed. The economy is still fragile and cannot take for long high energy prices. I don't see that as a problem during the first quarter, however, mostly just the becoming a problem by Q2.


For tomorrow (Mon, 4 Jan) and later this week, watch to see if we can get above 11,834 on DJ Industrial. Such a move this week could be insightful. Any breakdown of 11,466 to 11,400 area this month could trigger short-term Short hedge strategies. 10,735 area, is key near-term support.

If we close above 11,825 by the end of this week it will be easier to extend gains in January.

I will try and figure things out better. For now, this is just my very best "quick look" idea what to watch for now. If the market trades down the next two days today's nice first day of trading was just a game playing effort to suck in more new money. If we keep getting more buy days, the bull is poised to extend itself this month.

Hope this helps! I am still holding Long that one trade from December.

[MR]

Wednesday, 5 January 2011 New Trading Year 'QUICK' Update --

Only the third day of trading into the new year, am still comfortable holding Long going into the new year.

NEW IDEA-- Would have bought 250 shares of American International Group AIG around 57-56 this morning. (mental stop loss below 55)... going to see how high I can ride it ... trailing a $5 stop to keep it out of the way for now.... (see chart below)

[Philby]

Alternate "New Idea"

Thursday January 6th 2011

Marc, here is a possible alternate idea for you to think about.

BHP is a key supplier in the commodities business especially for coal, coking coal, alumina & steel, and with the floods in Australia being the combined size of Germany & France, many of the mines are flooded, rail heads are under around 20 feet of water, roads are blocked and the expectation is that supply will be interrupted for well over six months before infrastructure can be rebuilt and replaced etc. China & India are key customers of Australia and of BHP with respect to coking coal so the impacts are likely to have a global impact on the pricing of manufactured goods out of these countries as well. Queensland is where the floods are and it is a major food growing area and exporter as well and prices are expected to increase between 30-50% due to the wide spread devastation of crops so industries involved in this space will also have significant downward pressure on their P&L as well.

In the attached BHP price chart from today, price has broken out of the regression channel, passed below the 6,4 exponential DMA and looks to be heading south along with BHP's near term profits.

Today price touched the ellipse support and retraced, so I am waiting for price to cut below $44.68 before entering. The trade has a good risk reward profile with an expectation of around 2.5:1 by the time it hits the MOB.

As BHP is also listed in the USA, I would be interested in your thoughts on a simple PUT strategy - My plan is to buy the $44 Feb puts as they have a delta of 35 right now and this is the sweet spot for leveraging the growth of the delta curve.

Cheers