Sloppy Mess

Today was a day of more mood swings then a sorority house that is cycling together.

SPX started the morning off bullish, on the heels of the great news that the economy only contracted by 0.7%. High fives all around to everyone. The economy is back! But wait, the Chicago PMI came out and painted a picture that was showing a weakening economy. I thought Berndicke said the recession was over oh ben!

SPX bounced off its support zone at 1046 and climbed back up to 1060 but was met with resistance. One nice thing to see for the bears(myself included) is stair stepping action. This action is allow SPX to walk right down forming a nice triangle. Either way it breaks it should start a new trend. But with a lot of bulls now underwater from 1070, the pressure may be to the downside. The 21 and 50 EMA are add to the resistance. The last hour candle very interesting, but what do you expect on the last day of the quarter.

On the daily chart the 20 Ema held as support again but the more the market moves to test this level the weaker it becomes. SPX on the daily is in a make or break spot, it is coming close to it's larger up trendline and being pressure by it's short-term down trendline.
Again watch which ever breaks.
I mentioned it yesterday that the markets chop is really not providing a edge and to wait for that edge, a break of on the long-term trendline would be an edge.

High Hanging Fruit

If you think the market has run up way to much from it's March lows, then here is a list of stocks that really look like they have run up big time.

The stocks listed below all have run up 200% or more from their 52week low.  Some have moved 1000% above their 52 week low.  Look at BZ it has moved 26450% from it's low.
The stocks also have a low short float, so the crowded trade is not the short one.  More people are long these junk stocks then short.

Here is a link to all these stocks looking at their weekly charts.

Ticker	Short Ratio	Extreme price change % above 52 week low
BZ	0.8	26450
DAN	2	3330
CNO	1.7	1970
GNW	0.6	1680
AIB	0.3	1200
TRW	1.8	1800
LVS	1.6	1060
MIC	1	1070
SOA	1.6	1300
SANM	0.8	1000
SVA	0.1	957.33
TCK	0.7	947.69
FITB	1.4	884.16
BEXP	1.2	787.5
SAY	0.7	753.85
BCS	0	749.82
HIG	0.8	724.02
OSK	1.4	713.25
PL	0	664.77
F	2	637.62
MTL	0.5	607.81
FIG	1.3	596.1
MGM	1.4	588.95
AIG	0.3	585.15
DDR	0	581.16
BAC	0	578.26
XL	0	577.73
PAY	1.2	572.73
MED	1.8	554.63
IAG	0.7	520.72
FNSRD	0.3	490.48
TX	0.6	487.47
FLEX	1.1	484.55
IP	1.6	479.39
TSL	1.6	468.27
SLG	0	467.48
LINTA	2	460.41
PLD	0	456.82
LNC	0	446.64
PWRD	1.5	438.16
WLT	1.5	437.5
CDE	1.3	434.72
TXT	0	424.09
STX	1.3	408.73
CBL	0	403.13
HRP	0	400.64
UQM	1.1	392.5
JAG	0.8	389.73
SLW	0.7	388.45
AINV	1.8	376.88
PRU	1.3	369.99
PLX	1.9	361.67
HUN	0.5	360.1
DOW	1.6	347.37
CE	0	345.53
VIT	1	342.38
CHIC	0.8	338.95
FCX	1.8	335.16
MDR	1.7	332.61
SNDK	1.8	329.19
FCE-A	0	318.1
MTW	1.4	314.1
EAT	1.5	309.28
CBS	0	305.56
OVTI	1.5	298.54
JBL	1.1	296.13
BX	1.7	295.78
AFL	1.9	295.48
CLP	0	294.85
BIDU	1.6	292.46
OI	1.2	290.77
CBI	2	289.01
VIP	0.9	287.73
GS	1.2	287.22
CZZ	1.3	285.71
GRS	0.8	283.65
BRCD	1.2	283.42
JNS	2	282.84
BVN	1.3	281.89
WDC	2	281.54
VSH	1.3	280.93
FCS	2	279.85
SID	1.6	279.42
STI	0	275.83
COMS	1.7	264.34
CTRP	1.7	263.74
WFC	0	263.46
AMD	1.6	256.79
MRVL	1.1	255.36

BZ-  From .50 to 5.00+.  The company didn't even make money in 2008 and last quarter was the first time they made money, and it was on some Alternative fuel tax joke.

DAN- is one of my favorites.

The one caveat to DAN is that it looks like an inverted head and shoulders pattern but the clean stop at 7.07 limits your risk.

TRW- another good short- clean stop at 17 or the 200EMA.

Take a look at all of them, they all aren't the perfect shorts but you can see how much some of these stocks were beaten down bad during the decline, and look how much they have climbed since then.
Most of these stocks have an overbought STOCH and RSI, and the MACD are rolling over.

The reason for looking at these stocks, is take BZ for example(chart above) a 32% retracement would a move from 5.25 to 3.25.  That is not a bad trade, your risk is easily managed since resistance is clearly defined.  

*These are not recommendations or suggested trades. They trade ideas, please seek professional advice before placing any trade and trade at your risk. All trading involves high risk; past performance is not necessarily indicative of future results.

Choppy Seas and some Natural Gas

SPX crashed a whopping 2 points today! The bulls looked like they were ready to take the market up to 1,000,000. When the consumer confidence numbers came out and the bears came out to play and pushed the market back below 1065.

The last two days, 1065 has been a closing resistance level, while the market has been able to get above it intra-day it could not close above it.

Also look at the lack of any trend or pattern in the market, it is a messy market chopping in the range between its 20 and 50 EMA and 1065. One of these levels will break moving the market.

With the market being so chopping, there was no reason to enter any of the stocks mentioned this morning.

So with SPX looking chopping and not giving a good edge it is important to look at other sectors.

UNG- 11.89-12.00 has been strong resistance for UNG. Now it is hitting it's down trendline, it also looks to be forming a rounded top. UNG looks like a decent safe short here with a stop above the down trendline. The indicators are looking to be rolling over.

New York Times Top Tick?

Here is the front page of the NY Times today:

There has always been theory of Magazine covers calling tops.  Here is a article on it over at Big Picture.

The article doesn't really cheerlead the market to get to 10,000.  The article describes  that 10K  is a big psychological hurdle and resistance line for the market.

On a larger scale this cover and many newspaper covers represent the boarder psychology of the market.
The optimism that Dow 10,000 can be reached can be reflected in the media.  Main stream media pundits talk about how the recession is over, point to increase in some economic indicator, or point to a unemployment rate that has fallen less.  This supports the old saying "Buy when their screaming sell when their yelling"

But one interesting thing to point out is that ? on the cover.  If you look around, various media outlets are all playing the "Cover Your Ass" game.  In 2008, main stream media was confronted with the potential backlash that could occur if they are cheerlead stocks and they go down.
  Remember Cramer and The Daily Show, or just the overall displeasure for stock gurus and CNBC.  This was because these experts were giving confidence that the market is fine and to put their money in into the market.  Then the market tanks and all they can say is "My bad".  CNBC was in serious trouble after the market tanked in 2008.

So now the media is covering their cheerleading with question marks or "maybes".
Here is CNBC's front page today:

Look at the wording there "may" and "but".  Way to cover your ass.

Route 66

Oil is nearing critical support right now at 66.00.  A break of this would make $62 (the triangle price target) very obtainable.

It has tested this level 3 times before and bounced slightly off this HL.  If Oil can catch a bid at this level it would help equities.

Watch for a break of this level.

A few for the road

Here are a couple of plays:


CATY- This is going bottom fishing but it provides a clean out, at 8.19.  It's oversold and nearing a previous Horizontal l level.  Would like to see it move up a little before getting to long.

CENX- bounced off support yesterday.  The last two candles show support can hold, a doji on Friday with light volume then a bullish candle yesterday with good volume.  Almost forming a double bottom, but be careful if it starts to run up it has failed at its 200EMA each time it tested it.

SOLR-A break of 6.25 would be a clean break of the down trendline and the triangle it is in.

Huh day?

There was a lot to shake your head about today.  SPX rose 1.78% today on fumes and a lack of any participation in the market.  Even more interesting was there was no news or economic data to move the market, CNBC report it was M&A activity that spured the advanced.  This makes sense since, they can't pump up the economy, or earnings and they already played the Warren Buffet card.  So they now have to cheerlead about M&A.

There was a complete lack of volume today, 87% of the volume today was up-volume and 13% was down-volume.  This shows a bullish basis but it may not be a correct signal since the total volume in the market was well below normal.  A low volume can be manipulated easily.

The market regained it's bullish ways today breaking above 1054 and touching the bottom of its previous  August support at 1065.  But this area provided strong resistance and smacked SPX back down each time it tried to get around the 1065 level.

Another shake the head moment was while SPX climbed the dollar climbed today too. While this should've been bearish for equities, both equities and oil seem to shrug this off and move up their own way up.

What an odd day, SPX climbed on a day with weak volume and managed to do so with a rising dollar.

Fast and the Furious

SPX went from very oversold, to very overbought in just a few hours.

It amazing what the market can do on a low volume day, since today is Yon Kippur. Look at the complete lack of volume.

If I was a bull I would want to see a lot of up-volume on a day when SPX is almost up 2%. Dollar is rallying here and back above 77.00, oil is off it's highs. Both bearish for equities but with such light volume the market can ignore this and keep rallying, but there is resistance at 1065-1070.

Looks like the 20ema is still support for this market on the daily chart it was able hold off the selling last week and SPX bounced hard today.

The test will be if SPX can get above 1065.

The Long and Short of it

Looking at tons of charts this weekend, there is similar patterns on various charts. The majority of stocks have declined the past 3 days and are nearing support of their previous break out highs. The patterns look to SPX as it has the potential to move to test its August highs, but has resistance above it from its breakout highs which it broke below.

Now if the market is going to bounce, the stocks will have to hold these support levels and break out of the resistance. The danger to getting long these stocks, is if selling pressure picks up and these support levels break selling will quick, since now the longs from the breakout highs are underwater and the longs that were holding from the previous breakout highs are underwater. What the support levels do provide is a easy stop loss.

On the opposite side of the trade, many stocks will begin to test their break out highs from below. This level many provide strong resistance and may be a good entry short.

The market is definitely at a turning point. Here are some stocks to play both sides:
*These are not recommendations or suggested trades. They are ideas, please seek professional advice before placing any trade and trade at your risk. All trading involves high risk; past performance is not necessarily indicative of future results.


Sorry for not having the charts. Stockcharts.com is down this morning.

TICKER	Long or Short	Reason
AGEN	Long	Long above 2.25 break of down trend line
AMSC	Short	If breaks 29.45 sell
ATLS	Long	with a break above 25
ATPG	Short	Stop at 20, great short on the weekly timeframe
AXL	Long @ 6.83-.62	20eam first support and HL support at 6.63
BANR	Long @ 2.85	wedge forming bottom fo trendline is at 2.85
BBI	Long	some HL support around 1.10
CENX	Long	risky but if it can get above its 50 ema it's safe, doji after 2 big down days is showing stalling
CPF	Long	doji after down day on week volume
DTG	Short and Long	Short around 25 but a long at 22, unless 22.00 breaks short there
FTK	Long	HL support a 2.00
GLBC	Short	Stop at 15.20
GMCR	Long	Bull flag pattern, at least 2 or 3 point move in stock
IBB	Long	stop at 79.90, invert hammer after two 3 down days, support at 80.00
JOSB	Short	weekly looks good short, new resistance at 45.44
LHO	Short	break of 17.00
LXK	Short	No support for this stock till 18
MAC	Long	Support at 29.85 doji after a down day
NCS	Long	Consolidation move, bull flag forming
NFLX	N/A	Waiting
OSG	N/A	Waiting
PALM	Long	Reversal candle on daily chart and ended at support up in the premarket
RT	Short	if it breaks 8.50 sell, it breaks
RYL	Long	It holds $20,00 get long
SFI	Long	Support at 2.97
SIGM	Long	Suppor at 14.00-14.20
SKS	Short
STEC	Short	Short @ 15, long if it breaks above 15.40
TLB	N/A
TRLG	N/A
UA	Short	if it breaks 27.00
INT	Short	weekly resistance at 49.00

STSA Long HL support at 2.00

Time to Test Support

Before we get to charts, I want to thank Tom Lydon! Yesterday the market kept crepping higher and I keep holding my SDS and adding to it. My stop was nearing when on CNBC I hear this

That is right yesterday as oil breaks 69,( you can watch oil tank on the ticker while he is talking) this guy is recommending USO for an oil play (By the way dummy, USO doesn't track oil), then he recommends UDN(Bear dollar) and GLD(Gold). Once I saw someone on CNBC recommending UDN. I knew it was all over.
CONGRATS!!!!!! YOU TOP TICKED ALL 3 OF THOSE SECTORS!!!!

Now to the charts, while the bears had their day today. The bulls may have one last fight left in them.

On the 60 Min chart, the market is oversold and may be turning up. There is some potential for a bounce, but resistance is at 1054-1060.

On the daily chart, SPX broke below the top it formed and has resistance at 1060-1080. While SPX did close above 1050, it remains below 1054 which is bearish. Now the indicators are starting to rolling over, MACD looks be dropping, and the divergence has confirm the possible top. Plus STOCH is still overbought even though the market has declined. Now SPX nears it's long term trendline. This will be a key area to watch.

On the longer-term charts SPX weekly broke below its 1054 89 week ema.

Oil can be a nice foreshadow of what will happen to SPX if it breaks it's up trendline.

Other key sectors are nearing support levels that if broken could start some strong selling or could be a strong bounce point.

IYR- watch for a break of the 20EMA and nearing support at 41.

XLE- is nearing support at 52.00.

XHB- is one sector that broke support and it's 21 EMA. It's next support is at 14.50