Surging through resistance.

More macroeconomic reports and overall investor sentiment helped the market rally in all sectors but energy, which was hurt bad by Exxon Mobil (XOM)’s lower than expected earnings. Aside from that sector, the market had a huge up day, as SPY ended up 2%. More importantly, however, SPY closed above the long term 139 resistance it’s held since January and the longer term 140 resistance its held for two years now. If these gains are kept and the market continues rallying, preferably with higher volume to indicate institutional investor involvement, we will be entering a new overall uptrend. Look for a retracement in the coming days to 139-140, and if the market is able to bounce off of that level with no problem, the uptrend is confirmed.

IMCL is in the midst of what seems to be a long term cup and handle pattern beginning in early March. It is bouncing off of its trendline support well right now on high volume and with high price spikes. There is increasing accumulation, indicating increasing momentum, and I think it should break out soon, which is great because it would break out right near its resistance around 41, driving the stock all the more higher.

The huge commodity parabolic run up, in oil and ag’s particularly, has ended, at least temporarily. This transfers the momentum into the dollar’s appreciation, and with currency valuation come run ups in techs. One specific tech sector I’m focusing on is telecom’s. AT&T (T) and Verizon (VZ) have netted me great gains in just the last two days and I think there’s still some momentum left in them.

T seems to have just broken out of a long term rising head and shoulders pattern, and it is giving its 40 resistance a run for its money. If it can use its breakout momentum to rally above resistance on high volume, the sky is the limit for T. A May40Call for T might be a very profitable trade.

VZ had a head and shoulders pattern at the same time as T, and broke out in a similar fashion, confirming my intuition about tech run ups. VZ is making a run at a strong historical support level at 40, and if it can rally above it on high volume, 40 should be very strong and stable support, off of which a base setting up a parabolic run up is very likely.

Qwest (Q) is my favorite telecom play, as its breakout brought it above strong resistance at 5.20. There is hugely increasing volume as the stock rises and rises and a breakout soon is very plausible. There is also heavy accumulation that I think should push the stock to at least 6.15ish. Call options on this stock can be extremely profitable.

Kelly Services Class A (KELYA) has a very bullish chart. It seems to be beginning an exponential run up, with great volume involvement, off of a base located at newly developed support. It also just experienced a 50/200 DMA bullish cross. With no resistance in sight, this stock could trend upwards big in the next few days.

China Mobile (CHL) seems to also be rounding off of a base with huge potential upside. Not only is the price action indicating this possibility, but the volume is following the pattern perfectly, as is highlighted on the chart. There is heavy recent accumulation and the stock just experienced a 50/200 DMA cross, so its price action for the next 5-10 market days seems very bullish.

New Oriental Edu & Tech (EDU) seems to be beginning a rounding base pattern, as well. It also is experiencing heavy accumulation and just had a 50/200 DMA cross, setting the stock up perfectly for a potential breakout. The fact that so many stocks are forming similar patterns and having DMA crossovers simultaneously is a very bullish signal for the overall market.

iShares Spain Index Fund (EWP) is also setting up a rounding base pattern with huge upside potential if a breakout occurs. It seems to be breaking out of a possible cup and handle pattern, as well, but needs to rally above 65 resistance on high volume for any confirmation. There is very heavy accumulation into this index fund, and that can perhaps supply the momentum needed to carry this stock through resistance and into 52-week high territory. There is heavy volume on the up days in the last two days, which is a good sign. Wait for confirmation before participating in this stock, however.

Heico (HEI) could break through 53 resistance with the momentum gained from its 50/200 DMA cross today and its heavy increasing accumulation. A breakout could result in big gains.

Leapfrog (LF) is one of my favorite stock plays. It has been trending upward very well since January, while the market has just plummeted. It broke out of 7.60 resistance recently and seems to be setting up a perfect rounding base pattern off of which exponential gains could result. High volume rallies and today’s 50/200 DMA crossover could provide what it needs to drive this stock all the way up to 9.50 and even more.

Putnam Master Int Trust (PIM) is approaching resistance at 6.30 on high volume and what seems to be a great base pattern. Today’s 50/200 DMA bullish cross could provide the momentum it needs to get over that level and go up for big exponential gains.

Compania de San Bashi (SBS) broke out of resistance recently and is setting up for more gains. It just had a 50/200 DMA crossover as well, so that could push the stock higher soon. Volume is huge on the last two days, which were both up.

If the last few months have brought you a jaded perspective in regards to the market, here’s some motivation. Take a look at net liquidating value on the top left. Keep in mind I started trading at the end of January with $6500.

Get money, son.

Another move upward… are the bulls back?

Some good earnings today propelled the market upward for almost a 3% overall gain. Looking at SPY, it bounced off the downtrend line well, confirming it to be at least temporary support. I’ve drawn in falling resistance, parallel to this downtrend support line, and I’ll be looking for SPY to break this channel trend, whether upward or downward. It bounced well off the 50 DMA today, which is another good sign, but yet again, volume was missing. If the market retraces back big within the next few days, we’ll see how good of support the 50 DMA offers; otherwise the next strong support level is that downtrend line. If that line is ever broken on medium to high volume, we’re going back down to January and March lows, and that will be the market bottom. If SPY can break out of that channeling resistance today, particularly if it can finally do so on high volume, the 138.00 resistance level is in sight and can be taken out. Breaking out of the 138.00 level on medium to high volume confirms a bullish trend, and that the market bottomed back in March. It’s earnings season, and as financials start to report their write-offs and losses, prepare for high volatility days. This type of market isn’t very conducive to technical trading, but if you watch overall trends, you should do fine.

I am looking at quite a few stocks to buy in the next few days, if the market doesn’t show too much weakness. One such stock is Diodes (DIOD). It is channeling upwards well, from its March 17 bottom that correlated with the Bear Stearns (BSC) crash. There is heavy accumulation occuring as the price trends upward, and yesterday’s big move up was on high volume. The 50 DMA is starting to point back upward now, and if DIOD can break its channel resistance line on high volume, this would be a great play. I am considering buying right now, before any confirmation. Cut your losses at the 24.00 support level.

BJS Wholesale (BJ) is another great long candidate. It is caught in a rising wedge, and moved upward big yesterday. All it needs is a breakout from resistance on high volume and this stock can rake in big gains. It has to happen soon, as the wedge is almost at a point. My only concern is the lack of volume, and thought volume is one of my biggest indicators of price movement confirmation, the overall lack of volume pervading the market the last few weeks has left me turning a blind eye to a few instances. Also, its 50 DMA crossed its 200 DMA on the bullish side, which is a fantastic signal for break outs coming soon. Cut your losses at the wedge support line.

NX Quanex (NX) has been trading horizontally since its big move up last November. Yesterday, it finally broke that important resistance on high volume, so I’m looking for a nice uptrend for this stock to develop. There is lots of accumulation occurring and the price bounced off of the 50 DMA brilliantly. Cut your losses just under the resistance level it broke.

John Hancock Private Equity Fund (HPI) is caught in a rising wedge and bouncing off of the 50 DMA. Volume is low, but there has been ridiculous accumulation in the last few weeks, and it’s really pushing me to buy this stock. Cut your losses under the 50 DMA.

Taiwan Fund Inc (TWN), my favorite long stock right now, broke out of a wedge pattern yesterday on high volume and closed at its high. It has been forming bases very well and volume is following the trend, an extreme rarity in this market. It is a fund that invests in Chinese and Taiwanese equities, so look for Baidu (BIDU)’s resurgence as a possible fundamental aid to this great technical chart. Cut your losses at the 200 DMA, but don’t worry you won’t have to, CMF is at ridiculous levels around 0.4.

Exide Technologies (XIDE) is channeling upward and moved up on high volume yesterday. Great accumulation occurring and a great base has formed to trend off of for a few weeks. Also broke resistance today. Great play.

Enernoc (ENOC) went up 35% yesterday on very high volume and if it can break through its channel resistance at around 14.00 on high volume, it should be in for even more gains. Accumulation is rising, as well. This is a stock, like a lot of the others I’ve mentioned, that isn’t ready for purchase quite yet, but might be a good play to throw on your watch list.

American Superconductor (AMSC) is trending well in a rising wedge and just had a big up day on strong volume. If it can break out of that resistance, this is a great looking intermediate term stock play. Lack of accumulation troubles me, but price action is most important, so we’ll see if it is able to break out. Its 50 DMA crossed its 200 DMA on the bullish side, which is a great break out signal. Watch this stock for the next couple days.

I’ve been daytrading a lot, and I obviously can’t post those plays, because they’re in and out within 20-30 minutes, but once the market calms down a bit, I should be looking at more intermediate and long term plays. Feel free to ask any questions and dood luck trading.

GE falls and brings the market down with it.

General Electric (GE)’s horrid earnings release and forecast has brought back recession worries into investors’ minds. Standing firm to expected numbers only a week ago, the GE surprise characterizes the consumer spending problem in the United States and the effect the housing bubble has had on financials.

On a technical level, the market is moving exactly as I forecasted it to. Looking at the SPDR ETF (SPY), it is bouncing off of long term resistance, retracing to the trendline support. If it breaks this support, it should head down to long term support near the March lows. If it bounces off of the trendline, it should continue back up to test the long term resistance, and we’ll see if a breakout occurs. With volume increasing as the price falls, and money flow indicating increasing distribution, there’s a good chance it will break down through the trendline support and head back down toward March lows. If this happens, this retracement should be a prime candidate for a true “bottom,” setting up a bullish reversal, finally.

Here is today’s SPY chart:

Again, whether the market is short-term bullish or bearish depends on how it acts around the trendline support, but I am looking for bearish stocks for Monday specifically.

Walgreens (WAG) is breaking down below its 50 DMA, as well as its support trendline, on high volume. The stock has been retracing from its channel resistance trendline to its support, but volume has been increasing with the falling price. This is a marked difference from the previous two times the stock dipped below the 50 DMA. Cut your loss just above the 50 DMA if the stock does not move downward immediately.

Blackrock Muni Intermediate Fund (MUI) has been testing resistance around 13.50 since February. The price has been hovering around that level in recent weeks, with no breakouts on high volume, with no indication of accumulation. This consolidation comes after a huge price spike, characterized by overall distribution and low volume surges, suggesting a correction is on the way, especially if the overall market trend is bearish. Cut your losses just above the resistance line if it surges on high volume.

CIGNA (CI) has been trending upwards in recent weeks. This price surge has been on low volume and increasing distribution, however. The price is right on its support trendline, and I’m looking for it to break down on its support. Cut your losses at the resistance trendline if the stock does not move downward immediately.

Valhi (VHI) has also been trending upward with increasing distribution. The stock just broke a support trendline, but on low volume. Volume has been following the uptrend, as well, so whether or not this is truly a reversal has yet to be seen. Trade this stock with caution, and cut your losses just above the support trendline.

Kindred Health Cared (KND) just suffered a bearish 50/200 DMA “death cross.” At the same time, price broke a short term support trendline. All of this occurred on high volume, as the recent price fall is characterized by increasing volume. Cut your losses at the 200 DMA.

Good luck trading.

Indecision, indecision, indecision.

My SKF long and BK short suggestions worked out very well, as did my HYTM short if profits were taken timely. My IIF short worked out for one day as I thought, but did not trend as I expected the next few days.

Today’s market opened well above yesterday’s close, based on Washington Mutual’s positive news, but declined throughout the day to close just above yesterday’s close. Again, the market movement was on low volume, the lowest this month has seen, in fact.

After hitting an intraday high of around 138.90, SPY shot back down. This significant level falls right in that 138.80-139.20 range that has been tested as resistance twice now. It certainly seems like short-term negative price action is imminent, as the late day sell-offs prevalent last week and today show people taking profits and the bulls losing energy as they reach this resistance. We’ll have to wait for a significant pullback to the 50 DMA to confirm that price is heading back to support, but short-term price action does suggest short-term selloffs coming soon.

The last sell-off from this resistance level was near the end of February, and its pattern and volumes are very similar to the price and volume action of the past few days. Volume has been in an overall downtrend since mid-March, which happens to be the last “low.” This all points to the market in being a consolidation trend, with a short-term sell-off back to support. I’ll look for a sell-off back to around the 50 DMA, which is also around a significant short-term support/resistance level, and if it breaks that level, a sell-off back to mid-March lows. The market will not be in a bullish uptrend unless and until 140 levels are broken, retraced to, and bounced off of in the SPY, and the 200 DMA starts pointing upwards. Today’s big sell-off of solars is another indication of negative price action on its way for the next week or two.

Here is today’s SPY chart:

So I’m bearish for tomorrow, but the low volume across the board keeps me away from overtrading. Cash is king in markets without defined trends. However, one short/put possibility I like is Nuveen Perf Plus Mini Fund (NPP). NPP witnessed the 200/50 DMA bearish “death cross” and is also bouncing off of resistance around 13.60.

I’m not looking to be long on anything tomorrow, and even my favorite bearish play long of SKF (UltraShort ProShares Financials) is out of the picture as financials are gearing up for a breakout, based on the rising triangle wedge visible in XLF (SPDR Financial ETF).

It’s a waiting game from here. We have to wait for a trend to develop, some volume to intensify with increased institutional activity, and we will take it from there.

Follow-through day on April Fool’s rally.

Yesterday’s rally was one of the few big positive market stories of the last few months. It caused a lot of bullish sentiment that trickled into today’s follow-through day. The rally came on low volume, however, and by no means are we out of the water just yet.

Still, the April Fool’s rally was significant in that it broke the three-month-long downtrend. This also came after a double bottom, with SPY testing the 127 support level twice since the start of 2008. The rally and subsequent follow-through were on low volume, however, and there’s resistance in sight at the SPY 139 level.

The most bullish signal of all for the follow-through, however, is the fact that one occurred. All of the big rallies in the past few months have preceded big down days that erased much of the gains. Not so today.

I still think there is downtrend action left to occur and that the market has not bottomed quite yet. But this is a sign that good days are possibly in sight. Once volume retires to rallies, uptrends and hot charts will come with.

For now, though, I will look to be short, anticipating a retracement soon, with people taking profits, something that the follow-through showed had not been completed. The 50 day moving average should provide good support short-term for the market, so I’m also anticipating a retracement to that level. Most importantly, however, I believe new economic data and the Bernanke speech have yet to be priced into the market.

Here is today’s SPY chart:

So I’m bearish for tomorrow and will be looking to short stocks and buy puts. I am specifically looking at buying puts on BK (Bank of New York Mellon). With a huge sell-off today on monstrous volume, the chart looks bearish enough, but issues are compounded with its 200 DMA approaching its 50 DMA on the bearish side. Stochastics are around 35, so it still have plenty of room to fall before it’s oversold.

Financials in general will be a focal point for me tomorrow. SKF (UltraShorts Financials ETF) is one of my favorite bearish financials plays. It attempts to mimic double the inverse of the Dow Jones Financials price movement. I will be looking to buy calls on it tomorrow.

On a bit of a more speculative play, I will be looking at shorting/buying puts on IIF (Morgan Stanley India Invest Fund). The 200 DMA just crossed the 50 DMA today downward, as the stock bounces off a resistance level tested four times now. I’m looking for a big sell-off tomorrow on high volume. There is a possibility of an early morning spike beginning tomorrow, considering its late-day rally today, that I will take into account.

A microcap play I’m looking at is HYTM (Hythiam). After an exponential surge the last three days and up 22% today, it looks like this is just another microcap runner. It is down 9% after hours and I will be looking for a quick 10-15% gain by shorting it tomorrow after a possible early morning spike.

Feel free to post comments, everyone.