Trader Mike

November 12, 2009 Stock Market Recap

Michael — Thu, 12 Nov 2009 18:04:27 PST

We had a little pullback today on mixed volume. The S&P 500's volume remained about the same as the past couple of sessions but volume increased on the Nasdaq, Russell 2000 and Dow. So I still have the same concerns about a lack of upside volume relative to the down days. While there wasn't a lot of technical damage done today we've still got to be alert for topping patterns -- a double top on the S&P 500 and a head & shoulders on the Nasdaq.

As usual, the small caps performed the worst. The Russell fell twice as much as the other indices on a percentage basis. This is the index most in danger of taking out its November low.

Trend Table

One downgrade

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Down(-)
Short-term	Up	Up	Up

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

November 11, 2009 Stock Market Recap

Michael — Wed, 11 Nov 2009 16:35:14 PST

The market has gained some ground since my last post but there were no technical developments to change my opinion on things. I'm still skeptical of this attempt at new highs. The indices are now firmly overbought and there's been poor volume behind this rally. At best (for now) the Nasdaq and S&P are range-bound. I'm sticking with that theory until it's proven incorrect. Given that and the overbought stochastic readings I'm looking for a move back toward the bottom of the range. I'm also finding a lot of short candidates among stocks which are stalling near their 50-day moving averages. (That's one of the things William O'Neil looks for in short candidates. Those stocks that peaked in the spring are really lining up with his criteria.)

The small caps have a long way to go to catch up with the larger cap indices. This chart really looks like a failing rally...

Trend Table

No changes

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Lat
Short-term	Up	Up	Up

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

November 9, 2009 Stock Market Recap

Michael — Mon, 09 Nov 2009 18:09:15 PST

So it's broken record time for me. You know I have to complain about the lack of volume over these last few sessions. Sure, the price action has been great but I just can't shake the feeling that I shouldn't trust this rally due to the relatively light volume. The Dow was able to break to a new 52-week high today and the S&P 500 isn't far away from that same feat. I'm a little skeptical that the S&P will be able to hold new highs but stranger things have happened.

Trend Table

The table's looking much better...

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up(+)	Up	Lat(+)
Short-term	Up	Up	Up

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

November 5, 2009 Stock Market Recap

Michael — Thu, 05 Nov 2009 18:31:44 PST

I don't want to read too much into today's rally because it was on lackluster volume and because tomorrow's employment report could override any technicals. The S&P and Nasdaq climbed back above their 50-day moving averages today. That's a good sign for the bulls but we've still got to watch out for those indices forming head & shoulders patterns. Hopefully things will be clearer by midday tomorrow.

I rarely even look at the Dow so I was surprised to see how relatively well it's held up.

Trend Table

Several upgrades today

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Lat(+)	Up(+)	Down
Short-term	Up(+)	Up(+)	Up(+)

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

November 4, 2009 Stock Market Recap

Michael — Wed, 04 Nov 2009 18:50:33 PST

The bulls can't be happy with the way the market sold off in the last hour. But, as I often have to remind myself, the market often takes a day or two to figure out where it wants to go after a Fed decision / statement. (we had the exact same reaction after the September 23rd Fed meeting and the market reversed two day later) So I wouldn't read too much into that late selloff. Also, Cisco (CSCO) lifted the indices in the after-hours session with its earnings report. At the end of the regular session I was eager to get short tomorrow. I just knew there would be tons of stocks that made shooting stars and other bearish candles today. Even better, many of them would be at or near important moving averages. But Cisco curbed my enthusiasm with a quickness. I'm also a little concerned that we won't move much tomorrow because people may wait for Friday's jobs report to make any serious comittments.

The 50-day moving average has been a key level on the S&P 500 and it could become a factor on the Nasdaq if CSCO can avoid the post-good-earnings slides that so many stocks have had this earnings season. It seems that the indices always end up at some important technical level right before the monthly payroll report so it wouldn't surprise me if the Nasdaq and S&P closed near their 50 DMAs tomorrow.

Trend Table

No changes

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Down	Down	Down
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

November 2, 2009 Stock Market Recap

Michael — Mon, 02 Nov 2009 16:28:01 PST

So we had another session with wild intraday swings that were opposite the dollar. Unlike other recent sessions with those type of swings, this session resulted in a stalemate. Indeed, bulls and bears could claim victory today. The bulls can rejoice that they were able to defend last week's lows. But the bears can point to the failed morning rally on the back of pretty good economic data. Given the oversold nature of the market we could have easily seen a 2 or 3% gain on the day.

My outlook is basically the same as it was yesterday. The danger of an oversold rally is a little less now that the stochastics are starting to rise. I think that if the market can't make any progress beyond today's range by Wednesday's close (post-Fed decision) it will be open season for shorting. The market would just have gone sideways and relieved the oversold condition. I will be paying close attention to the S&P 500's 50-day moving average. It was a cap on today's rally and could very well continue to be resistance.

Trend Table

No changes for a change

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Down	Down	Down
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 30, 2009 Stock Market Recap

Michael — Sun, 01 Nov 2009 17:36:48 PST

I made comment to a friend in the middle of last week that it seemed like the wheels were coming off the market. I said that because of the wild swings which were apparently tied to the currency market. Given the sharp reversals on Thursday and Friday I think at least one wheel has come off. This is a tricky juncture. I still want to be cautious about being too bearish in the short term given the oversold condition of the market. And it's not just short-term oversold, T2108 has dropped to 20.67, so it's just a hair away from its oversold level of 20. However, I'm seeing a ton of stocks that look like they still have air under them despite being oversold. The vast majority of those stocks look like they're failing at their 50-day moving averages. (Moving average breaks are why T2108 plunged from 66 last week.) Here are a couple of examples:

Most of the charts on my short candidate list look like Dick's Sporting Goods (DKS). DKS is threatening to break last weeks low and there's a decent amount of room to the next support level. These stocks are tempting to try despite their oversold nature. If the market starts to drop again I'll be looking to get in some of these. (I have a lot of retailers on the list, which makes sense given the consumer data on Friday)

Charts like TD Ameritrade Holding Corp (AMTD) are a little more rare. The bet here is for a failure of the recovery bounce to the 50-day moving average.

The Nasdaq and S&P 500 show potential for similar rejections from their 50-day moving averages. But this week could be even crazier than last week due to the Fed meeting, the payroll report, ISM and several other reports. Plus there's still the potential for an oversold bounce. This is a week to stay on your toes.

Trend Table

A little whipsaw on the intermediate trends over the last 3 sessions as the Nasdaq and S&P 500 thrash around their 50-day moving averages.

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Down(-)	Down(-)	Down
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 29, 2009 Stock Market Recap

Michael — Thu, 29 Oct 2009 20:48:03 PDT

Sorry for the late post but I got caught up watching baseball among other things. We got our oversold bounce today. It was helped along by the better than expected GDP and probably by some month-end and year-end mutual fund buying. It was a broad based rally but volume was disappointing relative to yesterday. Still, the market remains oversold and I have to assume the path of least resistance is up (or sideways) in the very short term. We have a Federal Reserve interest rate decision next Wednesday, so that will likely be the focus in the coming days.

Trend Table

Some upgrades today...

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Lat(+)	Up(+)	Down
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 28, 2009 Stock Market Recap

Michael — Wed, 28 Oct 2009 17:00:25 PDT

It was a bloodbath today, especially in small caps and Nasdaq stocks. Midday I was surprised at how many stocks were popping up on my scanner which were down between 4 and 9%. There was a lot of technical damage done as many stocks and indices broke their 50-day moving averages. (T2108 plunged all the way down to 25 today.) Volume surged across the board and every sector was down on the day. We're also starting to see October lows get broken. The Russell 2000 did just that today and in doing so confirmed its double-top. It's fallen a long way, 9%, in a short amount of time so I wouldn't expect much more downside without at least some sideways movement first.

I won't be surprised to see some snap-back on the Nasdaq too but look out for the 50-day moving average turning to resistance.

On a percentage basis the S&P is twice as far away from its October low as the Nasdaq. So one could argue that it has room to play catch up but I'd be careful trying to chase it here.

Here's part of tonight's Worden report, which sums things up nicely:

Oversold...But

Trading stats have careened to extremely negative levels--indicating, paradoxically, that the market is either short-term oversold or at least very likely within a day of it. I think it's quite normal for a market to bounce off of a significant support level for a short time, while getting ready to take a walloping dive. The market has probably built up hefty oversold pressures, but not enough to win the battle of the October low. Before this skirmish is over, I strongly suspect the October low will have been shattered. But for the immediate period ahead, a lot of shorts could be bludgeoned.

Why do I think we're into oversold territory? To a great extent I'm going by the Dominant PV Relationship, which is a big-time PDVU (price down, volume up), consisting of a whopping 1780 stocks. That smacks of panic selling, and panic-anything seldom pays off.

But I believe the trading stats will carry the battle, and they are very negative. All Eight Important Averages were down today, averaging a jumbo -2.65%. Nothing was down less than one percent.

All 16 Breadth Groupings were Super-Decisively Negative.

Trend Table

More downgrades...

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Down(-)	Lat(-)	Down
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 27, 2009 Stock Market Recap

Michael — Tue, 27 Oct 2009 16:50:43 PDT

We had another strange day today. Once again the market had wild swings early on but this day was really marked by the relative weakness of the Nasdaq. It was like a tug-o-war all day between the Nasdaq and the Dow. So the Nasdaq lost a bit of its relative strength today by playing catch up (catch down?) with the S&P 500. It was about 1% weaker than the S&P today but both indices broke their March trendlines today. That's not a huge deal though, I'm more concerned with the 50-day moving averages on those indices and the October low on the Russell 2000.

Trend Table

The Russell is now clearly below its 50 DMA so I'm downgrading the intermediate trend again

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Down(-)
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 26 Recap: On Double-Top Watch

Michael — Mon, 26 Oct 2009 17:06:47 PDT

We had a pretty wild morning today which started off with about 1% gains in the first half hour but a rally in the dollar caused a sharp reversal in stocks. Those gains quickly turned to losses and that was about all she wrote for the day. The S&P 500, Russell 2000 and Dow lost just over 1% today. Even worse, they're starting to show some technical damage. I wrote about how I felt like the indices were masking some deterioration in leading stocks and it looks like that game is coming to an end. The small caps continue to look the worst. The Russell 2000 broke its March trendline on Friday and closed below its 50-day moving average today. To top it off, it's not far from breaking the October low which would confirm a double-top.

The transportation index is also in danger of confirming a double top. Followers of Dow Theory would say that doesn't bode well for the broader market.

The S&P is a couple of days behind the Russell. It's now threatening its March trendline and is one bad day away from its 50-day moving average. It also dropped back under its September highs today, so that 1070 - 1075 zone may have flipped back to resistance from support.

It's no surprise that the Nasdaq is showing the most resilience with the recent impressive moves by the likes of AAPL, AMZN and GOOG. But if the broader market really starts sliding those stocks could see some sharp reversals and take the Nasdaq with it.

Trend Table

The Russell 2000 closed a little bit below its 50-day moving average so I'm setting its intermediate trend to lateral.

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Lat(-)
Short-term	Down	Down	Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 23, 2009 Stock Market Recap

Michael — Sun, 25 Oct 2009 19:40:46 PDT

So we've had two days of chop since my last update and the indices are basically right where they were at Wednesday's close. Like the indices, my outlook has barely changed. It still seems like the indices are masking underlying weakness in some key stocks. It seems like people just have programs set to buy the broad market whenever it dips to the September highs. The Nasdaq and S&P 500 have been churning just above those support levels for the last week and a half. I can't see them staying in those ranges much longer and I suspect the break will be to the downside.

Trend Table

The short term trends flipped to up on Thursday and back to down on Friday.

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Up
Short-term	Down(-)	Down(-)	Down(-)

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 21 Recap: A Key Reversal Day?

Michael — Sun, 25 Oct 2009 16:06:40 PDT

We had a pretty good reversal today which made outside days on the S&P 500 and Nasdaq. Both of those indices made marginal new highs intraday and had volume increases today. So that qualifies them for key reversal day status. As usual though, we need to get some follow-through selling for this to be nothing but another blip in the multi-month rally.

As usual, I don't think there was one thing responsible for the selloff this afternoon. I think there was a technical aspect to it thanks to the indices failing to hold the marginal new highs they made around 10:30. I was already leery of that early push to new highs because Goldman Sachs (GS) was showing weakness as well as the 2:00 Beige Book release. We got a little selling when that data hit the wires but things stabilized until an analyst note about Wells Fargo brought out more selling. (Did the GS action telegraph the later WFC analyst note? )

Whatever the reason(s) for the selling, I think there's good reason to get cautious here. I haven't liked the way many stocks, which had good numbers, have reacted to their earnings reports. Goldman, which is regarded as the cream of the crop of banks has been weak ever since its earnings:

The other day I thought Intel (INTC) was set to recover from its post-earnings slide but it has continued to slide and is now back in its old trading range.

TXN has had a disappointing post-earnings reaction.

Ditto for AA.

Add IBM to the club.

So there's nothing really terrible in any of those charts. They just tell me that those stocks (and the broader market) got a little ahead of themselves. We're starting to see some cracks in the indices now too. They had been able to mask those slides that individual stocks have had but that changed today. It's most evident in the small caps. Note that the Russell 2000 was not able to take out its September highs like the other indices have done.

The S&P 500 and Nasdaq are now in danger of slipping back under their September highs...

Trend Table

Downgrades to all of the short-term trends today:

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Up
Short-term	Down(-)	Down(-)	Down(-)

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 19 Stock Market Recap

Michael — Mon, 19 Oct 2009 15:54:49 PDT

The market cruised higher once again today and it's looking even stronger in the after-hours session thanks to earnings from AAPL and TXN. Apple has traded on both sides of its all-time high of 202.96 tonight. I'm a little concerned about it doing a gap & crap tomorrow, like AA and INTC did after their good earnings reports last week. The $200 level should be a battlefield tomorrow and I'll be watching closely for a play long or short off of the action around 200 -- assuming it even gets down to 200. Here's the aforementioned Intel chart, which has pulled back and now looks ready for a push higher.

Here are the index charts.

Trend Table

No changes

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Up
Short-term	Up	Up	Up

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

October 14 Recap: New 52-Week Highs

Michael — Wed, 14 Oct 2009 16:38:09 PDT

It was "all systems go" for the bull case today. Many of the indices powered to new 52-week closing and intraday highs. The Dow also reclaimed the 10,000 level (for about the 10,000th time). There's no stink at all on today's action, volume even increased to (slightly) above average levels. However, it's still early in earnings season and the indices are still extended. It will be important for the good reports to keep rolling in to keep the market afloat.

Trend Table

No changes

*Trend*	Nasdaq	S&P 500	Russell 2000
Long-Term	Up	Up	Up
Intermediate	Up	Up	Up
Short-term	Up	Up	Up

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.