Just a quick update here on the SPDR Trust (AMEX:SPY) chart. As mentioned in my recent post, if SPY breaks Oct lows, expect to find support at 75. We have the SPY rally over the last few days when it found support at 75. With a shortened trading week due to Thanksgiving holiday on Thursday, expect volume to be thin. The indices are likely to consolidate the recent move; or if there is any headline news, given the thin volume, we'll see exaggerated move.
Gold broke out of consolidation mode last Friday. See above chart of SPDR Gold Trust (NYSE:GLD). This sector may interest you. Watch for stocks like AEM, ABX, NEM etc. But wait for pullback before going long. You may also be interested to see this free video by MarketClub on gold.
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Will Hedge Fund Redemptions Sink the Market Lower?
Two weeks ago, I discussed about the positive divergence in SPY chart. I said that we could be looking at a more sustainable rally in the bear market. Indeed, we managed to sustain the rally for about 1 week. We never have one for more than 3 days in a long long time. I also caution about resistance at 100 level. The SPDR Trust (AMEX:SPY) turned down from there and we are now close to retesting the Oct's low. If we do break these lows, next level of support would come in around 75. See monthly 10 year chart below.
Are the selling these few days related to hedge fund redemptions? According to a slightly dated article from MarketWatch:
"Many hedge fund investors can withdraw money on Dec. 31. Some funds require that redemption requests be submitted 90 days ahead of time. That means requests have to be in by Tuesday. Other funds require 45 days notice, so there may be another round of withdrawal requests toward the middle of November."
First Solar, Inc. (NASDAQ:FSLR) Intraday Trade Setup
After several days of rocketing upwards after its earnings announcement, First Solar, Inc. (NASDAQ:FSLR) gapped down today. See 15min chart above. After gapping down, it tried to retrace on lower volume, but stalled at the downward sloping 20EMA, printing a shooting star. It was also unable to close above S1 of pivot point at about 169.37 (not shown). A good entry to go short or buy Put options would be at the break of the shooting star low. While the 50SMA appears just right below the shooting star, it is not of a big concern since its slope is pretty flattish.
Good to partial take profits at round number $160 or as it approaches a former resistance (see black line). That proved to be quite a strong support and the trade would have been shaken out by bullish bar formed at 12.45pm. After some consolidation, FSLR breakdown once more and eventually hit the 61.8% fibonacci extension from previous day high to today's ORL (opening range low)