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Monday, December 22, 2008

Watchlist Stocks - JOYG, MA, GS, SUN, NUE

Nucor Corporation (NYSE:NUE) - Broke out of double bottom formation and now pulling back to support area between $42.5-$40. It has also pulled back to a short term uptrend line. Wait for a day or two for a bullish candle for confirmation successful retest.

MasterCard Incorporated (NYSE:MA) - Broke out of downtrend line. Now trading above 50SMA and resistance $150. Next target @ $170.

Goldman Sachs Group, Inc. (NYSE:GS) - Still in the formation of ascending triangle pattern. If it is able to breakout with good volume and sustain above 50SMA overhead, next target would be $100.

Joy Global Inc. (NASDAQ:JOYG) - Broke out of ascending triangle on earnings announced a few days back. It has cleared a downtrend line that formed since Sep. Now retesting former resistance now support at around $22.5

Sunoco, Inc. (NYSE:SUN) -In an ascending triangle breakout and now hovering around 200SMA. It has retested former resistance, now support @ $40. But the the move up could potentially stall at $45, which doesn't make it a very good risk/reward candidate.

The VIX has fallen by about 50% from the peak at 80 and bad news seems to have been well cushioned by the market. While we can start dipping our toes back into swing trading, it is advisable to still trade lightly with smaller position size because trading volume will start to dwindle this week till year end as we approach the holiday season. Well, if possible, stay away from the market these 2 weeks and enjoy your holidays!

Wednesday, December 17, 2008

Fed Cuts Rate, US Dollar Falls

After a 0.75% rate cut on Tuesday to 0.25%, US now officially has the lowest interest rate amongst major currencies. This marks the first time the target rate has been below 1.00% in 50 years. The FOMC is said to be targeting a fed funds rate ranging from 0.00% to 0.25% and. It looks to be following the foot step of Japan? Table above from dailymarkets.com

The aggressive rate cut has sent the US dollar diving, although technically speaking, the chart was already showing a rounded topping pattern around late Nov / early Dec when it is unable to break resistance @ 88 and MACD showing negative divergence. There is potential support at around 80. If it breaks further, next support level to look out for would be 76.

I have been monitoring the Forex market lately due to the high implied volatility in options and also due to personal reason, I've not been able to trade the US market at night (in Singapore) as much as I'd like to. Don't be surprise if you start hearing more about forex from me. For those interested, here's a free forex video on how to approach both trends and market timing in the forex markets using the EUR/USD as an example.

Friday, December 12, 2008

Free Trading Videos

I have 2 free trading videos from MarketClub to share with you this weekend.

1) How to determine the trend in any market?
- How to determine a downtrend.
- How to determine an uptrend.
- How to determine when a market is making a change of direction.

"One of the key components I look for is how a market closes on a Friday or the last trading day of the week. This is when traders have to decide what they want to do with their positions. It also tells you with a high degree of probability which way the market is headed for the upcoming week. I learned this trading secret on the floor of the exchange in Chicago and it is one I would like to share with you today. I feel that this technique has a lot of validity, particularly in light of today's volatile markets."

Watch free video here.

2)Rule of 50 and Pullbacks

Adam from MarketClub - "I can honestly say that 30 years ago I learned how to trade the markets in the pits of Chicago. It was there, in one of those sweaty, tumultuous, in your face trading pits, that I learned one of the most valuable trading secrets in the world. This one trading secret opened my eyes to why things happen in the markets. This trading secret, which is over 800 years old, is one of the most monumental mathematical discoveries of all time."

Watch free video here.

Thursday, December 11, 2008

Which Direction Will the Stock Market Break?

SPDR Trust, (AMEX:SPY) printed 2 consecutive inside days on Tue & Wed with low volume as the market awaits the auto industry bailout approval. With 2 inside days, the market is now like a coiled spring. Expect a big move coming. It is now facing the 50 day moving average and also a downward trendline overhead. Having said that, it is also in a inverse head and shoulder pattern, which is a bullish pattern. In fact, many of the charts are in the same pattern as the SPY, i.e. facing overhead resistance, but also forming a bullish pattern. Which way will the market break? We should have an answer end this week or early next week with the FOMC policy statement on 16 Dec.

The Market Vectors Agribusiness (NYSE:MOO), which is the ETF for agri stocks like AGU, POT, MOS, is also in a similar pattern as SPY, but more bullish as it has already broken above the downward trendline and 50 day moving average. You may wish to keep some agri stocks on your watchlist.

Thursday, December 04, 2008

Intraday Action of Research In Motion Limited (NASDAQ:RIMM)

Research In Motion Limited (NASDAQ:RIMM) gapped down on Wednesday on issuance of downside guidance, ahead of its earnings report to be announced on 18 Dec. However, it managed to close up the gap, probably in part due to the general market strength.

On 15 min chart above, it broke resistance @ $37.5 and after printing 3 solid bullish bars, it stalled at the downward sloping 50 SMA. Placing Fibonacci retracement from day's low to swing high of the day, the retracement found support at around 50% Fib level. At 2pm ET, it formed a inside bar just below resistance @ $37.5. A good entry would be long on break of inside bar high, which is also a break of the resistance. By then, the 50SMA slope has also become flattish and converging with the 5EMA & 20EMA. Place stop just below inside bar low and partial profit at previous swing high. As it approaches round number $40 and also 38% fib extension, take final profit or keep a tight stop.

Note: There are 2 reasons, in my opinion, why the earlier break of resistance @$37.5 at around 10.45am ET is not such a good entry for going long:

-It is just about less than $1 away from the downward sloping 50SMA, where the upmove may potentially store. And especially if you're trading options, this is not a very favourable reward to look at.

-If you look at the 5min chart below, before the break of resistance @ $37.5, it made many consecutive bullish bars without any consolidation. It is higher risk setup if you enter here as price could pullback / consolidation anytime.