Archive for August, 2008

Monday, the SPX breached the trend line and has now bounced back up to retest that level. Should the index break through this area, the next stop would be some minor resistance at 1317 with major resistance at 1340. Should the SPX stall at current levels, it will probably go down to retest the swing low at 1264. 1264 is fairly stout support and a break there will signal the beginning of a strong bearish move. There are three swing lows on the way to major support at 1200 (refer to the charts of 8/15 for specific swing low price levels). Each of those swing lows could provide a cause to pause the move but most likely only a brief pause on the way down. It’s my belief that the last three sessions have had no conviction with enemic volume. IMHO, it’s a head fake and my money is short. However, you need to do your own due diligence.

The NDX has formed a classic cup and handle chart pattern. A break above 1975 would be very bullish. Friday gapped up on low volume off of Thursday’s low volume “Hammer” and the 20 day EMA. Let’s watch how the market performs Monday to see if there is any follow through. My sense is that the NDX is headed down. When summer ends and liquidity returns to the markets, I feel that volume will be bearish. I’m short here as well. I don’t feel that the Bulls have enough steam to take this index beyond 1975. Again, do your own due diligence before commiting any capital.

ECONOMIC REPORTS

MONDAY 8/25

Existing Home sales

TUESDAY 8/26

Consumer Confidence, New Home Sales, and FOMC Minutes

WEDNESDAY 8/27

Durable Goods, Crude Inventories

THURSDAY 8/28

Chain Deflator, GDP, Initial Claims

FRIDAY 8/29

Personal Income, Personal Spending, Chicago PMI, Michigan Sentiment

EARNINGS OF NOTE

MONDAY 8/25

None

TUESDAY 8/26

BIG, BGP, CHS, JCG, RTP, SAFM

WEDNESDAY 8/27

CWTR, DLTR, FCEL, MW

THURSDAY 8/28

JMBA, KIRK, MRVL, NOVL, OVTI, SHLD, SIGM, TIF, WIND, ZLC

FRIDAY 8/29

None

The market doesn’t seem to know what it wants to do. The week was a low volume affair. It felt like a typical summer market. There wasn’t a lot of news to move the market. The Dow and the S&P 500 broke through a supporting trend line and is now retesting that level with both indexes ending essentially where they began. We are now moving into the National Political Conventions leading up to the election. Volume will soon return to the markets and it should begin to get interesting. It is still my opinion that we will retest the lows from July with a cathartic selloff and the beginning of a more consistent bullish sentiment in the markets. Right now there is still a lot of indecisive and range bound trading. From a trading perspective, it is a good time to sell premium with Credit Spreads, Iron Condors and Iron Butterflies. The directional game is just too tough right now. Robin

Well we’re wrapping up our series on “What Kind of Trader Are You”. The last trading personality on the hit parade is “Greedy Gerdie”. You may recall, Gerdie has a tendency to stay way too long at the party and more often than not, she ends up with a hangover. She wants it all, usually in one trade and the result is almost always negative.

Why does she do what she does?! Traders like Gerdie don’t have the confidence that they can consistently win in the market. When these types of traders find themselves on the right side of the market, they stay too long trying to squeeze every last penny out of the position. The “Greedy Gerdies “of the trading world also have a tendency to not trade a diversified portfolio. They put all of their eggs into one basket and watch that basket very closely. However, to Gerdie’s credit, she has a trading plan. Having a plan sets her apart from a majority of traders. The problem is that the plan is not well thought out.

Gerdie’s five step trading plan:

1) Turn on the computer

2) Find a stock that has a catchy ticker symbol

3) Hit the buy button

4) Hope and pray

5) When the trade is working, make as much as possible

Gerdie is currently ruled by her emotions. She is undisciplined and has no plan for success in the stock market. She is random in her approach. So, how can we possible help this lost soul?? Here is Robin’s elixir for Gerdie:

1) She must have a TRADING SYSTEM

2) Gerdie must not deviate from the RULES OF THAT SYSTEM

3) It is imperative that Gerdie have PREDEFINED ENTRY AND EXITS in order to eliminate fear and greed

4) Gerdie must DIVERSIFY her portfolio and pay special attention to POSITION SIZING

5) Gerdie must resist playing the HOLY GRAIL GAME. No system is perfect. Find a system that works for you and stick with it.

Well another hard day working for the rights of the common man This Robin hood gig is not all that it’s cracked up to be. I have to try and keep “Little John” under control and sometimes he can be a real pain in the Tunic. By the way, stop by and visit the “Merry Band of Traders” at www.MarketTamer.com. They have a plan for your stock market success. See you next week. Robin

Geopolitical issues with Russian and Georgia coupled with an early pop in oil contributed to a weak open on Monday. Stocks recovered by the end of the trading day to close moderately higher. On Tuesday, the commerce department report on the trade deficit was favorable but was negated by a large 102 Billion federal budget deficit as stocks tumbled to triple digit losses. Midweek, the retail sector disappointed pushing the Dow to its second triple digit loss in two days. Thursday saw jobless claims up and both the CPI and Core CPI worse than expected. However, that wasn’t enough to keep the market down three days running as oil dropped to fuel an 82 point gain in the Dow. We closed out the week with a low volume day that saw the major indexes moderately higher. Oil finished at $113.77 a barrel. For the week, the Dow lost 74 points, the SPX gained a paltry 2 points and the NDX was the big winner with a 31 point gain.

ECONOMIC REPORTS

MONDAY 8/18

None

TUESDAY 8/19

Building Permits, Core PPI, PPI, Housing Starts

WEDNESDAY 8/20

Crude Inventories

THURSDAY 8/21

Initial Claims, Leading Indicators, Philadelphia Fed

FRIDAY 8/22

None

EARNINGS OF NOTE

MONDAY 8/18

BHP, LOW, TSL

TUESDAY 8/19

HPQ, HD, MDT, NVTL, SKS, TGT

WEDNESDAY 8/20

HOTT, JDSU, LDG, CRM

THURSDAY 8/21

ARO, BKS, BEBE, BKC, DKS, FL, FRO, GME, GPS, HNZ, INTU, JMBA, PSUN, BKE, PLCE

FRIDAY 8/22

ANN, CSUN