Archive for April, 2009

The DOW has moved into a Bull Flag chart pattern and is having difficulty punching through the 8200-8500 level.  The key breakout will be the swing high from 4/17 at 8191.  We need to get through that area with conviction as evidenced by increased volume.  When that happens, our first target will be the swing high from 2/9 at 8315 and then the swing high from 1/28 at 8406.  The ascending channel has flattened and I am less bullish until the market reestablishes its’ direction.  That means that some scaling out may be in order.  If we break the aforementioned highs, you can get longer once again.

Key areas of support are the bottom of the flag at 7792 and 7750.  If those levels are broken to the downside, we could retest 7449.

No market can continue the parabolic move that we have had since early March.  It is healthy that we pause and go sideways.  I still feel that we have more to go to the upside.  However, it is always prudent to make an unrealized gain, a realized gain before giving it back to the market.  It is ok to take some off the table when you have profit.

The SPX is very similar to the DOW in that we have some short term resistance that must be breached in order to continue the ascent.  The swing high from Friday 4/17 at 876 is the first target, then the Double Top from 1/28 and 2/9 at 878 and 875 respectively.  If those levels are broken then we could move to 944.  Both the DOW and the SPX have formed a “J Hook” type pattern in this past week and that is a bullish set up for a breakout above the high posted on Friday 4/17.  Be ready for that move as I feel that it is likely to occur.

The COMPQ has continued to lead the way as I projected.  The next stop is the swing high from 11/04 at 1786.

Monday, the DOW sank 290 points as concerns about Bank stability surfaced amidst negative analyst comments on BAC and C.

The Market recovered Tuesday as IBM and TXN surprised in their earnings despite continuing concerns regarding Bank stability.  The DOW finished higher by 128 points.

Wednesday was volatile as the Market made a valiant attempt to close in the green on positive housing news, but it finally succumbed to a loss by the close as the DOW finished lower by 83 points.

Thursday was a ‘Tug of War’ between the Bears and the Bulls.  Jobs data was squarely in the Bears camp as well as disappointing housing numbers from the NAR.  The bulls countered with positive earnings from the likes of AAPL and EBAY as well as some financial stocks.  The Bulls eked out a win as the DOW closed higher by 70 points.

Friday saw the Market up on positive earnings from AXP, F and AMZN.  Durable Goods and New Home Sales were ‘less bad’.    The criterion for the ‘Bank Stress Test’ was unveiled as well.  The DOW finished higher by 119 points. 

Week over week, the DOW was off 55, the SPX down 4 and the COMPQ better by 21.

Learn to trade like the Pros!!  Click Here.

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This position is the inverse of the Covered Call.  However, the risk in the covered call is limited to zero whereas the risk in the covered put is theoretically unlimited.  The trade is comprised of two legs: 1) Short Stock and 2) a Short Put.  The trade optimizes a bearish trend but has a limited reward.  As with the Covered Call, the short option provides a credit that helps to hedge the position to a limited degree.  If one wishes to limit the upside risk in the position, a long call could be added which would morph the position into a Reverse Collar.

Study the risk graph and you should gain an understanding of the risk and reward of the trade.  Best, Robin

 

ECONOMIC REPORTS

MONDAY 4/27

None

TUESDAY 4/28

Consumer Confidence, S&P CaseShiller Home Price Index

WEDNESDAY 4/29

GDP-Adv., Chain Deflator-Adv., Crude Inventories, FOMC Rate Decision

THURSDAY 4/30

Initial Claims, Personal Income, Personal Spending, Employment Cost Index, Chicago PMI

FRIDAY 5/1

Michigan Sentiment-Rev, Factory Orders, ISM Index, Auto Sales, Truck Sales

 

 

EARNINGS OF NOTE

MONDAY 4/27

AAN, BIDU, CHKP, HUM, PCL, PPD, SWN, TZOO, TUES, VLO, VZ

 

TUESDAY 4/28

BMY, BWLD, CRDN, CERN, CEA, DAI, DB, ETFC, ELNK, BEN, HTZ, HMC, JEC, LVLT, MEE, PNRA, PEET, PFE, STFC, JAVA, TLAB, MHP, UA, X, USNA,

WEDNESDAY 4/29

AET, AFL, AKAM, AMT, BKC, ESRX, FSLR, FSRV, FLEX, FLS, GD, HES, IRIS, JDSU, JNY, NTRI, OSIP, PROV, Q, RYL, SNY, SBUX, TXT, TWX, WMI, WYE, WYN

THURSDAY 4/30

AMAG, APA, BASF, BWA, BC, CAB, ELY, CBEY, CELG, CL, CI, CMI, DPZ, EK, ETH, ESLR, EXPE, XOM, FISV, HIG, HP, IP, K, MTW, MRO, MSO, MFE, MET, MWW, MORN, MOT, NANO, NBL, NUS, OMX, OSIS, OC, PG, SWY, HOT, STRA, TSM, DOW, VIA, WMB, XEL

FRIDAY 5/1

CVX, FLIR, FO, JRCC, MA, SPG, WPO

Please forgive me for somewhat of a departure this week from the average financial blog.  My wife is an oncology (cancer) nurse and she makes a difference daily in the lives of her patients and their families.  She has a passion for her work.  Unfortunately, so many people trade their time for a paycheck and live for their time off; postponing their lives and not living in the present.

Life is way too short to be doing something you are not passionate about.  Time is not a renewable commodity, when it is gone…it’s gone!  I am moved to reveal my feelings today on this subject because my wife just lost a co-worker to cancer today….a young mother and wife of 32, with three children.  This young woman made a difference and was loved by everyone who came in contact with her.

Vow to yourself not to go another day sleep-walking through life.  Make a difference.  Maximize your talents and be passionate about your life’s work.  If you don’t like what you are doing with your life, then don’t let another second pass.  Change it!  If you love your life’s work, others will see that and you will have a major impact on those you touch.

This is a financial blog and this commentary may seem inconsistent with the aim of what I’m trying to accomplish here; but not really.  I’m out to change lives in a positive way and events such as the tragedy of losing someone prematurely tends to prompt one to re-evaluate.  I left corporate life which I had grown increasingly disillusioned with to pursue my passion to trade fulltime and to help others do the same.  If you are not happy with your current situation, I encourage you to make changes in your life.  Happy people are those that lead fulfilling lives and since what we do as a life’s work encompasses so much of our energy, it only make sense that if we are enriched in our work, we will enrich others and we will be happy, productive people.

Today we lost a person that did it right and was loved by many.  Do you make a difference?

Best, Robin

ROBIN HAS BEEN ABSOLUTELY SPOT ON IN HIS MARKET CALLS!!  “ANY CALLS BEYOND A FEW DAYS TO A WEEK ARE PURELY SPECULATION, HOWEVER, I HAVE BEEN ABLE TO ACCUATELY CALL THE SHORT TERM MARKET WITH A COMBINATION OF COMMON TECHNICAL INDICATORS USED IN AN UNCOMMON WAY.”  SO HOW DID ROBIN DO LAST WEEK!?

COMMENTS FROM LAST WEEK’S BLOG POSTED ON 4/11/2009:

DOW:  “THE DOW WILL CONTINUE HIGHER TO TEST THE DOUBLE TOP FROM JANUARY/FEBRUARY.  THE FIRST TEST WILL BE AT 8315 AND THEN 8405.  IF IT BREAKS THOSE LEVELS, IT WILL MOVE HIGHER TO CHALLENGE THE SWING HIGH AT 9088 FROM THE FIRST OF THE YEAR.”  

 What happened!?  We went higher as forecast, reaching a high of 8190 on Friday 4/17, closing at 8131.

SPX:  “THE SPX IS GOING HIGHER TO TEST THE DOUBLE TOP AT 877 FROM LATE JANUARY AND MID FEBRUARY.  FROM THERE, THE NEXT STOP IS THE DOUBLE TOP AT 918 FROM DECEMBER ’08.  I BELIEVE IT WILL EVENTUALLY HIT THE SWING HIGH AT 944 FROM EARLY JANUARY.”

What happened!?  Up we went to test the high at 876 on Friday 4/17 and settled at 870.

COMPQ:  “THE COMPQ SHOULD TEST 1666 THIS WEEK.  IF IT BREACHES THAT LEVEL, WE HAVE A STRAIGHT SHOT TO THE SWING HIGH OF 1786 FROM 11/4/08.”

What did it do!?  The COMPQ reached a high of 1682 on 4/17 and closed at 1673.

Monday formed a hanging man candle, which is bearish.  Profit taking was evident in the morning hours, but the indexes rebounded late to pare losses as the DOW finished down 25 points. 

As expected, Tuesday was bearish on economic news and some less than upbeat comments on the economy by President Obama.  The DOW closed down 138 points.

Wednesday morning, the trading was bearish based on poor manufacturing data.  However, better than expected earnings pushed the market higher in the afternoon to close up 109 points on the DOW.

Thursday saw a continuation of Wednesday’s triple digit gain as the markets battled off negative jobless claims numbers and declining housing starts to close 96 points higher in the DOW.

The week ended on the plus side in choppy trading as Google, GE and Citi all reported earnings.  Continuing speculation regarding GM’s possible bankruptcy added to the uncertainty as the DOW closed up 6 points.

Week over week, the DOW was up 48, the SPX gained 13 and the COMPQ  was better by 20.

LEARN HOW ROBIN TRADES THE MARKET!!  CLICK HERE.

 

-We are continuing our trek higher.  Targets are 8315 then 8404.  If that level is broken we will challenge 9088.  As I have said since the rally began, once the double top at 8300-8400 is breached money will begin to come in off the sidelines and we could really explode upwards.  We are stair stepping our way up with higher highs and higher lows.-Once 877 is broken we will accelerate to 944 then 1007.  Up we go!!

-1786 is the next stop.

-The longer term perspective is always helpful.  This is an important trendline and if breached will confirm the upward move.

-The SPX has already breached this trendline.  If it holds and retests successfully, that will confirm the strength of the rally.