Archive for October, 2009

The DOW broke down out of the recent Bull Flag this week.  The index closed at 9972 on Friday 10/23 and settled at 9713 this week for a 259 point drop.  The lower trend line held and the 50 day SMA seems to also be acting as support.  This may be nothing more than a simple pullback.  It is interesting to note that  all of the doomsday people come out of the woodwork on any kind of a correction.  The fact is, we have had three pullbacks since August and this one is not any more excessive than those.  Not to say that we will not continue the bearish move, however, I need additional confirmation.  A break of the lower trend line and a solid break of the 50 SMA on increased volume would convince me that this recent move is more than profit taking.  I think we will have a bounce this coming week, but we shall see.

The SPX has broken the lower trend line from last week.  I have redrawn another lower line this week that has three solid touches.  We must respect the trend line break as well as the break of the 50 day SMA.  The volume on the move this past week was not remarkable, so I will also need confirmation of the likelihood of a continuing move to the downside.  I feel that we will get a bounce this week in the index.

The COMPQ is currently testing the swing low from 10/2 at 2041.  There is some confluence from the swing high from 8/28.   The index clearly broke the lower trend line of the channel as well as the 50 SMA.  However, the volume was not convincing.  I feel that the double bottom may slow the move. 

Earnings season has been good for the most part.  We have a lot of economic news coming this week which could move the markets.  Stay on your toes and don’t fight the tape.  Robin

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-The Put Ratio is nothing more than a Bear Put with an extra Short Put usually at the strike price of the Short Put in the Bear Put.  Example:  BTO one Long Put at 25 and STO two Puts at strike 20.  The maximum reward is achieved if the stock settles at the Short Put strike.  The trade can be placed for a debit or a credit.  If the stock settles between the long and short strikes, we will achieve profit but it is reduced and the downside break even is the Long Put strike less the debit (if placed for a debit).  If placed for a credit, the trade will make a small profit wherever it settles above the Long Put Strike.

The downside profit begins to diminish the further the stock falls  below the Short Put strike.  The Short Puts will cost more to close as the stock falls which is detrimental to the seller of the Puts, so even though the 25 Long Put is increasing in value, the Short Puts are losing faster that the Long Put is gaining.  At expiration, when the Stock falls below the amount of the Short Put premium collected, the position begins to lose.  Because there is one Put uncovered, the trader must post margin on the trade.

ECONOMIC REPORTS

MONDAY 11/2

Construction Spending, ISM Index, Pending Home Sales

TUESDAY 11/3

Factory Orders, Auto Sales, Truck Sales

WEDNESDAY 11/4

Challenger Job Cuts, ADP Employment Report, ISM Services, Crude Inventories, FOMC Rate Decision

THURSDAY 11/5

Employment Cost Index, Productivity – Prel, Initial Claims, Continuing Claims

FRIDAY 11/6

Average Workweek, Hourly Earnings, Nonfarm Payrolls, Unemployment Rate, Wholesale Inventories, Consumer Credit

 

 

EARNINGS OF NOTE

MONDAY 11/2

APC, CHK, F, HUM, PFG

TUESDAY 11/3

ALY, ADM, BGFV, CHD, CTSH, DUF, HIG, IUSA, ICE, JRCC, KCP, KFT, LPX, MTEX, MRO, MLM, MA, ONXX, OSK, PZZA, MALL, PBI, RL, RCL, STEC, SHOO, UBS, VIA, VNO, AUY

WEDNESDAY 11/4

 AGU, CECO, CBOU, CBEY, CKP, CLH, FWLT, GRMN, GG, IOC, LIZ, MMC, MSO, TAP, MUR, PRU, PHM, RLH, ALL, TWX, RIG, WFMI

 

THURSDAY 11/5

BEBE, NILE, CFL, CPKI, CI, CROX, DPS, DYN, FTO, HANS, ISIS, NVDA, PDC, PLA, RRGB, RJET, RST, SLE, SKYW, BID, SBUX, TRI, TWC, TM, WEN

FRIDAY 11/6

SU, BX

 

I’m watching the market get hammered today and the bears are having their way.  The bulls are panicky and selling.  I’m calmly sipping my coffee and writing this blog while others are vomiting as they watch their accounts disappear.

I decided many years ago to get off the roller coaster and hedge my trading.  There were days when I traded the “old way”, that were pure joy as I could seemingly do no wrong as the money rolled in.  However, those times were more than offset by the stomach churning losses that I endured on days like today.  

There are those I suppose who crave the adrenaline rush of the highs and lows, but quite frankly, I prefer to get my excitement in other ways.  The Stock Market is littered with the decimated accounts of many of the roller coaster crowd.  Just remember that when you blow up your account, you are out of the game.

I hope that you enjoy your weekend and Halloween.   It should be a fun break from the Stock Market as we watch the trick or treating and the World Series…..but my sense is that many will be anguishing over their Stock Market losses.  Is the pain really worth it!?  Learn to trade the MarketTamer way and take back your life! Click Here.  Best, Robin

 The DOW is currently In a box between 9917 and 10118. The RSI, Stochastics and the MACD are pointing down.  Volume has been unremarkable.  We are at the top end of the Bollinger Bands as well as the broadening trend line channel.  The market appears to be very indecisive.  I will just wait and follow where it wants to go.  We are at significant resistance from 1999- 2001 and 2004 and 2005.

The SPX is a carbon copy of the DOW.  Long term resistance resides at current levels from 2001 and 2004 and 2005.

The COMPQ is at the top end of the Bollinger Bands about mid channel and very indecisive on average volume. 

 

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