Archive for November, 2009

-Drawing trend lines is one of the first things that a professional chartist will do.  But how do we do it?  There can be short term trend lines and  longer term trend lines.  There can be trend lines that define resistance as well as support.  Do we connect the open, close, high or low?  Do we need to be absolutely exact or is close good enough. 

Here are the rules that I suggest when drawing trend lines.  Start with finding the longer term lines and then move to shorter term trend lines.  You need to have at least three definitive touches to be valid.  The more touches the better and over a longer period of time.  I suggest that you connect the lows of the candle for the lower trend line and the highs for the upper trend line.  It is best if the lines  touch exactly, but that will not always be the case. 

You will begin to see obvious trend lines the more experienced you become.  You will also begin to see that trend lines are a very powerful yet simple way to define support and resistance which if combined with other indicators can further enhance the strength of the support and resistance levels .  Best, Robin

ECONOMIC REPORTS

MONDAY 11/23

Existing Home Sales

TUESDAY 11/24

GDP- Preliminary, GDP Deflator – Preliminary, Case Shiller 20 City Index, Consumer Confidence, FHFA Home Price Index

WEDNESDAY 11/25

Personal Income, Personal Spending, PCE Prices, PCR Prices – Core, Initial Claims, Continuing Claims, Durable Orders, Durable Orders ex Transportation, Michigan Sentiment- Rev, New Home Sales, Crude Inventories

THURSDAY 11/26

Thanksgiving, Market Closed

 

FRIDAY 11/27

 None

 

 

EARNINGS OF NOTE

MONDAY 11/23

CPB, HPQ, LDK, TSN, VAL

TUESDAY 11/24

 AEO, BMO, BKS, BGP, CWTR, CBRL, DLTR, HNZ, JCG, MDT

WEDNESDAY 11/25

  DE, TIF

THURSDAY 11/26

NONE

FRIDAY 11/27

 FRO

The DOW looked like it wanted to pause mid channel on its way up to the top of the broadening ascending channel, however, it continued until it ran into the upper trend line of the channel and then pulled back slightly.  The index is currently forming a tight Bull Flag on decreasing volume.  The key breakout level is the high of the flag at 10,342.  If  the DOW rolls over, it will likely come back down in the channel and retest the lower trend line.

The SPX rose to test the swing high from10/21 at 1101 putting in a top of 1105 and then pulling back.  We have a Cup & Handle chart pattern and the upside target is the first lip of the cup at 1101 and then 1105.  A pullback would take the index back to the bottom of the recent channel.

The COMPQ is also putting in a Cup & Handle with the first taget at 2179 and then 2190.  The index broke back above the lower trend line of the recent channel and will probably retest the lower trend line before bouncing higher.  The COMPQ settled right at 2168 one of the upside targets pointed out from last weeks blog. 

I feel that the market will continue to edge higher through the end of the year and into January.

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-The Short combo is comprised of a higher strike Short Call and a lower strike Long Put in the same expiration month.  The credit from the Short Call helps to finance the Long Put.  As a result, the position can have very little if any debit.  The strategy simulates very closely the risk profile of Short Stock, but for much less money.  It is a bearish position.  Study the risk graph and you should gain understanding of the risk and reward.  Robin

ECONOMIC REPORTS

MONDAY 11/16

Retail Sales, Retail Sales ex-auto, Empire Manufacturing , Business Inventories

TUESDAY 11/17

Core PPI, PPI, Net Long Term TIC Flows, Capacity Utilization, Industrial Production

WEDNESDAY 11/18

Housing Starts, Building Permits, Crude Inventories

THURSDAY 11/19

 Initial Claims & Continuing Claims, Leading Indicators, Philadelphia Fed

FRIDAY 11/20

 None

 

 

EARNINGS OF NOTE

MONDAY 11/16

PSUN, SINA

TUESDAY 11/17

 CSIQ, HD, LZB, JEC, SKS, CRM, TGT, TJX

WEDNESDAY 11/18

  BJ, CHS, CSUN, CYBX, GYMB, HOTT, JACK, NTAP, NTES, PERY, PETM, PVH, SOLF

THURSDAY 11/19

BONT, CMRG, DKS, DBRN, FL, GME, GPS, HIBB, INTU, ROST, SHLD, BKE, PLCE, TSL, WSM

FRIDAY 11/20

 CRMT, ANN, DHI, SJM, KIRK

 

Next week’s earnings reports include a heavy dose of Retail including HD, TGT, TJX, CHS, HOTT and ANN among several others.  Reports from these retailers along with their forward guidance should foretell the real consumer sentiment as people vote on the economy with their wallets.

Unemployment numbers have been dismal at 10.2% with the real unemployment probably closer to 18% counting those who have given up looking for work and those who are underemployed.  November and December should set the tone going forward into 2010 and next week should be a glimpse into what the immediate future will hold for our economy.

Top line growth has been hard to come by these days with most company’s posting decent bottom lines by instituting stringent cost cutting measures.  Job cuts and inventory reduction have contributed to acceptable bottom line numbers, however, at some point these companies need to begin to grow the top line.  Forward projections from these retailers should act as somewhat of a crystal ball into the 1^st and 2^nd quarter of 2010.  Stay tuned and stay nimble.  Best Robin