Archive for the ‘Commentary’ Category

The DOW remains in a sideways channel and has been so for the last 19 sessions.  Volume has been unremarkable and as we approach the end of the year, one begins to think that this unprecedented rally off of the March lows is too tired to continue the trek higher.  Looking at a 10 year chart of the DOW reveals massive upside resistance from most of 1999 through late 2001 as well as 2004 and 2005.  In my opinion, a push through 11,000 would be significant and probably unlikely at this point.  I see the index going sideways to down in the near term.  We will know more if the DOW breaks out of its’ current Box.  I will be ready to take advantage either way it decides to go.

The SPX tells a very similar story as the DOW.   The current trading range has spent the last 23 days in “The Box”.  The high in the range is 1119 and the low is 1084.  I am watching closely and expect a break soon.  I tend to think that we will break down out of the range, but will be prepared to follow the trend whichever way it decides to go.    There is also long term overhead resistance from 1100 to 1200 from late 2001 to mid 2002 as well as 2004 and 2005.

The COMPQ is also at an inflection point at current levels.  The index has been in a box for the last 9 trading days and is bumping its head against significant upside resistance and will probably continue sideways to down in the short term.  If the index does break to the upside with increasing volume, that would be notable.

ECONOMIC REPORTS

MONDAY 12/14

None

TUESDAY 12/15

Core PPI, PPI, Empire Manufacturing,  Net Long – term TIC Flows, Capacity Utilization, Industrial Production

WEDNESDAY 12/16

Building Permits, Housing Starts, CPI, Core CPI, Crude Inventories,  FOMC Rate Decision

THURSDAY 12/17

Initial Claims, Continuing Claims, Leading Indicators, Philadelphia Fed

 

FRIDAY 12/18

 None

 

 

EARNINGS OF NOTE

MONDAY 12/14

TTWO

TUESDAY 12/15

 ADBE, BBY

WEDNESDAY 12/16

 HOV, JOYG

THURSDAY 12/17

 DRI, FDX, GIS, NKE, PIR, RIMM, RAD, WGO

FRIDAY 12/18

 KMX

This is the time of year that evokes scores of emotions.  That’s ok, we’re human beings.  I have written frequently in my blog of removing emotion from your trading in order to make your decisions based upon objective, non – emotional criteria.  However, it is our ability to feel deeply about various issues and care about others that denotes our uniqueness as humans. It seems like so many areas of our lives are encouraged to be efficient with flawless execution, devoid of emotion and subjectivity.  We forget to celebrate and embrace our frailty and the frailty of those around us.

This blog is dedicated to helping the retail stock market trader to achieve consistent success in the Market.  I have had some say to me, “What are you really contributing to the overall good by showing people how to make money in the Stock Market?”  That question made me pause.  The answer is that unless you are willing to help others who are less fortunate or struggling with your prosperity, you are failing yourself and those that you touch every day and your success becomes futile.

So, as you gather together with those that you care about this holiday season, look into their eyes and if you see pain and despair, know and realize that you can help them. If you do that, you will truly be “Home for the Holidays.”  Robin

The DOW is currently trading in a sideways range or box.  There is substantial resistance from trading activity in 2004 and 2005.  It should be difficult to continue higher at this point.  The trend is tiring and it appears that it is time for a pullback.  Friday printed a Shooting Star type pattern on significant volume.  I feel that the index will move back down in the range and test the lower trend line of the broadening channel.

The SPX is has also been trading in a consolidation pattern for the last three weeks and appears that the trend has weakened tremendously.  The ADX supports the thesis of a  diminishing trend and we also have a Bearish MACD divergence and crossover with confirmation from a Bearish Stochastics.  We are more than likely headed back down in the range to test the lower trend line of the channel.

The COMPQ has been very erratic over the last three weeks with several gaps and indecisive trading.  There is major resistance at 2200 and I feel that the index will trade sideways to down in the immediate term.  Look for a test of the 50 days simple moving average and the lower trend line of the channel about 2135-2140.

ECONOMIC REPORTS

MONDAY 12/7

Consumer Credit,

TUESDAY 12/8

None

WEDNESDAY 12/9

Wholesale Inventories, Crude Inventories

THURSDAY 12/10

Initial Claims, Continuing Claims, Trade Balance, Treasury Budget

 

FRIDAY 12/11

 Export Prices ex- ag., Import Prices ex – oil, Retail Sales, Retail Sales ex – auto, Michigan Sentiment – Prel,  

Business Inventories

 

 

 

EARNINGS OF NOTE

MONDAY 12/7

CASY, KKD, PBY, KR

TUESDAY 12/8

 HRB, TLB, COO

WEDNESDAY 12/9

 JTX, MW

THURSDAY 12/10

CIEN, COST

FRIDAY 12/11

 NONE

Here are some ideas for your New Year’s trading resolutions:

1. I will complete a detailed trading plan which will become my “Bible for Trading”.
2. I will read one trading book a month and outline the best ideas that it presents.
3. I will seek out a trading partner who will be a person with whom I can share and exchange trading ideas and hold each other accountable for disciplined trading.
4. I will build a watch list which shall be comprised of fundamentally, well diversified stocks.
5. I will master the art and science of technical analysis.
6. I will adhere to strict money management principals.
7. I will master the Collar Trade.
8. I will eliminate fear and greed from my trading.
9. I will learn how to use the Greeks to manage my portfolio.
10. I will mentor other traders and in doing so I will help others to become successful in the Stock Market.

This list should give you a good head start on becoming more disciplined in your approach to trading.  If you make a concerted effort to improve your processes, you will improve as a trader.  Best, Robin

The DOW traded down 154 points on a low volume holiday shorten session on Friday.  The debt restructure issue with Dubai drove the move.  My feeling is that the move was an overreaction and trading this coming week should sort out the importance of the situation.  The index rebounded nicely off the lows of the day.  With that said, the bullish trend is running out of gas as indicated by the ADX and the low volume associated with the move.  We are essentially trading in a box.  The upside breakout level is the high from 11/23 at 10,496 and the key level to the downside is the swing low from 11/12 at 10,171.

The SPX analysis is similar to that of the DOW.  We are also in a sideways channel on decreasing volume with a target breakout level of 1114 from the high on 11/16.  The downside level to watch is the lows from 11/12 and 11/27 at 1084.  The upside trend is very tired at this point.  A turn to the downside is not far away.

The COMPQ staged a Counterattack type candle pattern after gapping down significantly at the open on Friday.  Again, the move was fundamentally driven by the Dubai situation on low volume.  It is interesting to note that the low of the day coincided with three prior gaps that acted as solid support.  The bullish trend is essentially done.  I see sideways to down from here.  If we do manage to go higher, it will be in very small increments.  There is too much overhead resistance at this point.