Online Stock Trading

Stocks Fizzle as Volume Dries Up

Posted on July 10, 2008
Filed Under Market Commentary | Leave a Comment

Price action continues to be very poor on Wall Street.  Its not surprising action continues to be poor given some market internals.  I have spotted these out over the past few posts and they have no improved.  New Highs are enemic and the VIX/VXN continue to show a lack of fear.   Any rally attempt that does not have a favorable NH/NL ratio will not be a powerful rally.  In addition, without the VIX/VXN indexes showing any sign of fear it is highly unlikely a new bull market will emerge.

It took the market nearly 13 years after the 1929 stock market crash to form a tremendous bull market run.  Although we are dealing with high oil prices like the 70s this market action is more tied to the 30s and early 40s.  History is an amazing thing to study because patterns tend to mimic themselves and we are closely aligned with that time period.  Are we going to wait another 3 years for a bull market?  It is quite possible it will be that long before we begin to see stocks that move 1,000% or more.

The most difficult pill to swallow for most is to completely sit out this market.  Human nature is to crave action and shy away from inaction.  However, its the inaction, patience one exudes will make him/her more prepared for the next bull market.  At this time, it is wise to keep a large cash position, very large to insure we have enough capital to deploy for the next bull run.  For those predicting that its in 2009 I point to an old Chinese proverb “Those who predict do not have knowledge, those who have knowledge do not predict.”  History tells us we’ll see another bull market run, that is knowledge but I have no idea when.  There will be signs of a new bull market run, it will be then we can start to deploy our cash reserves.

Enjoy

Market Speculator

No Positions (80% Cash) 

Extreme Oversold Conditions Set Stocks for a Massive Rebound

Posted on July 9, 2008
Filed Under Market Commentary | 4 Comments

For much of the trading session on Tuesday it was a volitile day where stocks couldn’t decide whether the downside or upside was the place to be.  It wasn’t until late in the session where shorts started to cover sparking a late day short covering rally.  Volume was tracking higher all day long and finished higher on the day.  Helping stocks surge was the huge price drop in crude oil prices.  Tuesday marked the 2nd day of an attempted rally and we’ll need to see continued upward movement with volume favoring the long side, heavily!

Once again New Lows (NL) outpaced New Highs (NH) by a large margin; 27 to 1.  In addition, VIX and VXN failed to reach new highs as stocks pushed to new lows.  Ideally, you would see NH outpace NL and VIX and VXN hitting new highs as stocks hit lows.  Unfortunately we have not seen enough fear in the market to warrant a true market bottom.  Like March, VIX and VXN didn’t hit new highs as stock hit lows signaling the rally forming wouldn’t last.  The same will go with this rally attempt even if it follows through.

Time frames in this market must be real short, longer term positions aren’t just there yet.

Enjoy

Market Speculator

No Positions 

Near Term Weakness Always Leads to Long Term Gains

Posted on July 8, 2008
Filed Under Market Commentary | Leave a Comment

Stocks once again took a dive and notched some hefty losses.  The NASDAQ was held up by AAPL whose lower volume effort looked mediocre at best.  We are simply in a weak time for stocks at the moment.  Following the removal of the uptick rule shorts are able to work more freely in the market.  There is no question that, for now it has bolstered their position.  Remember, human emotion is always to overshoot and there is no doubt there are far too many shorts in this market.  It will create a situation, when ripe a rush to cover will send a flurry of sideline cash into the market.  This could very well spark a tremendous rally in stocks, but we simply do not have the charts nor earnings firepower to do so just yet.  Financials continue to weigh heavily on the markets and once favored big oil names continue to falter.  We haven’t gotten to the point of capitulation, there is still some hope we rebound.

Enjoy

Market Speculator

No Positions 

Global Stocks are Showing Weakier Economic Times Ahead

Posted on July 6, 2008
Filed Under Fundamentals & Charts, Market Commentary | Leave a Comment

Our new world, the Global Economy. Many pundits are touting the power of the global economy. New powerhouses that are emerging: India, China, Singapore, and Australia. Most notably are India and China, the two countries who hold (seemingly) half of th world’s population. Tremendous growth potential in either country is obvious but, is it reality? I am not denying 20 years from now India and China will have economies that will rival those of the G8’s best but, is it just straight up? In reality, there are natural swings whereby the economy will experience peaks and troughs but end up higher over a long period of time. The United States certainly has seen its growth and corrections even a great depression. It appears our global economy is about to suffer a correction. What on earth could be foreshadowing a downturn? Stocks!

Downturns in the economy are usually foreshadowed by stock market declines. The United States most notable declines were proceeded by the 1929 crash and the 2000 stock market bubbles. Let’s take a look at India’s, China’s, Singapore’s, and Australians most notable indexes:

Stocks will foreshadow economic events 6-12 months in advance.  Of course history never repeats itself exactly but it will show in different forms.  In the end, the same result will occur.  After stock declines in the above charts there is no doubt the economies which make up the stocks will certainly suffer substantial losses.  Its not like the United States was never proned to long economic recessions, this time isn’t different because human nature never changes.

Look for GDP of these countries to begin faulter and ultimately begin to show recession.  This will certainly help the energy picture as well as other demands on agriculture related items.

Market Speculator

No positions in the above indexes 

Happy 4th of July

Posted on July 4, 2008
Filed Under Market Commentary | Leave a Comment

Happy 4th of July! Thursday’s shortened session provided little help to stocks as many on Wall Street were on vacation enjoying this Holiday weekend. Crude oil remains the hot topic on Wall Street as it traded above $144 much of the day. However, we were unable to hit the $150 a barrel like many had anticipated. This proves predictions are like bum holes: Everyone has one and they all STINK! Even without hitting $150 prior to July 4th I still believe Crude is headed higher and much higher than $150 a barrel. The trend is firmly in place and at some point the Oil shorts will become discouraged and rush for the exits. Most likely scenerio will be when our first Atlantic Hurricane threatens the Gulf Coast and its oil rigs. This will only mean more selling for stocks, whether or not it creates shear panic has yet to be seen. Even with $144 a barrel of oil the VIX/VXN have failed to show any sort of FEAR in this market. I’m afraid it will take more than just crude above $150 a barrel to get fear pumped into this market.

Make sure you are safe this 4th of July holiday weekend.  Trading stocks is just like swimming with sharks, chances are you will be bitten with a slight chance you get away free.  Odds are just not in anyone’s favor at the moment, I like to play when I have the odds in my favor.

Enjoy

Market Speculator

No positions

Our Bounce Lasts Just One Day

Posted on July 3, 2008
Filed Under Market Commentary | Leave a Comment

Stocks could not manage to sustain the bullish reversal on Tuesday. Crude oil moved higher and continued financial meltdown fears helped push stocks lower. The extreme oversold conditions we saw on Tuesday mid-day were extreme enough to push a rally. However, those oversold conditions continued on Wednesday. Oversold/overbought markets can stretch for periods of time longer than many expect. This is the market where trying to catch a bottom using an oversold indicator will only burn your account dry! Price and volume action are tell us that prices are headed lower for stocks and lower lows are on our horizon. Crude Oil should continue its trend higher and ultimately blow off its top. This market is continuing its bear market status.

Bear markets usually last anywhere from 9 months to over a year.  However, Bull markets do not immediately proceed Bear markets as sometimes it takes time to head sideways prior to a new Bull.  At some point the financials will clear themselves from the mess they are in and crude oil will top out.  History will repeat itself in one form or another we just have to be patient for these things to sort themselves out.  In the meantime, enjoy the July 4th holiday…INDEPENDENCE DAY!

Have a beer for me and be safe!

Market Speculator

No positions 

Market Bounces Intra-Day, But It was Another Bear Market Bounce

Posted on July 2, 2008
Filed Under Market Psychology | Leave a Comment

Tuesday’s action was following our most recent trend: DOWN! However, when GM news was released a flood of short covering hit Wall Street. This set off a wave of short sellers across the market to head for cover, pun intended.  The market got to a point where it could not get anymore oversold and needed to blow off the steam from selling.  New Lows (NL) topped out at 1162 indicated that a short term bottom was being put in.  Unfortunately, VIX and VXN did not show we had bottomed whatsoever with the VIX merely peaking above 25 level during the morning swoon.  We have everyone’s bounce, but unfortunately I believe the bounce will be short lived and yield little gains.

More to come.  This rally will be short lived, with VIX and VXN not showing capitulation we will not see meaningful gains.

Enjoy

Market Speculator

No Positions 

Stocks End the Quarter on a Lackluster Note

Posted on July 1, 2008
Filed Under Market Commentary | Leave a Comment

An interesting day on Wall Street as Q2 was set to wrap up. Big Cap stocks lead the way for the entire day spending most of it in the green. However, the NASDAQ, the leading index was pounded by Tech giants GOOG, AAPL, RIMM, MSFT, YHOO continue to roll over. Volume was lower across the board when compared to last Friday and Thursday. The holiday shorten week will certainly effect volume this week. Running into the close a wave a selling struck Wall Street sending both the Dow and S&P500 in negative territory for a bit but ending higher. Although ending in positive territory, the major indexes were well off their highs at the close. For those who were looking for a bounce certainly got a weak one signaling there may be more trouble ahead.

New Highs (NH) continued to be dominated by New Lows (NL) as NL outpaced NH by nearly an 8 to 1 ratio. Although these numbers are not at extremes it does show there is considerable weakness in stocks and is likely to continue. Extreme levels that could possibly make a turn is where NH or NL +/- 1000. We haven’t seen these levels since March when NL hit 1000+.  A new bull market will see the complete opposite in numbers where NH/NL begin to dominate.  Until then, there will be tradeable bounces however, no new bull market.

My two favorite secondary, second to price and volume indicators is VIX/VXN.  When the S&P 500 and NASDAQ hit fresh lows I want to see VXN and VIX hit fresh new highs.  Back in March when we made new lows both VIX and VXN failed to hit new highs.  Although we bounced, we began to roll over again and we are headed for fresh new lows.  Why is this important?  VIX and VXN show fear in the options pits, when option traders feel pain volitility soars!  Signaling to me that we’ve washed out.  This occurred on August 16th 2007.   I think we’ll be waiting awhile for VIX/VXN to confirm a wash out.

Enjoy the weather outside, if you can!

Enjoy

Market Speculator

No positions in the above stocks 

« go back — keep looking »