Thursday, May 31, 2012

One stock that doesn't care about external noise

This market currently is heavily influenced by rumors and news coming out of Greece and Spain.  So far the bounce is not supported by breadth.  It is best to sit in cash and watch the fun from the sidelines.  However, PKT is one stock that caught my attention which has been acting right the past few days. The catalyst seem to be a news on 05/29 about a $3 million follow on order.  Recent earnings have been excellent.  When the market turns this is one stock that could take off.

Monday, May 28, 2012

The Patient Fisherman: Process Makes Perfect

A simple article on why following a process is key to trading success.  Some tips and tools ingrained in the article below.

The Patient Fisherman: Process Makes Perfect: When I moved out to Colorado, I quickly realized that fishing was just not the same. Back in Florida, the bigger the bait, and the bigger t...

Wednesday, May 23, 2012

Portfolio - the best indicator of market action

The markets staged a nice recovery today after almost retesting the lows made a couple of days ago.  Shorts were on the run for cover.  When you are playing for a bounce after SPX made a low around 1295 zone and when the market action is choppy, one of the best indicators on whether the bounce would stick or not is your portfolio.  When you get stopped out of your positions is when you have to be cautious of initiating any new positions.  Some of the positions I took on the long side SWI, FIRE, WNR, DRI all held up well and some even staged upside breakout albeit on below average volume which is a concern.  In situations like this it is best to keep your profit target low perhaps around 5-10%.  We need to see some huge buying supported by breadth thrust for this market to stage a solid recovery to the upside.  Always trade what you see, do not fight the trend and use proper risk management, position sizing and honor your stops.  

Monday, May 21, 2012

An expected rebound

Overall the markets rebounded today as expected.  As I mentioned in my previous post SP-500 index tested strong support levels at around 1290-1295 zone and bounced back.  Now the bigger question is does this bounce have conviction.  While the DOW, NASDAQ and SP-500 made 1.09%, 2.46% and 1.6% move respectively, the number of stocks participating in the move did not impress.  In order for the bounce to stick we need to see some quality stocks setting up and break out and also a large number of stocks carry the market upward.  Given the correction in the last few weeks, the stocks need time to setup.  We may retest the lows and chop around a bit at this level which could potentially be lethal for your portfolio.   So it is best to remain in cash and watch for a buy signal from the market (read my post on market momentum index).  There are a few charts showed up today that could have a potential follow through to the upside.  As always use proper position sizing and risk management and honor your stops.

Thursday, May 17, 2012

SPX - One simple reason for this correction

SPX has gone up by about 32% since establishing a low in Oct'11 with a few minor pull backs along the way leading up to the Apr'12 top.  Several leading growth stocks like AAPL, PCLN, CMG, LNKD, BWLD etc outperformed the market during this upward thrust.  A simple reason for the correction, having gone up 30% plus the market needed to take breather.  Nothing goes up straight forever.  A 10-12% intermediate correction was not out of character for the market. The Fibonacci retracement drawn from oct'11 low to Apr'12 high shows 1290 zone to be a 38.2% retracement which also happens to be about 10% correction zone from the Apr'12 highs.  The macro economic theme also played its part in the correction.  The news coming from the Euro zone, JP Morgan debacle, disappointing economic data etc seem to add fuel to the fire.  If you notice even before all the news came out the market was putting in a top.  Breadth did not conform to the upside move.  Leading stocks started cracking one by one.  Distribution was taking place.  Some of the sentiment indicators I follow like the investors intelligence survey  showed complacency on the part of bearish players.  There was absolutely no fear in the markets while the market started to go down in earnest.  All of these factors contributed to the downside move.  The 1290 area is the one to watch for how the market would react around this level.

Wednesday, May 02, 2012

A few good looking charts for today

If only the market was acting right and more volume came in...I would be a buyer of these charts.