S&P 500 breakout

      Sorry, friends about the late post today.  My internet was down this morning so I could not post as per my usual.  I am really getting pissed off at my poor internet service.  It's has been down at least 6 hours each of the past 4 days.  I call tech support and of course they have no idea what's going on.  My line is a good distance away from the main office so that is why it's always going up and down.  I'm going to call them and ask for a free upgrade and if they don't give it to me, I'm going to get a new ISP.   Anyways, on to the markets...

     Today was a very good and powerful day for the indexes.  I'm calling the breakout on the SNP 500.  This should lead to more follow through buying next week.

 As you can see on the above chart, SPY finally popped above that little red line which had been like a brick wall for over 2 months now.  It is okay to buy stocks here and I will probably do some on Monday.

Support is holding for now

     World markets are selling off once again today but strong support at 1120 is holding on the S&P 500.

     As you can see from this chart, the 112 level has been support for the last two months on SPY which is the ETF that represents the S&P 500.  Every time prices hit this level, buyers have come in and sent us back higher.  That is why it is called support.  I'm of the opinion that that we are finally going to break through 112 and head lower.   Generally when we break through support, more people start selling and we head dramatically lower.  If we can hold support here, we will probably head higher back to 1200.  We are in a trading range market for now as long as support holds.  If we break support, look out below!

Market Recap
    The big story today was gold which fell 100 dollars!  Gold has formed a double top formation and there could be more downside on the way.

   

    The reasons for gold's selloff is that hedge funds are selling their winners to raise cash.  Also, with the dollar strengthening gold's appeal as a currency hedge is lessened.

    There will probably be a buying opportunity coming up however so I am going to keep my eye on gold.  The Chartographer has a great post on gold here and basically called the top in gold.  I am real glad I sold my gold yesterday, I would not want to ride out this kind of move.

     Stocks finished today in the green with technology stocks showing strength.  The Dow was up 38 pts but the S&P 500 was up 7 and the NASDAQ was up 28.  Support at 1120 has held for now.  Overnight, SPY hit a low 110.85 but we bounced back smartly from there.  We could be heading back up the range, however, I don't know if there is strength enough for us to power to 1200 again.  But we could have a little rally from here to 1160-1170.  

     Foreign stocks did good today with European and Emergent Markets stocks doing well after getting obliterated yesterday.  I thought the selloff was way overdone on foreign stocks and so dipped my toe in yesterday and bought some EM's for my long term portfolio.  That is working out well so far as EM's are up about 2.5% today.  You can track Emergent Market's stocks with EEM.  My friend the Hasidic Plumber likes to track the Brazilian Bovespa and the Argentina Merval and you can track those with EWZ and ARGT or the Argentine Merval index if you like.

     I was away from the computer all morning so wasn't able to track the stock market and did not do anything with my portfolio.  I am definitely looking to get back into AAPL and start a position in MCD at this time.  I like stocks that have shown strength and AAPL and MCD are two of the strongest stocks in the market right now.  Cyclical stocks like CAT and energy stocks like XLE have really gotten bombed recently.  XLE is an energy index and CAT or Caterpillar is a good proxy for global growth.  These sectors are so weak it's best to stay away from them right now and stick with tech and consumer staples.  Utility stocks are also strong right now.

     Being at the bottom of the range, it would seem like a good time to get back in and set a stop at the recent lows.  I will probably do that on Monday, although I will be away from the computer that day as well. 

     

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Stocks plunge worldwide

     A dour outlook from Fed chairman Ben Bernanke and slowing growth in China are contributing to a worldwide market selloff this morning.   US stocks are down 300 pts at the open.

     Yesterday's Fed statement offered a bleak assessment of the prospects of future economic growth in the US and said there are "significant downside risks to the economic outlook."  Markets sold off 284 pts after yesterdays Fed statement.

     Also, Chinese Flash PMI which is the purchasing manager's index, a measure or manufacturing output, declined to 49.4, the lowest in two months.  This is adding to fears that global economic growth is cooling.

     US Markets opened 300 pts lower with the SNP down 31 to 1135 and the NASDAQ off 66.  Oil cratered tumbling over 6% to 81 and change.  Gold fell sharply off almost 4% or 70 dollars down to 1737.70.  Meanwhile US 10 year yields hit a new 60 year low at 1.77%

     Foreign markets were down with the Hang Seng Index trading down 900 points or 5% and the Nikkei down 180.  European stocks as you can imagine are tanking as well with the French, German and British bourses all down 4% or more.

     Across South America, the Brazilian Bovespa is down 3.5% and the Argentina Merval is down 4.3%.

     It looks like we could be starting the next leg down in the selloff.  We still haven't broken down through support so I won't add any shorts until we do.  The bulls need to make a stand soon if they want to hold this bottom.  Interestingly enough, small cap stocks are outperforming today in a horrible tape which could mean we get a bounce from the lows.

Stocks I'm Watching

     IWM- The Russell 2000 small cap index is outperforming today in a brutal tape.  It is down 1% less than the Dow.  I watch the small caps for signs or risk taking and risk aversion.  Usually on a bad tape, the small caps underperform.  I'm taking this as a signal that we could bounce back from here and am adding a long.

     AAPL- Apple is also performing well today in a bad tape.  It seems to be a safe haven in this market environment.  AAPL is down only half as much as the DOW.  I will probably buy my AAPL back today.

     MCD- McDonalds is also performing well today down about half as much as the DOW.  MCD is a great place to hide out in this market.

     CAT- Caterpillar has been performing horribly lately.  It has completely broken down from support around 80 dollars.  This is a bad sign for global growth.  CAT is down over 10% in the last 2 days! 

     NFLX- NFLX is up today!  This is mildly surprising to me as today is a risk off day and NFLX short is a risk on trade.  NFLX is up 1%. 

     FCX- Freeport McMoran Copper and Gold has been getting absolutely obliterated lately on slowing global growth.  The breakdown in this name is a strong signal about slowing global growth.  It is down 9% today and 15% in two days.

Market Recap

     Well it was a pretty bad day for my trading account.  I sold my gold long for a 6 percent loss and I tried to trade AAPL today unsucessfully.  I bought AAPL in the early going and got stopped out when it dropped past 400 later in the day losing about 2 pct.  Today's action was brutal.  I don't understand this market right now.  I don't see how we can be down 500 pts on basically no news and when Greece was going to hell last week we were rallying!  Emergent Markets were down 6-9% today!  FCX was down 12%!  What the hell!  There was no news to justify that kind of action.  I know global growth was slowing but so did everybody else I thought.  China's PMI wasn't that bad last night! You would have thought Greece went belly up today based on the price action. 
    
    With that being said, I am now 100% cash in my trading account.  It looks like the market wants to break down from here.  EM's have already started the second leg down, it's just a matter of time for the US markets I believe.  Call me crazy but on day's like this I like to buy for my long term portfolio so I picked up a small amount of emerging markets stock today.  It's probably a mistake trying to bottom feed here but I don't see the justification for the kind of move we had today so I'll pick up some on the cheap. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Italy downgraded!

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!   

      Yesterday, after the markets closed S&P downgraded Italian debt from Triple A to A+ rating citing a heavy debt load and weak growth and a dysfunctional political environment.  Hmm, sounds familiar?  Amazing they didn't cut it before.  S&P are real idiots and probably should be arrested for causing so much havoc in the financial markets.  How can you cut the US debt before you cut Italian debt, it makes no sense unless you have an agenda!  Not saying that the US debt deserves a triple A rating but the bond market sure thinks so with 10 years below 2 percent!!  Italian debt is junk and it's a travesty that S& P is only now getting around to downgrading Italy! Put them out of business, they are worthless!  Now there is word that the SEC is investigating insider trading by hedge funds ahead of the US debt downgrade.  S&P are crooks, lock them up and throw away the key!

     The Italian debt downgrade seems to have had a limited impact on the markets so far as futures dropped about 80 pts on the news but have since recovered and moved into positive territory.  Markets opened with a 40 pt gain but quickly sold off into negative territory before recovering.  Gold and oil are both up even with a stronger dollar and the euro is down. 

     European stocks are solidly in the green at 7:18 AM PST with the FTSE up 1% and the DAX up 1.5%.  The Hang Seng index finished up 100 pts while the Japanese Nikkei played catchup from yesterday and fell 140 pts.

     The markets seem to be trading fairly well ahead of the 2 day FOMC meeting where it is widely expected the Fed will do another bond buying operation called Operation Twist.  This is where they will try to extend the duration of their portfolio of bonds by selling shorter duration bonds and buying longer duration bonds.  The size of their balance sheet will remain the same but their mix of bonds will change.  I don't see how this is going to help things because the 30 yr is already around 3.2%.  How low do they want it to go?

Stocks I'm watching
     AAPL-  Apple is making another new all time high in early going as the breakout continues.  Fast Money traders speculated that AAPL is becoming a safe haven and I had been saying that for awhile now.  AAPL has hit an all time high of 419.87 just below the magical level of 420.  OK AAPL has just hit 420 for a new all time high, so to speak.

     MCD-  McDonalds is trading very well again today up about 1% outperforming the overall market.

     IAU-  Gold is bouncing back nicely after yesterday's selloff as the chop continues.  IAU is up 1.3 pct in the early going.

     NFLX-  Netflix is down another 8% today as investors are piling out of the stock after yesterdays perplexing move by CEO Reed Hastings to split the company in two.  Netflix is the cool name, nobody gives a hoot about Qwikster!

     EEM-  Emerging markets have been underperforming US markets pretty significantly recently.  I'm not sure what's causing this.  It could be the stronger US dollar and lower commodity prices or perhaps investors fear a slowdown in the global economy.  Whatever the reasons, it is definitely worth monitoring.

One month chart of SPY(SNP 500 in yellow) vs EEM(in blue) the emerging markets index.  As you can see EM's have underperformed by about 7% coinciding with a rise in the US dollar.

Final recap

     Markets sold off in the final hour of trading today.  This was not a good finish for the bulls.  We are near the top of the range and had a big intraday reversal going from up 150 to up 10 at the bell.  I suppose it is a small victory that we did not go negative.  I got caught up in the selloff as I got stopped out of my AAPL today for about 413.63.  I had been raising my stop as I went along and AAPL got hit hard in the late day selloff and my stop was triggered.  It was still a very nice trade as I made 5% in about 5 days.  AAPL looks like it has topped for now but I will be looking to get back into AAPL at some point.

     The Dow finished up 10 pts and the SNP 500 was down by about 2 pts but the NASDAQ was down almost 1%.  NASDAQ had been outperforming recently but got hit hard in the late day selloff. Gold was up 30 bucks and oil was up a buck to 86 and change.

     This could be the top of this recent rally and we might start heading back down again.  Small caps performed very poorly today as well.  The wild card is the FOMC meeting going on.  Whatever the Fed says in the next few days will move the markets.

PS  Hey everybody, if you are interested in trading, I want you to check out a friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff and he's definitely a better trader than me!  So check it out if you are interested, especially if you are starting out looking to get into it, he has a lot of good advice.

http://swingtrading101.blogspot.com

Apple Breakout City!

Disclaimer:  Nothing in this blog should be construed as a recommendation to buy or sell any securities!  Please do your own due dilligence before buying any stocks or bonds!  

      I was just checking out the futures before bed and I noticed they were down about 1.5%.  Apparently, the Greeks are having some problems with their budget...AGAIN!  They are having problems meeting their budget cutting targets to get the next tranche of bailout money from the rest of the EU.  The Greek economy is in major contraction and trying to get more money out of the greek people is like squeezing blood from a turnip!  This has renewed the fears of traders who have pushed down stock futures.  US Dow futures are down 141 pts and the London FTSE is down 1%.  The German Dax is down 2% and the Hang Seng is down 450 pts as of 12:25 AM PST.  It looks like it could be another interesting day tomorrow!  I was hoping for a continuation of the rally but it looks like we are going to head back down in the trading range we've been in for a month now.

6:36 AM PST Update

    Stocks open lower investors fret over Greek default scenario.  Investors are dumping Euro's and European stocks today as fears of a Greek default grow.  Over the weekend, EU finance ministers met to discuss the situation but failed to come up with any new resolutions and German chancellor Angela Merkel lost another regional election putting more doubt into Germany's participation in the bailout.

     The IMF told Greece that it needs to make more cuts in government spending to receive a new 8 billion bailout payment.

     "Additional savings measures were needed to cut the public deficit to a sustainable level and reduce the public sector's claim on resources—code for axing jobs and cutting pay and pensions—while improving tax collection rather than adding further taxes," said a CNBC article.

     The Euro was down by 1.5% and European stocks were down 2.5% or more.  Oil was down over 2% and even gold was down about 1% as the dollar strengthened.    The 10 year US treasury bond yield cratered to 1.96% as traders sought the safety of US Government debt.  The DJIA was down 200 pts in early going and the dollar was up against a basket of currencies by about 1%.

1:14 PM PST Update

     Markets surged in the last hour trading after news broke that Greece was near an agreement with its lenders.

     "Greece is near an agreement with its international lenders to continue receiving bailout funds, a Greek finance ministry official said on Monday after a conference call between Finance Minister Evangelos Venizelos and inspectors from the EU, IMF and ECB, known as the 'troika',"said CNBC.

     The Dow Jones Industrial Average after being down 250 pts in the early going finished down 109 pts after the last hour surge.  The SNP 500 was down 1% and the tech heavy NASDAQ was outperforming down .36%.  The NASDAQ was green at one point during the day as AAPL hit an all time record high.

Stocks I'm watching

    AAPL-  Apple was up 11 bucks and hit an all time high at 413.23 earlier today.  This is trade is working out very well for me so far and if I had any more money I would be adding to this trade right here.  There could be another 10-40 dollars of upside right here.

                                  Break out city!



    NFLX-  Netflix after earlier being up 3% finished down 7%.  They are splitting their DVD and streaming services into separate businesses.

    We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

-- Reed Hastings, Co-Founder and CEO, Netflix

    If I had some nads I'd short the shit out of NFLX right now.  NFLX is a broken high growth stock and I think there is much more downside to go.

                                    U-G-L-Y you ain't got no alibi, charts ugly!

     IAU-  Gold tanked today after the dollar rose against a basket of currencies.  Gold is trading the opposite of the dollar recently.  When the dollar goes up, gold goes down.  Gold looks like it is going to chop around for awhile as it consolidates it's huge gains from the past few months.  My gold trade isn't working too well for me right now.  I won't be adding to it unless it goes past my original buy price.  I won't be selling it either.

     MCD-  McDonalds is performing real well in a bad tape up .59% at the close.  MCD is a classic defensive play in this environment and I am looking to add it to my portfolio.  It has a nice 2.8% dividend yield as well.  Problems include exposure to Europe, but they have nice growth in Asia and people like their cheap eats in this economic environment.  Their chart looks pretty as well.

                                       Its always a good thing when the price goes from the lower left to the upper right.

     DBC-  Commodities across the board got smoked today on dollar strength.  Copper fell 4%, oil fell 2.5% and gold of course fell 2%.   If copper drops because of dollar strength that is okay but if its down because of economic weakness, it's bad.

     Today's action at the end of the day makes me constructive on tomorrow.  If Greece get's their money it should be all systems go.  Tomorrow, the FOMC starts their two days of meetings to discuss monetary policy.  The market is expecting something called Operation Twist to come out of these meetings as the Fed looks to stimulate the economy.  Let's see what happens.

PS  Hey everybody, if you are interested in trading, I want you to check out a friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff and he's definitely a better trader than me!  So check it out if you are interested, especially if you are starting out looking to get into it, he has a lot of good advice.

http://swingtrading101.blogspot.com