Sunday, July 31, 2011

Debt Ceiling

As of this writing, a deal was struck between the two political parties in Washington to increase the US debt ceiling and the SP500 future is rallying by adding more than 1%, +15.70. If the gains on the future hold up, a strong opening in New York will likely to occur. But don't let the euphoria take your eyes off the key technical levels. For the cash index, it must recapture and hold above 1295.92, and to close above Friday's high of 1304.16. And for the SPY (SP500 ETF), it must hold above 129.63 and close above 130.55 (see charts below.)



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Friday, July 29, 2011


Looks like YOKU could be making a move up toward the 200 SMA near the 40.50 level, and possibly could move to the upper bound of the rising price channel near 44.20 level of the 100 SMA.

Disclosure: no position on YOKU

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Tuesday, July 26, 2011

Ready To Move

Here are three stocks that been beaten up for a while, and now they appear to be ready to move.

GS has been trending down and showing divergence between price & MACD. It has broken out the two months downward price channel and trying to break above 139.

HPQ formed an inverted head & shoulder between mid May to the present. If it breaks out of this price pattern, look for potential move to fill the price gap near 39-40 level.

MU has formed a double bottom and could be making a move higher.

Disclosure: long GS & MU, no position on HPQ

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Sunday, July 3, 2011

The Dow Theory Has Spoken

From my last week post about the possibility of the US economy experiencing a double dip, I have suggested to keep an alert on the Dow Theory and keep a watch on some transportation stocks for clues to determine if recent slowdown of the US economy is a double dip or simply a temporary slowdown.

I put up some charts for some transportation stocks that might provide some signs on the future direction of the US economy. As seen from the updated charts below for these transportation stocks, some of them have already broke above the upper channel (red line).

Furthermore, the chart for the DJ Transportation index also shows it has closed at an all time high on Friday, July, 1, 2011, and the Dow Theory has spoken.

Although the DJ Industrial index did not close at a new high above its April 29, 2011 close, but this non-confirmation signaled by the Dow Theory indicates a new high for the DJ Industrial is yet to come.

The significance of the new closing high from the DJT is it is an indication the recent slowdown in the US economy could turn out to be only temporary; ‘slow patch’. When the DJ Industrial index confirms with the DJ Transportation index, then a strong case can be made that the US economy is on a road to recovery. Until then, I will keep watching for the next Dow Theory signal with a bullish bias for the intermediate term.

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