Monday, April 29, 2013

AMZN Post Earnings Watch - 4/29/2013

AMZN sold off after its recent earnings report. The price came down to the 252 support level of the trading range between 277-252. If it breaks below 252, the next possible support level is near 242 and that could lead to a 218 price target for a down swing. See the charts below.



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Saturday, April 27, 2013

AAPL Post Earnings Watch - 4/27/2013

AAPL stock price seems to be hold up fairly well after it has reported earnings on 4/23/2013. It appears the price actions could be setting up for a near term move toward the upside.

Here is a video on reviewing the price actions and where the positive near term upside price targets could be.

Click here to view the video if you do not see a video player on your screen.

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Tuesday, April 23, 2013

AAPL Earnings Watch - 4/23/2013

Here is a video reviewing possible price targets for AAPL after it reported its earnings and a potential post earnings report price target for NFLX.

Click here to view the video if you do not see a video player on your screen.

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Monday, April 22, 2013

NFLX Earnings Watch - 4/22/2013

Market is pricing NFLX to move +/- $26 based on its earnings report after the market close today. Here is a video looking at the various price levels.

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Sunday, April 21, 2013

Finally A Pull Back

The market finally pull back a bit last week. But it appears there are still dip buyers willing to commit cash in this market. Until these dip buyers are all in, the market will continue to grind higher. For those bears that are impatience, they will continue to be chopped as the market setting up the trap to remind those dip buyers who is the boss.

Here is a video reviewing the market and what to expect for the near term.

Click here to view the video if you do not see the video player on your screen.

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Sunday, April 14, 2013

Making The Top

The market continues to grind higher and causing much frustrations to all those traders looking for a pullback. As the DJI continues to make non-confirmed high, many of those sideline traders are giving up waiting for the pullback and starting to move back into the market. At the same time, the internal market is getting weaker. This behavior is no different than previous market cycle peak, and the next big move will not be any different from previous cycle as well.

Here the SP500 daily price chart shows it made a new all time closing high of 1593.37 on 4/11/13 with the intraday high nearly reached the rising price channel upper trend line.

Below is the daily price chart of the DJI. It also made a new all time closing high on 4/11/13 by closing at 14,855.14. Unfortunately, this new closing high was not confirmed by the DJT. But for whatever it's worth, this new ATH was confirmed by the SP500. Similar to the SP500, the intraday high for 4/11/13 was near the upper trend line of a rising price channel.

While the SP500 and the DJI were making new all time high, the DJT continue to form the lower high-lower low price pattern. This is a sign of a new downward price trend. If this index does not reverse back up and start making new ATH to confirm the DJI, the market might experience more than a correction or a pullback in the near future.

The tech weighted index, Nasdaq 100 finally woke up a bit and surged to near a new 52 week high. Some big cap tech stocks are due to report their earnings in the next couple weeks, and some volatile price actions could occur prior to their reporting. This price action could propel the NDX to a new 52 week high and get more of the non-informed market participants excited about the tech sector before the market reverse. As the chart below shows the NDX finally broken out of the trading range and made a move toward a new 52 week high.

Finally, the Russell 2000 also starting to form a lower high-lower low price pattern. It tried to recapture the lower trend line level from the rising price channel on 4/11/13. Instead, it finished with a shooting star doji type candle on the day the DJI and the SP500 made a new all time closing high. If this is not a subtle sign the market sent out to inform us a top is in the making, then the RUT will need to reverse itself from this lower high-lower low price pattern and to put in a new closing ATH soon.

The market is still creating attention for the talking heads to be on 'new record' watch. Until some catalyst that will divert the talking heads attention away from watching the DJI on making new closing high while other market indices are below their respective record high, traders should not be surprise to see the DJI continue to break higher into new high territory. The market is in the process of making a top, and when this process is completed, more people will end up losing money than making money on this bull run. This is how it always been, and it will always be. Trade cautiously and resist the temptation to chase the move. There will always be more opportunities in the market. The worse scenario is to lose your trading capitals and not being able to capitalize on the next opportunity due to lack of capitals. Good luck.

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Wednesday, April 10, 2013

What Is Wrong With This Picture?

Today, the market took off and the DJI along with the SP500 made another new all time high. But take a look at the 30 stocks in the DJI and see what is wrong with the picture. Only 14 of the 30 Dow stocks made a higher high to support the new high that was made by the index. If it is truly a market with strength, should it at least have more than half of the stocks in the index support the new high instead of less than half? Be cautious and don't get caught by the euphoria sucking in the sideline money.

Here is a video reviewing the closing prices of the 30 Dow stocks.

Click here to view the video if you do not see a video player on your screen.

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Tuesday, April 9, 2013

This Time Is Not Going To Be Different!

Today the DJI closed with another new all time high at 14,673.50 while the other major market indices such as the SP500, DJT, Nasdaq 100, and the Russell 2000 failed to follow suit. This put the market back into the traditional pattern where the DJI is the last index to make a new high (top out). Unless a market index other than the DJI makes a new high all by itself in the near future and before the market reverse direction, then today’s market price actions clearly show the market is not acting any different this time than previous market cycles.

Today’s DJI closing high is the second non-confirmed Dow Theory high within a week. The longer the DJI stayed elevated in non-confirmed new high territory, the more vulnerable it is to an abrupt major price reversal. In order to avoid being trapped from the potential market reversal, exercise tight stop and do not chase price move. Stick to your trading plan and abide to your stops.

Here is a chart of the closing prices for the market indices. Click on the chart to get an enlarged view.

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Sunday, April 7, 2013

NFLX - 4/6/2013

Here is a video analyzing NFLX price actions and highlight some of the price levels for the near term.

Click here to view the video if you do not see a video player on your screen.

Disclosure: Short on NFLX

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Saturday, April 6, 2013

Is This Time Different?

Before you answer, ask yourself this question “Since you went to sleep last night and woke up today, did your behavior completed changed. What was important to you now is no longer important?” I didn’t think so. If your behavior and the rest of the human race in this world did not change their behavior, then what make this market to be different this time? It is still being driven by the ingrained human fear and greed emotions. Unless we are no longer being driven by fear and greed, then this time is no different than any previous time or any time in the future.

As fear start to make its way back into the market, the small cap sector is the first one to falter and we can see that by the recent price action from the Russell 2000 index, RUT. As fear starts to build, risk will start to be reduced and money will start to be exiting the small cap stocks and put into more perceived to be safer large cap blue chip stocks. The RUT was the first index to make a new all time high when it closed at 873.42 on 1/2/13, then it continues higher until it reached its recent new all time intraday high on 3/15/13 at 954, the day after a new all time close high was made at the value of 953.07 on 3/14/13. On 4/1/13, it broke below a multi-month supporting trend line. Since then, the first 5 days in April resulted in 4 out of 5 down days with only one up day. It broke below a flattening 50 days moving average on 4/3/13, and a relief rally on the following day help it closed slightly above the moving average. On 4/5/13, after an initial selloff caused by the disappointed job report, it spend the entire session similar to rest of the market climbing back to recoup most of the losses from the open and closed near the high of the day. It still ended with a small loss and closed underneath the 50 days moving average. Although the RUT shown some resilience and some strength by printing a hammer like candle with a large body candle, unless it can close above the 932 level, the decline will likely to continue and probably will not encounter any possible support level until it reaches the 896 level, which is also coincide to the 78.6% Fib retracement level.

The tech heavily weighted index Nasdaq 100, NDX continues to struggle to breakout the trading zone between 2770-2820 and found itself ended up trying to hold above its 50 days moving average. Having other big cap tech stocks such as GOOG, AMZN and NFLX joining AAPL on the decline path, the NDX will likely continue to move lower. In the last trading session, this index also broke below its multi-month supporting trend line and it doesn’t appear to be near any support levels until it reaches the 2725 where the 78.6% Fib retracement and its 200 days moving average are stationed.

As for the Dow Jones Transportation index, DJT has been making a lower low, lower high since it closed with a new all time high on 3/14/13 at 6281.24. It also broke its multi-month supporting trend line and its 50 days moving average on an intraday basis during the last trading session. But just as it appears to be heading down to its possible support level of 5780, an oversold rally appeared and helped the index to close above its 50 days moving average and stayed above the supporting trend line with a long handle hammer. The DJT was the first to turn downward and it is currently oversold, the oversold rally could continue until it encounters likely resistance near 6120 area. As for the direction of this index, it needs to move above 6120 and make a new all time high in order to reverse the current downtrend. If it fails to move back and hold above 6120, it could be a long time before this index will breach the all time closing high.

While the DJT starting to establish a downtrend, the Dow Jones Industrial, DJI still sitting near its all time closing high of 14,662.01 made on 4/2/13. This is an expected behavior from the DJI as the Dow Theory put up a big red flag signaling a potential top is in the making (if it has not made a top on 4/2/13) from the DJT non-confirmation. It is also a clear sign of the expected flight to quality rotation near a market top that help the DJI to project a false sense of wellness in the market to the non-informed market watchers and market participants. Since this index broken through its resistance level near the 14,173 on 3/5/13, it reached the 127.2% Fib retracement level where it made its new all time closing high on 4/2/13. If the Dow Theory signal behaves without any distortions from the market manipulators, then the DJI should be heading down toward a test of support near the 14,365 area where the supporting trend line is located. Although this support level might not appears to be that far away from the last closing level of 14,565.20, but by breaching this support level will alter the market sentiment from buy-the-dips to sell-the-rips.

Finally, the SP500, SPX made its new all time closing high on 4/2/13 at 1570.25 but failed to reach the previous all time intraday high of 1576.09 made on 10/11/07 by less than six points. For the serious students of the market, they know what is important is the close, not the intraday numbers which can be fabricated. In a typical market cycle, the DJI is usually the last index to make the new high, not the broader market index such as SP500. This time it appears the laggard was the SP500 or is it? If the market is to behaves in its typical fashion, this imply the DJI could have another non-confirmed new all time high in the near future in order to put this market cycle back into its normal pattern. So we need to ask ourselves “Is this time different?” If you were to take this subtlety and wait for the DJI to make another new all time high, then you could end up waiting for a long, long time. But, there is the possibility that indeed the DJI will make another new high in the near term and get all the remaining sideline money into the trap before it snaps. But in regardless, the market is in a volatile state where it can run up sharply to form the climatic top or it will drop in a violent fashion similar to all the movie watchers are rushing out of the theater when they hear someone scream “Fire!” In the meantime, the SPX recaptured most of its last trading session losses and closed near its intraday high. The likely near term resistance for the SPX will be its recent new high near 1570 area, and the near term support is likely to be near 1530, also where its 50 days moving average is currently located.

As a market watcher and a trader, one needs to listen to the messages the market sends and interpret them accordingly. If one is trying to anticipate what the market will do, the market will surely remind you who is in charge by causing great damage to your ego and more importantly to your trading account. So be patient and tune in to listening to the market not the talking heads. Trade cautiously.

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Wednesday, April 3, 2013

Negative Breadth Developing

Once again, the market continues to march higher. The DJIA closed at another new all time high at 14,662, up 89.2 points, and the SP500 also closed at a new all time high at 1570.25, up 8.08 points. But, the DJT closed down 75.26 points at 6087.04. This created another non-confirmed DJIA closing high. Under the Dow Theory, this non-confirmation indicates a reversal is coming. In addition to the DJT closing on a down note, the Russell 2000 also closed at 934.30, down 4.48 points. Furthermore, some of the market breadth indicators are also showing sign of weakness. All of these signs of weakness and divergence are telling us the market is in the topping process and caution should be applied.

The following video take a closer look at some of the market breadth indicators and the reason for closing the newly established long position on DIS during the after hour extended session.

Click here to view the video if you do not see a video player on your screen.

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Monday, April 1, 2013

The Story Beneath The Surface

As the DJIA and the SP500 continue to make new high, the casual market watchers will think better time is ahead for the market. But for those that watch not only the market indices, those market watchers will know things are not as they appear to be. Beneath the surface of the market indices, there are vital market indicators that gauge the inner strength of the market. The daily advance/decline breadth indicator and the new high/new low are just a couple of these indicators that measure the strength of the market.

As one can see from the chart below, the SP500 has been making numerous new high while the advance/decline and the new high/new low are not expanding into new high. They are actually contracting while the recent new high was being made. This divergence is the first sign indicating the market is getting tire and caution should be exercise to avoid being caught in the market euphoria. As the market top is being made, these market breadth indicators will turn negative in addition to their divergence.

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