Friday, October 01, 2010

 

Booming Bull Market Rally in Emerging Markets; MSCI Index Reaches 27-Month High Today

By Dr. Mark J. Perry
BLOOMBERG -- "Emerging-market stocks rose, sending the benchmark index to the highest level in 27 months (see chart above), and currencies strengthened as reports showed China's manufacturing grew and developing-nation fund inflows hit an 11-month high.

The MSCI Emerging Markets Index climbed 0.7 percent to 1,082.92 at 11:07 a.m. New York time, poised for a fifth straight weekly advance.  China's manufacturing expanded at the fastest pace in four months in September, adding to signs that growth is stabilizing in the world's fastest-expanding major economy. Investors poured $4.3 billion into emerging-market equity funds in the week ended Sept. 29, the biggest amount since October 2009, and the funds are poised for record annual inflows."

MP: The Emerging Markets Index has gained 9.4% over the last month, and 19% over the last twelve months, and reached the highest level today since June 30, 2008, 27 months ago.

 

Stronger Yuan Will NOT Bring Jobs Back to the U.S.

By Dr. Mark J. Perry
Nancy Pelosi claims that "1 millions U.S. jobs could be created if the Chinese government took its thumb off the scale and allowed its currency to respond to market forces." 

In the NPR "Planet Money" report, Adam Davidson is pretty skeptical about Pelosi's claim, based on the following example:

Some American manufacturers that use industrial springs can buy them in China for 95% less than in the U.S. - if they cost $1.00 here, they're only 5 cents from China, shipping included.  In that case, even if China's currency appreciated significantly by 30% or 40% or more, the springs from China would still cost only 7 or 8 cents, or maybe even 10 cents, and there would be NO jobs coming back to the U.S. That's just one example, but there are many other products (toys, T-shirts, shoes, low-end electronics, commodities, etc.) that are so cheap to produce in China compared to the U.S., that even a greatly-appreciated renminbi/yuan wouldn't bring any manufacturing jobs back to America, and certainly not anywhere close to 1 million jobs.

A similar point was made in a WSJ article in May, subtitled: "You're not going to change the balance of China trade by adding 25 cents to the cost of a T-shirt."

There are other reasons that a stronger renminbi wouldn't bring jobs back to America:

1. A stronger renminbi/yuan would give China an advantage for any commodities, inputs, raw materials, and energy products (oil and natural gas) that it imports, which might allow them to maintain the current prices for exports to the U.S.

2. If a stronger renminbi/yuan did make Chinese exports to America more expensive, manufacturing production and jobs would likely shift to other areas in Asia (Vietnam, Bangladesh, India, Thailand, Korea, etc.) and not back to America.

 

Bookkeeping: Limit Order for Salesforce.com (CRM) Triggers

By Trader Mark
"I want my Salesforce.com"

Despite "elite" valuations I am willing to buy some of the generals that have pulled back in case somehow this market tacks on another 9% in October without a retreat.  I have a very specific strategy with
Salesforce.com (CRM)
since my bet is still that we have more odds of downside rather than upside in the coming few weeks.
Stage 1: After effectively selling the entire position except a holding stake, I placed a limit order at gap #1 around $111.00.  This just triggered today - I've added a 1.8% exposure.  This also happens to be the 50 day moving average.

Stage 2:
Either / or - either Salesforce.com bounces here (along with the general market I'd assume) OR it is going to go down (along with the greater market) to go fill gap #2 down at $100.   $100 is where I really want to create a position, not up here.

Stage 3:
 To compensate for the potential downside, my stop loss will be around $107.50, where I will exit today's purchase near $111.  If that happens, I will then make a much larger purchase down at $100.  (of course that will be below support but with the 'generals' it seems to matter less) Not only do I think this is a likely scenario, I am actually hoping this is how it would work out even though I'd take a near term loss, since my cost basis would be lower for the long term.  If I'm wrong to the upside, well then at least I have a pony in the race, even if its not the full position I want.



How do I lose in this scenario?  If HAL9000 sniffs me out, takes CRM down to $107 area and then quickly jerks it back up to $111+ on the path to CRM $200. (courtesy of QE2 of course)  Overall however, I like the construction of this trade and potential scenarios.


One caveat - due to extreme valuations in these type of names I will be cutting back no matter where we are in the chart, ahead of the earnings release.  So many of these leadership stocks have run so far in September that they will be prone to blowups. 

 

Long Citigroup

By Mike Paulenoff

Apart from the convoluted fundamentals in Citigroup (C) -- with government ownership, sale and influence -- my technical work is telling me to get long. The chart pattern has the look a price structure that's on the verge of thrusting to the upside to enter a secondary powerful upleg off of the low at 3.63.

insert.a.chart.C

The optimal swing target is 4.20/22, and an outside target zone is 4.38-4.44 thereafter. Only a decline that breaks 3.89 will compromise the current bullish set-up.


 

Trade Update on General Electric (GE)

By Scott Redler
Since we listed General Electric (GE) on Monday there has been one fakeout, but more basing in the bull flag. The longer a stock bases, the more energy it builds for the ultimate measured move. Also, however, you have to be mindful that the more times a stock tries to break higher out of a flag and fails, the more likely it is to eventually break down. We are not at that point yet with GE, but make sure you have a firm stop below Tuesday's low. The stock should be get to 19.50, but in this environment we are not going to get greedy with price targets, especially with a slower mover like GE. We will look to exit this trade at the measured move seen on the second chart below.





 

Push Yourself to Maximize Profits in Q4

By Scott Redler
Yesterday was a very tricky day as the market pushed through resistance and then closed back below, giving us a potential outside day or Red Dog Reversal.  These are the types of days you have to take notice of.  Most high beta tech had a quick push and then failed quickly, showing a chink in the armor, but for the most part it was nothing brutal (except in the case of NFLX, which put in a nasty red bar on high volume). Money flew into oil stocks early last week, and they held up well, especially BP. They were instrumental in helping the S&P hold the the upper range at 1130-1150.

insert.a.chart.NFLX

The market did not fall apart at the end of the day, which didn’t make yesterday as extreme as it could have been. Typically first few days of a new month are strong as new monthly/quarterly money needs to be put to work. Does new money continue to flow into the strongest stocks as they build new high level consolidations, or do the forces at will that “marked them up” let the tree shake a bit? As of now, we have a ton of new upper ranges to watch and see if they remain intact. Will we see our first real signs of a pull in? I am in the camp that we close the year around 1180-1200 in the S&P, but that bias will not dictate my trading. I will look to remain light on my feet given the implications of our poor market structure, where the stairs up elevator down especially holds trye.  Entries and exits are still key, and being in the right sector at the right time will be key also moving forward.


If you’re an experienced market participant you know that typically you can make your entire year in the 4th quarter.  If you go on a run and perform well this can be one of the most active three months of the year.
But, it won't happen on its own if you don't continue to strengthen your skill set.  You can't make excuses on why you missed a move, or why you fought a move?  Look inside yourself and ask probing questions. This weekend is as good a time as any to really look at how you handled last month, or last quarter, and really make a concerted effort to build on your strengths and work on your weaknesses.

I know for me, I identify where the money is going and execute great cash flow trigger points. But I often don’t hold my size long enough, and typically move on to the next trade too early. Sometimes I will make a call, and get out of the trade earlier than I even recommended because of short term gyrations in the market.  You never go broke taking profits, but in these market conditions you can't sweat every up or down tick in a stock.  That is what the computers want you to do.  At the same time, though, it keeps me out of a lot of danger.


I know I could make a lot more money if I tried to keep original size and last tier longer and let the market make me money.  It's like Rich Dad, Poor Dad says, don't work for money, let money work for you!


Examples: Buying a ton of Google (GOOG) around 482-485, I was done with the trade around 495, and the move went to 535 quickly.

Buying size in Apple (AAPL) around 256, I didn't hold size long enough to really maximize gains.
Even more recently I listed BP at 38.50-39 on Monday and had a tier 4 size, but sold the vast majority around 40.25.  Three days later it is at 42.

Another weakness I have is trying to be in a little early to a potential “big move” and after being a few days early I get a bit fatigued before the real trade ignites. I take less size then I had or wanted to have, because I was worn out from stalking the trade.


So even after 15 years and countless hours of preparation and self-evaluation, a market participant is always trying to perfect his craft.  The moment you stop trying to get better is the moment you should hang it up.  The market is a quickly evolving creature, and it is on you to change with it.

 

18th day of QQQQ short term up-trend; RWB rocket stock: DORM

By Dr. Wish
The QQQQ short term up-trend completed its 18th day on Thursday.  During that time, the QQQQ has risen 7.4% , QLD  (the ultra 2x bullish QQQQ ETF) by 15.6%, and the TYH (3x bullish technology ETF) by 22.7%. This analysis shows once again that one can do quite well by riding the up-trend with one of the 2X or 3X ultra index ETF’s. Below is another RWB rocket stock to begin to research. During tough economic times people tend to fix their cars rather than trading them in, thus producing profits for auto parts businesses like DORM.

  • gmi: 6
  • gmi-r: 10
  • t2108: 84

 

Forget Gold, Try this ETF Instead (GLD, SMH, INTC)

By Andrew Hart

With Gold (GLD) reaching all-time highs again this week more investors are putting cash into anything precious metal related but I am here to caution you on doing so.  There are far better opportunities than gold right now and chasing this trend is not the formula for generating short-term growth.  We have traded GLD call options 8 times this year (7 profitable) in the ETF TRADR portfolio but now it’s time to step away.  Of course, what type of ‘tradr’ would I be if I failed to offer a better alternative.  

First off, it would be very difficult to find a long-term chart more strong and persistent than the Gold chart �" it’s nothing short of amazing (and at the same time scary for the future of the dollar).  That said, even as Gold has made new highs in recent days there is a better place to focus your trading capital.  The semiconductor industry has lifted off in recent days and I expect it to continue.  Here’s the performance chart between the headline-making Gold (GLD) rally and the Semiconductor ETF (SMH).  

So what’s making the semis perform so well?  It’s certainly not the lackluster outlook from PC manufacturers who continue to see challenges ahead.  It was just three weeks ago when Intel (INTC) slashed their outlook sending the stock down nearly 4%.  Others like Cisco have also expressed concern with speak of “unusual uncertainty” in the global economy that could impact sales.  If these headlines weren’t enough many analysts also believe Apple’s iPad is hurting sales of the Semiconductor Industry because the chip is Apple branded and made by Samsung who is not a major Semiconductor.  The major players are not benefiting from this particular increase in chip demand.  Bottom line, here’s what is making semiconductors (SMH) move.

If you want real-time ETF and ETF Option recommendations start with our Freemium TRADR by signing up here 

In a classic contrarian move Semiconductors shifted in to high gear directly after the industry leader (INTC) lowered their outlook.  SMH has one of the strongest ETFs trends in September and I believe it will continue.  Let’s take a look at the SMH charts to see the how the ETF is trading.  We’ll take a look at the following:

  • Current Trend Analysis (how strong is this trend and how much further can it go)
  • Resistance and Support Levels
  • How to Enter with a Lower Risk Profile


 
Trade well,
Andrew Hart �" ETFTRADR.com

 

Short Form Buffalo Trader Bullish Reversal Report 10/01/2010

By David Buffalo

For the time being, this will be the new format, showing only the basic U.S. stock index momentum, the bullish reversals in ETFs and bullish reversals in stocks. I will periodically comment on major issues at critical times, but during the time I am attempting to build the algorithm required to download signals from almost 1300 stocks that I have built models for using NeuroShell Day Trader Professional, this is what I will leave you with. Most who have commented (and I have received, thankfully lots of comments with great appreciation to readers) want to see the reversals and not necessarily trade signals I generate. That makes life simpler for me, though at some point I will discuss methodology for building your own models. For now, I will present the data with little commentary. I will always respond to readers’ comments. This blog will steadily evolve as the time I have and the technology I use evolves. Thanks for your patience during this transition.

For 10/01//2010:

                                     $INDU      $SPX         $COMPQ     $RUT

Monthly Momentum   Pos            Pos              Pos              Pos

Weekly Momentum     Pos           Pos              Pos              Pos

Daily Momentum        Neg           Neg             Neg              Pos

N means neutral, Neg means negative, Pos means positive (OS) means oversold and (OB) means overbought. The value to price estimate (it is not a guarantee, only a cash flow based estimate) can be defined loosely as a multiplier of price. A number higher than one means the stock is undervalued using this model and a number less than one means the stock is overvalued.

Index and ETF I-shares Bullish Reversals (Note: to look up quotes for the Dow Indexes (starting with DJ or DW, add a dollar sign. No dollar sign is required for the ETFs beginning with other letters.) Today’s list includes only those ETFs with a 50-day moving average of daily volume greater than 100,000 shares:

Company Symbol Exch. Industry Sector
iPath DJCopper JJC xA ETFs (Commdty)\TotRtn) ETFs
ProShrsShort500 SH xA ETFs (Short) ETFs
ProshrsUlSht500 SDS xA ETFs (Short) ETFs
ProShrsUlShtRE SRS xA ETFs (Short) ETFs
ProShrsUlShtSmc SSG xA ETFs (Short) ETFs
ProShrsUlShtTch REW xA ETFs (Short) ETFs
Direxion LgCpBr BGZ xN ETFs (Short) ETFs
PwrShrsDBGldSht DZZ N ETFs (Short) ETFs
ProShrsUlShS500 SPXU xN ETFs (Short) ETFs
Direxion DvBr3x DPK xN ETFs (Short) ETFs
Direxion RelEst DRV xN ETFs (Short) ETFs

The stocks listed below are ranked by pattern bullish reversals based on a momentum indicator. Each stock by sector is listed with the cheapest stocks on a near-free-cash-flow value/price basis at the top, and more expensive stocks on that basis farther down each sector list (they are listed alphabetically):

Company Symbol Exch. Industry Sector
MuniYld NY Fund MYN N Market (ClsdEndFndsDom) Market

 

Stocks that almost passed the neural net screens but just missed: None

Note:  The cracks in the most recent rally began to show again yesterday as volume increases as sellers pressed forward. There were very few bullish reversals, and the one instrument that made the stock list was a closed end muni-bond fund. The shorts are lining up in the ultra-short and short ETFs, and the fear trade is obviously alive with the closed end fund.

Patience is again required as we move into the weekend and next week. If sellers return in greater numbers, there should be many set-ups coming ahead. I will comment on EURUSD this weekend. I will be away at a funeral for part of the time, but I will do my best to get some training regarding time symmetry and price symmetry in blog.

 Take care,

DBB


 

Increase in Volatility Ahead of the Month-End

By Darell Jobman

EUR/USD

The Euro found support below 1.36 against the dollar in early Europe on Thursday and tested resistance near 1.3650 during the day, but did find it harder to secure further gains following the recent strong advance.

The Euro-zone flash inflation data recorded a rate of 1.8% for September which was slightly higher than expected and increased speculation that the ECB would look to move away from extraordinary liquidity early next year. There were, however, still very important concerns surrounding the financial sector with a particular focus on the Irish banking sector.

The Irish government revised up its estimates of likely bailout costs for the banks and the data suggested that the Irish budget deficit could rise to above 30% of GDP. The Euro will still be vulnerable to fears surrounding the peripheral economies.

The US economic data was slightly stronger than expected and provided some dollar support, although the overall market impact was measured. There was a decline in jobless claims to 453,000 in the latest week from 469,000 previously while second-quarter GDP was at 1.7% from 1.6%. In addition, the Chicago PMI index rose to 60.4 from 56.7, maintaining the recent run of erratic readings for the regional PMI indices.

There was some increase in volatility ahead of the month-end with the Euro consolidating above 1.36 after finding support on dips to the 1.3570 area.

jobman_100110_1.JPG

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Yen

There was speculation over corporate and institutional month-end capital flows back to Japan on Thursday which provided some degree of support for the Japanese currency. There was still a high degree of caution over yen buying given the persistent threat of intervention by the central bank at these levels.

The Japanese economic data was mixed as stronger than expected releases for housing starts and retail sales were offset by a third successive decline in industrial production. Doubts over the manufacturing sector will maintain pressure for yen gains to be resisted. The dollar still dipped to test support below 83.20 in Europe on Thursday with dollar selling still a notable feature.

The US economic data provided some degree of relief for the dollar and it rallied to the 83.50 area, but still found it very difficult to secure buying support.

Sterling

After some respite on Wednesday, high volatility was again a notable feature during Thursday. The UK currency secured an initial boost from the latest housing data with the Nationwide reporting a 0.1% increase in prices for September. The UK currency pushed sharply higher with an attack on resistance above 1.59 against the dollar with Sterling demand against the Euro ahead of a scheduled EU payment

Once this payment was completed, Sterling support weakened and there was notable stop-loss Euro buying as traders pushed Sterling weaker. The UK currency fell to a four-month low near 0.8680 against the Euro and also fell to test support below 1.57 against the dollar before finding some respite.

There was further speculation that the Bank of England could consider further quantitative easing at the October meeting, although MPC member Posen was slightly more cautious in comments on Thursday. The PMI manufacturing release will be important for Sterling sentiment during Friday.

Swiss franc

The dollar found support close to fresh record lows near 0.97 against the franc on Thursday and rallied to test resistance above 0.98 later in the US session. The franc came under fresh pressure against the Euro with lows near 1.34.

There was a decline in defensive franc demand against the Euro with recued fears over the Euro-zone financial sector as a while as European banks required reduced liquidity from the ECB. The dip in franc demand came despite a high degree of unease over the Irish banking sector and safe-haven demand could return quickly given the underlying stresses.

jobman_100110_2.JPG

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Australian dollar

The Australian dollar found support below 0.97 against the US currency in local trading on Thursday and pushed to a high above 0.9730 as markets looked to push the currency higher.

The domestic data provided no support for the Australian currency with a larger than expected 4.7% decline in building approvals for August while credit growth was also weak. There are liable to be growing risks surrounding the domestic economy which could pose an important threat to the currency.

There was a more cautious attitude towards risk later in US trading and commodity currencies were subjected to selling pressure and the Australian dollar dipped to lows near 0.9625 before finding fresh buying support.

Read More at TraderPlanet.com »

 

Energies Market Commentary

By Jim Wyckoff

November crude oil closed up $2.15 at $80.03 a barrel yesterday. Prices closed nearer the session high yesterday, hit a fresh seven-week high and closed at a bullish monthly high close. Bulls have the near-term technical advantage in crude. Prices are in a five-week-old uptrend on the daily bar chart. The next near-term upside price objective for the bulls is producing a close above solid technical resistance at the August high of $83.91 a barrel. The next near-term downside price objective for the crude oil bears is to produce a close below solid technical support at $75.00. First resistance is seen at yesterday's high of $80.18 and then at $80.50.First support is seen at $79.50 and then at $79.00.

Wyckoff's Market Rating: 7.0.

wyckoff_100110.JPG

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November heating oil closed up 582 points at $2.2695 yesterday. Prices closed near the session high yesterday and hit a fresh 4.5-month high. Prices also closed at a bullish monthly and quarterly high close. Bulls have the solid near-term technical advantage and gained more power yesterday. Prices are in a five-week-old uptrend on the daily bar chart. The bulls' next upside price objective is closing prices above solid technical resistance at $2.3500. Bears' next downside price objective is producing a close below solid technical support at $2.1750. First resistance lies at yesterday's high of $2.2707 and then at $2.3000. First support is seen at $2.2500 and then at $2.2250.

Wyckoff's Market Rating: 7.5.

November unleaded gasoline closed up 553 points at $2.0382. Prices closed near the session high yesterday and hit a fresh seven-week high. Prices also closed at a bullish monthly high close yesterday. Bulls have the solid near-term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the August high of $2.0997. Bears' next downside price objective is closing prices below solid support at $1.9250. First resistance is seen at yesterday's high of $2.0400 and then at $2.0500. First support is seen at $2.0250 and then at $2.0000.

Wyckoff's Market Rating: 7.0.

November natural gas closed down 9.2 cents at $3.87 yesterday. Prices closed near the session low yesterday, scored a bearish "outside day" down on the daily bar chart, hit a fresh contract low and closed at a bearish monthly and quarterly low close. A bearish weekly gas storage report fueled the sellers yesterday. The bears have the solid overall near-term technical advantage and gained more downside power yesterday. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.20. The next downside price objective for the bears is closing prices below solid technical support at $3.65. First resistance is seen at yesterday's high of $4.012 and then at $4.10. First support is seen at yesterday's contract low of $3.78 and then at $3.75.

Wyckoff's Market Rating: 1.0.

Read More at TraderPlanet.com »

 

Jim Wyckoff's Morning Blog--Friday

By Jim Wyckoff

Friday, October 1-Jim Wyckoff's Morning Web Log

JIM'S MARKET THOUGHT OF THE DAY *

Crude oil prices have pushed above $81.00 a barrel
this morning, as the crude oil bulls have this week
gained good upside technical momentum. The crude
oil market bulls are benefiting from recent rallies
in other commodity markets and from the weaker U.S.
dollar. The fact that U.S. stock indexes have also
been trending higher is bullish for crude. I would
not be surprised to see crude oil challenge the
$85.00 level soon and then back off to trade
sideways into the end of the year.--Jim

U.S. STOCK INDEXES

S&P 500 futures: The shorter-term moving averages
are still bullish early today.
The 4-day moving average is above the 9-day and 18-
day. The 9-day is above the 18-day moving average.
Short-term oscillators are
neutral early today. Today, shorter-term technical
resistance comes in at the overnight high of
1,144.40 and then at Thursday's high of 1,153.50.
Buy stops likely reside just above those levels.
Downside support for active traders today is
located at Thursday's low of 1,131.50 and then at
this week's low of 1,127.30. Sell stops are likely
located just below those levels. Wyckoff's Intra-
day Market Rating: 5.5

Nasdaq index futures: The shorter-term moving
averages are still bullish early
today. The 4-day moving average is above the 9-day
and 18-day. The 9-day average is above the 18-day.
Short-term oscillators are
neutral to bearish early today. Shorter-term
technical resistance is located at 2,018.50 and
then at this week's high of 2,032.00. Buy stops
likely reside just above those levels. On the
downside, short-term support is seen at the
overnight low of 1,995.00 and then at Thursday's
low of 1,983.25. Sell stops are likely located just
below those levels. Wyckoff's Intra-Day Market
Rating: 5.5

Dow futures: Sell stops likely reside just below
support at 10,700 and then more stops just below
support at Thursday's low of 10,684. Buy stops
likely reside just above technical resistance at
this week's high of 10,800 and then at 10,820.
Shorter-term moving averages are bullish early
today, as the 4-day moving average is above the 9-
day. The 9-day moving average is above the 18-day
moving average. Shorter-term oscillators are bearish early today. Wyckoff's
Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Shorter-term moving averages
are bullish early today. The 4-day
moving average is above the 9-day and 18-day. The
9-day is above the 18-day moving average.
Oscillators are neutral to
bearish early today. Shorter-term resistance lies
at the overnight high of 134 2/32 and then at this
week's high of 134 11/32. Buy stops likely reside
just above those levels. Shorter-term technical
support lies at the overnight low of 133 7/32 and
then at 133 even. Sell stops likely reside just
below those levels. Wyckoff's Intra-Day Market
Rating: 5.0

DECEMBER U.S. T-Bonds

135 19/32--lifetime high
135 14/32--second pivot point resistance
135 4/32--Previous Month's high
134 19/32--first pivot point resistance
134 9/32--previous day's high
133 24/32--previous day's close
133 24/32--4-day moving average
133 14/32--pivot point
132 25/32--9-day moving average
132 19/32--first pivot point support
132 9/32--previous day's low
131 28/32--18-day moving average
131 14/32--second pivot point support
129 5/32--previous month's low
126 29/32--100-day moving average
112 --lifetime low

December U.S. T-Notes: Shorter-term oscillators
are neutral to bearish
early today. Buy stops likely reside just above
shorter-term technical resistance at the overnight
high of 126.08.0 and then at the contract high of
126.15.5. Shorter-term moving averages are bullish
early today. The 4-day moving average is above the
9-day and 18-day. The 9-day is above the 18-day
moving average. Sell stop orders are likely located
just below support at the overnight low of 125.24.5
and then at this week's low of 125.10.0. Wyckoff's
Intra Day Market Rating: 5.0

DECEMBER U.S. T-Notes

127 1/32--second pivot point resistance
126 18/32--first pivot point resistance
126 15/32--lifetime high
126 15/32--previous month's high
126 13/32--previous day's high
126 5/32--4-day moving average
126 3/32--previous day's close
125 30/32--pivot point
125 21/32--9-day moving average
125 15/32--first pivot point support
125 10/32--previous day's low
124 28/32--18-day moving average
124 27/32--second pivot point support
122 16/32--previous month's low
122 --100-day moving average
111 9/32--lifetime low

U.S. DOLLAR INDEX

The December U.S. dollar index is lower again in
early trading today. Prices hit a fresh 8.5-month
low overnight. Bears have solid downside near-term
technical momentum on their side. Slow stochastics
for the dollar index are neutral early today. The
dollar index finds shorter-term technical
resistance at the overnight high of 78.75 and then
at the overnight high of 79.01. Shorter-term
support is seen at the overnight low of 78.37 and
then at 78.00. Wyckoff's Intra Day Market Rating:
3.5

CRUDE OIL

Crude oil prices are higher early today and hit a
fresh seven-week high overnight as the bulls have
gained solid upside technical momentum. In November
crude, look for buy stops to reside just above
resistance at $81.50 and then at $82.00. Look for
sell stops just below technical support at $80.00
and then at the overnight low of $79.70. Wyckoff's
Intra-Day Market Rating: 7.0

GRAINS

Prices were mostly lower in overnight trading, with
corn leading losses following Thursday's bearish
USDA report. Very good harvest progress in the U.S.
Corn Belt this week is a negative for the grains.
No serious chart damage has yet occurred in corn,
and soybeans have seen no chart damage inflicted.
Wheat futures have seen significant chart damage
occur this week.

Read More at TraderPlanet.com »

 

Energies Market Commentary from Jim Wyckoff

By Jim Wyckoff

ENERGIES: November crude oil closed up $2.15 at $80.03
a barrel today. Prices closed nearer the session high
today, hit a fresh seven-week high and closed at a
bullish monthly high close. Bulls have the near-term
technical advantage in crude. Prices are in a five-week-
old uptrend on the daily bar chart. The next near-term
upside price objective for the bulls is producing a close
above solid technical resistance at the August high of
$83.91 a barrel. The next near-term downside price
objective for the crude oil bears is to produce a close
below solid technical support at $75.00. First resistance
is seen at today's high of $80.18 and then at $80.50.
First support is seen at $79.50 and then at $79.00.
Wyckoff's Market Rating: 7.0.

November heating oil closed up 582 points at $2.2695
today. Prices closed near the session high today and hit
a fresh 4.5-month high. Prices also closed at a bullish
monthly and quarterly high close. Bulls have the solid
near-term technical advantage and gained more power
today. Prices are in a five-week-old uptrend on the daily
bar chart. The bulls' next upside price objective is
closing prices above solid technical resistance at
$2.3500. Bears' next downside price objective is
producing a close below solid technical support at
$2.1750. First resistance lies at today's high of $2.2707
and then at $2.3000. First support is seen at $2.2500 and
then at $2.2250. Wyckoff's Market Rating: 7.5.

November unleaded gasoline closed up 553 points at
$2.0382. Prices closed near the session high today and
hit a fresh seven-week high. Prices also closed at a
bullish monthly high close today. Bulls have the solid
near-term technical advantage. The next upside price
objective for the bulls is closing prices above solid
technical resistance at the August high of $2.0997.
Bears' next downside price objective is closing prices
below solid support at $1.9250. First resistance is seen
at today's high of $2.0400 and then at $2.0500. First
support is seen at $2.0250 and then at $2.0000. Wyckoff's
Market Rating: 7.0.

November natural gas closed down 9.2 cents at $3.87
today. Prices closed near the session low today, scored a
bearish "outside day" down on the daily bar chart, hit a
fresh contract low and closed at a bearish monthly and
quarterly low close. A bearish weekly gas storage report
fueled the sellers today. The bears have the solid
overall near-term technical advantage and gained more
downside power today. The next upside price objective for
the bulls is closing prices above solid technical
resistance at $4.20. The next downside price objective
for the bears is closing prices below solid technical
support at $3.65. First resistance is seen at today's
high of $4.012 and then at $4.10. First support is seen
at today's contract low of $3.78 and then at $3.75.
Wyckoff's Market Rating: 1.0.

Read More at TraderPlanet.com »

 

Daily Market Commentary: Fails Follow Through

By Declan Fallon
Thursday opened with the market unwinding higher, but it wasn't long before the gains were clawed back - and then some. It was commendable bulls didn't run and hide, although it's going to be harder for them to push higher given the morning's events. With bears spoiling, now could be the time we start seeing tests of 20-day MAs.

The S&P is holding above the rising channel line (former resistance). But there was an on-balance-volume 'sell' as technicals started to weaken.

($SPX)

via StockCharts.com

The Nasdaq closed with a bearish engulfing pattern, which is not hard to understand given yesterday's narrow range day. Strengthening the bearish factor is overbought stochastics. Look for a lower close Friday.

($COMPQ)

via StockCharts.com

The Russell 2000 closed just above trading range support. It's not as bearish as other indices but will likely suffer if others do.

($RUT)

via StockCharts.com

The Dow completed a picture perfect touch of rising channel resistance. Lower prices are the natural route from here.

($INDU)

via StockCharts.com

Friday is likely to be a tough day. Bulls will be looking for damage limitation and perhaps a test of 20-day MAs; a strong finish would set things up nicely for Monday. If bears can attack the morning session with gusto it's going to be hard for bulls to recover, particularly if indices fall back into prior trading ranges.


 

Another Record Week for Intermodal Rail Traffic

By Dr. Mark J. Perry
"The Association of American Railroads (AAR) today reported that U.S. railroads saw the highest weekly intermodal volume for 2010 and highest container count on record for the second consecutive week. For the week ending Sept. 25, 2010, intermodal traffic on U.S. railroads totaled 241,167 trailers and containers, up 17.3 percent from the same week in 2009, but down 2.1 percent compared with 2008. Container volume last week increased 19.2 percent compared with 2009, and rose 6 percent compared with 2008. Trailer volume last week rose 7 percent compared with 2009, but dropped 32.8 percent compared with 2008.

U.S. railroads originated 300,908 carloads for the week, up 10.7 percent compared with the same week in 2009, but down 8.2 percent from the same week in 2008. In order to offer a complete picture of the progress in rail traffic, AAR reports 2010 weekly rail traffic with comparison weeks in both 2009 and 2008."

MP: For the year-t0-date (38 weeks), carload rail volume is up by 7.2% and intermodal rail traffic is up by 14.7%. This marks the 37th straight week starting in mid-January of improvements in intermodal rail traffic compared to the same week in 2009, and except for a holiday-related decline in July, carload volume has increased for the last 31 weeks starting in late February.

Once again, Warren Buffett's favorite economic indicator improved last week and container rail traffic set an all-time historical high.  It has to be a sign of economic recovery that the amount of raw materials, natural resources, grains, chemicals, metals, lumber, paper, glass, sand, gravel, ores, coal, petroleum and farm products keeps increasing week after week.  After all, those inputs are being ordered by producers somewhere around the country, and will eventually be produced into some intermediate good or final product, and be counted as part of GDP in future quarters.  And an increased volume of inputs moving around the country and the subsequent increase in final output has to eventually translate into more employment. 

 

Amazing Stat - Over 12 Year Period You Made More on 1st Day of Month then all Other Days Combined

By Trader Mark
Some amazing statistics from an unlikely source - USA Today.  I wish these folks would use the broader S&P 500 than the old DJIA.

First, 7 of the 9 first days of the year have been up (78% win rate) Partly due to "first day inflows" (401ks and such) and a lot of those days we were waiting for Chinese Purchasing Managers Index reports overnight (released before their first day of the month) which usually led to premarket surges in the U.S..  Translation to bears: You feeling lucky punk?? (remember there is a very interesting Manufacturing ISM tomorrow - let's see if it can break the pattern)


 FIRST DAY RALLIES
The first trading day of the month has been a good day to own stocks in 2010. First-day performance, measured by points, for the Dow Jones industrials:
January
156
February
118
March
79
April
70
May
143
June
-112
July
-41
August
208
September
255
Source: USA TODAY research

  • The last day of the month this year has been poor from a performance standpoint, with the Dow either flat or in the red each month.

----------------------------------

While that is a quite interesting statistic here is the astounding one.  I am curious why they stopped at May 2009 (perhaps data mining) but in a 12 year period
you could make as much on the first day of the month, as all other days of the month combined!
  • There is no sure thing on Wall Street. But making money in stocks on the first trading day of a new month is a good bet.  
  • The 2010 edition of the Stock Trader's Almanac notes that in the 12-year period ending May 2009, the Dow Jones industrials "gained more points on the first trading days of all months than all the other days combined." The tally: plus 4,399 points on the first days of months, vs. a loss of 3,809 points the rest of the days.
That is just amazing.  Wish they had gone through mid 2010 to see if it continued.

Look for a second fund launch in late 2011:
1st Day Fund   Our strategy? 100% net long from 3:59 PM the last day of previous month through 3:59 PM first day of the month, 100% cash otherwise.  Boo Yah.

 

SEC Should Rethink Reg NMS to Fix HFT Liquidity Problem

By Scott Redler
Tuesday's mini tech flash crash and the SEC's upcoming report on the causes of and fixes for the May 6th market flash crash have high frequency trading and market structure topics back in the headlines. Bloomberg Businessweek's lead Markets & Finance article in this week's issue is titled "Missing: The Stock Exchange Buyers of Last Resort" arguing that the move away from the NYSE specialist has eliminated the only key source of liquidity during tumultuous markets. (Some smart writers over there, sounds a lot like T3Live's article published in this week's Advanced Trading magazine titled "A Flawed Model: Relying on High Frequency Traders As Liquidity Providers".)

A primary solution to the liquidity problem is to rethink Reg NMS and, in particular, repeal the Order Protection (or Trade Through) Rule.


What is Reg NMS and Rule 611?


The SEC describes Regulation National Market System (NMS) as "a series of initiatives designed to modernize and strengthen the national market system for equity securities." The laws were passed in 2005 and intended to lower costs and promote fairness to all competitors in the financial markets. Rule 611 of the regulation was the Order Protection Rule essentially giving priority to limit orders on the inside market. This rule made it impossible to pay through the market and forced transactions to occur at the quotes on the inside market.


The Order Protection Rule has been controversial since its passage with some claiming that it forces traders to execute on possibly slow or unreliable venues only because the venue is offering the best price quote. Yet, the trader may be happy to pay a slightly higher price if execution is faster, more reliable or of greater size. Others believe the rule rightly forces brokers to act in the best interests of their clients. Still others think the rule isn't stringent enough.

What has Reg NMS caused?


While Reg NMS was passed with good intentions, the ensuing consequences have arguably caused greater fragmentation of the markets and extremely unreliable order books. The rule fueled the explosion of so-called "footprint detection" high frequency trading firms that gauge transactions to find larger players and take advantage of their intention to buy or sell. Thus, large buyside firms have responded in kind.


First, buyside firms have invested heavily in algorithm equipment to shield their order flow from opportunistic HFT looking to take advantage of their relatively large and slow limit orders. Second, these firms have taken their order flow off so-called lit markets and moved it to dark markets. These dark pools allow large institutions to trade blocks with each other without displaying the liquidity on public order books. Dark pool transactions are considered over-the-counter and represent exactly the type of market fragmentation Reg NMS was designed to fix.


The Trade Through Rule has inadvertently forced large buyside firms to unveil their intentions by first executing on the inside market. So, 100 shares posted on the inside market must be transacted with first rather than perhaps the 5,000 shares behind. For larger institutions, the 100 shares likely posted by an HFT market maker offers ultra-fast computers an albeit minor peak, but a peak nonetheless, into the buyer's intentions. Yet, this tip of the hand occurs with no benefit to the large institution as the 100 share fill is entirely inconsequential if the order is for say for 20,000 shares. It is not difficult to guess what happens next; the liquidity posted behind that order immediately disappears.


The passage of Reg NMS has unintentionally made markets much less liquid and quotes much less reliable. The extremely high quote cancellation rate is a direct result of HFT firms adjusting to the footprints large players are mandated to make by transacting small, irrelevant orders on the inside market before being allowed to access the orders of material size that sit behind. (In the past we have advocated an
Order Cancellation Tax to correct this problem). The slowdown in order fills essentially effects latency arbitrage opportunities for HFT. HFTs are faster and can cancel before the buyer can buy them.

Knowledge of this rule has also allowed nefarious traders to manipulate stocks by layering the order book outside of the inside market. The trader does not intend to receive a fill and will back away if he believes he may be filled, but he uses disproportionately large orders just outside the inside market to artificially prop a stock up or push it down.


The flash crash was a direct result of false liquidity in the marketplace insulated by the Order Protection Rule. While there may have been visible orders across stocks and markets, the minute large-scale sell-side volume started hitting the tape, the assumed liquidity disappeared as HFTs backed away from their bids. Any imbalance to the sell-side is immediately recognized and the bids are all pulled at once. This all happens nearly instantaneously causing the flash drops in shares of stocks. And it should be recognized that these are not one-off events and they will continue to happen under current regulation and market structure.


How to fix Reg NMS?


Rule 611 within Reg NMS should be repealed. The inability to pay through the inside market has removed any incentive to sit outside the inside market with a block of liquidity. It forces traders to pay the small players that create a tighter inside spread. Yet, the "real" spread in terms of sizable, reliable liquidity may be a few cents out on either side. The inability to simultaneously execute orders through the inside market allows HFTs to layer stocks and then rapidly cancel upon the first transaction.


Relaxing the Order Protection Rule would allow traders to go after the real liquidity in the market and force greater reliability of orders that are placed outside the inside market. While the regulation's aim of assuring brokers have their clients best interests at heart when executing orders is certainly valid, Rule 611 has unexpectedly damaged market efficiency overall. The goal of any market reform should be to reduce fragmentation and bring reliable liquidity back to lit markets. Repealing Rule 611 would accomplish both.

 

MrSwing Lite - Swing Trading Picks - 10-01-2010

By Stoc Scan Pro

Some Potential Swing Trading Opportunities for today...

These stocks will be monitored by you every day!!! Follow the master plan and you will be on your way to learn to trade stocks like a PRO... enjoy...

The results are generated by my stock screener. Only the first 5 results are displayed here for every scan.

For full results, subscribe now to StockScanPRO for 30 days FREE, then only pay $9.99 a month!.

SECRETS TO GREAT RESULTS:
CONFIDENCE - PATIENCE- FOCUS - DISCIPLINE

Long Swings

Window

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 7) and (adx(10) > 30) and (pdi(10) > mdi(10)) and (high() < sma(close,5))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


Displaying 5 results of 8 for NYSE:

BVF


NYSE Biovail Corporation 9/28/2010
COT


NYSE Cott Corporation 9/30/2010
CZZ


NYSE Cosan Limited 9/30/2010
EJ


NYSE E-House (China) Holdings Limited 9/30/2010
GFA


NYSE Gafisa S.A. 9/30/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


2 results for NYSEARCA:

DBA


NYSEARCA PowerShares DB Agriculture Fund 9/29/2010
PGF


NYSEARCA PowerShares Financial Preferred Portfolio 9/29/2010

Swings

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 12) and (force_index(3) <= 0) and (force_index(13) >= 0) and (adx(10) > 30) and (high() < high()[-1]) and (high()[-1] < high()[-2]) and (close() > sma(close,10)) and (close() > sma(close,20))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


5 results for NYSE:

JWN


NYSE Nordstrom Inc. 9/30/2010
KMT


NYSE Kennametal Inc. 9/30/2010
NVS


NYSE Novartis AG 9/30/2010
PHH


NYSE PHH Corporation 9/30/2010
VIT


NYSE VanceInfo Technologies Inc. 9/30/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


2 results for NYSEARCA:

EWU


NYSEARCA iShares MSCI United Kingdom Index Fund 9/29/2010
QLD


NYSEARCA ProShares Ultra QQQ 9/29/2010

1-2-3-4

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 12) and ((adx(10) + adx(20))/2 > 30) and (pdi(10)+pdi(20) > mdi(10) + mdi(20)) and (low() < low()[-1]) and (low()[-1] < low()[-2]) and (high() < high()[-1]) and (high()[-1] < high()[-2])

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


Displaying 5 results of 7 for NYSE:

ACL


NYSE Alcon Inc. 9/30/2010
BMY


NYSE Bristol Myers Squibb Company 9/30/2010
DD


NYSE E. I. du Pont de Nemours and Company (DuPont) 9/30/2010
ENR


NYSE Energizer Holdings, Inc. 9/30/2010
LVS


NYSE Las Vegas Sands Corp. 9/30/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


2 results for NYSEARCA:

DBA


NYSEARCA PowerShares DB Agriculture Fund 9/29/2010
MOO


NYSEARCA Market Vectors--Agribusiness ETF 9/29/2010

Cross

Scan Code From www.StockScanPRO.com:
(sma(volume,20)>=500000)and(close() > 12)and(sma(close,5)>sma(close,15))and(close() < sma(close,5))and(close() > sma(close,15))and(high() < high()[-1])and(close() > open())

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


Displaying 5 results of 6 for NYSE:

CHL


NYSE China Mobile Limited 9/30/2010
EJ


NYSE E-House (China) Holdings Limited 9/30/2010
GFA


NYSE Gafisa S.A. 9/30/2010
KMT


NYSE Kennametal Inc. 9/30/2010
N


NYSE NetSuite Inc. 9/30/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


1 results for NYSEARCA:

DBA


NYSEARCA PowerShares DB Agriculture Fund 9/29/2010

Triangle

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 12) and (close() > sma(close,20)) and (high()[-2] > high()[-1]) and (high()[-2] > high()) and (low()[-2] < low()[-1]) and (low()[-2] < low()) and (high()[-1] > high()) and (low()[-1] < low())

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


0 results for NYSE:

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


0 results for NYSEARCA:

Reverse

Scan Code From www.StockScanPRO.com:
(sma(volume,20)>=500000)and(close() > 12)and(high()[-2] > high()[-1])and(high()[-1] > high())and(low()[-2] > low()[-1])and(low()[-1] > low())and(close()[-2] <= open()[-2])and(close()[-1] <= open()[-1])and(close() >= open())and(volume() > 1.5 * sma(volume,20))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


1 results for NYSE:

CL


NYSE Colgate-Palmolive Co. 9/30/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


0 results for NYSEARCA:

Breakouts

Scan Code From www.StockScanPRO.com:
(sma(volume,20) > 200000)and(close() > 7)and(high() >= max(high,40))and(high()[-1] >= max(high,40)[-1])and(volume() > 1.5 * sma(volume,20))and(close() > open())and(volume()[-1] < sma(volume,20))and( (close() - low()) >= (0.75 *(high() - low())) )

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


3 results for NYSE:

AGP


NYSE AMERIGROUP Corporation 9/30/2010
CVD


NYSE Covance Inc. 9/30/2010
SBS


NYSE SABESP 9/30/2010

Results for AMEX


2 results for AMEX:

HYG


AMEX iShares iBoxx $ High Yield Corporate Bond Fund 9/30/2010
JNK


AMEX SPDR Lehman High Yield Bond ETF 9/30/2010

Results for NYSEARCA


0 results for NYSEARCA:

Revival

Scan Code From www.StockScanPRO.com:
(sma(volume,20)>=500000) and (close() > 12) and (close()[-1] - low()[-1] <= 0.1 *(high()[-1] - low()[-1])) and (close() - low() >= 0.95 *(high() - low())) and (close() > sma(close,15)) and (close() > sma(close,50))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


1 results for NYSE:

PAR


NYSE 3PAR Inc. 9/27/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


1 results for NYSEARCA:

CSJ


NYSEARCA iShares Barclays 1-3 Year Credit Bond Fund 9/29/2010

Reversals

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 200000) and (close() > 12) and (low() <= min(low,40)[-1]) and (volume() > 2*sma(volume,20)) and (close() > open())

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


0 results for NYSE:

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


0 results for NYSEARCA:

Short Swings

Cross

Scan Code From www.StockScanPRO.com:
(sma(volume,20)>=500000) and (close() > 12) and (sma(close,5) sma(close,5)) and (close() < sma(close,15)) and (low() > low()[-1]) and (close() < open())

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


Displaying 5 results of 21 for NYSE:

AKS


NYSE AK Steel Holding Corp 9/30/2010
CCK


NYSE Crown Holdings Inc. 9/30/2010
CLI


NYSE Mack Cali Realty Corporation 9/30/2010
CPX


NYSE Complete Production Services, Inc. 9/30/2010
DB


NYSE Deutsche Bank AG 9/30/2010

Results for AMEX


1 results for AMEX:

EGO


AMEX Eldorado Gold Corp 9/29/2010

Results for NYSEARCA


0 results for NYSEARCA:

1-2-3-4

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 12) and ((adx(10) + adx(20))/2 > 30) and (pdi(10) + pdi(20) < mdi(10) + mdi(20)) and (low() > low()[-1]) and (low()[-1] > low()[-2]) and (high() > high()[-1]) and (high()[-1] > high()[-2])

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


1 results for NYSE:

DGW


NYSE Duoyuan Global Water Inc. 9/29/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


0 results for NYSEARCA:

Swings

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 12) and (force_index(3) >= 0) and (force_index(13) <= 0) and (adx(10) > 30) and (low() > low()[-1]) and (low()[-1] > low()[-2]) and (close() < sma(close,10)) and (close() < sma(close,20))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


0 results for NYSE:

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


1 results for NYSEARCA:

VXX


NYSEARCA iPath S&P 500 VIX Short-Term FuturesTM ETN 9/29/2010

Window

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 7) and (adx(10) > 30) and (pdi(10) < mdi(10)) and (low() > sma(close,5))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


2 results for NYSE:

ACF


NYSE AmeriCredit Corp. 9/29/2010
DGW


NYSE Duoyuan Global Water Inc. 9/29/2010

Results for AMEX


0 results for AMEX:

Results for NYSEARCA


0 results for NYSEARCA:

Revival

Scan Code From www.StockScanPRO.com:
(sma(volume,20) >= 500000) and (close() > 12) and (close()[-1] - low()[-1] >= 0.9 *(high()[-1] - low()[-1])) and (close() - low() <= 0.1*(high()-low())) and (close() < sma(close,15)) and (close() < sma(close,50))

Results for NASDAQ


0 results for NASDAQ:

Results for NYSE


0 results for NYSE:


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