Mike Paulenoff, On More Strength Ahead ... and Why Ford? (MPTrader.com)
Some market observations this Tuesday morning. What am I thinking?
- That the stock index weakness this AM is "just" a minor pullback ahead of yet more strength that will attempt to test and to hurdle the late Oct. highs.
- Let's be aware that yesterday the DJIA was the ONLY major index to climb to new post-March highs, which could be significant IF the other indices continue to struggle. In other words, the fact that the narrowest index (30 Dow names), which happens to be the blue chip index too, is now LEADING the upside, while the broad market struggles, is NOT a particularly healthy situation -- unless the broad market (S&P 500, Nasdaq) catches up in a hurry.
- Let's notice that while the metals are down in sympathy with the highly correlative pullback in equities, spot gold prices are down only $2 (but still above $1100), and oil prices are unchanged, which may be a hint that commodities are starting to positively diverge from equities... but much more evidence of such remains to be seen.
Based on my pattern work, Ford (F) still should have some room on the upside that projects to a test of 9.00. As long as any intraday weakness is contained at or above 8.00, I expect additional strength prior to the onset of a meaningful bout of profit-taking.
Then again, should Ford fail to hurdle, say, 8.30 and then breaks down below 7.95 and sustains the weakness, I will be looking for a potentially nasty shakeout of the entrenched long positions that could press Ford into or below 7.00 again, where I will begin to look to accumulate a new long position.
Harry Boxer, On 6 Charts to Watch (TheTechTrader.com)
Today I'm going to look at the long side with the market still powering ahead here.
China Automotive Systems, Inc. (CAAS), which has been on our top 40 list for months now, continues to work its way higher. On Monday it popped across the October highs, up 79 cents or 6.3%, and the volume picked up to the highest level in about two weeks. The stock is at new multi-year highs, going back about three or four years now.
Cardtronics (CATM), too, continues in a very similar rising channel. The significance is that the last few days the stock has been moving steadily higher, not getting way ahead of itself, in a nice orderly advance with increasing technicals.
I want to revisit Kandi Tech Corp. (KNDI) at this time because, in particular, the volume has surged the last four sessions, while the stock has moved kind of sideways, but it's at the apex of a coil. It appears that it may want to come out of this coil and pop. If that's the case I'm looking for a move that takes us to 5-plus.
Protalix Biotherapeutic (PLX) has a steady rising channel similar to CAAS and Cardtronics. It broke above key resistance a week and a half ago, and has moved up steadily higher everyday. Not getting too far ahead of itself. Short-term target 14.
Here's one we can't say enough about -- Revlon (REV), which has absolutely gone ballistic, from $6.00 to $15.00 in 8 days, a huge percentage move on massive volume. Up 4.00 or 37%. Breaking out of this mini 4-day flag that it was in on low volume. It could see additional progress that takes us up to the 17-17 1/2 area short-term, which would be my target on it. But it's getting long in the tooth and may need to rest and form another consolidation in this zone.
Lastly is U.S. Energy Corp. (USEG), which since breaking out of the flag is edging slightly higher everyday, but not getting ahead itself. It's now above the 10 & 21 day moving averages as well as the 50. Looking at the long-term chart you'll see a 10-year base pattern that could support a huge move. The all-time high in '96 was in the mid 20s. It wouldn't surprise me if over a longer-term basis USEG did that. But from a short-term standpoint, I'm looking for a move that takes us up to 8-8 1/4, and then beyond that, around 10-10 1/2.
A few other longs to take a look at are: DG FastChannel, Inc. (DGIT), which has really powered ahead this week, while Human Genome Sciences, Inc. (HGSI), a stock we've had on our radar for a long time, continues to look well. Ocean Power Technologies, Inc. (OPTT) exploded Monday, up 1.10 or 13.3 % on 2.78 million. That's strong volume.
Jack Steiman, On Expectation of Contained Selling Before Next Upleg (SwingTradeOnline.com)
We are now very overbought on all the major index charts on the 60-minute time frame. We will need to pull back soon, especially since we're so close to major resistance on the S&P 500 at 1101. It's unlikely that we'll be able to just break through being so intensely overbought. It should be the type of selling that is contained now by the 50-day exponential moving averages underneath. 3-4% should be the maximum selling now. With strong internals on the up days you'd have to think that the bulls will undoubtedly defend critical support now.
They held these 50-day tests recently and with the strong move made back above, they aren't going to be willing to give it back. The 60's unwind quickly so it shouldn't take too much to get them neutral and then oversold if the selling gets strong enough. With the daily charts nowhere near overbought, this makes the selling to come less likely to be too intense. We can go a bit higher but selling should ensue soon. For now, any overbought selling can be used for buying good set ups which exist just about everywhere.
Monday saw the market gap up after the futures shot up on strong action overseas. From Asia to Europe and finally to us. They held all morning, although there were some selling attempts. We gapped up, churned for a few minutes, and then ran higher all day. The reason today was important was because you wanted to see the bulls follow through after taking back lost 50-day exponential moving averages on the S&P 500 and Nasdaq. The fight to get them back came fairly easily, but now we wanted to see if the bulls could put a strong gap day under their belt, and they accomplished it without too much of a headache from the bears. Solid action for the day with the bulls now having added support under their belts with today's strong gap up. Every gap up helps folks. They should not be taken for granted and now we have solid support added to the bullish scenario.
The dollar just continues to break down, as seen by its ETF the PowerShares DB US Dollar Index Bullish (UUP). All the gains from the additional added shares are now basically gone. Very negative action, that for now, is showing no desire to turn the tide. Sadly, this means the market is doing well. A bad dollar equaling a strong market isn't exactly the best of both worlds, but it is what it is.
With the market so close to 1101 on the S&P 500, I'd recommend watching a bit right here. There are so many wonderful set ups around, and they can be played, but most of them are very overbought and, like the market, could use a small pullback. When it comes, I will fire out more plays. For now, please move ahead slowly. If we blow through 1101, we'll be violently overbought and will need a back test; thus we won't miss anything and we're in two plays.
