Jack Steiman, On Why Bulls in Control (SwingTradeOnline.com)
You would think that the market would spend some time unwinding further after Friday, but not this market apparently. The futures shot up overnight prior to Monday's open. The dollar fell and that was the perfect tonic for the market. It seems a falling dollar is still the best medicine for this market, although we have seen the market stay resilient when the dollar sells. Seems the bears can't get it right on either side of that trade these days. We gapped up and never looked back although the move up after the open was more on the gradual side of things. Not a blast up and out but a nice slow and smooth move higher throughout the day. We closed a bit off the highs but it was still a solid day for the bulls. Every index is now basically on a buy signal. Nothing around for the bears to really hang their heads on except sentiment. That will kick in at some point, but for now the bears just can't catch a break.
What made Monday so bullish is the reality that we completely engulfed the down sticks from the action on Friday. Whenever an uptrend is confirmed such as this one is you look for evidence that it will remain after you get some much needed selling. That often will show itself in an engulfing stick we saw Monday. An engulfing stick meaning it was up more Monday than it was down Friday and thus it "engulfed" the entire down stick from last Friday. The volume obviously blasted higher based on the fact that the holiday season is now over and everyone was back to work. If we had gapped up, engulfed, and then closed poorly and printed a black candle, then today wouldn't be nearly as bullish. The bears would have had something to hang their hats on. The engulfing candle speaks volumes about this overall market and how the bulls remain in control.
An important event that took place Monday was the action from Goldman Sachs (GS). This key financial stock had been trading below its 50-day exponential moving average for a very long time but put that to bed in a big way today. When a key financial such as this one gets rocking, it's harder to keep the market down from a bearish perspective. It's such an important stock for this market. Remember, this is the number one leader in the financial world. On Monday this monster made a strong move back through those 50's with some real force, and thus we have yet another weapon for the bulls to hang their hats on.
Mike Paulenoff, On Case for Japan (MPTrader.com)
My outlier market for the first half of 2010 is Japan! Huh? Yes, that's right, Japan. On one hand, my intermediate term technical work is so compelling for upside of 16% to 20% from current levels, while Japan Inc., is so far removed from everyone's radar screen as an attractive fundamental investment vehicle that the contrarian in me says it is time to give the beleaguered Island of the Rising Sun the benefit of the doubt in 2010, a full 21 years AFTER its bull market peak.
Looking at the daily chart, my intermediate-term work indicates that at the November 19 low of 9.20, the iShares Japan Index (EWJ) started a very powerful secondary upleg off of its March low at 6.84. The initial upmove ended at 10.16 on December 4, after which prices corrected into the end of the year (9.72). Monday's strength has the right look of the initiation of the next phase of the secondary upleg, which should hurdle resistance at 10.08/16 on the way to an 11.25/50 projected target zone in the upcoming weeks. Only a plunge that violates both the Mar-Jan up trendline and the rising 200 DMA will wreck the very friendly technical set-up.
Harry Boxer, On 4 Charts to Watch (TheTechTrader.com)
Today we're going to talk about some of the stocks that appear to be breaking out.
There's certainly a lot of them. It's tough to narrow them down and that goes to show you how many stocks are out there now that appear to be moving and surging. Sometimes when you get too many of them all at once, it's an indication the market may be somewhat overbought or nearing an important peak. But we'll ride it until they turn and lower.
China Automotive (CAAS), in a very strong Chinese group Monday, has a kind of head and shoulders type of basing pattern, broke up 2.14 today at 1.8 million shares, the heaviest volume in 3-4 weeks. It looks like it's coming across a declining topsline. Next target is 26 plus range, maybe 27.
SmartHeat (HEAT) had a strong session Monday, up 1.34 or 9%, breaking out of its wedge with increasing volume. Initial target up around 17-17 1/4. Could be doable very short-term. Secondary target around 18 1/2-19.
Telestone Technologies (TSTC), a super Chinese stock, this last year has risen from under 1 to 22 1/2, and Monday broke out of a 3-day bull flag on increasing volume. Top of the short-term channel says 24 is doable. We may see that as quickly as Tuesday. Then the longer-term target, up around 30 plus, is very much in the cards.
Xyratex (XRTX), a model portfolio position of ours, jumped 90 cents or almost 7%, and may be breaking out of the congestion range or consolidation that has held the rising trend line or moving averages. Monday was a good day because it closed at a new closing high. Long-term target up around the mid 20s. Short-term target in the high teens.
Other stocks in our video chart analysis are Brigham Exploration (BEXP), Canadian Solar (CSIQ), Geron (GERN), Green Plains Renewable Energy (GPRE), Kandi (KNDI), Origin Agritech (SEED) and Tianyin Pharmaceutical (TIP).
Jerome "Mel" Hickerson, On Dueling Forces (MarketsPath.com)
The year opened with the typical Monday morning strength, and then continued with a follow-through, setting a new 52 week high and the high for the day at 11:44 and closing not far off that on the SPX.
There was one item from our Friday message that was affected by Monday's action: "The Santa period this year has seen a 1% losing session without (yet) a 1% gaining session. Our 59 year sample of data shows that 71% of the time this leads to a negative January versus the 62% positive bias for all Januarys." We now have the offsetting 1% gain to nullify that stat.
Another stat worth noting: Since 1990, the first session of the year has closed positive nine times. Eight times the SPX closed upward the following day; the one loss was -0.12%. From strictly a seasonality viewpoint, the second session of the year rates as the second most positive session of the year at 74% positive. So stats suggest that tomorrow will also be a positive day.
For Tuesday, it's the second half of our "Tuesday's close should be higher than Monday's open" signal. Lately, the second day of these signals has been listless and sometimes down trending. Our model is generating negative signals; seasonality is suggesting higher. We might see some choppy trade as dueling forces battle it out. A gap up followed by a slow downward trend creating a doji candle would fit the model well.
