Jerome "Mel" Hickerson, On Why Expecting a Bounce from Here (MarketsPath.com)
Wednesday's session opened under selling pressure from the futures, gapped down quickly, tried to stabilize, but bears regained control around 10:00 and pushed the ball downfield hard until setting the low of the day at 11:10. From there, the bulls mounted a weak comeback but the lows of the day were retested about 1:20 at which point the bulls mounted a stronger snapback rally erasing eight points of the earlier loss moving upward into the close. Welcome to renewed volatility.
Now, down to the more important business of looking at where we might go from here. I know that many in our Marketspath.com chat room see more work on the downside; so do I. I just differ on timing; I see a bounce coming from here before eventually testing the 50 day moving average of the SPX. I think it is possible we even move briefly above 1150 once again, although I do not think this is highly likely.
Why do I see a bounce? First, let's examine the SPX daily chart. This is now the 11th time since late November that that we have seen a similar pattern on the daily bar; the first 10 times all bounced. 10 for 10.... This may be the one failure - all patterns fail eventually. But until they do, you have to respect them.
Market internals are mixed but on balance are suggesting at least a brief bounce. We've got the signal that says "Friday's close should be higher than Thursday's open." This signal has a 79% success rate over the last 30 months; of course that's a 21% failure rate. You make the call.
Money flow today was into the long side ETFs and out of the inverse ETFs. This is almost always a clue that the movers and shakers intend to try to ratchet things upward tomorrow. Follow the money.
One more reason: The Dollar has been rallying strongly; a pullback on the Dollar would likely fuel a rally in the equities. The 2 Day RSI of the Dollar is 96, suggesting at least a brief pullback of the Dollar.
So there are my four main reasons for expecting a bounce from here. But here's one last one: We still have a 2.5 to 1 ratio of SPX components giving a Buy signal as opposed to a Sell signal. As long as this ratio remains above two, it's hard for me to get too bearish.
Harry Boxer, On Longs to Watch Despite Wed's Decline (TheTechTrader.com)
There's still a lot of stocks on the long side even with Wednesday's market break and snapback and I'm going to continue to highlight them because they continue to be bullish charts. Actually, most of them went up Wednesday in a lousy market so that shows extremely strong relative strength.
Amtech (ASYS) popped 56 cents or 4.7% Wednesday in a lousy market with increasing technicals and volume. The base that was formed over the summer and early fall was broken with a price-volume surge in mid-December. The stock then flagged for a couple weeks, broke out again five days ago, pulled back and tested the moving averages, before yesterday's move. It Looks like this stock wants to run up and test 14 shortly and eventually get to my 17 1/2 -18 shorter-term target.
Jazz Pharmaceuticals (JAZZ) has been acting great of late and Wednesday had the biggest volume in the last three months, trading nearly 2 million shares. It popped to 11.24, backed off to about 10.30, then closed back at 11, up 1.12 or 11.3%. The stock took out the September bounceback reaction high around the 10.40 area and is now approaching what looks like a two-year high up around the 11.88 area. Beyond that my secondary target is up around 15, and then at the top of the channel somewhere around the 19-20 zone.
McMoran Exploration (MMR) has had a real big surge of late after tremendous news of their oil well results. After a big surge and rising flag, it broke out Wednesday and backed off, but still up 65 cents in a lousy market as the technicals and volume surge. This one looks like it wants to move back up towards my intermediate target around 22. My shorter-term target is around the 18 -19 zone.
Wednesday was a stellar day for Rambus (RMBS). After severely testing support around the 20 level, and testing its moving averages and trendlines, it exploded for 3.37 Wednesday, up nearly 16% on 24.5 million. That's the heaviest volume since back in January '09. This stock appears to want to make a move to test and maybe take out the 26.40 area, which was the high reached last year, and beyond that the top of the channel trading target around 28.
Mike Paulenoff, On Climbing Dollar & Falling Gold (MPTrader.com)
The dollar (viewed from its cash index, the DXY) continues to climb, and in fact has exceeded its prior high of 78.45 from January 12, which is a very positive near-term technical "event" for the greenback. After all, the idea that the DXY could rally, pull back, and then rally again to a higher-high in the aftermath of a powerful downtrend was unthinkable to most fundamentalists.
Now, however, with the Scott Brown victory in Massachusetts, a possible refocus on fiscal priorities by the Democrats, and trouble brewing in Greece, all of sudden, perhaps, there are underlying reasons to move into dollars? Be that as it may, my work argues that the DXY is heading for 80.00, and then 82.00. Meanwhile, gold is acting inversely, as it should. Let's notice that the price structure has sliced just beneath its Aug-Jan support line (today at $1107.25).
Inability of prices to climb and sustain above the trendline as the session wears on, coupled with continued demand for the DXY could press gold prices quickly towards a test of the December low at $1074.00.
Jack Steiman, on Why Market Going Higher (SwingTradeOnline.com)
Let's discuss the single most important factor that moves the market. Earnings! This is so interesting. You're hearing nonsense on some of these shows such as what you see on CNBC about how earnings are being sold. Great earnings are being sold. Are they? NO!!! Nice fantasy but no reality.
Some that are great are being rewarded immediately. Cree (CREE), eBay (EBAY), Seagate Technology (STX), to name just a few. Others are solid but being sold off some. So what!! Some are full and need to unwind; thus it doesn't matter if they're good. They're being sold short-term. Intel (INTC) was sold. The market fell since and now it's back to flat from when those earnings came out. Many are like INTC. They go down 1-2% initially and then are coming right back up because they are solid and offer buying opportunities on any selling that takes place. If earnings are strong there is no chance of a market that will fall apart. Correct sentiment? Yes! Correct overbought? Yes! Crash out? No!Earnings thus far have been stellar versus expectations. There will always be bad reports. However, overall it has been solid. That my friends I believe will prevent anything terrible for this market.
Maybe I'm wrong, but I do NOT think the market is done trying higher prices. I do NOT think we are back in a bear market. I do think this market has a good chance to test the 50-day exponential moving averages and that won't feel good. When markets get overbought we have to get through a period of time where things need to unwind. The oscillators (RSI, stochastics and MACD) get to the point where the band just snaps and we need to pull lower. However, it is essential that you differentiate between some selling and a bear market taking hold once again.
