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Market Reaction to Healthcare Deal is Important

Moby Waller — Mon, 22 Mar 2010 05:00:00 +0100

As you may know, we often consider the reaction to news events more important than the news itself. This will likely be the case with the Congressional battle over Healthcare. The House passed a bill late Sunday night, and the market futures have been down a varying degree since then.

With this legislative process now basically a "done deal" and the bill itself fairly watered-down compared to original proposals, it will be interesting to see the market reaction i [...]

A Big Weekend Ahead

Bob Lang — Fri, 19 Mar 2010 05:00:00 +0100

Well, that title is a bit facetious. I believe the eyes of the world will be on us this weekend a some historic legislation is about to be passed. Yes, it effects everyone across the globe from a financial and economic perspective. Frankly our markets have been distracted from anything from healthcare to march madness. I can understand the angst over this huge bill, it's likely to be passed over the weekend. If not, does the market rally? Did it sell [...]

Overbought? Yes - But ...

Moby Waller — Thu, 18 Mar 2010 05:00:00 +0100

Many are talking today about the great recent steady run we've had in the markets. I recently wrote about the 9-day up streak in the Russell 2000 (RUT) (IWM) and how this bodes well historically for the following 2 weeks.

The media is abuzz about how 20% of the S&P 500 (SPX) (SPY) is making new 52 week highs ... but to me this is more of a calendar function due to the fact that we hit massive multi-year lows last March (the infamous 666 low on the SPX that I've written previ [...]

Anatomy of a Breakout - BWLD

Bob Lang — Tue, 16 Mar 2010 05:00:00 +0100

Just look around charts and you'll find a plethora of stocks that are moving higher from relatively nice bases. Of course, not every setup is perfect, and some are better than others. One that caught my eye recently was Buffalo Wild Wings (BWLD). This had a big drop (see chart) and ran right back up, but the buy point was an advance over the solid resistance, which fell like a hot knife through butter. Still a buy? Test that lower trend line and then I woul [...]

Gold and Commodities

Bob Lang — Tue, 16 Mar 2010 05:00:00 +0100

Gold is starting to regain its shine and I am expecting a move back to 1200 soon. The metal tested 1100 on multiple occasions of late and held its ground. The dollar is elevated but that has not knocked down gold as much. Room for the dollar and gold? That's what the market is telling us. Gold will be in breakout mode after it eclipses 1156, where a swift move higher is a strong probability.

Commodities are also on the radar. Today many coal name [...]

Fed Day

Bob Lang — Tue, 16 Mar 2010 05:00:00 +0100

The Fed meeting just snuck up on us, did you know there was a one day session scheduled? I don't expect much change from the last meeting, perhaps some discussion about the intermeeting discount rate hike, and I would not be surprised to see this moved higher once again. Talk about the weaker jobs market and the effect on the economy will no doubt headline the discussion. I'll be watching bonds and the short end of the curve for some clues. The market is sanguine about [...]

Cup/Handles Everywhere

Bob Lang — Fri, 12 Mar 2010 05:00:00 +0100

One of the best patterns to play in a bull market is the cup/handle, coined appropriately by William O'Neil of IBD fame. This chart pattern shows a big surge after a pause (cup) in the stock price then a rest on lower volume (handle), which tends to look like a coffee cup (hence the name). This is a timeless pattern that has worked in every bull market. Last week, I was scouring chart after chart and all I could find were these patterns. I don' [...]

I Smell Something Funny

Bob Lang — Thu, 11 Mar 2010 05:00:00 +0100

Ok, that title was a bit of a joke there. Fertilizer stocks are on the move tonite with a big guide up from Potash, a favorite of ours. We can look to POT, MOS, AGU and IPI to lift higher on Friday and likely beyond. The charts were setting up nicely too, and this will likely put these stocks in breakout mode. We'll be looking for an opportunity for a trade here, taking advantage of the surprise and low volatility for an upside trade.

A Forgotten Tech Name is Breaking Out

Moby Waller — Thu, 11 Mar 2010 05:00:00 +0100

A technology company that was a "hot stock" of the 1990s is quietly breaking out to its highest levels in about 15 years. The company is Sybase (SY). One prominent commentator speculated that it would be a good fit for an acquisition by Hewlett-Packard (HPQ).

Taking a quick look at the fundamentals, trailing and forward P/E averages about in the 20 area, profit margins are close to 20% (healthy, as stocks in this sector usually are), quarterly revenues grew ab [...]

Leadership

Bob Lang — Wed, 10 Mar 2010 05:00:00 +0100

Lately we've been seeing good leadership in stocks, and yet the indices are just slowly moving forward. This may be the best of all worlds, for the 'wall of worry' is up. How so? First, we've seen stocks breaking higher on lower volume. Normally this would concern me, however the 'non believers' are out there. Frustrated bunch, aren't they? Retail has been strong of late but traders may fade the retail sales number due out on Friday. Tech has bee [...]

A Quiet Name Making 10-Year Highs

Moby Waller — Wed, 10 Mar 2010 05:00:00 +0100

A relatively quiet consumer products company that's been in business since 1916 has made new 10-year highs over the past week: DelMonte Foods (DLM). This week, DLM reached its highest level since 1999.

DLM is primarily in the food business, with its major divisions being edibles for Humans and Pets. It looks like the Pet division is driving the recent growth, with such strong brand names such as Meow Mix, Kibbles n Bits, 9Lives, and Milk-Bone. Its Human Food di [...]

Really Overbought?

Bob Lang — Mon, 08 Mar 2010 05:00:00 +0100

That's a good question. By some metrics yes, we're overbought and due for a pullback. But by and large the indices ae not in nosebleed territory. Oh sure, the markets are up 3% or so over the last week, and over 6% since the last reaction low on Feb 25. Given the low VIX we don't expect to see massive surges, in fact the SPX has had only 2 days of a 1% move since mid Feb, nearly a month. It's been a jagged climb since early February. But the important [...]

VIX 17.5 and SPX 1,150

Moby Waller — Mon, 08 Mar 2010 05:00:00 +0100

Well here we are again ... the CBOE Volatility Index (VIX) has dropped down to the key 17.5 level, meanwhile the S&P 500 Index (SPX) has rallied again towards the 1,150 area.

Where have we seen this scenario before? Well, it wasn't very long ago -- in January 2010, we tested these areas (see the following chart). Last time around, we spent several days waffling around before a fairly big market reversal occurred. This pushed the VIX from 17.5 all the way to the u [...]

Watchlists for Grandslam and Extreme

Bob Lang — Fri, 05 Mar 2010 05:00:00 +0100

I use different timeframes and like to see confirmation over a different series, of course when all the technicals are in alignment we have a high probability trade. The daily chart shows great formations for Grandslam trades, while the hourly setups are much better for Extreme ideas. Here's what is showing up this am:

Grandslam (Daily) - POT, RIM, ANR, CLF, ICE, IBM, JPM, HIG, AFL, BRCM, AMZN, VALE, CNX, BBY, DNDN

Extreme (hourly) - QCOM, AAPL, GOOG, MON, MS, GS, HIG, [...]

DJIA 1929 versus 2010 - Depression Averted Thus Far

Moby Waller — Thu, 04 Mar 2010 05:00:00 +0100

Take a look at the following chart, which overlays the Dow Jones Industrial Average (DJIA) (DIA) with the 1929 market crash and the 2008 market crash. It shows the subsequent performance over the next 5/6 years.

What is interesting here is that 2009/2010 is thus far creating almost a mirror inverse pattern of what occurred following the 1929 Crash. You can see that back then we had kind of a "false rally" which ultimately turned into a a 2 year strong bear market [...]

Retail Sales

Bob Lang — Thu, 04 Mar 2010 05:00:00 +0100

Early returns for February are in and it seems retail numbers are pretty decent. Given the bad weather and the literal shutdown of roads for days in in the month it was expected to see a softer number. However, some retailers are showing stong comps, but against a very weak month of Feb 2009 this may end soon. Retail stocks have rallied sharply since January and may be long in the tooth.

Jobs Data Coming - Is the Market Ready?

Bob Lang — Tue, 02 Mar 2010 05:00:00 +0100

The one big snag on the recovery has obviously been a lack of job growth. For whatever reason you believe the fact remains the private sector has had trouble adding payrolls. Certainly the Federal Gov't has been trying to help, but perhaps we have regressed. The confidence numbers are weaker, regional areas are showing signs of stalling and revisions tell us there are more job losses in the pipeline. The market says: 'what, me worry?' The remainder of [...]

VIX busts Lower

Bob Lang — Tue, 02 Mar 2010 05:00:00 +0100

The fear gauge, or the VIX is showing high complacency and general malaise about bad news. That's dangerous, but for now the market is sanguine. As you can see from the chart the indicator is sitting right where it was when the last big rise occurred. Remember that one? The SPX dropped 60 points in about three days. Jobs data is out the remainder of the week, and perhaps the bulls have exhausted themselves for the time being.