On Monday the NASDAQ Composite lost 0.28 points to close at 2007.51 while the S&P500 closed at 1183.78, losing 5.87 points. Volume overall was lower, but I do feel this is not significant following the quad witching on Friday. We saw 1.85 billion shares on the NYSE and on NASDAQ 1.65 billion shares changed hands. Advancers led decliners again, and we had more new 52 week lows than new 52 week highs. On Monday the DOW closed under its 50 day moving average for the third day in a row. This is a good intermediate to longer term indicator of trends, and as it starts to turn over the markets will have a hard time getting ahead. Remember that just 4 weeks ago the DOW was a sliver away from 11,000, it has fallen now nearly 1000 points in this time. I am concerned that volume patterns remain weak. I also did not like the fact that on Friday financial stocks acted like they were going to hold, but yesterday they stunk up the joint. Volume patterns overall continue to favor the downside. Today Uncle Al and his board meet on the future of interest rates. They have already risen rates six times this year, and it is pretty well accepted that they will raise them again today. That will not be the key point to listen in on, you will want to see what the language is: Namely do they continue to talk about raising at a "measured pace"? There continues to be only a few names in the market that look "good". When I spend two or three hours at night scanning and I'm only able to find a hand full of names that look even mildly attractive that tells me all I need to know. Why should I remain fully invested when things look like crap? So far this has been a wild year. Eventually the trends will resolve themselves up or down, if I had to place a bet, and I'm thankful that I don't, I would say it will be down. When that happens it will become clear and then I will be short. For the time being I am playing small with select stocks, but I have the majority of my money invested in cash. This has allowed me to have a great year thus far. How great of a year? I have not lost a dime when the market has jerked all over the place and tech is now down sharply. Its not the absolute positive returns I need to generate fee's, but it's enough to keep me happy at this point and always in the game.
On Wednesday the markets were mixed. The Nasdaq Composite gained 0.88 points, closing at 1990.22 while the S&P500 gained 0.82 points and closed at 1172.53. Volume was not all that heavy, while the advance to decline line remained terrible with decliners leading advancers more than 2 to 1. The new high list continues to contract, last night I only saw 14 relatively liquid stocks near new highs which tells you most of what you need to know for the time being. Over the last few days it looks as though we are getting our bounce. It appears to be occurring by having the market churn sideways on low volume. For the bulls this is the worst case scenario and suggests that there is very little interest in buying stock. The one positive thing I see is that the McClellan Oscillator on the NYSE is as negative as it has been since July of 2002 and September of 2001.This is, however, a secondary indicator and as long as the volume patterns remain what they are the market is going to have a hard time getting any traction. The Fed has now raised rates a total of 7 times and they are indicating that more rate hikes are in the pipeline. They have also indicated that they are somewhat concerned about inflation. I suspect that Mr. Greenspan does not pump his own gas or buy his own eggs and health insurance, because it sure did take them awhile to wake up to the inflation that we have been seeing for the last year and a half. The markets always look out several quarters anticipating what is to come. So far outside of the airline industry most companies have not felt the impact of higher energy and commodity costs. I suspect that by the 3rd or 4th quarter we are going to start seeing companies mention higher costs as a factor in earnings trouble. Yesterday the Oil stocks cracked like a rotten egg. Many of the leading stocks in that group did so on very heavy volume. The music here has stopped, and if your still standing you need to find a seat. These stocks will be shortable on the next move higher. As far as the long side goes I am not seeing a whole lot. You might be able to play a few of the semiconductors long for a bounce of a few days. Stocks like NVDA and NSM stand out, but again this is a very short term trade that may only last one or two days. Other stocks that stand out are CVS in the very strong Drug Retailers group, TSCO, HLTH, ESRX and JBX. Right now CD's are paying up to 4% on cash. There is no reason not to have some of your longer term capital working for this risk free return. The markets, in my opinion, are going to remain tricky for the rest of this year. As always though, I will be here looking to play it one day at a time based upon what is seen in the market right now. Brandon
Video on PNRA Hello Brandonf I took a look at your video. Nice. It is the way many exchanges will go in the near future as higher speed internet and better compression of files will permit. Just plain old text is not enough. A picture is worth 10K words... A suggestion.. if I may? Color your mouse-arrow to contrast the background. The viewer does not have the physical input you have as to where your moving it. A glance away at the wrong moment results is a "lost" arrow. A "spray can" underlining an area might help too. In other words can your visual movements relay a basis story without your speaking? If it could, then speaking the info will be even better? A double input from audio as well as visual. What software are you using? Have you tried WMV files? Thanks. agpilot
Brandon, I check out your webpage and found it very informative. I enjoy your journal, and find it pretty educational. I have a question about the OOPS setup you described in the webpage if you dont mind. For a long set up, does the wide ranging down day volume matter? I am guessing I should screen for stocks that formed the wide ranging bar on light volume? (my reasoning is that that the selloff really didnt have much force behind it, and the scared hands were shaken out, while the institutions waited for a good entry point?) Thanks for any further input you might have..
This is a good idea...video trading journal... perfect if someone has a notebook computer and a headphone so during the weekend, he can review what he did during the week and learn/reinforce habits on it. Can give a lot more info than writing everything down , but then it will take up more harddrive space. But then sometimes , some people like to take the written approach so they can review it anytime anywhere by flipping pages/scanning quickly if there are charts. All depends on your personal preference. Very good idea anyways.
03-19-05 11:27 AM I'm messing around with a new program that allows me to make a video of the stuff I'm doing. Right now I don't have a streaming server, so its slow to download, but if you are interested check out this link on the PNRA trade. Let me know what you think of it. http://www.tradingfrommainstreet.co...n/cams/PNRA.avi Brandon ---------------------------------------------------------- We did post comments. Did you read them? agpilot
On Monday the S&P500 closed at 1,178.84, up 7.49 points. The NASDAQ Composite gained 12.32 and closed at 1,976.67. Both exchanges saw a decent A/D line, 22-10 for advancers on the NYSE and 19-11 on the S&P500. On the NYSE new highs are starting to show up nicely with 102 new 52 week highs vs only 29 new lows. On the Nasdaq things do not look as good, at 52 new highs and 75 new lows, but this ratios is improving dramatically from last week. This is a good sign. The A/D line stayed positive all day as well, even when the market was down earlier, this is a sign of strenght. Last week as the DOW chopped around 10,000 a line was drawn in the sand. Buyers stepped in and we now are seeing much more positive action in the overall market than we had been before. We basically saw the wrong way crowd get extremely bearish and they always have to lose, that's just the way the market is. Looking at the charts I am seeing some things I really like. If you look at a chart of the DOW Jones Industreal's you will notice that last Wednesday the DOW made a higher high. This is a critical sign for you to watch that shows TECHNICAL STRENGTH in the market. What we now want to see is a higher low, and should that occur the market is likely to get some legs. This pullback is shaping up nicely. This is what I absolutely love about the stock market: Two and a half weeks ago everything was very bearsish, and I myself was screaming from the rooftops, which I have been doing since January, to be short. In the last few few days that has changed and we are now playing a new game. You cant rest for long and things are always changing. Maybe I have "adult ADD" but I do so love this game. Here is a list of several stocks you can keep an eye on for buying opportunities. RNWK (it needs to rest first), PZZA, PAS, ORLY, JAH, and CHH. Those of you who play the indexes via Holders or Rydex should be switching OUT OF SHORT and DEFENSIVE LONGS, and into long market exposure. Trade smart, Brandon Fredrickson
With the effect of higher oil prices wieghing in the overall markets had a rough day on Tuesday. The S&P500 lost 12.62 points and closed at 1,166.22, while the NASDAQ Composite Index lost 16.90 points and closed at 1, 926.77. Volume was heavier across the board, up 10% on the NASDAQ to 1.65 billion shares and up 3% on the NYSE to 1.65 billion shares. There were 68 new 52 week highs and 40 new lows on the NYSE, 47 new highs and 107 new lows on the NASDAQ. Decliners trailed advancers by about 2 to 1 on both exchanges. Right now I am going to stand by what I said yesterday. The major indexes have all put in significant higher highs and I am not yet willing to bet on them not putting in a higher low as well. That said, the market better hold fast here. It would not suprise me at all to see it churn for a bit back and forth because we are right under some major resistance, both price and key moving averages. This type of resistance does not just break in a day, it has to be digested. I think what we saw today was some of that digesting. I have a few new names to add to my list of stocks to watch today, and one from yesterday to remove. JAH had a pretty rough day and it sold off more than I'd like to see for a "leading stock". I am no longer interested in this stock. PZZA, PAS, ORLY and CHH still look fine. In addition to those I am also watching SE which broke very nicely to a new high today on strong volume. This is exactly the kind of action I like to see in a stock that I am buying. Also of interest is GOOG, which has been a leader for some time and is hanging in there pretty nicely after a large gap up. I think that as the market heads higher the people who do not want to do much work will pick up GOOG and it will head higher. Finally I like WFMI. One additional stock I want to mention, and its a short. I normally do not short 52 week highs, but BA really stood out to me today. It made a significant intraday double top and then it really tanked, I think it might be vulnerable over the next few days at least. Trade smart, Brandon Fredrickson
If you are a bull the action on Wednesday was decent, but I do see some area's of concern. The market started selling off early and it accelerated on news of a jet in restricted White House airspace, however by the end of the day the market had recovered fairly nicely and the markets where positive. The S&P500 gained 4.89 points, closing at 1,171.11 while the NASDAQ Composite gained 8.78 points and closed at 1,971.55. These numbers are all well and good, especially after the earlier troubles. Whenever the market is down big and it can recover into the close this shows you some sort of underlying bid, and you do not want to ignore this. The market internals though are not as "nice" as I would like to see them. We had NYSE volume decrease 4% to 1.84 billion shares while the NASDAQ volume fell by 7%, to 1.77 billion shares. I would like to see stronger volume on a reversal day. Next, on the NYSE there were 66 new 52 week highs vs 68 new 52 week lows. This is the first time in several days there have been more new lows on the NYSE. On the NASDAQ, where lows have continued to lead there were 45 new highs and 95 new lows. Next I look at the Advancing Vs Declining issues on both exchanges, and this is where my real disapointment comes in. On the NYSE advancing issues led declining issues by a ratio of 18 to 14, while on the NASDAQ decliners lead narrowly by 16 to 15. Neither of these are stand out numbers, but I like to see strong leadership in advancing issues in a bullish market. I am going to continue to keep an eye on this, as well as the new highs, and if there is not some better action soon I am likely to turn much more cautious going forward. I have no new names to add to my list today. GOOG is an open position, and I also picked up some small long exposure to the SPY into the close. PZZA, PAS, ORLY, CHH and SE all continue to look nice and may be worth further investigation. Trade smart. Brandon Fredrickson