Rotation Keeps Market Going!

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” - John Templeton

Last week the U. S. market has had seesawed sessions as expected. By Friday, all major indexes closed in fairly strong note. SPX closed at 1,556.89, only 6+ points from its year high of 1563, and 20 points from its 2007 high of 1576.

The strong finish was well helped by the month/quarter-end window dressing.  We saw rotation into some beaten down stocks lately, such as AAPL, VWM, SSYS, and MLNX.

Note: Beaten-down stocks VMW and MLNX both had sharp bounce from their recent lows, and then sold off from the big resistance levels at their 100-day SMA.

AAPL successfully closed above its 50-day SMA, its first time during its past six-month downward move. In my opinion, its next possible upside target would be 100-day SMA near 500-505 as volume should come in.

Conversely, the recent leading stocks have pulled back from their highs seen in GOOG, GS, ISRG, NFLX, KORS, EBAY, etc. , but some of them may see bounce along with market rally. Shorting them at current levels is risky.

The volume on the market upward move has been light recently, and it should pick up in the coming sessions. The volume may pick up until buying exhaustion is seen. Should we see euphoria-like rally before a short-term market top occurs? Let’s watch and see …

Notably, the disappointing earning related news caused bearish price action to LULU, ORCL and FDX. It demonstrates how vulnerable it is during the company earning time, especially when their rally had been extended for a very long time. With only a few weeks away from next earning season starting in April, we should get more per-earning warnings along the way.

It’s always good to be flexible and objective, especially in a choppy market with rotation going on. Remember: have trading plans, enter trades with nice cushion, and cut loss short. Happy trading!

Here is my SPX chart with notes:

The market is Shaky Again …

“When the forgotten old dogs begin to bark & spearhead the market advance, the stock market is on its last feeble legs.” – William O’Neil

Last week was triple-witching option expiration week, the market made small advance helped by the strength in bank and healthcare sectors, but many other leaders have behaved suspiciously with some sold off hard considerably. Internals were in doubt!

After a brief 3% correction, the market has reversed up and climbed nearly 5% for past three weeks.  S&P 500 rose over 68 points from its low of 1,485  hit on Feb. 26th to its high 1563.32 reached last Thursday.

But the market internals have weakened in recent sessions!

The strongest stocks are either stalling out or pulling back from their recent highs, such as GOOG, PCLN, AMZN, KORS, WHR, GS; the beaten down laggards bounced up sharply despite some of them retreating seen in VMW, MLNX, FSLR, AAPL; and also some weak names kept being sold off further to their year lows, such as ISRG, BIDU, ULTA, RAX, DDD, and ISRG is one of wild puppies mentioned repeatedly with huge bearish reversal. GOOG had an exhaustion gap when it hit recent high of 844 on big volume before pulling back, mentioned on Twitter.

There is a saying: Don’t short a strong market as 80% of stocks tend to follow the overall market trend. However, plenty of individual names have acted alone based upon their own charts and price action, not following the broad market trend, and it is an interesting character of the recent market rally.

In conclusion, there are a few caution signs for a serious market pullback:

1. The market rally is now four-month old since November low, mature enough for serious profit taking.
2. The volatility index or VIX is below year 2007 low near 11, a sign of complacency.
3. The rotation seems to be running out of gas with only beaten down stock trying to snap back, helping market stay up.
4. The random price and whipsawing action were seen everywhere, and it’s hard for traders to hold positions overnight, a sign of instability.

With the end month/quarter window dressing near, we will likely see further gyration moves as institutions would re allocate their portfolios. As traders, it’s time to keep our sense guarded, have powder dry, be flexible, and be objective. Best luck on trading!

Here is my SPX daily chart with notes:

Be Cautious When Market Changes Characters!

“Never be afraid of the normal movement, but be very fearful of abnormal movements, it is similar to a major change in personality” – Jesse Livermore

Despite closing near the high of day after a big day of sell off, the S&P index has traded in the narrow range of 25 points from 1490-1515 in past ten sessions. Lately it has been vacillating within a broader range since the Dow has hit the psychologically level of 14,000. SPY closed at 151.05, 0.43 off the session high of 151.48.

The gyration moves have changed traders’ stance toward market on daily basis;  random price action on individual stocks with big gaps continues. It has become a market of “Buy Dip, Sell Rip”. But how long will market rally last ?

Many stocks look fatigue and are well off from their recent highs after their earning reports, seen in IBM, WHR, LVS, AMZN, GOOG, MA, FB, etc.

When many stocks are becoming wild puppies and market behavior is becoming bipolar, it’s time to get defensive and cautious. Trade wisely with caution!

Here is my SPY daily chart with notes:

My Market View after Dow hit 14,000 …

“Real movements do not end the day they start, and it takes time to complete the end of a genuine movement.  Never be afraid of the normal movement, but be very fearful of abnormal movements.” – Jesse Livermore

On the first day of February or last Friday, the market celebrated most upbeat economic news including the Job Report with nice move. Dow finally closed above the psychological level of 14,000, the S&P 500 closed up 0.7% at 1,513.17 and the Nasdaq rose 0.9%. SPY closed at 151.24. Vix dipped below 13 again. GOOG closed at its fresh new high above 775.

However, the market internals don’t look as good as the absolute gains shown on the major indexes.

Many leaders either had bearish reversals or stalled out with choppy action for the recent days, seen in PCLN, AMZN, FB, DDD, SSYS, MA, not mentioning the previous leading stocks AAPL, MLNX, VMW which barely bounced from their recent year lows. Retailers also were the weaker ones as many closed in red; additionally, the IBD 50 lost 1.1% for the week. As much as rotation is going on, stock picking is becoming more challenging for momentum or swing traders.

In an overbought market with lots of random price action with fast speed and wild swing, it is good to be aware of big gap up or down reacting to earning news as HFT (High Frequency Trading) has been playing a big role that either bring them down or up.

Following first 30-minute rule helps avoid getting chopped off . Y0u can see the picture of the wild price action in ISRG CMG on my Twitter picture section. First 30-minute rule: some big gaps related to news can be hard to interpret in first 15-30 minutes of trading, so it is good to let stocks settle before jumping in.

It’s important to be nimble and be patient with the entries levels for cushion. Keep an open mind for any price change. Happy trading to all!

Here are a few charts with my notes to share:

SPY 151.24 1.54

PCLN 685.56 0.09 %)

MA 518.71 0.31

Wise Words by Lao Tzu

“If you are depressed, you are living in the past;

If you are anxious,  you are living in the future;

If you are at peace, you are living in the present.”

- Lao Tzu

AAPL, Market and Twitter

Dear readers,

This is my first blog for year 2013, and I wish everyone

A Happy, Healthy, and Prosperous New Year!

Today is Friday, Jan. 11th, 2013, the eighth trading session for the year. We have had huge market rally with all major indexes closing near or at their five-year highs: SPX closed at 1,472, almost unchanged; Nasdaq at 3,125.63, up 3.87; Dow at 13,488.4, up 17.3. A few recent strong sectors were weak seen in industrial, banks, and biotech; some technology stocks had good days led by FB, NFLX, RIMM, and BIDU. Meanwhile, some retailer stocks have showed lackluster action, such as LULU, TIF, M, and VFC. The rotation seems to be running out candidates soon.

WFC pulled back some after reporting its earning, similar to AA‘s post earning price action. To me, it’s somewhat warning sign as they both were sold off on the earning news after big run-ups.

Due to tremendous risk involved with trading during the earning season and option expiration week, please read those golden rules before your stocks report earnings: http://chartpattern.com/10_golden_rules.html

Ironically, if you’re a AAPL trader, its price action doesn’t make you feel that we are in such a bullish market. It might be one of the reasons that some traders including me are inclined to feel less optimistic about this market as AAPL closed at 520, near its four-month low.

Since I pointed out AAPL‘s toppy action on my chart back in Sept., it has been in a strong downtrend; therefore, it has automatically become the stock for me to short the most of time since then. You can see my AAPL daily chart with notes at the bottom of the page.

Just like many AAPL fans, I have tried to find reasons to believe that AAPL could rally with the market. I went to its stores and checked the business there, and I always saw busy crowds, especially the one in the Central Park in NYC during my New Year vacation. Indeed, a few AAPL store pictures I posted on Twitter seemed to have caused some upside moves before it reversed down. (I assume so, so please don’t laugh )

A few times when AAPL had a sharp bounce with wild gyration moves, I warned and even posted this proverb: One-day of sunshine doesn’t make it a summer. Gladly, I was told that my AAPL comments have saved some traders from being trapped. However, I also got bashed by a few traders who disagreed with me sometimes. They simply fall in love with the stock despite its bearish action.  They ignored such wisdom: “Markets are never wrong, opinions often are.”

I noticed that some well-respected traders don’t post their trades on Twitter, and I thought it is very wise. Not everyone has to trade everyday or day trade. When I used to post entries or exits during the trading hours, I received many replies asking questions about my trades, including basic knowledge for trading. It was very stressful and even opportunity costing because HFT (or High Frequency Trading) dominates trading world and it often causes sharp and fast mores with wild swings on many stocks. To me, nice trading requires good observation with clear thinking!

Now I tend to follow Jesse Livermore‘s wisdom: “I never hesitate to tell a man that I am bullish or bearish. But I don’t tell people to buy or sell any particular stocks.”

There are various trading methods and strategies involved with different trading plans and time frames for traders. Any one of them can work out well as long as traders are skilled with good risk management. I don’t follow others’ trades, so their market views are more important than their entry points or exits. Copying others’ trades eventually leads to failure in trading if not understanding the reasons behind.

I appreciate so many wonderful people on Twitter who have been supportive and encouraging. Sometimes different views on stocks suggested by others have helped me stay objective instead of being stubborn; and also, they have made me feel that it is worth spending time to do well-illustrated charts or write blogs about my market view even though my eyes might hurt after spending long hours on the computer.

In retrospect, it is interesting to recall how I started with Twitter!

In the past two years, I kept hearing about Twitter being mentioned by my favorite characters on CNBC.  Last year in March, my sister came to U.S. and lived with me for a few months. I was surprised that my quiet doctor sister enjoyed sharing her pictures and posts passionately on Chinese Twitter – Weibo by SINA. I then realized that Twitter had become such a popular social media place.

I signed up with Twitter in April, 2012, and started sharing my posts. I easily found a few well-known/popular traders to follow. But in the first week, one of them who is well known for his ego blocked me on a day when I posted opposite comments. What? Is this how I got treated by someone when I have just began to tweet? – That harsh experience has taught me that I needed to give new followers or chances before rejecting them. (My suggestion for new Twitter users: pick a favorite avatar for your profile instead of an egghead for credibility purpose.)

I love this motto by William Arthur Ward:

“Before you speak, listen.
Before you write, think.
Before you criticize, wait.
Before you quit, try.”

To me, Twitter is a great place for traders to share and learn from each others, but it’s not for making competition or bashing others in order to gain followers or to prove one’s superiority. Many of us as traders also enjoy sharing our passion in other areas in life, such as food, photos, or sports. But sometimes it’s uneasy to deal with unreasonable trolls on the internet. Today I burst into tears after I tried to put up with someone who kept attacking me as I made bearish comments on AAPL. It was not first time I dealt with it. Finally I had to push the “BLOCK” button, my second time. – Yes, it took me a while to do it for I prefer to be a classy lady who has tough mind with a tender heart. In real life, I never let negativity bother me for too long although I can be sensitive once for a while for being a woman.

I do my best to stay balanced by following Tao De Ting‘s teaching:

“Displaying self-righteousness, one reveals vanity.
Praising the self, one earns no respect.
Exaggerating achievements, one cannot long endure.”

I really enjoy people’s posts which are kind, objective, humorous, entertaining, educational, or informative. I smile every time when I see cute kids’ pictures posted by others. As the number of my followers grows on Twitter, I feel more responsible to bring real value and objective comments to the stream. I believe in treating others the way I want to be treated, and love everyone around me, and people in the world.

“People first, then money.” - Suzie Oman says.

Thanks for reading and understanding, and wishing you best luck on trading! – May Peace, Love, and Prosperity be with us Forever!

Here is my AAPL one-year daily chart with notes at all major turning points:

Michael Bublé – Grown Up Christmas List

I wish everyone

A Safe and Merry Christmas! Happy Holidays!

No more lives torn apart

That wars would never start

And time would heal all hearts

Every man would have a friend

That right would always win

And love would never end

This is my grown-up Christmas list!

 

 

 

Choppy Market Continues While Tech Giant AAPL Action Disappoints

- Happy Hanukkah!

“Don’t take tips of any kind, no matter where they come from. I trade on my own information and follow my own methods. Keep the number of stocks you own to a controllable number.” – Jesse Livermore

 The price action for U.S. market has been similar to last week as it remains a stock picking one with the rotation going on. Last week, SPY was chopped around at 141 – 143. By last Friday, the Dow was up 81 points; the S&P was up 4 points to 1,418.07; SPY closed at 142.41 near its higher trading range for the recent weeks, helped by the better job report and financial sector being outperformed.

However, tech giant AAPL was the biggest story of the week when it was sold off so hard by wiping out most of its previous gain since its November outside reversal. I am not surprised by its bearish reversal from 594ish since I pointed out to watch its resistance area on the tech leaders we watch closely.

My last post stated as below:

 “I’ll watch those resistance levels for these stocks:
SPY near 143; GOOG resistance area 700-705; AAPL 590-600, AMZN 250-255; PCLN 665-675. Any rejection from this level on heavy volume could spell some trouble.”

Indeed, they all came off those resistance levels! 

AAPL dropped 60 plus points from its recent high of 594ish which points loss surpassed my expectation since the broad market was holding up well. AAPL broke down every pivot point I was watching until it hit the low of 519ish before snapping back and then down. Some traders tried to catch the falling knife from 572, but HFT was way too fast than many could handle.

Its action just demonstrates that anything could happen to darling stocks once they are out of favor and after their charts are damaged technically.

Closing at 533.25 near its recent low, AAPL is still at risk of selling off further. I have 485 as the next downside destination if it breaks 505 which is its recent low.

GOOG and PCLN came off from their resistance levels modestly. But GOOG’s Friday close at 685 was an alarming sign, and breaking 680ish could see a similar plunge to what AAPL did, IMO. Could my target 625 be seen once GOOG does that?

SPY could see 143-144 as next upside level according to its chart.

Some leaders which made new highs have been choppy with wild swings, such as DDD, SSYS, requiring to be babysat. After what happened to QCOR, MLNX, AAPL, etc, which stock would be safe?

FCX got plunged on the merge news to its recent low, but 28-29 could be its selling exhaustion bottom as the next support.

NFLX closing at 85.98 had wild quick bounce from 75 to 90 on the Disney news, but 90 is my upside target based on my chart. Chasing at its toppy area could be risky unless it broke out 90 on heavy volume.

FB has been holding well, and it seems to be building a bull flag before next upside move soon.

During the holiday season, the trading volume continues to be anemic for the choppy market. HFT or High Frequency Trading easily plays tricky game on traders. Most stock leaders have been acting weak while the broad market held up, confusing majority of people.

With all has been said, It is good to trade smaller by following the price action instead of one’s opinions. Choose only a few stocks you’re familiar with to trade unless there are good setups on the stocks you find.

Some wise traders choose not to tweet or chat much when concentrating on trading during market hours. Many traders have already learned this important lesson: the Less Noise and Opinions, the More Profit!

So let’s be flexible and objective since Mr. Market is always right.  Best luck on trading!

Here is my SSYS chart to share:  http://stks.co/aG0N

It Remains a Stock-picking Market Despite a Huge Bounce

When a trader first realizes he is wrong, that it that is time to clear out, take his losses, study the record to determine the cause of the error, and await the next big opportunity. – Jesse Livermore

U.S. market has stalled out after its huge run-up from the mid-November low occurred ten session ago when SPY bounced hard with an outside reversal bar from  its capitulation low of 134.7 where is its fib 61.8% fib retracement level.

After a wild bullish reversal session last Wednesday, SPY finally had a follow-through and broke out its flag with closing price at 142.16 near its 50-day SMA. The price action for last two sessions was whipsawing and also strongly reacted to the fiscal cliff news while the rotation played a big role to support the market so far. 

A few old leaders GOOG, AMZN, PCLN, AAPL continued to dominate the powerful bounce along with some forgotten dogs such as RIMM, GMCR, FB, NFLX.

Meanwhile, some thin-traded leaders with short bases were looking shaky, such as DDD, SSYS, GNRC, CVLT when they pulled back hard after ripping to their year highs with some wide-loose charts, not typical ideal action to see. You can almost sense the end-of-month window dressing action.

On the negative side, Personal income and spending data for October were weaker than expected.  Retailer sales were mostly weaker than estimated as we saw the bearish reversal action in M. TIF, YUM, etc. Additionally, the U.S. fiscal cliff issue persisted.

After huge upside moves have been made for many stocks we follow and for the broad market, I won’t be surprised to see some consolidation  or decent pullback before further upside move continues.

I’ll watch those resistance levels for those stocks:

SPY near 143; GOOG resistance area 700-705; AAPL 590-600, AMZN 250-255; PCLN 665-675. Any rejection from these level on heavy volume could spell some trouble.

Lastly, always be flexible and protect gain without chasing high flyers which were too over extended.

Thanks for viewing and trade safe and well!

There is a REGN chart posted earlier on Stockstwits: http://stks.co/lFj6

SPY daily chart with note or you can click here: http://stks.co/mFgp

The Five-day Powerful Market Rally Could Pause or Pull back soon

 Reversal days on the chart signal the final exhaustion of the bullish or bearish forces that drove the market previously. Wait for the fat pitch when timing is right. There is nothing more important than your emotional balance. – Market Wisdom

 

- First of all, I wish everyone has had a great Thanksgiving holiday!

What a wild ride we have been through especially since November 6^th – the Presidential Election day!

The S&P 500 dropped over 75 points in eight straight sessions since then until it had an outside reversal day on Nov. 16th which was the option expiration Friday with huge volume, ending the two-month correction for at least the short term.

By last Friday on Nov. 23^rd, the U.S. market has been up sharply for five days with each index up nearly 1.4%, the S&P 500 closed at 1,409.15, and SPY at 141.35. SPX has retraced back its 50% of total loss occurred in previous two months. The volume has also dried up partially due to the shortened Thanksgiving week.

Among the leaders we keep eyes on: AAPL has bounced well to 572 last Friday from as low as 505 when it had a capitulation selling followed by a bullish reversal bar, now facing near-term resistance level 572-580; GOOG now at 668 has had mild bounce, not too exciting for longs; although benefited from holiday online shopping, AMZN closed at 239.88 or at its 100-day SMA line, and it could challenge its next resistance level near 243 or its 50-day SMA.

IBD resumed its market outlook from Market in Correction to Market in Uptrend. But being a trader, it’s hard to chase a sharp bounce which has been on decreasing volume and the lack of big guys’ participation in rally when SPX seems to face the next resistance area not far from the current level.

The V-shape market bounce can be explained as an elastic band effect: the further it is stretched out, the harder it rebounds. (As a female, I use elastic bands a lot for my hair and I also used to play with them during my childhood)

It’s worth pointing out the following:

Positives notes

- Market has gone through two months of correction from mid September to mid November with the internals improving in most sectors recently; Rotation is going on when beaten down stocks are alternatively bouncing to keep market alive; seasonality should be in favor of a potential Santa Clause rally. Meanwhile, some laggards have been up from their multi-year/month lows, such as RIMM, NOK, MCP, NLFX, FB, etc.

(But I’m not sure it’s an absolute good sign as dogs are flying.)

Negative notes

- The market bounced in a fast and furious fashion with next resistance levels near. Former growth leaders are still weak technically despite their bounce seen in AAPL, GOOG, MLNX, CRUS, IBM, etc. Tax related selling might put pressure on the further recovery. The oscillator now shows an overbought reading from an extreme oversold level six sessions ago when I pointed it out with an illustrated picture in my Twitter picture section: here is the link: http://pic.twitter.com/25uTzNyQ

Finally, it’s good to raise stops if you are long, and keep power dry for better entries levels if the market pulls back well. Always be flexible and open-minded with any development of price action.

Best luck on trading!

Here are a few charts to share:

SPY (at 141.35) daily chart with notes:

AAPL (at 571.50) daily chart with notes: