Wednesday, April 30, 2008

Post Fed Update

So I was right about it being all about the dollar, but I was wrong on the direction.

Surprisingly my stops on DZZ and DUG still haven't been hit yet. We'll see how it plays out tomorrow.

Anyhow, as the decision hit, my eyes were fixated on the dollar, which basically got whacked.

There will be more later, but I have to go take care of some errands.

IPI - Intrepid Potash - Cup & Handle

Great way to start the day. I've said basically everything I have to on the chart.



Be sure to take a look at MOS (Mosaic) and MON (Monsanto) on the same time frames (2-3 days x 5 minute bars. Take a look at how MON gaps up and starts to move ahead of the Ag sector and then compare the charts of MOS & IPI (especially the location of the handle and the volume).

Tuesday, April 29, 2008

Post - Fed? It's all about the US Dollar

I've noticed that lately a lot of people have been paying more attention and concern towards the US Dollar. So I've decided to take a technical look at it.

Usually, Wall St is a bunch of crack fiends that simply can't get enough rate cuts, but now they've shifted their focus and started whining about the dollar (it's about time).

First, let's start by taking a look at a long term US Dollar chart.



As you can see we've been a severe prolonged downtrend on the dollar. Also notice that we're still no where near that downtrend line and that multi-month/week rallies have taken place in the dollar before.

Are we at the bottom? I have no idea, but it does look like we're shaping up to put in a short term rally on the dollar (more on that later).

Now lets take a look at the relationship of the dollar to the $SPX.



As you can see the market has gone through periods of trading with and against the dollar. What's the exact relationship between those periods? I'm not entirely sure yet, but what is important to realize is that right now we're in a period where we are trading *with* the dollar.

Note: Periods in which we trade with the dollar are highlighted in blue & against the dollar in red.

Now, lets take a look at the recent action in the dollar.



The dollar has recently broken out to the upside of this descending triangle formation. We have an upside target of ~74.25, based on the height of the triangle.

It's still too early to tell if this is the absolute bottom in the dollar, but it does appear to be setting up for a short term rally, if nothing else.

Let's take a look at what the big money has been doing (wow, look @ that volume increase -- there's no other way to explain that kind of volume jump).



The big money is clearly getting long the US Dollar ahead of the Fed. Either they know something, or have seen something.

One odd thing/divergence I noticed today: Despite the strength of the dollar, the Russell 2000 was weak all day (strength in the dollar is in theory good for small cap stocks).

Now how does this all add up to the tomorrow's Fed meeting and how can we play it?

As I've pointed out in chart #2, the charts are telling me we're in a period where the market is trading with the dollar. Tomorrow's Fed decision obviously plays into not only the stock market, but also commodity, bond and most importantly currency markets.

Provided we get no more than a 25 basis point cut (that's what the majority of the Fed Funds future index is predicting) and language that suggests the Fed is done easing for a while, or that they are going to take the time to see the effects of the rate cuts they have put in place and will be ready to act if further action is needed:

  • The dollar should rally
  • In turn the stock market should rally as well
  • While commodity and bond markets sell off (yields rise)

Now, there are other possibilities of course, and we should be ready to act upon them:

  • The Fed could cut 50 bps and now I'm just guessing, but that may spook the market (What else does the Fed see out there? Don't they see inflation is creeping up? What about the dollar? Haven't they been paying attention to Volker, Greenspan, etc?)
  • The Fed could stand pat (which would be very bullish for the dollar, etc)
  • The news is already baked into the cake (always a possibility to be prepared for)
  • Some unforeseen scenario (another possibility to be prepared for)

Speaking of the Fed and its action tomorrow. Keep in mind that they have seen the data for the rest of the week. If we get 50 bps tomorrow, then most likely the data we see for the rest of the week will be bad.

All that being said, I still expect the 15 minutes before and the 15 minutes after the interest rate decision to be very choppy and emotional.

I've got 2 swing positions I'm holding into tomorrow's Fed decision and as far as day trades go I will be completely flat by 2 pm EST.

In case you were wondering, my 2 swing positions are basically related to the short term dollar rally I was talking about. I'm long DZZ (double inverse of gold) and DUG (ultra short of DIG). I will be ready to close out these position on a whim's notice if the Fed action, statement, or market reaction isn't what I'm looking for.

Here's a link to: the Head & Shoulders type pattern I mentioned in Gold earlier today.

Good trading out there. We'll see how my analysis of tomorrow's Fed decision pans out.

X - US Steel - Cup & Handle; MON - Monsanto - Tweezer Bottom Breadown

I'm guessing some gibberish was said during the conference call. I also didn't like how the rest of the steel sector wasn't moving up & reversing with X. That was the clue to be more aggressive with stop management.



MON on the other hand is one that just got away due to poor management. The rest of the sector was weak and I was way too aggressive with stop management.



Head & Shoulders on Gold? Looks like it



With the dollar strengthening ahead of the fed meeting tomorrow and gold showing relative weakness (esp to oil), over the last few weeks, it looks like gold has a bit further to go on the downside.

How can you profit from this? Take a look at going long the DZZ (ultra short gold) or by shorting the miners (ETF: GDX, Miners: AEM, NEM, AUY, HMY, ABX, GOLD, RGLD, GFI, KGC, etc)

Monday, April 28, 2008

Watch List for 4/29/08 - The calm before the storm?

Tomorrow will probably be another low volume day as we await the Fed, GDP, & a host of other data later this week.

A couple names to keep an eye on (make sure there's good volume, esp tomorrow):

  • ARD - follow through on today's break out (mentioned in last nights watch list)
  • FSLR - tweezer bottom type pattern (mentioned last night as well)
  • RIMM - bull flag?
  • BCSI - bull flag over 22.25
  • The dry shippers (DRYS, GNK, DSX, TBSI, etc) & other transports (esp the rails)

And on the short side:

  • Possible follow through on the Ag names?
  • Possible follow through on the gold miners
  • BVN - bear flag?

TEX - Terex - Base & Break / Target Trade; MOS - Mosaic - Bear Flag

TEX was a HCPG Watchlist pick from last night's newsletter. I saw it gap up and be on pace to post better than average volume for the session. I entered on what could be considered a base & break / target trade setup and exited @ the target of 73.



MOS gapped down with the rest of the Ag sector and printed a bearish flag. I entered on the breakdown of the flag and had a target of ~$123 in mind as 123 was yesterdays low and a decent support level on the daily chart.

Watch List & Entertainment for 4/28/08

A lot of the momentum sectors (Ag, Coal, Steel, Solar, Oil related names) appear to be bouncing off of support or shaking out weak holders. Look to them for continued movement upwards.

Some interesting findings:

  • FSLR - tweezer bottom
  • FLS - tweezer bottom
  • ARD - breaks out over 47.50
  • JASO - tweeezer bottom
  • ISRG - bear flag?
  • VIP - breaks down below 28.50ish
  • LULU - Short Squeeze over ~34
  • VMW - continuation / high short interest

And for some entertainment (it'll surprise you). Absolutely bloody brilliant :)


Also, check out Momentum Trader, for additional setups.

Sunday, April 27, 2008

Weekend Reading / Watching

Friday, April 25, 2008

IPI - Intrepid Potash - Cup & Handle; SOHU - Sohu.com Bull Flag / Gapper

It just goes to show you that you should trade what you see and not what you believe will happen. If you asked me yesterday and with the initial reaction to CF's earnings after the bell yesterday, I would have guessed the Ag sector would have continued lower and I did mention that in last night's watch list for today:

That probably would mean more selling for Ag, and more break downs for Coal, Steel, Energy, Solar names.

Woops :) Anyhow the Ag sector started off slow and then they all started to move higher one by one. I went through all the charts of sector and found IPI forming a nice Cup & Handle.



SOHU was from last night's watch list. It was forming a nice bull flag on the multiday / daily chart. Some @#$! analyst at Citigroup upgraded it in the premarket to have it gap above the bullish flag.

It probably would have been a pretty nice swing entry on a break of the bullish flag, but I didn't want to chase it.

Anyhow, it set up with a bull flag later in the day. I only got a partial fill so I scrapped my trade shortly there after.




Have a good weekend :)

I'll be watching the 2008 NFL Draft. Go Niners.

Thursday, April 24, 2008

Watch List for 4/25/08 - a sector based approach

Just a guess, but look for tomorrow to be more of the same as today.

That probably would mean more selling for Ag, and more break downs for Coal, Steel, Energy, Solar names.

They've all had fantastic runs and its still a bit early to tell if people are actually transitioning to what may become new leadership, or if they just have an excuse to sell what has been ridiculously hot and pick up what has been beaten down.

If you want to take a look at what kind of stocks that did poorly today, just take a look at any momentum type name over the last month, esp NEU & PBT. Wow, I'm guessing a few people wish they had sold or tightened their stops.

The steeper a stocks ascent has been, the more likely it is to roll over as profit taking feeds upon itself.

If gold continues its descent (and even otherwise), I particularly like GOLD (the ticker symbol, although its a bit thin, so be careful) as a swing short/short, but I'm probably a bit early as the double top I see hasn't been techincally confirmed yet.

Just to recap, sectors that did well today are:
Financials, Homebuilders, Tech, Semis, Retail and Consumer discretionary

Other names to keep an eye on to the long side:
China related tech stocks (BIDU, SINA, esp SOHU -- its coiling up for its next move), the rails appear to be bouncing here (CSX, NSC, BNI, UNP, etc), AAPL could continue its recent momentum (it had a solid move / reaction today after the earnings were digested), BCSI (appears to have bottomed... it purchased a company a few days ago and traded UP on the news -- usually the purchaser trades down), AKAM (broken down trend line & solid buying interest over the last few days), Semiconductor related names (LRCX, SNDK, QCOM, KLAC, BRCM)

And of course keep an eye out on the following stocks for any short squeeze type action:
BZH, VMW, NILE, NTRI, GRMN & LULU

Finally keep an eye out on education related stocks. They've been beaten up quite a bit recently due to concerns over student loans, but after the bell DV (DeVry) posted better than expected earnings. Other education stocks: STRA, CECO, APOL, EDU

RIMM - Research In Motion - Coil; MOS - Mosaic - Coil / Cup & Handle

RIMM & MOS offered similar patterns as far as their coils go.

RIMM then went on to form a bowl / rounded bottom type pattern, where as MOS failed in the C&H.

When looking at the 2 examples look at how dramatically different the volume is on their upside breaks.

Also notice, that despite leaving quite a bit of $$ on the table, I had some pretty successful trades in them. Even though the MOS patterns didn't exactly pan out, I still locked in some profit on each trade and managed my stops properly.



The AG names I was watching while trading MOS (I was cycling through them for evidence of reversals, as sectors often trade together): POT (sector leader), AGU, MON, & CF.



Just out of curiosity, do you guys prefer that I annotate the trades on the blog, or on the charts?

I try and use different (legible) colors where I can in order to make things easy to follow. I'm sure that MOS trade is probably a little on the crazy side though, since there are so many annotations.

Watch List for 4/24/08

There's quite a few notable earnings before the bell (MMM, MOT, PEP, DOW, & POT).

In addition, we have the durable goods orders & jobless claims.

So far the futures are pointing to a weaker than expected opening with some underwhelming earnings related news from SBUX, AMZN, AAPL & QCOM after the bell Wednesday.

Anyhow here are some names to keep an eye on.

If POT disappoints or starts to sell off as a result of its tremendous run up, also keep an eye on MOS below 131.

If the AG sector does well, I like AG just above Wednesday's high. It's formed a nice hammer at its previous break out point of 68 and isn't nearly as over extended as the rest of the sector.

Other possible longs:

  • NUE is finally starting to turn up and looks like it wants to push higher
  • CLF - bull flag
  • HANS has formed a narrow range hammer off of long term support and could be due for a bounce
  • MELI - bull flag
  • I like LULU over 34 as buying pressure should pick up providing the volume is good.

Possible shorts if the market rolls over:

  • CMED - bear flag
  • VIP - descending triangle - short below 29 on good volume
  • APOL - bear flag
  • With further weakness in gold look to short AEM / ABX
  • STLD if steel starts to roll over

Wednesday, April 23, 2008

BRCM - Broadcom - Gapper; NSC - Failed Bear Flag; CSX - Bear Flag





Tuesday, April 22, 2008

4/22/08 Recap & Reflections

Today started off on somewhat of a sour note.

While I'm normally not one to chase trades, the fact that FCX had gotten away from me was a bit disturbing to the psyche. I had a swing position on FCX that I contemplated holding for another night. I had held it up until yesterday's close.

FCX moved up yesterday and closed strong over the 115 level, but I closed out the position as I felt it was getting awfully close to its earnings. Up until today, FCX's earnings were scheduled to come out on Apr 23 (apparently that's now been changed to Apr 30th?!). I knew I didn't want to hold into earnings.

So anyhow, in pre-market I see that FCX is gapping up to the 117-118 range. I'm thinking to myself, great. I didn't take a position in FCX at the time, but what I did do was see that RIMM had pulled back from its break above 125 yesterday.

I picked some up in pre-market around 125.50 and told myself it would be a swing position. After all, volume had picked up nicely over the 125 break out yesterday that was basically vertical. I passed on yesterday's entry as I like to stay away from vertical moves.

So the market opens, and RIMM's sell off starts to accelerate to the downside. There's no news, nothing, but the volumes accelerating. I wanted to give it some room as it was a swing position. My stop was just below Friday's low (120.51), and what do you know, with in a few hours I get stopped out. So much for it being a swing position, eh?

My fear of missing its next big move up had caused me to be a bit over zealous on the entry. As opposed to waiting for a pull back, and entering as RIMM started to find some footing / bounce higher, I blindly entered in the pre-market.

The loss was contained, stops were in place, etc. But none the less, still not a good way to start the day.

From there I took one entry in FCX that didn't even meet my entry criteria, from which I was stopped out on and another in which I failed to tighten stops as it reversed.

The last bad trade of the day took part in RMBS. RMBS had been setting up a nice little bull flag. I entered on the break and tightened stops as the floor was pulled out of under the market at ~11:45/11:50.

From there all I did was scalp VMW's short squeeze and pick up a small call option position ahead of VMW's earnings. It's a setup I've been working on recently, that I'll address in another post. That helped cushion what has been one of the worst trading days for myself in a while.

Lessons:
1.) Don't enter on pull backs during the pre-market. Wait for pull backs to come into areas of support or show signs of firming up &/or bouncing.
2.) Missing a move isn't the end of the world and having a fear of missing the next move can be quite destructive. There's no harm in entering at higher prices, and just like you wouldn't enter a vertical move; you shouldn't enter when no real setup presents itself.
3.) As a stock is showing signs of a potential reversal, you should tighten your stops. I did on RMBS, but not doing so on FCX was a lapse in judgment.

Re: Today's Market action

I can't say I liked what I saw with the transports. They appear to be forming a rising bearish wedge. The railroads and dry shippers can only do so much to carry the weight of the index as the air lines and select truckers break down.

Ditto for the IWM, which was down almost 3% at one point today. It had also broken below last Tuesday's lows.

All things considered, the SMH & XLF held up relatively well (although there was no real bank/broker related news).

The little jabs are started to add up though and if nothing else are a reason to show more caution, especially on swing positions.

The jabs thus far this week:

  • TXN's disappointing earnings
  • BAC with disappointing earnings and having to increase loan loss reserves
  • MCD saying growth was slowing
  • UAUA's larger than expected loss / share
  • NCC needing a large capital infusion and further diluting share holders
  • Oil on a constant tear higher / the weakness of the dollar
  • Meredith Whitney saying C will eventually have to cut their dividend

The pressure on the earnings from AAPL, AMZN, MMM, PEP, AXP, and MSFT continues to build.

The market's are still holding up for now, but with enough jabs...

*edit* Re: Tonight's watch list, I'm not seeing a lot of setups I like and probably will just spend the time to further reflect on today's trades. 3 steps forward, 1 step back.

Watch List for 4/22/08










Also keep an eye on VMW. The earnings are after the close & its pulled back to the $56 support level it recently broke out from. It has a high short interest and we could see a squeeze into, or after earnings are reported.

CREE has a high short interest & reports earnings after tomorrow's close as well. It looks like its short squeeze has already begun. Keep an eye out on CREE for continuation

Look to RIMM for continuation.

Monday, April 21, 2008

AGU - Agrium - Descending triangle break down & RIMM - Research In Motion NR7 Channel Break

I was watching AGU early on as POT & the Ag group gapped up. I mentioned in last night's watch list that POT could continue its momentum early in the day as it closed it's highest tick on Friday. When the Ag plays started to roll over a bit, I found a nice short entry on AGU for a quick 2R.



RIMM started strong to continue its late day run from Friday before pushing lower. I noticed it was forming a channel type trading range. You could possibly even call it a bullish flag. It broke out of the channel and consolidated a bit with a nice NR7 (Narrow Range 7) bar. I entered on the break of the NR7 bar with a stop just below it.

As I highlighted in the picture below, I normally wouldn't have had such confidence in my trading to have such a tight stop. The stop was ~40 cents from my entry point and was the key to squeezing 3R out of the trade.

Sunday, April 20, 2008

Watch List for 4/21/08 - Keep an eye on coal stocks

Arch Coal, Inc (ACI) reports before the bell Monday and could help a few of the coal stocks highlighted below (FDG & MEE) break out.















Index Recap & Looking Ahead to Next Week

First, the earnings (I'll be paying attention to the italicized ones; courtesy of Briefing.com):

  • Monday: ALDN, ACI, BAC, LLY, GCI, MRK, NVLS, STLD, and TXN...
  • Tuesday: AKS, BHI, CME, COH, LMT, MCD, NCC, PAS, UAUA, UNH, WU, BRCM, CREE, CYMI, NSC, VMW, YHOO, and YUM..
  • Wednesday: AAPL, APD, ABK, ABC, BIIB, FCL, GENZ, SGP, BUD, AMZN, CMG, FFIV, NTRI, and QCOM...
  • Thursday: MMM, MO, DOW, FLIR, MOT, NOC, PEP, POT, RTN, TASR, ZMH, AXP, BIDU, MFE, WFR, MSFT, WDC, and YRCW...
  • Friday: AXL, GT, ERIC, and WEN.

Note: VMW, NTRI, CMG, BIDU, TASR, CREE and YRCW have significant short interests (a positive reaction to their earnings could accelerate quickly to the upside)

You'll notice there are quite a few coal, steel, semi

This week's economic reports are on the lighter side & there is no scheduled fed speak.

On to the indexes:

  • Keeping a longer term perspective on the S&P

  • The S&P daily

  • The QQQQ daily

  • The IWM daily

  • The XLF daily

  • The SMH daily



We've had quite a nice move up over the last week and we're probably due for some sort of a breather here. Another event that will make next week interesting is what happens of the YHOO/MSFT deal.

Things look good for now and I think that will continue, even if we get a few minor shocks along the way. Any unexpected major shocks could definitely change the course over the short to intermediate term.

Weekend Reading

The weekend reading list is a bit longer than I'd normally like to post, but I haven't posted any in a few days.

Saturday, April 19, 2008

Friday's Trades - RIMM - Base & Break; MON - Base & Break / Triangle; SINA - Bull Flag

I've finally got my blogger up and going. There still are some kinks I need to work out, but in the mean time I've been able to annotate and post Friday's trades.

I've done most of the commenting on the actual images and they can all be clicked on & enlarged.














Keep RIMM on your watch list as its in the process of breaking out of the C&H highlighted on it's daily chart above.

Be sure to check back in later this weekend for an index recap & stocks setting up for the next week.

Thursday, April 17, 2008

Watch List for 4/17/08

This is going to have to be another text only watch list. I still can't post pictures on Wordpress (or assign categories for my post right now) and most likely will be changing over my blogging platform this weekend. I will keep you posted.

I like:

  • RIMM here (or over 124) - Nice well formed C&H
  • RIO here - inverse H&S
  • The copper plays I mentioned a few days ago - FCX here inverse H&S, PCU same situation
  • GNK inverse H&S
  • TBSI (another dry shipper) symmetrical triangle
  • CEL - somewhat on the lighter side volume wise, but wow thats a nice C&H

Pending their earnings (tomorrow BMO):

  • RS - nice well formed multi year consolidation / base
  • NUE - symmetrical triangle

And of course keep VMW, NILE, NTRI and BZH on your radar as potential short squeezes.

And as always, check out Momentum Trader, for additional setups.

Wordpress Sucks & Recap

I had a great day and I wanted to highlight a setup I used to trade CSX after their earnings broke. You can call it an earnings setup per se... but I didn't actually enter until after the earnings of course.

We'll see how much longer Wordpress continues to have bugs with their image uploading system. I'm already some what dissatisfied with the fact that I can't run a lot of script type commands, including some minimal advertising. So I maybe switching over to blogger soon. I'll be sure to let you know if/when I do.

Re: The market.

Today's rally was for real. As I mentioned in my late post last night, we've begun the next leg higher and we should continue higher for the short to intermediate term as long as there are no real major shocks. Any minor shocks are buying opportunities for those of you that like to buy pullbacks.

Sure the volume today wasn't great, but if you remember the rally that took place off the lows in August didn't really have accumulation type volume either.

Money has to be put to work somewhere. Oil, as I highlighted early last week, has basically hit my primary target of $115-116 today. Who knows how high we could eventually go as the dollar continues to weaken. Anyhow, enough self promotion... and back to my point:

  • sure the economy looks bad and could potentially get worse
  • sure inflation is creeping up and is possibly out of control
  • sure housing prices are falling and probably will continue to fall

That being said, money has to be put to work somewhere. Cash has been building on the sidelines for weeks and as inflation creeps up and the dollar continues to fall, the value of that cash decreases. If you're going to do nothing and lose $$, you might as well put some of it to work.

  • With rates so low (and inflation creeping up), bonds don't exactly look like a great place to put $$
  • Gold, Silver, etc need time to correct &/or consolidate their huge recent run ups
  • Only so much money can be put towards shorting the dollar (especially at these levels - and no I'm not calling for a rebound or making a dollar prediction), or in other currencies
  • Housing is in a depression
  • In addition, money managers get paid for returns (it's also convenient that they're not managing their money, but yours)
  • Oil is in a similar situation as the dollar: only so much money can be put towards the long side, especially at these levels
  • Expectations for stocks have been taken down quite a bit. When WaMu can come out and report a bigger loss than expected and still move up nicely and when Intel can come out with average to slightly better than average numbers and have nearly a 10% move higher, you know people are just itching to put $$ into stocks

As a result, stocks have plenty of reasons to move higher (at least for the short to intermediate term)

*edit*

Other things to like:

  • The $VIX broke its up trendline
  • The IYT broke out
  • The XLE Broke out & set new all time highs
  • The XLB broke out & set new all time highs
  • The Nasdaq/Russell lead the way, the Financials participated their fair share, and the Semis have rebounded nicely

Market Update & Watchlist for 4/16/08

Hm, so Wordpress isn't letting me upload any images right now :(. I had just annotated some charts to post as well.

Anyhow, here's the text version in brief:

  • the XLF held the 24.40 level I was talking about on a closing basis and has started to bounce off that level. Additionally, despite posting worst than expected numbers on their earnings, WaMu rallied on the news (remember its not the numbers, but the reaction to the numbers that matters).
  • the SMH moved below the the up trendline of the ascending triangle type formation that was highlighted in last nights post. It has since trapped some sellers/bears below that level as it spiked underneath it on an intraday basis. After the bell, Intel came out with earnings that were basically inline and the stock rallied much higher.

Based on the action I've seen today and the reaction to the 2 key earnings reports after the close, I believe we've setup for the next leg higher. Whether we'll actually break through the key levels of overhead resistance is another topic, but I'm somewhat confident in being able to put on some swing positions here.

The market has priced in that earnings expectations will be somewhat lower, and provided we experience no major shocks (like GE's earnings last Friday), I believe we'll start to work our way higher for the short to intermediate term.

As for a watch list (they're just so much better when displayed visually).... check out Momentum Trader (he and I follow similar stocks and as a result come up with similar watch lists).

Some others to keep an eye on:

  • RIMM, Bullish flag
  • AKS, Bullish flag
  • NFLX, Bullish flag
  • XLB, Bullish flag
  • AEM, continuation type play (Gold's movement will have a lot to do with China's GDP released tomorrow and our CPI #s)
  • BZH, short squeeze continuation

DECK - Deckers Outdoor - Bearish Flag

DECK gapped down on the open in 'sympathy' with CROX. It had been on my watch list for the last 2 weeks and I had previously posted the chart below on the blog as a potential bearish wedge.

After gapping down, DECK had retraced almost back to break even before falling again. Towards the lower end of the opening range high, it began forming a bearish flag. I entered on a break of the bearish flag.

Price declined in an orderly manner, and accelerated to the downside before it began to bounce off of the 123.6% Fibonacci extension. I took partial profits at it bounced from that level and tightened my stop. The trade stopped out shortly there after, and I ended up with a gain of a little less than 3R.

DECK looks to have the potential for some more downside here, especially if the market &/or retailers head lower.

XLF - Financial Sector & SMH - Semi Holders Update

Over the weekend I posted some thoughts on the indexes. The Financials & Semis have come the closest to breaking the levels I mentioned.

These levels are important because they signal that the recent trend of 'higher highs and higher lows' is broken. Now that doesn't mean the trend is bearish all of a sudden. When those levels are broken, there is definitely a much greater likely hood of the short to intermediate term being bearish.

Take the semis for example (see below), I'd say they are neutral at best and bearish at the worst.

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