Trader MD

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.

Posted by Trader M.D. at 12:43 PM 0 comments

Labels: Watch List

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

Posted by Trader M.D. at 12:40 PM 0 comments

Labels: General, Recap

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

Posted by Trader M.D. at 12:39 PM 0 comments

Labels: Recap, Watch List

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.

Posted by Trader M.D. at 12:38 PM 0 comments

Labels: DECK, Flag, Gapper

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.

Posted by Trader M.D. at 12:37 PM 0 comments

Labels: Sector