Trader MD

All the major indexes have been trading in channels since the Bear Stearns low of March 17th. Below I've highlighted the S&P & Russell 2000 along with key levels to pay attention to.

In the near term, most of the indexes have also put in double tops.

Out of all the indexes, based on their channels, the weakest one is the Russell 2000 and the strongest is the Nasdaq.

In comparison to the 200 day moving average, the Transports are the only major average above that level.





If nothing else, the index charts are telling us to be a little more defensive and to tighten up those stops. More aggressive traders may look for an entry to go short.

Some things to dislike about today's breakdown:

• The energy sector (XLE) has been trading up with crude oil, but today as crude made a new high, the XLE began to break down.
• The dollar has also decoupled from oil. The dollar was up ~2/3 of a percent today and crude was up ~1.5%.
• The financial sector (XLF) sold off ~3.6% while the S&P sold off ~1.8%.
• The Russell is starting to break down out of its uptrending channel, after being a laggard this entire rally.
• Emerging markets like Brazil & China that were doing well recently sold off ~3% (EWZ) & ~6% (FXI), respectively.
• Volume picked up as the sell off accelerated.
  

It's still too early to tell if this is a correction, or the start of something bigger.

If the market continues its weakness tomorrow, one stock that I think can break down is ISRG.

It's been forming a bearish flag on declining/low volume since its earnings gap down a few weeks ago.

Posted by Trader M.D. at 6:58 PM 2 comments

Labels: Index, Recap

My targets on these trades were much higher. For MTL I was looking for a test of the recent all time highs 165 (if not higher) and for IPI I was looking for it's recent all time highs of 53.50 (if not higher), but sometimes you just have to take what the market gives you.

Both of these stocks are also follower stocks in leading sectors (Ag & Steel). When watching the leaders in those sectors (POT & X, respectively) start to act sluggish, while the rest of the market roll over, it was a good sign to be more aggressive with stops.


One thing to notice between the two swing trades, is how they were entered (especially since both have had pretty decent run ups before their break outs).

MTL had a more orderly consolidation/pause before breaking out of its channel and was in the stronger sector, so I entered the trade on a break above the recent highs.

IPI had a more violent break out and had little to no pause before breaking out, and as a result I waited for a break above the bars that close above the descending trendline of the triangle.

Posted by Trader M.D. at 5:19 PM 0 comments

Labels: Ag, Channel, IPI, MTL, Steel, Swing, Triangle

The market was generally weak all day and the morning trades had little follow through (essentially turning into scalps). It wasn't until the afternoon that the market really started to break down.

Aside from managing my swing trades in IPI, MTL & AKS, I was watching the Ag sector.

The annotated chart for POT basically says it all.



Speaking of those swing trades, I'll post up some charts later of my entries and exits (They've all been closed). I'll also try and post some index recaps.

Right now we're either going through a flush out or the market could be starting to break down. It's a bit early to tell, but one key area I'm watching on the S&P is the 1370/1380 area. IMO a break below 1380 could bring in more selling pressure.

If you are still in any swing positions, I would consider tightening my stops here.

Posted by Trader M.D. at 12:54 PM 5 comments

Labels: AKS, CupnHandle, IPI, MTL, POT

Market action improved today. We gapped down on the indexes, and gradually pushed higher through the day.

The Ag group was showing relative strength from the open. I saw POT and AG gap up, so I looked for an entry in the group and found AGU.



While I used a wider stop than I would have liked with AGU, the trade still still had a good result. I would have closed part of the trade at the fib extension and let the rest run, but the market has had little follow through over the last 2 days. AGU pushed higher, but I didn't miss too much.

V on the other hand, had a better formed handle (more distinct volume contraction) which let me use a tighter stop.



Taking a look at the V chart, you can see how either a conservative or aggressive fib level would have worked. I tend to use conservative fib extensions (drawn to the generalized base of the cup, as opposed to the very bottom of the cup).

Seems like the commodity areas (oil/energy/steel/ag/coal/etc) & solars just roar on.

Quite a few steel stocks hit new all time highs / recent highs (X, SCHN, MT, NUE, GGB). I also like to include CLF in that space (although they are an iron ore producer). The price action in CLF today was amazing. They report earnings and miss by something like 40 cents & gap down as a result. Buyers stepped in and pushed CLF to new all time highs.

Speaking of steel stocks, I picked up MTL today as a swing, and keep an eye on AKS as it sets a new all time high just above 69.62. RS looks very compelling as well (although it has lagged recently, it has formed a nice base and breaking above 64 could really push it higher).

JRCC (coal) & JOYG (machinery) had similar price action to CLF. Speaking of machinery stocks, CAT looks like it wants to push higher and test its recent highs of ~85.50.

Current swing positions:

• Picked up AKS, MTL & IPI.
• I was stopped out of my DZZ today for a small loss.

Posted by Trader M.D. at 12:42 PM 0 comments

Labels: Ag, AGU, AKS, CupnHandle, IPI, MTL, Steel, V

Nothing special on the day trade front. I was stopped out of a few trades and called it a day. I've really noticed between Friday and today that my system really doesn't work well on low volume / churn type days.

It almost feels like the street is a bit demoralized as despite the dollar improving somewhat over the last week/few weeks, oil continues to hit new highs.

The dry shippers & coal did really well today, and steel is breaking out to all time highs.

As far as swing trades go, I closed out RIMM (~134.50) today. I may look to re-enter after a consolidation/pullback.



In respect to the RIMM trade, after looking it over, there is very little I would have done differently. Not only was it a good trade in that it banked some coin, but my reads on the entry & exit points were solid.

It probably needs to rest a bit / consolidate here before making any realistic attempt to push higher. Volume (the power behind the move) has been decent, but not strong enough to power it through multiple resistance levels and to all time highs with out taking a breather first.

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After looking at the charts from today, I can't really say I have any special watch list type picks to add for tomorrow.

I'm looking for continued strength in the Steel / Coal / Dry Shippers and possibly Ag starting to push higher again.

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Depending on how the volume is tomorrow I may try and spend some more time away from the desk.

In a little over a month I'll be working about ~60-70 hours a week and need to start getting reacquainted with looking at my positions / adjusting my stops once every few hours (if that) on swing trades.

Posted by Trader M.D. at 5:16 PM 0 comments

Labels: CupnHandle, Recap, RIMM, Swing