Here are the charts fro last nights post. I don't have time to write analysis for them, but they are all long setups.

I'm running late tonight so I don't have time to post a full update. Most of the indices did in fact get the bounce on the 20sma I've been talking about, but there is still much work left if they are to rally from here. I will be posting charts of the following stocks tomorrow morning:


LMRA
HURC
LVLT
EFUT
SHW
BEE


For those of you learning how to chart, try working up charts on your own and see how they compare to mine tomorrow. While charting is unique to each trader, it helps when you compare charts to other traders.

Good Luck,


Joey

I like to use the 20 day simple moving average (sma) as the mean value during a given trend. In an uptrend, you will find that price tends to move higher, and then retrace to a rising 20sma. In a downtrend, the reverse is true. I like the value to be 20, but it is a matter of personal preference. The number you use should correspond with the timeframe you like to trade. I like the 20, since it also happens to be the middle of the bollinger band settings I use. As price moves to the upper bollinger band, it becomes more risky to buy, as price tends to revert to the mean value. The same is true for the lower band. Of course price could ride a band up or down, but conceptually, the further away price is from the 20 day sma, the riskier it is to enter as a continuation move. I am mentioning all this because I have been expecting the indices to revert to the mean and trade down to their 20 day sma's. The question is what will happen this time when price reverts to the 20?

Here is a chart of the Q's showing only the 20 sma and bollinger bands. Notice how in an uptrend price reverts to the mean and then uses it as a spring board. During a consolidation, price oscillates around the 20 as supply and demand are at equilibrium. After the markets broke down in late February, the 20 should of converted to resistance, but instead, price charged through and used it as support. Regardless of what happens next, the 20 will likely continue to be the best place to enter the trend.


I would expect most indices to tag the 20 day sma's tomorrow and then how they respond will set the tone for the next week or so.


Good Luck,


Joey

Volume has slowed to a crawl recently as the indices keep forming narrow range candles. I continue to take it slow as things could go either way here short term. While I am on alert for a reversal here, now that the gaps have been filled, I haven't seen any topping candles or reversal patterns. The biggest warnings are the declining volume diverging from rising prices, and the narrow range days at resistance signaling some indecision. These clues should be heeded, however, there is not enough information yet for me to lean to the short side. On the contrary, there are some positive signals recently which may lead to higher prices near term.

Here is a chart of the Q's showing the divergence between volume and price. I can see

NASDAQ 100 Trust Shares (ETF) (Public, NASDAQ:QQQQ)
I can envision a scenario where the Q's pull back to the 20 day sma and then move on to test the February highs.



Vanda Pharmaceuticals Inc. (Public, NASDAQ:VNDA)
Here is a decent looking chart. I've been tracking VNDA for a while now and it may be setting up for a buy here. It is in the process of retracing into the large breakaway gap and could be finding support on the lower band.


Thats it for tonight.

Good Luck,


Joey

Most of the indices filled the late February gaps today and pulled back from there. While there is a chance that this is as high as the rally will go, there is no evidence of a top yet, and the indices remain comfortably over their 20 and 50 day sma's. I am still staying away from shorting, but will be looking at QID or TWM to hedge if the markets do turn down here. Here are a couple more long setups.

Interpublic Group of Companies, Inc. (Public, NYSE:IPG)
IPG has been pulling back in a consolidative fashion after breaking to 52 week highs recently. It may be setting up for a bounce higher here if the markets are willing to cooperate.


Lockheed Martin Corporation (Public, NYSE:LMT)
Defense stocks have been pretty strong lately, and LMT looks like ot may be clearing a recent consolidation. It remains near multi year highs and could be breaking out here.


The next few days could be choppy, so it may be best to wait for the indices to retrace to their rising 20 day smas.


Good Luck,



Joey

I'm the type of person who feels out of synch after just a day or two of not monitoring the markets intraday. After two weeks of just monitoring my open positions and looking at index charts, I feel like I have no idea of what is coming next. The indices are close to filling gaps, yet look like they could squeeze higher. I am not looking to short as all the indices are over their 50day sma's. Yet, I also don't want to buy too aggressively as they are a little extended from their 20day sma's as well. I'll probably take the next few days to get back in synch with the markets, but I did find a couple decent long setups.

Level 3 Communications, Inc. (Public, NASDAQ:LVLT)
LVLT attempted to breakout a few times and then drifted back to the previous breakout area. It could find support here before attempting another breakout over the high $6 area.



American Science & Engineering, Inc. (Public, NASDAQ:ASEI)
ASEI has been correcting a reversal attempt for the past four months. It may be in the process of setting a higher low which would be a stepping stone to higher highs. I would wait for price to clear the narrow range candles while setting a stop below the same candles.

While I had a great time in France and Spain, I have to say it feels good to be back. Look for a more normal blogging routine moving forward.


Good luck,




Joey