The indices had what I would view as a consolidation day as they digested the large gains from yesterday. Most of the indices edged higher rejecting intraday pullbacks. Everything is quite extended here, so it's best to wait for some sort of pullback. I may still take plays from the small cap sector if they present themselves, but will probably stand pat for the most part.


Good Luck,


Joey

I have a new investopedia article out. I talk about spotting partial retraces and how they can let you in to a trend early.

If you read it, keep in mind that there is an edit I asked for.

In paragraph 7, the article states "Typically, the second highest daily high after a decline of several candles into such support is enough to confirm your thesis of a reversal.". What I was trying to say was the second instance of a higher daily high after a multi candle decline, not the highest high, which would imply something altogether different.

I would appreciate any feedback on it.


Thanks,

Joey

Before I start the market stuff, I am going through the blogroll and cleaning up any blogs that are being updated, and looking to add new blogs I may of missed. If you are a blogger that I have missed for whatever reason, and want a link, let me know in the comments section.

The shorts were squeezed a little today as the major indices started strong and put the pressure on. The Dow hit the big 13K and while it doesn't mean much, the media will make a big deal about it. While most stuff is a little extended, I'm looking for some spots in smallcaps as they have been lagging a little and aren't quite as extended as the other stuff. I like ICE, NTGR, PCLN, VIP, MFW, and LFL out of the IBD 100 list.

Here is a chart of ICE.

IntercontinentalExchange, Inc. (Public, NYSE:ICE)
It still looks like a decent setup to me with a possible move to close the gap shown on the chart.


Good Luck out there, and maintain the discipline and patience to not chase stocks for fear of missing out.



Joey

The semiconductor's had a strong move higher today clearing some chart resistance. There will be new highs soon if the semiconductors can follow through and hold this breakout.

Here is a chart of the $sox showing the break above resistance. When institutions are willing to buy semiconductors, tech, and smallcaps, it shows their confidence in the stock markets and economy. This is why they are leading indicators in a way. They will show the way up and down.


Keep an eye on the $sox. If the breakout holds, then good things are in store. If it fails, it could derail the entire rally.

Good Luck,

Joey

Today ended up being a probable consolidation day on lighter volume for most indices. While this is usually constructive, you need to be cautious anytime a chart is printing dojis near resistance. I can make a bullish or bearish case at this point, but I have to lean with the current trend which is higher. Below is some of the logic that I used to arrive at this conclusion.

UltraShort QQQ ProShares (ETF) (Public, AMEX:QID)
In looking at QID, which is an inverse fund of the Nasdaq 100, I can see a chart that is quite oversold, and sitting on support. Typically, I would look for a candle pattern to emerge in this area for an oversold rally trade. While the chart is looking like it is due a bounce here, there are a couple things that are signaling red flags. First, OBV is horrendous here leading price down. RSI is also making fresh lows coinciding with price. In this type of trade I typically scale out some shares at the declining 20sma which offers a decent play here, but the chart of the Q's is warning me away here.


PowerShares QQQ Trust, Series 1 (ETF) (Public, NASDAQ:QQQQ)
The Q's are showing me an argument for the bullish side. While I can see a little more weakness in the next few hours of this chart, overall this pattern looks constructive. It looks like a couple breaks out of broadening wedges with more room to the upside. One of the things that jumps out at me here is the ratio chart of the Q's vs the SP500 showing the Q's taking the lead. This usually happens in a bullish environment as market participants are willing to take on more risk.


Marathon Oil Corporation (Public, NYSE:MRO)
Oil was running higher today and some oil stocks were looking pretty good. MRO is looking to find some support on an internal trendline and the previous breakout area. Usually converging support holds so I am looking for a breakout here.


Good Luck,


Joey

Most of the major indices had strong days Friday with the Dow closing at a new record high. While the Dow doesn't hold much weight in my eyes, the S&P500 closed at new yearly highs as well. The Nasdaq and Russell have been lagging on this rebound which is worth noting, and they will need to lead if this rally will continue. The indices are overbought pushing over their bollinger bands. It still looks like there is room to play this rally although there will likely be a pullback soon. I am still only looking at long plays and looking at the inverse ETF's for hedging when necessary. Here are some interesting charts I added to my watchlist.


U.S. Global Investors, Inc. (Public, NASDAQ:GROW)
GROW has been a good stock to me this year, and it looks like it is setting up for more strength. Near term GROW seems to be forming a bull pennant, and overall looks to be in a cup and handle base.


Arrhythmia Research Technology, Inc. (Public, AMEX:HRT)
HRT looks like it is setting up for a double bottom off the bollinger band here. This looks like a chart that has corrected too fast and may be due a bounce soon.


NBTY, Inc. (Public, NYSE:NTY)
NTY has had a nice run over the past few months and has been consolidating pretty tightly over the past few weeks. It could be ready to move here if it can reclaim the 20sma.


Dick's Sporting Goods, Inc. (Public, NYSE:DKS)
DKS is forming what Bulkowski terms and inverted scallop pattern from the low in March to current levels. It looks like it broke out of a base and is now giving the first chance at a pullback entry.


Jinpan International Ltd. (Public, AMEX:JST)
JST has low volume and high volatility, so care needs to be taken with it. It looks like it is forming a partial retrace here after testing resistance at the down trendline shown below. If it can use the 20sma as support here, then it could be off to the races.


Ingles Markets, Incorporated (Public, NASDAQ:IMKTA)
IMKTA is another low floater that is sporting a good looking chart. It could be towards the end of consolidating in a triangle here, and the target for a successful breakout is near 50.


Vanda Pharmaceuticals Inc. (Public, NASDAQ:VNDA)
VNDA is technically still falling, but it is looking like it will turn soon. I was previously in this and sold out to wait for another entry. I'm waiting for a candle pattern to emerge here, but I thought it was worth mentioning as it has strong potential.


Good Luck,


Joey