Tuesday, 1 June 2010 -- We were hoping to see some positive things occur after the Memorial Day weekend holiday. This year we are not starting out June as we would have liked. For example, many of the energy stocks continue to look weak. Stocks, like SHLD, which performed well in the first quarter, also, continue to look weak. Is this a precursor that more 'profit-taking' will continue into June? Right now continues to have a cloudy picture what is really going. The market continues to struggle with showing that it has any real major rally potential yet. By the end of this week we should have a better handle on figuring things out better.... As for now it looks like I might have been a little premature trying to buy those couple Calls last week.
Monday, 7 June, 2010 -- We continue to remain defensive this market and will be monitoring to see if a 'basing pattern' can form this week once we test lower nearby supports.
NOON-- Wed, 9 June 2010:
Today's Morning Observations -- There may be a slight buy rotation back into NY Crude Oil & Unleaded Gas futures starting today. In addition, after reviewing some energy stocks that have not be decimated recently, am still seeing some selective rotation back into some energy/mining related stocks. This rotation makes me wonder if it is time to buy a little beat up energy related stuff now? (with tight stop loss and tight trailing stop logic to protect these ideas in case there is no convincing follow-through later.) Leaders in returning buy rotation today is in the energy sector, utilities, conglomerate sectors.
More Observations Today... The US indexes are at critical daily May/June "double bottom" patterns. If these lows can hold, odds are better than 60-40 we can see at least a minimal rally back up to the recent last week highs going into June options expiration next week. Because we are seeing more serious broad-based stock/ETF breakdowns of strong two-year uptrends in many various non-related key group/sector stock leaders, we are no longer quite as bullish as we once were about one to two months ago. If the market proceeds to finally base out and rally back up to form a double top pattern, we would actually consider some time this summer/early fall trying to identify more quality sell setups. We need more time to do more serious analysis and observe the market trading to come to better determine how to best approach this idea at this stage of the game... but we feel compelled to mention now are beginning to consider this as more of an future trading option. Expectations seem to have dramatically changed over the past six weeks where the notion the past two year rebound should continue just is not as strong a conclusion. The past two year uptrend could very well have run its course. As serious Bulls, we need to at least be open now to this possibility... just to be safe. My gut feeling right now is their is much higher risk if trading the US stock market in the near future than their has been in the past year. That risk just cannot quickly disappear no matter how suddenly rosy market makers may attempt to make it appear in the coming weeks... in my humble opinion.
Summary-- My first attempt to buy some Call options two weeks ago failed appear to be leading to a small lose. I am considering a 2nd small buy attempt to 'feel out' the market's true intentions. This time, however, if the market does rally in any meaningful way, I will now be adding Put strategies to my trading ideas. I overlooked this the last top, but I am not going to overlook Puts or Shorts this summer if the setups show up. I am no longer as Bullish as I once was. I no longer trust these markets.
Revised comment from earlier today post...
NOON-- Wed, 9 June 2010:
Today's General Update Comments -- Many people I talk to are telling me they expect a rally soon. Everything is looking like we are setting up to hold here, they say. I even thought this too until my Call options continued to struggle and lose value. Just in case a rally does not occur before June options expiration, or before July 4th weekend, I feel compelled to say what is on my heart and what technically concerns me as a technical analyst if everyone is wrong....
1. The US indexes daily charts are at critical, unusual severe pullback pattern where the additional May/June "double bottom" pattern we now see forming, must be preceded shortly by a rally, even a small rally. If not, odds are dangerously high a more severe pullback is highly possible.
2. Because market expectations/perceptions have dramatically changed the past six weeks, serious Bulls must now consider Bearish hedge strategies in the near-future IF the DJ Industrial cannot quickly rise above 10,300-10,400 before the July 4th weekend. Any further breakdown now seriously endangers the two year Bull markets ability to quickly recover the previous strong longer-term uptrend.
3. While I still have Bullish tendencies, I am no longer purely, blindly Bullish as I was two months ago. I will consider using appropriate Bearish trading strategies later this summer.
Thursday, 10 June, 2010 -- DJ Industrial was up very nicely today. (+273.28 = 10,172.53) Odds are improving a short-term bottom is in place. Critical support seems to be holding.
Tuesday, 15 June 2010 -- IT could just be short covering before options expiration, or it could be that the severe complex pullback of the past six weeks has run its course. Whatever the reasoning, it does appear that the most recent lows on the various US Indexes will hold for what appears to be the summer rally we were hoping to see accelerate back in May after a 'controlled' profit-taking pullback that turned ugly and caused a great deal of fear to enter the markets again. We went from extremely Bullish back then to cautiously Bullish during this correction. We are now shifting from a cautious mode back to a more "opportunistic" Bullish mode-- which means we are more inclined to buy these current nearby supports and good setups on dips or pullbacks the next few weeks; we will manage new positions with a tighter trailing stop strategy to compensate for what might be high volatility continuation into July. We will not be 'piggish' but be happy with little profits! Because we think the Bulls and Bears may be more willing to do battle in the near-term-- at the extreme support/resistance ranges-- we will also look for an occasional quality Short this summer until a more clear near-term trend is identifiable.... basically, we are shifting from neutral to a more Net Long strategy over the next 2-3 weeks.
Monday, 21 June 2010 -- Is a little bit of a reversal day. Might finally get the pullback we were hoping would show up soon.
THURSDAY, 24 June -- The pullback continues... Actually seeing some hints in some things that this pullback has a little more caution flag to it for the Bulls waiting to buy something... you might want to stay patient, more selective, do more 'due diligence' work before trying to enter something Long this week.
(06-21-2010 03:42 PM)Marc Rinehart Wrote: [ -> ]Monday, 21 June 2010 -- Is a little bit of a reversal day. Might finally get the pullback we were hoping would show up soon.
Friday, 25 June 2010 -- Nibbled a little today when S&P retraced to 62% support. Have a couple more hours to hold to see if it will only be a day-trade or an overnight position.
Tuesday, 29 June 2010 -- Glad we did not stay in more than a day with buying the 62% minor supports.... The US indices are rapidly moving to these the previous lows that we thought they would one more time. We are technically in a quandary because we wanted to buy this support region on the next pullback but now we honestly are wondering if this low is going to hold this time. We are not at the beginning of that critical support test area in the DJ Industrial, S&P500 and Nasdaq. If we do now rally even a little bit this week there could be some things to get worried about if you are Long this market. A strong correction is still very possible under the current pattern I am seeing. I REALLY want a rally off these lows... but am starting to have my doubts. Hoping and praying I am wrong. The market will shortly reveal it true intentions. I think we shall have a lot of our questions answered this week before the July 4th weekend. If we are going to have a rally of any form I think within the next two days it has to start to happen or the bears could gain control of things.
Wed, 30 June 2010 -- The next two weeks market action are critical to the Bull market of the past year and a half. The Nasdaq, S&P500, DJ Industrial Indices are at key support levels that need to show they still can support the longer-term uptrend. We can test nearby lower supports so long as we rebound by early next week.
Have a happy 4th of July weekend! See you next Tuesday!