Percentage of Stocks Below/Above Their 200 day moving average

Not much to say here except that the percentage of stocks 2 standard deviations below their 200 dma keeps growing. It still looks like the big boys are holding the market up.

Conspiratorial Cramer

I don't have a subscription to Real Money anymore, but I do like to check in from time to time and just read the blog titles. Jim Cramer had a classic yesterday. He always seems to find some conspiracy to explain away any market downturn and this time it was the futures and ETFs that were driving down prices. His explanation? There is no up-tick rule so money managers can push the broader markets down more easily.

There is only one problem with that hypothesis, namely that the uptick rule was ruled obsolete and was eliminated by the SEC this last June. Good one Jim.

Mitcham Fundamentals (MIND)

MIND had a big jump today along with the other oil related stocks. I doubt it will last and we should see a pullback down to the lower trendline.

As promised, the a bit of the fundamental story for MIND is shown above. It is a graph of the exploration and development expenditures of the oil industry. What it clearly shows is that exploration has taken a back seat to development. If demand stays strong the analyst who presented the chart expects spending on exploration to ramp up. This should definitely help Mitcham Industries.

S&P 500- The first to break support

From the support levels that I showed the other day, the SPX was the first to break below key levels on that nasty reversal day today.

It seems that most people aren't too worried about this decline. I'm not either, but I do expect it to be longer and deeper than most people expect. I'm not going to jump in until their is a little panic going on.

What is crazy is that the Russell 2000 is now at the highs of May 2006!

Mitcham Industries (MIND): Drink from the well

The chart for MIND is getting near that lower trendline again and the time to drink from the MIND well is fast approaching. I'll post a little fundamental data tomorrow, but here are the daily and weekly charts.

Market Breadth

This chart shows the percentage of NYSE stocks that are two standard deviations from their 200 day moving averages. Clearly there is something different this time with regard to the market breadth. The reading of 32% is already much larger than the four most recent market corrections and looks to most resemble the LTCM panic of 1998. This should not be surprising since in these later days of the markets rise it was clear that the large-caps were holding up most of the market averages (S&P 500, Dow, Nasdaq 100).

Russell 2000 (IWM): The small-caps are done!!!

I have a separate post for the IWM because it is so incredibly weak. If 77 breaks, the bull market in small-cap stocks will be officially over.

Index Support Levels

Here are the TDST support levels for the Dow Industrial, S&P 500, Nasdaq Comp and the Nasdaq 100. If these levels are broken with volume, look out for more pain and even better buying opportunities.

Finally!

I'm not going to trust this drop until we break some trading ranges and moving averages.

My stocks held up pretty well today. All came down, but with very light volume.

General Motors (GM) Trade

I got rid of my put options as they are now in the money. What a nice trade if I don't say so myself. I'm especially pleased with myself because when I bought the puts, GM was coming off of a huge up move and it seemed everyone was talking about how great GM was acting.

I think GM is headed lower but I didn't want to push my luck.

TD Sequential Signal for Agnico-Eagle Mines (AEM)

In the previous post I mentioned how I hate arbitrary technical analysis (TA). I forgot to mention the methods of Tom DeMark and how much I appreciate his efforts to take that "arbitrary factor" out of TA.

The technique that Mr. DeMark is most known for is his TD Sequential setup and countdown. The indicator doesn't always work but I was amazed by how much it matched up with Tom O'Brien's method. The above chart is that of AEM and gives a buy signal one day after Tom O'Brien picked the bottom.

World's worst trendline nominee

As a scientist I am drawn to technical analysis. I guess it is the joy of recognizing patterns in nature that seems to always push me to study charts and strive to find order in all of that chaos. The reality is, unfortunately, there are very few "real" patterns out there and sometimes it seems that technical analysis is more about helping an individual trader feel more comfortable about his or her thesis than actually predicting future prices. The chart below is a perfect example. That has to be the lamest and most arbitrary trendline that I've ever seen. I can easily draw 4 or 5 more trendlines on the same chart. Who is to judge what is right and what is wrong? Absolutely nobody. If the trendline is worthless, what good is the breakout? Trendlines like the one shown below are the type that give technical analysis a bad name.

There are methods, however, that I find to have incredible predictive power. Take Tom O'Brien's method for instance. He recently went long Agnico-Eagle Mines (AEM) around 34.50. He effectively bought the bottom using only price and volume to estimate the supply and demand, all in the face of an extremely bearish market outlook. He also has picked up several other gold stocks just before they shot up.



My point is that you can never just listen to anyone with a newsletter out there, like the guy who published that lame trendline. Make sure you follow someone who stays disciplined in the face mixed signals and, most of all, has proven themselves time and time again.

Wyeth (WYE): Strong stock in a weak sector

I was just talking to a friend of mine who works at Wyeth. I told him about the blog so I thought it would be appropriate to take a look at Wyeth's chart.

I'll start out with the weekly. As a reminder, my goal is to take stocks with strong fundamentals and use technical analysis to find low-risk entry points. As it can be seen, WYE has been in an uptrend channel since late 2004, so clearly the fundamentals are there. Right now it is hugging the upper trend line, which is not the best place to enter a long position. If I was looking to buy WYE, I would wait for a pullback to the lower trend line or wait until the price consolidated long enough for the lower trend line to catch up to the price. Right now, $52 looks like a nice price. I think it is important to point out that WYE is performing very well, especially since the pharma and biotech sectors seem to be in the dog house.


Let's now take a look at the daily chart for WYE. Sometimes the best entry points correspond to times of extreme market weakness and it is nice to identify strong support ahead of time so one is poised and ready to pull the trigger. WYE has such an area of support around $50.50. If for some reason it pulled back sharply to the breakout area and volume dried up, I would be all over WYE.

SNDK follow-up

I didn't short SNDK today. It was down 2% on huge volume and I was looking for continued strength into earnings. Good thing. SNDK really popped after-hours.

TD Sequential Signals for Sandisk (SNDK)

Intel disappointed last night so I thought that I'd look at a company that always seems to disappoint. We have also seen a lot of sell the news type action after earnings and SNDK is on tap tomorrow night. The above chart shows the TD sequential setup and countdown and clearly shows that SNDK is ready for a pullback.

It seems that some stocks follow the TD Sequential signals better than others so I have plotted a few of the recent tops for Sandisk. I was surprised to see how well the TD Sequential worked for it.

I'm inclined to short SNDK tomorrow.

Update: I just watched Fast Money on the DVR and they did a short blurb on SNDK. It was recommended to sell into earnings tomorrow. I just wanted to give credit to those guys.

Formfactor (FORM) coming into support

I was looking for a swing buy in the Semiconductor sector and came across Formfactor. I'm giving the weekly and daily charts along with the TDST lines for both. The support lines are showing that FORM should find some support around the $36 price point. I would like to see the volume lighten up before a buy, but things are looking pretty good if the price falls a little more.

US Dollar's Demise

I realize that a weak dollar has its good points but I still find it hard watching the greenback slowly disintegrate. The Canadian dollar is worth almost as much as the US dollar for Pete's sake!!!

Where will it end? I don't know but the chart is saying that there is plenty more downside. We just broke through a TDST support line and we are half way through a TD Combo buy countdown. Right now I would guess that 78 is a real possibility on the dollar index.

NYX at 72 proves to be a good call

This is a "toot my own horn" post. I recently made a suggestion to a friend regarding NYX. In the post I said to wait until the price got down to 72. Well NYX held the price and is now at the 83 pivot point for a nice little trade. I don't have a feel for what it might do now. If it holds just under 83, expect NYX to bust out to higher levels. It should be interesting to watch.

On another note, I love how my TD Combo Sum indicator picked the exact low. See the chart above.

I'm back!

I'm finally done with moving and just got my internet connection up. It looks like I've missed some interesting days.

My 3M short was stopped out.

I'll update more later.

Metalink gets the ball rolling

The announcements that I've been waiting for are here!!!

Expect revenue in the 4th quarter and massive growth next year!!!