U.S. Stocks fell sharply today as traders worried about the prospects of a double dip recession. The major averages closed anywhere from down 2.65% for the Dow Industrials to over 4% for the Dow Transports. Tech stocks really took it on the chin. The charts for the S&P 500 and Nasdaq averages look quite ominous, with large breakaway gaps appearing, and the lows of the day penetrating the June and February lows on the S&P 500. In fact, the S&P closed at its lowest level since last November.
This says to me that we have broken out to the downside. In all the other cases where the S&P tested the 1040 area this year, it actually closed above 1060 each time. Today, it closed at 1041 after trading as low as 1035. As such, the neckline is broken in my view, and the next major support area is 950. The only thing that can turn this around is a major upside surprise in the jobs data this week. If it comes in weak, look out below.
Scott Cole
www.kungfutrader.com
Tuesday, June 29, 2010
Stocks to Open Lower Tuesday
U.S. Stocks are set to open significantly lower Tuesday morning after China reported slower economic growth than previously estimated. Dow Jones Industrial futures are lower by over 110 points as of 8:45 ET, while S&P 500 futures are lower by 14. This equates to 1% losses across the board.
China has been one of the bright spots in the global economy in the last year, but its stock market has plunged sharply, suggesting that the Chinese economy is set for a more significant slowdown. This would put a big dent in the global economic recovery prospects.
Scott Cole
www.kungfutrader.com
China has been one of the bright spots in the global economy in the last year, but its stock market has plunged sharply, suggesting that the Chinese economy is set for a more significant slowdown. This would put a big dent in the global economic recovery prospects.
Scott Cole
www.kungfutrader.com
Monday, June 28, 2010
Boring Day for Stock Market
I guess most people were watching the World Cup games, because it sure was a boring day for the stock market, which essentially closed flat today, and traded within a very narrow range. The S&P 500 formed an inside day, and it just looks like today's action was a pause in the current leg down. The market also may remain quiet this week until we start to get new info regarding the employment situation. ADP usually reports on the Wednesday ahead of the government report, then on Thursday we will have weekly jobless claims, and finally, the big number will come out on Friday.
I still see pretty much a consensus among economists that we will not have a double dip recession. Instead, they seem to suggest a slow rate of growth and limited job gains. Corporations are flush with cash, and this may buoy the market as they look for potential acquisitions and do some stock buy backs. Eventually, the consumer needs to feel better and start spending in order for bigger gains to occur in the market. Until the job situation improves, don't expect that to happen any time soon.
There were no big industry moves of note today. IDT joined my list of high momentum stocks to watch, as it broke out to new highs above $11 on heavy volume. Its CEO was on CNBC this morning talking about pulling oil out of shale with a technology they developed. He suggested there is more shale oil in the U.S. than oil in Saudi Arabia. Interesting.
Scott Cole
www.kungfutrader.com
I still see pretty much a consensus among economists that we will not have a double dip recession. Instead, they seem to suggest a slow rate of growth and limited job gains. Corporations are flush with cash, and this may buoy the market as they look for potential acquisitions and do some stock buy backs. Eventually, the consumer needs to feel better and start spending in order for bigger gains to occur in the market. Until the job situation improves, don't expect that to happen any time soon.
There were no big industry moves of note today. IDT joined my list of high momentum stocks to watch, as it broke out to new highs above $11 on heavy volume. Its CEO was on CNBC this morning talking about pulling oil out of shale with a technology they developed. He suggested there is more shale oil in the U.S. than oil in Saudi Arabia. Interesting.
Scott Cole
www.kungfutrader.com
Sunday, June 27, 2010
Stock Market Weekly Review
Stocks closed mixed on Friday after a week that saw the major averages down about 3-3.5% across the board. The economic data this past week was generally weak, particularly in the housing market. Existing home sales were reported to be down over 2% in May, and new home sales dropped a whopping 33% for the month. As a result, homebuilder stocks continued their recent declines.
On Friday, Congress passed the new financial regulatory bill, and according to many analysts, it does not hurt the banks too much. As a result, financial issues rallied and were among the stock market leaders on Friday. Other strong sectors included REITs, silver, gold and casino stocks.
As the market has declined in recent weeks, my list of potential candidates for intermediate moves to the upside has continued to shrink, so one of the characteristics I look for is proximity to their 52 week highs. Many of these high momentum stocks have pulled back significantly from their highs and must form new bases before going higher.
Another key data point this week with the employment report coming out on Friday. More disappointment here could mean more weakness for this market. Technical analysts and traders are fixated on the 1040 level in the S&P 500. A break below that would suggest a drop to at least 950, and the breaking of a major head and shoulders formation.
Stay Tuned!
Scott Cole
www.kungfutrader.com
On Friday, Congress passed the new financial regulatory bill, and according to many analysts, it does not hurt the banks too much. As a result, financial issues rallied and were among the stock market leaders on Friday. Other strong sectors included REITs, silver, gold and casino stocks.
As the market has declined in recent weeks, my list of potential candidates for intermediate moves to the upside has continued to shrink, so one of the characteristics I look for is proximity to their 52 week highs. Many of these high momentum stocks have pulled back significantly from their highs and must form new bases before going higher.
Another key data point this week with the employment report coming out on Friday. More disappointment here could mean more weakness for this market. Technical analysts and traders are fixated on the 1040 level in the S&P 500. A break below that would suggest a drop to at least 950, and the breaking of a major head and shoulders formation.
Stay Tuned!
Scott Cole
www.kungfutrader.com
Tuesday, June 22, 2010
Bad Day For Stocks
U.S. Stocks closed sharply lower today after a modest open to the upside. The culprit? Likely the existing home sales data that came out this morning, showing a 2.2% drop in sales in May. This was a bad number because there should have been a surge in sales from the contracts signed in March and April as the tax credit was set to expire. So, an actual drop in sales suggests that the real estate market is still soft. What a surprise! With no jobs being created, how would we expect a significant bounce in the market? The fact is, more declines are likely until this economy really starts to turn around.
Anyhow, the major averages lost anywhere from 0.8% in the case of the Nasdaq 100 to nearly 4% for the Dow Transports. Another culprit again was the Euro, which declined again, but not nearly as much as yesterday.
One big concern among technical analysts is that there is a big head and shoulders top forming on all of the major averages. Some technicians will try to forecast the move if the neck line is broken to the downside as the distance between the neck line and the top of the head. For the S&P 500, this would take the market down under 900. For the Dow Industrials, down to about 8,000.
You can bet that a decline of that magnitude will be forecasting higher unemployment and a double dip recession ahead. However, I am not convinced that we will see that kind of a drop in the market. While I remain cautious, if not bearish, I think the Democrats will do everything in their power to try and fend off a double dip recession to save their asses in November.
On another note, I mentioned yesterday that I did not generally like the overall action in Apple yesterday. Today, however, it bucked the overall market trend and closed higher, although it has formed an inside day on its chart. Keep an eye on Apple...if it fails up here, you can bet the overall market is in trouble.
Scott Cole
www.kungfutrader.com
Anyhow, the major averages lost anywhere from 0.8% in the case of the Nasdaq 100 to nearly 4% for the Dow Transports. Another culprit again was the Euro, which declined again, but not nearly as much as yesterday.
One big concern among technical analysts is that there is a big head and shoulders top forming on all of the major averages. Some technicians will try to forecast the move if the neck line is broken to the downside as the distance between the neck line and the top of the head. For the S&P 500, this would take the market down under 900. For the Dow Industrials, down to about 8,000.
You can bet that a decline of that magnitude will be forecasting higher unemployment and a double dip recession ahead. However, I am not convinced that we will see that kind of a drop in the market. While I remain cautious, if not bearish, I think the Democrats will do everything in their power to try and fend off a double dip recession to save their asses in November.
On another note, I mentioned yesterday that I did not generally like the overall action in Apple yesterday. Today, however, it bucked the overall market trend and closed higher, although it has formed an inside day on its chart. Keep an eye on Apple...if it fails up here, you can bet the overall market is in trouble.
Scott Cole
www.kungfutrader.com
Monday, June 21, 2010
So goes the Euro, So Goes the Stock Market
Stocks opened strongly this morning on the back of news over the weekend that China was going to finally start letting the Yuan float a bit in the currency markets. This suggested that the Chinese government was confident about the global economy going forward. The Dow Industrials traded as high as up 150 points in early trading, but after noon, the Euro began its descent, and stocks followed. Financials lead the way down.
The chart pattern resulting from today's action is an outside day, and I would consider calling it a key reversal if the volume was higher. But, volume was actually very light compared to Friday. This suggests that the selling pressure was not all that significant.
Now, what I really did not like about the market today was how Apple traded. It made a new all time high over $279, but ended up making a three day low before closing at about $270. Again, the volume was a little bit light, but it looks like Apple may need to consolidate after a $30+ move in the last week or so. Since Apple is a leader of this market, it is worth paying attention to.
The bottom line is that stocks are still being held hostage by the movement in the Euro.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The chart pattern resulting from today's action is an outside day, and I would consider calling it a key reversal if the volume was higher. But, volume was actually very light compared to Friday. This suggests that the selling pressure was not all that significant.
Now, what I really did not like about the market today was how Apple traded. It made a new all time high over $279, but ended up making a three day low before closing at about $270. Again, the volume was a little bit light, but it looks like Apple may need to consolidate after a $30+ move in the last week or so. Since Apple is a leader of this market, it is worth paying attention to.
The bottom line is that stocks are still being held hostage by the movement in the Euro.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Stocks to Open Higher Monday on back of China move
U.S. Stocks are set to open strongly to the upside this morning after China announced over the weekend it would relax the Yuan's fixed rate to the dollar. The implication is that the Chinese government is confident in the global economy going forward. Stocks are sharply higher as the Yuan has traded strongly, as are other Asian currencies, except for the Japanese Yen.
Meanwhile, banking sector analyst Meredith Whitney remains very bearish on the banks and the stock market overall.
It looks to me like we may be setting up for a solid follow through day to the upside, if this move can hold up. So far, the S&P 500 futures are trading up over 13 points ahead of the open, and the Dow Industrials are trading up over 110. Both indicate over 1% moves above Friday's close. If we end up with close to 2% gains on the day, then traders should adopt a more bullish stance.
Scott Cole
www.bestdaytradingstocks.com
Meanwhile, banking sector analyst Meredith Whitney remains very bearish on the banks and the stock market overall.
It looks to me like we may be setting up for a solid follow through day to the upside, if this move can hold up. So far, the S&P 500 futures are trading up over 13 points ahead of the open, and the Dow Industrials are trading up over 110. Both indicate over 1% moves above Friday's close. If we end up with close to 2% gains on the day, then traders should adopt a more bullish stance.
Scott Cole
www.bestdaytradingstocks.com
Sunday, June 20, 2010
Weekly Stock Market Review
U.S. stocks closed modestly higher on Friday, but up nicely for the week overall. The major averages posted gains on the week ranging from about 2.3% to over 3% for the Nasdaq Composite. This was in spite of some weak economic data, particulary in housing. It is clear though that stocks are trading in line with the performance of the Euro, which was higher on the week. The Euro futures ended the week just under 1.24, after trading last week under 1.20. For now, the correlation is very strong, so be aware of any major weakness in the Euro.
Due to the strong performance of stocks over the last two weeks, many stocks have broken out to new highs. In fact, my list of high momentum stocks, based upon my current filters, has expanded quite a bit. This is an indication of a market that has some strength.
In the week ahead, we'll see some more important economic data, but the bottom line is that stocks will be most impacted by issues in Europe and the performance of the Euro.
Scott Cole
www.bestdaytradingstocks.com
Due to the strong performance of stocks over the last two weeks, many stocks have broken out to new highs. In fact, my list of high momentum stocks, based upon my current filters, has expanded quite a bit. This is an indication of a market that has some strength.
In the week ahead, we'll see some more important economic data, but the bottom line is that stocks will be most impacted by issues in Europe and the performance of the Euro.
Scott Cole
www.bestdaytradingstocks.com
Tuesday, June 15, 2010
Follow Through Day For Stocks?
Stocks posted big gains today with over 2% gains across the board among the major averages. Volume was up compared to yesterday, but still mediocre for such a strong move to the upside. However, we need to classify this as a follow through day, which signals that the market is ready to for at least an intermediate term move to the upside. While it is possible that the recent lows will be tested again, there is now strong support at those lows and it will require a major catalyst to drive the market through those lows.
The top industry groups today were the semiconductors along with manufactured housing, entertainment, oil and gas services and office supplies. All of these groups posted gains of over 4%.
Watch for potential volatility ahead of options expiration on Thursday.
Scott Cole
The top industry groups today were the semiconductors along with manufactured housing, entertainment, oil and gas services and office supplies. All of these groups posted gains of over 4%.
Watch for potential volatility ahead of options expiration on Thursday.
Scott Cole
Monday, June 14, 2010
A Classic Darvas Stock
I was just browsing through my stock charts this evening on the TC2000 platform and came across LGL Group (LGL), which broke out of a three week base today on nice volume. This is a classic example of a Darvas stock, as it is up over 500% so far this year, and has formed two nice boxes for its last two breakouts. This last breakout is what will get the attention of many momentum traders now, since it occurred above $12. It broke out from a yearlong base in late March, and has barely stopped since.
Keep in mind, this type of stock carries a lot of risk, so you must know how to manage your trades. It is quite volatile and could easily reverse in a hurry. At this point though, it looks like the sky is the limit.
Keep in mind, this type of stock carries a lot of risk, so you must know how to manage your trades. It is quite volatile and could easily reverse in a hurry. At this point though, it looks like the sky is the limit.
Stocks Close Mixed on Monday
U.S. stocks closed mixed on Monday after trading higher early in the morning. The S&P 500 ran into resistance at about 1105, and subsequently pulled back to close modestly lower. Financial stocks apparently started heading lower midway through the trading day, and they ultimately lead the market off of its highs. While Dow Industrials and S&P 500 closed modestly lower, the Russell 2000 and Dow Transports managed decent gains on the session. The Nasdaq brothers were essentially flat on the session.
One issue affecting financials may have been another downgrade for Greek debt, which is now viewed as junk status.
Today's top industry groups included consumer services, textiles, sporting goods stores, music and video stores and recreational vehicles. I would say those are primarily economically sensitive groups, so more money is being bet on a recovery.
Important economic data such as new home sales, PPI and CPI are due out this week, and this is options and futures expiration this week, so watch for volatility.
Scott Cole
One issue affecting financials may have been another downgrade for Greek debt, which is now viewed as junk status.
Today's top industry groups included consumer services, textiles, sporting goods stores, music and video stores and recreational vehicles. I would say those are primarily economically sensitive groups, so more money is being bet on a recovery.
Important economic data such as new home sales, PPI and CPI are due out this week, and this is options and futures expiration this week, so watch for volatility.
Scott Cole
Sunday, June 13, 2010
Weekly Market Review
U.S. Stocks managed to close with modest gains on Friday, which allowed the market to have a positive close for the week. Among the major averages, the Dow Transports lead the way with a weekly gain of almost 4%. This compares to a gain of only 1.1% for the Nasdaq Composite. The Dow Industrials and S&P 500 were both up over 2% for the week.
Among the best performing industry groups for the week were the REITs as well as copper and silver mining stocks. All of these groups are a pure bet on economic recovery. With that in mind, it is a good idea to pay attention to these groups going forward.
This week we have a few important economic reports such as new home sales and the inflation data. This is also options and futures expiration week, so be aware of the potential for volatility.
Scott Cole
www.bestdaytradingstocks.com
Among the best performing industry groups for the week were the REITs as well as copper and silver mining stocks. All of these groups are a pure bet on economic recovery. With that in mind, it is a good idea to pay attention to these groups going forward.
This week we have a few important economic reports such as new home sales and the inflation data. This is also options and futures expiration week, so be aware of the potential for volatility.
Scott Cole
www.bestdaytradingstocks.com
Friday, June 4, 2010
Weak Jobs Report Indicates Lower Open
The economy received mixed news on jobs this morning as the headline unemployment rate fell to 9.7% from last month's 9.9%. Unfortunately, virtually all of the reported jobs gains came from the hiring of census workers. The total number of jobs created was about 430,000, but 411,000 of those were census workers, who will be laid off in a couple months.
As a result, the market is not taking this news very well, and will be heading sharply lower at the open. Where it goes from there is anyone's guess, but I suspect there won't be too many traders looking to hold long positions over the weekend.
Scott Cole
www.kungfutrader.com
www.bestdaytradingstocks.com
As a result, the market is not taking this news very well, and will be heading sharply lower at the open. Where it goes from there is anyone's guess, but I suspect there won't be too many traders looking to hold long positions over the weekend.
Scott Cole
www.kungfutrader.com
www.bestdaytradingstocks.com
Tuesday, June 1, 2010
Stock Market Commentary
U.S. Stocks closed lower on Tuesday after a volatile session that involved a 200 point range in the Dow. In actuality, the Dow Jones was the best performer of the major averages, which is not usually a good sign. While the Dow Jones sold off by a mere 1.1%, the Russell 2000 was down over 3%. Tech stocks helped the bigger averages, as Apple closed higher by $3.95 per share.
Energy stocks were the big losers of the day, especially the oil and gas drillers. Anything to do with energy that is pulled from the earth took it on the chin today, due to the news that BP's top kill strategy failed to slow the oil leak in the Gulf over the weekend. As a result, the oil and gas drillers as well as mining stocks were taken out to the woodshed. Many of these stocks have lost nearly 50% of their value since the oil rig explosion over a month ago. For day traders that look for short selling opportunities, these stocks and related ETFs have provided big gains in recent days.
Based upon today's action, it looks like the market will likely test the May 25 lows. This may take another week, but a less than stellar employment report on Friday could be the catalyst.
I noted on CNBC today that Art Cashin indicated that mutual fund cash levels are extremely low. As such, any mutual fund redemptions by investors will result in more stock selling.
Scott Cole
www.kungfutrader.com
Energy stocks were the big losers of the day, especially the oil and gas drillers. Anything to do with energy that is pulled from the earth took it on the chin today, due to the news that BP's top kill strategy failed to slow the oil leak in the Gulf over the weekend. As a result, the oil and gas drillers as well as mining stocks were taken out to the woodshed. Many of these stocks have lost nearly 50% of their value since the oil rig explosion over a month ago. For day traders that look for short selling opportunities, these stocks and related ETFs have provided big gains in recent days.
Based upon today's action, it looks like the market will likely test the May 25 lows. This may take another week, but a less than stellar employment report on Friday could be the catalyst.
I noted on CNBC today that Art Cashin indicated that mutual fund cash levels are extremely low. As such, any mutual fund redemptions by investors will result in more stock selling.
Scott Cole
www.kungfutrader.com
Stocks Close Lower in Volatile Trade
U.S. Stocks closed lower after a volatile trading session with a 200 point swing. The market opened lower as stocks were under pressure from weak trade in Asia over night. Stocks managed to start rallying off of the open, and the Dow was up as much as 80 points intraday. However, yet again, the last 30 minutes proved to be the market's undoing, and the Dow closed lower by 112 points. Most other averages were actually weaker.
More to come later.
Scott Cole
www.kungfutrader.com
More to come later.
Scott Cole
www.kungfutrader.com
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