Looking for this reversal to be stalled somewhere between 1101 and 1105. Then expecting a pullback, where I would be lookiing for entering longs. The ideal area would be ~1095. Target for the next leg up would be 1118-1120.
Ultimate target would be 1130, which is a exactly 25 pts. from the 1105 resistance area.
Some things to watch out:
After a 70 pts. pullback it looks like the SPX index is ready to take a break.
1085 is acting as a strong support and I would be looking for a rebound to at least 1113 in the next several days. The game plan is following – we might go to 1105 from here, then a pullback to 1100 area, and the another leg up to 1113 area.
Currencies also support this theory, with the EUR/USD unwilling to go lower and 1.40 acting as a very strong support. Looking for a pullback to 1.43 in this pair.
My only concern here, is that indicators don’t support my theory of a coming rebound – both Stochastic and MACD show no signs of any divergence whatsoever.
This is the update of the list of potential plays from the last week.
With the current pullback in the stock market, most of the companies have reached buying levels. Others have breached below their support levels and headed lower and some have already reached their targets.
The most remarkable calls were in CPE and DSPG. Check out the charts:
The DSPG stock has made a pullback right to the entry point at 5.80 and then reversed all the way to 7$. It looks like it has some steam left. My target would be 7.75 before any rebound.
CPE has risen more than 40% since my call.
Here is the list of the remaining stocks to watch this week:
NTRI
TRA
AGU
TSO
VLO
PETD
ALY
OMNI
CFW
NGAS
WNR
Here is another stock similar to CPE:
KAZ - a US registered company ingaged in oil production and exploration in Kazakhstan. BMB Munai operates under its wholly owned subsidiary Emir Oil. The company is engaged in the exploration, development, and production of crude oil and natural gas. The Aksaz, Dolinnoe, and Emir oil and gas fields in western Kazakhstan serve as the primary areas for exploration and development. It transports oil and gas via rail, barge, and pipeline through Russian territory.
Although the stock is losing its steam and there is no follow through in price, it is strong fundamentilly. With the market Cap. of ~60$ mil. it has 250$ mil. of proven oil and gas reserves.
I have gone long at 1.20$ and planning to hold this one forawhile. Next week they will aanounce their 3rd quarter results, that should be interesting.
Rebound Plays
CLF- accumulate at 40-45. Should be above 55 if market holds.
NTRI- buy at ~22. target 27.
TRA – buy at 33. stop below 32.
AGU – buy 60-55
MOS – buy at 55.
APL – buy at 9$ or near 200ema.
LDL – buy at 6.50. Stop below 6. Target 8.
Breakout plays.
MINI – buy at ~15. add above 15.50. target 18-19
TSO – symm. triangle, buy above 15
VLO – 200ema acts as resistance. Buy when stock closes above it.
For those of you who are able to stomach big swings. Here is a list of Micro Cap Stocks with interesting formations.
Micro Cap. Trading at 5$
XTEX – pullback to 6-7 to buy
PETD – buy above 20. targets 23-25
BBEP – buy at 200ema
PKOH – buy at 6.50
FTBK – buy at 4.0-4.5
ALY – buy at 4. Target 6.
WNR – buy at 5. Target 7.
DSPG – buy at 5.80. Target 7$
Micro Caps. Trading Below 5$
KAZ – buy at 1.30.target 2.5
CPE – buy at a pullback to 1.7. stop at 1.5. target 4-5 (huge gap in that area)
CFW – symm. triangle. buy at 0.90. target 2-2.50
NGAS – buy at 1.6. target 3.5
OMNI – buy above 1.75. Traget 2.75
Exited USD/JPY here at 91.70.
+ 50 pts.
As I have posted before, SPX was forming a nice buying pattern, so I decided to grab some contracts at 1142. Was stupid enough to hold it for too long, so exited finally at a loss 1138.
After witnessing a downfall in stocks, with all support levels being broken, I turned my attention to currencies. Here is a nice long opportunity in USD/JPY.
Bought some at 91.20, have a very tight stop here at 91.10, so it either works out right away or it doesn’t. My first target is at 92.00, 96-97 longer term.
If I stopped out, will look to get back into position.
It looks like, we’ve stuck in another range, as it was in November – mid December. Only this time it’s only 20 pts. wide. In fact the volatility has dropped so much in the past several months, that most traders, who were used to turbulent 2008-2009, are finding it difficult right now.
Still, there is plenty of opportunities out there, especially among individual stocks. I will post a list of most interesting ones later this week.
As for now, here is my view on the market. It looks like the market is straggling to make new highs, every 20-30 point move is met with the 20 point sell off. Though, we haven’t sold off yet. This makes me thinking, that we won’t, at least in the near term. Someone wants it to hold, and every pullback of 20-30 points is bought back. Also, all major resistance lines have been broken, opening more room to the upside. This are all indicators that we are going higher longer term.
The general rule is, that after a strong up day, similar to the one we saw yesterday, there is usually a continuation rally the following day. So, Right now, 1140-1142 offers a nice support level. Buying here with the 5 pt. stop is a good R/R trade. My target would be at ~1210. If a breakdown below 1128 occurs, I would have to change my view on the future direction.
As always, we need to remain cautios, as at this point relentless buying is just not worth. As the indexes don’t offer much of reward right now, it may be usefull to turn your attention to individual stocks.
The current price action is inline with my expectations. The projection about Financials turned out to be spot on, with the general market rallying “only” 1,60%, while the XLF index has gained more than 2,00%. So, we can say that the banks are pushing the market higher.
I have no idea of how long this party will be going, so I am placing my bets accordingly. Looking to short SPX futures near the 1135 area or on a breakdown below 1130 (see the chart below). Looking to add on the way down, otherwise will close for a loss.
SPX is continuing forming its rising wedge. To say fair enough, the chances of the sudden rise and the sudden fall are equal. For now I’ll stick with my view of a sudden collapse and will be looking to place short bets at a 1125 – 1135 area (see the chart below). There is also a possible Wyckoff Formation in the making.
GOLD also indicates, that the current rise might be done. See the resisting trend lines above? So, if you are into gold trading, I would suggest to short at 1122-1130.
PS. GOLD and SPX are trading at exactly the same level right now.
This is the last post for the year. The price action for the last month indicates, that equities and currencies are not moving in the tandem as they used to. Despite the rise in the USD, equities were able to add more to their gains. So, my target of 1130-1140 has been reached. Now I am at the crossroads, as some indicators are pointing to a pullback in January, while others for a more run and bump price action to come.
The above chart of SPX indicates, that the rising trend we have witnessed since March, is losing its pace. The only thing that might help this thing to go higher is a violent buying, as one we’ve seen in July. Right now, nothing suggests that this is going to happen, in fact the there are good chances that we might see 1080 by the end of January. Using Wyckoff Schematics, I have 1030 as my second target. This is nothing outrageous, as 9-10% pull back would be healthy for this market. Though there are some things that suggest, that bull is not dead yet.
The first bullish indicator is XLF. Financials have been lagging during the latest rally but the chart below indicates that they have finally found solid support and have a good chance of rising as high as 15.50-15.75. This is actually a pretty save play, as you can buy at 14.40-14.50 and place a stop below 14.20, giving you a nice R/R.
It may sound odd though, but XLF is also the sector that may trigger the reversal of the broader market. In this case we need to watch 14.40-14.00 area losely, as a drop below 14.00 might lead to a sharp selloff.
Other indicators of the reversal are GOLD and EUR/USD.
To support the bear’s case, EUR/USD must stay below 1.4480-1.45. To get more confirmation, I would like to see 1.4070-1.4050 by mid January.
The same thing is about GOLD price action, as long as it is below 1110-1115 price tag.
So, all in all this makes me a cautious bear, as the chances of another run and bump action in SPX are strong. Who knows, maybe the big layers, have dumped EURs, just to accelerate the rise in equities later? I don’t know that, so as a trader the safest option is to trade what I see… But HEY, enough of this, there will be a lot of trading days going forward, as for now:
For the past month, we have been trading in a tight 30 pts. range in the SPX, while getting a pretty violent reversal in EUR/USD. This is the clear indication, that some sort of pullback is looming in the S&P 500 index. I personally still tend to believe, that there will be one last rise to the 1130-1140 area followed by the sharp reversal in the mid January.
As for the next week, I am looking for longs. The sharp sell off in the EUR is also indicates a high possibility of a rebound. My target on the pair would be ~1.47.
Also GOLD may have also finally found support at 1090-1100 with a strong positive divergence in MACD and a double bottom pattern on a 30-min. chart. This is a pretty safe play, with the target 1150-1160 and a stop loss of 10-15 pts.
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