Tuesday, April 15, 2014

Stock Market Technical Analysis Video for April 15, 2014 in HD - Stock Breakouts

Today I talk about what seems like a pretty nice bullish reversal especially on the Nasdaq Composite which came on higher volume basically across the board. I also discuss the trade I put on Tuesday (today) on QLD, the target for this trade, and the possibility that the market may possibly be doing nothing more than forming a right shoulder on the Nasdaq. Once again I stumbled over a few of my words (as usual). I said bearish at least one time when I meant bullish, and I messed up while talking about the stop loss levels for trades that would have been put on today into the close. The stops for all markets are a close below the lowest intraday level of the last three days whichever day on any given market was the lowest of the three. They are not all the same and this explains it in a nutshell. I also discuss how a right shoulder can look quite bullish by showing an example from the 2011 S&P 500 head and shoulders that exceeded its target. I promised to look at the candle signals on all the issues of the stock market over at StockCharts and forgot all about it. Oops! May bad! 

BTW, those who signed up using the "Opt in Alert" email box in the right margin of the blog, received an email before the close for an actionable trade with a couple charts and short commentary giving the justification for today's trade.

Charts courtesy of StockCharts.com and TD Ameritrade

Semiconductor Sector (SOXX) Volume and Price Action Hinted At a Top Even As It Went Up - Stock Breakouts

They say to follow the money. Nowhere is this more true (and easy) than in the stock market by taking a close look at the volume and price action. 

The Semiconductor Sector, as seen on the iShares instrument SOXX, topped on April 3, 2014, but the chart was giving clues that something was wrong with its health and a possible future top as early as the first week of March.

On March 7th, SOXX gapped up but closed slightly lower than the previous day on higher volume. Then on March 13th, it opened higher again, but ended the day with an outside day closing lower on higher volume. This was the first clear day of distribution by institutions since the February rally began. On March 19th, it tread water closing the day on a churn on higher volume. Then on both March 24th and 27th it closed lower with both days qualifying as distribution days. All these days came before it topped. Then on the rally between March 27 and its April 3rd top, the volume receded. Clearly the psychology as seen on the volume and price action since the beginning of March had been showing signs of bear market action.

Then off the head of the pattern the chart showed the biggest volume since February on two down days. As if this wasn't enough, the volume up to the right shoulder was some of the lowest volume in three months. Then in classic fashion volume increased, as it should, when it broke through the neckline of the head and shoulders pattern shown on the chart below. Will SOXX hit the target? A better question may be will it hit twice its target as many patterns do. Only time will tell as it is now throwing back toward the neckline to test the resistance.


Monday, April 14, 2014

Stock Market Technical Analysis Video for April 14, 2014 in HD - Stock Breakouts

Today I talk about Monday's unimpressive volume, and how I found the action unconvincing. I show how the S&P 500 and E-Minis have resistance right above from multiple fronts and how we may be witnessing nothing more than a little relief seeing last week's long red weekly candles. I talk a bit about candlesticks too throwing in a couple short candlestick lessons. (I actually used the word bearish a few times when I meant bullish when talking about engulfing and harami candlesticks.) Since today was much to do about nothing, (in my opinion at least), I also showed how to set a target for a falling wedge trade, and talked about the problem of using a head and shoulders neckline for a stop and a better way of setting a stop for this pattern. I also showed how the weekly stochastics momentum indicator (SMI) looks kind of similar to how it looked back in 2011 when the market completed a big head and shoulders and what we should look for in the case that we are seeing a repeat of that episode. 

Charts courtesy of StockCharts.com and TD Ameritrade
Pitbull Stock Option Mechanic - NEW!