Large Caps on Turnaround Tuesday Look the Same

I am noticing today that stocks in totally different industries are exhibiting the same pattern on a daily chart. All very bullish candlestick formation (long white candle with hardly any wick), outperforming the general market.

Here are the 6-month daily charts for (from the top):

Las Vegas Sand (LVS)
Nucor (NUE)
Google (GOOG)
Freeport-McMoran (FCX)
J.P.Morgan Chase (JPM)



Don't know what to make of them at this point, other than my guess that algo-bots are simply working the ETFs and index futures so the heavily traded large caps all move the same way regardless of industry or fundamentals.

But even with today's move, these stocks, with the exception of LVS, are either still below 50-DMA or barely touching, or crossing 50-DMA but 200-DMA is still far away. It will take a lot more consolidation to repair the damage.

I personally like LVS (not on the 6-month chart but on the longer charts like 3-year). It was a steal at $1.30 or so in early 2009. It could go up the thin vertical wall that was October 2008 and reach $30. I just don't know when or how. (Casinos in Singapore and Macau, maybe.)

"Turnaround Tuesday" delivered a turnaround. Let's see if they (bots and bots operators) intend to hold it. The Fed chairman Ben S. Bernanke will be testifying in the Congress on Wednesday and Thursday. It could affect the stock market.

OT: Google's New Search Result Page

Ooooo I hate the look. What is the point of trying to look like Yahoo's search result page?? See it for yourself. The top is Google's supposedly new and improved search result page. The bottom is Yahoo's search result page, which has been this design more or less for some time.

Three columns, with the left column dedicated to navigation buttons, the center column showing the search results, the right column an ad space.



No wonder Google's shares have been on the decline, which started long before the May 6 market near-meltdown. If the company's idea of new design is to mimic the look of its far lesser rival, I would start to worry if I was an investor. They don't even offer an option for the users to switch back to the previous look.

Google may be losing the edge quite rapidly, in fact. Their online applications are increasingly buggy, features are not added but subtracted (like Google Map's "Terrain" feature). They seem to have some indigestion problem of integrating companies and technologies that they have acquired (like Blogger). As I posted a few weeks ago, GOOG's chart resembles MSFT's chart.

Silicon Valley vs the Rest of the US

Or tech vs traditional. Or companies that continue to innovate vs companies that don't. I don't know how exactly to define it, but take a look at the comparison charts below. (They are 5-year charts.)


The first four are the tech companies, three in the Valley, one up in Washington. Netflix (NFLX) broke to all-time high today. Intuitive Surgical (ISRG), Apple (AAPL), and Amazon (AMZN) continue to break out from the high. Their charts say it all: Recession? What recession? Also notice that, except for ISRG, their recent bottom was NOT March 2009. They bottomed sooner than the rest of the market, and off to the races ever since...

Compare them to the rest. First two of "the rest" are tech companies, Google (GOOG) and Microsoft (MSFT). Even though they have recovered from their lows, they don't compare at all with the first four. (That tells me, unfortunately, GOOG has already become MSFT...) Rather, they resemble big, traditional businesses that are listed in New York Stock Exchange, rather than on Nasdaq. Their charts look more like J.P. Morgan Chase (JPM) or Coca Cola (KO). The last one is Freeport McMoran (FCX), a copper and gold company. Although it has recovered a lot, it is still far from recapturing the all-time high.

They (NFLX, ISRG, AAPL, AMZN, etc) are clearly in a bull market, disregarding the rest. In a bull market, you buy a breakout from the high. That's what I learned in the book by William O'Neil (How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition).

I am not advocating anything, going long or short, here. Do your own DD, but I sure wish I bought every single breakout from the high for these stocks.

Nasdaq Betas That Don't Come Back Down

With just about every analysts eager to call the top, the market marches on, bid or no bid. My portfolio has been rather stagnant for 2 months, with gains in precious metal stocks offsetting the weakness in financials. Probably a top is near, therefore, but I don't think the market will crash back to, say Dow 6,000, right away as some of them proclaim.

Why? Nasdaq "beta" stocks: AAPL, AMZN, GOOG, ISRG, PCLN.

They refuse so far to correct much. AAPL corrected the most after earning and filled the gap. But others, particularly AMZN and ISRG, hardly looked back, and has since resumed the upward march.


How much upside could there be for the major indices? Another 10%? 5%? I am debating whether it is worth to stay in the market, but when I look at these Nasdaq tech stocks it is tempting to believe this is a new bull market, in which you would buy stocks on the breakout from the high.

Looking for "Exception": AAPL, GOOG

I try to look for "exceptions"- stock, sector, index that doesn't move with the flow (whether it's down or up), because I've noticed that those often gives clues to easy trades that may come soon.

I wrote about how I missed GOOG entry and exit several posts ago. I also wrote about the possible AAPL entry 2 weeks ago. (I wish I followed my own advice.) Despite the misses, I've kept watching these two, (former) Nasdaq beta stocks. I say "former", because they don't seem to behave like one any more.

As I said in both posts, I didn't like them because of low volume. Then I started to notice something peculiar in the past 2 weeks. The market goes down, these two stocks remain green. The market goes up, these two stocks go up, but not by much. I mostly watch them on my main stock screen panel, and every trading day regardless of the market direction, these two stocks remained positive. In the past 10 days, Nasdaq went down on 4 days, and up 6 days.

So I called up the charts for both of them after Friday's close. They are 7-month daily charts. Well, well. There is some singular activity going on. First, they almost look identical. Second, both AAPL and GOOG finished 9 consecutive trading days of going up. The amount of increase each day was not very significant for these stocks. It is as if the buyers didn't want to alert the trading public by moving the stocks too much too fast. Although the volume for both stocks is lower than what was once a norm, it has decidedly picked up. Quiet accumulation..?

For AAPL, the last time the stock went up for 9 consecutive days was early May 2007, the beginning of the stock's huge run from $100 to $200 in 7 months. For GOOG, I couldn't find any other instance, except September 2007 when the stock went up 4 consecutive days, paused one day, and then continued to go up for another 6 days. Again, that was the beginning of the stock's climax top. GOOG went from $520 to $740 in two months.

Both stocks are now pushing the upper bollinger band and look stretched and due for correction. If my reading is right (chance may be miniscule, but not zero), however, these stocks are set to go even higher. Significantly higher, as their weekly chart formation (cup and handle) tends to yield gains equal to the depth of the cup. That would bring GOOG to $540, AAPL to $250, PROVIDED THE GENERAL MARKET REMAINS BULLISH.

I decided to take a chance on AAPL via a tiny position in AAPL October call options. If I'm wrong, all I lose is the money I put down to buy the options. The only reason I picked up AAPL over GOOG is that I liked the AAPL's P&F chart: the triangular pennant strongly broken out to the upside. But again, it all depends on how the general market behaves. After all, they are beta stocks which will move with the market in an exaggerated manner.

Lesson on Not Buying at the Right Time: GOOG

I sold Google (GOOG) $37 ago and I feel stung. So I decided to learn my lesson here in the hope of not repeating it. Well, it looks like my same old pattern, lesson unlearned. (Darn!)

Here's GOOG's 3-year weekly chart to get a better perspective.

My mistake was easy to spot. NOT BUYING AT THE RIGHT TIME. Now I see on the chart that the first (less risky) buying point was when the stock broke above the downward trend line from December 07 (yes, 07). That would have been $345 during the last week of March. The second buying opportunity was mid April, when the stock broke $381. You could call it a tiny cup break or breakout from irregular double-bottom.

Instead, I bought at middle-of-nowhere price of $360, and sold it at $389, right after the breakout from $381. Duh.

This seems to be my repeated pattern. Now more than ever I'm determined to correct it (if my ADD allows me to).

By the way, note the textbook climax top in October-November 07. Huge run-up every week on increasing volume, then the highest price on a very low volume. Sure enough, the next week saw a huge decline on a massive volume. That was a Nasdaq top. I didn't know then what I know now, so I remember those days as frightening, not sure what was happening.

So why am I not in the Nasdaq beta stocks like GOOG and AAPL? Why did I sell GOOG? It's VOLUME. It's not there AT ALL for either stock. No one (figuratively) is buying the breakouts. That's a precarious situation to go long.

Time To Say Goodbye To My GOOG Holding?

I have a minute position in Google (GOOG) since around $360. I haven't paid much attention other than check the price and volume now and then.

What has bothered me about the stock during the entire run from the March low is low volume. Except the huge spike over the earnings report, the volume is ever decreasing. I've heard it said that a stock can go up on a low volume after it bottomed, because stronger hands hold it now. But I'm not so sure.

I have had a distinct feeling that big traders have been using Nasdaq beta stocks (GOOG, AAPL, AMZN, RIMM, etc.) as ATM to fund their longs or shorts in financials.

The stock recently hit $412 on a very low volume and turned back. That price level was where the support was in 2008. It would have been a great long-term short from May 2008 high, but I think I will step aside for now and see how it behaves around $400 - 412.