Why Me, Worry? Says Ben (and Timmy and the Whole Crew)

This gotta be one of the biggest crap I've ever seen coming from Ben, Timmy, the whole PPT and TBTF Wall Street banks: to levitate the US stock market on a non-POMO day on a thin volume, after the massive earthquake in Japan and on-going and worsening turmoil in Libya and euro and the EU getting unhinged over debt crisis in PIG.

They've been throwing everything they've got on the market from the get-go.

The ostensible reason for today's gain? Because the oil price fell! Of course.

30 minutes to the close, Dow is up over 100 points, S&P500 up 13, Nasdaq 22.

US dollar is down big, gold, silver up, oil down, copper is up.

NFLX is still below 50-DMA (which sits at $204.03 today). For that matter, Nasdaq remains well below 50-DMA, despite today's advance.

Nasdaq Underperformers for the Day

Nasdaq is is up but underperforming Dow today (Dow is levitating on Bank of America Analyst Day in 3 years), but its major (momo) components are underperforming the index. Not a good sign.

The index is up 1% right now.

Nasdaq underperformers on my stock screen:

AMZN: down 0.50%
GOOG: up 0.65%
NFLX: down 5.21%
AAPL: up 0.48%
QCOM: down 0.75%
BIDU: up 0.16%
INTC: flat
RIMM: up 0.06%
CSCO: up 0.25%
ISRG: up 0.63%

On the other hand, overperformers are:

YHOO: up 1.44%
ORCL: up 2.59%
AMD: up 2.48%
WDC: up 2.85%

Over-performers and Under-performers on Nasdaq

(UPDATE) AMZN, NFLX continue to weaken in the final hour, despite Nasdaq remaining strong. NFLX is back to flat. We'll see if dip buyers come in, oh let's say in the last 30 seconds?

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So the market gapped up on less than expected unemployment number and Venezuela's offer for mediation in Libya. Great. It doesn't matter that there aren't many job openings, and Libyan opposition has said no to the mediation. Oil and gold/silver selling off.

Nasdaq is the best performer today of the three major indices, up 50 points or 1.83%. I'm curious which stock is over-performing (going up more than 1.83%), and which one is under-performing. So, from my stock screen, here's the list:

Over-performers:

QCOM (2.87%)
ORCL (3.05%)
EMC (2.17%)
BIDU (1.97%)
RIMM (4.22%)
AAPL (1.90%)

Under-performers:

AMZN (1.01%)
EBAY (1.16%)
GOOG (1.48%)
NFLX (0.54%)
INTC (1.23%)
MSFT (0.70%)

AMZN and NFLX continue to be rather weak, even in rebound.

Overall market under-performers:

FCX (0.63% Dr. Copper is not doing too well.)
POT (0.21%

Rebound to 61.8% Fib, Now What?

I should be getting used to it by now, but it never ceases to amaze me and sometimes nauseate me. The US stock market went up again today for no good reason other than Warren Buffett being bullish. Dow, S&P, Nasdaq all retraced back to 61.8% Fibonacci retracement; Dow and S&P past 61.8%, Nasdaq, barely. My short Amazon worked today, although I wish I had had enough money to put NFLX. Oh well. Can't win all the time.

So what now?Will it trace all the way back to the February 18 level and keep going up? I shouldn't be surprised, but as I said, it's nauseating, partly because it's been levitating like this for too long.

Here's the daily chart of Nasdaq. It was the weakest index today, along with Russell 2000 (so much for economic recovery and growth). I see negative signs - RSI, MACD and price in negative divergence, up-volume not as significant as down-volume, a hanging man formed today which could be a bearish reversal signal.


I am not shorting the market (just short AMZN), so if it keeps going up that should be good for my commodity stocks. If it corrects more seriously, that should be also good for my gold and silver stocks and VXX.

Tech, Small/Mid Cap Head Down While Big Caps Levitate

Just a heads-up for those who believe Obama is "pro-business". The two indices that represent growth (tech and small caps) may be heading south.

From the top: Nasdaq, Russel 2000, S&P500, Dow Jones Industrial Average.


Dow Jones Industrial and S&P500 continue to levitate, suggesting to me that they - big cap, multinational conglomerates - are the targets of Obama's affection for business. Like, GE.

Whether Dow and S&P can withstand the selling pressure coming from Naz and Russell remains to be seen. It is certainly possible, and may even be probable if the tax repatriation stuff passes Congress. After all, Dow and S&P500 are full of companies that stand to benefit from such a law.

Amazon Runs Out of Kindles

(Update 7/28/2010) So RIMM has popped on the news of iPhone killer. I'm not impressed with the move, at least not yet. The stock is yet to take out yesterday's high, which is $55.65. AMZN continues to languish, going nowhere.

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so reports Barron's Tech Trader Daily by Eric Savitz on July 27, 2010. Maybe that's why the stock had a miraculous reversal the day after the earning announcement:

(Quote)
Amazon.com (AMZN) has temporarily run out of Kindles.

Here’s what it says if you attempt to buy the e-Book reader on the company’s Web site:

“Temporarily out of stock. Order now and we’ll deliver when available. We’ll e-mail you with an estimated delivery date as soon as we have more information. Your account will only be charged when we ship the item.”

And what do you see when you go to the Amazon home page? Why, a promo for the extra-big Kindle DX!

As SlashGear notes, the sudden Kindle shortage could mean there has been a surge in demand - or it could mean a next-gen Kindle is on the way.
(Unquote)


That sudden reversal after the earning report has kept my AMZN puts worthless, but I still don't think much of the AMZN chart. Ever since the July top of $124.88 it's on the decline, underperforming the index (Nasdaq). You could say it is resilient, refusing to sell off. But it looks to me like it wants to sell off at any time now. (Of course I'm biased, I have AMZN puts.)

This stock and another Nasdaq beta Research in Motion (RIMM) look to me to be ready to dump. But then the Kindle rumor may be true, and RIMM just announced the iPhone "killer". They may turn on the dime.

Nasdaq Heading Back to Pre-Crash?

I continue to think Dow and S&P are heading to their respective 61.8% Fibonacci retracement area between 2007 October market top and 2009 March market bottom (Dow around 11,260, S&P around 1228) and have been sitting on my long positions.

And guess what. I totally missed the tech rally. I kept thinking, for example, AAPL (Apple Inc.) was a buy when it dropped to $190 in January. $190 was a support for several months. Didn't do anything. I still thought it was a buy at $217 (breakout point), and most recently at $228. I still think it is a buy on a pullback, but haven't done anything about it because I haven't been following Nasdaq as I used to and don't have a good feel for the index.

Nasdaq, after January swoon along with Dow and S&P which many traders and investors took as a sign of imminent severe downturn in the market, recovered and went past 61.8% retracement line around 2250 (that's where the index turned back down in January) and now seems to be on its way to 100% full retracement.



On 10 year chart, Nasdaq seems to be at a "Make or Break" place. The index is currently hitting the upper trendline from 2000 high. It is at a logical place to turn back down again. An ultra-slow slow stochastics (133) shows Nasdaq as an index has been a dead money for the past 10 years. Even now, it has barely emerged from oversold condition, with MACD finally coming back to zero.

We shall see. I think I will start watching Naz again and see how it behaves from here. And I'm hoping AAPL will pull back after iPad launch...

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.

Nasdaq (and Dow and S&P) at 2009 High

To the chagrin and frustration for the bears, the stock market keeps going up. Today, all three major indices marked the 2009 high with healthy gains but subdued volume (Op-Ex fatigue, maybe).

Barring disaster overnight (and premarket tomorrow), tomorrow's market looks brighter as Apple (AAPL) announced a blow-out earning after hours (the company sold more Macs and iPhones in any quarter in company's history), and the stock is currently trading over $200.

I haven't looked at Nasdaq chart since June (as I don't have tech stocks like I used to), so maybe this is a good time to do that to figure out whether every bear is saying is true ("the market is topping").

The first thing I notice about Nasdaq is the volume. Unlike other two indices (Dow and S&P500), Nasdaq's volume has remained robust. So far, I don't see negative divergence between RSI, price action, volume, CCI, slow stochastics. This is a very strong chart. About the only thing that makes me nervous is the extremely steep ascent from March low (steepest of the three major indices).

Around March 09 bottom, that was clearly a double bottom formation with handle, and the handle break in late May held. I should have paid more attention to Nasdaq around that time, for obviously easier money was in Nasdaq.

The index is right now between 50% and 61.8% Fib retracements, and 61.8% retracement is a logical target (2251). If 61.8% retracement is taken out (75 points away), it could go back up to 2007 high, I suppose. Some of the index components are already in that territory, about to take out all-time high (AAPL, BIDU, AMZN). Semiconductor sector is not acting well, despite the steller result from Intel (INTC). We'll see.

I don't quite see the topping formation on Nasdaq. The ascent has been steep, yes, but so far none of the indicators show overbought condition or trendline break. I personally prefer it would go sideways for a while, but what I think counts nothing toward making the market.

It's been a scary ride holding long positions (some positions as early as March) but I'm still holding most of them. Scary but lucky ride so far.

Rally Nobody Believes In Marches On

Just about every trader whose comment I read and hear wants to short the market or is already short. Then the market does what it does these days, which is to go up.

Quant/algo trading notwithstanding, today's intraday charts of all the major indices - Dow, S&P500, Nasdaq - registered a vertical spike all at the same time, at 2:27 PM EST. S&P Futures spiked at the same time. So far, there is no news that could have triggered it.

Certain patterns does not exist in nature, and this sure looks unnatural. You could possibly argue that the 30 minutes or so before the spike, the indices were sitting flat, getting ready for a pop.

Industrials and utilities supposed to pull the indices higher today. One of my watch list stocks, NOV, had a large volume up-day, ending the day above the overhead resistance of $40-41. I put in a partial order, which didn't fill. Might as well see if it can hold above today's close before I commit.

What To Expect Longer Term In The Stock Market

Here's the link to Breakpoint Trades' chart analysis that came in to my mailbox on Tuesday (I subscribe to their free newsletter). These guys have been spot-on. Their longer trend charts in particular are very much worth looking at. These bigger pictures may put your mind to ease, no matter whether you're bearish or bullish; you would know what to expect, better. The link below will take you to the page full of charts, and the accompanying audio file starts automatically (if not, click on the audio link at the left top of the page).

http://breakpointtrades.com/controls/preview.php?la_id=705

Major Indices In Between The Lines

The stock market is holding OK, pretty good actually, considering the unemployment rate in May came in at 9.4%, highest since 1983. (For more, you can read my other blog post.)

(Except... they are slamming the gold and silver stocks AGAIN!!)

So, between the "green shooters" and realists (you could say "doom and gloomers"), where does the market stand right now?

The answer: IN BETWEEN.

Here are the weekly charts of Dow Jones Industrial Average, S&P 500, and Nasdaq, with only Fibonacci Retracement lines drawn between the week of September 22, 2008 and the March 09 low. Dow and S&P this week are right in between the 38.% retracement line and 50% retracement line.

Nasdaq has been outperforming the other two in this whole run from the low, and that shows in the chart, too. Instead of in between the same Fib lines as the other two indices, Nasdaq is in between the 50% retracement line and 61.8% retracement line.

For Nasdaq, the next potential Fibonacci line resistance could be the 50% retracement line from the Oct-Nov 07 top to March 09 bottom, around 2,000.

Analysts and traders are saying now is the "make or break" time for the market. But then, haven't they been saying that for at least 2 months?

Point and Figure Charts on Dow, Nasdaq, S&P500 Are Cheerful

After a scary long-term Dow chart below, how about burying our heads in the sand and look at some cheerful little things? These are daily Point and Figure charts of Dow, Nasdaq, and S&P500. Whatever you think of overall economic fundamentals or geopolitical risks, the charts are pointing to a significant breakout.

Both Dow and S&P had a double-top breakout, Nasdaq had a triple-top breakout. The price objectives on the daily charts of Dow 8,650 and S&P 935 look achievable, while Nasdaq's price objective looks rather steep at 1,950. But Nasdaq has been outperforming the other two, so this may not be far off the mark.

But here's a shocker: WEEKLY P&F charts. Take a look at this. It's weekly Nasdaq P&F chart. The price objective is 2,780. Do you remember the last time Nasdaq was that high? I didn't, so I looked. November 6, 2007. Nasdaq topped on October 31.