traderankur

Tuesday, July 18, 2006

On second thoughts...

Perhaps getting rid of ANN so quickly wasn't a great idea. Hmmmm.... let me elaborate my sell reasons:

RSI and MACD don't look great, but could it be basing here?

Well, I think this brings me a peace of mind, if anything. Given the the talk of a weakening retail sector and a consumer who's stretched thin from higher mortgage payments (for those with variable rates) and - most importantly - higher oil prices, we're likely to see a cut in discretionary spending. At some point the consumer will give in. I must admit that the American consumer has been quite resilient... s/he must not view debt the same way I do.

Bottom line: I'll always be able to ask ANN out again, and I know she'll say yes.

I'll miss you, ANN




Well, ANN's a dog. I believe in a strict sell discipline; I had set my parameters, they were violated, and I'm out. I'll wait for the next trade.

Sold at 39.40.

Tuesday, July 11, 2006

Long ANN



ANN has been the best retail perfomer YTD. Recently shares have been consolidating in the 41 to 44 range. Long at 41.87 for the following reasons:

1. Today's retracement to the 61% support on the short term Fibs
2. Shares seen bouncing off lower line of the upper channel
3. RSI winding down

Stop: 39.25 - just under current 50 day MA.

Sunday, March 19, 2006

Buy on dips

I apologize for not posting over the past 2 weeks.

Things to note: The DJIA bounced off of the Fib retracement I had at 10930, calling an end to the short bear retracement I'd called.

Since then, we've rallied - big time! All looks strong, but I'd caution against taking massive long positions here as a sell-off for whatever reason (probably profit taking) will most certainly ensue in the near future without many more points on the upside. If you do decide to go long, have some tight stops in place. The stochastics show an overbought market but given that we've broken to the upside, the range has been broken and we're now in a trending market. Thus, stochastics can't be trusted as much.

The strategy here is to buy on dips as I believe the risks to the downside are contained.

Saturday, March 04, 2006

Bears make money, for now



Friday's action was important. After being up about 80 points, the DJIA gave up all gains and some more. This action was very predictable as I've stated in the past few blogs.

I expect the downtrend to continue, at least for the near-term, or a consolidation. The MACD remains negative, while RSI is showing a market approaching oversold levels, but not yet.

Notice the overall trend lines: Overall upward channel, with a current downward channel.

My take: continued downward pressure / consolidation here. Still bearish. Watch the 50-day MA as a possible support level.

Tuesday, February 28, 2006

Still Bearish

The chart, after all, is right. The trick is to read it.

We're getting the pull back I've been expecting, and I think it may continue. The candlesticks on the DJIA daily charts suggest a reversal and so does MACD. The DJIA attempted a rally yesterday, but gave most of the gains back by the end of the day.
Today's action was extremely bearish with selling going on right into the close.

I'm sticking with my bearish position for now.

Saturday, February 25, 2006

Near term Top on DJIA?

 

Time for another graph. This is a hard game. And picking tops or bottoms makes a hard game impossible. So, while I'm not in the business to pick tops and bottoms, the attached graph provides some analysis on where I think we're headed.

Several things to note:

1. Continued negative divergence indicating a move lower.
2. Down volume was higher than up volume in the past week.
3. Slow stochastics are at overbought levels. I've included vertical lines (the blue ones) corresponding to overbought levels and the DJIA - while not perfect, there's some good correlation.
4. MACD historgram showing a high bar has been placed - i.e. we'll move lower.
5. The VIX index (not shown) is, again, approaching lows. This indicates the market is getting complacent - always a sign of trouble.

All in all, I'm not too comfortable establishing long positions here. Again, we still need to see if we'll establish a new base on the DJIA, retest the previous (10700 region), or charge higher.

Overall strategy: bearish with tight stops.

Please note that my sentiment is NOT long term, but very short term i.e. days to a few weeks.

Happy trading! Posted by Picasa

Wednesday, February 22, 2006

New Support? Next Stop: 11,500?

The DOW's rallying nicely. MACD is bullish and RSI is not showing an oversold index. While this leaves the door open to a move higher especially since we don't have any resistance within the last 5 years, the run can't last too long: oil prices, interest rates, domestic and national political uncertainty continue. From a technical picture, the index is hitting the upper Bollinger Band - if we're still in a trading range, 95% of all price movements will remain within the bands.

If anything, I believe we're climbing the proverbial "wall of worry" that looms during times of uncertainty. We now have many earnings reports from the last quarter, but the question about the general macro economic conditions remains. In particular, the Fed indicated in their minutes released on Tuesday that they will rely on short-term data and not sweeping policy action. One can deduce that even the Fed is waiting for confirmation of what needs to be done.

While I don't think we'll hit 12,000 anytime soon, the possibility of a move higher to 11,500 exists. On the flip side, and perhaps more important, is to watch whether the DOW forms a new base at 10,900-11,000. Confirmation of this would create many trading opportunities going forward.