A 1 year old Swing Trader

[ezytrendtrader]

Are you ready for the next Commodities/Energy run ? (11 Jul ‘08)

If you have followed carefully on my market updates, I have been repeatably emphasizing on the selling of the commodities that are bringing the market down.


Its vital that the sellers are done with the commodities and then we could climb out of the oversold conditions to rally.


Yesterday , I am seeing a lot of leaders of commodities showing selling exhaustion and signs of strong buying.

Leaders are the captain of the market. They direct the market going up or down. Thus I have always focus my attention on them . LONGs be with them and SHORTs be with them is my motto.


Its becoming less and less attractive to me to continue shorting the market. I am seeing more and more leaders setting up and selling is drying up . (Pls note that I am a swing trader that looks not long than 2 weeks ahead)


Market moves in swings and the next swing should be a rally one before I decide to short some stocks if bear market prevails.


Lets take a look at some the leaders in the commodities sector.

 

[Splitlink]

*I always tell myself when market is in downtrend, dont try LONGs unless the stocks are in the strongest sector on a uptrend.

Commodities are now on selling pressure and might last for weeks depending how fast the sellers let go.


We agree on that one, but you'd be surprised at how many are buying now in anticipation of a rise. I decide, as you do, on trend direction before I start the day's trading.

Good luck, Split

 

[ezytrendtrader]

Potential Trades (11 Jul ‘08) - AGU, CLF, GMXR, FSLR

All of the best earning stocks or leaders are from commodity and energy sectors. So we will follow them when it comes to buying stocks.

Leaders will offer the best bang for your bucks as their charts are showing least resistance with most buying.

 

[ezytrendtrader]

My new positions (23 Jul ‘08) - HD, NOK, VMI calls

This market is getting overbought soon with the super rally from oil prices collapsing.
The market might be ready to rest and retrace for a few days soon.


So I am going to be more careful about my buying point.


Yesterday, Oil prices retest and failed to go up and close back down. This means the market might continue to go up this week despite the overbought conditions. (I am assuming the market is closely tied to oil prices)


I am slow to climb on the rally so this means there are many overbought stocks which I can’t buy until they have retraced.


Spotted this 3 stocks with good industry strength from Housing, Telecom and Manufacturing.

 

[ezytrendtrader]

Potential Trades (24 Jul ‘08) - Long MA,CSX,ATHR . Short CLR,CLF,ANR

I have been emphasizing the market is divided into Commodities and Non-Commodities.



So you can either short or long the other. Until they sort out themselves and moved together, we can use both to hedge as longs and shorts together.


Below are the few trades that I like.


LONGS




SHORTS

 

[Splitlink]

This market is getting overbought soon with the super rally from oil prices collapsing.
The market might be ready to rest and retrace for a few days soon.


So I am going to be more careful about my buying point.


Yesterday, Oil prices retest and failed to go up and close back down. This means the market might continue to go up this week despite the overbought conditions. (I am assuming the market is closely tied to oil prices)


I am slow to climb on the rally so this means there are many overbought stocks which I can’t buy until they have retraced.


Spotted this 3 stocks with good industry strength from Housing, Telecom and Manufacturing.

I had a buy order in place until I read this post. You are right, I am removing it until things are clearer.

Split

 

[ezytrendtrader]

I had a buy order in place until I read this post. You are right, I am removing it until things are clearer.

Today selling action just indicate how OVERBOUGHT are we.
Its normal or rather neccessary to have this sell-off so market could rest and go for a longer rally.

The interesting thing today is the possible capitulation and reversal of commodities.

If commodities are done with all the profit-taking, we might finally have all the sectors moving together in the same direction.

 

[ezytrendtrader]

Market Updates (25 Jul ‘08) - Market drop 283 points. Is it profit taking or back int

Market Outlook

Market Trend: (Short Term)
Bearish
(Buy stocks out of downtrend line and Short the Downtrend stocks only)
UpTrend Sectors :
Financial related, Health, Transportation, Homebuilders, Industrials, Retails & other consumer discretionary
DownTrend Sectors :
Energy, Commodities related




Sector performance (% change on day): Financials (-6.75%), Tech (-1.93%), Health Care (-0.16%), Consumer Staples (-0.93%), Consumer Discretionary (-2.81%), Industrials (-2.51%), Energy (-0.58%), Telecom (-3.07%), Materials (-2.23%), Utilities (-0.67%).


Extreme overbought always mean vulnerable selloff

Wow market selling off 283 points despite a mere $1 oil gain. Whats happening again?


Well, market was extreme overbought as mentioned yesterday and are very vulnerable for profit-taking with any uncomfortable news.


There were two such news yesterday:

1. Initial jobless claims for the week ending July 19 totaled 406,000, which is an increase of 34,000 from the prior week and 26,000 more than economists expected
2. Annualized sales came in at 4.86 million, which is down from the prior reading of 4.99 million and below the consensus forecast of 4.94 million. Month-over-month, existing home sales slipped 2.6%.

Do note that DOW went up almost 800 points in 6 trading days with not a single down day. Now that was an emotional run with no basis.


To expect market to continue such historic runs are almost impossible in such economic conditions.


So any uncomfortable news are going to give the investors a chance to take the good profits they have in hand.


Whether this is a simple profit-taking or we are going back to a downtrend spiral again, nobody knows. Market will definitely retrace more to ease the overbought levels.


Prices reaction to Support level is crucial to resume uptrend

How price react at the support level (around DOW 11220) will be crucial to gauge the investors sentiment to sustain a uptrend.


Falling back into the previous downtrend line will bring us back into official bear market again.


Sell off volume was light and SDS shorts were not enthusiatic

The sell-off volume yesterday was low. This means there was no buying present so buying ammunition may be available at support levels .


1 of my favourite indicator - SDS , Shorting ETFs didnt displayed a huge volume at the retest of its broken uptrend line. So that might mean something about the shorting sentiment.






Capitulation of Commodity & Energy sectors - End of Bear Market?

Commodity/Energy stocks went into a capitulation with massive volume yesterday. A bottom could be near if they are able to break their downtrend.


If that bottom is truly in, the market might finally have all sectors moving together. That would truly bring the influx of buying power to substain a major uptrend .


An uptrend market needs leaders or sectors with the best earnings to lead. The current leaders are the commodity/energy stocks esp the Oil stocks.


If you could recalled, the previous March bear rally was lead by the commodity/energy stocks.

Tech and Financials are not capable to do the job alone. They are not fundamentally sound and rally cannot be sustained. Their stocks will selloff too easily with any bad earnings from them.

 

[ezytrendtrader]

Open Trades Update (25 Jul ‘08) - Closed NOK, HD calls

I closed both my NOK and HD calls yesterday with a small net gains.


VMI was kept with a reversal candle formed so I might get a bounce sooner than I expected.





I handle my HD exit poorly leaving a 50-70% on the table . (a 10% on the stock movement at 1 time) Seriously, I should have exited when it was retesting its downtrend and failed.


I am getting slack with my exit points and leaving behind lots of profits. I need to improve, improve and improve on them.


Stock that failed to breach a resistance will definitely retrace . No point keeping the stock for short term. Thats why I emphasize on having the same position sizing for every option trades so I can spread my gains and losses evenly.

 

[ezytrendtrader]

A possible bottom and we need the leaders to get us out

I have been very bearish on stocks (buying PUTs) that is until the market hear of the possible worst news anyone can think of. A possible bankruptcy of the biggest nation mortage companies. (FNM & FRE).


A massive capitulation swept the entire stock market in a few days forcing out many sellers. Another “big discount” made on the market prices. This is just how historical bottom has been made.


The market is a funny place where the majority is always wrong.

So just when all the oversold sectors are ready to climb out of the downtrend line, the leaders stalled.

The market cannot substain an uptrend without its “leaders” .

Leaders are stocks that made investors dreamed and excited.


Just Who are they?


They are the commodities/energy (C.E) stocks.


C.E stocks provide the idealist prospects from a global C.E demand. They have the abilities to beat earning estimates quarterly/annually without much sweat. The global demand of commodities are rising every year and will not stop until China & India peaked or people stop making babies ! .


The Tech and Financials are unable to be the leaders. The economic conditions are not helping them.


Unfortunately C.E stocks are way too overbought that they are no longer pulling in funds to overcome the selling.
Thus the massive selling swept across them.


FYI: You could make more money by shorting these leaders in a few days than buying them for months.


Until they are oversold and become attractive again, market cannot substain any consistent rally without them.

If you recall, the March rally was “lead” by the C.E stocks. The C.E leaders “double” or “triple” their worth in just 3 months from March ‘08 from a long term decline of market. (at a time where all the other sectors were just trying to recover their $$$ damage)


Yesterday massive selling volume of C.E might indicate an upcoming bottom for the C.E stocks. Once they have bottomed, this might be the first time when “ALL the main sectors” are able to move together from an oversold condition.


The market doesn’t move out of bottom from a “perfect” economic condition. It bottomed when everyone has bailed out and all the possible bad news are accounted for.


Remember how stocks move? They move up and down based on net volume of Buyers & Sellers alone. Nothing else.


No one can tell how long the upcoming rally (if there is) can last but it might break all the possible downtrend lines and try for another new high from May .


Until another worse news are out, the market longer term trend is UP.

So short term am I bearish or bullish now? I am neither. I follow the trend and the trend indicates that LONGs are more attractive now esp when C.E stocks are done selling.

 

[ezytrendtrader]

Market Updates (26 Jul) - Good economic reports but an indecision trading day

Market Condition

Market Trend: (Short Term)
Uptrend
(Buy stocks out of downtrend line and Short the Downtrend stocks only)
UpTrend Sectors :
Financial related, Health, Transportation, Homebuilders, Industrials, Retails & other consumer discretionary
DownTrend Sectors :
Energy, Commodities related


Sector performance (% change on day): Financials (-0.60%), Tech (+1.57%), Health Care (+0.64%), Consumer Staples (-0.06%), Consumer Discretionary (-0.38%), Industrials (+0.69%), Energy (+1.00%), Telecom (-0.74%), Materials (+0.92%), Utilities (-0.62%).


Favorable market news

Plenty of market moving news today which is bias on the upside.

1. Durable goods orders make surprise increase
2. New home sales better than expected
3. Earnings generally upbeat
4. Oil prices head lower

A flat low decision day

However the market didnt react too strongly to the favourable news and ended up a low volume indecision day.

The only consolation is that the mass selling yesterday was not continued so the mini-uptrend in progress is still intact.


And it is not unusual to see a small bar action(indecision- a possible reversal)
after a big sell-off.


In fact, that’s what we technical traders want to see !


Commodities and Energy (C.E) trend

The charts of XLE and DBC didn’t reflect any confirmation that the reversal is coming like I wanted. All I can see is a mass volume sell off followed by indecision bars.
Market might be waiting for the earnings of its counterparts.


Next week we will have a better idea and market will also soon realise that the commodites/energy stocks are the leaders of this market.

The C.E components in the DOW will get a boost and finally we might have all the sectors moving together for a powerful upcoming rally.


As of now, C.E stocks are not a good shorts until we can see weakness again.


Have a nice weekend !

 

[ezytrendtrader]

My new positions (26 Jul) - XTO Call

Energy stocks look real oversold . Lots of them displaying potential reversal.


I got into 1 today.


Other stock you can look into : GMXR, EAC, PQ


My portfolio

 

[yellowlion]

ezytrendtrader,

Just doing analysis for the newsletter and had to stop by to add confirmation to your technical call on XTO. While I'm not a stock trader this is a good looking play.

With Crude coming into weekly support at 122.30, it was interesting to see XTO anticipate the trade which has set up with good probability and well defined risk.

The caution is that daily crude could push through weekly support for the test and cause some XTO stops to get hit. With volume looking for a bounce, this could push crude a bit lower. If that happens, the setup certainly is negated but I would stay with it for a bit and look for a re-entry opportunity.

For now, I'd play the probability and be a buyer at the open. Nice work.

 

[ezytrendtrader]

Market Updates (30 Jul) - Market resume its uptrend

Market Outlook

Market Trend: (Short Term)
UpTrend
(Buy stocks out of downtrend line and Short the Downtrend stocks only)

UpTrend Sectors :
Financial related, Health, Transportation, Homebuilders, Industrials, Retails & other consumer discretionary

DownTrend Sectors :
Energy, Commodities related


A short term reversal in place

Marketmake a point to stop its consecutive selling days with a rather convincing higher volume reversal. DOW was up 266 points forming a nice bullish engulfing to signify that market is interested to go up.


The earnings have been rather good taking expectation of the high energy costs and financial crisis. Thanks to globalization. If we do get a positive US GDP number, it might paved the way for market to go higher for the next few months.


Oil stocks continued their selling with a lower crude price while the rest of the commodities (esp Coal and Steel) are showing signs of buying with better earnings coming out.


Until the oil stocks clear the majority of the buyers who attached their value to crude price, they might continued to go down. It might only be possible when Oil crude prices bottomed.


I have mentioned that commodities are likely to exhaust their selling with the last few high volume selling. All we need now is a rush of buying power to break their downtrend line and we will have the real leaders pushing the market up.


The current leaders on the move are health and biotech stocks. Many of their A class earning stocks are making new highs. So catch on their dips while you can ! They move real fast.

 

[ezytrendtrader]

Potential Trades (30 Jul) - BIDU, CAL, JRCC, FNM, VLO

There are many stocks to buy now with the continued lowering of crude prices.


Here are a few stocks from the sectors I am looking at.



Sister stocks: SOHU, SINA

Sister stocks: AMR, LUV

Sister stocks: PCX, ACI, MEE

Sister stocks: FRE, GS, LEH, IBN

Sister stocks: TSO

 

[ezytrendtrader]

Crude prices might go lower

ezytrendtrader,

Just doing analysis for the newsletter and had to stop by to add confirmation to your technical call on XTO. While I'm not a stock trader this is a good looking play.

With Crude coming into weekly support at 122.30, it was interesting to see XTO anticipate the trade which has set up with good probability and well defined risk.

The caution is that daily crude could push through weekly support for the test and cause some XTO stops to get hit. With volume looking for a bounce, this could push crude a bit lower. If that happens, the setup certainly is negated but I would stay with it for a bit and look for a re-entry opportunity.

For now, I'd play the probability and be a buyer at the open. Nice work.

You are right. The setup certainly looks negated right now. I exited my XTO yesterday.

Right now these Oil related stocks looks the worst to own now.

I would only buy them if crude prices have bottomed.

 

[ezytrendtrader]

Market Updates (31 Jul ‘08) - Finally a unified action of all sectors , Commodities a

Market Outlook

Market Trend: (Short Term)
UpTrend
(Buy stocks out of downtrend line and Short the Downtrend stocks only)
UpTrend Sectors :

Energy, Commodities related, Financial related, Health, Transportation
Homebuilders, Industrials, Retails & other consumer discretionary

DownTrend Sectors : None


Crude oil prices were up but market stay up ?

The market was up while Crude oil prices made a strong comeback !



This is a signficant action as market was able to look objectively at the stock prices based on earnings rather than on volatile oil prices.


This unusual relationship make it hard for any swing traders to stay with their trade. The earning seasons came at a right time !


It has been a long time that all the major sectors were able to move up together. This was what the market to substain a strong rally.


I will still keep my comments short waiting for the key GDP numbers today.


Regardless of the numbers, I am still slightly biased on the uptrend as the oversold commodities/energy stocks(C.E) will fired up the buying power for the market regardless of the numbers.


Remember the March bear market rally was fired up by the overbought commodities !


A key reversal day for commodities

C.E stocks were undoubtly oversold with the high volume selling the past few days. Yet we could not see the buying power to mark the reversal.


Today action was that key reversal buying we wanted for the C.E stocks.

 

[ezytrendtrader]

My new trades (31 Jul 08) - AGU,VISN,APWR calls

I bought some LONG calls at the opening anticpating the market strength.


I have bought those too early as the commodities reversal came after the Oil inventory report.


C.E stocks are still the best stock and I would load up ALL their calls instead.
Anyway, these are my buys.

 

[ezytrendtrader]

Open trades Update (31 Jul '08) - VMI, NOK