You are here: Home / Archives for Chris

A Gold Climax Top?

August 21, 2011 by 13 Comments

Signs are pointing towards a possible climax run for $GLD but please note that this may only be the beginning. Climax runs can push stocks and commodities to extreme levels with parabolic shapes at nearly 90 degree take-offs. Gold is starting to make a similar run, right now!

I have nailed several climax tops in the past and will use two prominent examples to highlight the extreme runs they made before dropping hard. These examples will also show us what to look for when selling into exhausting strength and possibly taking the opposite side of the trade on the down side.

Both Platinum $PL_F and PetroChina $PTR formed climax tops that I highlighted in real time on the blog back in 2007 and 2008. I started to notice both climax tops early in the run so use that information when analyzing my take on the current $GLD chart. I am most likely early and I feel that gold may have more rebound power if it does start to drop. What do I mean? I mean that Gold may drop hard (short-term), only to find support and then resume its up-trend.

I don’t know if Gold will fall apart the way that Platinum and Petrochina did a few years ago because the global economy is in bad shape and humans have been programmed to turn to the shiny metal as protection against “all things bad” – such as fiat money, recessions and depressions, etc.

Platinum Climax Top? | February 18, 2008

What catches my eye is the extreme run-up over the past two months as the metal seems to be making a climax run (out of character during the 10-year up-trend). Similar action started to happen in PTR and I highlighted it in the exact manner as I am doing here with $PL_F in a post titled The Real PTR Climax Run.

The Real PTR Climax Run? | October 10, 2007

…the HUGE volume on the latest push to new highs clearly indicates something is going on.
…a climax top is where the stock has advanced for many months and suddenly races up for one or two weeks much faster than any prior one-or two-week period or since the beginning of the stock’s long move up.

Filed Under: Commodities, Technical Analysis

Market Overview: Identifying a Change of Trend

August 7, 2011 by 6 Comments

Standard & Poor’s said it downgraded the U.S. government’s credit rating from AAA to AA+ because it believes the U.S. will keep having problems getting its finances under control and pointed to the lack of leadership in Washington. Per Yahoo Finance: “The Obama administration called the move a hasty decision based on wrong calculations about the federal budget. It had tried to head off the downgrade before it was announced late Friday.”

Politicians lie and markets do not so ignore Washington and focus on PRICE and VOLUME action!

So, with that said, what does last week’s action across the US and global market truly mean? The $DJIA was down 5.75% on the largest volume since last summer, the $COMPQ was down 8.13% on the largest volume since May 2010 and the $SPX was down 7.19% on the largest volume since May 2010.

All three major markets confirmed a Dow Theory Reversal, a “Change of Trend”. In addition to the major indexes, the Dow Transports TRAN also confirmed a Dow Theory Reversal by breaking support and making a lower low.

Emotionally, I suspect that the market will bounce and that many stocks and indexes are “oversold” but this will most likely only be short term. Long term, the trend HAS CHANGED according to the charts. And until the charts show a new trend to the upside, all moves up are suspect. No one has to pick the exact bottom or top of a market so be grateful to recognize a trend and grab 60-80% of the move. It’s a lot safer and less risky to jump on board once the trend is confirmed rather than play a guessing game that can get you caught in a 500 point slide, similar to last Thursday. Markets can change on a dime so be prepared at all times but longer term trends stay intact for months, if not years.

I made a mistake in my general market analysis by not paying enough attention to my New High – New Low (NH/NL) Indicator. And it cost me because I put on positions in $RENN and $DANG in recent weeks after warning signals had been given. I did avoid a new position in $LNKD and saved money heading into the earnings announcement. Overall, shame on me but I didn’t lose too much because rules were followed and I am digging deep to listen to my indicators. Regardless of what “ I think may happen”, I am listening to my indicators and charts 100%!

So you ask: What warning signals?
The first signal was given by the Dow Jones NH/NL 10-day average differential (Diff) (chart above). The 10-d Diff started to make lower lows as the Dow was making higher highs, a clear divergence that warns the underlying stocks are weakening while the overall market is making a new high. This one signal alone should have put me on caution while entering new positions. It didn’t because the NH/NL 10-d Diff was still above the critical level of zero. Well, the market took care of that this week by plunging below the zero level, closing at -203 on Friday for the Dow. Consider this, it closed at +15.1 last Thursday ( 7/28) but went red the following day at -2.5 (last Friday, July 29, 2011). The divergence and the reading below zero was now screaming MOVE TO CASH and gave us enough time to do it before the end of the week romp! We all had time to get out without taking a loss. As it stands now, the 30-d Diff is also below zero with a reading of -21.47, the first reading below zero since July of 2010.

It’s interesting that the markets topped in May, just as Osama Bin Laden was killed – I must give a HT to Howard Lindzon for coining the Osama Bin Laden Top (he may have nailed it) and closing his blog post with this statement:

With the mood of financial markets quickly turning negative, the horrific price action of financials, the silliness of IPO valuations and some Bitcoin mishigas, you may not soon forget the ‘Osama’ top.

Now, let’s take a look at a number of charts and see what they “were” saying and what they “are” saying right now, as we head into next week (ahead of the market reaction to the US credit downgrade). NOTE: I personally believe that the downgrade is mostly priced into the market but I am sure we will still see some further selling pressure before a normal bounce.

[Read more…]

Filed Under: 1-2-3 Pattern, General Market, NH-NL Ratio, Wall Street

The StockTwits Edge

July 10, 2011 by 1 Comment

I am honored to be included (Chapter 4: Know Thyself) in the latest investing book by Wiley Publishing featuring 40 actionable market setups, shared by some of the most renowned traders and investors on the financial web:

The StockTwits Edge: 40 Actionable Trade Set-Ups from Real Market Pros
By Howard Lindzon, Philip Pearlman, Ivaylo Ivanhoff

StockTwits Edge

From the Inside Flap

The Internet as we know it has changed many things for stocks, markets, and finance in general. The “social web” and advances in technology have helped create tools and platforms that are empowering traders and investors, and allowing them to capture consistent profits along the way.

StockTwits® has emerged as the leading stock market social network, providing individuals with a vehicle to exchange ideas and receive real-time market insights. Made up of over 100,000 people from all corners of the world, trading thousands of instruments, StockTwits is all about crowdsourcing the best ideas and talent, and that’s exactly what you’ll find here in this new book.

Created by StockTwits cofounder and CEO Howard Lindzon and his colleagues Philip Pearlman and Ivaylo Ivanhoff, this unique guide is comprised of over forty contributed chapters from both well-known professional traders and individual traders who have attracted a following on StockTwits. While some of the people you’ll meet have been trading for years, others have been in the business for just a short time—but each has an amazing focus and belief that if you can master one thing well in the markets you can succeed.

In The StockTwits Edge, each trader and investor presents his/her favorite setup in detail, highlighting the underlying psychology and real examples for better understanding of the rationale behind each step, including risk management. You will learn how to use their approach to find new ideas yourself.

Divided into seven comprehensive parts, this reliable resource covers a wide range of topics that can help improve your trading endeavors, such as:

    1. Trend following
    2. Value investing
    3. Day trading
    4. Swing trading
    5. Options trading
    6. Forex trading
    7. The art of trading

Whether you trade every day or every so often, the ideas found here can help you make the most of your time in today’s markets. Armed with each contributor’s favorite setup, you can excel on your own or visit the StockTwits website and gain real-time insights into leveraging the wealth of information contained within these pages.

Click below for the table of contents which features the excellent list of contributors and their StockTwits handles (also their twitter handles):

40 Actionable Trade Setups from Real Market Pros

Filed Under: Books

Will Renren Run

June 26, 2011 by 2 Comments

Renren $RENN has been running downhill since its debut in May, from $20+ to $6.23. It’s trading at less than 1/3rd of its high on opening day. I am not surprised due to the overall market pulling back to major moving averages and support levels but the main reason is due to Chinese stocks taking a beating lately.

Several China based stocks have been scrutinized for faulty accounting and some shady government practices such as censorship. Renren takes that a step further due to a sudden resignation by a key board member before the IPO (this board member was the chief of its audit committee).

Renren is consider by many as the “Facebook” of China, with a population base at least 3-4 times grater than that of the United States. Renren is a social networking Internet platform in China that generates revenues from online advertising and Internet value-added services.

Revenues and total cash from operations have been increasing year-over-year but net income has not lived up to expectations. It does appear that the company has a boat load of cash and future earnings pan out as such:

FY 2011: -0.03
FY 2012: 0.03
FY 2013: 0.13

With all of that said, I wouldn’t touch this stock with a 10-foot pole since it doesn’t come anywhere near my technical criteria but something keeps pulling me back. I hope it’s not a gambling tingle but more of a hint of intuition knocking. I almost want to compare $RENN to $SIRI when it was trading in cents. $SIRI was crap and still wasn’t turning a profit but my intuition said to buy, at least a few thousands shares. I didn’t and now it’s up nearly 10-fold from that point. I know traders that did and have been paid off handsomely.

So Is RENN teasing me because of my SirusXM miss or is intuition correct again in telling me that this stock has been unfairly beaten down in a rough Chinese stock environment and overall market pullback?

Intuition says to grab shares and hold as a value/ rebound play. My “technical” rules say to STAY AWAY.
I think I’ll grab shares on Monday and tuck them away for a while.

Let’s see if breaking the rules comes back to haunt me. My leash will be slightly larger because my overall position size will be smaller than normal.

To give you an idea of a couple of stocks that my screens and rules are pointing me towards, check out $FIO and $BBRG. They are new IPO’s with earnings and sales growth with prices making new highs.

Let’s revisit all three in 3-6 months.

Filed Under: Stocks, Stocks to Watch 2011

Stocks near 200-d MA Support

June 12, 2011 by 3 Comments

The following spreadsheet consists of 175 stocks that are trending back towards their 200 day moving average while maintaining strong relative strength. It’s essentially a screen of the stocks that have potential to catch support at the 200-day moving average and lead the market IF (a BIG “IF”) it decides to resume the up-trend.

I’ll narrow down this list of 175 to 10 – 20 of the best, technically, in my opinion (later this week).

Take a look:

Filed Under: Stock Screens
« Previous Page
Next Page »