Weekly Market Review: July 24, 2009

After touching the neckline on the head & shoulder formation last week, the market has been steaming upward at an unstoppable pace. Retracements have been shallow throughout this upward climb.

We're now testing 980 and the market just closed a hair beneath it on Friday. Today's (Friday) volume has been intriguingly low. However, it bears remarkable resemblance to last Friday's action wherein we were also testing a significant resistance (950) on both Thursday and Friday and then the Friday closed near the top but with very little volume.

With the lackluster retracements lately, one wonder what happened to all the bears out there. And where is the profit-taking?

I'm afraid I don't have much to say in way of analysis now. This market is just beyond me as of late.

[caption id="attachment_1622" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

[caption id="attachment_1623" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

GICS Sectors Overview

[caption id="attachment_1624" align="aligncenter" width="499" caption="6 months: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"][6 months:
XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU][][/caption]

[caption id="attachment_1625" align="aligncenter" width="500" caption="1 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"][1 month:
XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU][][/caption]

[caption id="attachment_1626" align="aligncenter" width="500" caption="5 days: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"][5 days: XLE
XLB XLI XLY XLP XLV XLF XLK IYZ XLU][][/caption]

[S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-24-spy.png [S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-24-spy_prop.png [6 months: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU]: http://traderpau.files.wordpress.com/2009/07/2009-07-24-6m_sectors.png [1 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU]: http://traderpau.files.wordpress.com/2009/07/2009-07-24-1m_sectors.png [5 days: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU]: http://traderpau.files.wordpress.com/2009/07/2009-07-24-5d_sectors.png

Posted 24 July 2009 in stocks.

Weekly Market Review: July 10, 2009

We finally broke below the well-known support of 880 for the S&P500 (Figure 1). However, I don't think we should short aggressively just yet for the following reasons.

  1. Lack of volume in the breakdown of support. As I said, we need some momentum to break our trading range. Even though the price has shown us the card of the market, the volume is simply lacking to show us any momentum. Figure 1.
  2. Volatility is still below 30, Figure 3. Which means we're experiencing a systematic move and not a dive just yet. So do expect some choppiness as we go downward to stop out the retail traders as usual.

In all, it's obvious to everyone that the bears are in control now. However, we need to maintain nimble positions as with these past few months because this downward move is expected by everyone and it won't be a free ride downward.

I'll preferably ease in the shorts in a controlled fashion rather than betting the farm on it. However, don't discount the scenario where we have a sudden and violent down move all of a sudden.

[caption id="attachment_1572" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

[caption id="attachment_1573" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

[caption id="attachment_1574" align="aligncenter" width="500" caption="S&P 500 ETF"][S&P 500 ETF][][/caption]

[S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-12-spy.png [S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-12-spy_prop.png [S&P 500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-12-spx_vix.png

Posted 12 July 2009 in stocks.

Weekly Market Review: July 3, 2009

I completely forgot about my weekly market review because of the July 4th long weekend! Here's a quick snapshot of the market from last week before the market opens.

Just when everyone is expected the week to pass by without much affair, S&P500 tanked 8 points at the open on Thursday (Friday was closed for July 4th weekend) and we closed below 900 for the week. The week before Independence Day is historically positive, on top of that most traders are on vacation, so this breakdown move is definitely unexpected. This reminds me of the saying by Atilla from xTrends, the market does the most obvious thing in the most unexpected way.

Anyway, we're heading to 880 in the pre-market on this Monday morning. Everyone is watching to see if this May's low can hold. We'll probably get a lot of choppy price action to shake both the bulls and bears out before any real move can mature.

[caption id="attachment_1552" align="aligncenter" width="500" caption="S&P500 ETF"][S&P500 ETF][][/caption]

[caption id="attachment_1553" align="aligncenter" width="500" caption="S&P500 ETF"][S&P500 ETF][][/caption]

GICS Sectors Review

The chart below is taken from CaraCommunity’s RSIApp.

Ticker![][] Last![][] RSI7d![][] RSI7w![][] RSI7m![][] Zone (estimate)![][]
[XLE][] \*
46.16 25.27 41.47 37.49
[XLB][] \*
25.15 33.83 47.67 41.87
[XLI][] \*
21.36 32.55 46.92 38.91
[XLY][] \*
22.29 35.39 48.93 44.23
[XLP][] \*
22.89 46 58.05 45.35
[XLV][] \*
25.75 44.06 57.54 44.7
[XLF][] \*
11.47 36.01 51.78 38.43
[XLK][] \*
17.83 40.58 59.52 48.41
[IYZ][] \*
17.32 33.28 50.44 42.4
[XLU][] \*
27.44 46.01 61.55 40.47

[S&P500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-06-spy.png [S&P500 ETF]: http://traderpau.files.wordpress.com/2009/07/2009-07-06-spy_prop.png

Posted 06 July 2009 in stocks.

Weekly Market Review: June 26, 2009

The market dropped almost 20 points on Monday followed with Tuesday touching 888 on the S&P500. Then starting Wednesday, the market steadily climbed its way back to exactly where it started at the Friday close at 918. Doesn't this get monotonic? I seem to be writing the same thing every week for the past month because the market is getting nowhere. Obvious to everyone, our big trading range is the low of May at 880 and the high of June at 950. Everyone is watching it closely.

However, the bears are at an advantage now. The downward channel seems to have started already with the price level and 10 day MA below the 200 day MA and 40 day MA, respectively. A more aggressive resistance is at 930 from last week.

From Figure 2, we see that in a long term perspective, the market is still adhering to its downward resistance from September 2008. Furthermore, there's a negative divergence in the RSI at the current price level as compared to May 2009 when we were topping around 920 also.

In any case, this sideway but volatile action is difficult for me to trade. So rather than keep trying to play the swings in equities, I've started an options strangle position in Gold (GLD) this week. The risk is just lower there.

[caption id="attachment_1544" align="aligncenter" width="500" caption="S&P500 ETF"][S&P500 ETF][][/caption]

[caption id="attachment_1545" align="aligncenter" width="500" caption="S&P500 ETF"][S&P500 ETF][][/caption]

GICS Sectors Review

The chart below is taken from CaraCommunity’s RSIApp. The RSIs are slightly higher this week compared to last week. Otherwise, the overall picture remains the same between various sectors.

Ticker![][] Last![][] RSI7d![][] RSI7w![][] RSI7m![][] Zone (estimate)![][]
[XLE][] \*
47.89 36.2 47.55 40.84
[XLB][] \*
25.82 44.83 53.94 44.1
[XLI][] \*
21.97 44.82 52.78 38.39
[XLY][] \*
22.96 49.13 57.72 47.65
[XLP][] \*
23.03 53.65 62.05 46.99
[XLV][] \*
26.37 68.51 69.38 48.04
[XLF][] \*
11.92 52.4 60.98 38.47
[XLK][] \*
18.16 58.49 74.38 52.1
[IYZ][] \*
17.90 58.46 61.23 47.35
[XLU][] \*
27.74 60.95 63.84 42.59

[S&P500 ETF]: http://traderpau.files.wordpress.com/2009/06/2009-06-28-spy.png [S&P500 ETF]: http://traderpau.files.wordpress.com/2009/06/2009-06-28-spy_prop.png

Posted 28 June 2009 in stocks.

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