ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Excitement over earnings almost trumped technicals today. The S&P 500 tipped over and then faded back ever so slightly from its 50-day moving average (DMA). Earnings news typically trumps technicals, but I was pretty convinced looming overhead resistance would hold firm no matter then news given the weak buying volume coming into today. Buying volume … Read more
Almost on schedule, the pendulum has swung back to “sell” on the S&P 500. The technical setup on the index shows extremely overbought conditions with buying volume falling just as the index reaches for overhead resistance (see chart below). Combine these conditions with the launch of earnings season, a new round of U.S. economic releases … Read more
It took a little patience, but the bounce from oversold conditions delivered in spectacular fashion on Wednesday with a 3.1% jump. The setup this time was a “bullish hammer” that formed ahead of the U.S. unemployment report last Friday. This is how I described the setup at the time: “The good news is that the … Read more
If the summer ends up trading in a range, it will have a wider berth than I had expected. This week the S&P 500 broke both closing and intra-day lows for 2010 and confirmed an unfolding downtrend. The index is down 8 of the last 9 days. The good news is that the S&P 500 … Read more
The first half of 2010 has ended and another earnings season is upon us. The second quarter should be a time of easy comparisons as the economy hit a trough leading into spring of last year. If there is any credence to the argument that the economy is on a sustainable path to recovery, we … Read more
The strength in the Swiss Franc has accelerated. Even as the euro has stabilized somewhat against the U.S. dollar the past two weeks, the franc continues to set new record highs against the euro. The monthly chart of the euro vs the franc (EUR/CHF) shows how rapidly the franc has gained steam just in the … Read more
As Research In Motion’s stock (RIMM) plunged the last repurchase program underwater, I speculated that RIMM would initiate another share repurchase program if the stock continued to go lower. It now seems that Research In Motion (RIMM) is indeed determined to prop up its stock with its hard-earned cash. During tonight’s earnings call, RIMM announced … Read more
Many homebuilder stocks, like Toll Brothers (TOL), went parabolic in April. The homebuilder index, XHB, hit 18-month highs at the time. Since flaming out, TOL is down 26%, and the homebuilder’s ETF, XHB, has sunk 23% in two months. This action further confirms the principle that parabolic moves more than likely signal the coming end … Read more
By now, I think we should recognize that low-volume rallies simply do not last – the odds tend to favor a return of most, if not all, those kinds of gains, sooner than later. Last week, I was particularly puzzled by a low-volume 2.4% rally on the S&P 500 that came on the heels of … Read more
Two weeks ago, I wrote “Sellers Step Out of the Way” to describe an impressive rally from oversold conditions on poor volume on May 27th. The S&P 500 closed up 3.3% that day, just short of the 200-day moving average (DMA). Today, the index finally hurdled over the 200DMA resistance for the first time in … Read more