the Yuppie Pig

For the past week, we've basically had tight trading ranges intraday, with a couple of major gap moves last Monday and Thursday morning. You had to be in the positions before they happened, making it a tough trading environment. During times like these, I basically try to just hold my gains while I wait for the market to tip its hand. On the 15 minute chart, its basically a bit directionless. There is clear support at 1085, but there is definitely a possibility for the SPX to move higher.


On this 60 minute chart, we can easily see another short term head and shoulders pattern developing. Perhaps the right shoulder is complete, or we could easily see a rally up to 1102 to create a symmetrical right side before another move lower to test 1085. It's for that reason, I don't want to be too bullish at this point... just picking my longs with tight stops.


I will still look for breakout candidates here, but anything other than the best acting stocks should be sold shortly after a break.

Here we go again.. New highs, and negative divergence setting up in the 60 minute chart. This feels a lot like the week of Oct 19 to 26. In the very short term, its difficult to say where the market is going. I wouldn't be surprised if the SPX makes its way up to 1120 to tag the upper trend line. Nor would it surprise me, if the market flip flops around, rolling over through the week. Stochastics are also rolling over which is a warning sign that the current rally is weakening. It's time to tighten stops for long positions (but remain long for the moment), and look for potential shorts on a break down.

VFC, M, JEF all look like candidates for shorts, should the market roll over. Should the strength continue, and you want to be neutral on the market, GRMN, UA, MON all look like candidates to short into further strength.

I continue to look around for short candidates that have good support levels to be broken. ANF is an interesting choice for a quick move. My strategy is pretty simple here. On a market pull back, I want to be quickly pushed into a short position, so a good break of 37 should coincide with overall market pressure. Target is a quick move to 35.

I've spend the morning looking for good short candidates, expecting that sooner or later, the market will roll over, or at least correct a couple percent. When that happens, I'd like to have some limit sell stops on place, to immediately kick me into a neutral or even net short positions. Electronic Arts looks to be a good candidate for just that. With a lack of big named titles this year, save for COD4, out yesterday, I don't see any catalysts to move the entire gaming sector. GME also looks week. (currently short) So, that being said, I'm looking for a break down in the stock below 17.5. This is a rather large pattern, so I do want to see a good break. Initially, I'll give it a tight stop, but I'll be flexible depending on where the broader market is. The pattern measures down to about 14 to 15, but I'll take 15 in this situation.

Early in the day, we got our answer from the market, as it swiftly moved higher. It was nice to see my shorts quickly get stopped out, inherently moving my positions into sync with the market. (despite my intellectual protest!) For now, the market is firmly entrenched in its upward trajectory, and I don't see any reason why the SPX could not reach its 52 week high, or even a little higher. In the very short term, the market is grinding up in an extremely tight channel within this up trend channel. We'll see how a break here, is reacted to.



Given the extreme overbought condition, late in the day, I re-initiated a short on CCL as it pushed up against broken support, now resistance. It was nice to come in short, and sidestep most of the rally, before re-shorting.

Friday's jobs number really didn't move the market too much, but I believe it might just be taking the weekend to mull over the numbers. On one hand, the jobs numbers weren't great, although still declining at a lower rate... How long the market can hang by marginal second derivative improvements is anyones guess. And on the other hand, the Fed's rather subdued message to the market pretty much gives a go-ahead on continued risk taking. Ultimately, jobs do matter, but in the short term, corporate profits drive stock prices. Corporations have done quite well through costs cuts. It's a lot like squeezing blood from a rock. What's amazing, is how much blood can actually be squeezed out!


For the moment, I suspect there is a slight bearish bias, only because of the major gain from Thursday. Additionally, there is major resistance overhead beyond 1075, and a rather large head and shoulder formation is developing. Every trader is aware of this pattern, so perhaps it thereby becomes self fulfilling. What will be more telling, is if the neckline is broken.

On Friday, I added additional short positions only to hedge against my long positions, so overall, I'm generally net neutral. However, tight stops on both longs and shorts will hopefully set me in the same direction as the market, when it shows its hand.

While I believe the market is going to grind up just a few points over the next few days, the wireless sector may get some additional benefit from sector rotation. RIM has initiated a stock buyback, CSCO reported good numbers, QCOM - while not the greatest number, still reacted well to its earnings release. Since the sector has been quite out of favor recently, it appears to be a good time to add some exposure with the bulk of earnings out of the way. Here are 3 names within the sector, that have already reported good numbers.

I'll also note that this sector has ties towards smart grid technology, which also has good momentum at this time.

So far, the market has been acting a little more predictable than normal to me. I suppose this probably means its about to do what I don't expect...

Right now, the SPX is consolidated within a rising bear wedge, and I think (barring some terrible jobs number out tomorrow morning) that the market can make its way up to 1075. At this point, there is considerable resistance. And potentially a second shoulder of a head and shoulders topping pattern. We'll see when it comes to that. Given today's big gains, it's a good idea to tighten stops, and perhaps take some profits.

I'll remain generally bullish until the market breaks down from this wedge.


Here's the 60 minute chart, and I will endeavor to hold long positions and tighten stops as the market does not break down. Ultimately, I believe it will top out at 1075, but I'll wait for the trend to change.

An odd day with all of the intraday swings. As I wrote yesterday, we did get some additional downside pressure, but not before an unexpected rally up to 1052 before hand. Right now, the market appears to be consolidating in a bullish wedge which I have outlined in red on the 15 minute chart. The price action is starting to firm up a little, and there is some positive divergence setting up on the MACD.

My guess - and this is purely a guess here; is that we will break out of the downtrend channel without making a new low. This should set up a rally to the 1075 area, where we can re-evaluate things.

One sector I've been watching over the past few months is the restaurant sector. I'll quickly bullet the highlights that I see as reasons to be bearish on this sector.

1) Generally poor reactions to earnings lately.

2) It seems like only PNRA (Panera Bread) has generated a favourable response, and is the last General in the sector standing. CMG (Chipotle - the other General) failed to inspire, and I believe its growth rate is in question, which is going to put serious downside pressure on the stock despite its good fundamentals. Longer term, I still like this stock. But not this quarter!

3) Unlike retailers, much of the restaurant business is domestic and levered to the consumer. As long as jobs are continually lost, this sector is going to suffer. I'll note that I don't consider MCD (McDonalds) as part of this sector, as its more of a recessionary stock, in my opinion.

4) Commodity inflation is back. Two quarters ago, this sector saw huge year over year declines in commodity prices. Those easy compares are over, and in fact, have been rising recently - although the agricultural sector has lagged somewhat. Gasoline rising, is again, going to pressure the sector.

5) Terrible charts! If the market indeed, is rolling over here, there is very little support in these stocks! Downward volume has generally been decreasing (excluding the Generals) and there have been some major selling volume spikes.

It's starting to get very dangerous on both sides of the trade. Here's what I see, from the charts alone on three different time frames.

The 15 minute chart is in oversold territory, and yet, it could still make one more push down below the 1030 range. The downtrend channel is very clearly defined and any rallies up to the upper trendline, is likely to be met with a line of bears. We'll see how the bulls deal with that, when the time comes; however, it does make for a low risk short with a tight stop once that happens.


The 60 minute chart is actually starting to set up and show some positive divergence in the MACD. It's quiet likely, the market needs to reset here, and work off the oversold condition before resuming a downtrend. For the moment, the trend is clearly down in this time frame, but it doesn't look like its time to aggressively add shorts here. Time to tighten up stops and take some profits.


The daily chart looks like a cliff. Clearly, the trend is broken, but instead of being outright bearish on this chart, we'll need to see a lower high, and finally a lower low to establish a new downtrend. For now, this chart is more in a neutral state. Perhaps we get a short bounce to backtest the broken trendline before making a new downtrend. Or maybe that was it, on Thursday! To be determined...