Sunday, December 13, 2009

Technical Picture - Yawn

The SPY is stuck between two trendlines. The price/volume contraction at this intersection would have us believe that the expansion, when it comes, will be worth the wait. I suspect many investors hanging in until January to postpone the capital gains tax to next year. In the meantime, try not to lose money in the daily chop.

Rather than trading the markets, it's time to really focus on sectors. For strength we're looking at airlines/transports, retail, utilities, aluminum and Reits. For weakness, the obvious choices are gold and oil, but these will likely get a technical bounce when the $USD takes a breather.

A few charts of interest on the long side - FSLR - flag forming

BLL - high volume thrust to the base followed by NRIBs in upper range.

AA - High volume move towards upper base line.

TIF - Target trade to base

Short side - RIMM was weak on Friday, setting up a low risk short on NR7 trigger bar.

At the end of the day we have a bearish engulfing stick on the daily.

POT sold off Friday as well. The daily could be setting up for a failed BO.

And, last but least, the Tiger Woods stock play - sharp sell-off into the base, followed by low volume bounce, foreshadows a BO to the downside.


Day Tradr said...

Nice calls Jamie.

Jamie said...

Thanks Day Tradr,

FSLR had legs.

Adam said...

The free lunch can only last for so long because of the laws of mathematics- ultimately we'll have to pay the piper for the reckless decisions of our government. And I think that until the govt addresses the basic structural problems in our financial system of too much debt, we will not have a sustainable recovery. So while the stock market can stay irrational in the shorter term, in the long run I believe it will go back to reflecting the fundamentals of our boom and bust economy. And that's why I continue to feel that for long term investors a better portfolio allocation is in cash and gold. I think the gold price will continue to rise due to a lack of faith in central banks' policies and in fiat currencies. I recently read a good article on this topic called Gold Price Wobbles Under $1,130 But U.S. Dollar Future Bleak, which discusses the relationship between the dollar, the gold price, and gold mining companies as a result of the Federal Reserve's monetary policies. I thought it was especially helpful for investors to read to get a better sense of the relationship between these asset classes given all the uncertainty in the economy.