03/03: Markets pronounced dead. Second day of flat-lining

Markets chopped around during the middle day of the trading week, with the S&P500 up fractionally (and less than 0.1%) to close at 1119. The I-D high and low values of the index were 1126 and 1117, respectively. Of particular note, price action dipped aggressively below the 50SMA (using 15 minute bars) with a long thrust in the 2:00p (EST) hour. Here's a 10-day from the customary source:



The other two main benchmarks were likewise little changed: the DJIA settled at 10397 after a dip of 0.1%, while the NASDAQ closed unchanged from Tuesday, i.e. at 2281.

In my own trade, I scurried away from long positions taken at Tuesday's close, selling each into strength near the market's open, and reaping slight gains on each position. In the case of BA, I was concerned that Tuesday's resistance of $65.00 would not be broken. Indeed, price action retreated to below the 50SMA (using 15-minute bars). Here's what bigcharts says:



With regards to BAC, $16.57-16.60 is a significant support/resistance level at multiple points on a 60-day; hence, it was a logical exit position. Indeed, price retreated upon hitting an intra-day high of $16.62. Here's a 10-day:



Regarding QCOM, I likewise pulled the sell trigger as price approached the upper demarcation of an important price channel off the 60-day. Indeed, price action consolidated just under the price channel for the remainder of the session -- a bullish sign compared to the alternative of pulling back strongly. I expect to re-enter a long QCOM position if I perceive a durable break above the upper price channel during today's trade. Here's a 60-day (1-hour bars) from ThinkOrSwim:



In closing, I expect another subdued trading day today ahead of tomorrow's critical BLS employment report. Indeed, /ES futures (e-mini S&P500 futures, a 24-hour market) are currently showing only slight change compared to yesterday's close -- up about 2 points -- indicating that markets will open with only slight change. Yet no bets are certain vis-a-vis the equity markets; a forecast sleeper could turn out to be a thriller. Good luck, snake oil salesmen!

02/03: Markets flat-line

Markets traded tepidly on the second day of March, with the S&P500 closing ahead by 0.2 percent and settling at 1118. The intra-day high and low, respectively, were 1123 and 1117. Yes, the trading range was indeed just shy of 7 points. Here's a 10-day chart (15-minute bars) with a 50-period SMA, courtesy of bigcharts.com:



In my own trade, I decided to dip my toes into the long waters yesterday. Many leading stocks became attractive upon the late-afternoon market pull-back, and I entered BAC and BA, each at key support levels ($16.40 in the case of the former, a key level off the 60-day; $64.35 in the case of the latter, an important support off the 10-day chart). Gold and the USD notched bullishness. In the case of the precious metal, one should be mindful that present prices, while off of last year's highs in USD terms, are actually at all-time highs in EUR terms. Something to ponder!

With the bell <60 seconds away, good luck tight rope walkers!

01/03: Markets continue advance, spurred by M&A

Equity markets advanced on solid footing yesterday, with the broad-based S&P500 ahead 1.0 percent, or 11 points, to 1116. The index's close was its highest since mid-January, and its intra-day high -- also 1116 -- surpassed the mid-February intra-day highs on about 1113. Markets seem firmly en-route to, at least, a re-test of the mid-January high of 1150.

Leading equities onward was an announcement of a significant deal in the insurance industry: British insurer Prudential announced a purchase of AIG's Asian business in a deal worth $35.5bn.

Airlines continued their rip to higher ground, with many issues notching fresh 52-week highs. UAUA popped as high as 18.49, settling up 5.1 percent at 18.03 on heavy (but not quite capitulation) volume. LCC continued its month-long sprint, advancing 5.0 percent to 7.69; it began February around $5.50.

Gold is maintaining a more bullish hue, with price action hugging key resistance from the 1-month chart around $1125; this follows a bounce in the middle of last week from a key sloping support level (around $1090). Possibly expect an explosive advance if $1130 is breached. Longer-term outlook for the yellow metal is also favourable, assuming the USD begins to weaken anew, which it most certainly would should the Greek debt situation be expeditiously resolved.

Good luck, traders. And be careful in shorting those pesky airline shares.

25/02: Shares bounce decisively off intra-day lows

O Goldman, who art on Wall Street...

So might begin my inspired chant of contrition to those crazy enough to read these pages. (Thankfully there are very few of you.) More frequent posts are forthcoming. Oh yes.

Markets recorded a volatile session on Thursday, with the Dow initially free-falling nearly 188 points before paring losses to close down 53 points, or 0.5%, at 10,321.

EUR/USD trade proved dramatic, with the European currency declining to an intra-day low of 1.345, a level only a whisker above last Friday's touch of 1.3444, which represents the currency's nadir since May 2009. Of course, fears of Greek default and spillover into other EU weak links are the drivers behind Euro weakness.

Gold futures also had a notable session. Front-month contracts kissed a critical support area around $1090, a support that takes the form of a descending trendline that begins at price action on December 3, 2009 (a day after the market's peak), incorporates the upward reversal peaks in mid-January, neatly contains the highs of February 3rd, and beautifully underpins support of February 17th, 18th, 24th and 25th. I anticipate either a durable bounce upward (if the Greek situation should become resolved and leads to dollar depreciation), or a downward break (if Greek problems re-intensify).

I have been trading, among others, MT (Arcelot Mittal ADRs) and AKS (AK Steel), perceiving recent selling pressure to have reached durable support. I entered both positions earlier this week, and while yesterday's sharply lower open brought losses, the ensuing turn-around changed these to slight gains. As the overall market and steel were both trading into significant resistance off 5-day charts near yesterday's close, I sold both positions near yesterday's respective intra-day highs.

Good luck today, traders of the world!

03/02: Technology bounces as market recovery stalls

YHOO:


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GOOG:


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MS:


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TXN:

02/02: Risk trade further intensifies

After an uncertain start of trade, markets eventually shifted into higher gear and placed further distance between their new-found bullish spirit and January's pronounced correction. On the day, the broad-based S&P500 gained 1.3 percent to 1,103. The DJIA propelled forward by 1.1%, while the NASDAQ languished with a +0.9% return. A 10-day chart of the S&P500, courtesy of bigcharts.com, follows:



My own trade on Tuesday, 2/2 focused on five different securities. Forgive me, dear reader, for presently doing no more than posting charts. I shall return to fill-in the story, either within this entry or in a subsequent one.


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01/02: Markets begin February with a pop

Market action on Monday, February 1 was positive, with the S&P500 ahead by 1.4% to 1089.2 and the DJIA and NASDAQ as relative under-performers, with respective returns of +1.2% and +1.1%.

A major catalyst for Monday's advance was a favourable reading of the Institute for Supply Management (ISM) index, which registered as 58.4. Any value in excess of 50.0 indicates manufacturing expansion. Furthermore, the dollar pivoted from multi-month highs, notably in the EUR/USD market, where the dollar declined from an intra-day high on Sunday, January 31 of 1.3852; and in the USD trade-weighted index, where the dollar lost ground from an intra-day high of 79.55. Other risk-on trades also re-ignited, with crude oil futures advancing from an intra-day low of $72.43, recorded during Friday's (29/1) trade.

My own trade focused on identifying securities with heavily oversold 60- and 30-day price action. Pickings were abundant, and I further focused on a higher-probability situation whereby price first declines within an explicit downward-sloping price channel, and then violates that channel on high volume to plunge lower still, in accelerated fashion. My own in-house term for such a set-up is the "parabolic sell-off" (though such a phenomenon also occurs in the capitulation phase of bull markets), as the second derivative of price-vs-time takes and maintains the same sign as the first derivative, e.g. the second derivative would become negative in a sell-off, indicating accelerated selling. This is analogous to the behaviour of the second derivative in a simple parabolic equation (such as y=x^2), where it also takes a non-zero value with a sustained orientation in sign that is equal to the sign of the first derivative.

The above-described search yielded three securities of particular interest: YHOO, GOOG and BP. Yahoo and Google share the position of technology bellweathers, and as such, it is not surprising that their charts should share common technical characteristics. Plotting of price channels and support/resistance lines, along with consideration of key support/resistance areas on the 1-year chart of each security, all supported a bullish viewpoint of both stocks. (I expect to post charts of these with the market wrap-up for 2/2.) BP, likewise, featured an attractive entry towards the end of "parabolic sell-off" price action event, and the security also came with earnings risk, as the quarterly figures would be released during the morning hours, London time, of 2/2. The earnings risk was not altogether undesirable, as rival Exxon (XOM) itself issued an earnings report, in its case positive, on Monday that sent shares soaring.

Thanks for reading!

19/01: Markets rally off support levels, led by healthcare

Tuesday's market action was buoyant, on the one hand articulating the customary knee-jerk reaction that a touch of significant support typically catalyzes, and on the other hand pricing-in ever-increasing odds of a Republican victory in the ostensibly parochial Massachusetts race for a U.S. Senate seat (but, in reality, a highly significant, national litmus test on the durability of the agenda of the Democratic party's liberal wing). A national lurch rightward would, of course, change expectations about the expected degree of heathcare reform, and more of the status quo shall (obviously) benefit the incumbent firms.

The Republican, Scott Brown, won emphatically. (This is a little voice from the future.)

In summary, the S&P500 advanced 1.3 percent to close at 1150, a post-Lehman closing high, while the DJIA recorded a triple-digit gain of 1.1 percent and the technology-weighted NASDAQ notched a relative out-performance, appreciating 1.4 percent.

Among notable price action -- and forgive me, reader, for the lack of colour, one caused by the increased irrelevance of such details due to the elapsed time since long-gone 19/01 --, Google (GOOG) saw gains as the markets continued to digest last week's bombshell news of the firm's possibly pulling out of the Chinese market; the financial sector SPDR (XLF) regained momentum in anticipation of the mid-week earnings report from sector bellwether Goldman Sachs (GS); and Apple (AAPL) exploded to a fresh 52-week closing high on fresh (and feverish) speculation about the forthcoming iSlate. Humana (HUM), the leading S&P500 heathcare-sector stock in Tuesday's trade, leapt 7.1 percent.

15/01: Markets sell-off to key support levels

If I were to offer you, dear reader, a quarter for every 'reset' in relations between myself and this blog (and a half dollar for each unapologetic mixing of cliches), then you might have the green for a free lunch! Yet, as the saying goes, there is no such thing. And, esteemed reader, you already are privy to uptake of the latest mind bullets within this trader's mind, so what's another quarter or half dollar?

With that positively garish introduction, I must now add a pinch of the customary humility: yes, I regret this latest of my absences from the blog; yes, I shall not leave my dear lambs any more; no, I do not intend to disappear again in a fortnight or two. I live to serve my readers. Right.

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In brief, my non-trading life -- which would, naturally, be comprised in large part by my alter ego of rather excessive travelling -- enjoyed some highly notable moments during my absence from regular posting, i.e. the two-month period since about mid-November. I enjoyed hops to the exotic locales of Traverse City (MI) and Madison, obligatory multiple visits to West Coast mileage run destinations of San Francisco and Seattle, and most significantly, a roaring and powder-dumping skiing jaunt to the northern Lake Tahoe area. Below, looking beautiful, is a specimen of the oft-maligned CRJ species, on an idyllic late-November afternoon on the Chicago O'Hare tarmac:



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Finally, markets! Yes, this blog's true raison d'etre. Friday's trade proved more tumultuous than any in this still-young year, with indices declining to significant support levels that, if broken in follow-up trade of early next week, would provide fertile grounds for an intensified sell-off (a.k.a. the correction forecast by every talking-head analyst and his grandmother). To add some objectivity to the just-spewed blabber, the S&P500 ended Friday's market action with a 1.1% decline (-12 points) to 1136, while the DJIA declined 0.9% and the NASDAQ erased 1.2%. The S&P500's intra-day registered a trading range between 1148 and 1131. Here's a 10-day chart of the broad-based benchmark, courtesy of bigcharts.com:



My own trade of Friday was not altogether laudable, as the sharpness of the morning pull-back took me by surprise. I entered the session long in X (that's US Steel) calls, which defied a bullish chart by savagely selling-off in the opening minutes, though recovering considerably later. Materials stocks, such as US Steel, alongside financials have been the market leaders since the Christmas holiday while the previous baton-carrier, technology, has been a relative underperformer. It shall be interesting to see whether Friday's unnerving pull-back shall henceforth disrupt this market dynamic of risk-trade leadership. I wrap-up with a quick artistic musing on the essence of '10dX':

29/12: "Up in the Air" inspires a fresh blast of commentary from this neglectful blogger.

With apologies (to myself, probably the only regular reader, it must be noted) for the near- three fortnight lack of content, an absolute eternity in the blogosphere, I've decided to peck away about my recent experience of viewing the movie Up in the Air. As it's a much-awaited movie about frequent-flying, how could the movie possibly escape my comment?

And with luck, this shall be a new dawn for more frequent content generation on these pages.

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While certainly not among the most profound productions in the medium, Up in the Air did leave me with some positive insights (into the human condition, as insights from the arts generally go) and, likewise, did inspire a fairly intense feel-good state of mind that stuck for the night’s remainder. The movie begins with stunning eye-candy that presents the most literal interpretation of the film’s title: scenes from up in the heavens, including angles on wispy cloud, from-altitude shots of the serpentine highways and downtown business districts of Midwestern mini-metropolises, mosaics of bucolic countryside as from 20,000 feet, meanders of the camera onto the criss-crossing patterns of runways at undefined airports.

And the visual pleasures for those with romanticized views of travel and aviation would continue, brilliantly so. One of the first scenes shows the protagonist, Ryan Bingham (played by George Clooney) at his home: the airport terminal. “To know me is to fly with me,” he says in a voice-over, as the camera tracks him at an American Airlines First Class check-in counter, then discombobulating himself in uber-efficient, almost lyrical fashion at the security screening checkpoint, and finally boarding across the red carpet lane (how else?) to take his seat at the pointy end of a Maddog American Airlines MD80-series jet.

Is this deliberate, extended view of the indulgent premium travel experience, this protracted, discerning contemplation in the manner of a grand genre scene of Velazquez or Michelangelo’s time, meant to be a labor of love, an exaltation of the seamless fluidity, the Swiss-like simplicity, the unexpected joy, that the travel experience at its apogee can be? Or is the message cryptically sinister?, the first brush strokes into the checkered colour of the protagonist, who viewers shortly learn to engage in a most-despicable profession, the ruthless and uncaring firing of people, many of whom have very bleak prospects of ever again turning their lives onto a positive trajectory, burdened by under-developed skills, advanced age, financial travails, etc.

Whatever the meaning of Jason Reitman, the film’s avant-garde, himself serial-flying director, the film proceeds to rapidly present ever-more insight into the life of the enigmatic Ryan Bingham, part admirable high-flying success story, the rest despicable and soulless automaton of inhumane “workforce rationalization,” and without sufficient love for fellow man to desire so much as a network of substantial friendships and perhaps a stable and intimate romantic relationship. Yes, viewers soon learn that Up in the Air refers not just to Ryan’s Sisyphean flying, nor even to the travels combined with the other-worldly feeling of the recently-unemployed, those who, in the midst of despair, uncertainty and grief, all of the sudden feel curiously groundless and adrift. The film title is actually a triple-entendre (at least!), for Ryan Bingham is also up in the air with regards to his relationships or, put another way, with that most fundamental aspect of humanity, inter-relations with one’s fellow women and men.

“Don’t you feel isolated?”, asks an irked family member of Ryan Bingham, frustrated that he remains reticent towards deeper involvement with the family, despite his sister’s approaching wedding. “Isolated?, I’m surrounded!”, Ryan quips into his Blackberry’s mouthpiece, gesticulating at the bustling, anonymous crowds all around, within the airport terminal. Yes, Ryan Bingham was again travelling. (“To know me…”). And yes, he was missing the point by a mile. While technically in ever-ongoing transit from public airport to populated aircraft cabin to bustling hotel lobby, where were Ryan’s real relationships? Who knew his dreams, for whom did he yearn while falling asleep, with whom did he catch up over beers or dinner?

And so, in a steady meander through seemingly never-ending product placements (American Airlines, Hilton and Hertz, you dogs!), airport / airline / travel porn (loved that suave, ‘wingletted’ Boeing 757-200, gingerly kissing the runway on landing before thundering down in gradual deceleration), and unfolding insight into the life and business of one Ryan Bingham, Jason Reitman serves up the meat of the film, the main-course inquiry: how do people relate to one another, and what might be appropriate?

One the one hand, there’s Ryan, up in the air, haughty and self-centered, untethered and mobile. The man, dismissive of human connections, replaces them with manufactured and corporate ones, for instance by seeing false community in the ubiquitous American Airlines adverts that thank customers for their loyalty. These stilted posters -- imagine, a corporation making friends with a human! -- are at once also genuine, as the airline does understand that frequent fliers tend to contribute inordinately towards the firm’s profitability, which is its ultimate end; yet, Ryan Bingham does nonetheless inappropriately allocate the few warm embers within his heart to such inanimate marketing.

Conversely, the supporting cast, though not as impressively accomplished as Ryan, is notably more receptive to forming and nurturing human relationships. Ryan’s sister and her fiancé, both distinct underachievers, manifest the human longing to find love and settle down. Ryan’s newly-hired work colleague, the clever and confident-to-a-fault Natalie (played by Anna Kendrick), turns down superior job offers to follow a boyfriend to underwhelming Omaha. Even the seductress of Ryan Bingham, Alex (with Vera Farmiga acting), a character initially appearing as Ryan’s female mirror-image, owing to her own exhaustive travels and irreverence of more prudent social norms, is actually a married woman and mother. Granted, her failure to reveal these crucial details to her lover are a serious (but separate, I’d argue) matter.

In summary, Up in the Air abounds in giddiness-inspiring scenes for the travel junkie while also provoking serious thought on the very consequential issue of human relationships. It’s a film to which I’ll certainly wish to return in subsequent writing!

16/11: Stocks soar on a bullish retail sales report. Also, words on Wicker Park!

Before this evening's tardy report on Monday's market action -- a happy day, with strong gains in my desk's prop trade -- a few tangential words.

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The past few days, to which some readers of this living document can attest, have seen the author make a significant discovery of a vibrant, uplifting neighborhood just down the life-blood Milwaukee Avenue from more usual haunts. These new environs are Wicker Park / Ukrainian Village. And what an emphatic improvement on my hitherto-frequented portions of the city: Jefferson Park, Portage Park and Six Corners! This near-northwest side district boasts independent, cutesy coffee shops (if one knows where to peek); young, purposeful people on the sidewalks; sushi spots and legacy Polish bars in unlikely side-by-side existence (this area used to be the primo Polish 'hood). I could go on, and should, yet it's a topic for another day.

In sum, I've energized my routine during the last few days by repeatedly returning to this oasis of existential salvation; and upon this fortunate scapegoat and the associated investments of time, the most precious resource of all, I project the blame of my missing Monday report. Yes, such is my story!

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Monday's markets, in any event, witnessed soaring equities trade in the United States and its geographic precursors into the new trading week. A bit of keyboard tickling about these foreign locales and their trading: It's interesting to note that the forex markets, some of which I recently started tracking closely -- (even though I can't trade them at present, currencies' pronounced correlation of late with equities merits keeping a close eye on them and, in particular, upon the 500-pound gorilla of the group: EUR/USD trade) -- are only closed for some 48 hours a week: in roughly New York City time, no trade occurs only between late Friday afternoon and Sunday evening, when Monday morning trade in Tokyo commences. I mention this because, by Monday evening, nearly 24 hours of continuous trade has already elapsed on the world's interconnected, virtual marketplace -- a calming consideration to the trader primarily obsessed with the P/L of the local stomping ground, i.e. Wall Street, only. (I raise a guilty hand.)

Sentiment on Monday was buoyed by a bullish retail sales report released in the pre-market and, in the all-important technical analysis sphere, by the S&P500's durable break above 1100 -- prior attempts in the last few sessions were all short-lived -- and the Nasdaq's flirting with 2200. The last hour of trade, however, brought a sharp, though not menacingly deep, correction catalyzed by the caustic comments of noted banking industry analyst Meredith Whitney, which were carried by that quintessential soapbox of market-makers, CNBC. Ms. Whitney, in her infinite wisdom, -- she did, after all, delphically prophesy the banking industry's existential crisis as early as October 2007 -- proclaimed on Monday that she's currently more bearish on banking than at any time in the last year. Why? I haven't seen any reasoning behind her brash, hyperbolic pronouncement but, then again, missed the CNBC special. (I had seen a teaser and incorrectly assumed the forthcoming would be with the less-exciting Meg Whitman, the eBay founder).

The post-Whitney selling pressure, in any event, did not hurt indices by much more than a half percent, although the bite from the (hitherto soaring) value of my QQQQ calls was nonetheless felt. Whitney, 2; your fearless author, 0. Yes, I was already burned by Meredith once this summer, when my ownership of Goldman Sachs (GS) calls coincided with one of her trademark uber-bearish publications.

Charts shall have to wait for the next installment. In the meantime, a few brush strokes of Ms. Whitney (did I mention she's surely one of Wall Street's most attractive analysts?) --

13/11: Friday the 13th is kind to equity markets

U.S. markets closed-out the week with modest gains. The S&P500 index advanced 6.24 points (+0.57%) to 1093.48 on November 13th while the NASDAQ outperformed with a gain of 18.86 points (+0.88%) to settle at 2167.88.

Intra-day high and low values for the S&P500 were 1098 and 1088, respectively. These levels for NASDAQ index registered as 2172 and 2157. Ten-day, hourly charts for both indexes follow, produced at bigcharts.com:



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Notice, reader, how the NASDAQ has been outperforming the broader market -- a stark contrast to the pullback of late October and early November, when the tech-heavy index lagged the broader market. The NASDAQ, nearly nudging 2170 at Friday's close, is oh-so near its 10-day highs, while the broader market is about a percent removed. Also, the last session's MACD and RSI values for the NASDAQ are more bullish than those for the S&P500. And the 'naz' did not come as close to its 50-period SMA as did the S-and-P during lows of the last two sessions.

Given these observations, I decided during Friday's session to transition from COF puts -- which I unfortunately sold at a slight loss -- into QQQQ December calls. With this move, I'm betting on an advance in the markets and, in particular, in the NASDAQ index, as QQQQ is a so-called exchange-traded fund (ETF) designed to track that index. To conclude this evening's entry, I include a six-month chart of QQQQ for broader perspective:



And to add a post-script tangent, I'm presently moments away from the commencement of a screening of the Polish-language film 'Ile Wazy Kon Trojanski?' (How Much Does the Trojan Horse Weigh?), a 2008 release directed by Juliusz Machulski, at the Polish Film Festival in Chicago. (To readers of the Polish language, apologies about the lack of true Polish script in some of the title's letters.) Perhaps a few words of commentary will follow in the upcoming week?