The market pushed higher today in fits and starts, and in the end, the Dow and S&P 500 closed down a little while the Russell 2000 - home of smaller cap stocks - pushed to a new high.
Even though the market seems unfazed by the weakness in NZD/USD, it is still worth watching. This currency pair has done a decent job indicating recent turning points in the market.
One stock I don't think I've mentioned before is Bunge. This has made a flag pattern recently. You can make of the pattern what you will:
BTJ has been a recent high-flier that might make a good short candidate:
CRS had a nice breakout a few weeks ago, but this breakout seems to be losing steam in a big hurry. Failed breakouts make great shorts.
Much of the housing sector - - lenders such as AHC as well as builders like BZH - had a nice bounce higher today. I took it as a good opportunity to enter some shorts of stocks that were retracing their head and shoulders pattern to the neckline, such as ESS, shown here.
Honeywell (HON) is starting to lose ground.
....as is Microsoft (MSFT)...
A couple of long suggestions. JetBlue, mentioned here not long ago as a potential buy, looks good. A series of higher lows and agreeable volume trends make this a handsome candidate for puchase.
And Questar (STR), also mentioned in the past, continues to prosper after its well-formed breakout.
In typical fashion, the market did a total spasm when the Fed did their announcement today. First the market fell hard. Then went up. Then fell down. then finally went up again, staying there, and closing up to yet another record high (rolling eyes).
There are a few interesting charts that are busting into new highs off of pretty bullish patterns. One of them is BBD.
Another, with a similar pattern, is Carpenter (CRS):
I'm going to give Sotheby's (BID) another try on the short side.
The market's just going to keep rising until it stops, folks. Nothing more to it. It'll be interesting to see how Friday goes, since there are some key retail figures coming out.
You can thank the good people of United Airlines for my ability to get this post done relatively promptly. My brief flight from Seattle to San Francisco has been delayed three hours. So here I sit on the plane, waxing poetic about this insane market.
By the way, does anyone find this image from the login page of TMobile to be strangely suggestive? (Long, uncomfortable pause). No? I guess it's just me.
Here's the NZD/USD - - what I have to say about it is basically the same as what I've got to say in the next paragraph.....
As long as the dollar remains weak, there's going to be yet another reason for stocks to go higher. Looking at the EUR/USD chart, it's clear that we're at an extreme point, but (obviously) it could push to yet another extreme. This chart, in case it's not clear to you, shows the strength of the Euro (and, conversely, the weakness of the dollar), so mentally invert it.
What's interesting about the market is just how swiftly it has pushed higher. Look at the chart below. I've highlighted each of the most recent three "surges", and as you can see, each surge is happening with greater speed. The two lonely down periods here were last summer (oh, how I miss those days....) and - ever so briefly - about eight weeks ago.
The NASDAQ Composite is still within its rising channel, at the tippy-tippy top. Clearly Apple's (AAPL) sensational earnings will push both Apple and the NASDAQ higher first thing in the morning.
The S&P 500 is clearly above its channel. An overshot, or a whole new ball game? Search me.
If you want a truly bullish picture of the market, take a step back and look at the long-term $XMI. This is a chart of an amazing breakout, a perfect pullback, and a subsequent push to new highs. This is exactly what bull markets are made of. Astonishing.
I have suggested Akamai (AKAM) as a short before. It didn't really perform until today.
I like looking for weak stocks on a day like today, because if a stock can't get it up on a day like this, it's in sorry shape. Check out ATI.
Same goes for Colgate, which actually opened higher. Look at the honey of a bearish engulfing pattern on this one.
CRS, mentioned here yesterday, is failing its breakout, and it fell today on strong volume.
Dril Quip (DRQ), mentioned in this blog before as a buy, continues to perform well. Just about anything to do with energy (either classic or alternate) seems to be zooming these days. I can at least take heart that I am in a natural gas partnership.
General Dynamics (GD) looks like a potential short. It busted its trendline a number of weeks back, and it seems to have double topped today, falling when everything else was rising.
I don't have any particular opinion on GOOG, but it only rose one tenth of one percent today - - pretty feeble, wouldn't you say? I think it may be telling. I'd also point out that all the gains from its fantastic earnings report a few days ago have vanished. Everyone who bought into that rally - even at the day's low - is in a losing position now.
I like Southern Copper (PCU) as a short at this price.
Schnitzer Steel (SCHN) - - man, can you imagine being the receptionist there and saying that name all day long? - - continues to look fantastic as a bullish play. Wonderful strength on handsome volume.
Questar also looks good on the long side.
Given today's action, I'm glad the readers voting to take anonymous comments down. You can imagine what much mud slinging would be going on right now.
I appreciate so many people voting - well over 600 took part in the first "Technical Analysis with Tim Knight" poll, and the results are illuminating.
The first question was to address whether or not anonymous posters should be allowed to comment on this blog. I've flip-flopped on this decision (alone) many times. Sometimes I open it up to anonymous posters, since it increases the activity of the comments section and makes it easy for everyone to post. But then, once a few bad apples spoil things for everyone else with abuse and pointless put-downs, I decide to shut them off again.
So I decided to take this issue to the voting public. Watching the results was like watching a horse race. It was neck and neck for a long time, then "Ban Anonymous" starting to take hold. In the end, the majority voted to eliminate anonymous posters. I guess the verbal fistfights got to be just too much. So.......you have to be a registered user to post here. That definitely means the comments section will be a lot less active, but it will by the same token be a lot more civil.
The next question I asked was how to improve the blog - - unfortunately, I only gave three choices: more index analysis, more stock analysis, or a reduction in the comedy. I didn't include a forth choice, "Everything is Fine", which apparently a lot of people would have checked had they been given the chance.
Those that clicked Other entered nearly one hundred specific suggestions, most of which were along the lines of "Leave it just the way it is." So - - will do!
Finally, out of curiosity, I wanted to see if the readers of this blog tended to be bulls, bears, or simply rational non-animals. It seems that most people claim to be agnostic, neither bullish nor bearish. I guess this is similar to asking whether a person is liberal or conservative, and they answer "economically conservative and socially liberal." It's a nice, safe middle ground. So be it.
In spite of the Dow's strong run today (and its continued attempts to crack 13,000 - - come on, can't you get it over with?!?!?) the Russell is still looking good on the short side.
And the Gold and Silver index continues to behave nicely within its descending channel.
I entered a new short today, CRR.
I don't have a position in CRS right now, but it looks like a potential short, since an otherwise beautiful bullish pattern isn't seeming to catch fire - - added to which, the volume has been slowly dying down for over a year.
I like the looks of MicroStrategy (MSTR) for a short position too.
...same story with MWP. As you can see, I'm using a trip of moving averages to help drive home the waning momentum.
As for ONT, the stock I keep mentioning as a long - - it continues to look good, and on sensational volume. Remember my cautionary tale from yesterday, though.
Lastly, my X puts finally started pushing up in price. It's about time.
Everyone is obsessed with 13,000. As I said, I (strangely) want to cross it. "13k and out of the way", so to speak. I imagine once this barrier is crossed, people will check that off their list and start selling into it.
I know, I know, it's been up. But it's still a bore. Not even two weeks ago, the entire thing was collapsing. Now we're back to the markets just inching around, not really knowing what to do with themselves.
Speaking of boredom, here's my pointless social observation of the day. I eat out a fair bit. I eat a lot of Chinese food in particular - - most of it quite good, since I live in the SF Bay Area. I'd guess I've probably eaten at Chinese restaurants maybe 700 times or more.
I therefore have a pretty good eye about what to expect. Among the stranger phenomenon......which inexplicably bugs me........is the Person Reading At the Table.
Now, if some poor soul is by himself, by all means, read! I'd hate to see a person alone just staring into space. But when you're with a companion.....and typically, it seems to be a wife.....to whip out the newspaper and read it while you await your food is just plain rude.
And it's not like these couples are even exchanging opinions about what they are reading. Only one person is reading, and both of them are staying dead silent. The ignored one - the wife, typically - is just staring into space, probably wondering how she wound up with this total dork. The inclusion of other family members seems to diminish this desire not a whit. Weird.
Oh, yeah. This is supposed to be about technical analysis. Well, my blog, my space, right? But your wish is my command.....
There is formidable resistance around the levels we're at right now. The bad news for us bears is that, should this resistance be broken, it makes an easy argument for the Dow to blast about 400 points higher. I've highlighted the "resistance zone" as it stands now on the S&P 500.
A longer-term view - this one a minute graph of the Dow over the past couple of months - shows there's plenty of upside on the Dow if its only substantial barrier is the underside of that giant broken trendline. Now that would be a real shame. I imagine the bulls have already long forgotten what happened on February 27th. Another few hundred points would make them giddy again. And we all know how nauseating that can be.
The Russell 2000 shows very substantial resistance about the $796 zone, which is where two Fib retracement lines lay in the the same vicinity. A $RUT above $800 would depress poor old Tim mightily.
Just a short ideas to ponder today. CRS on the short side.
MCD also on the short side, with puts being attractive for you option players.
NBL, with a nice RSI signal and a potential double top, another short idea.
PICO, mentioned here a couple of times already, is having a nice run up. (Happily, this was one of my rare bullish suggestions).
I'm more animated and interesting where there's dynamism in the market. Particularly on the downside. Try me again tomorrow. The market muse may have smiled upon me by then. In the meantime, I'd like you to enjoy the adventures of.....Stedman!
Tim Knight founded Prophet.net, considered by Forbes and Barrons to be the #1 technical analysis site (sold in early 2005 to INVESTools, where he is the SVP of Technology now). Tim has been trading actively since 1987 and focuses mostly on option positions. He is a dyed-in-the-wool technician, leaning heavily on marked-up charts for his analysis. The contents of this blog are NOT to be considered investment advice, and you should know Tim may or may not have positions in the securities mentioned here.
