Wednesday, March 30, 2011
Another impressive day for equities, the S&P continues to charge upward and we will likely revisit recent highs soon. The next two days should be interesting, we have some important figures out tomorrow (Jobless Claims, Chicago PMI and Factory Orders) and on Friday (Non Farm Payrolls, Unemployment, ISM and Construction Spending) so we’ll see how the market reacts to their prints. I would like to add though that in order for Bernanke to press on with another QE he really needs the public and congress to see poor economic figures and “low inflation” ehem core cpi is bs to confirm that they need to continue QE to affirm their mandate. So a lot of times even numbers that miss consensus and look terrible actually have a bullish affect pushing market participants to further drive equities higher in the expectation of continued excess liquidity from the fed.
Anyway WFMI had an outstanding day today closing near its highs again as it did yesterday. The only question is how much further? Tomorrow we’ll see if we can’t push further up, I have a belief that the market likes to push prices to “even” or “pretty” price levels. So if a stock goes to 47 it will likely travel 3 dollars more to 50 or 97 to 100 etc. etc. Obviously this isn’t something we should count on but I firmly believe that WFMI would look damn good at 70.
NRG made a decent move today confirming a breakout, MHP on the other hand painted somewhat of a bearish doji. Right now looking ike more upside in NRG but with MHP the possibility of a pullback is increasing its important to observe though that the doji has a relatively small body and pretty big tails. Obviously today there was indecision between buyers and sellers and no side (from a daily basis) really had control. Therefore this bar could be just a trading range bar. Upside break of today’s high will confirm, a downside break will confirm bearish doji.
Tuesday, March 29, 2011
The s&p confirmed a continued upward move today, early we sold off on some poor economic figures and dove for the 20 ema, but the market it held that level and quickly reversed up and retested the lower trendline, consolidated under and exploded through that resistance. So we now have a nice reversal bar in a bullish trend from the lows put in place on 3/16. Fortunately on seeing that bounce off the 20 ema I unloaded my SPY put and am looking to add SPY calls on a break of today’s high tomorrow.
Of course a rising tide normally brings up all ships NRG and MHP both broke upside resistance. MHP had a very powerful move and I would expect to see strength tomorrow as well. Would like to buy calls in May on both; however I only have so much capital to risk and probably will only choose one. Leaning more towards
One stock I have a call position on, WFMI, I’m looking for more upside on, we broke out of a possible double top on 3/21 and have made highs of 64.33 yesterday and made a two cent higher high today, we nearly broke this level in today’s trading session multiple times, tomorrow we could have a decent breakout of this level and a new high, if we fail and break below today’s low I think the 20 ema will be where we fall and a confirmation of a 2 bar double top.
Monday, March 28, 2011
So in looking for my text books this evening I stumbled across MHP-(McGraw-Hill), interesting ascending triangle-ish(TL 1, TL 3)/ horizontal channel (TL 2, TL 3 [TL=Trendline]), multiple entries on the chart and possibilities, any reversal bar off the 20 ema TL 1 or TL 2, or a break of TL 3 would have me buying calls. On the other side bearish reversal off TL 3 would start to make me feel like a triple top was in and I would begin accumulating puts with breaks of the 20 ema, TL 1, and TL 2 causing me to add to position.
An obvious inverted head and shoulders is seen below on NRG, we tested the neckline on Friday and traded inside that range forming an inside bear bar. A break below the bar should give us a test of the 20 ema and a possible entry if that level holds. A break above tomorrow will likely result in a retest of the neckline. Measured move is approximately $3, looking for a quick swing from the 20 to above the neckline.
Trend line Break on S&P
Reversal Bar Entry off 20ema OR break of Neckline
NRG MAY 11 $21/$22 CALLS
It couldn’t have happened much better today the market ran up early and retested a major downward trend line. A nice reversal bar was painted off this area of resistance on the daily chart. Currently it is my projection that a break to the upside of this line will bring us back to recent highs. However failure as we saw today suggest possibly more downside. Just a couple points below we will smack into the 20 ema and price action around this level will be critical towards how todays reversal bar leads us. A break of the downward trend line will likely have the s&p retesting recent highs. However a break of the 20ema and close below that moving average should pull us back down a bit. Nevertheless we have to see tomorrow’s price action to decide on direction.