Global Trading Blog
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Dear Subscribers:Market halted its decline today and reversed its losses as it reached a short term oversold condition for the third time in just a few weeks. The 150 day moving average served as support in the Nasdaq Composite. There is a change of character. As the market trended higher and things were going well, we saw the market reach overbought conditions and remain in the higher ranges of its oscillator. Oversold conditions were quickly bought.Now we have become short term oversold a few times and the bounce have been weak and short lived. The weakness in the market has ... -
Dear Subscribers:We are seeing some positive developments today.The S&P 500 has bounced from short term oversold conditions (as it should if it really is in an uptrend) and it has now broken to the upside the short term downtrend that has halted rally attempts as of late.This is a positive and it could be the start of new up stage for the markets.It would be ideal to see the market close near the highs of today and with accumulation, that is, high volume that hints that institutional investors are behind the move. A negative is that indices such as the ... -
Dear Subscribers:Today the market is bouncing from the oversold conditions we mentioned on yesterday's update.Most major US indices hit their lower bollinger band at 2 standard deviations and their RSI marked short term oversold readings. We are also seeing a positive divergence here.In an uptrend we can expect a reflexive bounce from conditions like this.However we are facing resistance once again here in the S&P 500 and in the Nasdaq Composite, the 50 day moving average. Macro data gave a hand today with a very positive reading in the Unemployment Claims which has reached its lowest level since February of ... -
Dear Subscribers:The market has continued to move lower after Friday's selloff.As we warned on Monday, we could be entering a pullback-corrective period in stocks.Yesterday's selloff was pretty potent and logged additional distribution days on the major indices. This is big money getting out of stocks and can move the market downward in a significant and prolonged way.The uptrend that started back in June 29th is now under pressure. The Russell 2000 continues to underperform. Remember that we want to see strength and outperformance in the Russell 2000 or Nasdaq Composite for the bullish trend to resume.Today we reached some short ... -
Dear Subscribers:Friday was pretty bearish day for the market as we failed to breakout and then revesed from the old highs in the S&P 500 and Dow Jones Industrials.Broader indices such as the Russell 2000 or Nasdaq Composite didn't even reach the old highs before reversing, a bearish signal.We have seen a loss of momentum during the last weeks and only 3 components of the 36 that make up the market monitor are showing rising momentum.Thus I think it is a good time to cut down trading positions, be more selective if taking trades and adopt a "wait & see" ... -
Dear Subscribers:The bullish reversal from the lows in the market that we saw yesterday extends into more gains today after a round of bullish macro data. The ADP Non Farm Employment & ISM Non Manufacturing PMI beat expectations. However they still show bearish charts which show that the economy isn't strong. The S&P 500 is still under the short term downtrend that has been acting as resistance. Momentum is also trending downward. Look for a breakout over these trendlines for a new phase of the rally to occur. Overall things look bullish technically and the market has just pulled back ... -
Dear Subscribers:Today the market received some pretty dissapointing macro data that only confirm that the economy is weak, which shouldn't be a surprise. Especially dismal were the numbers of Core Durable Goods. The Final GDP for the second quarter was revised downwards with an anemic 1.3%. However a weak economy is old news and the market focus was set in Spain as the government would approve and release the budget for 2013.Budget cuts were approved and tax hikes were avoided. The market reaction was favorable as this increases the odds that the ECB will print Euros and shore the spanish ... -
Dear Subscribers:Today we had a very macro intesive day but data was in general better than expected.CB Consumer confidence and Richmond Manufactoring Index beated estimates by a wide margin. The S&P Home Price index continues to edge up, this month reaching a positive reading year to date. Home prices have increased this year and thus the housing bottom looks more solid month by month.As noted above, the CB Consumer index posted a much better than expected reading and edged upwards substantially. Overall the economy has been improving a bit and the odds of a recession have been lowered this year. ... -
Dear Subscribers:The market continues to act bullish and breadth has improved worldwide as many different markets or assets are breaking out / setting up bullishly.As I mentioned in the last update, the market is a bit overbought short term so we might consolidate or pullback a bit here but overall, longer term momentum seems to be building into equities as the "risk on" trade is on.We should continue to see the Nasdaq Composite or the Russell 2000 outperfom the S&P 500 or Dow Jones industrials to mantain the bullish tone. The macro calendar for this week has some important releases. ... -
Dear Subscribers:The market had a bullish reaction to yesterday's announcement by the ECB in which it affirmed that it will renew bond purchases of PIIG countries in order to control and lower their interest rates.The only condition for this to occur is that the alleged PIIGS countries must ask for a bailout and follow the austerity standards set by the EU.Now its up to the bigger PIIGS, Italy & Spain to formally ask for a bailout and thus allow the ECB to print Euros to shore up their debt. The S&P 500 broke out to new 4 year highs as ... -
Dear Subscribers:On Friday the market recovered most of Thursday's losses. Ben Bernanke didn't commit to an specific date to launch a new QE program but he left clear that it is in the table and the FED will probably act sooner rather than later.The S&P 500 and other major indices are still trapped in the consolidation area of the last couple weeks, just beneath the old yearly highs.There is still no resolution but we saw a bunch of accumulation days on most major indices, that is, that institutional buyers were buying in volume which is positive. What really moved and broke ... -
Dear Subscribers:An ugly day in the stock market today as investors turn to risk off mode before the much awaited "Jackson Hole" conference.The market is expecting that some new monetary stimulus will be announced in this conference and some profit taking might be occuring in case Bernanke dissapoints.Most markets are negative and our stock watchlist is also in a sea of red, something we haven't seen a while.Technically things are not looking pretty as the S&P 500 looses its 20 day moving average and the 1400 level. Concerns over Europe is touted as the culprit but there isn't much in ... -
Dear Subscribers:I'm back from vacations. I needed some time off to re-energize and re-focus.In respect to the market, it remained consolidating at the May highs until last Thursday when it broke out and made a move to test & break the yearly highs.However sellers quickly appeared from the overbought conditions and rejected the market from those levels.We have now pulled back once again to the May highs and we have to see if the pullback will continue or the market will launch another up move from here. The move to the new highs has been narrow in breadth. The up ... -
Dear Subscribers:For the moment we are seeing a change of character in the market compared to other times it got short term overbought during the previous months.Instead of selling off sharply and reversing most of the advance, the market is consolidating in low volume near the highs.The internals have shown a slight bias towards buying, with no strong selling pressure.It would be healthy for the market to drift sideways for one more week or so in order to relieve the overbought conditions we reached last Tuesday and more setups to appear. Something that might be hinting for a negative development ... -
Dear Subscribers:First let me apologize for not updating the site as frequently as I do this week.I was affected by a bad flu and wasn't feeling well, thus needed to take some time off.However, I have been monitoring the market closely.The chop fest market once again showed its dramatic nature on Friday as it did a sharp U-turn and erased four consecutive days of selling with big gains after a better than expected Non-Farm Payrolls report.Since then we have had two positive up days that has brought us back to the yearly highs and the S&P 500 over 1400.If the ... -
Dear Subscribers:The market mantains its choppy behavior. There aren't strong trends and the movements are news driven.The market internals show confusion, with most indicators neutral or mixed.On Wednesday the FED dissapointed as it didn´t announce QE. On Thursday the ECB central bank dissapointed as it didn´t announce new agressive monetary measures to stem the Euro crisis.This has caused the market to fall consecutively for four days this week and once again chop and stop all the traders that bought the rally. The maket has logged some distribution days and today the Nasdaq Composite falls below its 150 day moving average. It ... -
Dear Subscribers:Challenging, volatile, news driven, choppy conditions continue to drive the market.After failing to make new highs the market tanked for 3 consecutive days.Yesterday it found some support at the 50 day moving average and today a sharp rally is ignited due to comments of the Mario Draghi, president of the European Central Bank.Draghi says he will do everything in his power to mantain the Euro, sparking a powerful short covering rally which is now starting to fade.Technically we are holding the 50 day MA and making a higher low, but due to the chop fest, this could hardly be ... -
Dear Subscribers:The market continues to rally from the lows with a buy the dip mentality that we started to observe since the end of last week.The advance has been concentrated this week in technolgy stocks while other indexes have lagged. The strong hands have not been strong buyers, but the market monitor remains in a general uptrend. Yesterday we also got an accumulation day in the NASDAQ 100 which is a positive.I would like to see a broader advance in which the Russell 2000 or NYSE lead the charge. It is concerning that up thrust breadth is narrowing. Macro data has been ... -
Dear Subscribers:We are ending a choppy week in which the market had 6 consecutive down days but with very volatile action that with a lot of reversals from the lows. Despite all the movement, the market is ending the week flat. The market internals have deteriorated substantially and the uptrend is under pressure, however today's action is more positive with a big rally from support.Yesterday the market closed the gap from the big June 29th rally, broke support and then reversed. I see this as bullish as longs get more discouraged and stopped out ( adding fuel for a positive move ... -
Dear Subscribers:The market sells off today on a dissapointing Non Farm Payroll report, making it the second down day in a row.For the moment, I see the current pullback as the market working off overbought conditions and catching up to its 20-50 day moving averages.The Volume-Breadth trend is positive which signals that uptrend is healthy and the "strong hands" are buyers. We still have no distribution days in the major US indices which is still positive.The current pullback if we remain in an uptrend will be a good opportunity to add some new positions at better prices. As for the Non ... -
Dear Subscribers:Stocks and markets worldwide got hammered yesterday.This technically caused the "Market Monitor" to issue another sell signal and end the questionable buy signal we had gotten.As I have mentioned week after week, we are in a trading environment filled with land mines. Uncertainty and risk are high with the ongoing Macro slowdown across the globe plus the Europe fiscal and banking crisis. However it is not easy to just go short as central banks and politicians are obsessed with monetary easing and bailouts that cause violente "rip your face rallies". It is a market for only the extremely quick where profits ... -
Dear Subscribers:I know that I have been repetitive about the weak Macro issue and the high probability of the US entering recession but yesterday we saw a clear example of why I have been so insistent on this subject.The new technical uptrend got hammered after a string of Macro misses from the US economy. Adding insult to injury, Moody's downgraded a series of spanish banks that added power to the sell off. The Philly FED Manufactoring Index was the most disturbing, entering firmly into negative territory which indicates economic contraction. The only positive surprise was the CB Leading Index which ... -
Dear Subscribers:Today the markets were up in decent volume and breadth improved.This technically means that the trend is getting stronger and "should" be more stable going forward. The S&P 500 crossed over its 50 day moving average but did not get another accumulation day. The breadth and participation of the "strong hands" is improving but note that the market has reachend and overbought condition. If you look at another momentum indicators such as the McClellan Oscillator you will see that short term we are extremely overbought. The market is putting very high hopes on a new Quantitative Easing or some ... -
Dear Subscribers:After Friday's rally, the market triggered a new technical uptrend.The Nasdaq Composite had a second accumulation day after the the low established the 6th of June which indicates that some buying pressure is entering the market and a new uptrend is emerging. We didn't have confirmation from the S&P 500 with another accumulation day. Also the Nasdaq Composite and other indices will be facing stiff resistance of important technical levels and the 50 day moving average. The buying pressure, looking at the internals through the market monitor, is still weak and thus the strong hands are not buying agressively ... -
This week all the important macro releases came out with readings that were worst than expected. Since early February, macro data has been missing expectations and we saw the effect earlier this year with a very weak GDP growth for the first quarter of only 1.9%From then on things haven´t improved and Macro misses have continued. Leading indicators such as the ECRI Weekly Index or the CB Leading (rate of change) have turned negative. ECRI co-founder Laksman Achuthan states that the recession has probably started but isn't evident at the moment. Watch interview here. If we just take a look at ... -
Dear Subscribers:Today was a good example of how being systematic and having the discipline to follow your model is critical to have a chance of success in investing / trading.In the current market environment, filled with rumors, bailouts, monetary intervention and banking fraud it is even more important.I wrote last night on how silly this "Spanish Bailout" was and how it opened the door for more problems as other PIIGS will probably revolt to get a similar deal as the one handed to Spain.Also there are elections occuring in Greece this weekend and the party that opposes to the European ... -
Dear Subscribers:Last week the market reversed from the lows and a technical break down. Stocks ended with a bullish tone with the best gain week over week for 2012. During last week's bounce, we even got to see an accumulation day on Wednesday, which hadn´t occured since late April.With another accumulation day, the market will generate a new buy signal as a new uptrend should be starting. At this moment the S&P 500 futures are up 12 points because Spain requested a $125 bailout package for their banking system.Adding more debt to an over indebted system/country seems to be the ... -
Dear Subscribers:It is risk on today as QE rumors increase after FED Evans called for more easing last night.Together with this, there was a "step forward" in Europe to create a "Bank Union" that would make the sector more "responsible".The Bank Union would include tighter coordination between the regulators and a bail out tool in which banks would be recapitalized while shareholders are wiped out and bond holders would get cut in their claims and converted into share holders.Technically the market is making a big move with 100% of the components of the market monitor, showing that is a risk ... -
Dear Subscribers:Yesterday the market was smacked was selling on higher volume and technically the downtrend seems to have resumed.The weak buying spurts since the May 18th oversold signal showed us that there wasn't strong buying behind the move and that the market was vulnerable.Yesterday we got a sell off that had mild sellers but the ratio between buyers and sellers was extremely bearish. Take a look at the market monitor to glance at the internals: Technically we have breached the 150 day moving average and it looks like the October 2011 highs & 200 day moving average are a probable target ... -
Dear Subscribers:Macro data this week is not lending a hand.The most important releases due today; Unemployment Claims, Chicago PMI, ADP Non Farm Employment were worst than expected.The fourth quarter GDP was revised downwards to meager 1.9%.The Chicago Purchasing Managers reported the May Chicago Business Barometer decreased for a third consecutive month to its lowest level since September 2009. The short term trend of the Chicago Business Barometer, and all seven Business Activity indexes, declined in May. Among the Business Activity measures, only the Supplier Delivery index expanded faster while Order Backlogs and Inventories contracted. Unemployment claims are starting to move ... -
Dear Subscribers:An interesting chart from Sentimentrader.com today.Risk aversion is hitting a short term extreme and bottoming action has been since from similar readings.Evidence is mounting that is a bottom has been reached or is near.If you look at a chart of the S&P 500, 1342 seems like a probable area that this bounce will reach before some strong resistance will come into play. However notice that there has been no accumulation since April. This confirms that the "strong hands" are not participating in the bounce. For a new uptrend to begin we need to see some accumulation and stronger breadth & ... -
Dear Subscribers:Yesterday we got a sharp upside reversal during the afternoon. The S&P 500 managed to close over its 150 day moving average and close positive.This technical action is positive and high volatility is to be expected as bottoms are formed.Just remember how crazy the market was during the August-November 2011 when the market bottomed.However, the Market Monitor is showing weak buying. The strong money is still not entering the market. We can interpret the current action as timid buying or short covering. When we get a very strong up day, with 800 or 1000 stocks being accumulated, that will be ... -
Dear Subscribers:Doing some macro catch up today. Macro data has been in general better than expected during the last couple of days. These are valid fundamental excuses to buy the market from the current oversold levels which are being dampened by the Greek-Euro situation. We can see that the US economic surprise index has stabilized. Housing data has been better than expected and supports the idea that it has bottomed and recovery is gaining firm footing. Retail sales was the big dissapointment which came under expectations and last month was revised lower. Empire State Manufactoring Index also came in better ... -
Dear Subscribers:Today the market was unable to rebound from the Oversold signal of the Market Monitor.There was a feeble attempt to rally on some better than expected macro data but the situation in Europe (Greece) got the most out of investors and the market sold off in the afternoon.EUR/USD has been very weak which helps drag down the market.I think we have one more day of selling left, in which panicky sellers appear, before a short term tradable bottom occurs.Selling pressure has increased during the last couple of days but with still need to see the market "vomit" everything in ... -
Dear Subscribers:Market has remained in a weak downtrend for the last 11 days.Sellers have control of the market but they haven't shown real power as of yet.The indices have mostly held the support created by March's lows and at first glance, there hasn't been much damage as of yet. However, beneath the surface a lot of stocks have corrected by large amounts.A bunch of leading stocks have been hit hard, falling more than 40% in some cases after earning reports.Support has held but the market isn't strong.A bit more selling and support will fall and downside will accelerate.I believe there ... -
Dear Subscribers:Another day of dull market action. Sellers are controlling the action but they haven't made a poweful move.Breadth is almost balanced between Accumulation & Distribution.For the market to really break down, we need to see selling with more conviction and volume.The Market Monitor reached a 90% oversold condition intraday and staged a bounce, just like the other two previous days. It ended the day with an 82% oversold reading which is a bit below an extreme oversold (starts at 85%). It is holding support from March lows and thus we could see a rebound from here.However, it is very ... -
Dear Subscribers:Market is gapping down 15 points at this moment after socialist Hollande wins the presidential election in France.Hollande promises lowering retirement age to 60, raise taxes to 75% to people who earn over 1.3 million USD a year and stopping austerity.This in my opinion is demented, especially given the fiscal condition of Europe and France.I think bond vigilantes will have a feast with French government debt and the European crisis might start to worsen from here.Technically the market started a bounce from ultra oversold conditions on April 11th and a buy signal was generated in April 25th. However breadth and ... -
Dear Subscribers:Market ends the week with a sharp sell off that terminates the uptrend signal from April 25th and causes the S&P 500 and Nasdaq Composite to breakdown below their 50 day moving average. This week we got the scenario that we didn't want to see as I highlighted on Monday's market comentary. The culprit of the break down has been the non stop macro misses coming out from developed economies. Since the uptrend started last April 25th, economic news have been very bad yet the market held up ok and continued higher until mid week.However the selling pressure caused ... -
Dear Subscribers:Macro releases continue to miss expectations. During the beginning of the European session we got very bad numbers from the manufactoring PMI's from Italy, France, Germany and Spain.Germany posted its worst number in 33 months.This stopped the risk appettite rally that was starting in the Asian session after a better than expected Chinese PMI number.The US data released didn't help much as ADP Non Farm Payrolls missed expectations by a wide margin with a reading of 119K vs 178K that was expected. Last month's reading was revised lower to 201K from 209K. We can see that the G10 Economic ... -
Dear Subscribers:It seems that today we will have another follow through day with high volume in the market.A better than expected ISM Report lifts the S&P 500 to previous highs/resistance. Yesterday we saw action that we didn't wanted to see, as I highlighted in the previous update.The market fell a bit but in higher volume, creating a distribution day. This means that institutional investors were behind the selling and this is never good at the start of a new uptrend.Today we want to see the opposite action to give firmer footing to the rally: Big gains with higher volume.From the macro ... -
Dear Subscribers:After the last housing data was released, there has been a lot of bottom calling in real estate by some economists and pundits in the financial media.Let's take a look at the housing economic series & stock market ETF's with technical analysis and see if we can support the housing bottom call. Housing has been the weakest sector in the economic recovery and if it starts to trend up it will surely help boost the current anemic GDP growth. Building Permits:This series seems to have bottomed. We have a clear double bottom pattern & the 6 month moving average ... -
Today we had more macro beats than misses, something that hadn't occured in a long while. Home prices continue to sink to new "post-bubble" lows. The S&P/CS Composite Home price index fell 3.5% which was in line with expectations. Housing continues to be the weakest link in the US economy and I think that a new FED intervention, if it occurs, will be directed to "revive" this market. Richmond Fed Manufactoring Index beat expectations with a reading of 14. The survey showed that Manufacturing activity in the central Atlantic region advanced somewhat faster in April following slower growth in March. Looking ... -
Dear Subscribers:A series of worst than expected macro releases during the European session plus political news, with Sarkozy losing first round election to socialist Hollande and the Dutch government entering crisis, has caused the market enter into risk off mode.At this moment 100% of the "Market Monitor" is negative, with Germany, gold stocks, silver, China and emerging markets leading the downside. The S&P 500 is testing April's lows, something that I have mentioned here in the updates as probable. The bounce from the ultra oversold conditions was very weak and lacking volume. Highest turnover has been observed in down days for ... -
Dear Subscribers:Today´s macro data once again dissapointed. Everything missed expectations with the exception of the CB Leading Index which was marginally better. Spanish yields rose but the amount of debt emitted was also higher than expected.Unemployment Claims rose once again and last week number was revised higher. They have broken over their 30 week moving average which is a bit concerning. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 2.6 percent to a seasonally adjusted annual rate of 4.48 million in March from an upwardly revised 4.60 million in February, but are 5.2 percent ... -
Dear Subscribers:Today we had a lazy and mixed in the market. Movement was very slow and choppy, volume remained low but a bit higher than yesterday.We still don't have a move higher with strong volume that would confirm a new market uptrend from the rally attempt that started in April 11th from ultra oversold conditions. Since late February we have seen higher volume in down days than in up days. This caused the uptrend that started in December 20th to be under pressure and finally ended it on April 3rd. In the current rebound from the lows, higher volume has also ... -
Dear Subscribers:The market yesterday entered in a "panic selling" mode.We basically sold off straight down all day with no bounces at all despite being oversold in a daily timeframe and ultra oversold in a short term time frame.The sell off pushed the already oversold technical indicators into ultra oversold levels that we have only seen in other important panic sell offs like last year during the European crisis.Of course the market can keep on moving lower but the odds for a bottom or strong bounce from here are very high if one analyzes the past market behavior.Pictures tell more than ... -
Dear Subscribers:With today's gap down the market has become oversold and there is a high probability we will get a meaningful bounce from the current levels. A variety of important momentum/breadth indicators have become oversold and historically we have seen strong rebounds from similar readings.Last time all of these indicators were this oversold was on November 24, 2011.From the lows of that correction the market bounced 9.4% Also, the S&P 500 has support from its 50 day moving average and bollinger bands, increasing the probability of a bounce here. Market Monitor: Mclellan Oscillator: I also found an interesting stat from ... -
Dear Subscribers:I good blog from a very good trader, Darrin Donnelly, from the Darvas Trader website. How to Eliminate Trader Stress by Darrin Donnelly on April 5, 2012 How to Eliminate Trader Stress Trader. Stress. The two words have become forever linked to each other, largely due to the stereotypical image of what a trader is and how a trader acts. You know the stereotype. The 20-something testosterone-fueled Alpha Male who sucks down a Red Bull every 15 minutes and lives off adrenaline. His days are spent maniacally screaming and bullying his way through Wall Street trading rooms while his ... -
Dear Subscribers:Yesterday's technical uptrend ended. This move that started on December 20th was finished after indices were hit with significant losses (Nasdaq lost 1.5%) and new distribution days.The S&P 500 and Nasdaq managed to barely hold their 20 day Moving averages. The Nasdaq Composite couldn't break out over its 50% retracement from its 2000 high. The Russell 2000 staged another fake breakout and fell through to its 50 day moving average. How deep will this correction be? Who knows?If we are in a true bull market, the indices could fall 3% to 5% from their highs. If it is the ... -
Dear Subscribers:Yesterday the market popped to new yearly highs thanks to a better than expected ISM Manufacturing PMI.The move to new highs wasn't extremely powerful as the previous ones @ 1419 in the S&P 500 were barely breached. Volume was below average which hints a lack of conviction and participation of institutional buyers. The Russell 2000 via the IWM is trying to break out once again but with average volume and with a limited price move. The IWM needs to hold this level or probably we will fail and have a deeper correction from this breakout attempt. Macro data today ... -
Dear Subscribers:Mixed macro data was released today to end a week of dissapointing economic releases. Personal Spending jumped today over expectations but personal saving declined.From Calculated Risk: This was a sharp increase in spending in February (and January spending was revised up). Using the two-month method, it appears real PCE will increase around 2.0% in Q1 (PCE is the largest component of GDP); the mid-month method suggests an increase closer to 2.9%. Chicago PMI had a slightly missed expectations but market its fifth month over 60 which is positive. UOM Consumer Sentiment was revised higher to 76.2, breaking out of ... -
Dear Subscribers:First I would recommend to read this excellent analysis of yesterday's market action.A lot of gaps were filled but the market then rallied from these levels and that is bullish. The S&P 500 managed to close over 1400 and the Russell 2000 is barely holding this week's breakout. Read article here. Another positive, asides from the indices bouncing from their gap fill, was that volatility had big gains until the afternoon were it reversed to end negative on the day. A big reversal in volatility hints that fear is under control.With all the positives already explained lets focus on the ... -
Yesterday I read a couple of blogs about copper from two respected traders/analysts.Peter Brandt is bearish on the Red Metal while JC Parets from All Star Chartsis bullish on copper. Based on my analysis and looking at the charts of copper and the stock markets of the two biggest copper producers in the world, Chile and Peru, my opinion is that technically copper seems to be set up to move higher.Let's start with the chart of copper. It seems to be forming a symmetrical triangle with price currently trading over its 20-50-150 day moving averages. Volume has been the highest on ... -
Dear Subscribers:Markets broke out today with force.Many new breakouts occured in leading stocks while others kept advancing from breakouts that occured during the last couple of weeks.Volume in general increased in the major indices.Last week's overbought conditions (65% of the market monitor was overbought. See it here) found relief with little price erosion and most indices setup bullishly for this week. Knowing that, today's strong advance shouldn't have been a surprise.Lets look at a few charts:The S&P 500 reached new highs and seems set to reach the May 2008 highs at 1437 which should provide resistance short term. The Nasdaq ... -
Dear Subscribers:Today the market opens weak for the fourth consecutive day as Chinese & Euro Zone PMI show economic contraction. These industrial production numbers are trading below 50 in both cases and any number below this threshold implicates an economic slowdown. Read more about the Chinese slowdown here. Today we see more weakness than yesterday as a lot of important indexes such as the Russell 2000, S&P 500, Dow Jones Industrials and semiconductors have made new lows today. In the other hand, the Nasdaq remains the leader and is holding previous lows.Leading stocks are weaker today but for the moment nothing ... -
Dear Subscribers:Today we get another weak opening in equities (3 in a row) as Existing Home Sales comes slightly under expectations and the market relieves some technical overbought conditions, allowing moving averages to catch up.However unlike yesterday, most leading stocks are acting well and showing strength.Many major indices are testing yesterday's lows at this moment or making new lows. However the leaders are strong and we are seeing good gains and new breakouts across the board.This is a positive divergence. But technial leaders are strong: The momentum run without corrections that we have witnessed has been remarkable and a rare ... -
Dear Subscribers:Equities open weaker amid "China concerns" fearing a larger than expected slow down.Steel production is slowing according to BHP Billiton and China raised fuel prices by the most in two years.The China ETF (FXI) gaps down today below its 200 day moving average. Weakness is seen in commodities, emerging markets, miners and precious metals. Yesterday we got some positive action in the US indices with good gains in the Nasdaq Composite and especially with the Russell 2000 which finally broke out from its consolidation/resistance pattern to new highs.The Dow Jones Transports couldn't manage to breakout from resistance.Today the Russell ... -
Dear Subscribers:Yesterday we got a new high, supported with volume, in some of the major US Indices.After the sharp and fast correction early last week, the market has erased some of the technical dangers with this powerful new high that shows accumulation.The S&P 500 managed to close over 1,380, the Dow Industrials over 13,000 and Nasdaq Composite over 3000. All of this is positive and bullish.The new highs in the market were powered by a lot of breakouts in leading quality stocks.If you check this week's watchlist you will see that great number of the stocks broke out and exploded ... -
Dear Subscribers:Markets open slightly weaker today around the globe concerned on a large trade deficit posted by China of $31.5 billion. Emerging markets, commodities, silver and gold stocks are hit the most by this announcement.Last week we had a positive bullish reversal on most major markets. While the price action was bullish, volume was lacking.We are still observing some technical deterioration and momentum starting to wane which are risks that need to be considered.Bullish setups should be taken but with more caution and lowering the position size.A breakout of the S&P 500 to new highs with good volume would remove this ... -
Tuesday's selling had no follow through and the S&P 500 is now higher for the week, erasing all the weakness. The semiconductor index (SOX) and the Russell 2000 (IWM) bounced from their 50 day moving average and showed strength. Remember that this two indices were lagging and causing a negative divergence in the averages. The market's strength is remarkable and it has been helped with good US macro data plus that the Greek debt situation remained in control.Leaders have been acting well and forming good consolidation patterns and started to break out yesterday which is bullish.However, some risks persist. We ... -
Dear Subscribers:The finished with a clear reversal and distribution day yesterday after making new highs.There have been 4 distribution days in the NYSE, 3 in the S&P 500 and 2 in NASDAQ.Remember that a distribution day is were selling volume is higher than day prior. This indicates that big players were selling.Usually 5 distribution days during a 4-6 week period will trigger a meaningful market correction.Yesterday's sell volume in the S&P 500 was higher than its 50 & 150 day moving average and highest since 12/16/2011. Still we haven't seen real market weakness and the grinding up trend is still ... -
Equity markets have been holding their highs or correctly slightly this week but much more interesting moves have been observed in the currency markets where a strong "risk on" trade has been in place.From a record net short position, EUR/USD has been ramping higher with a small hiccup in early February. Shorts are getting hammered and during the last couple of days, they have been running for the exits in despair as the up move has gone vertical. A lower USD traditionally helps equity markets, commodities and precious metals. We have seen the strong moves in Gold and Oil this ... -
Dear Subscribers: The market uptrend has remained in place and indices have kept creeping higher despite overbought conditions and technical divergences.Here I will highlight some of the negative aspects that other analysts and myself have noticed in the major market averages which suggest that a meaningful pullback is near. The Russell 2000 is one of the major indices is not confirming the new highs reached yesterday in the Dow Jones Industrials or the S&P 500. We can also see how its RSI is pulling back. If you are a student of the "Dow Theory" it will be evident that the ... -
Dear Subscribers:Markets reversed yesterday on higher in most major indexes. This is a distribution day in were big institutions were most likely sellers.One day reversals are not accurate predictors of market direction but yesterday's action was bearish and could be the start of something bigger. This was more evident or dramatic in the NASDAQ 100 in which Apple weights 20% of the index. The sharp reversal of Apple in high volume translated into an ugly reversal in the NASDAQ 100 Index. Today we are getting a bounce back to 1350 resistance reversing the losses from the futures market due to ... -
Dear Subscribers:Today people were going crazy about Apple in Twitter.One notable trader wrote: "Buy AAPL and the leaders and head to the beach" That was early in the morning.What happened is that AAPL reversed hard in very high volume in the afternoon and booked and over 2% loss.If AAPL break down, expect the market to follow lower. Best regards, Victor Riesco -
Dear Subscribers:The tug of war between Bulls & Bears continues at the 1350 resistance in the S&P 500.There have been some attempts to breach this level during the pre market futures and during normal trading but bulls have lacked the power to break on through.However, we have seen some very good performance in leading stocks and mega leading stocks such as Apple. To get a real pullback we will need to see this stocks start to break down. Also a divergence is building between the EUR/USD and the market. Normally they move in sync but since last Friday the EURO ... -
Dear Subscribers:For the moment, the winning streak in the market is being halted at resistance.The market has not been able to breach the 1350 resistance area from its overbought conditions.Today news from Europe are the excuse to sell. Bailout money to Greece was delayed until next week after euro-zone finance ministers demanded the country's parliament first approve another round of deep cutbacks. Copper falls over 2% and retests its 200 day moving average. Losses in copper show risk aversion. For the moment, everything is going as expected. I have warned about this pullback during this week and we have positioned ... -
Dear Subcribers:Buyers continue to appear in the small dips the market is giving.Weakness on Monday quickly faded and yesterday the market advanced slightly.We are hitting the 1350 resistance area which has proved to be a tough area for the market.2011 highs were achieved at these levels and it will be tougher for the market to continue to grind higher from here. A pretty steep trendline has been playing out since mid December. I would watch for a close on stronger volume below this trendline as a signal that the market will pullback with more sharply. Also the Dollar Index's momentum ... -
Dear Subscribers:Market has difficulty to continue its advance and reverses the small gains it had achieved near the open.As we have mentioned during the last couple of weeks, the market is overbought and focusing in profit taking rather than buying should be the norm.Despite the FED's bullish FOMC statament, with low rates at least until the end of 2014,the market is struggling to move higher and it seems other market participants are profit taking into the good news. A variety on sentiment gauges are suggesting that an important pull back is due.The % of assets of leveraged traders in money ... -
Dear Subscribers:In an almost copy-paste FOMC Statement from previous months, where the FED sees still a weak recovery and high risks due the situation in Europe, low rates until at least late 2014 were assured for the market.This was interpreted by most market participants as a form of QE 2.5. The market reverses its losses and the EUR/USD which was down for the day spikes higher and challenges its 50 day moving average.Breaching this resistance will probably accelerate the short covering rally that is occuring in this currency pair. The S&P 500 is overbought but has been consolidating in a very ... -
Dear Subscribers:Market continues to make new highs in a risk on day where every asset of the market monitor is positive.A supposed deal between Greece and its creditors supports European stocks and the Euro which lifts US stocks in the american session.The market is now overbought and making new stock purchases is riskier. My focus is now centered more in profit taking rather than buying.That being said, technically the market seems to be headed to the 1340-1350 area in the S&P 500, which were previous highs and should act as a magnet. The EUR/USD short cover is on its way. ... -
Dear Subscribers:Yesterday we saw various indices that were lagging or hitting resistance, breakout higher.The NYSE composite managed to close over its 200 day moving average, the S&P 500 made new highs and the PDP (the technical leaders ETF) also managed to close decisively over its 200 day moving average. Perharps more important, the Nasdaq-100 (or QQQ) is trying to break out over a 11 high-resistance in which it failed to move higher during 2011 in 7 attempts. It is positive that innovative-tech driven companies lead the rally and if we get a decisive break out over 11 year highs I ... -
Dear Subscribers:Today the market gaps fueled by higher than expected growth in Chinese GDP. Emerging markets, commodities and Brazil lead the rally today on these news.Also today we got a positive Spanish bond auction. The market has completely ignored the S&P downgrades on France, Austria and the ESFS bailout fund. I think is a positive that the market stops paying attention to this rating agencies which have shown during the last 5 years or so to be most of the time wrong and late in ther risk classifications. The market has given up a big part of its gap up ... -
Dear Subscribers:Markets sell off today, something that hadn't occured in a while.Europe comes back as the culprit after a time in which it "didn´t matter".Before the open the market begun to sell off on rumors that S&P wias downgrading some European countries. This rumor is now confirmed with Austria and France losing their AAA rating and downgraded to AA+ which is only one notch. The EUR/USD which was rallying after recovering the lower trendline of its downward channel reverses hard more than 230 pips and hits new lows for the year.New longs buying the technical breakout got caught and hammered ... -
Dear Subscribers:Markets remain firm and now the S&P 500, Dow Jones Industrrials and the Russell 2000 are trading their october highs. However the NASDAQ Composite, NYSE Composite Index or Emerging markets are below this level. This is an overall negative divergence in the market as the new highs are not being confirmed by most indexes. We are observing some negative divergences in the indexes that are making new highs.For example the S&P 500 has a lagging Advance/Decline line and Mclellan Summation Index. Both of these breadth indicators are below the October highs. Also sentiment in the option market is pretty ... -
Dear Subscribers:Markets remain trading near their october '11 highs but are losing some momentum and unable to gain traction over this resistance.Friday, despite better a better than expected non-farm payroll, we couldn't take out October highs in most major indices. Also the EUR/USD remains very weak and trading below 1.30. A weak Euro and strong dollar is usually a bad combination for stocks and other assets.Leading stocks remain relatively strong and we are entering a generally bullish time of the year which is earnings season which is a positive.However, until we get a coordinated breakout on the important indices I ... -
Dear Subscribers:Market continues to digest the gains produced by Tuesday's gap up.Today focus got centered once again in Europe as equity markets in the old continent slide due to worries related to bank capitalization and mixed French Bond auction where yields rose.The EUR/USD tanks more than 150 pips and trades at a 15 month low. The Dollar Index rallies and is trying to break out, hitting resistance at 22.60 in the UUP. Normally you would think that with this news the market would be tanking over 2% as it had occured before in similar occasions. Not this time. Markets have held very ... -
Dear Subscribers:2012 starts with a bang with investors and traders getting into their bull suits.Major US Indexes gap up higher over 2% and world markets around the globe are rallying.We got some positive macro data today for the US with the ISM Manufactoring Index showing a stronger than expected increase in December. Also Europe has been "quiet" and bond yields in most PIIGS countries are dropping while US Treasury yields are rising, which is a positive development.I mantain a bullish bias but in order to get a new longer term uptrend we need to start to observe that not only ... -
Last Friday the S&P 500 finally took out resistance at 1260 and closed over its 200 day moving average. The Dow Jones Industrials broke out from a reverse head and shoulders pattern and closed over resistance at 12.250. The market looks more bullish, with a couple of higher lows since the October bottom and is now offering some setups in leading stocks that want to breakout higher. We still have some positive seasonality left which is also bullish.However, we still need a high volume-conviction breakout in the S&P 500 and other indices to confirm that a new uptrend has begun. ... -
Here we are again. Back into major resistance levels from which the overall market has failed to break out and move higher since the October bottom.We got a strong participation up day last Tuesday, which technically can be interpreted as a buy signal, but we need to see stronger confirmation with a solid breakout over resistance in the major indexes to see if this is finally for real.The S&P 500 is hitting its 200 day moving average today, a level it has headbanged and failed constantly. For a new, longer duration uptrend to start in the markets we need to ... -
Dear Subscribers:Yesterday's rally extended into the ending the day with huge gains in most major indexes and breaking the 6 day consecutive streak of the market closing lower than the open.The action of yesterday was quite historic. The Up/Down volume ratio on the NYSE Composite Index reached a historical high of 43.74. This is normally interpreted as strong accumulation and in normal times, precedes higher prices for the stock market going forward. We have had 4 similar buying episodes since the August low in the markets. This is interpreted as bullish going forward.Yesterday's action also creates a technical buy signal. Markets ... -
Dear Subscribers:Market opens sharply higher today and its hitting resistance in its 50 day moving average for the S&P 500.The market has been trading in a choppy downtrend since it hit its December high and had closed lower than its opening range during 6 days in a row. As usual, dissapointing comments coming from the European Union or European Central Bank has dominated trading and dragged the market lower despite continued better than expected macro data from the US.For the moment we have not seen the sesaonal bullish bias of year end except for the powerful bounce from the end ... -
Dear Subscribers:Today we had a heavy macro day with lots of data. In general market data was better than expected.Core PPI came out with a reading of 0.1% vs 0.2% that was expected. This means inflation is lower than expected and thus monetary policy can remain agressive for a longer period of time which is generally bullish for equities, commodities and precious metals. Unemployment claims reached their lowest level since May 2008. This should bode well for employment in the US economy and is macro bullish. Empire State Manufactoring Index was much higher than expected with a reading of 9.5 ... -
Dear Subscribers:We got the oversold rally in the markets and now, for them to continue to rise, they will need to show real strength that will have be attributed to a new uptrend and not just a powerful bounce from extreme pessimism.Major averages are all facing stiff technical resistance and a grim macro picture. Positive seasonality is here till year end but to consolidate an uptrend with longer term implications we need to see the indices break out with conviction out of resistance.If we once again start to fail at these levels, the least path of resistance is down and ... -
Dear Subscribers:We got the powerful bounce from deep oversold conditions that I highlighted last week. When the market monitor has 85%-90% of its assets in an oversold condition there is a lot of "powder" for an upside explotion. A catalyst, a "match" is what it is needed to light the fire and propel the markets higher from extreme pessimism.The catalyst came this week with positive black friday sales, progress in the European ESFS bailout fund and yesterday the coordinated central bank intervention.The catalysts have been coupled with positive US macro data that continues to beat expectations and suggest that 4th ... -
Markets fell hard on Wednesday to mark the sixth day of consecutive losses for the S&P 500. The continued sell off experienced by the markets made the current pre thanksgiving week one of the worst performing in history. The Euro crisis and the political deadlock of the "super committee" are the culprits of the current sell off according to the headlines.I attribute the selling to a macro problem. There is an ongoing deleveraging process in developed western economies that started in 2007. Abscent of new monetary and fiscal stimulus ( QE2 ended this June and the US & European governments ... -
A fourth day of consecutive selling was experienced in most world indexes today.The sell pressure got "crash like"for part of day. A lot of well known stocks like Amazon fell over 6% before bouncing as indexes found no support and buyers had fled the market.Although the markets closed off the lows, the selling was very intense and a lot of technical damage was done to leading stocks and the major indexes. The S&P 500 broke down with ease from its 50 day moving average and the NASDAQ Composite has no clear visible support unitl the October lows. Charts paint a ... -
A broad sell off in equity markets around the globe caused major indices like the S&P 500 and the NASDAQ composite to breach important support levels. The two consecutive down days on higher volume have technically broken the uptrend that started in early October and warns us to be cautious.Buying stocks right now is risky and one should wait until a new uptrend to emerge or wait for the to markets become extremely oversold to play a rebound trade (which has worked the best during the last three months or so). The market has remained risk averse and unable to ... -
Today before the market open I did this interview /presentation with Mike Swanson of Wall street window about the my outlook for the markets and the economy.Click here to see the presentation.Best regards, Victor Riesco -
Markets rally around the world with all of the Market Monitor positive except for UNG which makes new lows.Optimism hits the market after Italian senate approves the austerity measures.This causes the Italian 10 Year Bond Yield to spike lower under 7% which was the critical level that the market was observing. Despite the market being held "hostage" to headlines from Europe that have caused high volatility with sharp sell-offs and meltups, technically the uptrend remains in place and important support levels have held despite the losses in the indexes. In order for this rally to have real legs and start a ... -
The European situation with Italy's 10 year bond yields spiking over 7% plus the mess in the Greek parliament, which still doesn't have a new prime minister, caused investors and traders to panic.Europe needs to get its act together fast and launch a massive bailout package (like TARP) and start their own QE program in order to get over this situation and avoid a sharp deleveraging. Weakening the Euro and generating inflation is a less harsh way to pay down the excessive debts. This will also stimulate exports and tourism which improves the balance of trade and bolsters GDP and ... -
Dear Subscribers:A rough awakening for american markets occurs this morning after yesterday's promising close on most indexes, which reversed losses and ended positive and near the highs in most world markets. Overnight the clearing firm LCH decides to raise the margin for italian bonds and this creates fear in the financial markets, sending the Italian 10-Year Bond yield over 7% (very near the crisis level of 8%) and the EUR/USD dropping over 200 pips which is about -1.6%. The S&P 500 index has been trading with a very strong negative correlation with the Dollar Index and especially the EUR/USD and ... -
The market uptrend that started in early October, after the markets reached a deeply oversold condition, continues into November despite a complicated political and fiscal situation in Europe and with the US economy facing sluggish growth & double dip recession fears.Developed economies are striving to "kick the can" as much as they can to avoid a massive develeraging that would stunt growth and raise unemployment for a long time. As I highlighted last week, the powerful bounce that lead to a historic rally in October made most world markets reach extreme short term overbought conditions. Last week almost 90% of ... -
The majority of world markets are selling off today on renewed concerns on the PIIGS situation and a slightly dissapointing Non-Farm Payrolls report.Europe woes continue today as Italian 10 Year Bond yields climb to 6.2% and threaten to cut off financing and cause fiscal distress. Portugal and Ireland got bailed out when their 10 year yields climbed to 8%. The spread between 10 year German Bonds and 10 Year Italian Bonds are at a record 4.4%.In the G20 meeting Italian Prime Minister Berlusconi argued that the situation was under control and that Italy did not need aid from International Monetary ... -
Dear Subscribers:Despite today's eventful day in which the Euro drama was in its maximum expression and the ECB decided to do a surprise rate cut for the Euro, markets finished the day with good gains and rallied into the close with higher volume than yesterday.This is a positive and is normally considered an accumulation day where institutional money enters the market. The market despite all this Euro mess looks bullish and it is enjoying its best seasonal cycle during the fourth quarter. Bear market or not, I believe the market should sustain an uptrend until year end. The NASDAQ ... -
Dear Subscribers: Markets begun this week overbought after the extended rally in October. As I highlighted on Monday, this made it highly probable that we would face some sort of consolidation or correction this week. 90% of the assets I track in the market monitor were overbought. European politics made this correction a lot worse with the announcement of Greek Referendum that would approve the conditions set by the EU to Greece in order to receive bailout funds and give their debt a 50% haircut.If the Greeks refuse and enter default, rejecting the conditions set by the EU, European banks would face ... -
Dear Subscribers:Markets are currently pretty extended to the upside as you can see in this week's Market Monitor: Given the current conditions, it is probable we will take a short on some index ETF to hedge our long exposure.This week we have a pretty heavy macro calendar in which the most important release will be the Non-Farm employment report on Friday. Best regards, Victor Riesco -
Dear Subscribers: After the strong gains of yesterday, the market takes a breather small losses. Yesterday's big gains were on high volume and breadth which is a positive but this made the markets to reach a pretty extreme short term overbought condition. The S&P 500 managed to close over its 150 day moving average, which normally shows the long term trend in the market. The % of stocks over their 20 and 50 day moving average shows that the market is very extended to the upside. The % of stocks over their 50 day moving average hadn't been as high as ... -
Dear Subscribers: World markets celebrate with a powerful rally the agreement in the European Union to lend 110 billion Euros to Greece and that banks take a voluntary "haircut" of 50% to the debt lent to this country. There is also an agreement to add capital to European banks once they have written down the losses for the Greek haircuts. The result is a powerful rally in all markets across the world. There is a strong risk appetite as the Dollar Index tanks with treasuries. The S&P 500 breakout over its 150 day moving average and the resistance of 1260 which was ... -
Dear Subscribers: A day with high volatility that had not been observed in a while is being experimented by the markets today. We are back to "political trading" that generates distorsions in the market and makes it hard to determine market direction. Today the European leaders are holding a conference to iron out the bailout plan for the debt ladden PIIGS countries. The market rallied before the start of the american session and optimism was founded on the approval of the German parliament to lever up the ESFS bailout fund. During the open of the american session the market "sold the news." The ... -
Dear Subscribers: Market continues to display great strength and basically reach the target of 1260 in the S&P 500 which were the lows in previous corrections. Despite the market being overbought short term we continue to observe a lot of strength in leading stocks which is necessary for the rally to sustain and keep on pushing forward. In Europe, the situation appears to be stable and that an agreement to lever the ESFS bailout fund will be reached. This week we have a lot of important macro data released. The most important release will be the Advance GDP of the third quarter. GDP ... -
Dear Subscribers:Market continues to display great strength with leading stocks acting strongly.We are going to enter a small position on ULTA, which has one of the best break out setups that has just triggered a buy point.Adjust your position size so that if we are stopped out, the loss will only be 1% of your trading account.You can use this Spread Sheet to adjust your position size accordingly.ULTA:Buy Price: 70.00Stop Loss: 63.45Best regards, Victor Riesco -
Dear Subscribers: I great deal of macro data was released today and the readings were mixed. At least this is an improvement since just some weaks ago macro data was dissapointing and dismal. Unemployment Claims come out with a reading of 403K which is not favorable for employment. The industrial production data from the Philly FED Manufactoring Index beat expectations by a wide margin. The reading of + 8.7 was much better than the -9.0 expected. The CB Leading Index, a leading indicator of economic growth comes out with a reading of 0.2% while 0.3% was expected. The economists that build ... -
Dear Subscribers: The market is stalling near the highs of the month that coincide with those of August and September. After the potent rebound that started early this month, it is normal that these previous highs offer technical resistance and traders decide to take profits or short expecting the downtrend to resume. Breaking these levels we will probably reach 1260 which are the lows and support of March and June corrections. Also the 150 day Moving Average lies there and will probably act as a magnet in further upside. I expect the market to reach these levels sooner or later. Technically the market ... -
Dear Subscribers: Markets begin the week with a sell off, starting to pull back from short term overbought conditions. Macro data and earnings released today were mixed. Lets remember that 52% of the Market Monitor is overbought short term and any type of dissapointing news or data releases can spark some selling and profit taking. Today Citigroup and Wells Fargo released their earnings.Citi beat expectations and Wells Fargo increased its profit by 68% but was under Wall Street's analysts concensus. The reaction in the financial sector is negative with the XLF falling over 2%. Macro data was also mixed with negative bias. The Empire State ... -
Dear Subscribers:The market continued its up stride on Friday with a strong close during the last hour of trading.The S&P 500 closes at its highest level since early August before the market crashed.Participation remains healty with leading stocks and high growth stocks leading the gains which is a bullish configuration.However, short term markets are getting overbought with 51.72% of the Market Monitor reaching an overbought condition. This drastically differs from two weeks ago when the Market Monitor was oversold in over 86% of its components and the market bottomed shortly after.This doesn't mean that the market can't continue upwards but ... -
Dear Subscribers: After last weeks market reversal, the market has mantained a positive trend and strong gains that have been only briefly interrupted. Leading and momentum stocks have been strong which show that the market rebound is still healthy. Today we touched 1220 in the S&P 500, the previous highs reached in August and September and pulled back a bit. Short term the market is extended and we could expect a pull back back to the 1200 area. In this pullback, it is important to see how leading stocks behave. If we see that they start lagging and lead the downside, we will ... -
Dear Subscribers:Take profits in HANS. Market has had an excellent run since the bottom and is once again at the previous highs of 1220 in the S&P 500.Although the market seems stronger, I still prefer to play it safe and cash in the good profits we made and just a few days.Close our HANS position at 96.10. The stock is up more than 4% today.Closing this position will give us a gain of 15.7%.Have a good weekend.Best regards, Victor Riesco -
.Dear Subscribers: Markets continue their rebound but hit the 1200 resistance zone in the S&P 500. This level has stopped all rallies during the last two months and the S&P 500 has bounced 12% since the lows reached last week. I think it is a good time to take profits or lighten up on your positions if you are playing this rebound long. The resistance at 1200 plus tomorrow's FOMC meeting are a good excuse for the market to take a breather before making its next important move. From what I have observed plus what numerous technical indicators, cyclical studies and sentiment ... -
Dear Subscribers:We´ve had a good bounce from the lows and we are hitting 1200 resistance once again in the S&P 500. Tomorrow we have the FOMC meeting and I prefer to cash in our good gains in LULU of 14.8%.Our trade is HANS is positive about 6% and I recommend to raise stops to 85.35.I attach the summary of open and closed positions.Best regards, Victor Riesco -
Dear Subscribers: Today is Columbus day and it is a bank and bond market holiday, however the NYSE is online and stocks celebrate with huge gains. Optimism is generated by the announcement of the presidents of France and Germany, Nicolas Sarkozy and Angela Merkel, that they have a solid plan to recapitalize troubled European banks. This "definitive" plan will be revealed in details in early November. In this moment the S&P 500 is up nearly 3% and for the first time since July 28th, it is trading over its 50 day moving average. This a positive technical achievement which shows that the ... -
Since the end of July the stock market has been very weak. We've had a couple of days in which markets fell over 6% and various in which we had 3%+ losses.After the deep sell off in August, the S&P 500 traded on a very volatile range between 1220 and 1120.The market broke down from its 1120 support and things were looking pretty grim. However yesterday during the last hour of trading the market had a sharp reversal on European news and recovered this level.I personally think that the market will start a powerful move either to the downside or ... -
Dear Subscribers: Last week the markets suffered one of their worst drops since 2008. The S&P 500 lost 7% in about 24 hours and many emerging and European markets made new lows. The majority of US stock indexes are above the August lows and are showing strength versus other markets. Markets around the world are now extremely oversold. In normal conditions this would create a bottom from which a rally should ensue. 89% of the "Market Monitor" is in a oversold condition which makes me expect at least a bounce during this week. This is probably the most extreme reading I have ... -
Dear Subscribers: Extreme volatility and fear continues in the markets world wide. The S&P 500 yesterday dropped to test the August lows which held as support. Today we continue with a weak bounce on most US Indexes but the gains are volatile with some stocks bouncing a lot and others dropping. Emerging markets remain very weak and continue to sell off. Something that stands out today is the strong sell off in precious metals such as platinum, gold and silver. Gold drops over 5% and looses 9% in the week. Things are more extreme for silver which drops 15% and looses 24% in the ... -
Dear Subscribers: Yesterday the FED announces a new monetary intervention denominated by the market as "operation twist". Instead of printing more dollars to monetize treasuries or mortgage backed securities the FED will purchase 400 Billion of longer term treasuries and sell the same amount of short term securities in order to lower long term interest rates and lift shorter term rates. This intends to lower the cost of mortgages which are linked to longer term treasuries in an effort to revive the depressed housing market. An increased activity in the housing market would increase employment by hiring workers and boost economic activity. The ... -
Dear Subscribers: Yesterday the markets begun the week with a lot weakness with the S&P 500 futures openining 15 points down and with the market falling about 2% before rallying in the afternoon and recovering most of the losses. Today we see a continuation of the rally that started yesterday in the afternoon making the S&P 500 hit the previous highs at 1220 from the end of August. Also at these level the 50 day moving average is trading so I expect some resistance at these levels, especially with the FOMC meeting tomorrow. Traders are expecting a new round of monetary ... -
Dear Subscribers: Yesterday Wall Street closed with a second consecutive day of gains that got halted at it highs twice when the S&P 500 hit its 20 day moving average that is acting as short term resistance. Volatility has persisted during the Asian & European session with the S&P futures at one point being off more than 1% and now before the market open they are open near 1% to the upside. Today's important macro data release, Retail Sales, dissapoints with a flat number (0%) while an increase of 0.2% was expected. Note that retail sales, at least in nominal terms, are ... -
Dear Subscribers: Yesterday the market was extremely volatile with S&P 500 futures trading in a over 40 point range, being down over 2% in pre market trading to end about 1% positive at the close. Yesterday's late rally was due to rumors that stated that the Chinese Sovereign Fund would buy Italian debt and ease the pressure for financing from this country. This hysterical trading of the markets is due to very sensible conditions present right now. If the PIIGS situation isn't managed correctly, we could be entering a "domino effect" of defaults and banks imploding which would cause deep economic ... -
Dear Subscribers: After friday's weak close and "castastrophic" news coming out from Europe regarding the Greek, banks and PIIGS situation, the S&P 500 opened up sharply lower on Sunday afternoon. For a moment, futures were down 24 handles (over 2%) and then rallied back to be barely positive at the start of the american trading session. High volatility and a ultra sensible market to news about Europe will be the mode during this week. Also, we have important macro being released such as the CPI, retail sales and consumer confidence numbers just to name a few. The S&P 500 remains ... -
Dear Subscribers: Fear takes control of the market once again due to negative news pouring out of Europe. Rumors that Greece is entering default this weekend and that Germany is readying a plan to shield and save its banks from this scenario puts the market on a major "risk off" trade today. Also one of the memembers of the Europe Central Bank, Stark, quits because he doesn't agree with the PIIGS countries bond purchases that this institution has been conducting. In a day with extreme risk aversion, everything is selling off today except the dollar index and treasuries. Even gold and ... -
Dear Subscribers: Today we received some mixed macro data in the markets. Also, the European Central Bank and Bank of England mantain interest rates due to lower than expected economic growth in the euro zone. With this, it is expected that interest rates won't increase during the rest of the year and it is probable that we see some interest rate reductions through this quarter. Today during the afternoon, FED president Ben Bernanke will deliver a speech and at 7 PM Obama will adress the country with a new jobs plan to bolster the economy and jobs in the US. The unemployment ... -
Dear Subscribers: Market continues the rebound from yesterday's last hour of trading. News that were "less bad" coming out from Europe, ratified just some minutes ago with the approval of an austerity plan in Italy has cheered up markets. Also expectation on Obama's new "job plan" announcement has also waken risk appetite. Just some minutes ago the FED "Beige Book" was released and basically said the same things we have heard during the last month: Growth slower than expectations. Technically the S&P 500 has recoverd its 20 day moving average and seems that it will reach once again resistance at 1200. Conditions ... -
Dear Subscribers: A new week begins today after the labor day holiday. I expect this week to be bad for markets. The constant deception in macro data, with the dismal Non-Farm payrolls report on friday, plus the constant fiscal and bank solvency problems in Europe is creating a harsh environment for the markets and short sellers are back in force. Technically we saw how weakness started to appear in leading stocks since Wednesday, something I highlighted as a negative and unhealthy for the markets. On Friday the flood gates opened and the strong selling pressure was unleashed. Once again the market failed ... -
Dear Subscribers: As it is "usual" during the last months, macro data released today dissapoints. Non Farm Payrolls comes weay below expectations and everything starts to indicate that the US is entering another recession. Abscent from fiscal stimulus because the government is cutting spending, the US economy stopped growing and shifted into reverse rapidly. With today´s data and other we have received this week, such as the ISM Manufactoring PMI that showed contraction in production, it is almost certain that the FED will launch a new monetary stimulus plan or QE 3 in the September FOMC meeting. With this they will ... -
Dear Subscribers: Yesterday we observed how the market started to loose momentum. After being broadly positive with gains over 1% in most stock indexes with leading stocks making new highs, the market put reverse and went negative for a while to end barely positive. However the damage was greater in leading stocks such as AAPl which ends the day with losses near 2%. Other leading stocks had a similar behavior. This is not a good sign and that is why I preferred to cash in the profits in our swing trade in ALXN which made new highs but then sold ... -
Dear Subscribers:ALXN keeps on rocking and we will raise our stops to 55.45 to secure a 10% profit in this trade.It is currently hitting resistance at it's historic highs and we might consolidate here for a while. Best regards, Victor Riesco -
Dear Subscribers: Yesterday the market could withstand the dismal CB Consumer Confidence report because it was mostly discounted. The day ends with gains across the board after the FOMC minutes revealed that many members were in favor of a new QE in August. This raises the odds that QE3 or some of monetary stimulus will be announced in September in order to "aid" the economic recovery. Yesterday's optimism carries on today with most indexes rallying. Macro data comes in line or better than expected and the S&P 500 is up 1.14% in these moments. Our trade in ALXN remains strong, gaining over ... -
Dear Subscribers: CB Consumer Confidence totally misses expectations of 52.1 with a reading of 44.5. This is a 25% drop compared to last month's reading, retreating to levels comparable to mid 2009. The market initial reacton is histeric. It drops 10 points on the dismal report. However I think that the "smart money" has already discounted this data because the UOM Consumer Confidence data, released earlier this month had already been very bad. Smart money has been buying stocks agressively during August. Today sentimentrader.com posted this chart that shows they have been buying at the highest level in over 15 ... -
Dear Subscribers: The day begins with lots of volatility in the markets with the speculation of a possible yet improbable announcement of QE3 from Ben Bernanke in the Jackson Hole conference. The macro data released today is once again, dissapointing. Preliminary GDP has a reading of only 1% while revised UOM Consumer Sentiment is also under expectations with a reading of 55.7. Over 90% of macro data has been dissapointing during the last months. At 10:00 AM Bernanke ratified that there will be no more QE3 for the moment but the FED will consider further measures in September's FOMC meeting. He once again ... -
Dear Subscribers: During the asian session stocks and the S&P 500 futures started to rebound after a positive Chinese PMI which was better than expected and reached a two month high. Later in the European session, futures reversed the gains to later rally once more during the american session where we obtained dissapointing macro data from New Home Sales and Richmond FED Manufactoring Index. New Home Sales get a reading of 298K while the Richmond Manufactoring Index is below the expectations of -7 with a reading of -10. Despite dismal macro data stocks are in "rebound mode" probably discounting a new ... -
Dear Subscribers: Last week stocks started on a positive note with the S&P 500 reaching resistance at 1260 from where the market crash had started a couple of weeks back. However, by the end of the week, dismal macro data started to choke optimism making world indexes fall hard and ending the week deep in the red, nearing the lows of the market crash. However, in the S&P 500 and other indexes we are starting to see some positive divergences and lower volumes during the sell offs. American indexes are oversold at a level not seen during the financial crisis and ... -
Dear Subscribers: Today the bears attacked the market with all their artillery with a barrage of bad news and dissapointing macro data. Investment bank Morgan Stanely during the asian session sent a report where it states that the US and Europe are near a recession and lowered its growth forecast for the world to 3.8% from 4.5% for 2012. The reaction in Europe was powerful, with most banks and car markes falling hard. BMW fell about 8% and banks such as Barclays and Societe Generale plummet 12%. The German DAX in germany ends lower by 5.82%. Then it was the turn ... -
Dear Subscribers: We finished today's trading session with most world markets mixed. The S&P 500 ended barely positive but under its resistance level at 1200, level from which tlast week's monday crash started. In the media I have started to see lots of comments and articles related to the "death cross" that is occuring in most american indexes. The death cross is when the 50 day moving average crosses the 200 day moving average downwards. This is supposed to signal that a new bear market is starting and traders and investors should exist the market and look to short stocks. Last ... -
Dear Subscribers: Market is finding difficulty in breaching resistance at 1200 in the S&P 500, level from which the market crash of last monday started. This is a pretty obvious level from which short sellers can re-enter the market and bull who bought at the lows to cover their positions. At the moment, the sell volume is low and the news from Europe have been less negative which is a positive. The market was fairly positive for a while but it reversed hard after Standard & Poors lowers its growth forecast for the US economy for the next three years. It ... -
Dear Subscribers: The strong gains continue in markets around the world after the crash we experienced last monday. Those who sold in panic o shorted at the bottom are either getting long or covering shorts together with "value investors" which are finding good opportunties across the board. The S&P 500 fell over 20% in just a couple of weeks, one of its strongest and fastest losses in history, and thus a strong rebound is expected. The excessive pessimism that had taken control of the markets has started to dissipate as things in Europe seem a bit more stable and yields of PIIGS debt ... -
Dear Subscribers: Markets positively absorb the macro data due for today despite a dismal UOM Consumer Confidence report which reaches its lowest levels since 1980. Consumer confidence is lower now than in the midst of the 2008-2009 bear market and financial crisis.. However, retail sales were better than expected with an increase of 0.5%, something positive for the US economy whose GDP is 70% consumption.75% of the market is positive today, the S&P 500 gains over 1% in a continuation of the rebound from the panic lows we hit on monday. The UOM Consumer confidence report is the worst level since 1980 but ironically, ... -
Dear Subscribers: Markets around the globe are experiencing huge gains today. Something that didn't happen in a while, gold, silver, treasuries and gold stocks are down for the day. It is a relief that treasuries are finally following some fundamentals and falling, helping our losing position trade on TBT. It helped the rally that the weekly unemployment claims were better than expected. A in line or better than expected is always of great aid in an ultra oversold and shorted market. Unemployment claims dropped to 395K which is under the critical 400k level. Also the trend of this economic indicator seems to be turning ... -
Dear Subscribers:I highlight a couple of value stocks that are setting up which we could enter long in the coming days.Aflac (AFL) Quality Value Stock showing positive momo divergences in clear bottom and good volume. Earnings have been steady and stock has been increasing dividends since 1973. Ambev (ABV) Leading Brazilian softdrink producer that has shown strong earnings growth and returns over equity along the years. Has outperformed the brazilian stock market that has been weak during this year. It is also the leading stock in its industry group.Testing long term support at its 150 and 200 day moving average. ... -
Dear Subscribers: Markets continued to sell off yesterday depressed by the "uncertainty" that is generated by the US congress that doesn't reach a budget agreement to lift the debt ceiling. If there is no resolution by August 2nd, the USA will enter default and lose its AAA credit rating. I wrote "uncertainty" with quotations because it is obvious that congress will reach an agreement and raise the debt limit in order to keep stimulating the US economy and avoid entering an inmediate recession if the fiscal deficit is agressively cut. Remember that the deficit is 11% of GDP and it need to ... -
Dear Subscribers:Selling persisted yesterday during the afternoon and the S&P 500 falls over 2% breaching support at 1310 where the 50 and 150 day moving averages lie. Support didn´t "support" the market much in a day in which pessimism was overwhelming and 100% of the "Market Monitor" closed negative.The only assets that closed positive were the dollar and treasuriess, showing risk aversion. For tomorrow we don´t have important macro data. Today's selloff, from a technical point of view suggests that were are going to see more downside in the short term. We broke down support with ease, volume was on the ... -
Dear Subscribers:Fear takes grip of the markets, investors and traders are literally selling everything today except the dollar which is bouncing after weeks of getting hammered. Congress hasn´t been able to reach an agreement on the budget in order to raise the debt ceiling and the probability of default is making the market nervous. However, as I have said in previous updates, the US government will lift its debt ceiling and will continue to increase its public debt to keep a high fiscal deficit and spending. It will continue doing so until the market forces it to stop with higher ... -
Dear Subscribers: Microsoft (MSFT) beats earnings estimates, delivering results after the market close.Revenues increase to 17.37 billions while the market expected 17.25 billion.Earnings per share to 69 cents per share, a increment of 30% compared to last year. Consensus for earnings was of 59 cents per share.This positive surprise should be good for MSFT's performance going forward. The company is growing its earnings 30% but it is only trading at 10 times P/E.Few companies have the track record of stellar performance of MSFT. The current market price of MSFT is discounting excessive pessimism and all the stock needs is more ... -
Dear Subscribers:Markets rebounded with force from the support and moving average confluence zone near 1300 in the S&P 500. Despite persistant bad news coming out from Europe and from the US, markets contain pessimism and make the Bears run for the exists yesterday seeing that there was no follow through to the downside and Apple reported after the market closed. Today we have see some consolidation after yesterday's strong move up, but most markets around the world are positive. 73% of the Market Monitor has gained. TBT, GDX and SLV are the leaders. The american trading session started with ... -
Dear Subscribers: Today the markets are set begin the week to the downside after the asian session ends negative and the european bourses are deep in red.In europe, investors are worriend about Italy's fiscal debt situation. The country has over 1.5 Trillion Euros in public debt which amounts to 119% of GDP. During the next weeks and months, Italy has to roll over a large amount of debt to finance government spending and honor interest and principal payments. Italian bond yields spiked friday and also today, putting stress on Italy's ability to finace itself and pay back debt interest and debt ... -
Dear Subscribers:Market softens the losses after the Consumer Credit report comes in line with expectations by increasing 5.1 Billion in May. S&P 500 rebounds 10 handles from the lows and manages to close over 1340, which was the resistance level we managed to break over yesterday.Technically this is bullish and market remains in a short term uptrend. I found this chart on Super Bear Zerohedge Website. It is a good chart that show how many jobs are needed to be created in order to recover pre-recession unemployment levels in the USA. Very tough task that shows how high unemployment in ... -
Dear Subscribers: Today the world markets, except gold and silver, fall harshly after a big dissapointment in the Non Farm Payrolls and Unemployment rate. Yesterday we had a better than expected report of ADP Non Farm Employment which led market participants to believe that today's report was going to be in line or better than expectations. We saw how the S&P 500 cleared resistance at 1340 points and was targetting its yearly highs. However, today's Non Farm Payrolls report dissapoints and sends the late buyers to do the exits in mass. The market expected the creation of 97K jobs in ... -
Dear Subscribers: First of all, I recommend to take profits in our position in ABT. The stock has gone up around 11% since our original buy recommendation and once again nears previous resistance levels which it couldn't surpass in the previous rally. ABT is a good company and has fundamental potential to keep moving higher. However, my view for the markets in the coming months isn´t overly bullish and I prefer to take some profits thanks to last week's powerful rally. The S&P 500 is pausing in the 1340 resistance zone. Tomorrow and Friday we have important macro data regarding ... -
Dear Subscribers: Markets say good bye to the second round of "Quantitative Easing" with a rally that continues this week's bull run. The Nasdaq, Dow Jones Industrials and S&P 500 all have gains of roughly 1% and reach their 50 day Moving average which should offer resistance. Today's rally was boosted with a much better than expected "Chicago PMI". This is the first reading regarding industrial production, in quite a while, that comes better than forecasted. The market had been hit with 6 consecutive down weeks and 90% of economic data has been worst than expected. A better reading on an important data ... -
Dear Subscribers:Last week we had a very volatile week that which until wednesday it seemed the global markets and the S&P 500 were consolidating a rebound from a persistant oversold condition.However after the FOMC statement and press conference, in which Bernanke confirmed a slower growth and higher inflation for the economy, sellers came back into the market. The market had also reached a technical resistance level at the 1285-1295 level in the S&P 500. The selling drag the S&P 500 back to the support zone of its 200 day moving average and march lows, endind the week negative by 1.17%. ... -
Dear Subscribers: Yesterday the FED mantained interest rates near 0% and confirmed that at the end of June, Quantitative Easing part 2 would end. Let's remember what "QE" is all about. The FED "prints" dollars to buy treasuries in open market operations. With this the FED attempts to keep interest rates very low being a buyer of an average of 7 Billion in treasuries a day. This attempts to create some inflation and by adding liquidity to the market so credit is cheap and consumers and business borrow and spend. With QE the FED also "finances" the mammoth fiscal deficits the ... -
Dear Subscribers:I found this good article on Value Tech Stocks. It is interesting how the author uses the PEG ratio, historical earnings growth, earnings growth, projected earnings growth and historical valuations to uncover the value in each of the stocks mentioned in the article.I like the use of charts to explain and visualize the valuation techniques discussed.Best regards, Victor Riesco -
Dear Subscribers: Yesterday we had a strong gains in all markets around the world. There was strong breadth that we hadn't seen in an upday for quite some time. Of the Market Monitor, all assets except one (China with the FXI ETF), ended the day positive. The Up Volume/Down volume ratio was 10 to 1. A lot of buyers emerged to defend the support zone created by the 200 day Moving Average and March lows in the S&P 500. Up Volume/Down Volume Ratios: It helped the market that we only had one macro data point yesterday, Existing Home Sales, and that it ... -
Dear Subscribers: Yesterday the market continued to rebound the support zone created by the march lows and the 200 day moving average despite that negotions on the greek bailout plan failed during the weekend. The absence of macro data yesterday and the rather stale news regarding Greece allowed the market that trading in the markets to remained very technical, with most world indexes, that are oversold, rebounding during the day. This helps our short term swing trade long on the DIA that we entered last monday. Currently asian and european stocks are rising, dragging to the upside the S&P 500 futures ... -
You can read the original article in this link: Pullback Offers Great Chance for Quick ProfitWhen I wrote my mid-March blog, markets had corrected about 5 percent from their highs and investors were running scared due to a plethora of bad news — but especially because Japan had suffered a major natural disaster.At that moment, markets had become short-term oversold and I advised: "don’t fall prey to the fear and use these sell-offs as opportunities to buy quality stocks that are undervalued." From then onward, the market rallied until the beginning of May.This time, the downdraft in stocks has been caused ... -
Dear Subscribers: We begin a new week in which I expect it to be positive for the markets after 6 weeks of consecutive downside for american indices. Despite various short term positives that should have generated at least a short term rebound, markets fell last week everyday except for Thursday. Important levels of support and favorable historical stats have not stopped sellers from dragging the market lower. Last week it seemed the market would never bottom and that traditional oversold and bottom seeking tools were just not working. You must know that the intensity of the selling has been the strongest in ... -
Dear Subscribers: Contrary to the favorable stats that we had shown yesterday, the S&P 500 continued to drop down and got near the level were we have our stop (126.80) for our long trade on the SPY. Since the SPY exists, it was the first time that five consecutive down days into a wednesday results in a down day. 11 out 11 times before the market had rallied yesterday with average gain of 1.3%. The same stats, however, show that 8 of 11 times when this type of selling has occured, the S&P 500 ends the week positive. These statistics ... -
Dear Subscribers:Yesterday the S&P 500 and other american indices tried to bounce from their oversold condition and support of the 150 day moving average. For most of the day, markets were positive but during the last hour of trade we observed a strong reversal that drove the S&P 500 to close barely negative and at the low of the day. This lack of strength from an oversold condition is a behavior we hadn't seen since the financial crisis or european crisis last year. However, sentimentrader.com presented very interesting stats that suggest a very high probability of closing the week positive ... -
Last week we had some very negative action for the american indices. Until Tuesday, it seemed that the oversold bounce of the previous week was going to continue with a very strong technical close. However, it seems that the cotinued negative surprises were too much for the market and the next three days of downside erased all gains and dropped the S&P 500 to the 1300 support zone.Despite the strong sell pressure in the american indices, emerging markets, commodities and gold were firm. Something that caught my attention is that despite the sell off, the dollar index had losses ... -
The last couple of days remind us of the sometimes, bi-polar character that financial markets have. Last tuesday the market closed at the highs with good breadth and volume even though we had a dismal "trifecta" of macro data. During the last or so we have constantly observed dissapointing data regarding consumer spending, GDP, employment and manufacturing activity. Despite that, the market has been relatively flat and started to bounce last week after reaching a general oversold condition. Based on this trend of negative macro data I wrote on yesterday's update that I didn't expect a positive number from the ADP ... -
This is an in depth analysis of the effects of Quantitative Easing in the economy and asset markets plus what will happen once the FED stops using this monetary tool in June 30th, 2011. This article was published in Gurufocus.com and received great ratings and was selected as "Editor's Pick". Read the article here: The Effects of Quantitative Easing
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I’M VICTOR RIESCO
I’m a financial analyst and professional investor from Santiago, Chile. I’m the owner of Global Trader, a brokerage and trading .
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