Traders Corner   15 comments

I love it when different time-based technicals start to come together to say the same thing. While it hasn’t happened yet, the S&P 500 seems to be setting up for a nice Santa Claus rally:

1. The weekly technicals, specifically the RSI and the Williams %R are still overbought, but another bad week or two should move them back into neutral. Actually, the RSI is only barely overbought at the moment. If the S&P 500 finishes this week below where it is, RSI may fall out of overbought.

2. The McClellan Oscillator, which is a short-term indicator, is moving closer to oversold territory, closing at -33 yesterday, with -60 being oversold.

3. The S&P 500’s daily technicals are currently in neutral territory. However, enough of a move down could easily push them to oversold.

If the weekly technicals move out of overbought, and the daily technicals start flashing oversold, we could have a perfect setup for at least a one-day pop, if not several days or longer.

The S&P 500 levels to watch today:

UPSIDE: 1794-1803 (13 data points), 1810 (December 2nd’s high), 1813 (November’s high and the all-time high), and 1819 (top of the Bollinger Bands).
DOWNSIDE: 1788 (20 day moving average), 1787 (December 3rd’s low), 1779 (December 4th’s low), 1775 (October’s high), 1757 (bottom of the Bollinger Bands), and 1747 (50 day moving average).


15 responses to “Traders Corner

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  1. I bought some TC this morning at 2.19. I just felt that trading 70% under book value is a big enough margin of safety. I went with TC as I wanted greater liquidity.

    • I’m with you Marshall at 2.11.

    • I’m going to sit tight and wait for the daily technicals to form a bottom and maybe the weekly. I may miss .30 or so off the bottom but want to be sure that I find it before buying back in. Selling volume is still high so I want to be sure there are buyers before I become one of them. There will be a time to double my position…

  2. I added a small position of SPXU at $16.74. Will sell at $17.62, or carry into tomorrow.

  3. Ed, I see different on the S&P. Using the daily chart. Starting the first part of November the technicals I use started to show weakness as the market moved slowly higher. It appears that since that time we have been going through a period of distribution. The daily technicals are now starting to move lower and the weekly are starting to turn. I wouldn’t be in any rush to go long here. We may very well get a Santa Claus rally, but unless you are a trader, it might be best to wait and see if what appears to be the start of a downtrend is nothing more than a small pullback again. I wouldn’t suggest selling everything, but it might not be a bad idea to take some profits if you have them and or sell some covered calls. As a side note, I find it interesting that November was one of the largest months for insider selling. In addition, the market seems to have ignored todays gdp number. Have to wonder if the Fed has finally run out of steam?

    • Trader,
      Short-term, you and I are seeing the same thing. What I was talking about in the post won’t come to pass for another week or two, unless we get a HUGE drop. What I am seeing is how one set of technicals seems to be stepping out of the way (they aren’t out of the way yet) as another set of technicals seems to be ready to move through (they aren’t ready yet).

    • Ed, what I look for is consistency in the technicals and the price action. They are lining up on the daily chart and weekly is starting to follow. It appears momentum is gaining to the downside. I have no idea how far we could drop. It just looks like being cautious would be prudent. A little insurance with a broad market inverse etf might not be a bad idea. There are plenty out there. For the conservative players, you don’t have to go with leverage.

  4. Since there a couple of you who are interested in the UCO/SCO play, I thought I would update you on the last couple of months. Besides, I need to keep my hands moving on the keys. -20 here this morning.
    1) 10/22 UCO @ 33.54 Sold Nov 34’s a @ 1.00. Bought back those calls for .35 Resold Dec 34’s for 1.15. Current basis is 31.74. If called out my profit will be 34.00-31.74=2.26 7.1%. If UCO continues to move higher, I may buy back the Dec calls.

    2)10/23 UCO at 31.47. Sold 10/25 for 32.15. Plus 68 2.2%

    3) 11/18 UCO at 29.70. Sold Dec 30’s for 1.05. Basis is 28.65. If called out profit will be 30.00-28.65=1.35 4.7%

  5. Sold the other half of my PVCT today at .98. Bought about 3 weeks ago or so for .79.

    Thanks for the heads up Ed.

    I’m going to put another puke buy in at .79 and cross my fingers

    • Nice 24% gain Jeff!

      That is one nice thing about penny stocks. You can always pick up a few bucks along the way as you wait for them to pop. 😉

    • True, however they can of course go the other way just as easily. I am sitting on a 50% loss on my LYSDY penny position and still waiting for the pop. Unfortunately rare earths are just not getting the interest they once did. However, I’m not in a hurry and I don’t think Lynas is anywhere near bankruptcy, especially since they got their Indonesian mines up and running

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