Traders Corner   18 comments

We had a “mini death cross” on the S&P 500, with the 20 day moving average moving below the 50 day moving average. On the other hand, the S&P 500 did bounce off of the 150 day moving average, so I am adding it as a support level below, as well as adding the 100 day moving average as a resistance level.

S&P 500 futures are slightly positive this morning, although the March futures are pointing to a 1749 price. Regardless, I don’t expect much to happen until after tomorrow morning’s U.S. Employment Report.

The S&P 500 levels to watch today:

UPSIDE: 1755 (February 5th’s high), 1758 (February 4th’s high), 1767 (December’s low), 1770 (January’s low), 1771 (100 day moving average), 1775 (October’s high), 1784 (February 3rd’s high), 1809 (20 day moving average), 1810 (50 day moving average), 1849-1850 (January’s high, December’s high and the all-time high), and 1879 (top of the Bollinger Bands).
DOWNSIDE: 1746 (November’s low), 1743 (February 4th’s low), 1739 (February 3rd’s low and the bottom of the Bollinger Bands), 1737 (February 5th’s low and the 150 day moving average), 1729 (September’s high), and 1709 (August’s high and the 200 day moving average).


18 responses to “Traders Corner

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  1. Ed

    Have you ever looked at SDRL? What is your opinion?

    • ojunker,
      Heavy debt load, negative leveraged free cash flow, and high dividend payout ratio, all signal the dividend yield isn’t safe. On the flip side, SDRL has shown good growth, with analysts expecting more.

      If I wasn’t negative on the overall market, I’d be tempted to take a position here. It’s risky, but SDRL looks like they are doing the right things. I will add it to my watchlist.

  2. We’ll have to see where we end up today, but it is starting to look like the markets may not be afraid of tomorrows employment numbers. If we do bounce I wouldn’t get too excited until we pass through the 100 day like it wasn’t there.

  3. Ed,
    I think you bought SPXU and SQQQ because you shouldn’t fight the Fed (ie taper = markets falling). But now you are saying that the employment number is going to dictate the market direction in the short term. Did you buy SPXU and SQQQ as longer term plays? Seems that you are simply hoping that the employment number causes the markets to drop at this point. If SPXU and SQQQ are short term plays it doesn’t appear that the original logic for buying them is valid in the short term (next day or two).
    I am not advocating selling or holding just trying to understand your logic now that what seemed to be a short term trade is being extended into a longer term play but without what you consider to be a predictable indicator for market direction (ie Fed vs employment report).


    • Robb,
      Even though I got the timing wrong, it wouldn’t make sense to sell them now at a loss, when the longer technicals still support the play. The jobs report is a one-day thing.

      Having said that, if we do end up the week at 1784 or above, then I will have to sheepishly say the support held for now, and take my lumps.

  4. Bumping up against the 100 day ma. I think we need to break through with technical strength and then hold above for a few days. In that case, the correction will probably be over. May trade sideways for a while, but probably not a big drop. I would expect to see a continuation of the volatility. The next few days should be interesting. The 50, 100, 150, and 200 day ma’s are important to watch. Why? Because they are widely followed. Billions of dollars watching the same thing can dictate direction.

  5. Ed, I bought SODA at 38.91 . It fell about 9% before jumping today on speculation of deal with Pepsi. what do you think of this company. should i sell it now so that i dont loose money if drops if no deal happens with pepsi? thanks

    • Venu,
      Somebody asked me about SODA the other day. I’m not a fan of the product, but Wall Street seems to like it. I wouldn’t own it because I think it’s a fad. My straight answer is: sell it.

      Having said that, Pepsi going after it makes sense, especially in light of the Coke deal for Green Mountain. Mind you, I think it’s a mistake for Pepsi, but that’s irrelevant to you. Pepsi has plenty of cash to buy it, so that isn’t a problem.

      I think the question for you is this: Do you believe in the product and/or the company’s business plan? If the answer is yes, then you have to hold it. Simply put, it isn’t about the Pepsi deal, but about believing the company is worth more than it is currently valued at. On the other hand, if your answer is no, you may as well sell it.

      • Its business model seems to be more like razor and blade by selling machines and then required co2 refills and flavor additives. I bought it after it lost about 25% and felt reasonably priced. Its continued slide was not too pleasing. With coke siding with green mountain there is acknowledgement that there is some demand for home soda/cold beverages. PEPSI is going to jump into the market but not sure it is going to go with sodastream. Also sticking point could be political as this company is located in sensitive ,contested area of Israel. Big companies try to shy away from controversy as they dont like backlash from any part of the world. I have very small amount invested in it. would wait and see. Atleast I dont see SODA failing completely and going out of business.

  6. Thoughts on AT&T for a long-term hold?

    • John,
      I don’t like AT&T, mainly because their customer service is arguably the worst in the telecomm industry. It hasn’t seemed to hit their financials yet, but that kind of problem takes time to show up on the financials.

      Buy Verizon (VZ) for the long-term.

  7. Hey Marshall… NUS has really tanked recently. As I understand it the problem deals with being declared a pyramid scheme by the Chinese government, or something the like. Doesn’t that suggest that the problem could be solved with a big bribe to someone over there? If that’s the case wouldn’t the stock shoot up? What do you reckon the odds to be that it’ll shoot up sometime soon? Maybe time to gamble with it?

  8. Marshall, ATVI released earning AH and it is up 10%. Thanks for the tip. I bought it the same time as you.

  9. Be sure to look critically at tomorrow’s jobs report. I’m 40% cash for a reason. All the talking heads are saying its all about the weather. Even tho, It’s never really been about the weather in the past. If we get a bad jobs report with negative revisions for the previous months, I’m guessing a “bad” day.

    good luck to all

  10. I broke my own rule today about going in and out of penny stocks, selling all the rest of my PHOT. There’s a vote tomorrow re dilution (results in on Monday). Either they’ll get it, which should drive it down, or they won’t, which will drive it down, so it seemed like a no-brainer. I may very well buy back when the dust settles. Just wanted to give a heads up to those of you who have mentioned it as a possible buy.

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