Traders Corner   26 comments

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral, leaning oversold
S&P 500 Weekly Momentum: Bearish
S&P 500 Weekly Overbought/oversold: Neutral
S&P 500 Futures (June): Flat
Overall: I won’t go so far as to say a big drop is out of the question today, since the momentum is decidedly bearish. However, the overbought/oversold indicators are getting dangerously close to oversold territory, which means if we don’t get at least a minimal bounce, or even a flat day, within the next two or three days, we could get a surprise bounce. With the bearish momentum considered, it looks like the next stop is the 150 day moving average at 1793.

The S&P 500 levels to watch today:

UPSIDE: 1826 (bottom of the Bollinger Bands), 1828 (100 day moving average), 1830 (April 10th’s low), 1834-1835 (April 11th’s high and March’s low), 1837 (April 8th’s low), 1841 (April 7th’s low), 1843 (50 day moving average), 1849-1850 (January’s high and December’s high), 1852 (April 9th’s low), 1854 (April 8th’s high), 1862 (20 day moving average), 1863-1864 (2 data points), 1867 (February’s high), 1872 (2 data points), 1882-1885 (3 data points and March’s high), 1892 (top of the Bollinger Bands), 1893 (2 data points), and 1897 (April 4th’s high and the all-time high).
LAST CLOSE: 1815.
DOWNSIDE: 1814 (April 14th’s low), 1793 (150 day moving average), 1775 (October’s high), 1770 (January’s low), 1767 (December’s low), and 1761 (200 day moving average).

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26 responses to “Traders Corner

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  1. For the groups question on when you may jump into a beaten down sector. The offshore oil drillers are trading near 52 week lows and analyst after analyst have come out and downgraded them.

    Their story of a rough 2014 for day rig prices is well known by everyone right now. You also have a possible correction in the market overall.

    I understand that stocks can always go lower but when a sector has been hit hard like the oil drillers will that mean that an overall correction in the market may not effect them as much?

    And if you were to get into a stock you have SDRL which is a highly leverage stock but possibly highest reward or ESV which has new rigs also but funded them internally so not as leveraged but a more cinder rive reward.

    • Bobb,
      The problem with the offshore drillers is too many rigs, not enough offshore drilling. This is true for both SDRL and RIG. This industry has every reason to go lower, although I also think we are getting near the bottom, mainly because the valuations have been so hard hit.

      I wouldn’t buy these stocks for a turnaround this year, but they are good adds for a long-term dividend portfolio. I lean towards SDRL for the higher and somewhat more consistent dividend, although RIG has a lower price/book ratio.

  2. Ed, If this trend continues you may want to short today. On the Emini the s&p looks like we open in over bought area.

  3. Got called out on my LNG shares. Nice 7% profit but I still want the company so I’ll be looking to rebuy sometime this week. Still not convinced the market has bottomed so I’ll be selling calls.

  4. Unless the S&P can close above its open I wouldn’t get too excited about this bounce this morning. We have to expect bounces after the drop of the last few days. Unless there is some strength, they may be nothing more than opportunities to sell.

    • Trader, I’d like to thank you for your advice on uco. I didn’t use the covered call but that trade worked out well. I also wanted to ask how did you notice the top at the correct time? 1897 what indicator are you using? Or is that a need to know 🙂

      • Glad to hear that the oil trade is working for you. I use four indicators. MACD, Stochastic RSI, Keltner Channels and the Detrending Price Oscillator. After a lot study, the oscillator has a pretty good track record of forecasting market direction. What bothered me about the market is what I saw in the weekly chart of the SPY. The week ending 3-7 the oscillator failed to make a higher high even though it was trading in its recent range. For the next four weeks the oscillator started to drop and the SPY stayed within its trading range. The oscillator on the daily chart rolled over at the same time as the weekly and has continued to move down indicating weakness ahead. I do not rely on any one indicator. Ideally, they are working together. Having said that, I do pay close attention to the oscillator. You can also use it on individual stocks and etf’s. Take a look at it on GTAT. You’ll see one of the reasons I have been selling calls on GTAT. For those of you who are interested, you can find the oscillator on Freestockcharts.com.

  5. I added SPXU at $60.25. My usual momentum play.

  6. Just standing pat today. I keep thinking about selling some more of my disastrous LMNS (down about 30% for me), but at 9 dollars in change, I keep finding myself tempted to buy more. Otherwise, staying entertained by watching GTAT, it just moves all over the place.

    • I’ve got a bunch of GTAT calls expiring this week at 16, 17 and 19. Good possibility that all will expire, including the 16s, which I think would be great since I want the shares and the 16 calls were the least profitable (I sold them in a fit of panic when GTAT was rapidly dropping).

    • I’m not concerned about GTAT unless it breaks 15.

    • Sold May 17 Call for 1.30 today on part of my GTAT. My April 18’s are likely expiring worthless this week. I’ll cover the rest come Friday or next week.

      • Looks like a good move. I bought back my April 17 calls today for .10. I sold them for 1.16 on 3-28. I’m going to take a chance and look for a bounce in GTAT before I resell calls. I may regret this since GTAT and the market looks weak. Not much strength in this bounce so far.

      • Thanks Trader. I was hoping for a little more strength before I sold on the rest of my position, but yah didn’t get it today so i am very thankful to catch some at 1.30. Hopefully its got another pop or two in it for an opportunity for us to sell calls at a better price.

      • Good work trader, I was thinking of doing the same thing with my SCUSA 19 and 17 calls today but never got around to it before the price started dropping.

      • mdista as well. Good timing on GTAT

  7. I’ll hold TZA from Friday. This bounce is starting to fade. It has looked weak all day.

    • Another comment on TZA. Even with the nice bounce this morning, TZA barely dropped from its opening price and has now moved to the high of the day. If it closes at the high, this would be a strong move. Tomorrow is a new day, but it is not looking good for the longs.

    • Trader – looks like a smart move. I am doing nothing and taking some serious lumps. I have given up close to 10% in past 8 tracings days. Good Friday cannot get here fast enough.

      • Marshall, looks like there is a good chance we will hit the 150 day ma. Over the last two years, the 150 has been strong support. Even when it has dropped below that level, it has bounced within a few days. If it doesn’t hold, we probably see the 200 around 1765. After that then??? I’m not seeing any strength in this market. Maybe tomorrow will be a better day for the bulls.

      • Trader – seemed to reverse a bit down the stretch.

      • Marshall, sure did. Nice rally at the end. We’ll have to see if we get any follow through. I chickened out and sold May 17’s on GTAT for 1.00. I’ve reduced my basis from 17.29 to 15.23.

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