I liked what I saw in the markets today. It was as quiet as could be but at this point I think that is good. A little consolidation under the highs and above the MA’s is probably healthy, and we also saw an uptick in volume.

GS, XLF & IWM which had all been acting poorly outperformed nicely today with volume along to make it more believable. This is by no means a game changer but it was encouraging.

My feeling is that this Dubai situation could have been one of those events that got people to move to the sidelines after such a strong move off the bottom. You can envision a scenario when folks start saying ok we’ve had a good year let’s lock it in and start over in January. That looked like it might have been the case early Friday but there was no follow through. Barring unforeseen disasters this market it feels like it wants to close the year at or close to the highs.

When I have trade ideas I usually like to see a nice clean defined entry point. For example buy XYZ when it breaks through 30 on good volume and relative strength. It allows for nice clean entry’s, well defined stop losses and it cuts down on imagining entry spots. Due to the recent choppiness nice clean spots are harder to come by, so if you don’t see a number next to the symbol use the most recent highs or lows for entry. This makes the rate of failure higher so make sure you have good volume and strong relative strength or weakness.

wcrx 24.65
aee 26.1
jag
amed short
axp 42ish
bcr
cme 330
flr 42 short
sbux 22.1
snda 51

I took a few days off from posting to enjoy Thanksgivign and try and get a fresh perspective on the markets. The choppiness was killing me. It was interesting to be able to sit back and watch how things unfolded last week.

In my last post I wrote “Also don’t discount the chance that the White House does an 11th hour news drop. Sorry I am a suspicious type.” Who knew that they moved the White House to Dubai? I am not going to get into all of the potential implications of this situation except to say that it will be interesting to see how things play out next week. Was the sell off Friday the start of something bigger or just another pull back?

Right now it is looking like a pull back. You could have bought just about any stock today on the opening bar today and made money on it. I didn’t trade today but it almost looked like we could have retraced all or most of the move if there was a full session. Not a lot room for what ifs in trading but it is something to think about.

Seeing as Tigers car crash is getting more play than Dubai I think we are going to be ok.

Technical damage seems to be pretty limited as volume was light and many stocks stopped at the 20 or 50 day moving average. You can really see this kind of action in AAPL, SPY & QQQQ.

With that said I am still troubled by the action in GS, small caps (IWM) and financials (XLF). All three underperformed the market Friday and are trading below the 20 & 50 day MA.

http://tradermike.net/has done some outstanding work on this in his most recent post.

The following ideas may be actionable early next week, but use caution selling support short has been nearly impossible lately.

abfs 24 short
cme 330
mlm 84 short
omi 38.75 short
rdc 24 short
xle 56 short

On Tuesday I wrote “we may have put a reversal hammer in on the dollar index followed by a green candle.” Since then the dollar index has trended higher and equities have gone lower. Nothing really dramatic mind you but if this trend continues the 20 day MA could cross over the 50 day on the upside in the dollar index, and conversely in the SPY. This is definitely something to keep an eye on.

Internally underperformance of key sectors continues, financials (xlf), energy (uso, oih, dig, ung) and semis are really lagging. It also appears that there significant levels are building in AAPL 208 and transports (IYT) 73.50.

Conventional wisdom is that the market has had a great year and that no one is going to let it fall apart now and ruin the year. I agree with that for the most part and don’t expect a lot of fireworks but we need to keep an eye on these levels.

My only other observation is on the VIX , SPY and t bills. The VXX (vix etf) is trading at 52 week lows on big volume while the SPY is trading near the highs on an expiration Friday on the lightest volume in almost 2 months. Meanwhile the T-bill yield turned negative for the first time since the Lehman collapse. Not quite sure what to make of that.

Thanksgiving is obviously out there but this coming week does have some potential market moving economic events.

Monday 10:00 existing home sales

Tuesday 8:30 GDP 9:00 Case Shiller 10:00 Consumer Confidence 2:00 FOMC Minutes

Wednesday 8:30 Durable Goods, Personal Income & Jobless Claims 9:55 Consumer Sentiment 10:00 New Home Sales 10:30 Petroleum #’s

Also don’t discount the chance that the White House does an 11th hour news drop. Sorry I am a suspicious type.

The following ideas could be actionable early next week but I would caution you to look for volume and relative strength or weakness because I am not sure that it will be the week for big momentum moves.

agu 58
cern 75 short
cmp 66ish
ges 36 short
omi 38.75 short

So it finally happened the market actually moved. Energy materials and semis lead the way down and the only etfs green on my screen were fixed income. Was this just Opex games or the start of something bigger that remains to be seen. I made the oberservation early on that the last decent trend day we had was Monday and that today was looking like the mirror image of it. Hopefully the next week won’t be like this last one but with Thanksgiving coming I hold out little hope.

I have very little for tomorrow.

The following ideas all shorts maybe actionable:

bhi 40.5
cern 75
gva 30

I was encouraged about the market action I saw yesterday, a run at new highs on an uptick in volume with lagging sectors participating. Here is a quote from yesterday “Small caps (IWM), Transports, (IYT) and Real Estate (IYR) all out performed today on better than average volume which was encouraging.”

I realized this evening that the big pick up in volume came in the afternoon on the downside after Meredith Whitney started talking. If my calculations are correct roughly 20% of the day’s volume in the SPY came in 4 bars on the downside late in the afternoon (that does not include the last 10 minute bar).

I am not one much for Japanese Candlestick theory but it also looks like we may have put in a reversal hammer on the dollar index yesterday followed by a green bar today. Feel free to correct me here I am not really sure about this stuff.

On to more conventional issues, volume today was awful, the lightest since the Columbus Day holiday. Despite the lackluster action in the broader market commodities specifically ags (think POT) and metals (think XME and its components) acted great. XME looks like it wants to break out over 50 and POT has broken out of a consolidation going back to the middle of June.

It maybe time that we start to consider what a somewhat stronger dollar does to the markets going forward.

The following ideas maybe actionable for tomorrow:
aapl 208/208.71
amed 38 short
bcr 82
bdx 74
cenx 10
ceco 26
itg 19 short
pbr 52

Not too much to say about today except that I continue to be surprised, that seemingly important technical levels in indexes and stocks are breached and there is in many cases very little action. Focus on the dollar /economy and being at the highs is making for some pretty lackluster volume and trading.

Today at least came with an uptick in volume and some decent action if you were involved early. As a testament to how strong this market is, strong dollar comments by Bernanke and Meredith Whitney saying” she hasn’t been this bearish in a year” was not enough to take the market down.

Small caps (IWM), Transports, (IYT) and Real Estate (IYR) all out performed today on better than average volume which was encouraging.

As always treat every alert with caution, make sure that there is good volume and relative strength or weakenss. Be especially careful with the two short alerts. Shorting support has been damm near impossible recently and these could easily be support buys.

The following alerts could be actionable tomorrow.

cern 81
cnq 70
de 50
gfa 35
ilmn 32 short
pot 106
rht 29
swn 42 short

Not much to say about Friday except that it was a low volume chop fest between resistance and the trend line and 20 day MA on the SPY. There are no real clean numbers on the resistance levels but keep an eye on the most recent highs they should tell the tale. (SPY 110.82 & QQQQ 44.16)

The dollar/equity trade is still in full force watch 22.25 it is the most recent low.

Hopefully the economic announcements this week will break this string of low volume lackluster trading. The last 7 trading days have come on lower than average volume.

The alerts for tomorrow maybe a little far away and not be actionable for a day or two if the low action volume continues.

alxn 32 short
bg 56 short
bhi 40.5 short
mcrs 30
pot 106
qcom 46
swn 42 short

Also watch the AAPL 205 level it should give us a good sense of where the market is headed.

I think the argument can be made that for this market to take the next leg up we need to cool off a little digest some of the recent gains and then proceed. That maybe we are currently experiencing. Not a real sell off just kind of drifting lower. The QQQQ & SPY are both trading above all major ma’s and trend lines.

But I continue to see what I think are troubling signs. Tech acts pretty well but energy, small caps, semis and transports are not confirming any move to new highs. Also the dollar etf UUP closed above the 20 & 50 day ma on a decent bar of volume so we may be starting a bottoming process.

I don’t want to sound like a perma-bear, I really am not. But I would like to see some volume, enthusiasm and a better economy to go along with the rally. I just do what the charts tell me.

This week was pretty quiet on the economic front but next week is not. Retail Sales, PPI, TIC Data, Industrial Production, CPI and Housing starts all come before next Wednesdays open. So we may have to wait it out until then.

I don’t have much for you on the trade idea front for tomorrow. Momentum has been tough this week but here are a few things I will be watching tomorrow.

symbol alert ave vol
alxn 43 680 short
ge 16 108
ice 110 1.3
ntrs 43 2.1 short
sun 27 3.2 short
aapl 205 18.1

Today was kind of a weird day, the market had a couple of technical levels in play so I was expecting some kind of interesting moves, but because of the holiday only half the players showed up. Reaction was muted at best. My opinion that this rally should be treated suspect hasn’t changed much.

GS, Small caps (IWM), midcaps (MDY), transports (IYT), oil service holders (OIH), semis (SMH), financials (XLF), energy (XLE) and volume are not confirming this run at the highs. I am not much of a guy for stochastics but I have read that we are overbought on that indicator as well.

Yet my best trades today were on the long side and all of my setups for tomorrow are longs as well. These long alerts should be treated with a healthy bit of skepticism and even be looked at as possible resistance shorts.

With that out of the way I am watching the following spots.

Symbol alert price ave daily vol
ge 16 109.1
sy 41 1.2
ice 110 1.3
acl 149 530k

Continue to watch the dollar it is currently the key to this market and should be constantly monitored.

I know that I am consistently skeptical in the face of a strong market and that my best trades recently have been longs, but when I look at important sectors and stocks not confirming a strong tape on weak volume I am skeptical. Not crying Chicken Little just trying to keep a critical eye out.

A shout out to my boy Kevin D in Chi town. Welcome to the Right Edge.

A quiet day today digesting yesterday’s gains while everyone looks up and stares at the big gap level in the SPY. I would imagine that we are going to need much better volume than we have been seeing lately to make it through that gap successfully. 110.31 is the official high from 10/21 but I keep seeing people throw 110 around. We made it through the “gap “on QQQQ a while back but keep an eye on 44 it would be a new 2009 high.

The dollar continues to be the driving force in the market, after the news on UUP last week I took it off of my screen because it had become disconnected from the market. It looks like the dust may have settled and it may be a useful indicator again. The all time low on UUP was 21.92 reached during the week of March 7th 2008. Today’s low on the UUP was 22.25 so we are getting close to all time lows in this product. The dollar index ($DXY) has been around longer than the UUP and may be a better indicator. As far as I can tell the all time low there was during the week of 3/21/2008 and got down to 70.70, it closed today at 74.95 two pennies off of the 2009 low.

I hate to keep harping on this dollar trade, everyone knows about it at this point and it is redundant, but I geuss that is my point. The market is laser focused on this trade and at some point it is going to stop working. When it does there could be fireworks and I don't want to get blownup. Also as am American I am not happy about this devalued dollar and worry about inflation.

As you know I have been suspicious of this rally so with that in mind my best trade today was a long, LIFE 50 and all of my ideas for tomorrow are longs. Just bear in mind that CMG & CRM are tough stocks and you should reduce your size in these names.

acl 149 530
aet 30 7.4
cmg 90 616
crm 65 1.9
ge 16 109
hsp 48 970
sy 41 1.2

The market is very sloppy with the S&P sandwiched between its 20 day and 50 day/trend line. This should resolve itself soon enough and the key may be GS. I have seen in more than one place that GS appears to have a bear flag and that the MA are about to cross on the down side. There is no clean level here but it is something to monitor.

With the economic calendar light this week technical indicators like GS and important MA’s on the indexes could get more play. life and qcom long could be actionable tomorrow, but the qcom does look a little extended.

life 50 1.9
qcom 44 18.6

FDO 28 short could also be actionable tomorrow as well. This is one could be more tricky because we have bounced here 4 times in the last 4 days, and the 50 day MA is 28.07, so it could be a support buy around the figure.

fdo 28 3.9

As you can tell from my commentary over the last week or so I am cautious to bearish on the market. The crossing over of the moving averages on the major stocks and etfs and the break of the SPY trend line is the cause for this. Today’s market action has not done much to change my view. The volume was well below average today so I would really like to see some volume to go along with the rally to be a believer. A close above 107.50 or even better 108 on some decent volume would go a long way towards changing the psychology of the market.

Dr Brett Steenbarger has a truly outstanding blog,I read it religiously. Last evening he put up a post regarding some under performance by key sectors in the market. It dove tails nicely with what I have been thinking and highly recommend you check it out.

The 50 day on the SPY is now 105.50 we opened right on that number this morning traded up to the March trend line and when we couldn’t go through it post fed, sold off hard in the final 30 minutes and closed below the 50 day. Not a disaster but I think the bulls wanted to see more. The SPY and the QQQQ have almost the exact same chart. They don’t look like they want to break down, but the MA’s and trend line are acting as a lid. With that said I think the internals look awful.

The 20 & 50 day MA either have crossed or will tomorrow on the following stocks and etfs: GE, IYR, IYT, URE, PRU, BAC, SMH and C.

The 20 & 50 day MA’s are close to crossing on the following: GS JPM IWM.

UNG the 20 day crossed the 50 day on the down side and it is close to all time lows with a nat gas # out tomorrow at 10:30.

Those are just a few names that I consider to be important, there are many more that look the same.

Considering the warnings I have been seeing about troubles to come in commercial real estate I am going to be closely watching the IYR and URE and looking for potential REIT’s to short. With that in mind, KRE the KBW regional bank index closed below its 200 day MA.

Again I would remind you to keep an eye on the 50 day MA in AAPL, now 184.40. A lot of eyes are on this spot and reaction to it could tell the tale for the rest of the market.

The UUP dipped below its 20 day ma today right after the fed announcement before recovering a bit. Interestingly it traded almost 11 million shares today that may be the most for it ever. Average volume for UUP is about 2.8 million shares.

One last thing.

I’m not sure what to make of this but the US Government bond ETF’s also look terrible.

AGG, IEF, TLT, and SHY all look like they want to roll over. The TBT ultra short 20 year treasury had a nice bar of volume today its 20 have crossed the 50 on the upside and looks like it wants to pop through its 200 day. This coupled with the recent action in gold could be signaling inflation.

Wisdom from Kansas

“Nothin last forever but the earth and sky It slips away And all your money won’t another minute buy”

The weak dollar strong equities trade has been working like a charm. Watch the UUP or the dollar index when it is weak you buy stocks when it is strong you sell them. Nothing fancy it’s just that simple.

When I know about it and they are talking about it on CNBC you need to start worrying.

When I first started on the Street conventional wisdom was the US consumer could not handle $50 barrel oil. It would be such a burden on people that they wouldn’t be able to buy anything other than the bare essentials and discretionary spending would dry up. Now crude below $65 or $70 is viewed as a sign of contracting global demand and a slowing economy.

My point is that things change and this weak dollar/strong equities trade will as well.

You need to ask yourself when does such a weak dollar start to become a real problem; or what causes the dollar to start to rally?

My guess is that answer lies in Washington DC somewhere. In the mean time this trade is the flavor of the month and we must monitor it. Because when it stops working Lord knows what is going to happen.

Fed tomorrow it’s going to be quiet blah blah.

I think we need to ask ourselves what if the Fed weren’t tomorrow. What stuck out to me today was the number of 20 day MA’s that are ready to cross over the 50 day MA’s on the downside.

GE, PRU, URE, IYT, SMH, & IYR are all ready to cross over tomorrow on any weakness, and if it weren’t for the BNI deal IYT would have crossed over today.

IWM & XLF are not as close as the others but they are ready to cross over as well. I feel that if we have any more weakness this will be more than the pull back everyone has been waiting for.

The DIA still have not convincingly broken its 50 day MA, but I wonder what will happen if it does.

From a macro perspective you really have to ask yourself what the move in gold was about today. You can say inflation considering the move down in the bond market, but the dollar and crude were up on the day so I am not sure what to make of the whole thing. If you were suspicious you could suspect political turmoil but who knows.

The 50 day MA continues to act as a lid on the SPY, QQQQ & UUP keep those on your radar screen something’s gotta give.

The canary in the coal mine for the market may be AAPL. If you remember last week the strong selloff in the market was foreshadowed by GS breaking its 50 day MA back on 10/28. Keep AAPL 183.97 on your radar screen it may tell the tale of the market.

The focus of the market continues to be the dollar. UUP touched the 50 day bounced off and the market sold off, when it topped out at Fridays high (22.70) the market rallied back. I said yesterday that we will need to keep an eye on the 50 day MA’s to see if they act like a lid on the ETF’s SPY (h.o.d.105.41 50 day 105.43) QQQQ (h.o.d.41.57 50 day 41.74).

Keep the following levels on you radar.
UUP 22.70 (today and Fridays high) 22.80 (50 day) & 22.54 (20 day and today’s low)
SPY 103 (effectively today’s low) & SPY 102 (the most recent October low)

The IWM moving averages have not crossed yet, but two more good down days and it will.

The only other thing I would add is that I was surprised by the big bars of volume that I saw in some of the ETF’s. For a pre fed Monday there was some paper being moved.

Not much in the way of stock levels for you tonight but momentum sells are still working look at the following from today.

c 4
x 34
iwm 56

The following may be actionable tomorrow. The market is pretty oversold at this point so keep tight stops and don't over stay them if they do work.

ESI 90 short on education weakness.
ALXN 43 short.
And CLI 30 short on weakness in the IYR.

Well, so much for my quite inside day scenarios. The trend line on the SPY's which more or less coincided with the 50 day has been convincingly broken. There were huge bars of volume in the major etf’s dia, eem, iwm, spy & qqqq all put in well above average volume on the way down. My guess is that the 50 day will now act as lid; this will definitely be something to keep an eye on.

The dollar continues to be the focus of the market and the UUP is the place to look. Right now it is sandwiched between its 50 day (above at 22.81) and its 20 day (below at 22.55). These are going to be key levels to watch you have been able to trade the SPY’s off of this so it cannot be ignored.

We are trading below the 50 and 20 day MA’s in the important etf’s, but the MA’s have not crossed over each other yet. This will also be something to monitor. The IWM (Russell 2000) is a good measure of risk appetite and has lead the way down. His 20 and 50 day are the closest to crossing and should be watched to see if this is the pull back everyone has been waiting for or if we are headed for another leg down.

For the first time in weeks I have started to have some decent success with selling support and getting the breakdown. Take a look at MON (70), BAC (15) & BIIB (43.50) from this week. That is no coincidence given the market action but it definitely show a change in mentality, pull back buyers are starting to get run over. Don’t know how long this will continue but following are some spots I think are important.

c 4 750
x 34 12.9
iwm 56 48.9
smh 24 14.3
spy 102 192