Market Timing

QQQQ Does a Full Intra Day Reversal Today

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Remember I did this post on the SP500?  I was talking about how we are somewhat constrained by this top line resistance that has some tendency to a broadening wedge formation.  Then I did a post a couple days ago on the QQQQ and said that the QQQQ’s seem to be signaling a top based on a test of previous swing with 26% lighter volume.

But Today the Market was up like the 4th of July!

Yes it was.  I thought for sure I would have egg all over my face after saying that the QQQQ’s had signaled a short term top based on the price retest on 26% less volume and a price close under that relevant price swing.

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US Dollar Index Bounces off of Support Creating Bullish Divergence

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The US Dollar Index has elected to bounce off of support creating a short term double bottom.  The bounce has also created a bullish divergence which is now playing out and should allow the US Dollar to move higher shorter term.

In a previous post I was talking about how the US Dollar index was at crucial long term support and that it really needed to hold the 79 level.  A significant bearish decline could ensue with a downward break of the 79 level.  But so far the index had decided to evade this break of support and is now heading higher as a result of this moderate shorter term bullish divergence.

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QQQQ has a Non Event Day

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qqqq20090729 Yesterday I was talking about how I noticed a confirmation sell signal on the QQQQ’s based on price and volume.  But today we really don’t seem to have confirmation either way. Volume was slightly higher on the Q’s but as far as price goes we did not test either the high or low of yesterday so we really don’t have much new information to go on.  Today is considered an ‘inside day’ since we stayed within the low and high of yesterday.  Tomorrow, if we again stay within the low and high of today, then that will be a ‘double inside day’ and would be a sign that a big move is coming.  Confused yet?

But seriously, double inside days can lead to big price moves.  They problem is they do not give a directional indication, just a general signal that a big move may be coming.  But since we don’t have a double inside day yet there is nothing to go on.

The market in general seems very reluctant to give any price back despite my signal for short term bearishness.  Perhaps it is not surprise since we are really getting close to super low volume summer doldrums season coming up here in August.  I suspect that if we do get a pullback in the next week or two, that it may be really quite a lame one.

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Bounce Play in SRSR Sarissa Resources coming ?

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There may be a ‘bounce play’ developing in SRSR Sarissa Resources, the pinksheet stock that has a tremendous run over the last few months.  It peaked out near .20 cents last week and the last few days price has been literally free falling like there is no tomorrow.

This is a highly speculative type setup (or is it?), however I believe SRSR could be setting up for what is known as an ‘automatic rally’ either by end of day today or tomorrow.  An automatic rally from current levels could lead to a 50% move higher.

An automatic rally is  just like a rubber band or a bungee cord.  You can stretch a rubber band only so far until the opposite forces take over and then it SNAPS back in the other direction almost automatically.

The heavy volume today seems indicative of us being close to washout levels.  I would not be surprised to see us hit .14 or .15 cents on a rebounding automatic rally.

The only question is, is today the bottom or tomorrow.  I am going to stick my neck out and say that .081 is the final low and that we will not have another washout day tomorrow.  I suppose we could break .081 tomorrow and then reverse back up on an intra day reversal… but that is guesswork.  I will just stick with the low being .081 and believe the automatic rally should start either by late end of day today or tomorrow.

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Watching EPEX Edge Petroleum Corporation for a Signal

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We are keeping an eye on Edge Petroleum Corp EPEX for a possible decision point in early August.  EPEX is a crude oil and natural gas exploration company.  So clearly the price of oil and natural gas is one factor in the potential future price of EPEX.

I did a brief post on the price of natural gas earlier indicating that natural gas as represented by the UNG ETF is slowly starting to form a bottom.  It probably has quite a bit more work to do at the lows for a clearer picture on a real trend change, but for now the first major guidepost for UNG is the July monthly closing price bar and then the follow through on the August price bar.

We already know that the price of crude oil has been able to get a substantial recovery rally going from the depths of its bear market lows.  Now if natural gas can start a similar trend, we feel it will be beneficial to EPEX.

More important than that however is the actual price action on EPEX.  Lets take a look at what it has been doing.

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ETFC Etrade shows signs of New Uptrend

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ETFC – Etrade Financial continues to show good signs of a new uptrend based on price structure and trading volume.  They recently reported another loss on July 22nd but CEO indicates that the recent money they raised will be enough to pull them out of their loan loss crisis.  In true market forward looking fashion, the market starts to mark ETFC up well in advance of any full resolution to their loan crisis.

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BestOnlineTrades added ETFC to the recommended list this morning very near the open at 1.47.  The stop is set at 1.38 but in this case that may need some fine tuning depending on if or how much of a pullback ETFC initiates this week or next.

The ideal buy price for ETFC was at 1.35.  But here at BestOnlineTrades we were a couple days late in spotting ETFC as a possible candidate.  If a 1.35 entry was taken than it would have allowed ideal stop placement just under that support area as depicted by the red dashed line.

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PIR Pier One Looks Ripe for a Breakout Soon

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PIR or Pier One the specialty retailer looks like it is ripe for a breakout soon.

I am initiating a buy stop on PIR at 2.30 for tomorrow with a protective stop at 2.09

I like how PIR has held tight in this sideways range since early May and not given back too much ground especially considering how far and how fast it has come since the March lows.

It looks like constructive cause building to me.  There were two blow out spikes that occurred about a month ago, but in each case both of them failed to hold above resistance.  I believe those spikes are referred to as upthrusts. In each case they were on quite heavy volume.  So you saw new longs come in on those spikes and shorts unfortunately got blown out.  All of this is part of the cause building process. So now it seems patience is in order and lets see if PIR can get a breakout going here.

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FITB and CEMJQ

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Both Fifth Third Bancorp FITB and Chemtura CEMJQ have initiated buy signals as of the early morning today and based on my previous post.  Both stocks were trading in congestion ranges similar to what was occurring in the SP500 and other broad market indices.

Today they have spoken and are now part of the BestOnlineTrades Recommended List.

FITB had a really clean and clear looking uptrend since the advance began in early March.  Up until now it has been stuck in a long somewhat sideways trading range and consolidation.  But what was clear was that it was not intending to give back that much ground.  So today we see a breakout from the resistance line.

CEMJQ has basically the same story as FITB.  I think FITB had a cleaner looking uptrend but the structure of both was more or less similar.

So for now I believe the trend is your friend with these too.

I think it is always interesting to do a side by side analysis of the broad market indices and then try to see part of the broad market action in the individual stocks.  I have always found that this helped me to gauge trends either up or down.  The broad market indices are indeed the ‘mother ships’ and the vast majority of stocks tend to follow them.  Of course there are plenty of exceptions at all times, but for the most part this is what I find to be true.

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