Stock Market has Switched into Overdrive

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The market has switched into total overdrive with the weekly RSI reading currently showing 72.62 above the critical 70 line.  BestOnlineTrades has been correct in maintaining the stance that this reading should be perceived as internal market strength and not a sudden reason to short the market.  The path of least resistance remains up and … Read more

Hanmi Financial Corp may do a continuation breakout soon

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HAFC has recently broken out north out of a quite large ascending triangle formation and has done so with a wide price spread and heavy volume, confirming it.  The volume was slightly less than the highest volume swing in the previous range and so that is somewhat of a concern.  However at least for now … Read more

China Agritech Inc Pulls back to the bottom of the broadening wedge formation

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China Agritech Inc CAGC has pulled back all the way to the bottom of its broadening wedge formation and it did it a lot sooner than I thought it would.  I indicated in a previous post that China Agritech has a habit of being just as volatile on the downside as to the upside.

CAGC was way overdue for some type of pullback given its recent 130% super move in just a month and a half to the upside.  Then some insiders started selling and I believe gross margins started to slip a little bit and so people started dumping shares.  It is probably a true statement to say that when any company gets near a 500 million dollar market cap it enters a new juncture where it must prove itself and show that it is ready to enter mid cap land and be able to continue to sustain growth despite the competition.

I don’t know whether this will be the case.  But I do know that CAGC has touched the falling wedge support and so far today has shown a nice price reaction off of this support.  The recent two candlestick bars also appeared to be a morning star candlestick pattern which is a reversal pattern.

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Prediction for the Week that Begins 4/19/2010

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I could be wrong about this, but I predict that we end this week higher in the broad market.  I also predict that Goldman Sachs will end higher this week than where it closed last Friday.

My guess is that investors will come to their senses when the Goldman earnings come out Tuesday and realize that this company is almost literally a non stop printing ATM machine and that any liabilities they have to pay out will be simply that, cold hard cash and a tiny fraction of what this company can earn in the real world.

In addition to that there are plenty of other earnings reports to chew on this week from a good portion of the SP500 index and the DJIA as well.

So it will be interesting to see how it all shakes out.  But for now I think higher by the end of the week or at the very least some decent base building before another move higher.

Ambac Financial Group, Inc. ABK may trend lower for most of this week and I would like to see it find support near the 1.00 range where there was an extremely high volume gap.  A more towards the 1.00 range also comes near the 78.6% retracement level and is an area where it has found support on previous mega spikes.

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The SPDR Gold Trust GLD ETF should have been up 100 dollars today

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One would think that with the major headliner news today regarding Goldman Sachs and the SEC you would see the gold price spike 100 dollars higher?

But no, the SPDR Gold Trust is singing its own tune and trading with a one track mind typical of gold.  2 steps forward, 1 step back.  Repeat. Rinse. Cycle Again.

But here at BestOnlinetrades we could care less what this headliner news is.  Trading off of news most of the time is a bad idea.  Sometimes there are exceptions to this rule, but what I have found is that most of the time one is better served to just trust the charts and the indicators (and the tape action!) as best you can because they are not in the habit of lying.

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Market Tops are not Made in One Day but Market Bottoms Are

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Today is another interesting day on Wall Street.  The Arms index hit a high today of close to 3.65 and tells me that today’s decline is most probably a one day oversold type event.  The market was very clearly in heavily overbought territory and very overdue for some type of pullback.  And so when any market gets in such a severe overbought level the smallest piece of news can be enough to get a big correction going.

How we close today will still be important as a setup going into next week.  If we close near the lows today then it could be a sign that next week will see some downside follow through.  On the other hand a decent end of day rally today may set the stage for a bounce next week to work off this oversold situation right now.

It is possible that this is a more significant top, but we will probably need another attempt at the highs for better confirmation.  So far the SP500 is still trading in a higher highs and higher lows type situation and until that changes I give the benefit of the doubt to the bulls.

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