The market popped last week on the federal reserves shift to a neutral bias bringing the indices to the area where the big plunge a few weeks back began. I would say we are at a pivotal point in the market where we either move higher and continue the bull market to new highs and more new highs, or we bounce of resistance above and head lower. Economic issues are definitely suggesting a major sell off should be occurring right now, but the chart just doesn't agree. I have the DIA (Dow Jones ETF) 6 month chart above. You can see DIA is trying to move above its declining 50 dma but on lighter volume. Some of the indicators suggest lower prices while others suggest it will pop. My feeling here is that this is probably the best time to be shorting but we better not fight the tape, lets just look at a few charts that we can trade while we await some confirmation of a broad market trend.
Compucredit (CCRT) is one that I like fundamentally short and was given to me by contributor betweenthebars. They offer credit cards and other forms of lending to poor credit customers and have a business segment in sub-prime. I traded this one down on the last big sell off and now after a big bounce it looks like time to re-load puts:
A massive wall of resistance lies around $34 for CCRT including it's upper BB, 50 dma, 200 dma and a declining trend line. I'd recommend placing a stop at $34 and targeting $25.50 below.
As a follow up to the post last week about ICE. It broke $125 and sold off hard as predicted but I failed to notice another support level nearby in my previous post. There should be some support at a the low on the last substantial ICE pullback, $123.16. In fact this level held on Friday and the stock appeared to rally from this area into the close. I can see why the stock is selling off on the impression that ICE is about to get involved in a bidding war for BOT. I can also see why the stock should correct after running for so long to such expensive levels with no major correction. But this is turning out to be way too easy for the shorts. ICE needs a good explosive run to shake out shorts before the downtrend continues. I would buy the stock here hoping to sell it near its 50 dma at $140. Set a stop loss around $120 as the lower BB should keep ICE from falling too much in the short term.
Have a great week and as before I will post as soon as I fell like the market has decisively picked a direction. Disclosure: I own ICE calls and DIA puts.