Note that while CME has broken support and big money has clearly been dumping it lately, the candlesticks alone suggest a reversal on the daily. If I were ignorant of the volume action in CME I would say buy it for a swing trade. I suspect the action early monday morning will set the standard for the week.
Right now, we have a major breakout on lower volume in a slowing economy. The chart says we go higher and so I would recomend looking for breakouts on individual stocks. Some that I will be following early next week will be LMS, FMD, TNL, GRMN, NITE, DRIV, TRMB, ISE & ICE. Yes that is a long list but there are alot of nice charts right now. As a technical trader I have to look for long set ups in this market, but I will be quick to sell as fundamentally we should break the last few weeks lows in a slowing economy. It may be smart to either hold a large amount cash or hedge your long positions as this breakout could easily fail and reverse. As a possible hedge you might ant to look into VIX (volatility index) calls, this is a bet on a major market decline. Also, histoically the VIX has not been much lower than the levels is at now(which suggests we may be on the cusp of a major decline).
I see the market averages at a very important pivot point right now with a high downward bias. We have seen strong opens get sold and lower volume on the days when the market closes up, strong indications that institutions are pulling money out of the market. The nasdaq tracking QQQQ have been in a severe decline ever since breaking down in early May. The S & P 500 tracking etf SPY looks a little better but is at strong resistance right now (below).
On blowout earnings GRMN gapped higher this morning reaching as high as 105 in the premarket. But as soon as the market opened the selling began in volume and did not abate. GRMN turned out to be a good trading stock with substantial moves all day long but the trend was decisively down. Having bounced twice off the closed gap at 90 GRMN broke that in the late afternoon touching 86 and closing near 88. I will not speculate on reasons for this aggressive distribution I will however speculate that GRMN goes alot lower from here, 80 is still the first target. Here is an hourly 10-day chart to keep the recent action into perspective, note the money flow and engulfing nature of today's trade.
I see the first stop at 80 but with a really nasty break GRMN could spend some time in the 60's. I will post updates on GRMN's progress this week. Cheers!
GME is the dominant player in the brick and morter video game retail industry and sells through gamestop and EB locations. The video game industry has been growing steadily over the years with the success of the playstation 2 and xbox and is likely to grow further with new systems comming out this christmas. Many have wondered not if, but when video games will begin being sold and downloaded online. When this transition occurs the brick and morters who are not ready will be hit hard no unlike the bankrupt musicland and distrubuters like Navarre. Nintendo recently announced their new wii system will be able to download games from any previous system online directly from them for 5-10$ a pop. This is bad news for gamestop because not only will it hurt sales of new games, but the re-sell portion of their business should also hurt. Many will say that nintendo is a smaller player, but they are quickly taking market share away from the competitors and the new portable nintendo DS is becoming a pop icon like the ipod. This is purely speculation but I suspect the era of game downloading to home systems will begin as early as next year. This is certainly a gradual change and not abrupt, but from a trading standpoint the top where funds and the stret begin to dump is lucrative. Also this could potentially be a very long term short given the horizons. Take a look at this 6 month daily chart:
From a technical standpoint the stock has been taking on water ever since it touched its 50 on a few gap an runs. This follows the 6 months of channeling leading to the breakout. Since the decline began GME has followed a trendline down with the lower BB through support around 38 and through both moving averages (50 and 200 dma). This has occured on increasing volume and I suspect that institutions are begining to take profits on GME. The ideal entry would be at 38 or higher with an initial target around 33 where a gap becomes closed from there GME may trade in the old range for an indefinate period of time before the big collapse. I suspect when all is said and done this decline will look alot like MOVI's.
There are alot of factors to keep in mind. The new nintendo DS lite is selling out like crazy right now along with the games. But I suspect this may hurt GME because the system only sells for 130$ so if it is being bought instead of the PSP at 250$ or xbox live at 500$ then GME may miss out on some profit. GME apears to be aware of this and is trying to make up for the cheaper system by selling in house accessories and system bundles. Also nintendo's new system wii coming out this christmas will be much cheaper than the competition. Again this is just speculation but I think nintendo is going to come out way ahead in all this stealing market share from it's competitors with innovative ideas like touch screens and motion interactive games, not to mention much lower costs.
I will follow this one for a while as I suspect there may be alot of downside comming for GME. There will be more later as the situation develops. For now go try out the new nintendo DS and ask yourself if nintendo is once again about to rule the world.
NOTE: I will be on vacation for the next two weeks so there won't be much if any posting during this time. The other members may post if they want. I will be back online in the swing of things mid july. My current holdings are long: IOTN, MOVI, HOM, short: GME. Have a great summer!
Shorting this stock might make you feel like Han Solo with a ticker like TIE. The titanium producer primarily sells to companies like Boeing who use the strong and lightweight metal for aerospace. If Boeing was building tie fighters they would certainly use titanium for the frame.
The stock has pulled back considerably from it's highs about a month ago when the stock split, but its still holding above it's 50 dma after a few bounces and a pierce last thursday. Compared with any other mining stock this is a considerable feat. Last week I had been buying puts looking for a big drop when it broke it's 50 dma for the first time. It broke it's 50 dma on thursday only to reverse intraday on high volume and close alomst breakeven. This was the stock's chance to reverse and head higher, however Friday much of this effort was negated when TIE closed almost at its daily low down 5%. It has now formed a slightly widening down channel on the daily and I think its ready to re-test the 30$ low monday or tuesday. The support there won't be as strong this time because last time it was there the 50 dma was just above 30. Also note there is alot of room to fall once the 50 dma is breached and 30 is broken (forming an ABC continuation pattern). Furthermore, on the weekly chart TIE actually did close just below it's 10 week average (~50 dma) for the first time since this parabolic move began over one year ago.
I think the fundamentals are on your side too because metal prices are declining after a couple year parabolic, speculation induced move (especially in Ti). Furthermore, Russia is producing more and more Titanium and recently signed a major 18B$ deal with Boeing to sell them Titanium. I'm not sure how much market this will take away from TIE, but it can't be good for them. In addition, TIE trades at more than twice it's peers valuations.
My only concern is that we have options expiration this friday and TIE has one of the highest implied volatilities out there. It is certainly a very good canidate for a max pain pin because of the large interest in selling TIE options. Max pain currently lies at about 30 but as I learned last month it can change rapidly as the option volumes spike towards the end of the week. By the look of the chart I would guess there will be more of a tendency towards 32.50 or 35 due to options but clearly this stock wants to go down and it may be impractical for the option writers to try and hold it up here.
Depending on how it behaves it's self there could potentially be a very large decline as it DAKT could be forming a long term top with such heavy volume in this 52-week high territory. Its certainly worth keeping an eye on. I have no position currently but will prob try and short it for a one-two day trade. Note, this stock is the strongest stock (not too many bearish indicators) I have mentioned as a possible short since this sites inception and it is the most risky. However, I have found the first few drops in a reversal to be the most profitable if they can be timed correctly and I smell a reversal comming in DAKT.
Caution is waranted, HOM is a hurricane play. Aside from ZENX (imo), HOM was (and may be in the future) the strongest hurricane play. Last year they reaped huge profits on rebuilding the South in the wake of Rita and Katrina. Another disasterous hurricane and HOM could pop. But it seems to me the stock has already made its move in anticipation of a strong hurricane season nearly tripling in price in six months. The stock's weakness friday is strongly correlated with a very negative report by the folks at Stock Lemon. Find it here. If any reader can find a more bearish chart I'd like to see it.
(click to enlarge)
By the way, I am out of AAPL completely after the breakdown today and yesterday. It failed to hold at the lower end of the symetrical triangle I mentioned before and apeared poised to break 60 (which it did) so I am out. There is a potential double bottom forming, but I am staying away from this one until it can show more strength and regain it's 200dma. If it breaks last month's low I could even go short.
There is a similar type of action in DAKT occuring now. The stock has vaulted above the upper BB on the highest volume days the stock has ever had. The last two times it tried this recently the stock sold off hard intra-day leaving the long tails circled in the chart. The current move looks like it could take DAKT to around 50, a nice round number for a top. If DAKT moved to the upper end of the first gap in this move (around 41) it would be just over 15% gain. Worth note was that DAKT announced a 2:1 split last thursday and may have contributed to the buying frenzy at the end of the week. I read this in an Oneil's book over the weekend: "It is also helpful (to the shorts) if a stock has recently split... The second time a stock splits is usually at a much later stage in the stocks overall move. This is normally too obvious to the crowd to be a rewarding stituation... Like everything else in the stock market it is a simple issue of supply and demand with a large potential supplyof stock that could be offered for sale in the market place."
SUPX jumped out at me in a scan of the IBD 100. It was 76 last week, is now 97 and apears to be comming off for good unless is can shake off some recent sellers. After filling a huge gap down on the biggest volume ever the stock failed to move higher and broke out of its channel up to that point. It now appears to be pausing before the next major leg down.
