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Dr. Kris
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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Notes: Market Firing On All Cylinders...or Is It?

    The market seemed to be firing on all cylinders as the threat of tensions in the Ukraine fades, but is today's rally just a cover-up before the next sell-off? Let's take a closer look at the technicals.

    Supporting the bulls' case, we have the following:
    1. The Dow Transports were the clear leader of today's rally with four airlines breaking out to new highs: Jet Blue (JBLU, $12), Southwest Air (LUV, $31), Spirit Air (SAVE, $72), and Allegiant Travel (ALGT, $127).
    2. Tech also led with the following tech etfs hopping over resistance: Tech (XLK, $40), Internet (PNQI, $70) & (FDN, $61),and IT (VGT, $100). The tech rally helped push the tech-heavy Nasdaq to a 14 year high.
    3. The VIX fell and closed the day near 12--a very bullish level.

    The case for the bears can be made by looking at more esoteric indicators:
    1. Despite today's drop in the VIX, the volatility of the VIX--the VVIX--did not drop as much as it should have.
    2. Considering today's level of bullishness, the VWAPs did not reflect that. The positive VWAPs (an indication of buying pressure) ended the day with a very tepid median value in the mid-50's while the negative VWAPs (an indication of selling pressure) ended the day with a median value near -100 which is quite bearish.
    3. The chart of the SPX is diverging from the chart of the ratio of the Consumer Discretionary/Consumer Staples. The only times since 2007 that this has occurred was right before market corrections.

    So, there you have it. Will the bulls win the end-of-summer race or will it be the bears?

    Aug 18 4:45 PM | Link | Comment!
  • Market Notes: China Rocks/Building Stocks On The Rocks -- July 28

    Last week's sell-off extended into today's morning session but abruptly turned around when the bulls came charging back. While most of the major averages were able to climb back into the green, the inertia on the Dow Transports appeared to be too much for the bulls to overcome. This is not a good sign and today's rally could be just a one-day event. While the market internals aren't bearish, they're not very bullish, either. Maybe the dog days of summer are upon us...

    Stepping up: China, Africa jump to new highs
    Chinese etfs have been soaring recently and today both the iShares China Large-cap etf (FXI, $41; Yield = 1.7%) and the SPDR China etf (GXC, $82; Yield = 1.8%) both broke out to new highs on heavier than normal volume. In fact, there isn't one long-based Chinese etf that hasn't been going nuts. I don't know when the honeymoon will end but it sure doesn't appear to be anytime soon. For those of you who are in either of the above-mentioned funds, please note the next levels of major resistance: $85 for GXC and $42 for FXI.

    Emerging markets have also been out-performing and today two Africa funds broke out to new highs: Market Vectors Africa fund (AFK, $34; Yield = 2.4%) and iShares S. Africa fund (EZA, $72; Yield = 2.2%). Both of these charts are quite bullish and many Wall Street pundits are saying that Africa is the place to be.

    Falling down: Building stocks continue to tumble
    If you had been paying attention to building and construction stocks, you wouldn't have been shocked to hear that pending home sales were down much more than expected for the month of June, as reported early this morning. The following stocks have been in free-fall for months and continue to slide to new yearly lows:
    1. Window & door maker PGT (PGTI, $7.39)
    2. Gypsum wallboard maker Continental Bldg (CBPX, $12.58)
    3. Siding & fencing maker Ply-gem (PGEM, $8.84)
    4. Modular carpet maker Interface (TILE, $16.07)

    Today's break-down in the Home Builder etf (NYSEARCA:XHB) indicates further downside for this industry group.

    Jul 28 5:40 PM | Link | Comment!
  • Market Notes: Time To Buckle Your Seatbelt? -- July 23

    While the S &P 500 (SPX) and the Dow Transports (DTX) both managed to eke out another new high (all-time high for the Transports), there are cracks beginning to form in the bulls' armor. To wit the following:
    1. The DTX--a leader in market direction--was actually moving down from the open, in contrast to the SPX and Nasdaq.
    2. Despite the gains made over the past week, the small-cap Russell 2000 (RUT) hasn't been able to close above its previous support level at 1160.
    3. While the VIX is still firmly planted in the bulls' garden, the implied volatility of the VIX is rising.
    4. Buying pressure is drying up and selling pressure is increasing, as measured by the VWAPs (a measure of institutional buying and selling).

    Now this doesn't mean that the market is going to reverse tomorrow, but the ground isn't looking as firm as it has been. While this earnings season seems to be humming along, stocks are starting to become fully-valued and once the bargains are gone, who will be left to buy?

    Today's Notable Movers & Shakers
    It was hard not to notice the 300% move in Puma Biotechnology (NYSE:PBYI). The stock soared on news of a MUCH better than expected cancer drug trial. While this situation is the wet dream of many investing in these early-stage biotechs, it's worth noting that this is the rare exception rather than the rule. Playing these biotechs with serious money is highly risky and more people have been sent to the poor house by betting on them than by those who have profited from them. I know the ones who need to hear this are the ones who don't want to--please don't let that person be you! Playing with money you can afford to lose is the only prudent way to gamble. (I don't mean to be a downer but I've seen too many acquaintances lose their shirts over betting the farm (literally) on these biotechs with drugs that are promised to be "sure winners.")

    On a cheerier note, the airlines continue to head into the stratosphere. Breaking out of recent consolidation today were Southwest (LUV, $29; +3%), Allegiant (ALGT, $125; +2%), JetBlue (JBLU, $11; +5%). Chartwise, these stocks appear to have the wind at their tails and further upside looks likely. However, these stocks, too, are becoming richly valued (unless the companies have raised their forward P/Es) and should the market start to crack, these stocks could fall with it. Replacing long stock with long call options might be a less risky way to play richly valued stocks in extended rallies.

    Jul 23 5:27 PM | Link | Comment!
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  • Instablog problems: I'm trying to post an instablog and the system just hangs. Anyone else having this problem?
    about 18 hours ago
  • Intraday support/resistance: $SPX 1986.75/1994.75, $DTX 841/848, $DJIA 16985/17065, Nasdaq 4514/4536, $RUT 1147.5/1163.5; $VIX 11.45/12.05
    about 22 hours ago
  • Intraday support/resistance: $SPX 1977.75/1986.25, $DTX 840.5/848.5, $DJIA 16895/16985, Nasdaq 4516/4533, $RUT 1154/1159: $VIX 11.85/12.25
    2 days ago
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