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Chart Swing Trader
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Hi, I am a 33 year old part-time trader that started this website as a way to improving my skills as a trader and also sharing my thoughts on the market. I am a follower of the CANSLIM method of investing developed by William O'Neil, founder of Investor's Business Daily. I have adapted this... More
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  • State of the Stock Market - 10/12/10
    Not a bad session today on Wall Street, as stocks fought back from a weak open to close slightly higher and continued to find support at a key short-term moving average.   The day started poorly, but after about twenty minutes, stocks found a bottom and bounced strongly.  They moved sideways in a very tight range from 11:00 to 2:00, but as the final two hours of trading started, stocks started moving up again and closed with gains.   Volume looks higher on the Nasdaq and close to yesterday's totals on the S&P.

    Technically, stocks keep chugging along and keep getting support at their 9 day moving average, and as long as this occurs, there is no reason to fight it.  My only worry right now is that the indices seem to be wedging up a bit again, but it doesn't mean anything until we see the breakdown.   In fact, retail continues to consolidate in a very bullish manner and as one of the leading sectors right now, a breakout here could lead to further ramping on the overall market.  

    S&P 500
    Russell 2000
    Charts from Telechart, Courtesy of Worden Brothers, Inc.

    This is not to say I don't have my worries about this market.   The breadth numbers I follow continue to flash many warning signs - the numbers continue to get stretched past levels from which corrections typically occur.  It is important to recognize these warning signs, but not let them totally control your thinking.   They can continue to be stretched further and further - they simply are saying that the market has moved enough that a correction is likely soon.  They do not say when exactly it will occur.

    Personally, I continue to believe that we will see a major, heavier volume, one-day selloff at some point that takes us through the short-term moving averages and that that move will be the signal that this rally is over for the time being.   However, that move hasn't occurred and until it does (I repeat) there is no reason to fight the market.   Stay long, take some profits when you get them, and keep your stops in place to protect yourself when/if that big move occurs. 

    I started a small position in ALGN today at the end of the session ($19.93) due to the higher volume it showed today.   I have noticed that this higher volume has recently led to breakouts and I am hopeful it will occur here, although there are obviously no guarantees.   It also classifies (I believe) as a pocket pivot candidate and as such I decided to enter.   I continue to hold IDSA but that's it for now.   With the warning signs flashing, I don't want to get too aggressive, but I also don't want to fight the market.   It's a delicate balance that I am doing the best I can to make. 

    That's about it for today - with earnings coming in now, it should be an interesting few weeks.   I am expecting a pullback at some point, but it may be from five percent higher than we are now, so again, don't fight the move until it proves to be over.   That's the best advice I can give.   Take care and good luck.

    Disclosure: Long IDSA, Long ALGN
    Oct 12 4:26 PM | Link | Comment!
  • State of the Stock Market - 9/28/10
    Another bullish day on Wall Street today, as stocks saw some early follow-through to yesterday's selling but quickly reversed that and ended up positive.   A bottom was put in today a little after 10:00, and stocks worked their way higher throughout the day in a steady manner.   The bounceback was impressive, with the Nasdaq climbing almost forty points off of its morning low and the S&P moving almost twenty points off its low.   Volume appears higher. 

    Technically, the market continues to act in a bullish manner, even with the divergences out there.   Today was another example of the importance of using a 9 or 10 day moving average on your charts - both major indices bounced right off those levels this morning.  The markets are still below Friday's highs but that could be just a matter of time given today's action.   We're not really overbought short-term either so a breakout could work again here.   The Russell 2000 and financials continue to underperform drastically as neither has broken through their resistance levels yet, but it hasn't mattered much to the other two indices - maybe it won't ever matter.

    S&P 500, Nasdaq
    Russell 2000 and XLF

    I didn't make any trades today but hopefully some of you were able to catch some of the move in CGNX today.  This was highlighted in the weekend video and was up a nice 16% on higher guidance.   This is one of those plays that not being around a computer intraday makes almost impossible to play.   I did put a limit order in on BIDU last night to short at $108, but that wasn't filled (although it did gap and reverse like I wrote about last night). 

    Instead of writing much more, I figured I would just share a few charts to wrap up here that are worth watching.   I have others (KNDI, FVE, VPG, AHD) but they are very, very thin.  The action today was bullish so it looks like the market wants to keep moving higher - no need to fight it.   Good luck Wednesday.

    Charts from Telechart, Courtesy of Worden Brothers, Inc.

    Sep 28 4:30 PM | Link | 1 Comment
  • State of the Stock Market - 9/27/10
    A quiet day for most of the session today on Wall Street, as stocks were down just slightly in the morning but didn't go anywhere sideways through lunch and into the early afternoon.  Around 2:00, however, the action picked up a bit and stocks moved briefly positive for the session.   They could not keep the rally going however and had a somewhat nasty selloff in the final hour of trading.   The selling wasn't drastic and no damage was done, but the drop was quick in that final hour and stocks did close at their lows for the day.   Volume appears to be lower.  

    Technically, nothing really changed today - the overall market remains quite bullish and a pullback/consolidation would be completely normal here.   As long as we remain above the former resistance levels broken last Monday, I would remain bullish.   A break of those levels might make me rethink things, but as I said in this weekend's video, there is no point in anticipating a breakdown occuring - wait for the evidence. 

    As I take a quick look through my scans, I don't notice much damage at all to individual stocks.  ISLN had a nasty break today on heavier volume (no news as well) and INFN sold off hard as well on heavier volume after some parabolic action last week.   That's really all I see however.   If I see more breakdowns like this over the next few days, I would get more worried, but again, let's wait until we see the evidence. 

    BIDU and LVS were two stocks up large today and I do expect BIDU in particular to reverse soon, much like INFN did today.  It is getting parabolic (two gaps in a row is a good signal) and if it gaps up again tomorrow, I would look to perhaps short a break of tomorrow's potential gap.   Since I am unable to trade intraday anymore, this won't be a trade I will be able to pay much attention to, but I am putting it out there as one to watch. 

    Charts from Telechart, Courtesy of Worden Brothers, Inc.

    Not much else to say today - it was a slow day overall and more days like this will be constructive.   There is still a lack of nice bases at this juncture because the market has run so much, and it takes time for new, safer buy points to emerge.   Patience is a virtue and you need it right now.   Take care and good luck Tuesday.
    Tags: BIDU, ISLN, INFN
    Sep 27 4:29 PM | Link | Comment!
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