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The Markets From The Eye Of A Trader

|Includes: AAPL, BBRY, QCOM, SPDR S&P 500 Trust ETF (SPY)

Ever since the reversal, short term bottoming signal on February 5th, 2010, the markets have traded in a wild manner. The bottoming tail on that day told me to look to go long but with the utmost care.  Anytime you have a day where the markets flush out on heavy volume, and then reverse to close higher, it is a good bet there will be a short term reversal. The SPDR S&P 500 ETF (NYSE:SPY) hit a low that day of $104.58 and ended up closing all the way up at $106.66.  The volume was the highest of any day since the March 2009 lows in the market.  Funny yet scary how the close of on Friday February 5th, 2010 had 666 ($106.66) while the low from March, which just so happened to be around the same volume, was 666 on the S&P 500.  In any case, while I expected this short term reversal, the markets still remained in a precarious place.  Global debt and growth worries, China raising capital requirements for banks and currency worries, wildness.  This alerted me to be extremely short term on any swing trades I took while using break even stops on all positions once they were in the money.

Since that great reversal a week ago, the markets have done exactly what one would have expected. We have chopped up and down wildly, today being no exception with a general short term trend of higher.  After a huge rally yesterday, China announced they would be raising their capital requirements for their banks.  This immediately put pressure on the futures.  The dollar started to jump as well.  Anything that is not viewed as a positive for any country outside the United States will strengthen the dollar. This in turn puts pressure on the markets.

I continue to expect further choppy upside trading in the coming one to two weeks. After this, I will be very careful as the markets may move sharply lower. Short term swing trades will continue to be the answer to profiting in this market.  The technical levels dictate the entries.

As I mentioned, the markets are selling again today after the big rally yesterday.  At this point of the day we have negated all of yesterdays move.  Stocks that continue to outperform are United States Steel Corporation (NYSE:X) and other commodity steel plays like Steel Dynamics, Inc. (NASDAQ:STLD).  These stocks have been hammered in recent weeks more so than other plays.  It appears as if they are getting some continued short covering and upward momentum.

The two technology stocks that are rallying higher today on an overall weak session are Qualcomm, Inc. (NASDAQ:QCOM) and Research In Motion Limited (NASDAQ:RIMM).  While most technology stocks are lower today, these two are higher. Research In Motion appears to have a clear path to gap window on the daily chart at $71.50.  Once that price hits, there will be some resistance. It it breaks, the gap could be filled all thew ay to $83.00.  Considering this market and the weakness, I would not hold my breath in the short term for that gap to be filled.  Qualcomm Inc. has continued its upward move following yesterdays buy signal I wrote about when it hit $37.00.  On the charts this is an unbelievable level of support and sure enough the stock continues to rip higher off that level.  Since the hit of $37.00 yesterday, Qualcomm Inc. has gone to a high of $38.68.  This move is probably coming to a short term end now.  Consolidation is needed.

Remember folks, this market is not a forgiving market right now. Never chase! Once a stock bounces, the entry is missed. Learn the technical levels, they work.

Gareth Soloway
Chief Market Strategist