By Gareth Soloway on June 30th, 2010 1:40pm Eastern Time
The markets are holding the flat line on the day. Volume has dried up after the massive sell off yesterday. The SPDR S&P 500 ETF (NYSE:SPY) did over 370 million shares yesterday. Today, a small 127 million thus far. It is on pace to barely reach 200 million. The ADP Private Sector Employment report was brutal showing just an increase of 13,000 jobs. The market had expected an increase of approximately 60,000. Even with this negative economic news, the markets barely dropped. After a massive drop like yesterday, the markets often go into pause, consolidation mode. This appears to be the case today. In addition, each day that passes this week gets the market closer to the July 4th holiday weekend. The volume should lighten up more and more. In addition, the markets are now turning their heads towards the Unemployment Report and Non Farm Payrolls on Friday at 8:30am ET. This will be a major report for this market.
Stocks are neither strong nor weak today at this point. The one thing we need to watch going into the last few hours of the day is end of quarter selling. Do some funds dump into the close as today is the last day of the second quarter of 2010? It is always a possibility.
Two of the hardest hit stocks in the last two weeks are Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). These two have dropped well over 10% in just a the last seven trading sessions. The thought process is end of quarter window undressing. Exxon and Chevron are stuck between a rock and a hard place. They are down substantially on the quarter which means fund managers do not want to show them on their end of quarter statements to their clients, in addition, the association to the BP plc (ADR) (NYSE:BP) Gulf oil disaster is also causing funds to dump. The drilling oil sector is very unpopular right now, and fund managers will do whatever they have to do to keep investment capital in their funds.
I expect a small rebound in Exxon and Chevron in the beginning of the quarter. Both have been hit harder than the overall market. To get entries, guidance, swing trades, analysis and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
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The key to the M-A pattern is to see the formation and recognize what makes it in play and what negates it. This M-A pattern played out for the prime reason that key rules were never broken. We will unveil this to you all so in the future you may profit off this pattern. The M-A pattern is a classic bearish pattern that signals downside. Knowing this would have told you that the markets were going to fall today. The first key comes in the form of the right side of the M pattern. Note how the left high of the M was at $110.13 on the SPY. Then please take note that the right side of the M pattern was at $110.34. The first rule to an M-A pattern is that the right side of the M should be higher than the left. This clearly is the case and tells any market technician that this could be an M-A pattern in play. Next, please note that as the rally happens and the upswing of the A forms, the high of that A cannot take out the right or left side of the M pattern. In addition, note that the upswing of the A never takes out the big red down candle on the 60 minute candle. Therefore, that entire upswing is considered inside candles do the big red down candle. This means that it is still categorized as an in spirit of bear flag. Because all these keys were in place, this M-A pattern had a high probability of working out. Sure enough, as the master level was hit, the A pattern drop occurred and the market sold hard. Learn these patterns, make the money!
#1. Note the right side of the M is higher than the left.
#2: Note the high of the A does not take out the high of the right or left side of the M.
#3: Note the move up in the A pattern, is all inside the big down candle on the 60 minute.
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By Gareth Soloway on June 29th, 2010 3:53pm Eastern Time
The markets gapped lower today. Note on the chart below, how the last candle yesterday closed below the blue key trend line signaling this possible massive move lower. The SPDR S&P 500 ETF (NYSE:SPY) are down 3.33% on the day, a massacre to say the least. Worries that China is dramatically slowing caused the Shanghai Index to drop over 4% last night. Europe also started to panic of issues in Spain with the banking system and Greek protests and strikes.
While a majority of this selling is off of the fear that is grasping the markets, some may be due to end of quarter window dressing, as fund managers reposition themselves. The fact that gold, the SPDR Gold Trust (ETF) (NYSE:GLD) is only fractionally higher tells us that. If the markets were dumping in a major way on excess fear, gold is a flight to safety play and should be up higher. The higher dollar is playing a small role in keeping gold in check as well.
Regardless of the move in gold or the markets, things are ugly and key support on the SPY has been broken at $107.50 on the gap down. In addition, the secondary massive support at $104.50 will possibly be broken as well. Should $104.50 be taken out and confirmed tomorrow, $99.50 is a key level to watch on the SPY.
Oil is getting lit up today as the a massive slow down in China would decrease demand great.
Some major stocks are taking a huge hit. Apple Inc. (NASDAQ:AAPL) is trading at $255.61, down $12.69 (-4.73%). This is a huge hit for the strongest stock out there and must be taken seriously in this market. Commodity stocks are taking a huge hit today as well with stocks like Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) continuing to extend losses from the previous week. To get more in depth analysis, swing trades, guidance and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
By Nicholas Santiago on June 29th, 2010 10:36am Eastern Time
Today the major market indexes are simply getting slaughtered. The SPDR S&P 500 ETF (NYSE:SPY), SPDR Dow Jones Industrial Average ETF (NYSE:DIA), and the Powershares QQQ Trust ETF (NYSE:QQQQ) are all lower by more than 2.00 percent on the session. The news out of Asia is simply terrible as the Shanghai Composite traded lower by over 4.00 percent last night. The global debt issues continue to remain center stage. As we all know many governments around the world continue to spend recklessly even as jobs and the housing markets remain in serious trouble.
Normally this looks like a death sentence and a very bearish sign. Truthfully, it probably is a death sentence for the markets. However, rarely do markets just continue to decline without a bounce. For example take the week of options expiration on June 14th – June 18th. At that time we said to our followers that the market should bounce that week as the institutional money will prop it up because the small retail option traders bought a lot of puts at the lows in early June, and the institutions would not let them make money into the end of the week at expiration. We also said to look for a decline to follow once expiration is over. So far that has worked out well. Now the stock market has been crushed since expiration Friday on June 18th. Today is an absolute blood bath and there is very little light at the end of the tunnel. However, this could be the time to start buying for a small bounce.
Cycle wise this market should ultimately go a lot lower this year. This year is a bearish year despite all the bullish economist and the Abby Joseph Cohen's of the world. However, it would not be shocking to see a short term bounce in the near term future from an oversold technical condition on the charts. While this is certainly a time to use caution on all long positions the reward could be very good should this market bounce in the next week or so. All traders should have stop loss orders on all trades to protect against a potential crash or dramatic decline if you do decide to nibble on the long side for a bounce.
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By Gareth Soloway on June 28th, 2010 1:13pm Eastern Time
The steel and copper stocks were leading indicators on the markets sell off. They started dropping before the markets in early May and continued. In this latest sell off over the last week, they have stopped leading to the downside and started to consolidate in a bullish pattern. This needs to be watched very closely as these stocks are leaders of the market and could tell us more about the coming market moves.
United States Steel Corporation (NYSE:X), AK Steel Holding Corporation (NYSE:AKS) and Southern Copper Corporation (NYSE:SCCO) are all lower today but still holding a beautiful bullish consolidation pattern. This may dictate a move up in these stocks in the near future. In addition, as leading indicators, these patterns should be look at as a market barometer. To get exact entries, swing trades, guidance, education and more, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
