Eek, how many of you went long on Friday? After getting a nice pullback and closing at support on Thursday I was expecting a reversal. I even posted this comment on HAS:

“I’m looking forward to a big up day tomorrow. This consolidation looks pretty bullish, Baidu (BIDU) has a bull flag formation, could easily pop if it breaks out of 300 on heavy volume. We should be set to explode…”

Technically, Friday should’ve been an up day…but with earnings coming out, I should’ve known better that anything could’ve happened. Instead of reversing we followed through to the downside breaking support after poor GE earnings. Here’s a chart of the S&P:

If you’ve been following my posts, this chart should make sense to you. We had a chance to break above 1356, we did not…and because of this, our chances of a short-term bullish run were ruined. We were also unable to hold on to Thursday’s low, that’s when the sellers came in and pushed the market below the 50 day moving average. Unless we get good earnings this week and hold above 1345, testing 1400 is out of the picture. For the time being, the path of least resistance is down!

Richard
richard@hedgeagainstspeculation.com

First of all, I would like to thank Richard for giving me this great opportunity to write for his website. Crude oil surged as high as $112, that’s $6 away from my December 13, 2007 predicted price of $120 per share. I predicted based on chart analysis that the price would reach $120 within the next 3 to 6 months. I’ve gotten a lot of mail bashing my statements but oil continues to run despite the way others feel. We will all have to face reality and conserve energy. Oil will continue to run higher due to many factors. With summer approaching, the hurricane season is just around the corner, June 1st to be precise. Oil rigs in the Gulf of Mexico as well as refineries along the Louisiana, Texas coastline will all be affected; therefore, prices will increase even higher. During the winter months heating oil as well as natural gas will continue to increase as well. Further, there are still threats of terrorists attacking facilities in the Middle East and Nigeria. With all these factors in place we must be prepared to deal with these issues.

Last week crude oil inventories fell 3.15 million barrels to 316 million. Gasoline prices also hit a record price average of $3.40 per gallon in the U.S. In the Bahamas, where I currently reside, prices also hit a record price average of $5.05 per gallon. Oil ended the day at $111.57 per barrel but ran as high as $112.21, the highest since the beginning of trading in 1983.

By: Marlin Rolle

http://stockmp.blogspot.com/

Ah earnings season.  You can feel the anticipation in the air, and see it in the markets.  All of the major indices are showing the same thing, a sense that the market is unsure.  Each index is sitting at or just above some major support/resistance lines, and with Alcoa kicking off the earning season with a mixed report, who knows if it will be enough to kick the market out of the sideways funk it has been in for the last several trading days.  In the S&P500, the markets were looking good for most of yesterday, and then dropped off towards the end of the day to finish just above the previous days close.  This indicates bulls and bears are still fighting to gain control.  Be ready to act should the market break down below its 1360 support line, as this would be a pretty bearish signal for the market.  Resistance still sits up around the 1390 level.

Looking back at other stocks I mentioned last week.  VIP successfully tested some major support at the 29-30 price area.  It broke up through some minor resistance at $31.75 and may be in for an approach to the next major resistance at $35.  This will be much more likely if it can crack through its 50 day MA, which it bounced off of yesterday.

Though I won’t show the picture here, MCK appears to be setting up in a channel between some major support at $51.50 and major resistance at $56.50.  I am neutral on the stock and do not plan on doing anything with it while it sits in limbo halfway between these two areas.  Two more stocks that I won’t show charts for are CELG and CXO.  I think both are potential longer term trades for those looking to sit on positions for a bit.  Both are in an uptrend.  CXO continues to putter its way closer to $30 everyday.  It never makes any big moves in any one day, but it is the slow and steady riser.  CELG broke through its $62 resistance last Tuesday, and has been slowly pulling back for the last couple of days.  Look for this $62 area to now behave as support, as CELG pulls back for another day or two before continuing its journey upward.

Morgan Stanley, MS is currently making a very interesting chart pattern.  It broke up through resistance last Tuesday, hit major resistance at $50, and looks to be making an ascending triangle (bullish pattern).  If the ascending triangle is to come true, look for MS to push north and break through the $50 level on good volume.  If it breaks down below the bottom of the wedge, I would get out of any speculative positions and would be neutral to bearish on the stock till it gives us something better.

Last stock ill put up, though I have others from my watch list that you may find interesting, is Aon Corp, AOC.  During the month of March, this stock made an inverted head and shoulders pattern which it broke up through in last week.  It now is sitting at resistance at $43.50.  If it breaks through this, next level of major resistance is in the $47-47.50 range.  If the resistance holds, it may plunge down to the next major support line at $39.50. 

Other stocks currently on my day to day watch list are DNA, FLS, MON, and STP.

Happy Trading

-Dylan

UPDATED

April 6, 2008: Hello Hedgers, sorry for being a bit inactive as of late…as you may already know, this month is a busy one for myself. I should be receiving an article or two from one of my guest writers, but in the meantime lets talk about how you should play the markets this week. The markets will have to correct eventually but I would trust the short-term rally for the time being. That doesn’t mean you should go all out and buy, it may look like there’s a double bottom at the moment but I still stand by the fact that we haven’t bottomed yet. Last week was filled with bad economic news yet we moved higher, I remain suspicious but fighting this run up is too dangerous. Trade smart, keep stop losses in place and stay away from shorting at the moment, you will have your time to short…there’s just too much uncertainty right now especially with all these earnings coming up.

A friend of mine, Momentum-Trader, brought up a trade to me last week. Permian Basin Rlty (PBT) has formed a large ascending triangle, it closed at an important mark Friday ($23)…keep a close eye on it because it could easily break to the upside on heavy volume. PBT could trigger early next week, attached is a chart and a few notes on PBT but please use your own due diligence.

April 7, 2008: PBT triggered today, attached is an updated chart on the breakout. I am no longer in this trade anymore as I took my profits before noon today.

In the coming week, we need to see some sort of a bull pullback in the markets if we want the indices to test resistance. We want the S&P 500 to fall back to the 50 day moving average before testing the 1400 mark. This sideways movement still favors the bulls, but after two failed attempts the bulls need a healthy pullback before pushing forward again. There is still lots of potential for upside…we could still test previous lows, but just not yet.  

Richard
richard@hedgeagainstspeculation.com