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Earnings Season
dylan
blog
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
April 8th, 2008 at 7:36 pm
“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.”
1360 is support, but I wouldn’t go all out bearish if we break this support. I’m actually looking for some sort of a bull pullback right now as mentioned in my previous article…we need this pullback if we want to test the 1390/1400 mark again.
And buddy, great work…your articles are really fantastic, sure beats mine, lol. I’m keeping an eye on Morgan Stanley and all your other trades
April 8th, 2008 at 7:43 pm
Here’s a chart of the S&P with moving averages:
http://stockcharts.com/charts/gallery.html?SPX
I have a feeling that the markets need to fall back to the 50 day moving average, around 1345…that mark should be critical because we could move up or down from there…hopefully up
So again, here’s my prediction…we will fall back to 1345, move to 1400…try to break resistance, if we can’t we’re falling back down to 1325. From 1325, we could easily test much lower lows
This has been my prediction for a while now so I’ll stick with it.
April 9th, 2008 at 11:50 am
The good thing about post articles on here is that you can get multiple interpretations of a chart. I like to get others views on the charts as well. Helps me bolster my confidence, and outlook on what is going on. Again i see the next lower support level below 1360 being at the 1325, and better support at 1310. Fortunately, i think the current support will hold it wont be an issue. This mainly has to do with the drop in volume as the SPX has slowly been approaching the 1360 line. Like you said, a couple days of pullback is actually a good thing for the market. Gives people a chance to settle down, and also gives stocks a chance to drop to levels that big investors would consider a better buying opportunity.
April 9th, 2008 at 5:34 pm
The indices are all red when should I start buying again?
April 10th, 2008 at 10:40 am
Hey David, There is nothing wrong with sitting out of the market if you are unsure what to do. Money is also a position. I actually got stopped out of two of my stocks today. One was up only a couple of percentage points, and the other was at the break even point for me when it hit my stop. Nothing wrong with that. Besides you have to risk some money if you want to win. However, since the overall market is still in a down trend, if you do get into stocks on the long side, make sure you have a sell stop in place that is pretty close to the most recent support line. If the market were in an uptrend, you can be a little looser with the stops, but in a down trending market, i recommend keeping the stops close. The way my portfolio is behaving right now, ive lost a couple percentage points of total value today, but I am keeping a close watch on my stocks as most of them have been retreating to their support lines.
Of the stocks i showed the other day. None of them were stocks that I am in, but they are stocks i am keeping an eye on. MS is now sitting right at its support line. Im looking for a bounce before i get in. AOC is sitting just below its 200 day moving average. It is holding above its most recent support, but the MA can often act as resistance, so i am still watching this one. Im actually anticipating a little bit of a pull back in this stock back to either its 30 or 50 day MA (they are both running at about the same lvl right now).
April 11th, 2008 at 5:38 am
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. We should be set to explode…AAPL, GOOG are looking good!
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