Danger and Opportunity
The current market is a two sided coin, or perhaps a two edged sword. I have to say that the stock market is risker now than it has been in well over a year. We won't want to ignore these risks, but often markets can drive much higher during the most risky periods. Of course, sometimes they don't.
The point is that we need to be very flexible. We need to be ready to take defensive action very quickly, but we also have to allow for and position for at least one more strong rally (if not several more).
DOW: The Dow has been acting pretty well and it looks like it wants to work higher.
DJU: The Utilities though are looking pretty sick. That's not good for the market at large.
S&P500: The S&P is looking pretty good and the chart says it has higher prices coming. I note that the weekly trend is still solidly down and the Daily has not officially turned.
NDX: As strong as the big leaders of the Nasdaq were, we didn't do all that well. Still, there's upside.
QQQ: We'll probably run into a little bit of problem just above.
HUI: Gold will continue to have problems so long as the Dollar is strong and Bonds are weak. At least near term.
XAU: Longer term, inflation is not necessary for Gold to do well.
VIX: The VIX measures investor concern for the market's prospects by measuring the premiums they are willing to pay for index options. We know that higher VIX readings indicate considerable fear and low VIX readings indicate very little fear. Currently, the VIX is at a multi-year low. Given that rates are rising, and prices are up, the fact that fear is low should be of major concern to us.
VIX Short-term: The Vix appears to be near some longer-term support and if I'm right, we're about to rally. Normally, we would expect the market to fall as the VIX rallies.
CYC: The Cyclicals broke out but they do well late in the cycle. The rally looks a little bit corrective.
SMH: The Semi's may be the Nasdaq's Achilles Heel.
IWM: I'm with Doug on the Russell. You can see his chart pattern. What bothers me is that the Weekly trend is solidly negative. What really bothers me is that the daily MACD looks like it's about to give a "kiss of death" Sell.
NIKKEI: Keep one eye on this chart. I'm not sure but I suspect that this will be of importance.
BKX: The Bank Index decline looks impulsive. We can, and probably will work higher in a corrective fashion, but overall, things don't look good for the Banks longer term.
ALTH: Allos Theraputic was a disappointment.
AWGI: Alderwood Group was a nice play and with a well placed stop.
GERN: Geron looks good above 9.25.
HNR: Nuts. Stopped out of Harvest Natural.
VLNC: Valence looks good and we are in.
INTC: Intel was a ballsy play and I'm impressed with not only the performance but also the vision on Doug's part.
LOJN: Lojack is looking OK.
NABI: Buy NABI Biopharmaceuticals above 17.12
NFLD: Buy Northfield Lab above 15.65
Summary:
That VIX is issue is very disturbing. Other sentiment measures area also scary. The problem is that this situation can persist for days or weeks. We can't afford to pass up opportunities if the chart patterns support. The gains can be explosive.
BUT, and this a big "But", should a chart pattern break down, we need to have a stop in place. When we have gains, we need to be quick to take them or to snug our stops up. Soon, if we can see the set ups, we may put on some shorts, too in the coming days.
Be Well, and Trade Smarter Than the Average Bear!
Mark, Doug, and Holly
-The ChartSmarts Team
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