December 2003 Archives

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article:

Today the NASDAQ finally closed over 2,000 and took out its November highs. This is the first close above 2,000 since January of 2002. It's hard to argue with the price action in the indices. About the only thing that I don't like is the fact that this NASDAQ high is on lighter volume than the previous highs. The NASDAQ's On Balance Volume is still showing a bearish divergence.

The Dow and S&P 500 continued their walk up their rising upper Bollinger Bands. Neither of these indices are showing the same divergence in OBV. The market remains in melt-up mode, with very few sellers to be found. I'm still loath to buy anything other than intraday momentum plays for day trades. (Although I am holding on to a couple of steel stocks... for the moment.)

Also, I'm not a Fibonacci follower, but Charles notes that the NASDAQ is sitting at a Fibonacci retracement level.

Edit to add: I should note that OBV on the QQQ looks great and is confirming its new high. So maybe the NASDAQ Composite is just an abberation.

Here's an article on how to trade Cup & Handle patterns -- Cup-And-Handle Trading Techniques For Swing Traders. This pattern can lead to impressive gains and it's the favorite of William ONeil/Investor's Business Daily.

I just finished running my scans and all I can say is that there's something for everybody out there. There are lots of stocks that have just been going straight up all month, and many that have been getting crushed all month long. It would appear that the rotation into cyclicals and large caps and out of technology and small caps is continuing. There are some other forces at work right now (options expiration and year-end maneuvering) that are likely adding to the confusion in the charts. The result is a group of stocks that has run too far to buy now and another group that's too beaten down to short. I'll probably go into daytrader mode and just play intraday momentum movers for the rest of the week and/or year.

Larry Conners has written a follow-up to his article from last week on breakouts vs. pullbacks -- Do You Buy Breakouts? Think Again (Part 2). The results are very interesting.

(Again, I've archived the article here)

Here's another good (and timely) article by Dave Landry -- Opening Gaps: Trade 'Em, Fade 'Em, Or Ignore 'Em?

(I've archived the article here)

Here's some good advice from Dave Landry at TradingMarkets -- How To Trade On News Events. That's required reading for anybody that bought at the open yesterday on the news of Saddam's capture. You'll also want to check out my #1 rule.

Sellers came out in force today to squash the 'Saddam rally'. In classic sell-the-news fashion, the market opened on its highs of the day and never looked back. What's worse is that the market closed on its lows and made bearish engulfing patterns in the indices and many individual stocks. The NASDAQ continues to show poor relative strength versus the S&P 500 and Dow. It wasn't even able to take out its December high on today's euphoric gap-up opening -- and it closed under its 50-day moving average again. It's also closing in on the trendline that began in May.

Looking at it another way, the NASDAQ is only 5 points above where it was in mid-September. So despite the trendline and moving average tests, the index is just going sideways. Whether it's building a top, or a base on which to build further gains remains to be seen. In the mean time, there continues to be a lot of tradable swings to be had.

Stocks did a nice job of confirming all the hammers that were made yesterday. Now there are a lot of morning star-like (many are missing the gap btwn days 1 and 2, but they're close enough for govt. work) patterns in individual stocks, especially on the NASDAQ. For its part, the NASDAQ index was able to jump back over its May-November trendline and its 50 day moving average. While there have been some very tradable swings on the NASDAQ, it's just been marking time since October. I pointed out before that the NASDAQ was in danger of building a head & shoulders top if it didn't take out its November high and I still think that's the case (or some other kind of top). I think if it can't surmount that old high it may drag the rest of the indices back down into the muck. But for now I think it's a good bet to think that the NASDAQ will at least test that old high.

Here's the chart of the QQQ:

Oh yeah, the Dow made a new 52-week high with its first close over 10,000 since May, 2002. My guess is that a fair number of bears have gotten themselves trapped by the action the last 3 days or so. I'm sure many people expected the Dow to roll over and play dead like the NASDAQ did when it hit 2,000 last week. Let's see if we get any panic buying from the trapped bears.

It certainly got ugly today, especially on the NASDAQ. Once again it's broken below its 50 day moving average. It's also sitting just a few points below its May - November trendline. The NASDAQ 100/QQQ was able to make a tiny bounce off of its corresponding trendline to close above the line. So we're right on the brink of having some bad breaks of these trendlines. The S&P 500, on the other hand, is still hovering above its November highs, where it's been for the last 7 days. I've been amazed at how it's been able to stay above that support. It'll be interesting to see if the bulls can make another stand here.

I'm decidedly neutral right now, as my scans didn't turn up squat tonight, long or short. My guess is that there will be a shakeout tomorrow morning and a rally in the afternoon. But that's nothing but a guess and I'll likely just be watching, unless there are some good news plays to trade.

TradingMarkets.com has posted an interesting study comparing the results of buying breakouts to buying pullbacks. The results are rather surprising to me. According to the methodology used in the study you would make more money shorting breakouts to new highs than buying them. Although I'm not a big proponent of buying breakouts I can't help but think this study is flawed. The first thing that comes to mind is the money management aspect. Most breakout traders are pretty aggressive. The good ones would likely not just leave a trailing stop below the 10 day moving average like was done in the study. They would be locking in their gains and not letting significant profits turn into losses. It's the exits that make/lose money, not the entries. I'd like to see a similar study done with different exit strategies.

Here's the complete article: