The chop & slop continued today. This was a good day to wait for the opening range to break before doing anything since those very early highs were never surpassed. I was more than happy to remain in cash all day and I'm not at all pressed about jumping into this mess tomorrow.
Aside from the now typical range-bound chop the battle over the 50-day moving averages continued in the S&P and Nasdaq. Both crossed and closed below that important line. Still, they're both within their long-established trading ranges.
What's more interesting to me is the continuing deterioration of former leading stocks (AAPL and GOOG, which closed under its 200 DMA for the first time) and new breakdowns of current leaders (OXPS, AMD). It almost like a slow motion, rotation crash taking place.
Below are the charts of the Nasdaq, S&P 500, Google (GOOG), Apple Computer (AAPL), OptionsXpress(OXPS) and Advanced Micro Devices (AMD):
Hello Mike:
i have enjoyed your daily commentary. I have been following your commentary on the leaders like aapl, amd, oxps and goog, and of course the NASDAQ..do you think these leaaders are going to be the laggards now? they have certainly broken down. Do you believe this is just a 6 week correction on AMD like you mentioned last week?
Thanks
Shawn,
It's tough to say on OXPS and AMD. GOOG and AAPL don't look like they'll be shooting (much) higher anytime soon though.
Great blog. Thanks!
Mike,
Thanks again for your great posts. I was curious to know about your day-trading style, more specifically with how you move your protective stops throughout the day on certain positions.
Thanks,
B
I think the other key index to look at is the SOX/SMH which typically leads. It has or is about to break the 200 Day MA. Not a good sign IMO.
Michael,
I agree, I almost posted SMH last night. It's not pretty! :-)
Michael,
Once again great post.
I find your posts very informative. No BS. Compared with the clowns (experts) on TV your work is refreshing.
Once again Thanks,
VC
Hi Mike,
A quick follow up on the GOOG chart I sent you last month. I will send you an updated one by email. (Here's a link to the chart that Steve sent me - Steve's Google Chart)
I mentioned that GOOG has entered a stage 4 downtrend. GOOG has areas of supply now all the way back up to the old high. There will be sellers in those areas until GOOG trades past the old high.
The first area of demand at $340.00 has been visited 3 times. I personally only trade the first time back to a fresh area of demand if the stock, commodity, or currency is in a stage 2 uptrend. This is the highest odds, lowest risk opportunity for a long entry.
The theory is the more times GOOG trades at $340.00, the less likely anyone who wanted to trade at that price will be left behind.
GOOG rallied sharply the first two times at $340.00, but now is is struggling to find buyers at this price this time. Once the number of willing buyers drops to zero, GOOG will trade lower.
There is still a possibility that GOOG could hang around $340.00 if it becomes a stage 1 trading range bottom.
The last time GOOG was in a stage 1 trading range was in December 2005 when it traded between $400.00 and $432.00 for most of the month.
If it does trade lower, the next fresh area of demand on the chart is at $300.00.
Compare the 2 charts of GOOG side by side, and you will see what I happened since I sent you the first one.
Anyone interested in learning more on using supply and demand analysis in their trading should visit www.thescientificinvestor.com.
It is Sam Seiden's website. There is plenty of free information including links to Sam's articles and videos on the subject.
Keep up the good work and good luck in all your trades,
Steve Misic
LaSalle Futures Group
Chicago Board Of Trade