Swing High

This week was bullish overall, but volume was very light. The major indexes appear to be putting in a swing high at their respective levels. The financials and Russell 2000 are showing significant relative weakness on multiple time frames. This is important, because the markets cannot continue much higher without support from the Russell stocks and especially the financials.

Next week will be very important in determining the direction of the markets. If stocks break down next week, then things could start setting up for the downside. Otherwise, the medium term trend is bullish and the long term trend may start healing itself if the markets remain bullish to close out the month of November. However, do expect a down leg here as we may be putting in swing highs across the board. It is impossible to tell where the next swing low will be, or even if this is a swing high (not yet confirmed until this down leg is confirmed). It is important to trade based on what is happening and want what the market wants. Keep an eye on the significant support and resistance lines and how the market reacts to them.

Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.

Happy Trading,

Jason

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Sorry for the late Weekend Review this week. At least you have all day Sunday to view it. Enjoy…

Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.

Happy Trading,

Jason

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We saw some serious deterioration in the markets this week. All of this action culminated in Friday’s incredibly bearish activity, with the TRIN and VIX giving highly bearish sentiment reads. The TRIN was well above 2 for most of Friday’s session. The VIX popped 24% on Friday putting it above 30 and causing it to close above its upper bollinger band.The volume is picking up on the down moves. Market Breadth reached extremely bearish levels on Wednesday and Friday. (Side note: if you do not understand something I just wrote, please let me know so I can explain it thoroughly).

The SPY monthly chart closed below my thick red trend line. SPY also broke down out of its rising wedge on the daily chart. IWM has a confirmed double top formation on the daily chart. The Nasdaq (QQQQ), Russells (RUT), and Financials (XLF) have shown significant relative weakness lately which is important because they are often considered leading indexes.

I made a couple of day trades this week. I had a 5% gain with SPXU on Wednesday. Played TNA for a healthy profit on Thursday. Much to my regret I sat out Friday. However, I am mostly in cash, so I am content with my neutral position (especially because I am not net long). I do plan to start picking up short positions on Monday morning and throughout next week.

The markets are looking very bearish. Please do not read this the wrong way. I am not excited because stocks are declining and wealth is being destroyed. I am excited because stocks are moving quickly and in an increasingly decisive manner. I like to couple fundamental analysis with technical analysis, and the fundamentals have been screaming at me for over a year that stocks should go down. Now, finally, after more than six months in a “bull market” or “bear market rally,” the technicals are joining in on the bearish chant.

Do not let this scare you if you are a new trader. There are many ways to play stocks to the downside. The most simple play in a bear market is to move into cash. If you do not own stocks, you cannot lose money as prices decline. In fact, your broker most likely pays you a tiny amount of interest on your cash; you could also buy short term bonds. Many traders will short stocks in a bear market (sell high, buy low). If shorting is not part of the trader’s strategy, buying inverse ETFs is a valid play to benefit from downward moves in select groups of stocks or indexes. Options traders buy puts in bear markets to make money on the downside.

As you can see, there are plenty of ways to profit in a bear market. If you want me to explain a strategy in greater depth let me know. Otherwise, I will explain strategies at my discretion.

Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Capital preservation comes before profits.

Happy Trading,
Jason

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What a week we had in the markets today. On Monday and Tuesday it looked like we were seeing the beginnings of a double top formation. Instead, good earnings led to the markets punching out new highs for 2009. Friday was bearish, however, and we did close under some major resistance on the daily, weekly, and monthly time frames. On the daily, we closed under our rising wedge formation. On the weekly, we have an unfilled gap in the 110 area on the SPY that goes back to October of 2008. On the monthly we have a major bearish trend line that we are sitting under at this point.

Some of my recent trades include: SPXU, UPRO, BEE, CVM, EDAP, FBC, MESA, MPG, and WAVE. These are all reviewed in the Weekend Review videos to follow.

We are in Earnings Season, so be careful! Over 500 companies are due to report this week. It is not prudent to hold your position through earnings. You can check your stocks’ earnings dates and times on FINVIZ.com. Also, be wary of some major Economic Reports coming out this week. Those can be checked on Bloomberg’s Economic Calendar.

Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage risk appropriately.

Happy Trading,
Jason

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The markets have reached a critical level. A decisive move in either direction next week will most likely tell us the trend for the next few weeks. The bull flag formation I had drawn on my daily chart was confirmed this week. After finding support at the 50 day moving average, we shot up to the next logical place of resistance. The S&P is currently sitting under a few MAJOR resistance areas. We are sitting under the bottom line of my big rising wedge (light blue lines) which is acting as resistance once again. We also have huge resistance coming up in the 1075 through 1080 area from the highs of 2009. Finally, we are hitting a very mature resistance line on the down-trend on the monthly chart (see my video for a little more on that).

If we break above this resistance and back into the rising wedge, it would not be surprising to see a quick run to 1100. I forgot to show why that is big resistance in my video, but looking at the weekly chart back in September of 2008 reveals why it is resistance. If we do go up from here, I do not see us going much higher than 1100. The odds are in favor of a rollover here. If we do start to drop here (which would not surprise me either), that would be the makings of a double top formation. Be careful though because the double top will not be confirmed until the neckline at 1020 is broken.

And now for the video! Check it out.

Like I said in my video, if you have not already done so, you need to check out Friday’s post.

Thanks for being a part of Swing-High.com!

Happy Trading,

Jason

ps. I would love to hear some feedback about swing-high.com. Your comments/questions/concerns are much appreciated. Thanks!

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