Stocks and Options
Stocks and Options Guru. Here is where the investor can level the playing field and learn what is necessary to make money in the financial markets. Looking for an edge? This is it.
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Market’s Next Move
Posted on July 16th, 2009 No commentsWhen guessing what will happen next, you need look no farther then the trend, and the condition of the market. So what knowledge can be gleaned from the current situation?
This chart shows the SPY, an etf that tracks the S&P 500 index. Read the rest of this entry »
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Time to short financials?
Posted on May 14th, 2009 No comments
So lets get straight to the point. The financial industry has been destroyed during this recession. Going by the XLF, a ETF that focuses on the financial sector, at the prior bottom, the sector was down 83%. Meaning a recovery to previous levels would be a 488% gain. Since the March bottom, it rallied 110%, and after a small pullback, has dropped to just 85% higher then the march levels.So what happens next? After this rollercoaster ride of a sector, what’s likely to happen next? There are a couple key ways we can predict that, but keep in mind that the point of technical analysis isn’t to be 100% sure of the direction; the idea is to get a good idea of what is most likely to happen next, and capitalize on the opperunities the market gives you, while keeping your risk in check. With that said, lets take a look at the technical picture. Basic technical analysis, step 1 is to identify support and resistance levels. Key support levels seem to be 11.20, and 9.80.
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Sector Update
Posted on May 13th, 2009 1 comment
I posted an article about using BP indexes a couple days ago. When the article was posted, a number of sectors were overbought, but it wasn’t a sell signal yet because they hadn’t entered a column of Os yet on the Point and Figure chart. That situation has changed. The Financials, Consumer Discretionary, Industrials, and Materials sectors are now all showing sell signals on the P&F charts, so anyone who is long those sectors should lighten exposure, and anyone looking to short them into a reversal has an added indicator to confirm that move. The overall market, as represented by the S&P 500 isn’t showing a sell signal yet, but with so many sectors switching from overbought to sell signal, there is a strong possibility that this bull market rally is nearing is nearing its climax.That being said, its important to note that the last time financials gave a BP chart sell signal, it turned out to be a head fake, and people shorting on that signal would have lost money. Still, this signal is right far more then its wrong, and traders should keep that in mind in the coming weeks.