FaceBook and more Reading for the weekend!

More stuff for your weekend. I've mentioned many times before that my videos will often be uploaded to my FaceBokk page first, simply because it is so fast and easy for me to do so. If you want to get those videos before you see them here or on Youtube, then join FaceBook, search for Brandt Hackney and select “add as friend” and attach a note saying you are from Trade Guild.

One of my friends turned me onto FaceBook, I never got involved in any of the social networking sites like MySpace, I'm always late to the party! However once joining, I re-connected with friends I haven't seen in 25 years in some cases! I've even had some greta opportunities present themselves because of it.

Well one friend I reconnected with is Jeffrey Scott Shapiro. We ate lunch together and he liked guitar, I was a guitar player. Many years later I discovered he is an Investigative Reporter and Washington, D.C.-Based Lawyer.

I read a recent article from the WSJ, I don't remember how I came acrosss it, but this morning i just found out, it was my old friend/my new friend who wrote it. So FaceBook is pretty cool in a lot of ways. Any way, check out my friend's article. Despite your political leaning, I think it's informative and I'm just damn proud of him.

http://online.wsj.com/article/SB122584386627599251.html

To follow his site and see the videos associated with this article, including WSJ online and promotion from The Colbert Report!t- http://drinkthis.typepad.com/shapiro/

In addition, don't forget-

Four free seminars from the world's foremost traders and technicians. INO TV is offering you a chance to view four of these seminars for free and they're not some schlep traders, these are the guys that wrote the books. So click on this link and enjoy!

I Know-Do you?

OK, the weekend is here. If you are looking for something to do, check this out-

Four free seminars from the world's foremost traders and technicians. INO TV is offering you a chance to view four of these seminars for free and they're not some schlep traders, these are the guys that wrote the books. So click on this link and enjoy!

USO Bounce Brewing?

This is a 30 min 3C chart showing obvious accumulation into the sustained downtrend



The second chart shows RSI in a positive divergence. Could USO finally be ready to work off that oversold condition?

Trading Range

Today there isn't much in the way of encouraging news for the bulls. It's important for yesterday's Key Reversal Day to see some follow through shortly. I have been suggesting recently that the most like scenario at this point is a trading range, that's what we have for the most part as of now.

Right now, the intraday charts are still making higher highs, higher lows, so we have (barely) and uptrend.

Look at this chart of the SPY. You can see two things, one a possible rectangle trading range, which I've been mentioning as a strong possibility and two a descending triangle. They both carry negative implications as they typically resolve in the direction of the preceding trend (down).


However, look at this 1 day 3C chart of the SPY.

Here we see a strong sign of accumulation at the rest of support.

And a one day 3C chart of QQQQ

The same pattern is visible here suggesting accumulation at support, which doesn't rule out a trading range, but it could also be the start of something bigger. Right now, the best we have suggests a trading range and a move to the upper resistance levels of each chart.

Finally this 5-min of the SPY suggests that we'll see a bit of a pullback here as sellers have stepped in.


If you are interested in trying out this 3C indicator, use the links from my site as I'm an affiliate and sign up for TeleChart. Email me and I'll get you started.

AAPL Follow UP

Here are some comments from Tuesday the 11th's post::


“Nothing goes straight up or down I mentioned there may be a quick long trade here. I think there's a good possibility we see a false breakout above the upper line of resistance on the triangle”

“Looking at this 15 minute 3C chart (orange), and now at C we have another positive divergence calling a bounce”

“To fine tune our analysis of 3C, look at this yellow 1-min chart and you can clearly see as AAPL was making lower lows even from yesterday around 2 p.m. on this chart, but look at the direction of 3C-it's heading higher signaling accumulation. My guess is market makers are stocking up to sell on the bounce and then short on the false breakout around the $114.25 area, which coincides with resistance that may very well be felt at the down sloping yellow 50 bar moving average. “

AAPL can be looked at in one of two ways, a triangle that failed with a downside breakout and may rally back into resistance near $100 or and probably more appropriately, it has formed a rectangle consolidation/trading range with the rest of the market. There's good support in the $85 area from early Oct and a solid hammer candle on 10/17 confirming support. Thursday's test of that level was not only successful, but formed a key reversal day on good volume. This brings the $112 area into play as the top of the trading range (or thereabouts) along with the declining 50 sma. I'd say that's a pretty reasonable upside target. 3C picked up on the reversal pretty early.

This current 3C 15 min chart (blue) shows how well 3C works in calling these divergences and reversals.


At point (A) price made a new high, 3C moved down signaling distribution and a likely reversal. At point (B) we have a retest near the $112 area, again, 3C fails to make that high needed to show serious buyers stepping in. Finally at point (C), we get a solid positive divergence as price makes a new low and 3C marches north signaling accumulation and a likely upside move. This doesn't change my longer term analysis one but, it just confirms the idea I proposed on Tuesday that AAPL would see some rally soon.

Why APPLE (AAPL) ?

Why would anyone want to own Apple (AAPL) for anything more than a quick bounce trade? Take a look at these charts.

First we have a pennant/triangle consolidation pattern that has formed marked by the red trend lines. They typically resolve in the direction of the trend preceding them, which in this case is down and it is near the point of a breakout.


Here is my long crossover setup, read the last post to understand what the rules are and how it works. there's no signal whatsoever to go long. In fact, it is missing 1 component of 3 to be a short.



Now take a look at this 5-day chart. Note how both green RSI and my super long stochastics both called a top with negative divergences at the retest of the highs May-June 2008. Finally look where our consolidation pattern sits in the big picture, under a huge zone of overhead resistance or supply. There are plenty of sellers there to keep this stock suppressed and it looks like they are ready to start selling again.


Nothing goes straight up or down and I mentioned there may be a quick long trade here. I think there's a good possibility we see a false breakout above the upper line of resistance on the triangle (red) in picture 1 and 2. A False breakout would add all the energy the bears need to waterfall AAPL in a massive sell-off.

Looking at this 15 minute 3C chart (orange) again, see my previous post to see how it works and how you can try it. You can see the indicator made a positive divergence at A calling the upside reversal, a negative divergence at B calling the downside sell-off and now at C we have another positive divergence calling a bounce, which is why I think a false breakout is likely.


To fine tune our analysis of 3C, look at this yellow 1-min chart and you can clearly see as AAPL was making lower lows even from yesterday around 2 p.m. on this chart, but look at the direction of 3C-it's heading higher signaling accumulation. My guess is market makers are stocking up to sell on the bounce and then short on the false breakout around the $114.25 area, which coincides with resistance that may very well be felt at the down sloping yellow 50 bar moving average.


So if you are a quick-on-your-feet trader, there's a possibility to make 15 or 15% in the next few days, but after that, the path of least resistance is down.

I'm not a clairvoyant, I use technical analysis to make the best decisions I can make with the current evidence. So can I be wrong? Of course and it won't bother me one bit as long as I exercise discipline in my stops when I'm wrong. However, technical analysis is about being impartial and putting the odds in your favor. When you look at all of the evidence presented, the odds are not in favor of continued upside north of the $125 area. the odds are stacked toward a decline that may reach $35-$50 ultimately. The topside distribution pattern suggests a move toward $33!!! I know, it sounds insane, it's a crazy idea, an 84% decline? However, the Q's in our last bear market saw about an 82% decline from their 2000 high to their 2002 lows and that's an index! So as unlikely as it seems, it's a possibility.



Be careful with Apple-and maybe, just maybe-make a killing!

Stock Market Entering A Trading Range?

On Friday Oct 7th, I released a series of videos that detailed several industry/stocks that I thought were headed for more down side. I also felt like we were likely to see more downside in the market and the probability that a trading range would develop. Right now, that trading range is looking like a fairly good bet, which also means it is a difficult time for longer term traders and investors to make money. We'll take a look at a few charts.

Looking at my X-over system (the rules are the yellow 10 bar must cross above the blue 22 bar and the yellow custom indicator in the middle window must cross above its moving average which is a 30 bar in blue and finally in the bottom window the green RSI-14 must be above at least 50 which is represented here as “0” because of the MACD histogram, but it must be above the middle. All 3 must apply for a long position this helps keep whipsaws and false crossovers to a minimum) you can see there is no long entry signal. The 30 bar VWAP (Volume Weighted Average Price) is near $98 so there are plenty of potential sellers still in this market even though volatility has dropped off.


The false breakout of November 4th did what I thought it would (in the video) and reversed to make a move lower. Ultimately it's a decent bet that we see a retest of the support zone in the trading range in all of the major averages.

The next chart is my Custom Trend Channel and it showed the downtrend being neutralized on Tues. November 4th, but has since penetrated (on an intraday basis) the uptrend stop level. It's possible that we see some support at the lower blue line around $90.45 on the SPY and it's not a bad idea to take a shot at a long position with a stop just below. If the stop gets hit, you can always try another long position at support around $84.25



On a short term trader's timeframe you can see my custom 3C indicator (yellow) called a positive divergence (accumulation) and the probability of a reversal pretty much the entire day, but a strong signal around noon time.


NOC is a chart I mentioned and called out as a short-you can see it's fallen out of the flag. There's still a lot of potential downside here and a short is still a viable position. This could be trading in the mid 20's. If you can short it on a bounce near $44-$45, all the better.


PFE-a sector I think is going to absorb some more punishment, not only broke the flag, but made an attempt to get back up through resistance yesterday above $17.25 or so, what a great opportunity to sell this one short!


XLF is near the bottom of the trading range, watch for a breakdown below support, if this happens, another great short sale oppty.

Take a look at these charts and see what you think. Please remember that I'm an affiliate for Worden's TeleChart and StockFinder (formerly Blocks). If you use the links from my site, they give me credit, it won't cost you a penny more. Or call them and tell them that you heard about them from Trade Guild.net if you sign up by phone. Once you've done that, shoot me an email and I'll set you up with my 3C indicator which works amazingly well for calling reversals, tops and bottoms, my MACD Heat Map which helps identify trends and when it is a good idea to buy, hold, sell, or sell short, also my Trend Channel which will take the emotion out of the exit decision and will help you maximize your winners and cut your losers before they get out of hand. Finally you'll get my blended crossover system that will help eliminate the numerous false signals that occur with any typical moving average system. I am also working hard on a trading system that has returned up to 600+% on an annualized basis, that is on StockFinder.

Also take advantage of the free offer to view some of the world's best traders giving seminars, you can watch 4 of them for free with the link at the top of my page, INO TV. What a fantastic resource. Learn how to use Bollinger Bands from John Bollinger himself! This is an awesome offer and service.

I'll be back with more later.

Video Analysis for the Stock Market, Week Ending 11/7/08

Here are 4 videos covering the broad market since the election via SPY video 1&2. I think the Democrat control of all 3 branches spells bad news for medical sector, specifically drug makers. We'll take a look at Astrazeneca AZN. Finally another sector that should see continued downward pressure is Energy in general, some of the unconventional sources may be exempt from this and actually even benefit; such as solar, wind power, etc. So we'll also look at XLE-the Energy sector ETF. 

New Videos

I have some things to do tonight, but I've uploaded a few videos on my FaceBook page, if you want to see them tonight, go to FaceBook, sign up and then search my name "Brandt Hackney". Selescct "add as friend" and later tonight I'll confirm you and you can watch the videos. Otherwise they'll be uploaded late tonight or early Friday am. They cover The market, XLE, and Drug makers. These are all groups that are subject to some more downside due to the elections. I think there are some good short sale opportunities. I'll see you on FaceBook.

Election follow up

Once again, InTrade calls the election. Here are some other observations from Tuesday's Election post:

-"out of 6 election year bear markets since 1960, Ronald Reagan was the only incumbent party to retain control over the White House in 1984. The odds favor Obama regardless of the polling assumptions."

There's no props there, that's just historical data, but historical data is part of our assessment in deciding when and how to trade and invest. The odds of a party change were stacked fairly high, like I said, even ignoring the obvious lead Obama had going into the election.

-"The decrease in volatility is exactly what the market needs to pull sidelined cash back into it."

That occurrence pulled cash into the markets on Tuesday as we saw a 4+% move in the S&P 500 on increased volume which also provided a solid breakout from the trading consolidation that has been underway. The Dow 30 and NASDAQ 100 both managed a respectable 3+% rally on Tuesday as well on increasing volume.

-"Another theme is certainty. If there's one thing the market hates, it is uncertainty."
and
-" So could the market's recent lack of volatility be a hint that the market has found its certainty in an election win for Obama?"
In retrospect, this was the obvious conclusion, but they're all obvious in retrospect, we need to make decisions based on the hard right edge of a chart, without the benefit of retrospect.

I mentioned a few drug makers that would probably come under pressure from an Obama win, AZN, LLY and PFE. LLY looks like a sort of bear flag which denotes the probability of further downside. AZN staged a false breakout above the 200 day moving average (blue on the chart) which has been acting as a support/resistance level for some time now, again the likelihood is that we see further downside in AZN.



Finally PFE right now has penetrated the last vestige of support in a very ugly bear flag. Taken the position of the flag, we can estimate a downside target for PFE of roughly $12, somewhere around another 25% loss.

AZN's downside target is harder to gauge, but there is some near term support that it is clinging to today around $40.65. It's not unreasonable to expect a retest of the $36 area.

I also mentioned XLE and it's decent performance on Tuesday, but looking at a weekly chart, it's obvious that the bull market in energy is over. OIH-energy services looks roughly the same. The party is over.

In Defense-NOC is falling out of a bear flag, BA also has resumed it's downtrend after faltering at the 50 day moving average. RTN seems to be in line with the rest of the sector.

I finally said "I expect in either case, the market will be down later this week." and so far today, from Tuesday's close, the SPY is down nearly 10%.

Well, things have changed, check out the videos for more detailed analysis.

I'll be releasing some videos later today to address each sector more specifically, opportunities abound.

Elections and the Market

Today is the day, John McCain and Barack Obama square off and clearly the expectation is an electoral win for Obama. If you need evidence of the the social market trend, take a look at http://www.intrade.com/ Clearly the share price of Obama has gained and the share price of McCain has fallen and this system is actually remarkably accurate in calling election, wall street, republican, democrat, contests.

So the market is up today, the assumption is that Wall Street prefers a Republican (generally speaking), but out of 6 election year bear markets since 1960, Ronald Reagan was the only incumbent party to retain control over the White House in 1984. The odds favor Obama regardless of the polling assumptions. A change in market direction from a down (Bear) market to an up (Bull) market typically coincides with a change in party, also typically occurs in none other than-November! The other stereotype is that Wall Street prefers divided government, one in which the House, Senate and White House are divided by party control. The truth is there is really no historical evidence to suggest that the market fares better under these circumstances and there is plenty of evidence to suggest just the opposite over the last century.

The recent action in the market is marked by a decrease in volatility, this is a welcomed event and as I've mentioned many times since the start of September, Octobers tend to end Bear Markets. The decrease in volatility is exactly what the market needs to pull sidelined cash back into it.

So what assumptions can we make about today's market in relation to the elections? One of the first things I teach in my Stock Market course is that the market is a discounting mechanism that forecasts or attempts to forecast events 6-12 months out in the future. So a sustained market rally this month would roughly equate an expectation that the economy will start a recovery in earnest within the next 6 to 12 months. In many ways the market is dumb, but in many ways, the very best and brightest are the ones operating in it. No one has better inside information regarding politics and government than market participants, they are tied into the loop in ways that the press could only hope and imagine.



Another theme is certainty. If there's one thing the market hates, it is uncertainty. That is why we say, "When the missiles fly, it's time to buy", not because the market loves war, but it loves the idea that the uncertainty leading up to a war (whether there will be one or not) has finally been resolved and planning can take place with that certainty in place. So could the market's recent lack of volatility be a hint that the market has found its certainty in an election win for Obama?

Taking a look at some of the industries that stand to gain or lose, things are jumbled and uncertain once again. Take for instance the fact the market is up today. While there can be many causes attributed to this fact, one could be the certainty of one candidate over the other, but looking at individual sectors that stand to win or lose, we lack clarity.

For example, take a look at these charts of Eli Lilly, Astrazeneca and Pfizer. All are up today, the notion is that a democratic win will be bad for drug makers, yet they are up today, granted on very low volume thus far. Another reason they could be up is the market is taking comfort that the Democrats WILL NOT pull of an upset and gain the filibuster proof 60 seat majority in the Senate.





Looking at the ETF for Energy, XLE, we can see thus far the energy complex is outperforming the broader market today as XLE is up over 6% and the broader S&P just over 3%. This could have to do with the dollar, but it could be an expectation that McCain will pull off an upset as the Energy markets clearly prefer a Republican over a Democrat.



Or again, it could be the feeling that the Dems won't pull off the 60 seat majority that would put the energy complex in dire straits.

Here's a chart of XLE in 2000 when the race was pretty tight, didn't look so good did it?



On November 3rd of 2004, you can see OIH-the ETF for the oil services sector had a lot of volume flowing in the previous week and it made an impressive surge after being down, probably denoting confidence in a GW Bush election win.



Here's a chart today of Northrop Grumman, a defense contractor and while it is up today, it has clearly formed a bear flag over the last month denoting the likelihood of further declines. This would seem to suggest that the defense industry is not too happy about an Obama win and fairly certain that one is coming.

Here's a chart of the ETF for the S&P 500, while it is up today, it looks very tentative and really has formed a bear flag of sorts.



Compare it with this chart from election day of 2004 when a Bush victory seemed pretty well in the can.



Not only were the SPyders up, but staged a decisive breakout of a long term trading range.

Now look at the SPY during the 2000 election cycle, hardly as decisive.



Finally take a look at this chart of Health Management Associates-hospitals/medical-down over 6% today


The notion is a Democratic win will not be good for this industry.

So what assumptions can be made? You look at the evidence and decide for yourself. I'm just pointing out market behavior. We'll know one way or another I suppose by this time tomorrow and I expect in either case, the market will be down later this week.