Can The Cash Cow Continue?

March 14, 2010

The week of March 15th through March 19th promises to be far different than the previous week in the markets. Why you ask?  Mainly because of volume.  Volume last week ranked in the top ten lightest in the previous multi year period. If I heard this piece of volume news, I would assume we are in July or August but no, it is mid March.  Having said that, this week will most likely have much higher volume levels because of options expiration and the wild calendar of economic news.  The coming week really has it all. From a closely watched Federal Reserve announcement on interest rates to inflation data like Producer Price Index (PPI) and Consumer Price Index (CPI).  There are countless other reports this coming week that will add more volatility to the markets mainly through an increase in volume.  All I can say is be ready!

Last week the markets floated generally higher.  This was much like the previous few weeks since the market bottomed on February 5th, 2010.  Friday was a unique day for many reasons.  The video below will summarize it better but suffice it to say, it was the first day in a while that the markets gapped higher and sold off sharply.  After the initial sell, light volume took over and the markets went sideways. Interestingly enough, this happened on January 11th, 2010.  The chart is almost identical and on that day, I called the top on the markets, nailing it.  Friday could very well be another top in the market.

There are many stocks to watch next week as swing trading and day trading should be fantastic.  Options expiration always brings wild moves and next week should be no different.  I will be on top of it all in the Research Center.

The top stocks on my radar next week will be Apple Inc. (NASDAQ:AAPL), Goldman Sachs Group, Inc. (NYSE:GS), Google Inc. (NASDAQ:GOOG) and Baidu, Inc. (NASDAQ:BIDU).  These stocks are all market leaders and have had a meteoric rise in the last few weeks. Based on technicals and even some fundamentals, they are all short term extended and need to pullback.  I have a negative bias on all four next week.

In addition, watch Palm, Inc. (NASDAQ:PALM).  Earnings next week could actually help this beaten down phone maker.  After dropping over 50% of its value from its highs in 2010, Palm may actually be able to help themselves by giving some clarification on future revenue and earnings. The stock has been beaten down so badly, it would not shock me to see a jump next week.  I am giving Palm a neutral to positive bias next week on earnings.

I will see you all next week in the Research Center or the Intra Day Stock Chat!  For those of you interested, try the Research Center out, I dare you!

Gareth Soloway

Chief Market Strategist

InTheMoneyStocks.com

RealTick graphics used with permission of Townsend Analytics, Ltd. ©1986-2010 Townsend Analytics, Ltd. All Rights Reserved. RealTick is a registered trademark of Townsend Analytics, Ltd

Disclosure: All comments made by inthemoneystocks llc and its subsidiaries, instructors, and representatives are for educational and informational purposes only and should not be construed as investment advice regarding the purchase or sale of securities, or any other financial instrument of any kind. Please consult with your financial advisor before making an investment decision regarding any securities mentioned herein. Inthemoneystocksllc and its representatives assume no responsibility for your trading and investment results. All information on the website was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Inthemoneystocksllc, its employees, representatives and affiliated individuals may have a position or effect transactions in the securities herein and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves a very high degree of risk. Futures and Options trading are not suitable for all investors. Past results are not indicative of future results. Inthemoneystocksllc, its subsidiaries and all affiliated individuals assume no responsibilities for your trading and investment results.

Volume Saves Market On Friday. Can It Again?

March 14, 2010

The markets gapped higher on Friday, only too sell off sharply.  For the first 45 minutes, the markets sold hard.  Then, light volume took over.  The markets floated sideways to higher creating a beautiful in spirit of bear flag. This pattern can be seen on charts of the S&P 500, Dow or Nasdaq.  It can also be viewed on the SPDR S&P 500 ETF (NYSE:SPY) as shown below or the PowerShares QQQ Trust, Series 1 (NASDAQ:QQQQ).  Stocks also showed this in spirit of bear flag in many charts.  To view this same pattern, look at the chart of Apple Inc. (NASDAQ:AAPL) or Research In Motion Limited (NASDAQ:RIMM).

What does this overall pattern mean?  An in spirit of bear flag pattern is a high probability pattern that dictates a coming down move.  The recognition of this pattern has been utilized by me to make countless dollars in the last few years.  While this pattern was forming all day on Friday, something else was afoot that had to be watched.  This factor was extremely light volume.

After the in spirit of bear flag formed all day long, the 3pm ET time frame hit.  The markets started to move lower, showing an attempt of the pattern to play out.  However, no sooner did the markets hit the first minor support level, the volume failed to push it through.  The flag pattern could not break lower and thus stalled out.  The markets bounced back higher.  Volume is a key to the markets and patterns playing out on the downside.  Friday was a great example how the pattern started to play out and then could not quite finish do to volume.

Did the pattern fail?  No.  The pattern is still intact, though weakened.  Watch Monday for volume in the markets.  Should that show up, the markets have a solid chance of continuing the pattern.  If the volume remains like last week, the pattern will likely fail.

Join the Research Center to gain access to all the guidance, education, calls and more!  Get the information the pros pay millions for. Just $49.99 per month.

Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com


RealTick graphics used with permission of Townsend Analytics, Ltd. ©1986-2010 Townsend Analytics, Ltd. All Rights Reserved. RealTick is a registered trademark of Townsend Analytics, Ltd