Is This The Next Leg Of The Bull Market Or Just Bull Shhh?

June 30, 2011

There is really no person that can deny the size of the rally over the past four trading sessions. The highly popular and followed Dow Jones Industrial Average(DJIA) has surged higher by 460.00 points in just four trading sessions. This is an enormous move in such a short period of time. One would think that cancer was cured with the action in this stock market. In reality, all that happened was the can of problems in Greece, and the European Union, was kicked down the road a little bit. There is not anyone on the earth that really expects Greece to resolve it’s problems in the next few years. The country will ultimately have to default.

You see, the stock market really is not about Greece, it is about banks. Yes banks, the banks are the institutions that are holding Greek, and European paper, or what we call Greek bonds(debt). If Greece defaulted the banks would lose a lot of money, as there so called bond investment went sour. It is always about the banks. In 2008, when the stock market crashed and every leading financial institution was insolvent, it was about the banks. Nothing has changed since that time, bailouts continue to occur on a daily basis. This action by the central banks and the International Monetary Fund will continue until the people lose faith in paper money. Until that time, it would be prudent to simply expect more bailouts for other nations and states down the road.

As traders, we continue to simply trade what we see on the charts. Traders really do not buy into the story that is being sold to the public via the mainstream media. How many times have we seen a public official rescind a comment, or statement that they have made six months or a year earlier? The answer is that we see it and hear it all the time. For example, when President Obama ran for office he said that he was against debt, now he says we need debt. The debt is over $14.3 trillion at the moment, how much do we really need? Lets take the Federal Reserve Chairman Ben Bernanke, in 2007, he said sub-prime loans were not a problem, then in 2008, sub-prime loans were the problem. Currently, Chairman Bernanke says that there is no inflation, yet the world is crying about inflation. Can anyone believe this stuff anymore? The only truth is the charts. The charts were oversold and the stock markets bounced ahead of a major U.S. holiday. As fast as these markets go up they can just as easily come down. If you want the really scoop on the markets just stick with the charts.

Nicholas Santiago

Two Stocks That Will Pull Back Next Week

June 30, 2011

The bears are morphing into bulls and the Greek aid package is solidified. This week, the Dow Jones Industrial Average is up close to 500 points. This move in the market is one of the biggest in a one week period in years. Stocks have gone from being at major low pivot support levels to huge resistance levels. They have gone from oversold to overbought in days. Below are two stocks that are extended and should see a pull back next week.

Caterpillar Inc. (NYSE:CAT) is currently trading at $105.75, +2.39 (+2.31%).  The stock has rocketed in the last two weeks from a low of $94.00. Once this stock hits $106.70, it will pull back. The $106.70 level is a double top, pivot high and is major resistance.

International Business Machines Corp. (NYSE:IBM) is trading at $172.18, +1.64 (+0.96%). The major component of the Dow Jones Industrial Average has jumped over $10.00 in the last two weeks. It is quickly approaching its all time high, which will also be a double top. This level is at $173.54. Should it hit this level, the stock should have a multi day pull back and be a great swing trade short.

These stocks have made impressive moves but are extremely extended. Look for them to pull back in the coming week.

Gareth Soloway

Stock Market Slams Into The 50 Moving Average

June 30, 2011

The markets are sharply higher again today. This is the fourth day in a row major gains are being seen on Wall Street. The Dollar again is sharply lower as the Greek aid package is essentially signed, sealed and delivered. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.22, -0.10 (-0.47%).  Remember, a weak Dollar is positive for the stock market. As things look better in Europe, the Euro gets stronger. As that currency strengthens, the Dollar must weaken in response.

While the markets are turning bears into bulls, it is extremely important to recognize that the major indexes are slamming into the daily 50 moving average. This is major resistance. It can be seen clearly on the daily charts of the SPDR S&P 500 ETF (NYSE:SPY) and the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ). After a four day sharp rally in the markets, this resistance level may signal a pull back in soon. Possibly as early as tomorrow or next week. It also allows for swing traders to jump on the short side for a couple days.

Gareth Soloway

Rare Earths Are Still The Rage

June 30, 2011

The rare earths stocks really became well know and popular in late 2010. This sector looks to have peaked in early May 2011 with the overall stock market indexes. The rare earths have been staging a short term rally on the daily chart since June 16, 2011. This morning, all of the rare earth stocks are trading higher. This recent move higher in this sector is now getting a little long in the tooth, therefore, this sector is likely going to pullback soon.

Molycorp Inc.(NYSE:MCP) is the leading rare earth stock in the stock market. This stock has rallied higher by $14.00 since June 16, 2011. the stock is now trading into its daily chart 50 moving average which is going to be short term resistance. This morning, the stock is trading higher by $3.57 to $60.60 a share. Short term traders should watch for intra-day resistance around the $61.50 area. The stock will have intra-day support around the $58.90 level should it decline throughout the trading session.

Other rare earth stocks that are trading higher this morning include Avalon Rare Metals Inc.(AMEX:AVL), Rare Element Resources Ltd.(AMEX:REE), and China Shen Zhou Mining & Resources(AMEX:SHZ ). Traders should remember that these stocks often do well when the U.S. Dollar Index is weak and trades lower.

Nicholas Santiago

F5 Networks and Netflix Are The NASDAQ Laggards

June 30, 2011

This morning, the major stock indexes are rallying higher for the fourth consecutive trading day. The NASDAQ Composite is trading higher by over 24.00 points to 2765.00. Just about every leading NASDAQ 100 stock is trading higher on the day. There seems to be just a couple of leaders that are lagging the tech heavy index. The two leading tech stocks that are trading lower are F5 Networks Inc.(NASDAQ:FFIV), and Netflix Inc.(NASDAQ:NFLX).

F5 Networks is a leading networking stock that has surged higher by $15.00 since June 20, 2011 when the stock traded as low as $96.21 a share. Short term traders can look for intra-day support around the $109.43 level should the stock decline throughout the session. The stock will have intra-day resistance around the $112.25 area should it rally higher.

Netflix Inc.(NASDAQ:NFLX) is the leading provider of online movie rental subscriptions. The stock has been a stock market leader for the past two years. This morning, NFLX stock is declining by $2.44 a share to $262.50 a share. Traders should watch for short intra-day support around the $262.00, and $260.00 levels.

Nicholas Santiago

Lululemon and Nike Bounce Off Lows

June 30, 2011

This morning, leading Canadian yoga apparel maker Lululemon Athletica Inc.(Nasdaq:LULU) started the morning lower trading below $110.00 a share. The early decline seemed to be caused by a downgrade. The stock has surged higher by 35.0 percent since making a low pivot on June 6, 2011 at $82.36 a share. This downgrade is understandable as the stock is very extended on the daily chart at this time. Short term traders can watch for intra-day resistance around the $112.85 level.

Nike Inc.(NYSE:NKE) is another leading athletic footwear and apparel manufacturer that has surged higher recently after reporting earnings. This stocks remains very strong on the charts by trading above all of its major moving averages. The stock looks to have hit some daily chart resistance around the $90.00 level which was the March 2011 high. Nike stock is also very extended on the daily charts and looks as if it needs to pullback and consolidate before making another move to the upside. Short term traders can watch for some minor intra-day support around the $89.00 level. The intra-day resistance levels for Nike stock will be around the $91.25 area should the stock trade higher.

Nicholas Santiago

Visa And Mastercard Soar On Swipe Fee Increase

June 29, 2011

This afternoon, Visa Inc.(NYSE:V), and Mastercard Inc.(NYSE:MA) are soaring higher after the Federal Reserve raised the cap on debit card swipe fees to 0.21 cents to 0.12 cents. Traders should watch for intra-day resistance on MA stock around the $308.25 level. The intra-day resistance level on Visa stock should be around the $86.70, and $91.00 levels.

Nicholas Santiago