Weekend Reading - March 29, 2008

On what was supposed to be our real wedding date (dang those Passover reservations at our hotel!), there’s been quite a bit of material to read on the internet. Let’s do this college football style with the good, bad, and just plain ugly.

The Good

  • Blain over at STTG has once again opened up the Falkin Library for the general public (US and Canada only). I made the suggestion to provide a copy of Trading in the Zone as it’s a great resource on trading psychology. Hopefully we’ll see that on May’s library list.
  • The Option Addict has given birth. ETF FOO is born!
  • After listening to one of thinkorswim’s chats this week (attempting to catch up!), I listened to Tim Knight, the creator of Prophet charts. His site, The Slope of Hope, is a heck of a resource for bearish technical traders. Here’s his weekend review with a plethora of great idea (plethora’s the word of the day by the way…)

The Bad

  • How was I not included in the top 25 blogs? I have a 100% growth rate month over month!

The Ugly

  • I’m not sure what it’ll take to realize that arguments will never be won on the internet. There’s so much more one can do with their time than arguing on this virtual idiot box. If you’re looking for something amusing, check out recent criticism about a microcapper and his response plus ensuing comments. And I thought the Yahoo/Google Finance (and to a lesser but growing extent Stockpickr) message boards were bad…

I’m about half way through Trading in the Zone by mark Douglas and it’s by far one of the best resources I’ve read in regards to trading. It’s amazing how in the first three chapters of his book, I’ve identified with each of the newbie trader pitfalls. With almost a year under my belt, this is definitely the right time to analyze what I’ve done right (not much), what I’ve done wrong (quite a bit), and how, if possible, can I improve. For me, it’s a matter of how to improve. No matter how much the markets knock me down, they won’t get rid of me that easily. And if they do, well I have a degree in Nuclear Engineering for a reason…

Have a great Sunday! I’m off to celebrate my dog’s 3rd birthday (I already know what you all are thinking, so hush!)

Jorge 29 March 2008 Weekend Reading Comments

Markets Look Confused

Jorge 28 March 2008 Miscellaneous Comments

So Far, So Good

So far so good. I know, one day doth not a pattern make, but it’s at least interesting, no? Market breadth is also holding steadily negative confirming the downside move so far today.

Jorge 26 March 2008 Market Pulse Comments

I’ve Seen Paint Dry…

… and it was more exciting than yesterday’s action. Couple of things I noticed during the day yesterday. First, look at this SPX chart. Compare the two rectangles. While not the exact same pattern, it looks fairly close to me. Notice the first bar in the pattern as a negative day for the market, followed by three positive bars which appear to lose steam each day, then followed by a negative bar and finally a nasty selloff. Looking at the action from the past week, it appears to be following a similar pattern. Futures so far this morning are down so we’ll see.

Jorge 26 March 2008 Market Pulse Comments

Confirmation?

Life appears to be grand for the bulls the past couple of days. Yesterday’s action appears to be strong in terms of closing prices, but was it as strong as everyone thinks? A year ago, I would have been excited to see such a rally. Today, I’d like to analyze it just a bit before waiving the all clear flag.

 

From a simple resistance/support view, it does appear by a healthy margin that the S&P 500 has broken above the 1330 level and is making a march potentially to 1400. The markets gapped open yesterday and never looked back.

Let’s take a look at a daily SPY chart since it typically follows the S&P.

On face value, it appears that the SPY too has broken above resistance and is headed toward the 139 - 140 level. But I’d expect a pullback, and potentially a sharp one at that. Take a look at yesterday’s volume for the SPY. A couple of things to note. First, yesterday’s volume was lower than the 20 day moving average volume. Next, look at the past three trading days. There appears to be a steady decrease in volume which may signal some tired out traders. The lack of volume might be a cause for concern. In any event, before the all clear is sounded, I’d like to see if this rally does indeed have legs. The first step in seeing if this rally is valid I think is to have a retest of that 1330 level and having it hold. If it fails, it may just be one of these two to three day sharp rallies nested in a bear market. Then again these markets have been very news driven the past couple of weeks it may be that no one has much of a clue about what’s going on.

Futures are marginally higher this morning. Let’s see if they can hold through the opening.

Jorge 25 March 2008 Equities, Market Pulse, Technical Analysis Comments
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