Enjoy the long weekend!
April 13, 2006
Today’s put off objectives reduce tomorrow’s achievements. Harry S. Banks
I am actually taking off to New York City for the weekend to catch up with family and friends and if the weather cooperates that will certainly be an added bonus. I will update the RSI numbers on this post later this afternoon or tomorrow.
Furthermore, as I mentioned yesterday, keep a close eye on where the SPY closes today. If it stays below the 50-day moving average a decent trade set-up could be in order for Monday. If you were unable to read yesterday’s post let me repeat my reasoning.
“While I try not to put too much emphasis on seasonality, historically, the Monday after Good Friday has been overwhelmingly negative for the S&P, especially if the broad market index was below the 50-day moving average. The closing price of SPY (S&P 500) today was 128.88, slightly below the 50-day moving-average of SPY (128.91). If SPY manages to stay below the 50-day MA then this could make for a nice short-term trade.”
I hope everyone has a wonderful weekend. See you on Monday.
Daily Articles of Interest
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Option Prices
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Robert Prechter
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.
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Webby Awards nominees.
RSI Wilder (5) for April 13, 2006
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DIA – 42.9 (Neutral)
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SPY – 30.7 (Neutral)
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QQQQ – 51.0 (Neutral)
The Trading Desks are Empty
April 12, 2006
The market traded in an extremely tight range today and will most likely do the same tomorrow. Volume has been low all week and understandably so, the holidays are here and the weather is nice. I would still like to see all three major indices move into oversold territory wihch should present a good trading opportunity. Monday could be the day when the bears decide to take over the reigns once again. Why you ask? Well, while I try not to put too much emphasis on seasonality, historically, the Monday after Good Friday has been overwhelmingly negative for the S&P, especially if the broad market index was below the 50-day moving average. The closing price of SPY (S&P 500) today was 128.88, slightly below the 50-day moving-average of SPY (128.91). If SPY manages to stay below the 50-day MA then this could make for a nice short-term trade.
Daily Articles of Interest
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The Top 50 (My wife will be happy to know that her job sits at #38)
RIA Wilder (5) for April 12, 2006
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DIA – 43.1 (Neutral)
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SPY – 33.1 (Neutral)
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QQQQ – 40.4 (Neutral)
The Bears Take Over Again
April 11, 2006
The market sold off again today as inflationary concerns and pre-earnings jitters were to blame. The S&P (SPY) is now officially in oversold territory which could present a few trading opportunities over the next few days. Although, I would like to see the Dow (DIA) and Nasdaq 100 (QQQQ) join the S&P in oversold territory to make the probablity for a succesful trade that much higher. Remember, patience is key.
Daily Articles of Interest
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. A common sense approach to investing and one that we value at Crowder Investment Research, LLC.
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Tax Tips
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RSI Wilder (5) for April 11, 2006
- DIA – 32.0 (Neutral)
- SPY – 26.6 (Oversold)
- QQQQ – 39.8 (Neutral)
Earnings Season Begins
April 10, 2006
Earnings season begins today and as always Alcoa is the first to announce. I have a feeling the holiday shortended week could trigger a few trades. Hopefully, the market (S&P 500) will move into oversold territory and present us with a few low-risk trading opportunities.
Earnings season is always an exciting time as it usually presents several nice trading opportunities. The herd usually gets overly excited about earnings reports, guidance, etc. and in most cases creates some wonderful set-ups. We shall see soon enough.
Several of you have asked me what books I recommend on options. I have three in mind that are must reads for anyone interested in options.
- I recommend starting with this one: “The Options WorkbooK” by Tony Saliba. A quick read and an excellent primer for those interested in understanding how options work.
- “Option Volatility and Pricing” by Sheldon Natenberg. In my opinion, the most complete work on option theory and practice.
- “Options as a Strategic Investment” by Lawrence G. McMillan. Some refer to it as the bible of the options world.
Daily Articles of Interest
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Interest Rates
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Long-Term Success
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to work for 2006. I had the privilege to work seven years for one of the few companies that makes this list year after year.
RSI Wilder (5) for April 10, 2006
- DIA – 42.8 (Neutral)
- SPY – 41.3 (Neutral)
- QQQQ – 55.4 (Neutral)
Could this be the beginning of a trend?
April 7, 2006
The Labor Department reported an increase of 211,000 jobs for the month of March, slightly higher than the 198,000 that economists’ anticipated. The better than expected number heightened inflation fears and caused the market to sell off. The 10-year Treasury note closed at 4.96%, the highest it has been in years. As I mentioned earlier in the week, I thought this would be the most likely scenario if the report came in above expectations. The question now: will this be the beginning of a trend lower? Today was definitely an anomaly; over the last 40 years the S&P has never witnessed a new high followed by a 4-to-1 decline in breadth. This rare occurrence should keep traders on their toes over the next few days. However, we must not forget that in the past the initial reaction to the employment report was often a false one. My hope is that we see the market move into oversold territory where things start to get interesting. Have a great weekend!
Daily Articles of Interest
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and Behavioral Finance
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Roth Rules
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Rich Easily
RSI Wilder (5) for April 7, 2006
- DIA – 34.5 (Neutral)
- SPY – 36.2 (Neutral)
- QQQQ – 58.6 (Neutral)
Patience is the key!
April 6, 2006
Despite the ability of the market to hold at current levels I still think we are in store for a correction in the near future. Tommorow’s action will be dominated by the Labor Department’s employment report. We could see a spike tomorrow depending on how the herd reacts to the report, although as I mentioned yesterday I do not think the rally will have to many followers. QQQQ is currently “very oversold” (86.1) which means the current rally in the Nasdaq 100 should be short-lived. This does not mean the trend upwards will not continue, but it means the chances of a short-term correction are highly probable. However, we must remember that only Mr. Market has access to the crystal ball.
Patience is key during times like these and we hope our ability to endure the last few weeks of sideways trading will pay off.
Daily Articles of Interest
This comes from a well-respected blog titled “Options Trading for Income” I absolutely love his description on the evolution of a typical trader.
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Follow my money? The March 6 edition of Business Week reported on a “host of young bloggers” that have “opened their finances for all to see – and learn from”. Here are a few personal finance blogs listed in the article. Insightful, to say the least.
RSI Wilder (5) for April 6, 2006
- DIA – 57.2 (Neutral)
- SPY – 68.0 (Neutral)
- QQQQ – 86.1 (Very Oversold)
Anxiously awaiting Friday
April 5, 2006
The market moved higher today despite a rise in oil prices ($67.04) and the 10-year Treasury note (4.85%). The 10-year note is now at a four year high and the S&P and Nasdaq are at five year highs. As a result, two of the three major indices are now in overbought territory (see RSI Wilder (5) below). I mentioned yesterday that we could see the market continue to trade in a range ahead of Friday’s unemployment report. Well, we are now at the top of the range and I would not be surprised to see some buyers come in at this level and move the market to new highs. However, I do not expect the euphoria to last long considering this would push the S&P and Nasdaq into “very overbought” territory which usually signals a short-term correction in the market. Moreover, the Vix is still hovering around 11 (11.13) which in the past has signaled difficulty for the bulls in their attempt to sustain any type of rally. The next two days should be very interesting.
Daily Articles of Interest
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”. The CBOE’s site provides a wealth of information on the VIX. The paper titled “Revised, more Robust Methodology” is an interesting read. Although, I would recommend starting at page nine. The “white paper” is also very informative. Check it out!
RSI Wilder (5) for April 5, 2006
- DIA – 64.1 (Neutral)
- S&P – 73.5 (Overbought)
- QQQQ – 84.4 (Overbought)
Sideways Trading Continues
April 4, 2006
- How to find a Financial Planner you can trust.
- Robert Kiyosaki, author of “Rich Dad Poor Dad” informs us “Why the Rich Get Richer”.
- Big jump in sentiment bodes ill for the stock market.
- Change is good. An interesting blog to say the least.
RSI Wilder (5) for April 4, 2006
DIA – 56.1 (Neutral)
SPY – 66.6 (Neutral)
QQQQ – 76.7 (Overbought)
Let the season begin!
April 3, 2006
Baseball season has officially started and so has the second quarter. The day started off with a bang as market participants seemed anxious to add to their positions in hopes of a good second quarter. Historically, April is the fourth best month for the S&P (+1.25%) and the best for the Dow (1.8%). As we approach another earnings season typically the first half of April is where all of the gains are made (gearing up for earnings). Soon after tax day the market historically starts to show some weakness. The bears took over towards the end of the day as the market gave up the majority of the gains witnessed earlier in the day. Could it be that investors are a little nervous ahead of the Labor Department’s employment numbers due out Friday? Economists’ anticipate that 198,000 jobs were created in March. If the numbers reported are significantly higher, the market could move lower. The thinking is: a better than expected employment number signifies a strong economy and just another reason for the Fed to continue raising interest rates.
- DIA - 33.3 (Neutral)
- SPY - 45.9 (Neutral)
- QQQQ - 69.9 (Neutral)
