Schaeffer's Trading Floor Blog

Chart Chatter - Monthly HUI

by 6/15/2005 2:01 PM
Stocks quoted in this article:

The post below prompted me to look at the chart of the Amex Gold Bugs (HUI) index...


Created with SuperCharts by Omega Research

This long-term, monthly view shows that the recent bounce in the HUI occurred right as the index was testing an area that proved to be support in May of last year. This is also close to the zone that was resistance in mid-2002 and early-2003.

It is also worth noting that a move higher from here would break the downtrend that has been in place since the November peak....

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Index Check

by 6/15/2005 1:34 PM
Stocks quoted in this article:

The selling pressure we saw right after the open was in place for nearly an hour and a half...but since then the SPX has flat-lined sideways. Here's where the major indices stand...

One of the reasons that I try to keep the order of this graph constant (as opposed to sorting is based on performance) is so that I can easily see trends. Today offers a good example of this.

The top portion of the graph contains the broad market indices and some of the key sectors. A quick glance is all it takes to see a general downward bias, with semis leading the way. The bottom portion of the graph shows the commodity related groups (gold and oil) where we see an upside bias.

From my perspective, the weakness is semis (on the heels of SMH failing to overtake resistance) and the strength in gold and oil stocks are the most interesting areas to explore...


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Stocks quoted in this article:

Gary says - "Nick, please give us some clue as to why the market rolled over so hard. Yes, oil prices are up, but the premarket looked so strong and the economic news was solid. What triggered this? Do you really think it was oil prices and inventory alone? I don't think we can characterize this as profit taking as the market hasn't really done anything over the last week. Some insight would truly be appreciated. I got clobbered this morning because everything I have learned told me this was going to be a big day for longs ... indices doing bullish consolidations on verge of breakouts, economic indicators looking up, future strong. Every long position I had stopped. What did I miss here. I am stymied as to what caused this. I even waited until after the economic news was released pre-market before deciding which positions to pursue. I thought I did everything right and instead of even coming out even, I got killed. Obviously I missed something. What was it? I would appreciate your thoughts here."

My response -When I first got involved with trading, one of the aspects I struggled with was looking for reason "why" moves happened. Over time I came to realize that sometimes you never get to know the real reason and sometimes selling is just selling. I have elaborated on these thoughts in the two links below:

From my perspective, today's action doesn't seem all too surprising in the context of the recent market action. For the last four weeks the SPX has basically moved sideways as we have watched the action slow so a reversal of the pre-open gains fits with this malaise.

This also touches on the topics that I discussed in a recent series of posts that discussed why you need trust your edge and take trades as they come because you accept that losses will happen and know that you have the appropriate loss control measures in place. If you missed this series you can find a list of links in this post.

As I noted last week, this recent narrow range combined with the sloppy action of the last six months has left pros and individual investors alike frustrated. That is the nature of ranges. The action dries up and whipsaw moves are common.


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Breakdown?

by 6/15/2005 12:21 PM
Stocks quoted in this article:

For what is it worth...Earler this morning I showed the chart of GOOG as the shares were testing their 20-day moving average. The stock has now broken below this trendline on an intraday basis...


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Checking Back on AFFX

by 6/15/2005 11:51 AM
Stocks quoted in this article:

While the broad market seems content to meander a stock on the move is Affymetrix (AFFX)...which I last profiled in early-May. Checking on the updated chart...


Created with SuperCharts by Omega Research

This short-term view shows the shares recently pulled back to test the former high from early-May as support. This was also the site of the 20-day moving average. The shares have now started to move off this support and are poised to challenge their recent annual high. This is encouraging given the sentiment profile below which shows that optimism is still not the dominant feeling toward the stock...

  • Percent of analysts tracked by Zacks who rate the stock with a "buy": 14%
  • Number of analysts tracked by Zacks: 7
  • Short interest as a percent of float: 13.6%
  • Short interest ratio: 6.326
  • Put/call ratio percent rank: 25.8%


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