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Intraday Market Notes & Observations
Alibaba debut fails to prop up the early morning rally
September 19, 2014

1:55 pm ET: Intraday support/resistance:
SPX 2004.75/2019.25
DTX 861.5/871.5
DJIA 17250/17350
Nasdaq 4565/4610
RUT 1142/1164
VIX 11.5/12.7 (rising VIX is bearish but VIX under 15 is overall bullish)
Trin range: 0.85 - 1.45 (bearish)
Average VWAPs: +25/-111 (bearish)

Old Guard getting new life
September 18, 2014

While the market continues to melt up, investors are finding that bargains are becoming more difficult to find. One area that is finally getting some respect is the Old Guard--investment banks, insurance companies, and big pharma. The reason? Compared with their smaller-cap brethren, they're still attractively priced. Here are some stocks that have broken out to new highs in recent days. They all sport P/E's at or below that of the S&P 500's (which currently stands at 20):

Investment banks/Commercial banks: Goldman Sachs (GS, $188; P/E = 12), Invesco (IVZ, $41; P/E = 20), Morgan Stanley (MS, $36; P/E = 17), Wells Fargo (WFC, $53; P/E = 13), Royal Bank of Canada (RY, $76; P/E = 13). The moves in some of these stocks helped push the US Broker-Dealer etf (IAI) and the Financial etf (XLF) to new highs.

Insurers: Allstate (ALL, $62; P/E = 12), Hartford Financial (HIG, $38; P/E = 14), Prudential (PRU, $93; P/E = 16).

Pharma: Johnson & Johnson (JNJ, $107; P/E = 19), Eli Lilly (LLY, $67; P/E = 21). The rally in these and others in their industry group helped push the Pharma etf (PJP) to a new high.

Bulls starting to flag after pushing S&P, Dow Transports, Dow Industrials to new highs
September 18, 2014

2:00 pm ET: Intraday support/resistance:
SPX 2000/2013
DTX 865.75/868.25
DJIA 17165/17265
Nasdaq 4573/4597
RUT 1156.5/1161.5
VIX 11.8/12.6 (low VIX is bullish)
Trin range: 1.05 - 1.3 (rising Trin is bearish)
Average VWAPs: +66/-53 (bull/bear seesaw)

Market fading before FOMC announcement
September 17, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1995.5/2004.5
DTX 857.5/869.5
DJIA 17120/17175
Nasdaq 4546/4564
RUT 1151/1158
VIX 12.45/13.45 (rising VIX is bearish)
Trin range: 0.8 - 1.15 (rising Trin is bearish)
Average VWAPs: +42/-63 (mildly bearish)

Plunging volatility pushes Dow to a new high
September 16, 2014

Market Notes (3:30pm ET): Tired of having the bears push them around, the bulls marched back into the ring and delivered a heavy blow to the bears. The expectation on the Street (at least according to the Wall Street Journal) is that the Fed will keep its accommodative stance for a considerable period . No doubt this had something to do with today's bullish ebullience. While there's no reason for the Fed to do anything rash, there is still the possibility that it may do what the Street least expects. We shall find out which way the wind will be blowing soon enough...

Today's market action was pretty much a mirror image of yesterday's. Other than the banks and gaming stocks, pretty much the rest of the sectors are trading in the green. In commodities, the hard commodities (metals, oil) rebounded strongly while the dollar (which has been on a tear) lagged. On the global front, Brazilian stocks enjoyed big gains especially the banks (BBD, ITUB) and oil (PBR).

In individual stocks, retailer Kohl's (KSS, $61) broke out of five and a half year trading range on no news other than some favorable articles on the company's brightening prospects for the second half of the year. On the small-cap front, shares of broadcast graphics provider ChyronHego (CHYR, $3.33) rallied over 7% on more than four times normal volume. The move caused the stock to break out of a five year inverse head and shoulders pattern which is a very bullish technical event. (See the weekly chart of the stock above.) Based on the distance from the head to the shoulder line, the stock could easily move to the $5 - $5.50 range. In its last earnings report, the company blew out estimates on both the top and bottom lines.

2:10 pm ET: Intraday support/resistance:
SPX 1979/2006
DTX 847/860
DJIA 16985/17175
Nasdaq 4500/4570
RUT 1141.5/1154.5
VIX 12.85/14.55 (falling VIX is bullish)
Trin range: 0.5 - 1.0 (falling Trin is bullish)
Average VWAPs: +145/-28 (very bullish)

Tech, Gaming are today's losing bets
September 15, 2014

The recent rise in VIX volatility has been putting pressure on the market, especially in the tech and gaming areas. Today, the small-cap Russell 2000 (RUT) made a statement by pushing well below its recent support level at 1160. The next stop for this index could be a test of major support at 1100. Options players with some tolerance for risk may wish to put on a bearish option position (bear put debit spread, puts, bear call credit spread) on its tracking stock, IWM. If you're not cleared for options trading but still want to get in on the action, you could buy shares in the inverse tracking stock, RWM. For those with more risk tolerance, the double levered fund TWM and the triple levered fund SRTY can offer more bang for your buck but the risks with leveraged funds increase according to the amount of leverage, so please do your research first!

Bearish action on the tech-heavy Nasdaq is pushing this index towards its 4500 support level. A violation of this level would be an indication of further downside. Should this happen, one way to cash in is to buy puts or put spreads on the Nasdaq 100 tracking stock, QQQ. Similar to the RUT above, the QQQ does have inverse funds that can be utilized: PSQ (no leverage), QID (double levered), SQQQ (triple levered).

In sector news, gaming stocks continue to be losing bets for investors. The Gaming etf (BJK) has fallen from an all time high of $56 put in two months ago and is now testing major support at $45. A break below this could send it tumbling much lower, perhaps even to its major support level at $30.

Right now, Wall Street is waiting on word from the Fed due out this Wednesday. Any hint of increasing hawkishness could put added pressure on the market. For right now, conservative investors should protect their positions and return to the sidelines until the dust settles.

Jumping VIX volatility & increasing selling putting pressure on the market
September 15, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1978/1986
DTX 849.3/854.7
DJIA 16950/17040
Nasdaq 4498/4567
RUT 1144/1160
VIX 13.55/14.25 (rising VIX is bearish but VIX under 15 is still bullish overall)
Trin range: 0.6 - 1.0 (rising Trin is bearish)
Average VWAPs: +35/-120 (bearish)

Rising VIX pushing market lower
September 12, 2014

1:30 pm ET: Intraday support/resistance:
SPX 1982.75/1996.75
DTX 854/858
DJIA 16945/17045
Nasdaq 4560/4590
RUT 1156/1173
VIX 12.85/14.35 (rising VIX is bearish but VIX under 15 is still bullish overall)
Trin range: 0.6 - 0.8 (bullish)
Average VWAPs: +34/-104 (bearish)

Bulls and bears trading punches as major averages cling to support
September 11, 2014

1:35 pm ET: Intraday support/resistance:
SPX 1986/1996
DTX 849/855.5
DJIA 16985/17065
Nasdaq 4560/4584
RUT 1158.5/1170.5
VIX 12.75/13.65 (VIX under 15 is still bullish but rising VIX volatility is bearish)
Trin range: 0.65 - 0.95 (bullish to neutral)
Average VWAPs: +56/-59 (bull/bear battle)

Market internals indicate that today's recovery may be short-lived
September 10, 2014

Intraday Notes (2:45pm ET): Softs softening; Whites fading
The bulls stepped in to halt the yesterday's sell-off putting in a floor on the major averages. The intraday levels (see below) on the S&P and the Nasdaq indicate that there's more room left to move to the upside before the closing bell rings. While this is a bit of good news for the bulls, there is a dark cloud looming over the market, and that is the fact that VIX volatility is jumping. This is shown by VVIX which popped over 4% today. Add to that the fact that the Dow Transport Index (DTX), considered a leader in market movement, is the laggard among the major indices, and you have a case for the bears regaining momentum.

Today's quick highlights:
1. Agricultural commodities continue to weaken with the Wheat (WEAT), Grains (GRU), Ag (JJA), and Sugar (SGG) all sliding to new lows. Sugar has been especially hit hard and today broke below $44--a level not seen in four years.
2. Metals continue to fade with the white metals--platinum, palladium, and silver--leading the downward movement. Today, the etf basket of White metals (WITE) violated its support level just under $39.
3. The Forex market has been a bundle of activity lately and today is no exception. While the US$ (UUP) is finally enjoying a day off, the Aussie $ (FXA) broke major $92 support while the Japanese Yen (FXY) hit a new yearly low. Both are showing no signs of consolidation. The good news in this space is today's rebound in the British pound (FXB) on the report that Scotland will likely vote not to secede from the UK.

That's it for now!

1:40 pm ET: Intraday support/resistance:
SPX 1983/1998
DTX 847/852.5
DJIA 16975/17085
Nasdaq 4545/4590
RUT 1155/1167
VIX 12.85/14.05 (VIX under 15 is still bullish but a pop in VIX volatility is bearish)
Trin range: 0.6 - 0.95 (falling Trin is bullish)
Average VWAPs: +108/-31 (bulls stepping back in)

Bulls trying to stem early morning sell-off--will the market close in the green?
September 9, 2014

1:50 pm ET: Intraday support/resistance:
SPX 1991.25/2002.75
DTX 853/857.5
DJIA 17010/17110
Nasdaq 4566/4592
RUT 1162/1171
VIX 12.65/13.35 (VIX under 15 is bullish)
Trin range: 0.6 - 0.95 (falling Trin is bullish)
Average VWAPs: +63/-44 (mildly bullish)

Old tech seeing new life
September 8, 2014

Lately, the market has been trying to decide which way it wants to go--one day it's up and the next day it's down. Although market internals are leaning towards the bears' side of the seesaw, the fact that the market-leading Dow Transports have been able to advance last week while the others stagnated is a big plus in the bulls' favor. September is historically a lackluster month for stocks but this market has shown a unique ability to defy the odds. While it's tempting to play the contrarian, I do think valuations are becoming quite heady and I think that being selective is the best course of action in this indecisive market.

Today's commodity highlights: Of metals, miners, and currencies
1. There's some bifurcation in the metals with the Base Metal exchange-traded vehicles (DBB, JJM) both breaking out of year and a half bases. This is a very bullish sign for a rally continuation. (Note that volume on JJM is extremely low (only about 4k/day) compared with that of DBB (around 180k/day).)
2. While base metals shine, precious metals continue to lose their luster. Leading the pack to the downside are the gold miners. Both the Gold Miner etf (GDX, $24.19) and the Junior Gold Miner etf (GDXJ, $37.26) have broken support levels and seem determined to test their next support levels which are $22 for GDX and $33 for GDXJ.
3. Not only is Oil (OIL, USO) continuing to break support levels, but so are Oil Services (OIH, XES) with many individual drillers sliding to new yearly lows (RIG, FI, KEG, DRQ).
4. Scotland's threat to secede from the UK sent the British Pound (FXB) and the Euro (FXE) plummeting and the US Dollar (UUP) soaring. Several weeks ago we noted the breakout in the UUP along with the breakdown in the FXE and suggested it as a viable long/short pairs trade. Currency traders who initiated this trade at the time are probably dancing around the Maypole.

Today's stock highlights: Old tech breaking out
Yahoo! (YHOO, $41.81) shareholders are shouting for joy as the stock rallied 5.6% on five times normal volume to a high not seen since 2000. The reason is because the company stands to gain around $8.8B (before taxes) in cold hard cash on the heels of the Alibaba (proposed symbol: BABA) IPO. It remains to be seen, however, if the company can put all that cash to good use...

Two other bright spots in the old tech space: Microsoft (MSFT, $46.47) and Nokia (NOK, $8.49) both broke out to new highs on heavier than normal volume today. Mr. Softie was recommended as a long pick to our *Blue Plate Specials* subscribers on 3/31/14 at $40.99. Since then, it's rallied over 13%.

Bears stepping in
September 8, 2014

1:30 pm ET: Intraday support/resistance:
SPX 1997/2007
DTX 854.75/860.75
DJIA 17075/17135
Nasdaq 4570/4600
RUT 1166.25/1174.25
VIX 12.4/13.1 (rising VIX is bearish but VIX under 15 is still bullish)
Trin range: 0.85 - 1.05 (neutral)
Average VWAPs: +30/-92 (bearish)

Bulls fight back as the Transports lead the way
September 5, 2014

Intraday Market Highlights (2:20pm ET): The strength in the Transports is leading the market higher. Intraday levels are showing that the major averages still potentially have more room to run to the upside. Some notable action:

1. Microsoft (MSFT, $45.75) is breaking out of a month and a half base
2. Ambarella (AMBA, $37) today broke out of a nine month base on 5 times normal volume on a blow-out earnings report and raised guidance
3. China Mobile Games (CMGE, $24.3) continues to surge, up nearly 13% today on heavy volume causing the stock to rise above major resistance at $24
4. Nike (NKE, $81.6) busting through MAJOR resistance at $80 on nearly 5 times volume--this is a very bullish indication!

2:10 pm ET: Intraday support/resistance:
SPX 1990/2006
DTX 850.5/862.5
DJIA 17010/17145
Nasdaq 4543/4577
RUT 1160/1171
VIX 11.9/13.2 (rising VIX is bearish but VIX under 15 is still bullish)
Trin range: 0.9 - 1.15 (neutral)
Average VWAPs: +93/-30 (bullish)

Bears raining on the bulls' parade
September 4, 2014

2:40 pm ET: Intraday support/resistance:
SPX 2000/2011
DTX 850/859
DJIA 17070/17160
Nasdaq 4575/4603
RUT 1172.5/1180.5
VIX 11.7/12.5 (rising VIX is bearish but VIX under 15 is still bullish)
Trin range: 0.85 - 1.1 (rising Trin is bearish)
Average VWAPs: +37/-115 (bears stepping in)

Rangebound market for rest of the trading session/ Softs slide to multi-year lows
September 3, 2014

Intraday Market Notes (2pm ET): Today's major highlights and lowlights:

1. Agricultural commodity etfs (aka the soft commodities) continue to break support levels: Soybeans (SOYB), Wheat (WEAT), Corn (CORN), Grains (GRU)--all helping to push the Ag etf (JJA) to a fresh low. It appears that Cocoa (NIB) which has enjoyed a nice run-up is starting to fade as well.

2. Emerging market (and some not-so emerging markets) etfs jumping to new highs: China (FXI, CAF, DGS, GXC), Vietnam (VNM), BRICs (EEB), Emerging markets (PXH, VWO, EEM), Thailand (THP). Russian bull funds (RUSL, RSX, RSXJ) making big leaps up as well.

1:50 pm ET: Intraday support/resistance:
SPX 1998.75/2009.25
DTX 846.25/853.75
DJIA 17070/17150
Nasdaq 4568/4610
RUT 1174.2/1183.8
VIX 11.9/12.6 (rising VIX is bearish but VIX under 15 is still bullish)
Trin range: 0.9 - 1.15 (rising Trin is bearish)
Average VWAPs: +48/-79 (bears have the edge for the moment)

Foreign stocks getting some love
September 2, 2014

One would think that Putin's sabre rattling would send investors fleeing from risk assets (aka stocks) and into the traditional safe havens--bonds, precious metals, and oil--but guess what? We're getting the exact opposite reaction. Sure, most of the major averages began the first trading day of September on a low note, but the market-leading Dow Transports refused to participate in the mid-session sell-off and ultimately managed to not only stop the hemorrhaging in the other indices but to coax them back into the green by the closing bell. The rally in the DTX was so intense that it closed the day at its all-time high.

While this is an extremely bullish indication of a continuation in the rally, not all of the market internals are on the same page. VIX volatility (as measured by VVIX) has been trending in an upward channeling pattern since May. While the VIX appears to be settling back down, the VVIX doesn't. In fact, it appears that it's continuing the next leg up off of its channel low put in on 8/15. While there's no call for alarm--yet!--it is a cause for some concern.

Market Highlights: Brazil continues to heat up We've been noting the bullish action of Brazilian banks BBD, BDORY, and ITUB. All of these stocks continued their winning streaks today on decent volume. Following in their footsteps has been Brazil oil producer Petrobras. Both classes of its stock, PBR and PBR.A, advanced more than 5% on heavy volume. All of this bullish movement helped the Brazil country fund (EWZ, $54) to break out of a ten month base recently. Based solely on technicals, the stock has plenty of room to run to the $70 level where it will retest its previous high.

Brazil isn't the only place where there's some interesting international stock action. Today, shares of Swiss drug maker Novartis (NVS, $94) leapt over resistance to hit an all-time high on nearly six times average volume on good clinical trial results of its new heart drug. Analysts believe this drug could be a block-buster and if you want to get in on the action, don't wait too long before taking a position! The stock has options and it is interesting to note that there was a huge volume spike in the September 90 calls on Friday (before the official announcement).

Other foreign stocks that have been in rally mode include the following: Lenovo (LNVGY), Biosyent (BIOYF), DHX Media (DHXMF), SK Telecom (SKM), ITV (ITVPY), and Lynden Energy (LVLEF). It's also interesting to note that ever since the latter company, Lynden Energy, was profiled in a Seeking Alpha Pro article on August 2nd, the stock has been under very heavy accumulation.

Dow Transports trying to coax the other averages out of their slump
September 2, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1994.1/2006.1
DTX 841.25/852.75
DJIA 16995/17115
Nasdaq 4575/4599
RUT 1172.6/1181.4
VIX 12.2/13.4 (rising VIX is bearish but VIX under 15 is still bullish)
Trin range: 0.9 - 1.15 (rising Trin is bearish)
Average VWAPs: +48/-79 (bears have the edge for the moment)

Labor Day Special: The week ahead
September 1, 2014

Well, I do hope everyone enjoyed their Labor Day holiday! My apologies for not getting this out earlier but I, too, wanted a couple of days of R&R. Lest you think I'm shirking my duty, okay, I am--to some extent. But on the other hand, I'm honestly not sure where the market will be heading in the next few days.

Essentially, the market has been moving sideways for the past week or so and the Dow Transports (DTX), the generally acknowledged leader in market direction, has been quiet. For now, the bulls are still in control. Here are some recent market mentions that continue to shine:
1. Brazilian banks (BBD, BDORY, ITUB), highlighted here recently continue to jump.
2. The currency pairs trade--long USD (UUP)/short euro (FXE) is still on track. On Friday, the USD remained stagnant but the euro broke to the downside

In brief, here's what is on my radar list for the next couple of days. Note that I am neither recommending buying them nor shorting them--most are speculative ventures and should be treated as such. They have all been exhibiting excellent upward momentum:
1. Imageware Software (IWSY, $2.65) is a provider of image-related security software to law enforcement and businesses. The stock has been rallying off a relative low put in a year ago and has been under accumulation for the past several months. It broke above $1.40 resistance and pushed ahead 10% on heavy volume on Friday.
2. Synthetic Biologics (SYN, $2.62) is a biotech focused on irritable bowel syndrome. The stock has been trending up but was seeing resistance at $2.40. On Friday, it motored well above it (+14%) on a good drug report that is incomprehensible to me. Those of you into biotechs should look into this as many in the know on Seeking Alpha like the company's prospects.
3. Veeva Systems (VEEV, $29.97) soared over 20% on Friday on seven times normal volume following a great earnings report and the news that the company is hiking full year 2015 guidance. Although the stock jumped considerably, it wasn't able to pierce minor resistance at $30. Should it do that on volume conviction, it could easily run to its next resistance levels at $34, $36, and $40.

Bulls trying to end the month on a high note
August 29, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1994.5/2004.5
DTX 838.25/843.25
DJIA 17035/17115
Nasdaq 4554/4584
RUT 1164.75/1174.25
VIX 11.75/12.45 (VIX under 15 is bullish)
Trin range: 0.6 - 0.95 (bullish)
Average VWAPs: +44/-38 (low volume trading on both the buy and sell sides)

Bulls push back after early morning bear attack
August 28, 2014

2:10 pm ET: Intraday support/resistance:
SPX 1990.5/2000.5
DTX 836.8/842.2
DJIA 17020/17120
Nasdaq 4546.5/4571.5
RUT 1164/1171
VIX 11.75/12.75 (rising VIX is bearish but under 15 is bullish)
Trin range: 0.8 - 1.0 (bullish to neutral)
Average VWAPs: +59/-45 (bulls & bears continue to trade lobs)

Major averages stuck in tight trading range on very light volume
August 27, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1997.6/2002.4
DTX 841/844
DJIA 17090/17140
Nasdaq 4562/4576
RUT 1172.5/1177
VIX 11.55/11.95 (slowing rising VIX is bearish but still very bullish)
Trin range: 0.8 - 1.1 (bullish to neutral)
Average VWAPs: +45/-56 (bull/bear seesaw)

Investors nuts for Brazil, Retail, Steel, Dollars
August 26, 2014

It was touch and go for the S&P 500 (SPX) going into the close: Would it or wouldn't it close above the 2000 mark? As the bell on the NYSE rung, the SPX was just shy of the mark, but after the final trades were tallied, it managed to push above it, marking an important event (in the psychological sense).

Earlier, it wasn't clear if it could actually make it above 2000. Sure, the rest of the major averages were advancing with the one exception of the Dow Transports (DTX). Out of all of them, this one is the most important as it is considered to be the leader in market direction. If you look at its chart for the past six days, it's been trading in a very tight range while the other major averages were advancing. Now this can be viewed in both a bullish and bearish light.

On the bullish side, the argument can be that the DTX is digesting gains before making its next push higher. On the bearish side, it could be the signal that it's about to poop out. Market internals aren't much help in swaying the argument to one side or the other except for perhaps one thing: VIX volatility, as measured by the $VVIX, has been moving sideways while the VIX has been declining. Under normal conditions, they should be moving in concert with each other and this situation represents a divergence. Whenever there's a divergence, a change in direction is typically (but not always) indicated.

Market direction aside, investors are still finding new places to park their money. Here's a quick and dirty run-down of some of the more notable market action:
1. Retail: Today, the Retail etf (XRT) broke out of a nine month base. Helping to push the industry group up to a new yearly high were retailers Abercrombie & Fitch (ANF, $46) and Cato (CATO, $36), and apparel maker G-III (GIII, $84) which all broke out to new highs themselves. Personally, I've never been a big fan of retail and Abercrombie in particular, but I must say that its chart looks particularly strong.
2. Brazil: Brazilian stocks took a huge hit earlier this year but they've come roaring back with a vengeance. The Brazil etf (BRF, $51.98) is testing major resistance at $52. A break above that could propel it to its next area of congestion in the $54-$56 range. If it can move above that, it will likely make a run for its previous high at $70. Going along for the ride are two Brazilian banks: Banco de Brasil (BDORY, $14) and Banco Bradesco (BBD, $17). Both broke out to new highs, both sport small dividends (under 1% yields), and both have very low valuations (P/E's around 6).
3. Steel Producers: Steel has been going strong for some time now. The Steel etf (SLX, $50) took a break at the end of July but has been advancing steadily since. It rose above the $50 mark today and is close to retesting its previous high near $50.50. A move above that would be a green flag for the industry. Stocks that continue to outperform in this area include AK Steel (AKS, $11.19) and US Steel (X, $39.49). US Steel was mentioned in our *Blue Plate Specials* Subscriber Notes on 8/5 as a potential long play and is up over 13% since.
4. US dollar: The US dollar is on a roll while foreign currencies tumble. Mentioned to Subscribers on 7/30 was a long dollar/short euro pairs trade for Forex traders. This was based on a breakout in the dollar and a concomitant breakdown in the euro. Since then, the trade has done very well and today's move in the US dollar etn (UUP) above $22 followed by a slide in the Euro etn (FXE) below $130 is indicating that this trade is still hot.

Dow Transports unable to find traction
August 26, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1998.5/2005.5
DTX 842.75/846.75
DJIA 17080/17160
Nasdaq 4556.75/4575.25
RUT 1166.25/1175.75
VIX 11.3/12 (very bullish to bullish contrarian)
Trin range: 0.75 - 1.0 (bullish to neutral)
Average VWAPs: +77/-40 (moderately bullish)

S&P breaks 2000; Nasdaq hits new 14 year high
August 25, 2014

1:50 pm ET: Intraday support/resistance:
SPX 1991.75/2002.25
DTX 843/847.5
DJIA 17010/17125
Nasdaq 4548/4571
RUT 1161.8/1170.7
VIX 11.25/11.8 (very bullish to bullish contrarian)
Trin range: 0.6 - 0.9 (bullish)
Average VWAPs: +55/-43 (bull/bear seesaw)

Dow Transports do an about face as the bulls charge back in
August 22, 2014

1:40 pm ET: Intraday support/resistance:
SPX 1984.75/1995.25
DTX 839.5/845.5
DJIA 16985/17070
Nasdaq 4522/4548
RUT 1155/1163
VIX 11.6/12.5
Trin range: 0.55 - 1.05 (bullish to neutral)
Average VWAPs: +75/-27 (bulls gaining control)

Investors banking on tech and financials
August 21, 2014

Despite the fact that the S&P 500 hit a record high today, market internals painted a less rosy picture. Both the positive and negative VWAPS, an indication of buying and selling pressure, were relatively equal. Some of the heightened selling appears to be profit-taking, especially in those issues that have experienced out-sized gains such as Chipotle (CMG) and Rex American Resources (REX). Over the past year, the stock of Chipotle has appreciated 75% while that of Rex has notched an impressive gain of 230%. The other indication that the market may be nearing a short-term top is the fact that the market-leading Dow Transports (DTX) was the only index not to close the day in the green. It would be no surprise if the market sold-off on tomorrow's open followed by a tepid to down day as traders make an early break for the beach.

Market Highlights: Banks on a roll/A growth & dividend tech stock
The good news in today's market were that both the Financial and the Tech etfs, XLF and XLK, broke out to new highs. Leading the financials were the insurers and the banks, especially foreign regional banks which, if considered purely on a P/E basis, are relatively undervalued compared to the overall market. (P/E of the S&P 500 currently stands at 19.76). Today's leaders in this space are the following: Banco Bradesco (BBD, $16.86; P/E = 6), Banco Latinoamericano (BLX, $32.84; P/E = 14), and Canadian Imperial Bank (CDN, $96.07; P/E = 13).

On the tech front, there is one etf that broke out to a new high today that not only combines the appreciation of tech stocks but throws in a dividend as well--the First Trust Nasdaq Tech Dividend Index Fund (TDIV, $27.60). The fund's major holdings include all of the tech giants--Intel, Apple, IBM, Microsoft, Hewlett-Packard, Cisco, and Oracle are among the fund's top ten holdings. Considering that this fund is composed of tech names, a yield of 2.46% is not too shabby. For you covered call players, there are options but they are thinly traded. If you're looking for long-term growth and income, this is one fund worth keeping on your watch list to buy on dips.

Market Lowlights: Apparel retailer Stage Stores (SSI, $17.03) gapped below $18 support on heavy volume after the company's second quarter report fell below analysts' estimates. Citing decreased foot-traffic as part of the problem, management lowered full year guidance on both the top and bottom lines. Technically, the stock has support at $16. Should the share price violate that level, it could easily drop down to its next level of support at $14.

S&P hits new high but divergence in the transports could derail the rally
August 21, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1986.75/1994.75
DTX 841.25/848.25
DJIA 16985/17065
Nasdaq 4514/4536
RUT 1147.5/1163.5
VIX 11.45/12.05
Trin range: 0.65 - 1.1 (rising Trin is bearish)
Average VWAPs: +63/-57 (bull/bear battle)

Fed opens the door for the bears to step in
August 20, 2014

2:05 pm ET: Intraday support/resistance:
SPX 1977.75/1986.25
DTX 840.5/848.5
DJIA 16895/16985
Nasdaq 4516/4533
RUT 1154.25/1158.75
VIX 11.85/12.25
Trin range: 0.45 - 0.85 (contrarian)
Average VWAPs: +41/-56 (mildly bearish)

Apple, USD shine as Oil slips
August 19, 2014

Market Highlights (8/19/14): A lot of action today in the market:

1. Real estate broke out in a big way today on the heels of better than expected housing starts and a good earnings report from Home Depot (HD). The combined news helped to drive real estate etfs VNQ and DRN to new highs and the Home Builder etf XHB to break above resistance. [Note: We use the VNQ as one proxy for the real estate sector in our Portfolio Preserver platform (see PortfolioPreserver.com for further info.)] This sector is showing very bullish strength and if you're looking to put money to good use, this is definitely one place to look.
2. The currency market is starting to get very interesting. Today, the long US Dollar fund, UUP, broke out while both the euro FXE and Brit pound FXB broke major support levels. Time to plan that trip to Tuscany!
3. Just when you thought the consumer was dead, along comes new data that indicates otherwise (although the breakout in the greenback could have something to do with it, too). Both the Consumer Discretionary fund, XLY, and a Retail fund, RTH, both broke out to new highs.
4. You wildcatters might want to lighten up on oil positions as three Oil funds--OIL, DBO, and USO--all broke support levels. It appears that there's more pain in order and a retest of previous lows looks likely.
5. Hey, how 'bout them Apples? Or just one apple--Apple Computer (AAPL)--to be precise. Today it reached a split-adjusted all-time high to close over $100/share. It was recommended a month ago on 7/17 as a Stock of the Day long pick and has gained 4.8% since then reaching its preliminary target of $100. Based on an inverse head and shoulders formation, I'm raising the target price to $107. If you're long this issue, please tighten up your stop-loss point. The stock has support levels at $95 (a conservative stop-loss point) and at $92.50 (a less conservative stop-loss).
6. Stocks that appear to be compelling: Two stocks making noticeable blips on my radar screen today are...(*Blue Plate Specials* subscribers can continue reading in the Subscriber section).

Dow Transports fading mid-day as the bears try to gain a foothold
August 19, 2014

1:30 pm ET: Intraday support/resistance:
SPX 1972.75/1982.25
DTX 841.25/844.1
DJIA 16840/16940
Nasdaq 4514/4524
RUT 1160/1165
VIX 11.9/12.45 (falling VIX is bullish)
Trin range: 0.5 - 0.8 (falling Trin is bullish but becoming contrarian)
Average VWAPs: +45/-53 (bears are trying to take over)

Market firing on all cylinders...or is it?
August 18, 2014

The market seemed to be firing on all cylinders as the threat of tensions in the Ukraine fades, but is today's rally just a cover-up before the next sell-off? Let's take a closer look at the technicals.

Supporting the bulls' case, we have the following:
1. The Dow Transports were the clear leader of today's rally with four airlines breaking out to new highs: Jet Blue (JBLU, $12), Southwest Air (LUV, $31), Spirit Air (SAVE, $72), and Allegiant Travel (ALGT, $127).
2. Tech also led with the following tech etfs hopping over resistance: Tech (XLK, $40), Internet (PNQI, $70) & (FDN, $61), and IT (VGT, $100). The tech rally helped push the tech-heavy Nasdaq to a 14 year high.
3. The VIX fell and closed the day near 12--a very bullish level.

The case for the bears can be made by looking at more esoteric indicators:
1. Despite today's drop in the VIX, the volatility of the VIX--the VVIX--did not drop as much as it should have.
2. Considering today's level of bullishness, the VWAPs did not reflect that. The positive VWAPs (an indication of buying pressure) ended the day with a very tepid median value in the mid-50's while the negative VWAPs (an indication of selling pressure) ended the day with a median value near -100 which is quite bearish.
3. The chart of the SPX is diverging from the chart of the ratio of the Consumer Discretionary/Consumer Staples. The only times since 2006 that this has occurred was right before market corrections.

So, there you have it. Will the bulls win the end-of-summer race or will it be the bears?

Bulls charge back, push Nasdaq to 14 year high
August 18, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1958.5/1972.5
DTX 827.25/840.25
DJIA 16665/16865
Nasdaq 4486.5/4511.5
RUT 1149.5/1158.5
VIX 12.35/12.85 (falling VIX is bullish)
Trin range: 0.75 - 0.95 (bullish)
Average VWAPs: +56/-34 (mildly bullish)

***The Stock Market Cook Book is on vacation until next Monday, Aug.18th.***
August 14, 2014

Investors checking into Hotels, IT, and Ethanol
August 13, 2014

Some of today's market highlights (after hours): Here's a summary of some of today's notable action:

1. Information Technology (IT). Three players in this space broke out to new highs: Fleetcor (FLT, $142) shares roared out of a two month consolidation pattern, gaining nearly 10% on five times normal volume on news that the company had acquired Comdata. Not sure where analysts are targeting the new combined price but technically it could easily move to the $155-$160 range. The other two stocks are our old buddy Xerox (XRX, $13.6; technical target of $20) and WEX (WEX, $113).
2. Hotels/Hospitality. Shares in both La Quinta Holdings (LQ, $19.7) and Marriott Vacations Worldwide (VAC, $59.9) surged to all-time highs on heavy volume. If growth in the US is expected to slow, one certainly wouldn't expect investors to buy into IT or hotel stocks...just sayin'.
3. Ethanol producers. Although ethanol producers have enjoyed a hefty run-up, shares of both Pacific Ethanol (PEIX, $20) and Rex American (REX, $96) continue to notch new highs. Despite the fact that shares in Rex have more than quintupled in less than two years, the stock's fundamental metrics (compared with its industry averages) justify the valuation and then some.

Bulls step back in; VIX plunges
August 13, 2014

Intraday Notes (2:30pm ET): The bulls are fighting back as they try to seize control from the bears. Intraday resistance levels are indicating a possibly rally into the close as there's more room to run to the upside. A close in the DTX above 820 and the SPX above 1650 would be an indication that the bulls are back in control--for now.

2:00 pm ET: Intraday support/resistance:
SPX 1935.5/1950.5
DTX 816.5/825
DJIA 16567.5/16687.5
Nasdaq 4403.5/4441.5
RUT 1135.5/1145
VIX 12.85/13.95 (falling VIX is bullish)
Trin range: 1.0 - 1.4 (falling Trin (intraday) is bullish but overall Trin is mildly bearish)
Average VWAPs: +81/-36 (moderately bullish)

Major averages appear rangebound for the rest of the day
August 12, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1929.5/1939.5
DTX 814/818.5
DJIA 16520/16590
Nasdaq 4378/4407
RUT 1131.75/1141.25
VIX 13.75/14.75 (VIX under 15 is bullish)
Trin range: 0.95 - 1.4 (bearish)
Average VWAPs: +41/-70 (mildly bearish to neutral)

Bears rebuffing the bulls' early morning charge
August 11, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1931/1945
DTX 809.5/821.5
DJIA 16550/16630
Nasdaq 4378/4416
RUT 1134/1149
VIX 13.7/15.2 (falling VIX is bullish)
Trin range: 0.7 - 1.0 (bullish to neutral)
Average VWAPs: +43/-80 (bears trying to unseat the bulls)

Bulls charge back but further advance into the close appears unlikely
August 8, 2014

Intraday Notes (2:20pm ET): The major averages just tested today's intraday resistance levels (see below) and it appears that Wall Street is packing it in for the weekend. While the VWAPS are bullish (showing buying pressure), the VIX and the Trin are still reflecting a lot of uncertainty, so if you're thinking that the sell-off is over and now would be a good time to jump back in, I'd suggest treading lightly. A lot of today's buying pressure could be short-covering and considering the increasing geopolitical risk, why not wait until Monday before taking on any new long positions?

2:00 pm ET: Intraday support/resistance:
SPX 1909/1927
DTX 796/807
DJIA 16365/16535
Nasdaq 4328/4369
RUT 1118.5/1132.5
VIX 15.5/17.1 (wide VIX range reflecting continuing bull/bear battle)
Trin range: 0.75 - 1.45 (wide Trin range also reflecting bull/bear battle)
Average VWAPs: +139/-35 (very bullish--for now)

Bulls staving off morning sell-off but can they hang on?
August 7, 2014

Intraday Notes (2:00pm ET): The bulls and the bears have been playing teeter-totter the past two days and it's unclear right now which side will prove to be the weightier one. Yesterday's extreme Trin level indicated that the bulls would likely come charging back and so they did, staving off today's early morning sell-off. The 800 level continues to provide support for the market-leading Dow Transport Index (DTX) but the intraday support levels are showing that there's still a bit of room to move to the downside. Should the DTX close under 800, that could be taken as a sign that the teeter-totter is favoring the bears.

1:40 pm ET: Intraday support/resistance:
SPX 1907/1929
DTX 798/807
DJIA 16335/16505
Nasdaq 4335/4380
RUT 1114.5/1131.6
VIX 15.45/17.15 (wide VIX range reflecting bull/bear battle)
Trin range: 0.85 - 1.3 (neutral)
Average VWAPs: +55/-60 (bull/bear battle)

Bulls fighting back as Dow Transport Index tests support
August 6, 2014

2:15 pm ET: Intraday support/resistance:
SPX 1911/1928
DTX 797.25/804.75
DJIA 16370/16490
Nasdaq 4325/4380
RUT 1114.5/1131.6
VIX 15.3/17.3 (wide VIX range reflecting bull/bear battle)
Trin range: 1.4 - 1.8 (Trin in contrarian territory)
Average VWAPs: +60/-68 (bull/bear battle)

Dow Industrials break 16500 minor support, now testing 16400 major support
August 5, 2014

Intraday market notes (2:25pm ET): Finding today's pivot points in the major averages wasn't easy and involved a bit more art than science. Honestly, I didn't think the Dow Industrials, DJIA, would have a chance of nearing today's calculated lower bound of 16360 but right now (2:15pm ET) it's already dropped below the 16400 support level and is still pushing lower.

As to be expected, the volatility index is moving higher reflecting the drop in the overall market. The volatility of the volatility index (VVIX) is zooming upward and soon could be spiking, perhaps as soon as tomorrow. This could be taken to mean that the bulls may be planning on charging back soon. Another bullish sign is today's rise in the Trin (an indication of institutional buying and selling). While a rising Trin is a sign of increasing selling pressure (and therefore bearish), a Trin can reach the point where there are no more sellers. On my Trin indicator, this level is typically around 1.5. When the Trin rises to this area and above, the market typically reverses course. [Educational note: Any indicator that reaches an extreme level (one way or the other) is said to be contrarian.] Just a few minutes ago, the Trin reached 1.4 which is definitely getting close to becoming contrarian. Those of you who are familiar with inverse VIX products such as the XIV and ZIV may wish to add these to your watchlist and begin accumulating when the volatility shows signs of deflating. (I prefer XIV as it is much more liquid than ZIV.)

1:55 pm ET: Intraday support/resistance:
SPX 1913.5/1936.5
DTX 805.5/815.5
DJIA 16360/16560
Nasdaq 4332/4383
RUT 1117.5/1129.5
VIX 15.1/16.9 (rising VIX is bearish)
Trin range: 0.8 - 1.5 (rising Trin is bearish but over 1.5 it becomes contrarian)
Average VWAPs: +30/-111 (bearish)

Bulls attempting to halt the market slide
August 4, 2014

Intraday market notes (2:10pm ET): So far today, the bulls have been able to stem the early morning sell-off. While the intraday resistance levels show that the major averages could end the day on a high note, the fact that the Dow Transport Index (DTX) is lagging isn't a good sign for the sustainability of any potential rally. As long as the VIX remains on the bearish side (i.e., over 15), I wouldn't be making any long-term bullish bets at the moment.

1:55 pm ET: Intraday support/resistance:
SPX 1921.25/1936.75
DTX 806.5/816.5
DJIA 16445/16565
Nasdaq 4343/4382
RUT 1108.25/1121.75
VIX 15.5/16.8 (falling VIX is bullish)
Trin range: 0.65 - 0.95 (bullish)
Average VWAPs: +109/-42 (bullish)

VIX volatility spiking--could the end of this down-turn be near?
August 1, 2014

Trade Alert! (1:45pm ET): VIX volatility, as given by the $VVIX, spiked to a six month high earlier in the session. While this doesn't mean that volatility can't continue to increase, the probability that it will is greatly diminished. One way for traders who wish to cash in on a falling VIX is to buy one of the two inverse VIX etns--either the XIV or the ZIV. I prefer the XIV for two reasons: 1. Its average daily trading volume is around 9.2 million shares versus only 94,000 shares for the ZIV, and 2. You get more bang for your buck on the XIV, meaning that the ratio of movement in the XIV is larger than that of the ZIV as compared to the movement in the VIX.

1:15 pm ET: Intraday support/resistance:
SPX 1914.75/1937.25
DTX 805/818
DJIA 16435/16585
Nasdaq 4325/4385
RUT 1106/1124
VIX 15.5/18.1 (bearish)
Trin range: 0.7 - 1.25 (rising Trin is bearish)
Average VWAPs: +50/-96 (bears in control but bulls are waiting in the wings)

Volatility spikes as major averages break support levels
July 31, 2014

Intraday notes (1:45pm ET): The bears are finally having their picnic and it appears that they're enjoying it immensely, too. We've been noting the increase in VIX volatility for a while which was an early indication that volatility was about to rise. Although it has been able to stay on the bull side of the fence (aka the 15 level) during the current market sell-off, the pressure finally proved to be too great causing it to jump up more than 20% at one point earlier in the day. The flip in the VIX from the bull to the bear side of the fence caused many of the major averages to break support levels:
SPX: Broke 1950; next support levels at 1925 (minor) and 1900 (major)
DTX: Broke 820; next support levels at 810 (minor) and 800 (major)
DJIA: Broke 16700; next support level at 16600
Nasdaq: Broke 4400; next support levels at 4350 (minor) and 4300 (major)
RUT: Currently testing 1120 support

2:00 pm ET: Intraday support/resistance:
SPX 1932/1965
DTX 811.7/826.3
DJIA 16570/16870
Nasdaq 4373/4431
RUT 1119/1137
VIX 14.25/16.76 (VIX jumping into bearish territory)
Trin range: 0.7 - 0.9 (neutral)
Average VWAPs: +87/-70 (bulls starting to fight back but bears still strong)

Volatility rising on fears of Fed tightening
July 30, 2014

Intraday notes (1:45pm ET): Right now, the bulls and bears are both waiting on the Fed decision due up shortly. While any indication of tightening could push the market to the downside, I do think that perhaps some of this bearishness is already reflected in the market, judging from the increase in volatility. While the intraday support/resistance levels are indicating further downside for most of the indices, the after-effects of a Fed decision has shown in the past that it has the capability of making mincemeat out of any prediction scheme. Today's decision could determine how the rest of the summer plays out.

1:15 pm ET: Intraday support/resistance:
SPX 1961/1979
DTX 821/829.5
DJIA 16805/16985
Nasdaq 4444/4470
RUT 1142.5/1150.5
VIX 12.5/14.1 (rising VIX is bearish but it's still in bullish territory)
Trin range: 0.7 - 1.0 (neutral)
Average VWAPs: +64/-89 (bears have the edge but the bulls are hanging in there)

Everyone a-twitter over Twitter's blow-out earnings
July 29, 2014

Shameless Plug: Wow! 'Ya couldn't have asked for a better earnings report than Twitter's. Reporting earnings today just after the bell, the company beat on pretty much every single metric including the dreaded User Sign-up rate. Appearing on CNBC during the earnings report, the company's president painted a rosy picture going forward which only helped to push the company's stock to a high of over $52 in the after-hours session--a gain of 37% over the regular session's closing price. Last month, the company was recommended to our *Blue Plate Specials* subscribers as a Stock of the Day long pick and I'm sure the folks who purchased the stock are very happy they did.

For further info on how you can become a subscriber and get in on the action before Wall Street wakes up, please click on the button above or on the right sidebar.

Dow Transports continue to press lower--will it spark a reversal in the other averages?
July 29, 2014 2:05 pm ET: Intraday support/resistance:
SPX 1973.5/1984.5
DTX 823.75/834.25
DJIA 16955/17055
Nasdaq 4441/4473
RUT 1140/1150
VIX 12.1/13 (rising VIX is bearish but it's still in bullish territory)
Trin range: 0.7 - 1.1 (neutral to mildly bullish)
Average VWAPs: +68/-64 (bull/bear stand-off)

China rocks/Building stocks on the rocks
July 28, 2014

Last week's sell-off extended into today's morning session but abruptly turned around when the bulls came charging back. While most of the major averages were able to climb back into the green, the inertia on the Dow Transports appeared to be too much for the bulls to overcome. This is not a good sign and today's rally could be just a one-day event. While the market internals aren't bearish, they're not very bullish, either. Maybe the dog days of summer are upon us...

Stepping up: China, Africa jump to new highs
Chinese etfs have been soaring recently and today both the iShares China Large-cap etf (FXI, $41; Yield = 1.7%) and the SPDR China etf (GXC, $82; Yield = 1.8%) both broke out to new highs on heavier than normal volume. In fact, there isn't one long-based Chinese etf that hasn't been going nuts. I don't know when the honeymoon will end but it sure doesn't appear to be anytime soon. For those of you who are in either of the above-mentioned funds, please note the next levels of major resistance: $85 for GXC and $42 for FXI.

Emerging markets have also been out-performing and today two Africa funds broke out to new highs: Market Vectors Africa fund (AFK, $34; Yield = 2.4%) and iShares S. Africa fund (EZA, $72; Yield = 2.2%). Both of these charts are quite bullish and many Wall Street pundits are saying that Africa is the place to be.

Falling down: Building stocks continue to tumble
If you had been paying attention to building and construction stocks, you wouldn't have been shocked to hear that pending home sales were down much more than expected for the month of June, as reported early this morning. The following stocks have been in free-fall for months and continue to slide to new yearly lows:
1. Window & door maker PGT (PGTI, $7.39)
2. Gypsum wallboard maker Continental Bldg (CBPX, $12.58)
3. Siding & fencing maker Ply-gem (PGEM, $8.84)
4. Modular carpet maker Interface (TILE, $16.07)

Today's break-down in the Home Builder etf (XHB) indicates further downside for this industry group.

Bulls charge back but can they hang in there?
July 28, 2014 1:55 pm ET: Intraday support/resistance:
SPX 1967/1983
DTX 831.3/843.3
DJIA 16875/17010
Nasdaq 4414/4456
RUT 1132/1146
VIX 12.35/13.65 (rising VIX is bearish but it's still in bullish territory)
Trin range: 0.8 - 1.2 (neutral)
Average VWAPs: +107/-34 (bullish)

Rising volatility has bulls running for cover
July 25, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1973.8/1984.6
DTX 842/849
DJIA 16870/17080
Nasdaq 4430/4465
RUT 1141.75/1149.75
VIX 12/12.7 (rising VIX is bearish but it's still in bullish territory)
Trin range: 0.7 - 1.0 (rising Trin is bearish)
Average VWAPs: +53/-69 (bulls losing ground)

Bulls barely hanging on
July 24, 2014

2:25 pm ET: Intraday support/resistance:
SPX 1985.75/1991.75
DTX 846.75/851.75
DJIA 17075/17130
Nasdaq 4466/4486
RUT 1153.5/1163.7
VIX 11.45/12.05 (bullish)
Trin range: 0.65 - 0.9 (falling Trin is bullish)
Average VWAPs: +71/-66 (bull/bear battle)

Time to fasten your seatbelt?
July 23, 2014

While the S &P 500 (SPX) and the Dow Transports (DTX) both managed to eke out another new high (all-time high for the Transports), there are cracks beginning to form in the bulls' armor. To wit the following:
1. The DTX--a leader in market direction--was actually moving down from the open, in contrast to the SPX and Nasdaq.
2. Despite the gains made over the past week, the small-cap Russell 2000 (RUT) hasn't been able to close above its previous support level at 1160.
3. While the VIX is still firmly planted in the bulls' garden, the implied volatility of the VIX is rising.
4. Buying pressure is drying up and selling pressure is increasing, as measured by the VWAPs (a measure of institutional buying and selling).

Now this doesn't mean that the market is going to reverse tomorrow, but the ground isn't looking as firm as it has been. While this earnings season seems to be humming along, stocks are starting to become fully-valued and once the bargains are gone, who will be left to buy?

Today's Notable Movers & Shakers
It was hard not to notice the 300% move in Puma Biotechnology (PBYI). The stock soared on news of a MUCH better than expected cancer drug trial. While this situation is the wet dream of many investing in these early-stage biotechs, it's worth noting that this is the rare exception rather than the rule. Playing these biotechs with serious money is highly risky and more people have been sent to the poor house by betting on them than by those who have profited from them. I know the ones who need to hear this are the ones who don't want to--please don't let that person be you! Playing with money you can afford to lose is the only prudent way to gamble. (I don't mean to be a downer but I've seen too many acquaintances lose their shirts over betting the farm (literally) on these biotechs with drugs that are promised to be sure winners. )

On a cheerier note, the airlines continue to head into the stratosphere. Breaking out of recent consolidation today were Southwest (LUV, $29; +3%), Allegiant (ALGT, $125; +2%), JetBlue (JBLU, $11; +5%). Chartwise, these stocks appear to have the wind at their tails and further upside looks likely. However, these stocks, too, are becoming richly valued (unless the companies have raised their forward P/Es) and should the market start to crack, these stocks could fall with it. Replacing long stock with long call options might be a less risky way to play richly valued stocks in extended rallies.

Market bifurcation: DTX bucking the uptrend--are the bears moving back?
July 23, 2014

2:05 pm ET: Intraday support/resistance:
SPX 1982.5/1990.5
DTX 844/851.5
DJIA 17060/17125
Nasdaq 4458/4482
RUT 1156/1162
VIX 11.4/12.2 (bullish)
Trin range: 0.9 - 1.2 (neutral)
Average VWAPs: +59/-61 (bull/bear battle)

A note on Ackman's Herbalife fiasco
July 22, 2014

Well, Bill Egg-on-his-face Ackman's earlier supposed expose of Herbalife's (HLF) business malpractices lit a spark under investors--but in the wrong direction. The facts didn't live up to the hype and the resultant sigh of relief sent Herbalife stock soaring into the close, gaining a whopping 25% on the day. That's the biggest one day rally in years. Adding insult to injury, Herbalife management said they are considering suing Ackman for slander. One wonders if employees of Ackman's Pershing Square Capital aren't quietly dusting off their resumes in fear of a mass exodus out of his funds...

On a tangent note, I do think it may be impossible for Ackman to bring Ponzi-scheme charges against the company. In other previous court decisions, it was decided that multi-level marketing (MLM) companies such as Herbalife, Amway, and Nu Skin do not operate as Ponzi schemes if a product is supplied to the end user, as it is in all of these cases. These companies have a battery of highly paid attorneys to keep them on the right side of the law and I have questioned Ackman's motives in going after Herbalife from the very beginning. Even Carl Icahn couldn't find any wrong-doing with it and proved his case by making a tidy profit from buying a chunk of stock and riding it up. (Icahn may have exited his entire position by now.)

Although I've never used Herbalife's products, I have friends who say they are very good and are repeat buyers. As for me, I've been a customer of both Amway and Nu Skin and think they both offer superior products (although Nu Skin's items are a bit pricey). Honestly, I'm not a fan of the MLM concept and I've never met a person in any of the above mentioned companies who was able to make a decent living off of selling MLM products. If these companies are guilty of anything, it would be the way they lure people into being distributors by promising them income streams that are neigh impossible to attain for all but the most savvy and dedicated (and with a lot of time to develop an underlying distributor base). If stretching the truth is a crime, then yes, I would find them all guilty...but not of operating a Ponzi scheme.

Disclosure: I do not own any shares in any of the above mentioned companies. I do wish I had...

Dow Transports initiating another leg up--#Winning!
July 22, 2014

2:05 pm ET: Intraday support/resistance:
SPX 1975.5/1987.5
DTX 826/848
DJIA 17040/17140
Nasdaq 4443/4467
RUT 1151.5/1152.5
VIX 11.7/12.2 (falling VIX is bullish)
Trin range: 0.85 - 1.45 (Trin falling from opening high shows bulls taking control)
Average VWAPs: +62/-50 (bulls slightly in control but bears still in the picture)

Base metals on the move
July 21, 2014

Market Notes (7/21/14): There was so much happening today that instead of going into great detail, I'm just going to summarize the major points:

1. How about that Hurco (HURC)? Mentioned in a note to our *Blue Plate Specials* subscribers on 7/15 as an exciting new entry into the 3-d printing space, the stock has been jumping on very heavy volume, an indication of institutional buying. The stock has risen 25% since it was mentioned and technically shows no signs of slowing down in the near-term.

2. On the international front, two Indonesian etfs (IF, IDX) both broke out today. IF was selected as an entrant in the 2014 Small Dogs of the Year portfolio and has been its best performer so far, gaining nearly 25% since the beginning of the year. Both funds appear to be in solid up-trends. Mentioned in Friday's blog, Brazil stocks continue to rally. The Brazil etf (EWZ) was up another 1.6% today on heavier than normal volume.

3. Commodities: Nat gas funds (UNG, GAZ) have broken three areas of support in just the last month. One of my Seeking Alpha peeps said this was due to strong inventory builds and he expects the prices to continue to drop for the next week or two.

While precious metals have been lackluster, base metals are shining. Today the Base Metal fund (DBB) broke out to a new yearly high, helped along in part by Aluminum (JJU) which has been in an uptrend since mid-March. (Witness the strong rally in aluminum stocks: Alcoa (AA), Kaiser (KALU), and Century Aluminum (CENX).) But aluminum isn't the only base metal garnering attention; zinc has also been gaining favor. A glowing article appearing in Barron's today caused the stock of zinc products maker Horsehead Holdings (ZINC) to pop to a new seven year high on three times normal volume. The Barron's article indicated that Horsehead's stock could rally by another 40%. Note that the company reports earnings before the bell on August 6th.

4. Day-trader Alert! Tomorrow, Herbalife (HLF) hater Bill Ackmann is going to meet with HLF company brass to present new evidence of company wrong-doing. Ackmann holds a massive short position in Herbalife and tomorrow's meeting might be the highest rated show for CNBC this year. (They should make it a pay-per-view!) I'm expecting a lot of movement in HLF stock surrounding this event and it should be a real roller-coaster ride during the press conference. Hi-ho!

Bulls chasing the bears away
July 21, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1965.75/1977.75
DTX 833.8/840.2
DJIA 16975/17110
Nasdaq 4405/4439
RUT 1140/1151
VIX 12.2/13.6 (falling VIX is bullish)
Trin range: 0.7 - 0.95 (slowly rising Trin is reflecting internal weakness)
Average VWAPs: +82/-33 (bullish)

A bit of market bifurcation & batty for Brazil
July 18, 2014

What a difference a day makes! It's unclear if today's recovery after yesterday's sell-off was due to short-covering or to geniune buying enthusiasm (maybe a bit of both), but the major averages were not only able to recover most of yesterday's losses but, in the case of the small-cap Russell 2000 (RUT) and the tech-heavy Nasdaq, it appears as if these averages are going to close above yesterday's highs. While the VIX dropped back down to its recent low level, the Trin didn't give up any ground. In fact, for the past three days it's been slowing climbing. Today's neutral tone in the Trin is divergent to the strongly positive VWAPs and falling VIX--both bullish indications. What this means is that traders should be cautious about entering long positions. Considering the uncertain state of global politics, holding over the weekend would be ill-advised (unless you're a long-term investor).

Today's Highlights: Investors going nuts over Brazil
Continuing their search for global dividend payers, investors are turning their focus to Brazil. Several US traded Brazilian stocks staged convincing breakouts today:
Brazil country etf (EWZ, $50; +3%; Yield = 3%).
Integrated oil and gas company Petro-Bras (PBR, $17; +6%; No dividend).
Utility companies: Comp. Energetica de Minas (CIG, $9; +5%; Yield = 8.9%) and Comp. Paranaense (ELP, $17; +5%; Yield = 4.8%).

Other hot areas of the market are residential property REITS which continue to advance. Both the triple-levered REIT etf (DRN) and the unlevered Vanguard REIT etf (VNQ) both are on track to close at new yearly highs. It sure appears that the REIT rally is not over yet, folks.

The rails also continue to roll along. Shares of Canadian National (CNI, $68), Canadian Pacific (CP, $195), and Norfolk Southern (NSC, $106) all popped to new all-time highs today. While the Transports have been hot, hot, hot, the ride maybe coming to an end soon. Valuations in this sector are starting to become heady and I wouldn't be surprised to see the DTX (Dow Transport Index) take a breather in the near future.

Have a good weekend!

Volatility plummets as the Street shrugs off global frictions
July 18, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1960.8/1980.2
DTX 828/837.5
DJIA 16975/17125
Nasdaq 4378/4428
RUT 1132/1156
VIX 11.95/12.55 (falling VIX is bullish)
Trin range: 0.95 - 1.125 (slowly rising Trin is reflecting internal weakness)
Average VWAPs: +95/-27 (bullish)

Global concerns boost market volatility
July 17, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1964/1982
DTX 831/842
DJIA 17045/17160
Nasdaq 4380/4425
RUT 1139.5/1150.5
VIX 10.85/12.95 (rising VIX is bearish)
Trin range: 0.8 - 1.1 (neutral but surprisingly low considering the expansion in volatility)
Average VWAPs: +40/-80 (moderately bearish)

Tech rally giving bulls the upperhand
July 16, 2014

Intraday Notes (2:15 pm ET): The bulls got a boost by tech and media stocks today as media surged on a take-over bid from Rupert Murdock (via 21st Century Fox (FOXA) for Time Warner Cable (TWX). Although the board rebuffed the offer, shares of TWX soared 17% on hopes for a sweetened offer from either Murdoch or someone else. The news caused the shares of other cable providers to jump as well sending the Telecom etf (VOX) to a new all-time high. In tech, shares of chip-maker Intel (INTC) gapped up nearly 8% following yesterday's earnings beat, raised guidance, and increased share buyback program (to $20B). The great news prompted two analysts to upgrade the company and helped push the Semiconductor etfs (SMH & SOXX) along with the Tech etf (XLK) to new highs.

1:30 pm ET: Intraday support/resistance:
SPX 1975/1984
DTX 835.2/840.4
DJIA 17060/17150
Nasdaq 4419/4449
RUT 1148/1160
VIX 10.6/11.9 (rising VIX is bearish)
Trin range: 0.7 - 0.95 (bullish)
Average VWAPs: +55/-52 (bull/bear standoff)

Bulls and bears playing seesaw
July 15, 2014

2:10 pm ET: Intraday support/resistance:
SPX 1965.5/1982.5
DTX 830/837
DJIA 17000/17120
Nasdaq 4398/4452
RUT 1145.5/1167.5
VIX 11.5/12.5 (rising VIX is bearish)
Trin range: 0.7 - 0.95 (falling Trin is bullish)
Average VWAPs: +56/-56 (bull/bear standoff)

Bulls tearing down the Bastille
July 14, 2014

While the Dow Transports hit another all-time high today--a bullish sign, the market is beginning to look a little tired. Yes, the market has been on a seemingly death-defying bull run, but all good things eventually come to an end. While the market advanced today, it was done on light buying pressure, a sign of market fatigue.

Another negative sign is that the trend of the VIX appears to be changing direction. It's a bit soon to tell for sure, but we should probably know in the next week or so, if not in the next couple of days.


Market Highlights: Today's standouts were in REITs, media, healthcare, and high income funds with international exposure. Breaking out to new yearly highs today on heavier than normal volume were the following:

REITs: Cohen & Steers REIT & Preferred Income Fund (RNP, $18.5, Yield 7.1%)
Media: Charter Communications (CHTR, $163.7) and Comcast (CMCSK, $54.6, Yield 1.7%).
Healthcare: Wellpoint (WLP, $113), United Healthcare (UNH, $84), and Cigna (CI, $94). All of these are still reasonably valued with P/E's in the 13-15 range.
International High Income: Investors are piling into high income funds like lemmings jumping off a cliff and are now going global in their quest for yield. Breaking out of two month bases today were Cohen &Steers Global Income Builder (INB, $13; Yield 8.6%) and Western Asset Worldwide Income (SBW, $13, Yield 7.6%).

2:10 pm ET: Intraday support/resistance:
SPX 1970/1981
DTX 826/835
DJIA 16950/17095
Nasdaq 4433/4455
RUT 1164/1170
VIX 11.4/11.8 (VIX is bullish but still at contrarian levels)
Trin range: 0.85 - 1.15 (neutral)
Average VWAPs: +50/-53 (bull/bear tug of war at the moment)

Market on a Sideways tour
July 11, 2014

Intraday Notes (2:00pm ET): Tech stocks are lifting the Nasdaq fueled in part by a breakout pop in shares of online retail giant Amazon (AMZN). Yesterday, the company announced an expansion in its mobile computing platform which sparked today's move. The stock gapped up on the open and has advanced more than 5%, breaking $360 resistance in the process. This is a very bullish event and traders may wish to ride this puppy up to the $380 level, the next level of resistance. Note that the company reports earnings later this month on the 24th.

Unfortunately, there were no major catalysts lighting a fire under the other major averages which appear to be rangebound. The intraday levels are suggesting there's some upside left to all of the below levels except for the Dow Transports (DTX). Since this index is generally considered to be a leader in market direction, we could see a sell-off going into the close or a lower open on Monday. Another bearish sign is that while the VIX has remained complacent, VIX volatility ($VVIX) has been on the rise. Sure, it pulled back a bit today mirroring the movement in the underlying but its overall direction is up. For more information on this phenomenon, please scroll down to the article below.

1:40 pm ET: Intraday support/resistance:
SPX 1959.6/1967.4
DTX 821/826
DJIA 16860/16930
Nasdaq 4389/4416
RUT 1155/1164
VIX 12.15/12.7 (rising VIX falling is bearish but overall still very bullish)
Trin range: 0.8 - 1.1 (neutral)
Average VWAPs: +66/-41 (currently tilting to the buy side)

Bulls halt opening sell-off
July 10, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1953/1969
DTX 815.5/826.5
DJIA 16805/16980
Nasdaq 4351/4429
RUT 1151/1169
VIX 11.55/13.25 (VIX falling intraday is bullish but rising overall is bearish)
Trin range: 0.65 - 0.9 (bullish)
Average VWAPs: +158/-24 (very bullish)

Bulls trying to tighten the downward spigot
July 9, 2014

1:30 pm ET: Intraday support/resistance:
SPX 1965/1972.9
DTX 817.75/828.25
DJIA 16915/16965
Nasdaq 4388/4422
RUT 1170/1178
VIX 11.5/12.1 (falling VIX is bullish but contrarian)
Trin range: 0.65 - 0.9 (falling Trin is bullish)
Average VWAPs: +77/-37 (mildly bullish)

The bulls trying to stem the sell-off
July 8, 2014

Intraday notes (2:25pm ET): There's a bit of bifurcation in the market today. The intraday levels for all of the major averages listed below are showing more room for movement to the downside except for the market-leading Dow Transport Index (DTX). The calculations for its levels show there's still some room for upside movement, and that's one good sign for the bulls. Another good sign is that the Trin reached a mid-day high of 1.78 which is considered a contrarian number. That was the signal for the bulls to charge back and charge they did. They were able to regain most of the opening losses but it remains to be seen whether they can keep up their stamina or whether they'll run out of gas before the market closes. Volume activity is heightened on both the buy and sell sides with sellers winning out at the moment. Right now, it's a coin toss which side will end up ruling the day.

2:00 pm ET: Intraday support/resistance:
SPX 1957.6/1976.4
DTX 812.8/822.2
DJIA 16878/17022
Nasdaq 4367/4444
RUT 1165/1185
VIX 11.7/12.85 (rising VIX is bearish but still overall bullish)
Trin range: 1.1 - 1.8 (bearish to bearish contrarian)
Average VWAPs: +64/-51 (bull/bear battle)

Market Movers: Tech breakouts & Commodity Breakdowns
July 7, 2014

Today's market sell-off wasn't completely unexpected considering that the VIX slid to its lowest level in years last Thursday. The good news is that both the market-leading Dow Transport Index (DTX) and the Dow Industrials (DJIA) both managed to close above near-term support levels. However, if the DTX can't hold the 820 level, expect a drop to intermediate support at 810 and possibly major support at 800. Similarly, should the Dow close below 17000, a drop to the 16750 area would be in the cards. The prognostications of future earnings made by market-leading companies during the upcoming earnings season will likely have a big impact on the final direction of this market. The next couple of weeks could be critical ones, so don't stray too far from your computer!



Today's Tech Winners
Apple (AAPL, $96) broke through $95 resistance on heavier than normal volume. Its all-time split-adjusted high is $100 and it sure appears as if it's going to be testing that level very soon. The stock is cheap (P/E = 16) compared with its peers and I do think that most of the negativity that drove the stock down following the passing of Steve Jobs has been wrung out of the price. The options market is also confirming growing optimism by the expansion in the open interest of call options at higher strikes.

The other technical tech event today was the breakout in wireless communications equipment maker BlackBerry (BBRY, $11.21). The stock has been floundering for a year but lately its chart has turned bullish. Today, the stock broke $11 semi-major resistance on heavier than normal volume (which is tougher to do in the summer because of lower volume in general). It's not out of the woods yet and more risk-adverse investors may wish to wait until it can clear major resistance at $12 before entering a position. Technically, if the stock jumps above the $12 level, it will have made what is known as an island reversal -- a very bullish pattern.

While investors gobble up these tech fruits, they're passing on other parts of the food pyramid...

Today's Commodity Losers
Corn (CORN, $28.50) has shucked roughly 45% of its value since early 2013 and dropped to a new four year low today. Also getting cut was Wheat (WEAT, $13.41) which is testing its all-time low put in back in February. Today's sell-off helped to nudge the Grains etn (GRU, $5.45) to a new yearly low. If these bearish charts are indications of an over-supply in both corn and wheat--both used to feed livestock--why is the Livestock etn (COW, $33.58) hitting a new high? Perhaps higher beef prices won't be on the menu for much longer...

Today's Sector Highlight: Food Products
Investors kept with the food theme by bidding up several stocks in the food products industry. Breaking out to new highs today were ag giant Archer Daniels Midland (ADM, $46.5) and Ingredion (INGR, $78.26), a maker of high-fructose corn syrup and specialty starches--America's favorite food additives. On a healthier note, Norway based salmon producer Marine Harvest (MHG, $13.87) continued its upward advance to move to yet another new high. Although volume has been heavy in this issue, it's been dissipating as the stock advances. This is typically viewed as a sign that interest is drying up.

Volatility jumps as major averages pull-back
July 7, 2014

1:20 pm ET: Intraday support/resistance:
SPX 1974.75/1984.25
DTX 817.75/829.25
DJIA 16975/17065
Nasdaq 4452/4478
RUT 1188.3/1204.7
VIX 11/11.75 (rising VIX is bearish but still overall bullish)
Trin range: 0.85 - 1.1 (rising Trin is bearish)
Average VWAPs: +29/-93 (bearish)

Bulls' starting their holiday party early
July 3, 2014

11:40 pm ET: Intraday support/resistance:
SPX 1975.75/1984.75
DTX 823.7/830.3
DJIA 16980/17060
Nasdaq 4464/4482
RUT 1203.5/1208
VIX 10.35/10.75 (VIX becoming very contrarian)
Trin range: 0.75 - 0.95 (bullish)
Average VWAPs: +54/-28 (very light volume trading)

Major averages in tight trading range on very light volume
July 2, 2014

2:05 pm ET: Intraday support/resistance:
SPX 1972.5/1976.7
DTX 821.1/825.9
DJIA 16950/16985
Nasdaq 4455/4470
RUT 1201.6/1207.4
VIX 10.5/11.2 (VIX becoming very contrarian)
Trin range: 0.55 - 0.75 (bullish to bullish contrarian)
Average VWAPs: +43/-83 (mildly bearish on light volume)

Investors still putting their money into banks
July 1, 2014

Nearly all of the sector etfs are trading in the green today with the glaring exception of mortgage REITs (MORT) and utilities (XLU), showing that investors are preferring risk (stocks) over over-valued income (bonds). The move back into equities prompted breakouts in many sectors including health related etfs--Pharma (PJP), Healthcare (XLV), and Biotech (BBH, FBT, IBB); tech related funds--Tech (XLK), Internet (PNQI, FDN), IT (VGT); and semiconductors (SMH, SOXX). Many individual issues in these names are becoming stretched on a valuation basis but there's still some bargains to be had in the more staid areas of the economy.

Two of these areas are banks and insurance companies, both of which saw solid gains today. (Check out today's 1-2% rallies in the bank etfs (KRE, KBE, IAT) and the insurance etf (KIE).) Most of the stocks in these groups that broke out to new yearly highs had price-to-earnings (P/E) ratios lower than the S&P's (currently at 19.7). Here's the list of the most compelling stocks from these two financial groups along with their P/E ratios and current dividend yields:

Banks: Int'l Bancshares (IBOC, $27.6; P/E = 13.1; D/Y = 1.8%) and United Bankshares WVa (UBSI, $32.8); P/E = 18.8; D/Y = 3.9%)
Insurers: Argo Group Int'l (AGII, $52; P/E = 9.2; D/Y = 1.4%) and Allied World Assurance (AWH, $38.5; P/E = 8.9; D/Y = 2.3%)

Major averages breaking records
July 1, 2014

Intraday Notes 1pm ET): Wowie!! The bulls charged back with a vengeance, insisting on being the host at this year's Fourth of July picnic. The major averages are literally jumping for joy with all of the ones tracked below popping out of short-term resistance at today's opening bell. Except for the Nasdaq, all of the major averages are notching new highs. It doesn't matter if the Dow Industrials don't cross the psychological 17000 level--they're already at a new all-time high. (The intraday levels below are suggesting that the index doesn't reach that level today.) The bulls are back, baby, and if you're on the short side, you're suffering. There is one ray of hope, though, for the bears, and that is that the VIX is nearing historic lows. Although the VIX can stay at depressed levels for a while, it eventually does make a return to the mean and when it does, it has the potential for an explosive move to the upside.

12:55 pm ET: Intraday support/resistance:
SPX 1962.25/1978.75
, DTX 820.75/830.25
DJIA 16825/16995
Nasdaq 4425/4480
RUT 1196/1216
VIX 10.9/11.4 (falling VIX is bullish/below 11 is extremely contrarian)
Trin range: 0.8 - 1.0 (neutral)
Average VWAPs: +97/-48 (bullish)

Muted market in holiday-shortened week
June 30, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1958.5/1964.5
DTX 817.75/823.25
DJIA 16802/16873
Nasdaq 4396.5/4415.5
RUT 1185.25/1191.75
VIX 11.1/11.8 (VIX is bullish but still at contrarian levels)
Trin range: 0.6 - 0.95 (bullish)
Average VWAPs: +72/-46 (mildly bullish on light volume)

End of quarter rebalancing causing seesaw market action
June 27, 2014

Intraday Notes (2:35pm ET): The intraday pivot points that I use to determine the support/resistance levels were tough to pin down today due to the seesaw action in the major indices. This action is likely due to rebalancing in the Russell along with some end-of-quarter portfolio rebalancing. Most of the major indices show that more upside movement is possible before the close except for the Dow Transports (DTX) whose action for the rest of the day appears to remain contained within previous established boundaries. A falling VIX reflects the overall mildly bullish sentiment. I'm expecting that most of Wall Street will be on vacation next week (if their desks aren't vacant already) and portfolio managers are doing the bulk of their rebalancing today instead of Monday. If not, expect the herky-jerky market action to continue until Tuesday.

2:00 pm ET: Intraday support/resistance:
SPX 1952/1959
DTX 812/816
DJIA 16773/16847
Nasdaq 4371.5/4392.5
RUT 1175/1188
VIX 11.45/12.05 (VIX is bullish but still at contrarian levels)
Trin range: 1.0 - 1.45 (rising Trin is short-term bearish, but values above 1.4 are becoming contrarian)
Average VWAPs: +57/-43 (bull/bear seesaw)

Bulls trying to claw their way back
June 26, 2014

1:50 pm ET: Intraday support/resistance:
SPX 1944.5/1961.5
DTX 808.5/816.5
DJIA 16745/16875
Nasdaq 4347.5/4382.5
RUT 1173/1183.5
VIX 11.4/12.5 (VIX is bullish but still at contrarian levels)
Trin range: 0.85 - 1.1 (neutral)
Average VWAPs: +73/-38 (mildly bullish)

Income-ing! Investors opt for yield over appreciation
June 25, 2014

This morning's mixed economic news wasn't bad enough to continue the downside momentum so the bears used this as a time to take a nap. Although the bulls were able to gain control (for the moment), today's rally was fueled mostly by fear--the fear that the market is becoming overheated. The reasoning behind this assertion is that most of today's buying activity was heavily skewed towards income producing vehicles--bonds, closed end income funds, master-limited partnerships (MLPs), utilities, and preferred stock shares--all considered havens of (relative) safety.

From the above groups, the following exchange-traded and closed-end funds rallied to new highs today:
Build America bond funds: Nuveen Build America Bond Fund (NBB, $20.38; Yield = 6.8%) and Blackrock Build America Bond Trust (BBN, $21.85; Yield = 7.2%)
MLP Funds: Clearbridge Energy MLP Fund (CEM, $29.64; Yield = 5.5%) and Clearbridge Energy MLP Opportunity Fund (CEM, $25.17; Yield = 5.5%)
Income Funds: Pimco Income Strategy (PFL, $12.33; Yield = 8.8%), Putnam Premier Income Trust (PPT, $5.65; Yield = 5.5%), American Strategic Income Portfolio II (BSP, $8.78; Yield = 6.5%), and Nuveen Global Income Opportunity Fund (JGG, $12.77; Yield = 6.4%)
Muni Bond Funds: Eaton-Vance Muni Bond Fund II (EIV, $12.55; Yield = 6.0%)
Preferred Funds: Nuveen Quality Preferred Income Fund (JTP, $8.48; Yield = 7.3%)

Although there were no stand-out utilities-based funds, the index tracking stock, the XLU, was up nicely today. It notched a new high late last week and looks like its chart still has legs.

*A word of caution: If you're interested in moving into one of the above funds, please check to see where its current price is compared with its NAV (net asset value--you can find this number in the description of the fund on the company's website). If the fund's price is trading too far above it, you may wish to wait until it returns to more normal levels before initiating a position.

Bears take a break
June 25, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1947.5/1961.5
DTX 807.25/818.25
DJIA 16800/16890
Nasdaq 4340/4380
RUT 1168.5/1181.5
VIX 11.25/12.35 (falling VIX is bullish but still is at contrarian levels)
Trin range: 0.65 - 1.0 (falling Trin is short-term bullish)
Average VWAPs: +93/-40 (bullish--for now)

Bears swat back the bulls' charge
June 24, 2014

Market Roundup: Volatility on the rebound
Boy, were my intraday support/resistance calculations off! The problem is that the true daily pivots sometimes don't show up until later in the day. As they say, you win some, you lose some.

The biggest losers today were the bulls who were doing fine--thank you very much!--until mid-day when news of a Syrian air strike in Iraq hit the wires. This was just the incentive needed for many investors and traders to book profits and begin packing for their summer vacations. There are two reasons I suspect that today's sell-off was triggered more by greed than by fear.

The first is that gold and other precious metals hardly budged. Typically, the spectre of global instability triggers a flight to safety with gold (and US treasuries) topping the list of safe havens. The second reason is that oil plunged--just the opposite reaction from what one would think considering the potential for disruption in Mid-East oil production.

The volatility index (VIX) finally sprung to life today and for those who heeded my advice to buy cheap index puts to protect against downside risk and to swap out long stock positions with call options are probably very happy they did. It's still not too late to take advantage of low volatility but the window of opportunity is closing fast, especially if the VIX keeps advancing at this rate (+10% today). And from the candlestick charts of the major averages and the VIX, it sure looks like the bulls could be in for more hurt.

Intraday Quick Note (2:20pm ET): Major averages stuck in a trading range
The intraday support/resistance levels are showing that the major averages will be stuck in a trading range for the rest of the day. A break below specified support levels, though, would be a victory for the bears. Long-term investors might want to purchase cheap put protection while the volatility is still low.

2:00 pm ET: Intraday support/resistance:
SPX 1959/1968
DTX 814.75/820.75
DJIA 16880/16970
Nasdaq 4365/4400
RUT 1181.5/1193.5
VIX 10.8/11.2 (very low VIX is bullish contrarian)
Trin range: 0.75 - 1.4 (rising Trin is bearish)
Average VWAPs: +35/-110 (bearish)

Transports starting to downshift
June 23, 2014

Market Notes: Not much to write home about today
While most of the major averages were stuck in gear, the market-leading Dow Transport Index (DTX) moved to the downside. The volatility index (VIX) made a valiant attempt to close below 11 but couldn't, confirming a slightly bearish undertone. The nearly dead-even positive and negative VWAPs is indicating that there's not a lot of conviction on either side of the fence, and complacency may be the new world order going into the summer months. Low trading volumes are indicating that the big Wall Street dogs have left for the Hampton's, although nowadays not being connected to your workplace from virtually any inhabited place in the world is no excuse for slacking off.

The number of bright spots in this market is waning but there are still a few areas investors are buying. Oil continues to move higher due to tensions in the Middle East. While many names appear to be over-bought there are a few values still to be had. The one name in this area that shined the brightest today was YPF Sociedad Anonima (NYSE: YPF, $36). This South American oil and gas producer broke out of a six month base on heavier than normal volume today. Volume in this issue has jumped in the past week, an indication of institutional buying. Technically, the stock looks good to go to at least $40 (+12% upside), an area of minor resistance. However, should oil keeping moving up, the stock could easily rally to major resistance at the $45 level (+25% upside). The company's P/E is on par with the industry's average and it does pay a small dividend currently yielding about 0.7%.

1:15 pm ET: Intraday support/resistance:
SPX 1959/1964
DTX 813.1/820.9
DJIA 16880/16955
Nasdaq 4359/4372
RUT 1182.5/1190.5
VIX 11.1/11.4 (rising Trin is bearish and very low VIX is bullish contrarian)
Trin range: 0.7 - 1.0 (neutral)
Average VWAPs: +68/-55 (bulls & bears still battling)

Take advantage of low volatility in a frothy market
June 19, 2014

Today the volatility index (VIX) hit a seven year, pre-recession low. A very low VIX is a contrarian indicator, but that doesn't necessarily mean that the market is going to reverse tomorrow. Historically, the VIX can stay low for weeks to months but at some point, it will reverse and when that happens, the market will begin moving to the downside. The biggest problem with the markets is always one of timing, and the more indications we get showing that the market is nearing a top, the better.

One indication that the market may be getting toppy is to take a look at the stocks populating the New Highs list: consumer staples (tobacco, household products, beverage makers), utilities, and commodities (look at today's jump in gold and silver). This rotation into the more defensive sectors is a sign that investors think a top is near and are repositioning their portfolios into the safer areas.

Another indication is to consider market valuations. The price/earning ratio (P/E) of the S&P 500 currently stands at 19.56. That's roughly 25% above its historical average. Now, markets can stay over-valued for a while but eventually the pendulum will swing back in the other direction. I look at hundreds of stocks a day and I'm telling you, that there are very few bargains left out there (other than highly speculative stocks such as biotechs). Nobody likes to pay more than the retail price of something, and this holds true for investors, too. When there are no more bargains to be had is when the buying pressure will dry up--and that will be the day the market begins to roll over.

The list of reasons why the market may be nearing a top is growing, and it would be wise for long-term investors to consider buying long-term put protection for their portfolios such as LEAP puts on index tracking stocks (DIA, SPY, QQQ). This low volatility environment means that options are cheap--like buying insurance at a discount. If you're looking for the real bargain in today's market, long-term put options are it.

Volatility hits seven year low
June 19, 2014

2:15 pm ET: Intraday support/resistance:
SPX 1951.5/1960
DTX 816/820
DJIA 16855/16925
Nasdaq 4333/4372
RUT 1175/1187
VIX 10.4/10.85 (bullish contrarian)
Trin range: 0.9 - 1.1 (rising Trin is bearish)
Average VWAPs: +52/-70 (bears trying to hone in)

The big yawn before the Fed rate announcement
June 18, 2014

1:20 pm ET: Intraday support/resistance:
SPX 1939.25/1945.75
DTX 806/815.5
DJIA 16755/16820
Nasdaq 4326/4342
RUT 1172/1177
VIX 11.6/11.9 (bullish)
Trin range: 0.7 - 0.9 (bullish)
Average VWAPs: +52/-52 (bulls & bears both out to lunch)

The Semis keep on truckin'
June 17, 2014

Tech stocks have been lagging the market but lately they've been playing catch-up. Regarding the major averages, the biggest movers today were the tech heavy Nasdaq (+0.4%) and the small-cap Russell 2000 (+0.8%). These indices got a big boost from internet stocks and especially the semiconductors. We've been noting how the Semiconductor etfs (SMH, SOXX) have been advancing along with the oil producers. However, the latter group has finally decided to take a break leaving the semis to do the bulls' heavy lifting. And it's really no wonder since a lot of M&A (mergers & acquisition) activity has been happening in this area and judging by the heavy trading volume, it appears as if investors are betting that the consolidation will continue.

Today, sixteen stocks hit new highs in the semiconductor space. (This is a lot.) Here are some of the more technically compelling names on that list:

Breaking out to new highs: Atmel (ATML, $9.6), Infineon (IFNNY, $12.56), MA Com (MTSI, $23), and Synaptics (SYNA, $90.3). (Actually, Synaptics broke out last week.)

Stocks in strong up-trends: Amkor (AMKR, $12.2), Spansion (CODE, $22), and Monolithic Power (MPWR, $42.4). All of the their charts appear to be over-extended and if you're looking to build a position in one of them, I'd wait for a pull-back.

My technical favorites: Rambus (RMBS, $14.6) and Sunpower (SPWR, $40.2). Sunpower has been trading sideways since October before finally breaking overhead resistance at $35 a couple of days ago. It did so on strong volume--a very bullish sign. In mid-March, Rambus broke out of an eight month base before moving on to consolidate at a higher level where it spent a month and a half digesting its gains. Last week, it popped out of this consolidation pattern and continues to notch new highs.

Bulls still trying to sidle back into the saddle
June 17, 2014

1:40 pm ET: Intraday support/resistance:
SPX 1933.5/1943.5
DTX 799/810
DJIA 16730/16830
Nasdaq 4311/4354
RUT 1163.7/1182.3
VIX 12/12.9 (falling VIX is bullish)
Trin range: 0.7 - 1.1 (neutral to bullish)
Average VWAPs: +93/-39 (bullish)

Bulls trying to sidle back into the saddle
June 16, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1931/1943
DTX 800.5/806
DJIA 16720/16810
Nasdaq 4296/4328
RUT 1158/1169
VIX 12.2/12.9 (rising VIX is bearish)
Trin range: 0.75 - 1.1 (rising Trin is bearish)
Average VWAPs: +71/-45 (mildly bullish)

Bulls & bears ducking out early
June 13, 2014

Weekend Roundup: Beach Blanket Seesaw The bulls and bears both bugged out early and spent the rest of the day playing seesaw on the beach. Volume was tilted to the light side while the teeter-totter was tilted to the bulls' side. Bullish action (what's left of it) is still heavily weighted towards the oil stocks. The rally in oil continued today, helped in part by oil and gas magnate T. Boone Pickens saying in an earlier CNBC interview that a disruption in Iraqi crude production would likely raise the price of oil to the $180 - $200 per barrel range. Time to sell the Suburban!

Semiconductors are still popular but their star is starting to fade, judging by the decreasing number of semi stocks making the daily New Highs List. Also ominous is the fact that while the semi etfs--SMH & SOXX--notched higher, their candlestick charts are showing what appears to be a hanging man formation. Translated into plain English this means is that buying pressure has dried up. Unless, there's some really good news coming out from this industry group over the weekend, I would expect Monday's overall action in the semis to be to the downside.

Despite the Friday the 13th pessimism in this group, there was one bright spot. Last night in an SEC filing, Intel (INTC, +7%) said that contrary to popular belief, the PC isn't dead--at least not in the business space. Here, mobile phones and tablets are good for small jobs but businesses need desktops to get the heavy lifting done. The company sees strong demand in its business systems lineup and raised second quarter revenues by 5%. The good news boosted Intel's share price by 7% and caused a 5% gain in the stock of computer maker Hewlett-Packard (HPQ). Both stocks jumped above resistance levels on heavy volume--a very bullish sign. Based on strong technicals and still-low valuations, both Intel and HP look like excellent buys for the intermediate time horizon (1-3 years).

Have a good weekend and remember who's your daddy this Sunday!

1:25 pm ET: Intraday support/resistance:
SPX 1927.75/1939.25
DTX 798.75/806.5
DJIA 16720/16790
Nasdaq 4288.5/424.5
RUT 1154.5/1167.7
VIX 11.9/12.7 (falling VIX is bullish but VIX volatility is rapidly expanding)
Trin range: 0.6 - 0.9 (falling Trin is bullish)
Average VWAPs: +65/-41 (bull/bear seesaw)

Bears come out of hibernation on oil disruption fears
June 12, 2014

Market Notes (4:30pm ET): Anytime the spectre of political unrest arises in an OPEC country, investors flee risk (aka stocks) and put their funds into safer havens, typically oil, precious metals, and bonds--and that's exactly what happened today. Three of the more popularly traded oil exchange-traded vehicles--OIL, DBO, USO--all broke out with 2% being the average gain (that's a lot for these guys).

Gold and other precious metals have been flagging in recent months but they all reversed course about a week and a half ago (some folks must have guessed something was going to happen in the Mid-East). Today, both the Gold Miner etf (GDX) and the Junior Gold Miner etf (GDXJ) tore through resistance levels on twice the normal trading volume. Two Canadian gold miners, Detour Gold (DRGDF, $12.25) and Osisko MIning (OSKFF, $7.91), both hit new yearly highs on heavy volume. Judging from the bullish patterns in all of these charts, it sure appears as if the gold miners are in the early stages of a recovery.

Turning to the movement in the major averages, the fact that the Dow Transports (DTX) lead the way down and closed below 800 support does not bode well for the bulls. While the S&P 500 and the Dow Industrials were barely able to hang onto support, the tech-heavy Nasdaq and the small-cap Russell 2000 slipped below their support levels. Another nail in the coffin for the bulls is that for the past week the VIX has been slowly rising off of a multi-year low, and today was the first time it closed above the 12 mark. An escalation in Mid-East tensions will certainly increase market volatility--hope you bought some put protection last week when options were cheap!

2:10 pm ET: Intraday support/resistance:
SPX 1926.5/1943.5
DTX 794.5/813.5
DJIA 16700/16840
Nasdaq 4286/4328
RUT 1156.6/1165.4
VIX 11.7/12.8 (rising VIX is bearish)
Trin range: 0.7 - 1.3 (rising Trin is bearish)
Average VWAPs: +44/-104 (bearish)

Bears trying to disrupt the bull run
June 11, 2014

Market Notes: The market internals weren't lying yesterday when they suggested that a sell-off was in the cards and that's exactly the hand we got dealt. The bears roared in after the last clang of the opening bell but the bulls quickly stepped in and managed to at least contain the damage. The rise in the VIX is indicating that the bearish momentum is starting to pick up some steam. Not to throw cold water on the bulls' rally, but the VIX has been at a multi-year low for way too long and if past history is any indication of future action, I'm fully expecting the VIX to continue marching back on up, at least to the 15 level--which of course means that the market will likely move lower. Maybe it's time to sell in June and don't come back soon.

Market Movers & Shakers: Despite today's bearish action, two industry groups were on fire. Investors were piling into Semiconductors (with the SOXX & SMH etfs hitting new highs) and Oil and Gas Explorers/Producers (with both the IEO & XOP also closing at new highs). Although the oil etfs appear to want to continue their move to the upside, the rally in the semiconductor etfs is becoming overextended. If you're in either the IEO or XOP, I'd suggest booking some profit or protecting your position.

1:50 pm ET: Intraday support/resistance:
SPX 1941.5/1949.5
DTX 809.6/819.6
DJIA 16805/16945
Nasdaq 4320/4342
RUT 1165/1169
VIX 11.2/11.7 (rising VIX is bearish but under 15 is bullish)
Trin range: 0.65 - 0.8 (bullish)
Average VWAPs: +61/-48 (bull/bear battle)

Internals turning contrarian--is a market reversal imminent?
June 10, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1944.5/1950.5
DTX 814.32/821.6
DJIA 16900/16950
Nasdaq 4320/4340
RUT 1166/1174
VIX 10.95/11.65 (extremely bullish but VIX falling below 11 is very contrarian)
Trin range: 0.5 - 0.7 (bullish to bullish contrarian)
Average VWAPs: +61/-44 (bulls bear-ly in control)

Are the bulls starting to tire?
June 9, 2014

Market Notes: The bears tried to crash the bulls' party today but the bulls were able to push back and all of the major averages again closed in the green--but just barely for the S&P and the Dow Transports. Signs of fatigue were also seen in the sector etfs for the semiconductors (SMH, SOXX), materials (XLB), and retail. And, although the VIX has been low, VIX volatility (as measured by the VVIX index) jumped by nearly 6% today. Could this be the first chinks in the bulls' armor?

2:20 pm ET: Intraday support/resistance:
SPX 1946.5/1955.5
DTX 818.3/825.7
DJIA 16900/16970
Nasdaq 4318/4347
RUT 1165.8/1179.8
VIX 11/11.6 (extremely bullish but VIX under 12 is contrarian)
Trin range: 0.75 - 1.1 (bullish to neutral)
Average VWAPs: +37/-87 (bears trying to wrest control)

Bulls bellow: Buy Buy Buy!
June 6, 2014

12:55 pm ET: Intraday support/resistance:
SPX 1942.5/1952.5
DTX 814.25/820.75
DJIA 16840/16930
Nasdaq 4305.75/4327.25
RUT 1158.5/1170
VIX 10.9/11.4 (extremely bullish but VIX under 12 is contrarian)
Trin range: 1.15 - 1.5 (neutral to bearish)
Average VWAPs: +63/-36 (neutral to mildly bullish; light volume)

Market internals showing market is starting to overheat
June 5, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1923/1944
DTX 808/817
DJIA 16710/16800
Nasdaq 4241/4308
RUT 1128.5/1156.5
VIX 11.35/12.35 (very bullish but VIX under 12 is contrarian)
Trin range: 0.9 - 1.5 (rising Trin is bearish)
Average VWAPs: +111/-33 (very bullish)

Bulls back in charge
June 4, 2014

Mid-day Notes: The bulls charged back to push the bears out of the driver's seat--for now. However, a slowly rising VIX could be telling us that this rally may be going to the Hamptons for the summer along with the rest of Wall Street. The intraday levels are showing that there's a bit more room for upside movement so we may see another jog up before the closing bell.

1:50 pm ET: Intraday support/resistance:
SPX 1918.5/1930.5
DTX 805.8/810.2
DJIA 16675/16755
Nasdaq 4216/4264
RUT 1120/1134
VIX 11.75/12.35 (slowly rising VIX is bearish but it's still in bullish territory)
Trin range: 0.55 - 0.75 (bullish)
Average VWAPs: +90/-31 (bullish)

Bulls trying to stop the bears from stepping in
June 3, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1918.75/1925.25
DTX 805.5/814.5
DJIA 16690/16740
Nasdaq 4216/4242
RUT 1118.75/1131.25
VIX 11.65/12.15 (rising VIX is bearish)
Trin range: 0.75 - 0.8 (falling Trin is bullish)
Average VWAPs: +63/-50 (bull/bear battle)

Market Notes: Investors still LUV-ing the airlines
June 2, 2014

Summary of today's action: The major averages keep marching up with the Dow Transports, the Dow Industrials, and the S&P 500 all notching new highs. The good news for the bulls is the rally is being led by the Transports; the bad news is that it's advancing on very light volume. The VIX continues to stay low but VIX volatility (yes, there is volatility on volatility) is rising. While the bulls do have good reason to cheer, there is some concern that any type of bad news could quickly move the market to the downside.

Where investors are putting their money: The areas of the market garnering the most attention are the ones that have been doing so for the past couple of months:
1. High income funds: Namely those yielding 8% and more. Check out the Eaton-Vance family of funds such as ETY, EOI, ETV, ETW, EXG--all of these are advancing to new highs.
2. REITs (Real Estate Investment Trusts): REITs have been on a roll. One of the more popular REIT funds, the Vanguard REIT etf (VNQ, $75; current yield = 3.6%), is up nearly 17% since the beginning of the year.
3. Airlines: This industry group continues to soar on relatively low P/E valuations and the expectation of robust summer travel. Hitting new highs today were Alaska (ALK), American (AAL), Delta (DAL), Hawaiian (HA), and Southwest (LUV).

Today's notable stock movers:
1. Triumph Group (TGI, $70.40): The designer and maker of components for the aerospace industry broke out of a four month base today on news that it will acquire GE's hydraulic actuation business. The $70M acquisition is expected to add ~$180M in annual revenue and to be immediately accretive to earnings.
2. Gannett (GCI, $28.9): The newspaper and TV media company popped today on a very favorable article appearing in Barron's over the weekend. The article's author maintains that the company is undervalued and sets a price target in the $34 - $40 range, depending on how management plays its cards.

Market moving up on fumes
June 2, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1916/1926
DTX 807.5/815.5
DJIA 16682/16763
Nasdaq 4208/4248
RUT 1121/1139
VIX 11.6/12.2 (VIX under 12 is contrarian)
Trin range: 0.7 - 0.9 (bullish)
Average VWAPs: +67/-48 (bulls trying to hang on)

Recent Articles
Is it about to rain on this rally?
July 3, 2014 at 3:14 pm

Today’s better than expected jobs number helped hoist most of the major averages to new highs…and pushed the volatility index (VIX) to a low not seen since the beginning of 2007.  While historically the VIX has shown that it can stay at depressed levels for a while, there is an indication that it may not be hanging out here for much longer.

VVIX/VIX divergence
The VIX volatility index (VVIX) is a measure of the implied volatilities of the options that make up the VIX.  It is an indicator of the expected volatility of the 30-day forward price of the VIX. The VIX and the VVIX usually move in concert with each other but lately there’s been a divergence in direction.

The charts below show that from the beginning of February to mid-May the general trend of both indices was down.  Since then, the VIX has continued its downward trend but the VVIX seems to have reversed course and appears to be trending in the opposite direction.  While this could be just a temporary phenomenon that may be explained by the differences between the underlying models involved in the calculation of each index, it could also mean that the era of the ultra-low VIX and an ever rising market is coming to an end.

Not to rain on anyone’s Fourth of July picnic, but it might behoove long-term investors to consider buying put protection as a hedge especially since options are at fire sale prices. Remember, it’s better to carry an umbrella and not have to use it than to be caught without one in a sudden downpour.

 

VVIX chart

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