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Intraday Market Notes & Observations
Bulls charge back on Cuba/Fed euphoria but internals indicate it could be a short celebration
December 17, 2014

2:40 pm ET: Intraday support/resistance:
SPX 1973.75/2013.25
DTX 858/880
DJIA 17070/17370
Nasdaq 4551/4639
RUT 1141/1167
VIX 19.4/24.6 (falling VIX is bullish but VIX over 15 is bearish)
Trin range: 0.45 - 0.7 (falling Trin is bullish but Trin around 0.5 or below is contrarian)
Average VWAPs: +178/-54 (very bullish to contrarian)

Bulls & Bears duke it out
December 16, 2014

Quick intraday note (2:10pm ET): Today's market action has been a rollercoaster ride but the intraday levels indicate that there's actually more room left to run to the upside, at least in the large-cap indices (SPX, DTX, DJIA). Historically, the day before a FOMC meeting is an up day and we could see the market close in the green. However, the bears are still on the war path so nothing is a given but at least there's a potential silver lining to this current storm cloud.

2:00 pm ET: Intraday support/resistance:
SPX 1976.5/2018.5
DTX 879/895
DJIA 17080/17470
Nasdaq 4564/4646
RUT 1134.5/1161.5
VIX 19.5/23.5 (VIX is bearish contrarian)
Trin range: 0.5 - 1.0 (falling Trin is bullish)
Average VWAPs: +85/-69 (bull/bear battle)

Wild VIX volatility a reflection of increasing market jitters?
December 15, 2014

There's no other way to describe the recent action in the stock market: It's just plain ugly. The risk-on trade appears to be over as investors are divesting themselves of higher beta names especially technology and biotech stocks. Exchange-traded funds in these areas include the Internet Portal (PNQI) and Biotech funds, IBB & FBT. All of these closed below recent support levels today.

The most interesting facet of today's market was the action in the Volatility Index (VIX). Trading was extremely jittery (for lack of a better word) and action was punctuated by severe momentary spikes on the order of 20-30%. I'm not at all sure why this is occurring but it could have something to do with a so-called delta-neutral strategy using VIX futures as a hedge against VIX calls. This action may be even more extreme tomorrow as VIX options expire on Wednesday.

Going parabolic: If you're on the bear side of the oil trade, you'll be jumping for joy especially if you took a position in either of the 3x bear funds: Crude oil (DWTI) and Russia (RUSS). The DWTI shot up more than 12% today but that was chump change compared with the RUSS which soared over 35%. If you're lucky enough to be in these, you may wish to ratchet-up your stop-loss point just in case the trade goes against you. Parabolic stocks have the tendency to fall as fast or faster than when they rose.

Picking up Steam: The etfs of gold miners reversed course a few weeks ago and are continuing down unabated. The Junior Gold Miner etf (GDXJ) broke to a new all-time low since 2009 fund inception with the Gold Miner etf (GDX) following right behind. The 3x Bear Gold Miner etf (DUST) jumped 20% just today to close at $32. It appears that it wants to make a run to its early November high at $50.

Also on the metals front, shares of the Steel etf (SLX) broke below $35 support and it, too, appears to be heading south. Next stop could be in the low to mid 20's.

Butt ugly: It's interesting that while some pundits are saying that oil is close to bottoming, it sure doesn't appear that way from the charts. Two of the most widely held Oil funds, USO & OIL, both broke below their early 2009 lows, losing nearly 5% on the day. So far, there's no sign of a bottoming pattern forming.

Currency slips: Not surprisingly, the fall in oil and metals has put pressure on the currencies of countries that supply these resources. Most notable are the Canadian dollar (FXC) and the Aussie dollar (FXA). Both exchange-traded funds hit multi-year lows today.

1:50 pm ET: Intraday support/resistance:
SPX 1982.5/2018.75
DTX 878.3/895.7
DJIA 17115/17405
Nasdaq 4590/4690
RUT 1137.5/1160.5
VIX 19/25? (wild VIX trading is unsettling)
Trin range: 0.95 - 1.6 (rising Trin is bearish but Trin over 1.5 is contrarian)
Average VWAPs: +48/-120 (bearish)

Rotation out of big-caps into small-caps
December 12, 2014

1:35 pm ET: Intraday support/resistance:
SPX 2010.75/2032.25
DTX 886/895
DJIA 17310/17590
Nasdaq 4660/4720
RUT 1153/1168
VIX 18.35/21.65 (spiking VIX is bearish contrarian)
Trin range: 0.8 - 1.2 (neutral)
Average VWAPs: +87/-63 (heightened VWAPs indicating sector rotation--the beginning of end-of-year rebalancing?)

Bulls try to reverse yesterday's sell-off but bears not throwing in the towel just yet
December 11, 2014

1:05 pm ET: Intraday support/resistance:
SPX 2028/2059
DTX 897/901
DJIA 17535/17795
Nasdaq 4704.5/4768
RUT 1166.5/1184.5
VIX 15.8/17.7 (falling VIX is bullish but VIX over 15 is overall bearish)
Trin range: 0.8 - 1.5 (falling Trin is bullish)
Average VWAPs: +76/-70 (bull/bear battle)

Da' Bears
December 10, 2014

1:55 pm ET: Intraday support/resistance:
SPX 2035/2059
DTX 890/901
DJIA 17560/17800
Nasdaq 4713/4767
RUT 1173/1185
VIX 15.4/17.6 (jumping VIX is bearish and VIX over 15 is overall bearish)
Trin range: 1.1 - 1.6 (rising Trin is bearish & over 1.5 is bearish contrarian)
Average VWAPs: +40/-144 (bearish)

Bulls fight back
December 9, 2014

The bulls got their revenge today in spades. The good news is that VIX volatility collapsed causing the VIX itself to close under 15, a bullish sign. Another piece of good news is that today's rally was lead from the open by the small-cap Russell 2000 (RUT) and the tech-heavy Nasdaq. Both of these indices have been recent laggards and the fact that they're starting to break free of the large caps could be an early indication that the Santa rally is back on track. The one piece of bad news, however, is that the market-leading Dow Transport Index (DTX) was today's biggest laggard and although it recovered somewhat from its early morning sell-off, it wasn't able to close in the green nor was it able to close back above 900 support. You bulls may not want to don your dancing shoes just yet.

Today's Biggest Loser was master limited partnerships (MLPs). The fall in oil has put extra (undue?) pressure on MLPs. Today, several MLP funds got crushed: GER, SRV, DSE. While it might be tempting to jump in at these depressed levels, the charts are still very bearish--don't do it!

Today's Winners hitting new highs include the usual suspects: Healthcare/pharma/biotech, utilities, REITs, some select semiconductors, and some regional banks (SQBK, INDB, MBFI, WBS). Standouts in the retail space are the automotive parts retailers: O'Reilly (ORLY, $192.54), Autozone (AZO, $605.8--they should split this stock), Group 1 (GPI, $92.94), and Advance Auto (AAP, $158.25). All of these gained over 3% today on heavier than average volume.

1:30 pm ET: Intraday support/resistance:
SPX 2034/2060
DTX 884.5/901.5
DJIA 17630/17850
Nasdaq 4674/4765
RUT 1153.5/1181.5
VIX 14.8/16.7 (VIX over 15 is bearish but falling VIX intraday is bullish)
Trin range: 0.7 - 1.15 (falling Trin is bullish)
Average VWAPs: +240/-27 (extremely bullish to bullish contrarian)

Is the Santa rally losing its ho-ho-ho?
December 8, 2014

Unfortunately, the market is starting to look tired. Oil dropped to new levels not seen in five years and the charts show no signs of reversing direction any time soon. Nearly every sector and industry group sold off except for gold and gold miners, insurance, and some individual biotech names.

Market internals were so bearish today (how bearish were they?) that they went well into contrary territory. The negative VWAPs sank below the -200 level while while the Trin nearly topped 1.7. (Anything over 1.5 is considered to be very bearish on my Trin scale.) These levels reached their extremes near 2pm ET when the bulls stepped in to stop further hemorraghing. The VIX managed to close the day under 15--the bull/bear dividing line, and the major averages managed to stay above key support levels (shown below). However, don't think for a second that the carnage is over because today saw a significant jump in VIX volatility and by the looks of the charts of the VVIX and the VXST, it appears they are determined to move higher. (The chart of VVIX is shown below.)






















The takeaway here is that long-term investors would be well advised to buy some put protection or better yet, lighten up their holdings. Raising cash to buy oil issues when the commodity finally does turn around (and this could take months) would be a good strategy.

Key Support Levels
Dow Transports (DTX): 900
S&P 500 (SPX): 2050
Dow Industrials (DJIA): 17800
Nasdaq: 4700
Russell 2000 (RUT): 1150

Bears charge back but internals are at contrarian levels
December 8, 2014

1:40 pm ET: Intraday support/resistance:
SPX 2058.25/2075.75
DTX 901/915
DJIA 17840/17960
Nasdaq 4732/4793
RUT 1169.75/1188.25
VIX 12.55/14.25 (jumping VIX is bearish but VIX under 15 is overall bullish)
Trin range: 1.15 - 1.7 (rising Trin is bearish & over 1.5 is bearish contrarian)
Average VWAPs: +25/-209 (bearish contrarian)

Bulls regroup after two days of gains
December 4, 2014

After two decent up days, the market decided to take a rest. While the daily chart of the major averages shows them flat-lining, intraday action was anything but dull. The elevated VWAPs on both the positive and negative sides combined with the large intra-day swing in the VIX reflects today's seesaw action between the bulls and the bears. There are some good and bad points to this market, both on the technical and fundamental sides:

1. The Dow Transport Index (DTX), a leader in determining market direction, is showing signs of forming a downward trending channel. If the index can't manage to close above today's high (917.7 on my chart; 9177 on other charts), a roll-over in the overall market becomes a higher probability scenario.

2. Today's Trin (Arm's Index) rose to top out at 1.4 before closing around 1.2. Values above 1.1 are considered bearish while values in the 1.5 or above area are considered to be bearish contrarian. We were near this contrarian level today meaning we could possibly see the market move to the upside tomorrow. Of course, what happens on the open is going to be determined in part by the jobs report due before tomorrow's bell.

3. The current P/E ratio of the S&P 500 sits at 20. That's 33% above its historical norm. Anyone who believes in the mean-reversion theory should be getting nervous. However, the real question is not if the market will revert back to its historical level it's when will it do so? Remember, the market can remain irrational for longer than you, the investor, can remain solvent.

So, what's the take-away from all this? My interpretation is that the market is showing us that Wall Street is becoming uneasy with the high market valuation and unless economic indicators continue to show increasing growth (and increasing wages), we could see investors move to the sidelines (which appears to be happening already). The moral of the story is to batten down the hatches and tighten up your stops!

1:55 pm ET: Intraday support/resistance:
SPX 2062.5/2077.5
DTX 909/918
DJIA 17815/17935
Nasdaq 4754/4790
RUT 1169.25/1180.75
VIX 11.85/13.25 (VIX under 15 is overall bullish)
Trin range: 0.85 - 1.35 (rising Trin is bearish)
Average VWAPs: +86/-51 (bullish but bears still in the picture)

Bulls push the market higher as volatility deflates
December 3, 2014

2:00 pm ET: Intraday support/resistance:
SPX 2066.5/2074
DTX 909/912
DJIA 17855/17915
Nasdaq 4745/4775
RUT 1168/1182
VIX 12.3/12.9 (falling VIX is bullish & VIX under 15 is overall bullish)
Trin range: 0.7 - 1.0 (falling Trin is bullish)
Average VWAPs: +85/-62 (bullish but bears still very much in the picture)

Dow Industrials looking to close at record high
December 2, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2053.75/2068.25
DTX 895/906
DJIA 17780/17880
Nasdaq 4730/4760
RUT 1156.25/1173.25
VIX 13/14.2 (falling VIX is bullish & VIX under 15 is overall bullish)
Trin range: 0.85 - 1.25 (neutral)
Average VWAPs: +101/-60 (bullish but bears still kicking around)

Market singin' the blues following Black Friday
December 1, 2014

Today's winners & losers (2:45pm ET):
Commodity Fund Break outs: Wheat (WEAT, +4.2%), Grains (GRU, +3.5%)
Commodity Fund Break downs: Agribiz (MOO, -0.8%), Water (FIW, -1.2%)
Sector Fund Break downs: Materials (XLB, -1.2%), Regional Banks (KRE, -1.8%). Shipping (SEA, -2.5%), Clean Energy (PUW, PBD, ICLN--all down around 3%)
Rolling over: Healthcare (XLV, IXJ), Biotech (FBT, IBB)

1:50 pm ET: Intraday support/resistance:
SPX 2049.5/2065.75
DTX 893/919
DJIA 17725/17855
Nasdaq 4725/4785
RUT 1154.5/1170.5
VIX 14.05/14.75 (rising VIX is bearish but VIX under 15 is overall bullish)
Trin range: 1.05 - 1.4 (bearish)
Average VWAPs: +75/-90 (bull/bear battle + rotation)

Market stuck in neutral before the Thanksgiving holiday
November 26, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2066.5/2071
DTX 919/922.5
DJIA 17785/17830
Nasdaq 4757.5/4787.5
RUT 1185.5/1189.5
VIX 11.75/12.4 (VIX under 15 is overall bullish)
Trin range: 1.05 - 1.3 (rising Trin is bearish)
Average VWAPs: +66/-53 (bull/bear tussle + rebalancing)

Transports chug higher as the other major averages begin to stall
November 25, 2014

2:00 pm ET: Intraday support/resistance:
SPX 2064.75/2074.25
DTX 917/924
DJIA 17790/17865
Nasdaq 4750/4775
RUT 1182.25/1191.75
VIX 12.35/13.05 (VIX under 15 is overall bullish)
Trin range: 0.65 - 1.15 (bullish to neutral)
Average VWAPs: +61/-58 (bull/bear tussle)

Investors rotating into small-caps & tech
November 24, 2014

1:50 pm ET: Intraday support/resistance:
SPX 2064.8/2070.2
DTX 910/917.75
DJIA 17780/17855
Nasdaq 4723.6/4751.4
RUT 1174.75/1183.75
VIX 12.45/13.05 (falling VIX is bullish & VIX under 15 is overall bullish)
Trin range: 1.0 - 1.3 (bearish)
Average VWAPs: +78/-64 (bull/bear tussle)

Traders booking profits before the weekend--a sign of fear creeping into the market?
November 21, 2014

2:00 pm ET: Intraday support/resistance:
SPX 2056.5/2071.5
DTX 905.2/912.8
DJIA 17720/17895
Nasdaq 4703/4751.5
RUT 1172.5/1184.5
VIX 13.15/13.8 (falling VIX is bullish & VIX under 15 is overall bullish)
Trin range: 0.6 - 0.9 (bullish)
Average VWAPs: +43/-102 (bearish)

Investors adding retailers to their stock inventories
November 20, 2014

The major averages continue to advance helped in part by the fall in oil (and gas) prices. Falling oil prices are the equivalent of a subsidy in the form of keeping more dollars in the wallets of consumers (and hence giving them more purchasing power) and lowering transportation costs. This is one big reason why the transports and airlines continue to advance and why retail and discretionary have both hit new highs.

As long as energy prices remain low, expect the above groups to continue advancing. Two of the most widely held Retail etfs (XRT, RTH) both notched new highs in concert with the Consumer Discretionary etf (XLY). The XRT broke out of a one week consolidation pattern while the RTH hasn't looked back from breaking out of a two month base over three weeks ago. Individual stand-outs in this group breaking out to new highs today are the following: Ross (ROST, $83.21), Macy's (M, $62.85), Nordstrom (JWN, $74.97), L Brands (LB, $80.08), Casey's General Stores (CASY, $85.55), Dollar Tree (DLTR, $65.87), Dollar General (DG, $66.55). None of these sport particularly high P/E's (the highest are LB & CASY at 25) and provided consumers do their part this holiday season, we could see further advancement in their share prices. Indeed, it's looking more and more as if the retailers will be celebrating a greener than expected holiday sales season.

Transports lead the major averages higher
November 20, 2014

1:30 pm ET: Intraday support/resistance:
SPX 2040.5/2054.5
DTX 896.3/909.7
DJIA 17605/17715
Nasdaq 4653/4711
RUT 1153.2/1169.4
VIX 13.3/14.7 (falling VIX is bullish & VIX under 15 is overall bullish)
Trin range: 0.65 - 0.955 (bullish)
Average VWAPs: +73/-50 (mildly bullish but bears still in the picture)

Bulls trying to push the major averages back to break-even
November 19, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2040.5/2052.5
DTX 896/904
DJIA 17625/17695
Nasdaq 4656/4699
RUT 1152/1171
VIX 14/14.8 (VIX under 15 is overall bullish)
Trin range: 0.65 - 1.15 (bullish to neutral)
Average VWAPs: +80/-48 (mildly bullish)

Bulls push S&P and Dow to record highs
November 18, 2014

1:55 pm ET: Intraday support/resistance:
SPX 2041.5/2054.5
DTX 901.4/908.6
DJIA 17642/17718
Nasdaq 4675/4715
RUT 1165/1172
VIX 13.2/14 (falling VIX is bullish & VIX under 15 is overall bullish)
Trin range: 0.85 - 1.3 (rising Trin is bearish)
Average VWAPs: +89/-46 (moderately bullish)

Sector rotation limiting market movement
November 17, 2014

2:05 pm ET: Intraday support/resistance:
SPX 2034.5/2043.5
DTX 901.4/905.6
DJIA 17607/17648
Nasdaq 4655/4692
RUT 1165/1175
VIX 13.8/14.75 (rising VIX is bearish but VIX under 15 is overall bullish)
Trin range: 0.75 - 1.05 (bullish to neutral)
Average VWAPs: +71/-69 (sector rotation contributing to elevated VWAPs)

Time to bet on bullion? Not just yet...
November 14, 2014

While the major averages have been spending the past few days digesting gains and trading within a narrow range, action in the metals market has been quite the opposite. Precious metals, especially gold, platinum, and silver, have been in the dumpster for the past six months. In that time, the Gold etf (GLD) lost 18%, the Silver etf (SLV) lost 30%, and the Platinum etf (PPLT) lost 22%.

But that situation may be about to change as witnessed by the extreme volatility seen this week in both the metal and miners stocks and their exchange-traded funds. The Gold Volatility Index (GVZ) has been moving up rapidly, gaining more than 11% just today to close over 23. Historically, a spike in the GVZ indicates that a reversal in gold is imminent. However, the GVZ isn't close to reaching an extreme level (typically over 35), and until it does, I'm staying away from making any move into the precious metals (although if you're a day trader you're probably loving this one!).

I wish I could find something more to write about but there are very few bargains left on the long side. Have a good weekend!

Bulls trying to regain control as volatility stabilizes
November 14, 2014

1:35 pm ET: Intraday support/resistance:
SPX 2035.75/2042.25
DTX 904.6/912.4
DJIA 17616/17664
Nasdaq 4664/3/4692.7
RUT 1172/1178
VIX 13.55/14.05 (falling VIX is bullish; VIX under 15 is overall bullish)
Trin range: 0.65 - 1.05 (falling Trin is bullish)
Average VWAPs: +91/-66 (bulls starting to pull ahead)

Major averages starting to roll over as market internals turn negative
November 13, 2014

2:00 pm ET: Intraday support/resistance:
SPX 2030/2046
DTX 901.2/911.7
DJIA 17585/17705
Nasdaq 4662/4703
RUT 1175.3/1188.7
VIX 12.85/14.35 (rising VIX is bearish but VIX under 15 is overall bullish)
Trin range: 0.85 - 1.1 (neutral)
Average VWAPs: +39/-93 (bearish)

Major averages inching higher with more room left to run before the close
November 12, 2014

12:40 pm ET: Intraday support/resistance:
SPX 2032/2042
DTX 902/909.75
DJIA 17536/17634
Nasdaq 4644/4674
RUT 1175/1182.5
VIX 12.85/13.75 (VIX under 15 is overall bullish)
Trin range: 0.7 - 1.05 (bullish to neutral)
Average VWAPs: +68/-39 (mildly bullish)

Major averages look to be rangebound for rest of this Veteran's Day
November 11, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2034.75/2041.25
DTX 901.6/910.4
DJIA 17578/17638
Nasdaq 4639.4/4657.6
RUT 1176.75/1180.25
VIX 12.6/13.2 (rising VIX is bearish but VIX under 15 is overall bullish)
Trin range: 0.75 - 1.05 (falling Trin is bullish)
Average VWAPs: +68/-64 (bull/bear battle)

Weakening market internals indicate bears trying to muscle in
November 10, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2030/2039.5
DTX 895/907
DJIA 17545/17625
Nasdaq 4626.5/4653.5
RUT 1171.5/1178.5
VIX 12.4/13.3 (falling VIX is bullish & VIX under 15 is bullish)
Trin range: 1.0 - 1.3 (rising Trin is bearish)
Average VWAPs: +65/-80 (bears gaining strength)

Bulls losing steam but still in charge as the week draws to a close
November 7, 2014

1:50 pm ET: Intraday support/resistance:
SPX 2025/2036
DTX 891/900.5
DJIA 17495/17585
Nasdaq 4607/4648
RUT 1165/1174
VIX 12.95/14.15 (falling VIX is bullish & VIX under 15 is bullish)
Trin range: 0.65 - 0.85 (falling Trin is bullish)
Average VWAPs: +103/-59 (bullish)

Transports leading the bull charge
November 6, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2016/2031
DTX 884/896
DJIA 17440/17570
Nasdaq 4605/4635
RUT 1163.5/1170.5
VIX 13.9/15.1 (VIX under 15 is bullish)
Trin range: 0.8 - 1.2 (neutral)
Average VWAPs: +105/-53 (bullish)

Major averages pushing to a post-election high
November 5, 2014

1:00 pm ET: Intraday support/resistance:
SPX 2014.5/2025.5
DTX 877.25/885.75
DJIA 17385/17505.5
Nasdaq 4610.5/4650.5
RUT 1167/1172
VIX 14.15/15.05 (rising VIX is bearish & VIX over 15 is bearish)
Trin range: 0.8 - 1.2 (falling Trin is bullish)
Average VWAPs: +69/-75 (bull/bear seesaw)

A bit of bifurcation: Transports push to new high as VIX moves back into bearish territory
November 4, 2014

1:15 pm ET: Intraday support/resistance:
SPX 2001/2017
DTX 877/887
DJIA 17280/17400
Nasdaq 4595/4640
RUT 1161/1171
VIX 14.85/15.95 (rising VIX is bearish & VIX over 15 is bearish)
Trin range: 1.15 - 1.45 (bearish)
Average VWAPs: +58/-84 (mildly bearish)

Is the sell-off in gold nearing an end?
November 3, 2014

There's so much going on in this market that I only have time to summarize the highlights:

1. Oil plunged to another yearly low today. While relief for this commodity is nowhere in sight, natural gas, however, enjoyed a big rally. Shares of nat gas etvs (exchange-traded vehicles (etns & etfs)) $GAZ and $UNG popped back above major support/resistance levels today--a bullish sign.

2. If today's pop in the gold miners is an indication of an impending reversal in the precious metal itself, then it appears we could be in for a significant move to the upside. Many of the junior miners gained as much as 10% on slightly heavier than normal volume. While I wouldn't be a buyer just yet, now is a good time to start building a watchlist in this area.

3. Real-estate investment trusts (REITs) are killing it! One popular exchange-traded fund in this space is the Vanguard REIT etf (VNQ, $80). It hurdled minor resistance to a new all-time high on Friday and pushed even higher today. Note that the fund pays a dividend currently yielding 3.5%. While the yields on some individual REITs may be higher, the appeal of this fund is that the risk is spread over a basket of issues.

4. Heavy call options were noted today in shares of the CME Group (CME, $85) and CBOE (CBOE, $60.5). Both stocks broke to new highs on slightly heavier than normal volume.

5. Speculative cannabis stocks Medical Marijuana (MJNA, $0.20) and Cannabis Science (CBIS, $0.09) rose on anticipation of favorable marijuana legislation being approved by voters in tomorrow's elections. While these stocks could make big moves, I would strongly recommend playing them with funds you don't mind seeing going up in smoke.

S&P hits a new all-time high
November 3, 2014

1:45 pm ET: Intraday support/resistance:
SPX 2014/2026
DTX 870/880
DJIA 17340/17420
Nasdaq 4630.5/4659.5
RUT 1172/1179
VIX 14.1/14.9 (VIX under 15 is bullish)
Trin range: 0.7 - 1.1 (bullish)
Average VWAPs: +76/-55 (bulls have the upper hand but bears still in the picture)

Market doing the monster mash!
October 31, 2014



Happy Halloween!

1:45 pm ET: Intraday support/resistance:
SPX 2001.25/2023.75
DTX 865.75/879.25
DJIA 17210/17410
Nasdaq 4608.5/4641.5
RUT 1166.7/1173.3
VIX 13.7/15 (VIX under 15 is bullish)
Trin range: 0.8 - 1.1 (falling Trin is bullish)
Average VWAPs: +91/-91 (bulls & bears in all-out war!)






Bulls on a tear--is it time to jump back in?
October 30, 2014

The strength of today's rally came as a bit of shock, at least it did to me. Much of the movement in the Dow Industrials (DJIA) was due to the surge in shares of Visa (V) on the heels of a much better than expected earnings report. Sure, Visa accounted for a significant portion of the upside in the Industrials, but it couldn't account for the rallies in the Nasdaq, S&P 500 (SPX), nor the Russell 2000 (RUT). While the S&P and the Dow Industrials flirted with recent resistance levels (17200 for the Dow and 2000 for the S&P), they couldn't manage to close above them. Only the small-cap Russell was able to best its 1150 resistance level, and that's one plus for the bulls. The second mark on the plus side is that the VIX managed to close the day under 15, something it couldn't accomplish yesterday.

However, the bears aren't without their own arsenal. There are several compelling factors in their favor:

1. The Dow Transport Index (DTX)--a leader in market direction--was the only major index to close the day in the red. A break back below 860 (8600 on some data services) could mean a reversal in direction for other indices.

2. Although today's overall market action was to the upside, the Trin (Arms Index) was solidly in bear territory. (A reading over 1.0 is considered bearish since, in general, there's more volume flowing into declining issues rather than into advancing ones.) While the Trin sometimes gives a false reading, in general it's quite reliable as a short-term indicator of market direction.

3. While investors are piling into the stocks of those companies reporting better than expected earnings, they are ignoring the ones that don't have some sort of catalyst behind them. Why? One reason is that much of the market is over-valued and there are few bargains to be had.

One of the places that we've been mentioning where investors are still finding value is in utilities, and those are precisely the issues that dominated today's New Yearly Highs list. The reason? The P/E's are not yet over-extended (most are in the 15-20 range) and they pay a decent dividend (in the 2.5%-3.5% range--a whole lot better than bonds!). This inflow of funds was reflected by today's 2% rally in the Utility etf (XLU) which shot up to hit a new all-time high (since 1999 inception). (Note: A 2% move is a big one for XLU.)

Here are some of the more technically compelling utility names that populated today's New Highs List: Integrys (TEG, $73), Xcel (XEL, $33.5), DTE (DTE, $82), Ameren (AEE, $42.6), California Water (CWT, $25.5). All of these appear to have more room to rally and conservative investors may wish to add to their positions. Note that all of these issues offer options making them good candidates for covered call strategies. (Just remember not to write the option close to the ex-dividend date!)

Full steam ahead for the bulls
October 30, 2014

1:40 pm ET: Intraday support/resistance:
SPX 1974.75/1995.25
DTX 857.5/874
DJIA 16920/17200
Nasdaq 4521.75/4573.25
RUT 1140.5/1154.5
VIX 14.05/15.75 (VIX plummeting under 15 is very bullish)
Trin range: 1.15 - 1.45 (bearish to contrarian (!))
Average VWAPs: +157/-39 (very bullish)

Bears attempting to stymie yesterday's bull run
October 29, 2014

1:25 pm ET: Intraday support/resistance:
SPX 1978.5/1991.5
DTX 866.25/879.25
DJIA 16955/17065
Nasdaq 4530.5/4564.5
RUT 1137.5/1153.5
VIX 14.2/16.2 (VIX rising over 15 is bearish)
Trin range: 1.0 - 1.3 (neutral to bearish )
Average VWAPs: +50/-82 (bears trying to rain on the bulls' picnic)

Bulls break out the picnic basket on improving market internals
October 28, 2014

Well, the bulls couldn't ask for better weather for their picnic. Today, both the Nasdaq and the Russell 2000 (RUT) popped above resistance levels: 4500 for the Nasdaq and 1120 for the Russell. The Dow Transports (DTX) led the march to advance above its previous all-time high. The internals also showed support for the bulls: both the VIX and VIX volatility fell (the VIX generally runs counter to the market). The bulls are keeping their fingers crossed that it will close below the bull/bear dividing line at 15--perhaps today?

Commodity Highlights: The Copper etn (JJC) hurdled near-term resistance at $37. Yesterday, rumors were swirling in the financial media that the copper market had been cornered and today's pop in the industrial metal could be evidence that the rumors are indeed true. Even more interesting is today's huge move in the Nickel etn (JJN). The stock is up nearly 6% at the time of this writing on eight times normal volume (note that the average volume is very slim--under 5k). Not sure what's going on here unless nickel's rise is in sympathy with the rally in copper...

Sector Highlighs: Nearly all sector and industry group exchange-traded funds were trading in the green. Today's standouts in this space are the following:

1. Both the Regional Bank etfs (KRE, +2%) and (IAT, +1.3% ) broke above near-term resistance levels, albeit on light volume. Although the price action is bullish, I'd wait for further volume conviction before entering a trade to the long side.

2. The two major Telecom etfs (VOX, IYQ) also broke resistance for a 1.3% gain over yesterday's close. There's a bit more buying conviction in these two compared with the banks especially in VOX. The stock is currently trading around $87.5. It faces its next technical hurdle at $89.

3. The Medical Device etf (IHI) popped above four month resistance to a new all-time high. From here on, it's clear sailing for the stock.

1:50 pm ET: Intraday support/resistance:
SPX 1964/1976
DTX 863.75/874.25
DJIA 16825/16925r
Nasdaq 4505/4550
RUT 1121/1143
VIX 15.0/15.8 (falling VIX is bullish)
Trin range: 0.9 - 1.3 (falling Trin is bullish)
Average VWAPs: +113/-41 (bullish)

Airlines soar/Oil tanks/Brazil bombs
October 27, 2014

The bulls are determined to have their way and despite the fact that today's modest rally was led by the Transports, market internals were mixed. On the upside, there were more buyers than sellers, but the fact that the volatility didn't drop much is a bit of a bummer. Add to that the fact that short-term VIX volatility (as measured by the VXST) moved up and the probability of a rally continuation lessens.

Today's Winners: Undervalued airlines and insurers top the New Highs list
As we've been noting here and in our proprietary notes for our subscribers, recent buying pressure has been focused on issues that are undervalued dividend payers. Today's stocks breaking out to new highs on heavier than average volume centered on the following airlines and insurers:

Alaska Air (ALK, $52): P/E = 13.3; Yield = 1%
Hawaiian Air (HA, $17): P/E = 11.8; Does not pay a dividend
Allstate (ALL, $963): P/E = 12.2; Yield = 1.8%
Chubb (CB, $98): P/E = 11.4; Yield = 2.1%

Today's Losers: Brazil bombs/Oil tanks
Investors showed their disappointment that the pro-growth candidate lost the majority vote in the Brazilian election by dumping their holdings. Hit the hardest were banks and energy companies including Petrobras (PBR, PBR.A; -14%), Companhia Energetica de Minas (CIG, -12%), and Banco do Brasil (BDORY,-8%). On these shores, oil and gas producers and drillers continued to sell-off hard. CNBC promoed this afternoon's Fast Money interview with Dennis Gartman by saying that he will be predicting oil to fall to $10 a barrel. (Just a side note: Mr. Gartman's predictions haven't always panned out.) If his prediction does prove to be the case, then sales of electric and hybrid vehicles could suffer but it sure would be a happy holiday season for the consumer!

Bulls trying to bolster the market but the internals aren't so rosy
October 27, 2014

1:35 pm ET: Intraday support/resistance:
SPX 1951.25/1967.75
DTX 850/865
DJIA 16730/16850
Nasdaq 4450/4495
RUT 1104/1119
VIX 15.9/17.9 (VIX over 15 is bearish)
Trin range: 1.0 - 1.5 (bearish )
Average VWAPs: +83/-55 (mildly bullish but bears definitely in the picture)

Major averages looking to end the week on a high note
October 24, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1946.25/1963.75
DTX 844.2/856.4
DJIA 16650/16820
Nasdaq 4446/4481
RUT 1112.5/1119
VIX 15.85/17.75 (VIX over 15 is bearish)
Trin range: 0.7 - 0.95 (bullish)
Average VWAPs: +78/-44 (mildly bullish)

Intraday levels suggest more upside left before the close
October 23, 2014

1:35 pm ET: Intraday support/resistance:
SPX 1931/1961
DTX 833.75/855.75
DJIA 16470/16770
Nasdaq 4421.5/4473.5
RUT 1105/1125
VIX 15.6/16.5 (falling VIX is bullish)
Trin range: 0.8 - 1.4 (falling Trin is bullish but overall in neutral to bearish territory)
Average VWAPs: +99/-54 (bulls on top but bears are still in the picture)

Canadian shooting highlights the market's instability
October 22, 2014

1:25 pm ET: Intraday support/resistance:
SPX 1932.7/1949.3
DTX 836/849
DJIA 16505/16655
Nasdaq 4389/4436
RUT 1105/1117
VIX 15.55/17.55 (rising VIX is bearish)
Trin range: 0.75 - 1.25 (rising Trin is bearish)
Average VWAPs: +25/-158 (very bearish)

Reading into reporting season
October 20, 2014

The precipitous fall in the VIX (volatility index) below the 20 mark (the dividing line between just plain bearish and very bearish) fueled some of the major averages to close above recent resistance levels. It was nice to see the S&P 500 (SPX), Nasdaq, and especially the market-leading Dow Transports (DTX) rise above these levels. However, the fact that the Dow Industrials (DJIA) and the small-cap laden Russell 2000 (RUT) were unable to pierce their own overhangs is a cause for some concern.

Sure, I could be making a mountain out of a mole hill and while I don't wish to rain on Jim Cramer's thesis that the bulls are back in town and are here to stay, I do want to point out a few things that are making me pause.

The first is IBM's (IBM) big earnings miss reported before the bell. The company's CEO, Ginni Rometty, admitted that Big Blue wasn't able to keep up with changing IT needs of their customers (aka, they were late to the cloud party). The situation was so dire that the company was forced to abandon next year's guidance--ouch! The news cratered the stock, sending it well below the $172.50 level which had been a source of major support for over a year.

Couple this with today's after hours earnings report by Apple (AAPL). As bad as IBM's report was, Apple's numbers were at the opposite extreme--it trounced estimates by the widest margin in ten quarters. You'd think the stock would be shooting through the roof right now but guess what? It's barely above its closing price! Of course, after-hours trades don't necessarily reflect how the stock will open tomorrow, but still...

What I'm getting at is that companies that shouldn't disappoint are, in fact, doing so while companies that report great numbers are being treated in a fairly ho-hum manner. My takeaway? I believe this is showing us that the bears do have some good reasons to stick around and they are not letting good news scare them away like it has done in the past. It appears that the direction of the market going forward into the holiday shopping season could be driven in part by how investors react (or don't react) to this season's earnings reports.

Major averages trying to push above key resistance levels
October 20, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1882.5/1902.5
DTX 812/821
DJIA 16260/16420
Nasdaq 4248/4312
RUT 1078.5/1096.5
VIX 18.85/22.15 (falling VIX is bullish)
Trin range: 0.7 - 1.3 (Trin falling under 1.0 is bullish)
Average VWAPs: +98/-41 (bullish)

Bulls fight back but can't push the major averages above resistance
October 17, 2014

Intraday Notes (2:20pm ET): This morning's bull charge lasted until lunch when the bears decided it was time to start taking back what they had lost earlier. While some of the major averages were closer than others to breaking near-term resistance levels, none of them were able to do so. Add to that the fact that the VIX couldn't push its way under support at 20 and you've got the makings of a sell-off going into the weekend.

And who can blame anyone for wanting to hold long positions over the weekend? If more cases of Ebola are reported here over the next two days you can bet the market will open down on Monday.

1:55 pm ET: Intraday support/resistance:
SPX 1865/1900
DTX 805/817
DJIA 16120/16430
Nasdaq 4244/4296
RUT 1080.5/1099.5
VIX 20.25/22.55 (falling VIX is bullish but still very bearish overall)
Trin range: 0.6 - 0.8 (bullish)
Average VWAPs: +49/-145 (bearish)

Transports & small-caps leading the bulls' recovery efforts
October 16, 2014

3:00 pm ET: Intraday support/resistance:
SPX 1835/1880
DTX 782/813
DJIA 15935/16245
Nasdaq 4132/4158
RUT 1059/1096
VIX 23.6/29.4 (extremely bearish)
Trin range: 0.9 - 1.6 (bearish to contrarian)
Average VWAPs: +139/-56 (bullish--for the moment)

Is the market oversold or are we in for more pain?
October 15, 2014

The past couple of weeks in the market have been a seat-of-the-pants rollercoaster ride but today's action was the wildest. To wit, we saw the VIX spike to a three year high, a 458 point swing in the Dow Industrials, an extremely bearish Trin (Arm's Index), and wild swings in both the positive and negative VWAPs (a measure of buying and selling pressure). Going into the close, the mean positive VWAPs were in the +350 area--a level I haven't seen in, well, I'm not sure I've ever seen them that high.

Is there some sense to be made from these market dramatics? The bears believe that today's capitulation is just the pause that refreshes before the next leg down while the bulls are looking at it as a buying opportunity. So, who's right? Unfortunately, my crystal ball is on the blink and the only thing I have to go on are today's compelling technicals:

1. The spike in the VIX and VIX volatility is contrarian. Sure, the VIX closed over 26 which is still very bearish but the fact that it plunged going into the close offers a ray of hope for the bulls.

2. Most of the major sector etfs found footing today. The bottoming tails seen in the candlestick charts of many of them indicate that selling pressure has dried up--at least for now.

While I don't think one should step in and buy stocks with abandon, I do think that taking a baby-step approach to buying isn't a bad idea, especially if a stock is entering over-sold territory. Where can we look for value right now?

Here are two such areas that attracted buyers today:

The first is the oil producers and oil service companies. Many of these stocks have sold off hard and buyers are starting to step in. Witness today's firmative action in some of the Oil & Gas producers/services exchange-traded funds: XOP, XES, PXJ, OIH, IEO. All of these rebounded on heavier than normal volume.

The other battered area that is heating up is the homebuilders. The Homebuilder etf (XHB) was today's bullish winner among the major sector etfs. Today, its candlestick chart formed a bullish engulfing bar on twice normal volume. Individual names in this showing strength today were Lennar (LEN), D R Horton (DHI), KB Home (KBH), and Pulte (PHM). All saw gains of 3% - 4% on twice normal volume.

The big X-factor in the market is the status of the Ebola virus. Should more cases arise (especially in the US), this could likely trigger another market sell-off. It is mainly for this reason that I recommend dipping your toe back in the water rather than doing a full-body cannonball. Don't let exuberance trump prudence!

Bond Alert!: Bearish candlestick hanging man formations formed in the charts of many Treasury and investment-grade corporate bond funds today. If you're long this trade, you may wish to tighten-up your stop-loss point and/or take profits.

Trade Update: The Long US Dollar (UUP)/Short Euro (FXE) trade recommended back on 7/30/14 may be over. Today, the UUP closed just under $22.60 support while the FXE rose above $126 resistance.

VIX spikes to three year high as major averages plummet below key support levels
October 15, 2014

1:35 pm ET: Intraday support/resistance:
SPX 1823/1874
DTX 770/790.5
DJIA 15835/16315
Nasdaq 4120/4210
RUT 1040.5/1066
VIX 23.95/31.05 (mega-contrarian)
Trin range: 0.95 - 1.75 (bearish contrarian)
Average VWAPs: +59/-215 (extremely bearish)

Wild market internals reflect all-out war between bulls and bears
October 14, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1876/1900
DTX 775/805
DJIA 16320/16500
Nasdaq 4213/4302
RUT 1057/1077
VIX 21.1/24.4 (bearish contrarian)
Trin range: 0.55 - 1.7 (wild Trin swinging from bearish contrarian to bullish contrarian)
Average VWAPs: +105/-71 (bulls and bears at war)

Spiking VIX is contrarian but falling Dow Transports indicate that any rally may be fleeting
October 13, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1891/1919
DTX 781/802
DJIA 16465/16635
Nasdaq 4220/4320
RUT 1046/1071
VIX 20.05/22.45 (spiking VIX is contrarian)
Trin range: 0.9 - 1.4
Average VWAPs: +92/-77 (bull/bear battle with bulls having the edge at the moment)

The bears continue to dominate
October 10, 2014

Very ugly day for the bulls! The market-leading Dow Transports broke major support at 800 and the Nasdaq slid below major support at 4300 due in big part by the extreme sell-off in the semiconductor stocks. One sliver of hope for the bulls was today's spike in volatility (VIX). The VIX closed near 21 and any value above 20 is considered to be contrarian. Sure, volatility can stay at extreme levels for a while, but it doesn't usually do so for very long.

If you're looking for a rebound trade, one way to play a fall in volatility is to buy the inverse VIX etn, the XIV. Shares of the XIV dropped over 11% today to close below $32. There is some support at $30 and if it falls below that, I'd definitely consider picking some up. If you're still long this market and have not hedged your positions, there's still time to do so. Timing in bear markets is tough because of their inherent volatility: They're quick to fall and sometimes even quicker to rebound. I've never recommended shorting stocks just for sport, and I only do so if there's a compelling fundamental reason why the company's business model isn't viable going into the future.

Spike in VIX volatility is bullish--for the moment
October 10, 2014

Intraday Notes (2:25pm ET): Today's spike in VIX volatility pushed the VIX over 20 which is not only bearish, but also getting into the contrarian zone. Both buying and selling pressure is heightened which usually means that institutions are repositioning their holdings. Intraday levels are mixed: the resistance levels for the S&P (SPX), Dow Industrials (DJIA), and Dow Transports (DTX) show there's a lot more room to run to the upside before the bell. However, the levels on the Nasdaq and the small-cap Russell 2000 (RUT) are showing range-bound activity for the rest of the day.

2:05 pm ET: Intraday support/resistance:
SPX 1918/1941
DTX 787/813
DJIA 16610/16790
Nasdaq 4299.5/4380.5
RUT 1055.5/1074.5
VIX 17.65/20.55 (contrarian)
Trin range: 0.75 - 1.85 (contrarian)
Average VWAPs: +131/-68 (bulls gaining strength but bears still very much in the picture)

Intraday levels indicate more a bit more room to run to the downside before the close
October 9, 2014

Market Notes (after the close): Sector funds breaking support
Yesterday's bearish market internals didn't lie--we did get that reversal. Today's market internals appear that there's more room to move to the downside, so entering into long positions right now is the riskier bet. If you're looking for some inspiration on how to play the short side, here's a list of some sector exchange-traded funds that broke support levels today:

Natural Gas: UNG, GAZ
Oil: OIL, DBO, USO
Oil services: XES
Oil explorers/producers: IEO, PXJ
Uranium: URA
Alternative energies: FAN, TAN, ICLN, PUW
Shipping: SEA
US Broker/Dealer: IAI
Telecom: VOX, IYZ

If you're interested in taking a bearish position on individual equity names, search for the weakest companies in each industry group. Stock screening software (available on many of the more popular financial websites and also available via online brokers) can help identify the laggards. For further ideas on how to separate the winners from the losers, start by reading this article from Zack's.

1:35 pm ET: Intraday support/resistance:
SPX 1927.5/1967.5
DTX 802.75/827.75
DJIA 16610/16990
Nasdaq 4381/4464
RUT 1069/1096
VIX 15.35/18.65 (bearish)
Trin range: 0.75 - 1.25 (rising Trin is bearish)
Average VWAPs: +28/-119 (bearish)

From one extreme to the other
October 8, 2014

Just when you thought it was safe to add to your short positions, along comes the Fed minutes to ruin your plans. Well, the Fed isn't entirely responsible for today's turnaround; in fact, judging from yesterday's extreme bearish contrarian levels, a rally today isn't a big surprise. But the bears shouldn't go away yet because today we got even stronger extremes--this time on the bullish side.

The median positive VWAPs (a measure of buying pressure) closed the day over 220. Numbers above 200 are strongly contrarian. It's also interesting to note that the median negative VWAP (a measure of selling pressure) was virtually nonexistent about a half an hour or so before the close but rapidly increased in magnitude to close at numbers under -90. This phenomenon could be interpreted as either an indication that the bears were selling into strength and/or that early morning buyers were taking profits. Neither one is bullish.

The other major contrarian factor is that today's rally was not led by the Dow Transports (DTX). Typically, we need this index to lead if a rally is to have lasting legs. On top of that, the DTX was one of the few major indexes not to show a bullish engulfing bar. (In candlestick charting, a bullish engulfing bar is when the current day's upward-trending candlestick body completely engulfs the previous day's down-trending candlestick body. The daily chart of the Russell 2000 (RUT) shown above exemplifies this chart pattern.) While engulfing bars aren't always accurate, neither should they be ignored.

The conclusion is that we could see another market reversal as early as tomorrow. If this roller coaster ride is too much for you to handle without a bottle of Pepto-Bismol, I would strongly recommend staying on the sidelines until the volatility settles down.

Contrarian internals signal a rally--at least for today
October 8, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1925.25/1944.75
DTX 805/820
DJIA 16665/16805
Nasdaq 4355/4415
RUT 1065.75/1078.25
VIX 16/18 (VIX is contrarian)
Trin range: 0.9 - 1.5 (contrarian)
Average VWAPs: +105/-55 (bulls gaining steam)

The bears charge back
October 7, 2014

The market extended yesterday's sell-off led by the Dow Transports. All of the major averages closed under recent support levels and it's especially important to note that the Dow Transports (DTX) and the small-cap Russell 2000 (RUT) both closed under key support levels (820 for the DTX and 1080 on the RUT). However, today's huge jump in volatility is contrarian and we could see a push back by the bulls as early as mid-morning tomorrow. But that doesn't mean that this bearish sell-off is over by any means. Where might we go from here? These key support levels could be the next stop:

S&P 500 (SPX): 1900
Dow Transports (DTX): 800
Dow Industrials (DJIA): 16400 (minor), 16000 (major)
Nasdaq: 4300
Russell 2000 (RUT): 1000

Rising VIX is bearish but bulls aren't going down without a fight
October 7, 2014

1:55 pm ET: Intraday support/resistance:
SPX 1947.5/1962.5
DTX 825/837.5
DJIA 16830/16990
Nasdaq 4413/4442
RUT 1084/1094
VIX 15.8/16.8 (VIX over 15 is bearish)
Trin range: 0.6 - 1.0 (bullish to neutral)
Average VWAPs: +56/-68 (bull/bear battle)

Bulls battle back
October 6, 2014

Intraday Notes (1:50 pm ET): The bulls were unable to continue Friday's rally as the bears stepped in early to swat them down. While the bulls were able to stem the bloodshed, intraday levels suggest that there's still a bit of room for most of the averages to move to the downside before the close. Unfortunately for the bulls, the fact that the market leading Dow Transports (DTX) and the small-cap Russell 2000 (RUT) are the biggest laggards is not a good omen.

1:35 pm ET: Intraday support/resistance:
SPX 1957/1978
DTX 837.5/854.5
DJIA 16920/17100
Nasdaq 4444/4497
RUT 1192/1108
VIX 14.05/15.95 (rising VIX is bearish)
Trin range: 0.7 - 1.1 (neutral)
Average VWAPs: +48/-81 (bears in control but bulls are fighting back)

A few long and short trade ideas for this week
October 5, 2014

The market rebounded sharply on Friday and the question now is whether this rally has legs. The big drop in the VIX and in VIX volatility is bullish so unless some negative headline appears, there's no technical barrier to impede the bulls.

The down side is that there are very few longer term bullish plays that appear compelling and it's on the bearish side where the interesting trades are showing up. Here's a run-down of some trades (and these are trades!) that those of you with some appetite for risk may wish to consider:

1. The contined breakdown in gold and precious metals and their miners have opened up opportunities on the short side. On Friday, the triple-levered junior gold miner bear etf (JDST) popped above $20 resistance while its cousin, the triple-levered gold miner bear etf (DUST) broke above $30.60 resistance. The next major tests for these two are at the $30 and $45 dollar levels respectively. Note that there are options on both but only DUST offers weeklies.

2. Noted here on 7/30 was the currency pair trade long USD/short euro. Since I'm not a forex trader, I don't know how this trade would have fared on the currency market. But if the etf market is any indication, the long USD etn (UUP) has risen 6.3% while the euro etn (FXE) has shed 6.6%--that's a lot in the currency market. And there's no indication that this trade is about to wind down anytime in the near future. On Friday, the UUP popped above $23 resistance while the FXE plunged below $124. The next levels for these two are $23.50 resistance for UUP and $120 support for FXE. If you're considering taking that European vacation, now is the time!

Turning to equities, here's a list of three that have recently appeared on my radar screen. I may play these to the long side if the market remains bullish. All of these stocks charged above resistance on Friday on heavier than normal volume:

1. Cempra (CEMP,$12.49). Cempra is a biotech focused on developing antibiotics to treat infectious bacterial diseases, particularly respiratory tract infections and chronic staph infections. On Friday, the stocked gained over 7% to push out of a six month base. The only (published) news to account for the move (that I could find) is that Zack's upgraded the company from all the way from Neutral to Outperform. The ten analysts covering the stock give it an average rating of Buy with an average price target of $15.86--27% above Friday's close. I tried to buy some out-of-the money calls on Friday but my order didn't get executed which was fine by me because they were a bit pricey. Perhaps when the excitement settles down and the implied volatility returns to a more palatable level, I'll try again.

[The rest of the article is for *Blue Plate Specials* subscribers only and appears in the Subscriber Notes. If you'd like to be a subscriber, please click here.]

Bullish internals indicate further upside
October 3, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1948/1972
DTX 832.5/849.5
DJIA 16800/17050
Nasdaq 4446/4494
RUT 1101.5/1112.5
VIX 14/15.45 (falling VIX is bullish and VIX under 15 is bullish)
Trin range: 0.75 - 1.15 (falling Trin is bullish)
Average VWAPs: +81/-45 (moderately bullish)

Bulls halt the bears' charge; intraday levels indicate a close in the green
October 2, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1926/1954
DTX 817.5/832.5
DJIA 16675/16845
Nasdaq 4368/4442
RUT 1076/1094
VIX 15.8/18 (falling VIX is bullish but over 15 is bearish)
Trin range: 0.9 - 2.0 (Trin near 2.0 is very contrarian)
Average VWAPs: +120/-32 (bullish)

How to profit from a sinking ship
October 1, 2014

The bears continue to dominate and were able to push the major averages below recent support levels with many of them on the verge of testing new ones. Here are the next support levels:

Dow Transports (DTX): 820, 800
S&P 500 (SPX): Just broke 1950, 1900
Dow Industrials (DJIA): Just broke 17000, testing 16800, 16400
Nasdaq: Testing 4400, 4200, 4000
Russell 2000 (RUT): Testing 1080 (a major level), 1000

While today's down draft was depressing, bulls should take some comfort in the fact that market internals are moving strongly into the bearish contrarian zone. What with the Trin pushing above 1.6 and VIX volatility spiking, we could see a relief rally as early as tomorrow. But don't party yet--this could be the pause that refreshes before the next leg down. With only three stocks populating today's New High list, this market is still firmly in control by the bears.

Relief rallies in bear markets provide a good time to initiate bearish bets. If you need inspiration, there's a lot to choose from as pretty much every sector is showing weakness. Many sector exchange-traded funds and notes broke support levels today with the most compelling (technically) being the following: Water (PHO, PIO, FIW), Timber (CUT), Agribiz (MOO), Financials (XLF), Insurance (KIE), Retail (RTH), Regional banks (IAT, KRE), and Shippers (SEA).

Regarding the shippers, Navios Maritime (NM, $5.52) broke below $6 support to touch a new yearly low. The bearish momentum is indicating that the stock could sink much further--possibly to the $3 level. If you're considering shorting this stock (or any of the other shippers), note that many of them pay a dividend which short sellers are required to pay when the stock goes ex-dividend. As an alternative to the inherent risk of shorting as well as being obligated to pay the dividend, if the stock offers options (as does NM) you could buy a put instead.

Major averages breaking support levels but market internals are flashing contrarian
October 1, 2014

1:45 pm ET: Intraday support/resistance:
SPX 1943.5/1971.5
DTX 817.25/844.75
DJIA 16760/17040
Nasdaq 4413/4487
RUT 1084/1101
VIX 16.1/17.9 (VIX over 15 is bearish)
Trin range: 1.1 - 1.65 (rising Trin is bearish but over 1.5 is contrarian)
Average VWAPs: +32/-157 (very bearish)

Bears fight back
September 30, 2014

2:15 pm ET: Intraday support/resistance:
SPX 1967/1985
DTX 842.75/855.25
DJIA 17015/17145
Nasdaq 4478/4522
RUT 1105.3/1118.7
VIX 15.2/16.5 (VIX over 15 is bearish)
Trin range: 0.6 - 1.3 (rising Trin is bearish)
Average VWAPs: +39/-134 (bearish)

Raise high the roof-beam, investors!
September 29, 2014

Today's notable movers to the upside

NiSource (NI, $40.85): The stock leapt to a new all-time high, tacking on 6% to its closing price on Friday on more than 4 times normal volume. Over the weekend, the company's board decided to spin off its natural gas pipelines from its utilities business. The split is expected to occur in mid-2015.

Federated National Holding (FNHC, $26.89): This Florida-based residential property insurer gained 4% on twice normal volume to break above major resistance following a big move on Friday. There was no discernible news to account for the move.

ClubCorp Holdings (MYCC, $19.85): This company manages and operates golf, sports, and business clubs. Today, the stock hurdled out of an eight month consolidation stage, gaining nearly 6% on twice normal volume to notch reach an all-time high. Investors cheered the news that an activist investor is urging the board to consider converting the business to REIT status. According to the company's Press Release, the spun-off assets could offer shareholders an upside of 65% to 90% from Friday's closing price of $18.74.

Beacon Roofing (BECN, $26.18): This New England based supplier of roofing materials has been in a major slump since January. It sunk to a new yearly low on Friday but got a big boost today from a favorable article appearing over the weekend in Barron's. (You need to be a subscriber to access the article.) According to the article's author, improving demand along with ongoing consolidation in the roofing space could boost the stock 40% from current levels. If you're looking to take a bullish stake in this one, I would recommend using options (perhaps selling a put to take advantage of heightened options volatility or using a call credit spread) to reduce risk.

Bulls push back; intraday levels indicate there's more room to rally before the close
September 29, 2014

Intraday notes (1:40pm ET): Yes, this is the same headline from Friday because it's the same type of market action. However, one big difference is that the market internals are becoming contrarian which may mean the bulls will end the day on top.

1:40 pm ET: Intraday support/resistance:
SPX 1964/1984
DTX 839.25/851.75
DJIA 16935/17125
Nasdaq 4464.5/4520.5
RUT 1105/1123
VIX 15.1/17.1 (VIX over 15 is bearish)
Trin range: 0.7 - 1.35 (?)
Average VWAPs: +53/-55 (bulls & bears tug of war)

Bulls push back; intraday levels indicate there's more room to rally before the close
September 26, 2014

2:00 pm ET: Intraday support/resistance:
SPX 1966.25/1977.75
DTX 839/850
DJIA 16950/17090
Nasdaq 4475.5/4494.5
RUT 1111/1117
VIX 14.8/16 (falling VIX is bullish but VIX over 15 is bearish)
Trin range: 0.6 - 0.9 (bullish)
Average VWAPs: +82/-36 (moderately bullish)

Bears push major averages below support levels
September 25, 2014

1:40 pm ET: Intraday support/resistance:
SPX 1968/1997
DTX 834/849.5
DJIA 16955/17205
Nasdaq 4463/4547
RUT 1108/1126
VIX 14/16.7 (rising VIX is bearish; VIX over 15 is in bear territory)
Trin range: 1.0 - 1.5 (bearish to bearish contrarian)
Average VWAPs: +42/-92 (bearish)

Bulls step in to keep major averages above support levels--for now
September 24, 2014

2:10 pm ET: Intraday support/resistance:
SPX 1978.5/1998.6
DTX 841.6/849.6
DJIA 171035/17205
Nasdaq 4500/4560
RUT 1116/1128
VIX 13.55/14.95 (falling VIX is bullish)
Trin range: 0.75 - 1.1 (neutral)
Average VWAPs: +106/-33 (bullish)

Weight Watchers stock bulking up
September 23, 2014

Yesterday's death cross in the small-cap laden Russell 2000 (RUT) cast a pall over today's market action. Midday, it appeared as if the bulls were trying to plug the hole in the dyke but the bears roared back with a late day route. VIX volatility took a jump helping to push the VIX close to the bull/bear dividing line at 15. (Over 15 is bearish and under 15 is bullish.) The major averages themselves are getting close to testing their next support levels. A fall below would be a strong indication of further downside, likely to their next levels of support.




Support Levels for the Major Averages
S&P 500 (SPX): 1975, 1950, 1900
Dow Tranports (DTX): 840, 820, 800
Dow Industrials (DJIA): 17000, 16500, 16000
Nasdaq: 4500, 4000
Russell 2000 (RUT): 1100, 1080

Sector etf breakdowns today: Industrials (XLI), Retail (XRT), Insurance (KIE), Aerospace & Defense (PPA), Consumer Discretionary (XLY), REITs (VNQ, MORT, DRN). The downward pressure in all of these etfs are indicating a high probability of further downside.

Notable Stock Weakness: Gun makers Sturm Ruger (RGR, $46.09) and Smith & Wesson (SWHC, $9.41) have been falling for months and they both recently broke major support levels to hit new yearly lows. Smith & Wesson won't face support until $8 while Sturm Ruger won't see it until $40, roughly 13-15% below today's closing prices.

Notable Stock Strength: Weight Watchers (WTW, $27) has been rallying off its mid-July low (a five year low!) and today closed the gap formed after its worse than expected earnings report in mid-February. The stock made a 7% move to the upside on over three times normal volume. The stock doesn't face major resistance until the gap at $34 which is 25% above its current price. Its past two earnings (post the bad February report) have surprised to the upside and the company could surprise again in its next announcement scheduled for October 29th.

Rising volatility sinking all boats
September 23, 2014

2:05 pm ET: Intraday support/resistance:
SPX 1984.5/1995.5
DTX 847/852.5
DJIA 171070/17170
Nasdaq 4508/4536
RUT 1118.5/1131.5
VIX 13.83/14.83 (rising VIX is bearish but VIX still under 15 is overall bullish)
Trin range: 0.6 - 0.95 (falling Trin is short-term bullish)
Average VWAPs: +35/-86 (moderately bearish)

Musk stocks poised for a fall?
September 22, 2014

Today's bearish action was strong enough to permit the formation of a death cross (when the 200 day moving average rises above the 50 day moving average) in the small-cap heavy Russell 2000 (RUT). While one's market outlook shouldn't be solely based on one technical indicator, prudent investors should not ignore it, either. The RUT has been in a down-trend since the beginning of the month and after breaking today's minor support level at 1140, a drop to 1120 seems likely.

Today's notable losers:
1. Commodity etfs breaking support levels: Timber (CUT); Water (PIO, FIW); Steel (SLX); Palladium (PALL, SPPP); Emerging markets (VWO, EEM, PXH); Oil services (OIH, PXJ, XES); Aussie $ (FXA).

2. Sector etfs breaking support levels: Consumer Discretionary (XLY); Homebuilders (XHB); Insurance (KIE); Shippers (SEA).

If you're looking to take some bearish positions, consider looking into the above areas for ideas.

One other note: To all of you Elon Musk fans, note that Tesla (TSLA, $250) and SolarCity (SCTY, $60) are both testing major support levels. A break below would be a strong indication that further downside is in the offing.

Bearish internals indicate further weakening
September 22, 2014

1:20 pm ET: Intraday support/resistance:
SPX 1989/2009
DTX 849/865
DJIA 17170/17280
Nasdaq 4501/4569
RUT 1124/1142
VIX 13.15/14.35 (rising VIX is bearish but VIX under 15 is overall bullish)
Trin range: 0.85 - 1.3 (bearish)
Average VWAPs: +30/-103 (bearish)

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.

Recent Articles
Historical returns of traditional asset classes
October 10, 2014 at 9:53 pm

The other day an acquaintance said that her nearly grown son wants to invest for the future but he doesn’t have the time nor the market savvy to invest in anything outside of an index tracking stock or mutual fund. She thought that investing in the S&P 500 or perhaps gold would be the most beneficial, but I countered with the small cap Russell 2000 (IWM is the index’s most popular tracking stock).

Sure, it’s more volatile in the short-term but in the long term it’s been tough to beat. As a favor, I said I’d run the historical numbers for the traditional asset classes (1928 to present). She was blown away by the results:

Asset Class Total Return
Class %
Small cap stocks 2,040,481
REITs 738,445
Large cap stocks (S&P 500) 329,976
International stocks 206,415
Long-term corp bonds 15,502
Long-term gov’t bonds 10,451
Intermediate gov’t bonds 8,288
International bonds 6,073
T-bills (cash) 1,837
Gold (since 1928) 5,786

The above numbers reflect total returns since January, 1928 through September, 2014. (Total returns include price appreciation plus dividends.)

Observations
1. Small-caps clobber all other asset classes. Going forward, I believe that biotechs and new tech (alternative energies, internet, space exploration, nanotech, quantum entanglement technologies, etc.) will be among the big leaders.

2. Long-term corporate bonds are better than long term government bonds due to the risk premium (higher rate of interest earned) because of the possibility of default. (Government bonds are considered to be essentially risk-less.)

3. Real-estate investment trusts (REITs) have always been solid and should be a major component of any portfolio.

4. The returns of large-cap US stocks (aka the S&P 500) still dominate the returns of International stocks. (But frontier markets shouldn’t be overlooked as future sources of increasing growth.)

5. Gold: The yellow metal was actually illegal to own in bullion form from 1933 to 1974. During those years the price was fixed by the government but afterward the law was changed and the price was allowed to float. Gold has been a terrific investment over some periods since the mid-’70s but it’s been a bad one in recent years. Since its mid-2011 peak, the metal has shed about 36%. The good thing about gold is that it is portable; the bad thing is that it does not pay a dividend. The other bad thing is that gold doesn’t have much use outside of being decorative while platinum and palladium have use in industry.

6. Cash (T-bills): Over the long term, cash has not been king. Stashing your cash under the mattress is the worst place to put your money. But in times of unrest, it’s better than being in losing investments.

Conclusion

When considering asset allocation, you must also take into account your investment horizon. Are you in your early 20′s and investing for the next 50-70+ or are you much closer to retirement and need to shelter your nest egg? This is where Modern Portfolio Theory comes into play and why investing only in the currently highest returning asset classes is not always the best move because volatility risk must be taken into account.

Modern Portfolio Theory strives to minimize risk over the the long term but it can become a major hindrance to portfolio returns during sharp market corrections. To learn one way to utilize the benefits of the asset allocation strategy provided by Modern Portfolio Theory while also protecting your nest egg during sharp market corrections (especially if you’re looking at less than 20 years to retirement) please visit the Portfolio Preserver website.

[Note: Total return data was provided by the Portfolio Preserver
software.]

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