Buzz on the Street: Worries Abroad Shape the Tape
Some of this week's most insightful and timely vibes.
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Monday, February 8, 2010
As shared on Friday, the SP-500 found support at 200-day exponential MA, a level that has not been violated since it SP-500 convincingly breached it on the upside in July 2009.
The morning after the storm is always precarious since there is a battle between hope and fear. Here are some technical levels of resistance that come into play. The quality of the bounce, and the market's ability (or inability) to reach these resistance areas will dictate the future market action.
Till then, as Ralph Waldo Emerson so eloquently stated, "In skating over thin ice, our safety is in our speed."
Click to enlarge
Tuesday, February 9, 2010
Taking a look this morning at daily and weekly charts of a handful of sovereign 5-year CDS, note TD Combo sell signals for Greece, Portugal and Spain on both the daily and weekly charts. This would suggest exhaustion is in place and spreads have, for now, widened as much as one could expect.
Interestingly, this accompanies speculation that Greece is poised to very soon get European help with respect to its budget deficit.
Greek CDS spreads have come in 65 basis points since the headline on Bloomberg:
EURO ZONE GOVERNMENTS HAVE DECIDED IN PRINCIPLE TO HELP GREECE-SENIOR GERMAN RULING COALITION SOURCE
Wednesday, February 10, 2010
In my report this morning, I incorrectly stated the range of the decline from 1150 to the 1045 low.
It is in fact 105 points giving a midpoint of 1097
If the S&P can recapture 1075 the mid point of the last swing and then 1086 it opens up the possibility of 1097 and a 1100 option expiration squeeze.
But right now a backtest of 1060 must hold for that to play out.
See 10 min SPX for week w/50 period ma below.
Click to enlarge
Some Charts and Stuff
Minyan Matthew asked about a couple of stocks, some I've covered before, others I have not, so here goes.
Tetra Tech (TTEK) - This was a stock I mentioned in the Five Themes to start the year as having a different monthly pattern than the broad market. Naturally, it tanked shortly thereafter. But where do we stand longer-term, since the original analysis was based on the long-term monthly patterns?
On a monthly basis, TTEK reached downside TD Propulsion Down exhaustion at 20.21. We are on bar 5 of a potential monthly TD buy setup 9 count.
Weekly shows the most worrisome pattern based on a (for now) disqualified potential TDST Down break. The level at 21.24 is disqualified but we are only on bar 4 of a potential buy setup and it remains possible TTEK could qualify a break of TDST over the coming weeks. Until it does, the evidence on the monthly suggests the stock is "ok." If that TDST Down is qualified, all bets are off.
Sunpower (SPRWA) - Sunpower shows a qualified break of a TDST Down level on the monthly chart and we are only on bar 5 of a potential TDF Sequential 13 buy signal, so this one appears to be in trouble. The weekly recently recorded overlapping TD Sequential buy signals and a buy setup which barely produced any upside reaction. Worse, the TDST Propulsion Momentum Down has been qualified with a potential target of 2.05. Yes, there is not a digit missing there.
Sunpower (SPWRB) - The B shares are not nearly as bad. The monthly is on bar 7 of a potential 9 buy setup. The weekly also has TD Propulsion Down Momentum qualified but the target on the downside is only 12.50.
Position in TTEK
Fear of missing vs. fear of losing
As the world waits with bated breath on the fate of Greece, and possibility of major market moves in the aftermath, investors and traders are encountering a classic battle between the fear of missing and fear of losing.
Here's an excerpt from a note I had written on 2/10/09.
"For most market participants, it's obviously the fear of missing that supersedes the fear of losing! Ironically, though, by yielding to the fear of missing, most of us assign more importance to 'opportunity dollars' than 'real dollars'. (And hey, let's not digress by discussing the real value of the dollar here!)
I was talking to a couple of long-time investors last night and we started talking about what makes someone sell (either to take profits or losses) and what makes someone not give in to the fear of missing a move. It was a stimulating discussion and I had several things to say on this (who would have thought!); one thought was to divide investment decisions on a scale that goes from greed to fear.
Those who look at the 'worst-case-scenario' side of things are quicker to sell; they yield in to fear more than greed. Those with a 'best-case-scenario outlook' do not give credence to fear; they are on the extreme other end of the scale where greed is paramount.
There is nothing wrong with being either and at times we have oscillated between both; in the roaring 90's, the bold and the restless found it easier to make money, while extremists on the other end watched the party from the sidelines. In the bear market, those who are 'hesitant' and who look at the how low things can go, stay relatively unscathed.
The ideal scenario would be to recognize your own stance on this fear-greed scale and then, customize your trading style to your stance.
I invite fellow Minyans to think about their own reasons. This exercise is not merely meant as a reenactment for idealistic talks in college; this can actually make us ask pertinent questions and make us aware of why we do what we do.
And answers come only when you ask questions!"
It's a tough battle for sure, with no easy outcome. Thus, I have one eye on the risk and the other trying to deal with this risk via a smaller overnight exposure.
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