Market Update - 4/16

I called it...

The necktie theory worked. The charts don't lie.

I think I'm going to buy myself a cookie with my profit :)

Selling another 25% of my MOS position right now @ 133 to lock profits.

Covered my last 25% on X for a loss. There's a time and place for everything. X hit the 150 mark. Can't win them all...I was wrong about X and I own it. I paid the consequences with my own money. But have to stick with discipline and keep losses under control.

Plan the trade, trade the plan.

Stupid GRMN, piece of crap stock...maybe I was a little bit overoptimistic about this one...Going to have to re-evaluate.

Enjoy today folks. I'll be back later when the markets close

Disclosure:
Long AAPL, GOOG, GRMN, 50% MOS
No Shorts


After the Bell Update:

What a monster move up in the indices today. If you have been following my blog from the past week or so you know I've been anticipating this move. And sure enough, the Dow went up 256 points to 12,619. Nasdaq up 64 points to 2,350. S&P up 30 points to 1,364. Just a phenomenal push up. Intel basically set things in motion with their up upbeat earnings. And after the bell today IBM has reported and they too have blown right past estimates. Nasdaq afterhours is up once again on the back of that. Just looking to be a phenomenal next few days in the greens.

But, no matter where the markets take us, always stay discipline. Observe the following S&P chart. Keep in mind the dow and nasdaq are pretty much looking the same. But here's my observation and game plan for the remaining trading week.



Notice now the indices is DEFINITIVELY above the necktie support. This necktie now should become solid support should we have any retrace. But with IBM and ebay setting us up with solid earnings, we could see another solid push up.

- RSI shows theres now a lot of room to run
- Stochastics showing this could be a beginning of a big move up.

Usually though, my experience tells me after a monster move up, we would want to see some pause days. The first pause could very well come when the indices hit the line I drew in the chart, or around the 1390-1400 level. This is the high from back in late Jan/early Feb. From a technical perspective, we have to reasonably expect once the markets hit that level we are going to see a pullback or some sort of profit taking kick in. This is normal, and has to occur in order for the markets to garner strength to push higher. If the markets kept on shooting up without pauses I'd be more worried committing capital.

But, I'm going to go out on a limb and say we are not done yet rallying. The chart pattern has been very bullish. My opinion is once the indices reach the late January high's we will probably see some sort of a retracement and consolidation (very much like what we've been seeing the past week or roughly 7-10 sessions). But once that occurs and if there's a continual flow of good news (be it that banks are not doing as bad as everyone believes, strong earnings, or a combination of both, or perhaps more governmental support), I think this market could very well be off to the races all the way to the 200DMA line. (This will effectively put the S&P @ 1,441, the Nasdaq @ 2,538, Dow @ 13,100

Everyday we're going to be seeing a new piece of the puzzle. So time will tell, and I will adjust my game plan accordingly. Ultimately, keep in mind this market is still fragile. It still has its problems. And chances are after some euphoric periods we will get bad news once again that will crater this market. But this is what doing swing trades is all about. We can profit from both directional moves - just as long as we're on the right side of it.

Tomorrow the tell will probably be Merrill Lynch reporting, and that would probably set the tone to the trading day. Google comes out after the bell so most definitely the markets will be watching that one. But for now, things seem to be setting up toward the bulls favor. It's not up to us to question of how the markets can still continue to rally. But let's just play by the rules and follow the charts. It is MUCH BETTER than following that wall street media jibberish.

I welcome all of your comments. Please feel free to tell me something I'm not aware of. And let's make some money.

PS - Jesus MOS and POT and the AG sector have just been on a tear. I wish I got in on POT during its March retracement...literally ran from 135 to almost $200 in a matter of 3 weeks!! Absolutely phenomenal. But you know what, if it can go up that fast, it can come down just as fast as well. The only reason I'm not betting against those companies right now yet is because of the way the indices are setting up. But I honestly believe those are going to be some tasty shorts in the coming weeks. Keep an eye out for those. And if you're thinking about going long now....better keep those tight stops handy.

Invest wisely and good luck to all of us.

-DL

Disclosure:
Long AAPL, GOOG, GRMN, 50% MOS
No Short Positions