Daily Archives: August 12, 2010

20 Stocks That Are Breaking Down (By Ryan Mallory)

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What we have below is a handful of stocks that are showing signs of,
or already in the process of, breaking down as the smart money
appears to be leaving them in a subtle manner. As I thumbed through
the different charts I noticed stocks trading at its peak and finally
showing some vulnerability, and on the other extreme I saw a few
stocks that had been in a channel near or at its lows, before finally
breaking down below those previous lows.

The industries that are popping up on the list the most are
semiconductor and oil-related companies. The rest is a mixed bag of
companies in various sectors. 

Here are 20 Stocks That Are Breaking Down.

Checkout Ryan's Blog at Shareplanner.com

My Lame Superpowers

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Some of us on Earth are endowed with special powers that most other humans do not enjoy. Some are remarkably strong. Others can sing with the voice of an angel. The senior management team at Goldman can make their hair fall out at will and, if faced with particularly grave danger, can shape-shift into terrifying forms so as to make predators flee.

I, too, have been blessed with special powers, but they aren't everything you might expect. I can't fly – – although, since I have no commute, I don't really need to do so. I don't have X-ray vision, although given the aesthetic constitution of most of Palo Alto's population, I'd just as soon be without it.

However, I am armed with these following powers. Ignore them at your peril:

+ Volume-Man: Do you have a pot of split-pea soup that you'd like stored in the fridge? Let me have one glance at its contents, and I can tell you precisely what storage container you need to use to hold that exact amount. I'm not kidding. I can look at any material (liquid or solid) in any peculiar container and instantly know what size storage jar, Pyrex, or Tupperware is called for. Once stored, the aforementioned substance is usually within a millimeter of the top of its new home. The kitchen is virtually the only room in the house where this superpower is useful.

+ Jiggling Eyeballs: I've mentioned this before, but newer Slopers may not be aware of this: I can jiggle my eyeballs at will. That is, I can make both eyeballs vibrate at a high rate of speed. I have, naturally, never observed this phenomenon, nor do I remember why it occurred to me as a child to give it a try and realize I was capable of this feat. In addition, I have found absolutely no application for this skill, except to really creep females out.

+ Captain Circadian: I need no clock. I can wake up in the middle of the night, and as a little game with myself, I'll guess what time it is……..I'm usually within a few minutes. I don't need an alarm clock, either; I'll wake up exactly when I've told myself to be awake. I guess the German part of me is really hung-up on time (and punctuality, for that matter), and this inner clock is personally handy, even though it hasn't saved any lives yet.

The one true superpower I've honed recently is my ability to analyze charts at a very high rate of speed. I can go through about 1,000 charts in 90 minutes or so, and a chunk of this time is simply waiting for each chart to load. This, I suppose, is the one ability I've been able to shape into some kind of livelihood. Otherwise…….if you need some vibrating eyeballs, drop me a line.

Avatar-Supertim

Day’s End

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Well, in spite of a lot of trades, I ended the day up with no change. And I mean it. Sometimes when folks say "no change", it simply means "a loss I can tolerate." But I'm serious. Zero change.

I did lighten up to some degree. I've gone from nearly 280 positions at the peak down to a mere 190 shorts right now, and – – still – – one long (FXE). I went through my charts as quickly as I could to trim out those I felt had a lot of "meat" on them and too much risk to hold onto. I've kind of had my fill this year of watching fat profits disappear in the face of rallies. That gets really, really old the third time you've gone through it.

I actually would have ended the day with a pretty OK profit were if not for meddling around with GLD. I went in and out of that sucker – both long and short – with nothing but losses to show for it. The lion's share of the loss was the fact that I entered today very short, and we gapped higher. I have no position in GLD right now (or GDX, for that matter).

I'm about 114% committed at this point, and about 20% of that is the FXE long. Tomorrow morning should be interesting, particularly with the retail sales report (RTH is the only big short position I have right now). Considering what a dynamite day I had yesterday, I'm fine with a flat day as a follow-up. All the same, seeing the QQQQ down 0.79% on the day and showing no profits on my almost-all-short portfolio is a disappointment.

The Symbol Extremes

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Dutch asked me which symbols had produced the best trading (and worst) results for me this year; it was an interesting question, and I did a query against my broker's database to determine the symbols. It's rather eye-opening! These rankings are by dollar amounts……..

Worst on LONG Side

SPY

TWM

TBT

GLD

OIH

Best on LONG Side

GDX

UNG

SCO

DBC

IWM

Worst on SHORT Side

EEM

RY

IFN

DIA

EWA

Best on SHORT Side

SPY

FXI

XLB

HTCH

EWZ

Looked Like a Wave 3

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That was a very impressive decline on SPX that continued after hours
yesterday, and the wave down bottomed at 1074 ES, making it a peak to
trough move of slightly over 50 points on ES in slightly over 24 hours.
Very impressive indeed.

I don't do EW much myself but I have read a couple of books and am
familiar with most of the rules. I've put a possible wave count on ES
since the high last week:

100812_ES_60min_ES_Count

I'm using the bull count taking this as an ABC move from the top. For
the bear count you just change ABC to 123 and assume an extra two waves
to follow of course. On this count we saw 3 of C yesterday and we have
started 4 of C. As you can see from the chart I'm considering the
possibility that wave 5 down has already started, though we could
technically have a rally under this count that went as high as 1106, but
would go no higher than the low on Tuesday.

In the very short term on the 1min chart ES formed a broadening
ascending wedge from the low last night but as I write has broken down
from it, which suggests to me that we may well see more downside this
morning:

100812_ES_1min_BA_Wedge

The main USD currency pairs are suggesting that too, as they rallied for
a while overnight with ES, but then diverged to make new lows after the
overnight peak on ES. EURUSD is now most of the way towards my target
for a longer term bullish scenario on EUR. A break below it would look
very bearish to me and would suggest that we may see a new low on it
this year:

100812_EURUSD_Daily_BA_Wedge

GBPUSD has also made it most of the way to my target.
Again, a break below would look very bearish and suggest that we may see
new lows:

100812_GBPUSD_Daily_BA_Wedge

Oil has made it most of the way towards the lower trendline of the rising channel:

100812_Oil_Daily_Rising_Channel

I have noted the exact target levels on all of these if these were to be hit today.

Copper hasn't been falling as fast ast the others, and is only halfway
to my target. Like ES, at the time of writing it is somewhat above the
overnight lows:

100812_Copper_Daily_Rising_Channel

The ones I'll be watching most carefully this morning apart from ES are
EURUSD and GBPUSD. If the bounce at my target levels that would only to
be expected, as they are the natural levels to see a reversal of course.
If they break down through them though, then it would suggest strongly
on both that we have been watching a rally on both of these since they
bottomed in early June, and that they are both still in a major bear
move. If so, that would suggest strongly that we haven't seen the low
this year for equities either so it is very significant if those levels
fail to hold.

I'll also be watching those levels because at the low in February the ES low was made at almost exactly the same time as my EURUSD trendline target was met. That didn't happen in July of course, where EURUSD bottomed almost a month before ES did, but it is something to watch regardless.

If that is the case, and this is an ABC correction as I have marked
it up in my EW count, then we may be very close to the low on ES, with
just one lower low yet to come and if so, then the relative strength of
copper overnight also has a bullish look to it.