And that is exactly what’s happening this week. Read on below to learn more about this pattern and how to trade from it…

Earlier this week, the market broke into new highs, but after the initial boost it pretty much fizzled into a big yawn.

The thing that really has market technicians excited right now is the fact that Thursday is the 50% Fibonacci time window of the whole bear market.

In plain English, that means that the whole bear lasted 17 months, and right now we’re sitting at 8.5 months into the move off of the bear lows. That’s significant because we’ve also seen a 50% gain in stocks since the market lows back in March. Take that 50% time move, couple it with 50% Fibonacci price levels being touched on the indexes, and you’ve got confluence here.

That’s why right now is technically significant.

When looking for opportunities to deploy new dollars in the market, all that matters is the short-term uptrend off of the November lows — that’s what we’re watching.

And as you can see from the chart above, it’s not anywhere near where we want to consider being buyers on the long side, because we “buy the dips and sell the rips” and the daily charts are telling us that we’ve just been ripping into higher territory this month.

Opportunities on the Short Side

But on the short side, we see lots of opportunities — all of them in the form of the First Thrust Down/Pullback Off Lows pattern. More on those in a minute…

In addition, when looking at the indexes, odds favor those on the short side than those on the long side — why? Well the indexes are all pushing the upward trend channel resistance with well into extreme overbought territory when viewing the daily charts.

So when you combine that event occurring in each of the major indexes along with the formation of a classic short-sell set-up in many individual stocks and some ETFs, you have a good combination where odds of success are much greater by betting against stocks right now.

Remember — it’s all about trading in tandem with the market. If the indexes are at resistance and you have a list of stocks that are showing a breakdown could be imminent, those are the issues you want to focus on until that trend changes in both the indexes and other individual stocks.

First Thrust Down / Pullback Off Lows Patterns

So, what about those First Thrust patterns I mentioned earlier?

In essence, a First Thrust is a potential transitional pattern as a Change in Trend occurs from up to down, or from down to up.

For this article we will be focused upon the transition from up to down — after all, we’ve already talked about why we’re looking at the short side of the market.

In order to give you a better idea of what these look like from a chart perspective, below are a few examples of past First Thrusts that have occurred, which were followed by deeper consolidations.

Notice the Blue box in the charts above? Those blue boxes are your first thrusts down.

After a first thrust we look for a snapback rally (everything above the Pink Line), these can range in duration from 1 week, up to 6 months, but all of these snapbacks have that same look and feel to them when all is said and done.

After an issue (or index) stages a snapback rally, it’s time for investors to really be watchful. This is when the market shows us whether or not it will find support, or if it will go on to deteriorate even further

Numerous issues as of late have staged First Thrusts downward, and from here forward it is all about seeing if they are going to be short-lived snapback rallies, or if sound new bases are going to being built.

Over the coming weeks and months we will get our answers. If we start seeing these snapback rallies fail, then we’ll know which way to lean and then be ready to trade accordingly.

As you build skill and grow to understand more about technical analysis, you will be able to take action with greater confidence trading based on what you actually see in the charts is critical to removing the guesswork of investing. After all, if you own stocks at a market top, you need to know when to get out; and if you are short stocks at a market bottom, you need to know when to buy and cover your position.

Sincerely,
David Grandey
AllAboutTrends.net

November 20, 2009

Learn How to Spot a “First Thrust Down” Pattern was originally featured in the Penny Sleuth.

We’ve said it before, and we’ll continue to say it — small caps consistently lead the way out of periods of recession. But while penny stocks generally outperform the rest of the market as a class, they rarely move against it.

In effect, small caps are a lot like gain multipliers. When a major broad-based index like the S&P 500 gains 1%, small-cap stocks in our portfolio could see gains of 3%. And when the market slips, our tumbles are equally magnified.

There’s no better example of the correlation between small stocks and the market than October 2008. As stock markets all over the world shed trillions of dollars in value, more volatile small stocks took some of the biggest knocks — regardless of their fundamental soundness as investments.

And when the market began to rebound back in March, the small caps were racking up the biggest gains…

It’s that strong correlation between small stocks and the broad market that makes knowing the market’s movements so significant. And with investors riding an emotional roller coaster in October and November 2009, now’s a particularly important time to check in with what stocks are doing as a group.

When it comes to aggregate market moves, there are two main factors to consider: fundamentals and technicals.

Fundamentals include economic metrics like unemployment and retail sales, whereas technical analysis looks at trends and patterns in price charts to determine where stocks are headed. Put simply, fundamentals look at the actual health of the stocks, while technicals look at the perceived health of the market.

And while we generally focus on a stock’s fundamentals, when it’s time to look at a broad market index like the S&P 500, technicals can be invaluable in helping us determine where prices are headed…

Here’s a chart of the S&P 500 since April…

In the chart, those vertical gray and black bars — known as candlesticks — represent the price movements of the S&P 500 on any given trading day. The gray lines are the average value of the S&P over the trailing 200 and 50 days, respectively, known as moving averages.

There are a lot of factors that make fundamental analysis work — too many to go into in this issue — but the key things that we’re going to talk about today are support, the price level that stocks have trouble falling below, and resistance, the price level that stocks have trouble pushing above.

Looking at the S&P 500 chart above, the stock has been in an uptrending channel (defined by the thick black lines) for some time now. That’s a good sign because it means that the market is obedient to the channel right now — it should continue to trade within that range until some catalyst prompts a reversal.

It also means that we have a somewhat predictable range of movement that we expect the S&P 500 to move within. Depending on its direction, a break through the thick black lines of the channel would send a strong signal to either buy or sell.

But with the market’s movements still predictable right now, we can make a couple of projections for the near term. For starters, if the last two price cycles are any indication of the S&P’s trend, we should see the current upswing last until the last week or so of November, hitting around 1,150 before turning back for another two-week down cycle.

That down cycle is nothing to worry about as long as the index bounces back up off the black lines for the fifth time since August. That’s most likely going to happen in the early days of December.

There’s no question that our small-cap positions are affected by the movements of the market at large. But while many investors look at the market’s movements as random price swings, we’re going to continue to take an analytical stance by looking at the technical indicators that stocks are exhibiting right now.

Things continue to look strong in the market for the rest of the month. We’ll monitor the indexes closely and alert you to any significant changes.

Cheers,
Jonas Elmerraji

November 18, 2009

Why You Need to Watch the Market Closely Right Now was originally featured in the Penny Sleuth.

Every week, we drum up a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

Last week was no exception – investors who played our GeoGlobal Resources (AMEX: GGR) pick had the chance to make 17.32% in the last give trading days…

And while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again last week, giving you the chance to offer up more speculative penny stock plays — and win a special edition DVD of I.O.U.S.A. in the process…

Watch your email inbox to see if you’re one of this week’s winners…

Now, let’s cut to the chase and take a look at four penny stocks worth watching in the coming week:

Youbet.com (NASDAQ: UBET) – This online wagering company offers a service for its customers allowing them to securely bet on horse races at more than 150 racetracks worldwide. But are you willing to bet on this stock? Shares have recently broken out right at resistance amid significant positive volume. With the market opening strong this week, shares should continue to climb.

Waste Services (NASDAQ: WSII) – While the company may focus on trash, this stock is anything but. Increased positive trading volume and bullish technicals helped Waste Services make this week’s cut. Consider picking up shares after a dip.

ESCO Technologies (NYSE: ESE) – On the short side of things, scientific product supplier ESCO is currently showing investors a very bearish set of technical patterns right now. After posting dismal quarterly results, traders jumped on a triple top that had been forming for the last couple of months, pushing the stock through its support line (blue above), and prompting even more traders to sell off shares at Friday’s open. At current levels, this stock still has further to fall.

Western Alliance Bancorporation (NYSE: WAL) – This $300 million regional banking stock has seen its numbers fall ever since the credit crunch heightened. And now, with profit margins still 38.5% underwater, this stock has attracted trader attention. WAL could easily see another significant drop this week.

Share Your Penny Stock Picks

Once again, we’re going interactive this week…

Just post your recommendation in the comments section of this article between now and the market’s close on Friday, November 20 to share your favorite penny stock play with the rest of the world.

Cheers,
Jonas Elmerraji

November 16, 2009

Monday Penny Stock Watchlist: Bet on This Betting Stock was originally featured in the Penny Sleuth.

The stock market has been running a rally for more than eight months now. Eventually all markets go into corrections. And although I’m not saying it’s going to right now, we are seeing a lot of potential kinks in the armor. In fact the bulk of what we are seeing are short side setups and that tells us something. It tells us to pay attention.

Above is an interesting chart. As you can see, our current market climate is looking strikingly similar to that of the minor correction in June-July.

Notice in the first blue box how the RSI and the full stochastics never really made it over the 50 level? That’s what happens during corrections.

By next week we’ll find out if we retest the highs or we fail. If we fail then it’s time to hit stocks hard on the short side. So why am I getting bearish? Because the chart below tells the story with regards to trends. It’s all about the blue line – that line shows the broad market trend from its July lows…

Volatility is on the rise, so from here on out its going to get real interesting. After all we’ve just ran for 8+ months with only a minor correction.

When an intermediate term correction rears its head it’s a huge moneymaker on the short side. Of course your long-only traditional Wall Streeter won’t tell you when an intermediate term correction is on the way because then you’d take your money out of their fund — they can’t have that now can they?

You need to be prepared so you can not only can get out of your long positions, but can profit from the correction via short-sell exposure or long positions in bearish exchange traded funds (ETFs).

For most investors, the ETF route is the simplest, especially for those without the margin accounts required to directly short stocks. If the market does indeed turn tail, two ETFs that you should consider are:

• ProShares Short S&P 500 ETF (NYSE: SH) – This ETF essentially takes an unleveraged short position in the S&P 500 index. When the markets go down, this fairly liquid fund goes up…

• ProShares UltraShort S&P 500 (NYSE: SDS) – This ETF takes a double short position in the S&P 500. That means that when the S&P 500 goes down 1%, SDS gains 2%. This fund is somewhat more risky than SH because it can move against you quickly and because it exhibits quite a bit of long-term tracking error. That means you shouldn’t hold this fund over the long term.

• ProShares Short Russell 2000 (NYSE: RWM) – This ETF takes a short position against the small-cap Russell 2000 index. While the Russell often moves in similar directions to the S&P 500, its focus on small-cap stocks means that it’s often more volatile.

Keep your eye on the Penny Sleuth to stay updated on where the market’s headed, and when to pull the trigger on your short plays…

Sincerely,
David Grandey
AllAboutTrends.net

November 11, 2009

Three Stocks to Prepare for the Market’s Correction was originally featured in the Penny Sleuth.

Every week, we drum up a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

With investors’ interest in the market rekindled after a strong week for stocks, it’s time to look at four stocks that are set to move right now.

First, let’s see how last week’s Watchlist performed. Last week, all five stocks on our Watchlist moved in the direction we predicted on Monday, with one stock – LiveDeal (NASDAQ: LIVE) – brining in as much as 11.4% returns in just five trading sessions.

That’s a compound annual growth rate of more than 273%!

And while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers last week, giving you the chance to offer up more speculative penny stock plays — and win a special edition DVD of I.O.U.S.A. in the process…

Bringing in the top honors last week was Penny Sleuth reader Stanley S., whose Continental Prison (PINK: CPSZ) pick brought in 71.4% returns last week. Also in the winner’s circle was Sandra M., who eeked out a 30% jump in San West (OTC: SNWT) and Louise, whose BioLargo (OTC: BLGO) pick raked in 33%. All three of our winners will be getting a Penny Sleuth Prize Package in the mail for their trouble.

You’ll get another chance to win this week. More on that in a minute…

First, onto this week’s Penny Stock Watchlist:

American Science & Engineering (NASDAQ: ASEI) – This Massachusetts-based security stock delivered awesome second quarter earnings last week, prompting buyers to go on a rally, and pushing shares up more than 7% on Friday. Expect strong technicals and buyer sentiment to keep this stock rising in the coming week.

GeoGlobal Resources (AMEX: GGR) – This $91 million oil and gas exploration company focuses on finding commodity reserves in India. And while they’re far from profitable at the moment, as far as an intraweek play is concerned, the bullish technicals and uptick in volume on this stock right now make a good enough case for picking up shares.

Video Display Corp (NASDAQ: VIDE) – Video Display Corporation is a designer, manufacturer and supplier of CRT and flat panel display devices. While Video Display Corp. is higher on the volatility spectrum than our other Watchlist stocks this week, increased investor visibility should serve shareholders well.

Global-Tech Advanced Innovations (NASDAQ: GAI) – This week’s only short play, Global-Tech Advanced Innovations is a Chinese consumer products maker. This low-volume stock is currently trading just under significant resistance at its 200-day moving average. Watch for this stock to hit its head on resistance – otherwise an upward breakout could hurt those betting against the stock. Watch this one closely if you decide to play it.

How to Play SFNL

Penny Sleuth reader Mark D. wants your help this week:

“I would like to see your thoughts on a small company in the electronic payment processing business, Secured Financial Network (OTC: SFNL), the float is roughly 28M and tightly held so it trades thin, chart indicates long term accumulation and the company does not engage in putting out fluffbomb PRs and is growing Q over Q even during the current economic crisis. I am a long term holder in that stock and would like to hear your opinion on it…”

Have an opinion about SFNL? Just post your analysis in the comments section of this article. You can even post your favorite penny stock pick at the same time…

Share Your Penny Stock Picks

Once again, we’re going interactive this week… And giving readers the chance to win a free copy of I.O.U.S.A. in the process.

Just post your recommendation below in the comments section of this article between now and the market’s close on Friday, November 13. The two readers with the best performing picks each score a Special Edition DVD of the award-winning documentary.

Cheers,
Jonas Elmerraji

November 9, 2009

Monday Penny Stock Watchlist: Four Stocks Worth Watching This Week was originally featured in the Penny Sleuth.

Last week we heard everyone saying you have got to buy stocks in the falling market.

That’s a classic herd mentality – what’s the point in buying stocks after we’ve already run? But the fact is, despite Friday’s sell-off, the uptrend remains intact and we simply followed the plan we laid out for you last weekend — ride our shorts down to support in the charts of the indexes, cover them there and look to buy stocks that are at support.

This Week’s Game Plan

Last week, the market was at resistance, so the game plan was to stay in our existing short-sell positions until the market hit support where we would cover and go long on stocks that were also at support. And this week, the game plan is exactly the opposite.

Why’s that? Because the market is right at support — yes, it’s only been five trading sessions and that’s all it took to take the market from resistance to support.

So as long as support holds, the game plan for this week is to stay in our existing long positions as the market attempts to stage a snap back rally.  When that occurs, we’ll take our profits on the long side and look to go short again as the rally set-ups stocks on the short side.

We don’t make up the game plans though — all we are doing is simply reacting to what the market is telling us and trading what we see. And here’s what we see:

As you can see from this S&P 500 index chart, our big picture uptrend is still intact and oversold at current levels. That doesn’t mean that they can’t go lower here, it just means that we’re at levels that ought to act as floors below.

Make note of is the pink bearish channel back in June and July…I’m bringing it up because it’s what we want to be on the lookout for with any rally from this point forward. It’s called a snapback rally and it’s a reaction to oversold market conditions that causes a fast bounce upward. But when the fundamentals are still bad on a snapback rally, it’s actually a very bearish signal that means stocks are headed decidedly lower.

To give you an example of what a snapback rally ought to look like, take a look at OmniVision Technologies’ (NASDAQ: OVTI) chart below…

The name of the game for next week is watch for a snapback rally or dead cat bounce. When all said and done it ought to look like some sort of bearish channel then we take profits on all long positions and start shorting.

When the market makes a noticeable bounce, watch very closely before going long. If the market turns tail, it’ll happen quick and you won’t want to be on the wrong side of the action.

Sincerely,
David Grandey
AllAboutTrends.net

November 3, 2009

How to Trade the Market’s Next Bounce was originally featured in the Penny Sleuth.

And it’s a list worth watching… if you kept up with our Penny Stock Watchlist last Monday, you could have made 12%, 24%, even 89% on a single play. This week, we’ve got five more stocks that are worth watching between now and Friday.

There’s no question that last week’s Watchlist was impacted by a stock market that pushed investors down four out of five trading days. But still, we managed to leverage that negative sentiment with our short recommendation in Synovus Financial (NYSE: SNV) for a potential 24% gain.

And while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers last week, giving you the chance to offer up more speculative penny stock plays – and win a special edition DVD of I.O.U.S.A. in the process…

Well, the results have been tabulated, and last week’s best-performing penny pickers were Kevin H. who suggested shares of Signature Devices (PINK: SDVI) for an 89.19% gain and Jay V. who suggested shares of Artificial Life (OTC: ALIF) for a gain of 39.13%. Both of our winners will be getting a Penny Sleuth Prize Package in the mail for their trouble.

You’ll get another chance to win this week. More on that in a minute…

First, onto this week’s Penny Stock Watchlist:

Nabi Biopharmaceuticals (NASDAQ: NABI) – This $163 million biopharma stock has been facing intense pressure from shareholders of late. Right now the stock is sitting right below its key resistance levels, which could be a very big deal. If this stock pushes above its 50-day moving average, expect the ensuing breakout to send shares up double-digits. Otherwise, this stock should be left to the short sellers this week.

LiveDeal (NASDAQ: LIVE) – This internet Yellow Pages publisher has fallen on tough times as advertising rates have fallen through the floor, posting yet another consecutive loss in its latest quarter. That said, things could be looking up for shareholders this week as the stock bounces off of support and back up into gain-range.

Sunwin International Neutraceuticals (OTC: SUWN) – Sunwin is a Chinese company produces and sells a natural sweeteners and medicinal herbs. Right now shares of this small and volatile company look like they’re consolidating, which with the help of a bullish overall market could be one sweet stock for careful investors.

Newpark Resources (NYSE: NR) – As with LiveDeal, Newpark Resources just found support at its 200-day moving average, and could be signaling for a big bounce. Newpark, an oilfield service provider, has taken some hard hits this year as oil prices fell from record highs down to $30 per barrel. But as oil prices make a resurgence, this stock should benefit from additional drilling activity.

Imation Corp (NYSE: IMN) – This digital media company is exhibiting a bearish pattern right now despite solid earnings number in late October. An uptick in volume on this stock doesn’t bode well for investors who are long.

Share Your Penny Stock Picks

Once again, we’re going interactive this week… And giving readers the chance to win a free copy of I.O.U.S.A. in the process.

Just post your recommendation below in the comments section of this article between now and the market’s close on Friday, November 6. The two readers with the best performing picks each score a Special Edition DVD of the award-winning documentary.

Cheers,
Jonas Elmerraji

November 2, 2009

Monday Penny Stock Watchlist: And the Winner Is… was originally featured in the Penny Sleuth.

If Friday’s action is any indication of what next week’s early action is all about then it’s “Pullback Off Highs” time in the indexes. Last week we saw some big kingpin names report their earnings results (AAPL, GOOG, MSFT) and they couldn’t even bust through the last 3-4 days’ high. Why? It’s trend channel resistance.

Resistance, the level that a stock or index’s price has trouble breaking through, is one of the strongest technical indicators out there. Stocks’ difficulty breaking through their resistance levels tell you just how strong trend channel resistance is currently. No matter, we don’t buy resistance anyway. Instead, we sell at it.

As you can see trend channel resistance and support are clearly defined by the green lines in this 6-month chart. As I’ve been saying the last few weeks, it’s all about buying stocks at trend channel support and selling them trend channel resistance.

You can also see that the S&P 500 has tried for 4 days in a row to bust through to higher highs but as of yet hasn’t been able to do so. A pullback to trend channel support may be just what’s needed to get a running start. Should that occur then we want to be buyers of stocks that fit a similar pattern that trade in tandem with the market.

Should trend channel support fail, below is another chart that shows an even larger trend channel support level.

So what could cause a running start? For starters, I’m looking for that pullback to trend channel support. That’s essential. Coupled with a news driven event tomorrow in the form of 3rd quarter GDP numbers, a catalyst is there to make stocks bounce back up.

Those GDP numbers are slated for Thursday before the market opens, and the estimates out there are for 2.2% to 3% growth. Remember it’s headline news that’s paid attention to, not the internals of the results that only economists will focus on. Either way this is a market moving news event.

When the market bounces tomorrow, we want to focus on buying only stocks that are sitting right at support.

How to Buy Stocks at Support

Be on the lookout for stocks that have pulled back from their recent highs to their support levels at either a trendline or 50-day moving average.  The chart of Goldman Sachs (NYSE:GS) is a good example of what we are looking for:

As you can see, GS is pulling back to support at its trendline channel and close to support of the 50-day moving average.  And if the market gets closer to support at the bottom of its trendline channel, then you have all the right conditions for a good long side trade.

And Goldman’s not unique. There are tons of similar plays out there right now – it’s just a matter of opening your favorite charting program and mapping out trendlines.

Sincerely,
David Grandey
AllAboutTrends.net

October 28, 2009

Learn to Profit By Buying Stocks at Support was originally featured in the Penny Sleuth.

Here’s our list of penny stocks to watch for the coming week.

Last week, we told you to watch five stocks – three long and two short – that exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week. Sure enough, four out of five of our watchlist stocks moved in line with our expectations, generating an overall average gain of 6% in just a week – that’s 312% annually!

And while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers last week, giving you the chance to offer up more speculative penny stock plays – and win a special edition DVD of I.O.U.S.A. in the process…

Well, the results have been tabulated, and last week’s best-performing penny pickers were Randy Moory, who recommended shares of China Finance (OTC: CHFI) for a 235% gain and L. West, whose XTEND Medical Corp. (PINK: XMDC) recommendation yielded a 150% gain. Both of our winners will be getting a Penny Sleuth Prize Package in the mail for their trouble.

You’ll get another chance to win this week. More on that in a minute…

First, onto this week’s Penny Stock Watchlist:

Synovus Financial (NYSE: SNV) – Synovus has been having a rough year in 2009. Since January, shares of this regional bank have slipped nearly 67%. And investors shouldn’t expect that trend to change anytime soon. The beginnings of a bearish descending triangle are starting to appear, and newfound resistance at the stock’s 50-day moving average is a good sign for Synovus’ short sellers. This stock could ultimately fall to $2.50 before finding any kind of support.

United America Indemnity (NASDAQ: INDM) – While insurers took their knocks last year along side the rest of the financial sector, things are looking up for United America Indemnity. A swing to thick margins in the company’s third quarter financials prompted investors to turn bullish on this stock, and the technicals are now starting to support a case for going long. Watch the increased volume on this play.

Middleburg Financial (NASDAQ: MBRG) – Middleburg is another financial stock that has made this week’s list. This regional banking company may be small, but with operations based in one of the most affluent parts of Virginia and still strong margins, this bank should continue to do well as investors pile into shares. It’s worth noting that MBRG is thinly traded, so it’s more volatile than most of our watchlist plays.

Fusion Telecommunications (OTC: FSNN) – This small over-the-counter VOIP operator has been rallying hard lately, pushing up nearly 42% in the last three months alone. While FSNN’s financial’s make the stock a somewhat dubious long-term play, the short term financials look strong enough to sustain a rally through Friday.

Hallwood Group (AMEX: HWG) – This textile and energy holding company may be small and under the radar, but traders have taken note recently pushing share up 145% in the last quarter. While the volume is thin on this stock as well, the technicals look enticing enough to make this week’s watchlist.

Share Your Penny Stock Picks

Once again, we’re going interactive this week… And giving readers the chance to win a free copy of I.O.U.S.A. in the process.

Just post your recommendation below in the comments section of this article between now and the market’s close on Friday, October 30. The two readers with the best performing picks each score a Special Edition DVD of the award-winning documentary.

Cheers,
Jonas Elmerraji

October 26, 2009

Monday Penny Stock Watchlist: Don’t Miss These Five Small-Caps was originally featured in the Penny Sleuth.

From a daily perspective, the markets are stretched right now. We are at trend channel resistance in virtually all the indexes. That means that the risk of a pullback to trend channel support is a very real possibility.

The name of the game on the long side from here is to “Let Them Come To You” in the form of a pullback off trend channel resistance highs back down to trend channel support.

It’s time to sit and wait, then we can start to pick off the best-positioned technical setups.

What Do I Need to See to Make Me Take a Trade?

Google gapped up on Friday, after an earnings release that impressed analysts and investors alike. That move in Wall Street’s favorite tech stock spurred the entire industry upward with the hope that tech profits would be solid across the board.

It’s interesting to note, however, that the “Google of China” – Bidu.com (NASDAQ: BIDU) — didnt participate on Friday with the rest of tech. That bothers me, and it should bother you too…

VMWare (NYSE: VMW) is a perfect example of trendline channel resistance. With shares currently trading right at that upper green bound, the technicals are telling us that this stock is unlikely to make it past the $47 mark right now. More importantly, this chart lets us know that a pullback to the lower green line is good time to go long on this virtualization solution company.

Apple announced earnings yesterday, but Apple announced its third quarter earnings yesterday – a completely irrelevant event for technical traders. With the company’s share prices sitting at trend channel resistance , we could care less about AAPL’s earnings as the overall technicals trump the news-driven event.

As you can see for the most part all the leading stocks out there are nowhere near low risk  entry points. This ought to tell you something about the overall market.

What to Watch for from Here

With what’s going on right now, the game plan is wait for trend channel support to buy, and sell trend channel resistance. And with  the bulk of what we see at trend channel resistance right now, we’re stuck in a waiting game of sorts until the market corrects itself.

When these issues above come down to trend channel support, we’ll start talking about going long.

Sincerely,
David Grandey
AllAboutTrends.net

October 20, 2009

Don’t Miss These Tech Stock Technicals was originally featured in the Penny Sleuth.