One more delay..

Good evening Rebels..

I have to delay my market summary one more day. My fire station was called this morning to assist with the forest fire in South Jersey (30 miles from RebelTraders HQ). I am trying to catch up now. I am still working on keeping on schedule with the release of my first installment of the RebelTrader market summary and watch list document. Keep checking back. Sorry for the delay. But when duty calls I have to respond.

To see video of the forest fire here click on this link. (Click on the video window to play the video)


http://abclocal.go.com/wpvi/story?section=local&id=5537764

The Day that Was

Sorry for not posting the market summary tonight. Fire Department call tonight so I was called out for duty. I will post the market summary on Saturday.

After the Bell

Novastar Financial (NFI) has just announced it is suspending wholesale loan activity. Stock is selling off in after hours.

Apple (AAPL) is being sued over the iPhone for patent violations by SP Technologies.

New lows

The S&P and the Nasdaq have gone lower than the first big drop. With the S&P now below major support we are setting up for even more volatility. I will not be surprised if we see the S&P drop to 1370 before this is all over. If we go below 1370 on the S&P then we have to face what may be a bear market underway.

My full market run down tonight.

The other shoe has dropped

As I have been saying for many days I did not want any of my subscribers to take on any new trades. I said that trying to trade in this market was dangerous because of the extreme volatility. I hope you have been following my advice and I kept you from losing money.

Never listen to the professional market talking heads (otherwise known as analysts) listen to the charts! The charts tell the truth, analysts may have their own agenda. And their agenda may not be yours. You should always manage your own investments and never put your faith in what an investment adviser tells you. Study the charts, use them to tell you what is good and what is bad. I will teach you how to use the charts to your advantage and keep you out of trouble.

The charts have been saying we are in trouble. And that is why I have not initiated any trades. Yet advisers on TV and in the press keep saying how good this company or that company is. Yet the stock keeps dropping. This is why I use technical analysis to trade. The charts tell me what is a good stock, what is a bad stock, and when to get in and when to get out.

The news today of lawsuits now starting in the financial circles is not good and will likely propagate even further than it is already known. The charts will tell us when it is safe to get in.

Volatility hits a new high

The VIX has achieved another new high.

Gold surges on the financial meltdown

The gold prices have surged today on the news from Bear Stearns (BSC) and the continued drop in the US financial sectors.

The only sectors that are up at this time are Silver,Gold,Defense,Staples

All other sectors are down big.

Market Update

The financial sector is melting away. The S&P has fallen back below support. This is turning out to be a very bad day. If there is no short covering in the end of the day we will be in danger territory.

Recall the XLF (financial sector) chart I posted last night. I said that the financials were going to keep going lower. Pay close attention to the area I highlighted as the target.

Market Update

Unemployment data came in and the jobs was lower than expected and the unemployment rate ticked up a bit. There seems to be mixed reactions in the futures so far.

Brush Engineered Materials (BW) released earnings this morning and although they beat on the current quarter EPS they have lowered guidance for Q3 by a rather large amount. This is taking BW down 6.5% in pre market. The materials sector is one I am watching closely because it weighs heavily on the market. Have to hope that other stocks in the sector don't trade down in sympathy.

Pre Market - August 3rd 2007

It is very quiet this morning as everyone is waiting for the jobs data at 8:30am. Futures are pointing slightly lower but are not moving much ahead of the unemployment data.

Asian stocks were mixed with the Hang Seng up 0.42% and the Nikkei 225 down 0.03%. Europe is mostly in the red at this time with the financial sectors taking a hit. The 3rd largest mutual fund in Germany has halted redemptions, this mutual fund is related to real estate assets. And Bloomberg reports this morning that in the UK home repossessions has risen to an 8 year high on their own sub prime issues.

The data to be released at 8:30 will be a HUGE market mover. If we have a healthy number stocks will be going up, but I will still not jump in yet. How we close the day will be key to reading the tea leaves. It is Friday and with the looming "other shoe to drop" scenario hanging over the markets any big advance today could be quickly sold off as more people want to sell into strength. If big money sees any advance as a gift and takes advantage of it to exit the market then we are going to see continued weakness ahead. If we end the day at the highs then that will tell me that there is some confidence in the weak ahead. Remember that next week we have the Fed meeting so there will be more big events next week as well.

Remember to check in to the site over the weekend for the 1st issue of the new watch list document. It will be worth the wait!

The Day that Was - August 2nd 2007

Good Evening Rebels...

Before I get started I have breaking news that just came over the wire. American Home Mortgage (AHM) has announced that effective tomorrow, Friday August 3rd 2007, they will lay off most of their employees. They are reducing their workforce from 7,000 down to 750! The CEO says they are doing this to preserve the value of what assets they have left. They also announced that they are no longer taking any mortgage applications. It is not looking good for American Home Mortgage, and I feel this is just the beginning of the financial sector problems. In his statement the CEO said the following:

"the market conditions in both the secondary mortgage market as well as the
national real estate market have deteriorated to the point that we have no
realistic alternative"

The market made some advances today but the technical indications are still signalling that another shoe may drop. The advance on the S&P 500 today was on slightly lower volume. On any advance you must have increasing volume in order for it to be registered as strong. With volume being higher on the down days than the up days is showing continued weakness. We may still see another large drop in the indices to levels that may be lower than the drop we had last week.

The wild price swings in the S&P over the past two days is signalling increasing confusion in the market. There is no clear direction and this becomes a dangerous condition to be in. The market can be easily spooked here and if a skeleton pops out of the closet and it is scary enough then we drop hard.

Another sign that there is no confidence in the market is how many advances in individual stocks keep getting sold off. No body is comfortable leaving money in the market yet.

The news tonight about American Home Mortgage will probably be felt in the financial sector tomorrow. And the chart for the XLF (Financials SPDR) is showing a continued weak sector. I project that the XLF will eventually drop to the 200 period moving average.

I received an email from one of my subscribers asking why I am not swing trading more during this period where everything looks to be "cheap". The answer comes down to one word "RISK". It is all about risk management and protecting ones capital. Trying to trade inside of the volatile swings can take your money away very quickly. We are in a state here where the market has no direction. Within a day we go from negative to positive, and back and forth over and over. You watch a stock start to go up and by the end of the day is has lost all of its gains and then some. Don't try to trade in this volatility. If you want to keep your money then you have to exercise restraint and wait out the storm. Trying to swing trade in this current environment is like driving a car on ice, down hill, with bald tires, and no breaks! Leave the keys on the kitchen table and when the storms clear and we can see clearly then we can establish our trades in the direction the market is taking.

The new RebelTrader watch list and commentary printouts will be completed this weekend. I know you will like it. You will be able to print out the watch list and keep it with you. You will know what I am looking for on each trade to become valid and you will know when you should get out if the market turns sour. There will be some other things in there too that I will let you see when I release the first issue this weekend. I strive to make you all great traders!

Tomorrow we have unemployment data and that will be very closely watched. If there is a negative tilt to the data then we will have a sell off tomorrow. Tomorrow also being Friday will add to the anxiety of the market. Whenever the market volatility is high like we have now there is more likely to be a "take some money home for the weekend".

S&P 500

DOW

XLF (Financial SPDR)

See Saw again

Today's market action was a see saw. This type of action continues to show us that the anxiety in the markets remains high. It also reveals extreme uncertainty. This type of movement can lead to a move lower. We may still have some upward drive in the coming sessions but I am still seeing the potential of another drop to come before we start the real recovery. And the drop may be to even lower levels then we have seen over the past week. Today's "see saw" action was a repeat of yesterday. There is absolutely no direction in the market now. And this is why I see the potential for another drop.

The full market analysis tonight..

Another Rumor on Wall Street

There is talk on Wall street right now that another broker is going to be releasing bad news with regard to losses resulting from sub prime problems. The news ticker does not say what broker or any other information. Just passing along why the market is now "more nervous" again here.

Market Update

There is nothing new to report here at lunch time. The markets are just floating around with no clear direction. At one point earlier the DOW was up almost 70 points but has since come back down most of that already.

Can not make any swing trades in this environment without getting shaken out of the trade. We will have good trades coming.. As soon as the weather get better we will be out there making some money. Right now too many storms on Wall Street.

Market Update

The strong rally in the last 30 minutes of the market yesterday is already burned itself out. So far this morning profit takers have been slowly cashing in on the advance from yesterday.

Will there be another rally today? Right now it looks more like a day of complete uncertainty in the markets. No one knows if they should go long, go short, or just sit it out. But any news that should come along that is good or bad on the economy today will spin the markets in high gear. Right now it is coasting along directionless.

Early profit taking

Market right out of the gate sees quick sells by those wanting to lock in some profits.

Pre Market- August 2nd 2007

Good Morning to all..

At this time the US futures are up but they are cautiously up based on the fluctuations. The advances in the market yesterday at the last 30 minutes will cause some early profit taking on the part of those who are still exploiting any opportunity to get out of the markets. There is still a lot of questions which remain unanswered as to just how far the lending problems will reach. Often when a problem is uncovered there are still more parts of the problem yet to be uncovered. Will the housing problems end up eating away at the overall economy even more? Will the banks and the mortgage companies increase their limits on who they issue loans to? Will scenarios like these play out and further slow the growth of the economy? These are the types of questions that are driving the fear in the markets and creating the high volatility. Everything has a way of migrating into other sectors over time. What may be a healthy sector now in 6 months will be a laggard after the final domino falls and then impacts that previously thought 'untouchable' sector. A lot to ponder and a lot of speculation on the part of the economists.

Where does that leave you and me who just want to make money in the markets? It leaves us where we always have been and that is we apply our understanding of technical analysis of the charts and we use those charts to our advantage for finding the right stocks at the right time.

Why I am not actively trading during this period is because the only way to trade in this is to day trade. Swing trading in this volatility is near impossible. And day trading is a whole world of its own which requires a vast amount of capital to work with, a very in depth understanding of technical analysis, and a robot like emotion response in order to keep cool, and you must be able to be in front of the trading screen all day. When I post my first installment of the series on swing trading and "how to be a swinger" I address the difference between the major types of trading.

I am watching, scanning, and researching stocks for our next swing trades. I'm looking for the stocks that stand the best chance for recovery/gains. Ones that will be less likely to be moved on fear with regard to housing, etc. Remain patient and soon our swing trades will come to us. As an experienced trader I have learned over time that you should never "force" a trade. In other words don't trade just because you feel that you should be in there with the bulls and bears fighting. Money comes to those traders who know when to stand aside and when to jump in, now we stand aside. The market can sometimes be like a hockey game and once in a while there are some bloody brawls between the players and it is tempting for the other players to all jump in to the fight. As smart traders we stand aside and let those who are fighting work it out and then when the game resumes we will open our wallets and start buying the popcorn and beer again. Until then it is safer to watch and analyze. I am watching and analyzing and when we take on new swing trades we will be positioned to capitalize on the bloodshed.

The Day that Was - August 1st 2007

Before I get started I want to ask everyone to keep in your thoughts the people involved in the terrible disaster in Minneapolis. And I know for my firefighter Brothers in that area there are some many long days and nights ahead of terrible and heart wrenching work to do. My heart and thoughts are with all involved.

Today was looking like we were going to end with another down day. Towards the end of the day the market sold off all the way until the S&P hit the support point. And as if it was right out of a text book the market bounced right at the support. What has taken place today is that once the S&P hit the support level some buyers stepped in as that is the most likely point where there would be the bounce. Once enough buying started those that were short in the market started covering at the same time. Those holding shorts also know that the support line would be the likely bounce point. So they watched for a few minutes when the buyers started coming in. When the buying was looking strong off of the bounce the shorts started covering in greater numbers. And the two together created the big run up at the end of the day.

So the end of the day rally was two things. The first was bargain buyers taking advantage of a likely bounce point, and the second is shorts covering. In extreme market volatility like we have been experiencing there are vast amounts of stocks being sold, shorted, covered, bought, shorted again, and so on.. that adds to the wild swings we see.

At the end of the day the S&P managed to just squeeze above resistance and close above the line, albeit just barely. So does this end of day rally provide some confidence to bring other buyers to the markets? Right now the market is being moved by the pros. The retail money (you and me) is not enough to have a significant affect on the broad markets during this volatile stage. What we are witnessing mostly here over the past few days is large amounts of money being moved into and out of various stocks and sectors by hedge funds and institutional money.

When the market is in this type of extreme volatility with big ups and downs the markets will be "tested" at each resistance and support levels. It is the reaction of what happens when these key levels are approached that determines if we move up or down. It is like what happens when you put your hand under the water to see if it is too hot or too cold before you get in the shower. If the market gets near a resistance point and it is too hot it pulls back. So now we have another level of resistance above to overcome. Remember my analogy the other night when I described support and resistance is like the floor and ceiling of a building. And that the market fell from the 4th floor down to the 1st floor. Today we climbed back up to the 2nd floor. Still have a ways to go.

The financial sector is still an anchor on the markets holding it down. Housing is just as bad and there is no bottom in sight yet.

Before I post some of the charts tonight I was to say that the new watch list that I am working on and which you will be able to download I am looking forward to everyone seeing. I feel everyone will like it when I make the first issue available for download. It will be a PDF file that you will be able to download and print. In it will be charts, buy points, a description of what it is that I like about the setup, the sector the stock is in, the short interest, and the next earnings release date. There will also be a weekly wrap up that can be printed and a full Microsoft Excel spreadsheet of all my trades showing date, price paid, price sold, gains, loss, etc. I hope all will like it!

Now some charts from today..

The S&P

The Nasdaq

The DOW

Last minute shoppers and short covering...

Watching the action on the tape towards the end of the day it was starting to look like the S&P was going to be testing major support (1438). And it did, the S&P came down to support and because there are so many people who use the charts just like I do here there was bound to be some kind of an attempt to bounce. And there was, some buyers started snatching up some of the bigger name stocks. Also, those who have been holding onto shorts saw the bounce from the support as well and they added to the last minute surge by covering their positions and taking their profits.

Does this mean everything is all over and we go back to a 'normal' market now. Not hardly. We have a ways to go before we have a healthy market again. The full market analysis tonight.

Here we go again..

Selling is intensifying going into the end of the session. Will buyers put a stop to the bleeding before the close? Looking tough for them..

Advances are being sold off

Just like yesterday at this time whenever the markets made an advance there were those waiting to cash it in. The broad indices have been all over the place this morning. It is directionless here. Will we see a repeat of yesterdays big sell off? Right now the charts are in the middle. We could have some late day buying or selling.

If there is late day buying I don't see it being able to break through resistance yet. The volume looks weak still.

Home builders can't see the bottom

Home builders are taking a big dump this morning on a rumor that has surfaced on Wall Street that either Beazer Homes (BZH) or Toll Brothers (TOL) may be on the verge of bankruptcy.

Change made to my long term portfolio

I have added to my long term portfolio UltraShort Russell2000 (TWM).

The Ultrashort Russell2000 (TWM) is an ETF. It mirrors the Russell 2000 and pays a gain when the Russell 2000 goes down. I am adding this to my long term portfolio as a hedge against the longer term down trend I anticipate in the small and mid cap stocks.

Market Update

As I said this morning I expected the volatility index to set a new 52wk high. That has already happened and is now at the highest point in in 4 years.

Pre Market - August 1st 2007

Good morning Rebels...

Not a good day setting up here, at least at this moment. We have a lot of data coming to the market today: ISM index, pending home sales, Oil inventory. This will have an amplified effect on the markets today with so much volatility everywhere.

The foreign markets got smoked overnight. The Asian markets suffered a broad sell off and all of the major Asian indices were down by significant amounts. In the European markets all are down at this time (with the exception of the Swiss market).

I expect to see the $VIX (volatility index) to set another 52wk high today. This is a day to just stay in cash. There is no need to feel that you have to go "bottom fishing" here. There will be a time to buy and this is NOT that time yet.

The Day that Was - July 31st 2007

Before I get started with tonight's market summary I want to once again thank all the people who have been sending me emails and complimenting my charts and analysis. As I have said some days ago, if I can help prevent someone from losing money in the markets then I had a good day, if I help someone make some money then I had an even better day! Again, thank you for the many emails and the kind words. While I may not always get time to respond to all your emails right away please note that I do read them and they are greatly appreciated. I will try to respond to each of you personally.

In the pre market we had some relatively good economic news. Nothing to write home about but it was more of a 'relief type of news' in that there was no bad news and that gave a boost to the futures in the pre market. Then General Motors (GM) beat the street and that gave a substantial boost to the market on the open. Very early in the trading day the markets reached up and tickled the resistance line. The resistance line did not say "uncle" , the resistance held and the markets gave up and started falling back down. Then there was some news that a tropical storm had formed in the Atlantic. While it does not appear to be of any threat to the US Gulf coast (where the oil rigs are) it was a reminder that we are in hurricane season and perhaps we are now seeing the hurricanes begin to get active. That added to the anxiety over the oil inventory data to be released tomorrow added new things for the market to worry about today.

Then American Home Mortgage (AHM) walked onto Wall Street and yelled 'fire'. American Home Mortgage released a statement that they could not make the payments for their loan obligations, and they were looking into ways to save the company. It could come down to liquidating assets. In other words AHM is on the brink of bankruptcy. Everyone knew that at some point someone was going to go bankrupt from the sub prime / prime lending disaster. But the news of it actually happening now sent the bulls running for the doors faster than you can say "bankruptcy".

Ok.. So guess what. Tonight we get news from the Wall Street Journal that Bear Stearns has another hedge fund in serious trouble. The fund which has $900 million in mortgage investments is in big 'doo doo' trouble. It is reported tonight that one investor in the fund had requested a redemption (withdraw from his account) and the request was postponed. Apparently because it has lost so much value Bear Stearns was hoping it would rebound and then they would have enough money to make payments. Well it looks like this is going to be a big issue for Bear Stearns. What is more important here is that Bear Stearns is not honoring redemption requests. Instead they said the following: ...

"we believe by suspending redemptions, we can ensure the best long term results
for our investors. We don't believe it's prudent or in the interest of our
investors to sell assets in this current market environment."

If I were a client of Bear Stearns and they refused to return my money that would be a big problem. And that is what they are doing. In after hours Bear Stearns was trading down even more.

I provided some charts of stocks that were good swing trade ideas. Intel (INTC) and Varian Semiconductor (VSEA). Both did exactly as I thought they would. They rallied and then the big market sell off hit and they pulled back. Before the bad news of the day hit I entered a 1/2 swing trade position on Intel (INTC). With the market being is turmoil I was only going to test the water with limited funds and would not establish a full swing trade unless it reached the next point (confirmation stage). My entry into Intel was a hedge that if resistance was broken and the market was able to rally through it then I would have established a good entry point right off of the trend line. Even though the market could not make it above resistance (and subsequently fell hard later) Intel stayed above the trend line so it is still healthy.

Now for tonight's charts: (click on the chart to see a larger image)

The DOW

The S&P 500

The Nasdaq

Crude Oil

Housing Index

Intel (INTC)

See you in the morning Rebels.. Tomorrow may be a bumpy ride.

Another "one of those days"

I was anticipating a pullback once we reached resistance levels which we hit this morning. But the sell off and the now lower close than last Friday confirms my fears that we are far from out of the woods. The fact that the S&P 500 closed lower than last weeks big decline is sending confirmation signals that the markets are still too weak to overcome the declines. And the declines may still have more to go.

And Apple today sold off rather substantially. And it closed below its 20 day moving average which is a bearish signal for the stock, at least for the short term. A couple weeks ago I was predicting that Apple was topping out at the $140 range. It did not happen overnight but now less than two weeks later that prediction from the charts became reality. The Apple run is over. One day Apple will resume an uptrend but the recent run has been exhausted. In hard market sell offs the ones to fall the hardest are the ones that are too over bought, which Apple was. One web site I saw kept saying it was healthy and was going to keep going up. Unfortunately that web site author was too caught up in the hype I suspect and missed the clues.

A full market analysis later tonight.

Have a good evening Rebels.. I will post the market charts tonight.

Roller Coaster

Just as I said in my market report last night trying to swing trade in these markets conditions will be like riding a roller coaster without wearing a seat belt. Imagine yourself sitting in a roller coaster and not having a safety harness to keep you in. That is why I am not being aggressive with swing trades. I only took one (1/2 position) earlier today to grab a good entry price on Intel (INTC). But you may have been watching your screens showing big gains this morning and wondering why I have not been getting in there and making trades. What you are seeing now is why.

From experience and from the charts this was bound to happen. We are not out of the woods and trading in this turbulence is very risky. Good trades will be coming. Once the market decides which way she is going.

Just hang on to your cash. No need to throw it into a blender which is all the markets are right now. Your money could end up getting shredded. Why am I not going aggressively on the short side of trades? Same reason as not being aggressive on the long side, big ups and big downs. This is just turmoil and difficult to swing trade from either side.

American Home Mortgage (AHM) - UPDATE

AHM resumes trading. Stock price is down 87%!

American Home Mortgage is the nations 10th largest retail mortgage lender according to the company statement. This was expected to happen to someone at some point. But just the news that one of these lenders may be on the verge of bankruptcy now has waken up the bears again.

American Home Mortgage (AHM)

The news from AHM moments ago is not sitting with the markets well. Substantial pullback in only a matter of minutes. The news that a mortgage company may not be able to meet their lending obligations and maybe having to liquidate their assets is reminding everyone again of what got this whole market correct started in the first place. Now they are nervous again. We'll see if it is only a quick panic attack or worse.

Market hit the ceiling

The markets are running into resistance and each time pull back. Not enough strength yet to move any higher. This may be picked up by the bears as they catch the scent of a 'stalled' rally and may come in at the end of the day and start taking more profits off the tables. There are some good gains in some stocks today but they can't seem to go any further. Little bit at a time is better than nothing. Each day that we can close above the previous day is an upside closure. And a good technical indication. But we still have resistance overhead causing us troubles. We will pullback again, maybe not today but soon.

If this is only going to be a market pullback (and not a bear market) then there has to be some pullbacks in order to consolidate and then make another run at the door. What we watch for is the failure of a break through resistance and then pullbacks that are lower than the previous. That signals more than a market correction is at hand.

American Home Mortgage (AHM) just announced that they can not locate funds to support their lending obligations. Looks like AHM will be the first mortgage company to possibly go bankrupt over the sub prime debacle. This news may now weigh on the financials again this afternoon and bring them back in.

Market Update

Crude oil has jumped up to $77.90 on news of a tropical storm has formed in the Atlantic.

Bears getting hungry

The bears have come in and in a very short period of time have swept up most of the advances this morning. Will the bulls put up a fight and take them back or will the bulls lay down and get trampled?

This is exactly what I said will happen in this volatile market. There is no instant recovery. A recovery if it is going to happen will be a sequence of events. Right now the bulls tried to put up a fight and they lost this round. The bell will ring soon and we will start another round of boxing in the ring following the lunch hour.

Financials trying to move up

But they are quickly being cut at the knees everytime they advance. Still a lot of people want out of the financials.

Long Intel (INTC) at $24.10

I am entering only 1/2 of a normal swing trade here at this time to limit my risk. See my post from last night on the Intel setup.

Pre Market Update

Futures have pulled back a bit. This may be an early pop in the markets followed by a profit taking later. Have to see how this plays out.

Also, the long drawn out and often dramatic Dow Jones (DJ) buyout by Rupert Murdoch appears to now be "a done deal". Finally, I was getting tired of the soap opera like events going on with the whole DJ buyout.

Economic Data

Data released was "as expected". Essentially neutral but even in this volatile market a 'neutral' can be viewed as a negative. So far no impact on futures.

Futures

With the futures up big at the moment here in pre market I will be watching very closely the impact of the economic data at 8:30 and also how the market handles any advances today. If there is profit taking stepping in on the advances then we are likely to pullback at the resistance levels I highlighted on the major indices.

Pre Market - July 31th 2007

General Motors releases their earnings and they were good. This is providing a boost to the futures this morning. 8:30 this morning is very important, watch the reaction in the futures to see the impact of the economic data that will be released at that time.

I am switching to a white background on my charts in order to make it easier to migrate to my watch list print outs that I said was coming very soon. Soon you will be able to print out a PDF file of my watch list setups which will have the chart, buy points, stop loss, sector, short interest, etc.. In order to keep some consistently between the web site and the file that you will be able to download I need to switch to a white background on the charts in order to make it easier to be printed.

Speaking of watch list I will add one more here that I am keeping an eye on:

Golar Lng Ltd (GLNG) Live Chart

The Day that Was - July 30th 2007

Good evening Rebels..

There was nothing surprising about the up day in the markets today. I mentioned in my market analysis from Friday that so many indices were sitting at support that is was expected there would be some kind of bounce. The issue that still remains is how will this and any more advances hold up.

The DOW ended the day up 92. That gain was really from only four companies. Of the 30 companies that make up the DOW index Boeing, Alcoa, American Express, and General Motors made up most of the gains on the DOW today. The remaining 26 companies were flat, down, or only up slightly. The advance today was weak and the reason I say that is because I am looking at the ADX indicator. Notice on the chart shown here the +DI (buying pressure) was only flat at best today. A healthy upward advance will be reflected by good buying pressure and today the buying pressure was almost non existent. The saving grace today was that the selling pressure (DI-) tapered off somewhat. Kind of makes me think the big sellers are sitting in the bushes waiting to strike again.

Ok.. now that we had an advance on the DOW where is our overhead resistance? Using the trusted Fibonacci numbers we will encounter resistance at 13560. We also have some minor resistance at a slightly lower level at 13480. Also note that we are still under the 50 day moving average and once under that important moving average that then becomes resistance as well.

The S&P 500 did a little better today but major resistance is still overhead.

Another chart to show is a sector analysis of the precious metals. See the chart here. Notice that it closed very close to the 50 day moving average (moving averages provide support during pullbacks). This sector needs to now advance from here otherwise it will drop down to the 200 day average. A drop in this sector will have a negative impact on the S&P.

So now where are we here in all this. We had a bounce today and it was no surprise. Actually if there was no bounce today that would have been a surprise (and scary). As with all bounces following a huge sell off the next few days and weeks will determine where the markets are going. There are still swing trades out there to be had but the risk is high because the market can drop again and take our swing trades along with it. Recall the trade idea I provided on Friday morning, Abb Ltd (ABB) today did exactly what I predicted it would do. It was a perfect bounce from strong support and in a company that has little exposure to the US economic problems. Today ABB gained 6% in one day. A good swing trade that worked as expected but one sneeze in the broader markets and this could fall back down. So while there are some good trades out there we have to trade them with even more caution. Protection of your capital is the most important part of trading in the markets, making money comes next.

A couple of stocks I like here:

Varian Semiconductor Equipment Associates (VSEA)

Intel (INTC)

Please remember my fellow Rebels... all swing trades while the market is in this very volatile condition are risky. Added risk can create added gains if the market goes up but think of it this way. Swing trading while the market is volatile is like trying to ride a roller coaster without a seat belt. It is tough to stay in the seat and if the car goes around the loop you could fall out and come crashing down. Hold on tight if you take a swing trade. As I said this morning I would not be taking any trades today. I need more signs of where this is going. will I make any trades tomorrow? I'll know after I see the earnings reports that are released pre market and the economic data tomorrow (lots of economic date to be released tomorrow - personal income & spending, Core PCE and the PMI).

Never be too anxious to make a trade. There are good times to trade and bad times to trade. Right now is not the best of times.

Market Update

The bounce after the lunch period held. In no way does this mean we are out of the woods. The charts will tell the story when I go over the sector and broad market indices tonight. At first glance we are still on the 1st floor (see my earlier comment).

In after market activity I'm seeing a bit of profit taking from today's bounce. Not heavy but still it is showing an unwillingness to leave profits sit over night on the part of some.

A full analysis if the market later tonight. The market is in a state of turmoil here. We must know the overall direction before getting too aggressive with new swing trades. Otherwise we are throwing money into a fire. I have some swing trade setups and I will post a few of them but we will play them with the utmost of caution if the market says to give it a try.

In after hours earnings reports coming in so far they are generally mixed. I don't see any market movers except for Sun Microsystems which had a decent number.

Market Update

The un-surprising bounce has been building since the lunch hour. Will the hungry bears come in and swoop up the bulls lunch like they did on Friday? 45 minutes to go so we will see how the bulls and bears get along. One must ALWAYS look at a bounce with caution. Traps being placed for the bulls is a common practice following a large market drop. They let the markets price up a bit and then catch them in the traps and take their money. When the market gets very nervous and the fear of a larger decline is looming over everyone then the smart money will take advantage of any bull feeding frenzy and find a way to take it away from them.

Never let an up day following a large decline entice you into thinking all is OK with the world again. That is exactly what the bears (smart money) want you to think. In order for the market to show real signs of health there must be a sequence of up periods and a break over resistance levels. We started out this morning sitting on top of support regions and over head is resistance again from where we came from. I need you to think of support and resistance like this..

Think of the market as a person on the 4th floor of a building. The floor the person is standing on is support. The floor develops a hole and the person falls through the floor down to the 3rd floor. That 3rd floor is now support and the ceiling where the person just fell through is now resistance to get back to the 4th floor. This is a very simplistic way of describing how resistance and support works but it is an accurate analogy to use in picturing in your mind what support and resistance is.

Last Thursday and Friday our 'market guy' fell from the 4th floor all the way down to the 1st floor. Right now the market is trying to get back to the 2nd floor. If it falls off the ladder trying to get back to the 2nd floor it may just make a hole in the floor and fall down into the basement!

The CBOE put/call options ratio is peaking today with options players betting on the market going down. More puts are being placed than calls. Are they right? Can't say. But they are hedging themselves for what would happen if the market falls into the basement.

Market Update

So far this morning any advance has been met with sellers wanting to take the gains and cash them in. An uneasy market today. Bounces so far are not holding. For every advance there is someone waiting to take the money away. We still have a lot of hours left today. The ending of the day will be key to giving us a clue about the future.

Rebel Trader Watch List changes

I am working a new format for providing my readers my watch list. In the near future you will be able to download a PDF file which includes all of my current watch list items. It will describe the play, the entry price, the confirmation price, the stop loss price, and the chart. The PDF file will be a file you can download and print out. Keep it handy and then you can watch the same things I am watching.

Pre Market - July 30th 2007

Good Morning to all...

This will be a big week for the markets. This week will give us some insight into where we are going. Just about all of the major indices are sitting at or near support levels. Will the anticipated bounce be a healthy one or will it be the last gasp of air before death?

As I said yesterday there will likely be a bounce in the markets but bounces can be a trap. As swing traders we can't view a bounce as the worst is over scenario. Instead we have to view the technicals of the bounce carefully to read the greed/fear levels. Does the fear over power the greed of investors looking for bargains or does the greed trump the fear and the worst is over? Good questions, but they can't be answered until we see what happens today and over the coming week.

Am I a buyer here at these support levels? Not today. As tempting as it may seem to jump on board to a stock that is beaten down I have learned over time that doing that is not always the smart thing to do for swing traders. As swing traders we need the markets to be displaying a healthy uptrend and then play the swings of individual stocks within the broad market. But when the broad market itself is questionable then all swing trades are questionable as well. I have some good stocks that I am going to be posting for swing trade ideas but the market has to show her cards and tell us if she will keep playing or if she will fold before we put our chips on the table.

The biggest news of the day so far is the events that took place this morning with American Home Mortgage (AHM). The company announced this morning that they have significantly lowered the value of their portfolio and also announced they are delaying the payment of their quarterly dividend. This is being seen as another knife in the back of the financial sector this morning. AHM has lost 50% of it's stock price in pre market trading! Watch for this news to spread today into other mortgage companies and maybe even extend into big banks as well.

ValueClick (VCLK) released earnings this morning and they missed. They also lowered guidance going forward. ValueClick has been a market darling as far as many had expected them to do well. Their miss may be viewed by large money as a softening of the internet sector and in turn could work their way into companies like Yahoo and Google. If ad revenue is declining I won't be surprised to see Google and Yahoo be impacted by the news.

The big market moving events this week:

• Monday: Nothing of note to report today
• Tuesday: Personal Income,Personal Spending,Core PCE inflation, Chicago PMI
• Wednesday: MBA mortgage application data, ADP employment data, ISM index, pending home sales, EIA petroleum inventory data
• Thursday: Initial claims, Factory orders
• Friday: Non farm payrolls, unemployment rate, ISM services

Futures are improving as the morning has been getting closer to the market open. A head fake? We'll see how any move up is handled. Watch for advances in various stocks to be sold off towards the end of the day, if that happens then the fear we saw on Thursday and Friday is still in place.