Thursday, February 10, 2011

51/2 Months Without a Pullback

!! Jack Steiman, On Must-Own Market (SwingTradeOnline) !!

There's no guarantee we'll just start a bear market out of the blue.
In fact, as long as printer Bernanke keeps those presses rolling, the
odds of a bear market are extremely remote. It's all about liquidity
and he's making sure those presses stay on 24/7. The bears haven't yet
accepted the consequences of this reality, and thus the bull market
continues forward and upward, ignoring overbought conditions.

The ancient expression of never playing against the trend is a real
lesson for everyone. If you can reckon from that perspective you can
learn to keep out of harms way. It allows you to stay unemotional.
That's the only way to play successfully. It still amazes me to see
how many people are not playing appropriately and trying to beat the
market to the correction. It's coming. I'm not talking about 2-3%.
That's ordinary. I'm talking about a much more sustained pullback. It
will come, but timing it is really impossible in this environment.

The market keeps sending unfortunate lessons to those who won't take
note. Don't be that person. When you see a reversal that sticks and
tells you it's time to go along then you do so, but until then you
keep long exposure. Not so much that you can't handle the consequences
of a normal pullback of a few percent. If you're not overly exposed,
you can handle a few dollars being taken off stocks as things cool
off. If you're fully loaded long, any normal pullback will feel
overwhelming. Bottom line is if you play without greed you have a much
superior opportunity of success long-term. Stick with the trend and
don't overdo at overbought. End of tale!

The market closed Monday over 1311, or the ancient highs, which, of
course, can only be looked upon as bullish. It doesn't mean the
correction won't start Tuesday, but it is beyond doubt excellent
action to close over 1311. The best part of this bull market, and the
best part again about Monday's action, was the simple reality of
participation all over the stock market world. Sector after sector
either went up, or pulled back a bit, within overall bullish patterns
that simply need handles or flags. Very modest is braking down within
a sector. Some stocks will permanently break down on terrible
earnings, etc., but the sectors are really holding up quite well.

This is the type of action that tells you things are still bullish
because for a market to break lower with break down, you need sector
charts to start flaw on huge volume trends, and we just aren't seeing
that take place. So we are lynching on to our plays for now.
Will take half positions off from time to time when need be, but the
market remains on a must-own basis to some degree. If you want to go
cash and wait for some deeper promotion to take place, I wouldn't
blame you. But I feel it's fine to hold some exposure as the bull
moves along, and just deal with the pullbacks as they occur.

!! Mike Paulenoff, On Oil Versus S&P ( !!

Oil prices continue to press lower off of the recent high at $92.84
during the first days of the Egyptian crisis., which turned out to be
a Bull Trap.
The ongoing decline is testing key near-term support along the Nov-Feb
support line, now at $85.83. So far Tuesday, the trendline appears to
be holding the onslaught; but, should nearby oil violate and sustain
beneath $85.83, then the price structure will be heading directly for
a test of the prior pivot low of $85.11 (Jan 27), which if breached
will complete a rounded top sample that has been developing since
ahead of schedule December when oil first climbed above $90.

At that juncture, all technical roads will be pointing towards
downside continuation towards $81-$80 next. How will the equity
indices respond to the prospect of a 12%-14% drop in oil prices? In
theory, it should be a net positive for the retail, consumer and
transport sectors, as well as for manufacturers -- unless, of course,
all asset classes initially follow oil's lead into a (well-deserved)

That said, a break of 1309.00/25 will be the first minor negative
technical signal that will bring to somebody's attention our concern,
while a break of 1298 will suggest strongly that a period of rest and
digestion is in progress in the S&P 500 emini.

!! Harry Boxer, On 4 Charts to Watch ( !!

Several stock we follow are spiking up, breaking out, and showing real
strong relative strength.

Allot Communications Ltd. (ALLT) came down to the bottom of the
channel and has been moving up the last 5-6 sessions, taking a go from
around 11 up to around 14 1/2. The top of the channel around 16 is
That's our small-term trading target. It sure has nice momentum,
fantastic technicals, and is moving along very nicely.

InterDigital, Inc. (IDCC), which has been a recent swing trade target
of ours, jumped 2.69 to 53.50 on Monday, success as high as 54.20.
Nevertheless, up 5.3% on 1.6 million shares. A go toward my trading
target up around 58 may be very doable.

Mercer International Inc. (MERC) had a huge day Monday. It's been in a
gorgeous rising channel for the last 3 1/2 months. Today it popped
1.38, or 16.4%, on 1 3/4 million shares. It appears to be able to go
higher. Looking for a trading target up around 11 - 11 1/2 range.

SodaStream International Ltd. (SODA) reached new all-time highs today
at 44.89, backed off, and closed at 44.28, up 1.79, but nevertheless
acting well. It appears this stock can make it up towards my 48-50
target rather promptly.

Other stocks in our Charts of the Day video are Alon USA Energy, Inc.
(ALJ), Allot Communications Ltd. (ALLT), Accuray Incorporated (ARAY),
AudioCodes Ltd. (AUDC), AXT Inc. (AXTI), Cognex Corp. (CGNX),
Evergreen Energy, Inc. (EEE), Fuwei Films (Holdings) Co., Ltd. (FFHL),
InterDigital, Inc. (IDCC), IDT Corporation (IDT), Mercer International
Inc. (MERC), Motricity, Inc. (MOTR), Repros Therapeutics Inc. (RPRX).
Silicon Graphics International Corp. (SGI), SodaStream International
Ltd. (SODA), and Ultra Clean Holdings Inc. (UCTT).

!! Mel Hickerson, On 51/2 Months Without A Pullback (@mels_info) !!

Five and a half months without much of a pullback and the 30 session
average of intraday trading range has narrowed from more than 2% per
day in June to a mere 0.9% currently. This is painful for day traders.

The largest pullback has been on the order of 4% (November). Six month
stretches without 5% pullbacks are nearly to no avail of. The last
time the SPX traded 5% lower than the thirty session high was on
September 1st. So today was the 108th session since the last 5%
pullback. We went 89 sessions without a 5% into the summer of 2007
after vacant 149 sessions ending in February of 2007.
Looking back through the description of the SPX, most of the lengthy
stretches without a 5% correction end between 100 sessions and 150
sessions with only three such streaks that continued longer than our
current streak during the last 15 years, all three leading up to the
market top in October of 2007.

But having said that, description is currently on the side of the
bears small-term. I am not convinced description means much right now,
*but here are the historical facts:*

Five times the SPX has been at a 52 week high on Payroll day, and then
gapped up more than 0.25%. Over the next three days performance was
consistently negative: -1.0%, -0.2%, -1.8%, -1.1%, and -0.1%. Only one
time was the SPX up more than 1% at any point.

With the SPX up more than 2.5% month-to-date on the first day of the
following week of a month, the SPX was up 1.0% on two occasions, but
lower -1.0% or superior on twenty occurrences out of forty-eight.

Our ten day relative is at 82. Seeing this value above 80 is quite
rare, last happening after the October 13th session.

Market has been up while volume is decreasing. This will often lead to
a brief pullback.

So description is calling for lower as the week progresses. Let's see
what we are given. A excellent down day would certainly broaden the
range for day trades.

We zoomed right up to the key level of 1320 today and spent much of
the day there, closing just below it. Key levels to watch on Tuesday:
1320 remains a key pivot.
Support on the downside is at 1318, 1213, and 1307. Of course, 1304
and 1300 remain as support if we should get that far. On the upside,
1324, 1329 and 1335. There really isn't a lot of resistance overhead
if we break above 1320 and hold it.


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