Showing posts from October, 2012

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Weekly Market Commentary: Breadth Not Oversold

The last few weeks have seen sharp losses in market breadth strength.  The week past was no exception, although losses weren't as great as others in recent weeks. Breadth indices have still to reach oversold conditions, which would suggest a tradable swing low, so look for downside to continue. The Percentage of Nasdaq Stocks above the 50-day MA finished the week at 34%, but is perhaps two weeks away from turning oversold.  Any rally from this point is likely to be temporary.  Which will only delay the development of a stronger swing low. The Nasdaq Bullish Percents saw its biggest loss since posting a swing high. Technicals are middling, but it never reached overbough conditions, despite a decent rally from April's 2012 bottom.  The MACD histogram is on the verge of a 'sell' signal, so further downside is favoured. The Nasdaq Summation Index is the smoothest of the three breadth indices I track. Last week saw sharp losses as it cut below zero. Like the Bull

Daily Market Commentary: Brief Respite

The market sided with neither bulls nor bears. The bullish play for the Nasdaq and Nasdaq 100 still holds, with today's small gain enough to keep the trade live. Despite the lack of nearby support for the semiconductor index, it is enjoying a relative strength shift in its favor against the Nasdaq 100. The Russell 2000 finished with another doji.  It had looked liked it was going to make another pass at its 200-day MA, but bulls were resilient enough to prevent this from happening. The S&P was relatively non-eventful. Play for a move down to its 200-day MA. Otherwise, what was said yesterday, still holds today.  Buy the Nasdaq and Nasdaq 100 / Sell the S&P. --- Follow Me on Twitter Dr. Declan Fallon is the Senior Market Technician and Community Director for . I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategi

Daily Market Commentary: Sellers Maintain Control

For a brief moment on Wednesday it had looked like bulls were going to get some change out of the market. But, by the close of business, bears had again reasserted themselves, and left indices close to, or at their lows. Hardest hit was again the Semiconductor index.  It suffered a large intraday swing which left it looking downwards, towards the summer double bottom low around 348.  If there is an inkling of a possible swing low, it's the bullish divergences in the CCI and MACD histogram, but technicals are otherwise bearish and have not indicated such a swing lows is in place. The net effect of the selling in the semiconductor index was to leave the Nasdaq and Nasdaq 100 with another pass on their 200-day MAs. Selling volume has been heavy, particularly for the Nasdaq 100; since the September high there have been 8 distributions days to 1 accumulation day.  Bulls buying the 200-day MA would want to be nimble on their feet if Thursday saw a close below this key long term su

Daily Market Commentary: Further Selling

It was substantial move down for the indices, bringing the Nasdaq and Russell 2000 to their respective 200-day MAs.  These indices will offer something more for bulls to work with tomorrow. The Nasdaq is well placed to stage a rally on Wednesday. Selling volume, while higher, was below what passed for Friday's action.  Technicals are all bearish, but stochastics are oversold, thus offering a starting point to mount a recovery.  A stop just below the 200-day MA should be sufficient protection. The Russell 2000 made a larger spike down to its 200-day MA.  Where there is a concern, it's that the spike down to the 200-day MA occurred below the band of support marked by 820.  A bright start in the morning would offer confidence which could be built on. Losing out in the shuffle was the S&P.  It broke below the rising channel, sending it on its way towards its 200-day MA. The Dow turned net bearish technically. With two days of heavy selling in three, there

Daily Market Commentary: Late Day Rally

Buyers managed a late day surge, recovering some of the losses following Friday's huge sell off.  For some of the indices, buying occurred before major support was reached, questioning the validity of this buying. One index jumping the gun was the Nasdaq 100. In early trading, there was very little follow through selling from Friday. However, subsequent buying occurred well above what is looking likely to be next support at 2,650.  The presence of the 200-day MA around 2,650 lends further weight to a potential test here.  Today's recovery may evolve into nothing more than a relief rally, but the 200-day MA is looking more probable as a support level. The semiconductor index finished with a doji, and didn't undercut the prior swing low to any great degree.  However, technicals returned to the bearish front after a failed attempt at a 'buy' signal in the MACD.  The only clear support is the double bottom at 348, so it's questionable whether there is enough

Weekly Market Commentary: Breadth Weakness Continues

Another week, another set of breadth losses for the indices. The Nasdaq was the worst hit of the indices.  The Percentage of Nasdaq Stocks above 50-day MA finished  at lows of 37%, but stochastics are only half-way towards oversold territory. The Summation Index only saw marginal more losses than last week. It closed the week below 0, but the index doesn't typically reach oversold levels until below -600. This could take another few weeks before a swing low is reached. The Bullish Percents similarly experienced a small loss.  Technicals are in neutral territory, but still net bearish.  Still looks to offer plenty of downside before a swing low is reached. Despite the brief respite on the daily timeframe, the weekly chart for the Nasdaq favours a move to 2,863 support.  Higher volume selling marked confirmed distribution. While tech struggles, Large Caps held their ground.  The Dow and S&P held support for another week. And the Russell 2000 finished

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Daily Market Commentary: Slow Day

Not surprising to see markets lower on day, but surprised to see significantly higher volume to get with it.  Strong consolidations in the early phase of a rally should come with lower volume.  This is because the weak hands should have already sold on the way down. The S&P closed modestly lower, but there was no great change to the chart besides that. The Nasdaq suffered the most, losing 1% on heavier volume.  The timing was also unfortunate, with converged 20-day and 50-day MAs acting as resistance. The Russell 2000 also sold off, but the selling came from above its 20-day and 50-day MAs, neither of which were breached. Tomorrow may see a test of the swing low.  The resolve of the bulls is likely to be tested as the three day rally comes under pressure.  It will be important these lows aren't violated, as they are tied to key support. --- Follow Me on Twitter Dr. Declan Fallon is the Senior Market Technician and Community Director for . I

Daily Market Commentary: Markets Inch Higher

Markets opened down on yesterday's close, but were able to finish slightly higher.  The best performing index was the Russell 2000 as it pushed over its 20-MA, adding nearly a percent by the close. The Russell 2000 was again outperforming the Tech indices after a brief respite. The semiconductor index managed to gain from the open, but it wasn't able to finish above its 20-day MA.  It's a little worrying because the moving average is playing as resistance, so bulls haven't yet done enough to suggest a swing low is in place, despite gains the past couple of days. The Nasdaq is similarly pegged by resistance, with converging 20-day and 50-day MAs providing the supply. Technicals are improving, although the Nasdaq is significantly underperforming relative to the S&P. FInally, the S&P keeps the flag flying with a decent volume day at major resistance of 1,470.  A break above this zone would offer bulls something to work with over the coming weeks (and

Daily Market Commentary: Decent Follow Through

The indices are attempting swing lows, with the Russell 2000, Nasdaq 100 and S&P offering the clearest support levels off which to work. Stops can be set below yesterday's lows, and a move to - and above - September's highs as targets. Gains in the S&P also resulted in bullish crosses for On-Balance-Volume and the Directional Movement System. The Nasdaq was working from a position below its 50-day MA, and the past two days have seen the index rally back to its 50-day MA. Volume climbed to register an accumulation day, a strong positive, and a better indicator the 50-day MA will hold as support. The Russell 2000 is coming up against its 20-day MA, but has at least managed to hold what was looking like last gasp support at 820. If bears are going to make a move, it will likely come against the Nasdaq 100.  The index rallied well on higher volume, but fell shy of its 50-day MA.  The 20-day MA is also falling sharply and is a day or two away from a 'Dea

Daily Market Commentary: Rally off Support

The bearish weekly picture is going to dominate for the next few weeks, but the rally off support emerged on the daily timeframe for the S&P and Russell 2000. The Russell 2000 likely offers the best upside in the days ahead. Today's boost off support confirms the importance of 820, and as a place below which to set stops. Likewise, the S&P rallied off channel support, but technicals remained net bearish (as they did for the Russell 2000). The Nasdaq is the most oversold of the indices, but is also the index lacking a strong support level from which to build a sustainable rally. I have drawn a thin line of support from the August lows as a possible location for stops. Although the Nasdaq 100, oddly, has reached a support trendline. It will be important today's lows are not undercut in the days ahead.  If we are looking at swing lows for the indices, then the buck stops at Monday's lows. --- Follow Me on Twitter Dr. Declan Fallon is the

Weekly Market Commentary: Major Breadth Loss

Breadth hits like last week usually fester for another few weeks, before a trade-worthy swing low develops in the parent index.  As a result, longs may be less likely to jump on some of the support levels currently available on the daily time frame. The Percentage of Nasdaq Stocks above the 50-d MA took a big hit, going from a net positive (>60%) to a net negative (45%) by week's end. Nasdaq Bullish Percents are slower to turn, and take longer to shape a bottom. Given its history, the current swing high is looking a little ominous as to what this means for the Nasdaq. Stochastics also support the theory there will be a new low in the Bullish Percents, before there will be a new high.  As the Nasdaq managed a new all-time high with a lower low in the Bullish Percents, does this mean the next low for the Bullish Percents will see a break of May Nasdaq swing low of 2,726? The Nasdaq Summation Index is holding to a net bullish picture technically, although the breadth in


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