Stock Market Analysis – 02-05-2010
A dragonfly doji is normally a bullish reversal signal, but the action was unconvincing to me. Whenever I get conflicting signals, I usually find it best to play it safe. After the first few hours on Monday we should get a better idea of whether Friday’s late bullish run will last, so I’d be inclined to trade the direction of the market at lunchtime if I was looking for overnight trades.
Stock Market Analysis – 02-02-2010
Breaking the immediate trend is bullish, but the volume says this is just an upwards correction. It might be a decent opportunity to enter bearish positions, but I’ll stay fairly conservative for now.
VanceInfo Technologies (VIT) – 01-29-2010
VIT is just an IBD stock with a nice chart. A low volume sell-off that matches the market is a good swing trade opportunity. With an obvious upside that’s at least 3R, it’s something to consider.
Stock Market Analysis – 01-29-2010
It’s been a while since I posted a weekly chart. As bad as the recent drop is looking to some people, it’s nothing on a grander scale. We’re hanging around the initial 2008 crash zone, so a pause is expected. Without any large corrections since the beginning of last year, we’re still considered a bull market that’s overbought. While it’s a short opportunity for more active players, it’s not panic time if you only look at the bigger picture. I would be taking profits on high fliers that look overextended, and I wouldn’t be purchasing new positions, but I also wouldn’t be liquidating my whole account blindly… yet.
Liar’s Poker – Michael Lewis
I just read Liar’s Poker, by Michael Lewis, the author also known for Moneyball. It’s interesting how a book written 2 decades ago is so relevant to today. If you don’t know, Michael Lewis worked at Salomon Brothers during the 80’s, and Liar’s Poker is the entertaining tale of his experiences there.
While the whole book is a good read, the interesting part is the section where he goes over Lewis Ranieri’s rise to fame. According to wikipedia, Ranieri “is considered the ‘godfather’ of mortgage finance for his role in pioneering securitization and mortgage-backed securities.” Mortgage-backed securities, as you may well know, are credited by many as one of the leading contributors to the financial meltdown we recently had.
The book is pretty light, and a good break from things like the Murphy book. I highly recommend it if you’re looking for something of the sort. Anyway, I just thought I’d share my reading list a little more often since it’s a question I get asked a lot too. Feel free to borrow any of the books I talk about if I regularly see you.
Caterpillar (CAT) – 01-27-2010
Caterpillar’s outlook basically follows the general economic outlook. When people think the future looks good and there will be lots of growth, CAT goes up. When there is a pessimistic view, CAT goes down. But the reason I’m looking at it today is obvious. A clean break of support with good volume is always something to keep an eye on. The hammer (bullish reversal) candlestick pattern isn’t so good for bears though.
Since CAT seems to be leading the bearish trend of the S&P 500, it looks like a decent short for a general market downturn. If the market hangs around in distribution, this might be a good range bound play. And if the market turns bullish, I’d probably ignore this since there are other better options I could consider right now.