Reaction to Fed's Interest rate hike

I picked up this article from Marketwatch.com on Fed's interest rate hike.

.....The Fed said "any additional firming that may be needed" will depend on the economic outlook; in its prior statement, the Fed had said some further measured policy firming "may" be needed.....

To me, Both the statements sound alike....what with both carrying the words "may be needed". The market reaction to this was a huge rally. Is this irrational exhuberance?

This is a good time to cast your vote on the poll that you see in the side bar. Cast your vote and also know how poll results look like so far.

Starbucks Corp (Nasdaq: SBUX)

SBUX is currently observing 50 DMA as resistance. Expanding the view to 6 months, I can see a bearish Head and Shoulder pattern as noted in the chart above. A break below $35.00 will confirm this.
The factor that makes this a good short candidate is that it has a declining OBV.

Marvel Technologies (Nasdaq: MRVL)

MRVL is maintaining the downtrend observing the 50 DMA (and downtrend line) as resistance and moving south. This is an intraday chart of MRVL, therefore today's volume will be much higher than shown in the chart.

Technically speaking, I see a lot more downside potential for MRVL.

1. It is following the downtrend line and every visit to the trendline is met with resistance.

2. This is a continuation of a bearish Head and shoulder pattern. I had indicated this in my May 16 article on MRVL

3. The 50-200 DMA crossover happened earlier this month.

Near term support is at $41.50.

Titanium Metals Corp (NYSE: TIE)

Titanium Metals Corp (NYSE: TIE)

TIE has had a huge run up and is now in a downtrend. I have marked the uptrend line in the long term weekly chart above. I am expecting TIE to touch the uptrend line in the coming weeks.

Lets look at TIE's action more closely (2 months daily chart). As you can see, it is clearly in a downtrend with bulk volume down days. It has pulled back from the lows of $28.00 to $34.00 on low volume. Lately, It has been trading in a tight range of $31-$34. I guess its time for TIE to break the range and take decisive direction. You may notice that the downtrend line and the pullback trend line is closing in.

Given the action so far, I am expecting TIE to observe the downtrend line as resistance and move downwards.

Qualcomm Inc (QCOM)

Qualcomm (QCOM) sold off on high volume after Nokia, the world's biggest mobile phone maker, said it would stop making phones based on CDMA, a cell phone standard developed by Qualcomm.

QCOM is currently very close to the lows established on June 12th at $41.05. Watch out for a break below this level.

Poll: Has the market reached a bottom?

I have been considering to host a poll for a while. So here it is..

Markets have taken a beating. Dow down 9%. Nasdaq down 12%. Markets have posted couple of big days now. Are we all gearing up for a rally? Is the bottom behind us.

Participate in the poll. If you prefer to provide comments, use the 'Comments' section.

Watchlist: OVTI, BIDU

Omnivision Technologies (OVTI) is forming lower highs while maintaining $22.50 as support. A snap below this area may trigger another round of selling. It is currently resting at the 200 DMA.


Baidu Inc (BIDU):
I am expecting BIDU to break below $77 - $76 area this week. Stay tuned.

Is the rally convincing?

I do not think so..! I know there are sceptics out there who are not willing to believe in this rally. but those who think that I have lost my mind not to believe in this rally inspite of Nasdaq gaining 58 points...here is the reason.

VOLUME.

The volume was just not there. Lets pick some prominent names.
GOOG: 6,788,401 (Avg: 7,298,200)
BRCM: 18,393,215 (Avg: 19,993,500)
YHOO: 22,375,490 (Avg: 19,993,900)
EBAY: 23,302,215 (Avg: 20,141,500)
AAPL: 42,519,228 (Avg: 28,298,300)..slightly better than others but the OBV indicator paints a different picture.

It remains to be seen the indices behavior tomorrow and the week ahead.

Good Luck all.

InVentive Health Inc (VTIV)

Many of my earlier articles were focused on short term trades but this one is not. I am considering this to be a long term investment. I will suggest taking money out during very obvious resistance point and increasing your stake at obvious support levels.


InVentiv Health Inc (VTIV) has been on my radar for a long time. As you see, VTIV formed a nice cup and handle to break out in great volume in March. It is currently testing its breakout point. VTIV has been in and out of IBD 100 atleast thrice during the past 9-12 months. That was to give some perspective of its performance.

Take a look at the next chart.


Today, It bounced off of a support point and formed a hammer indicating a possibility of reversal. Another strong indicator is OBV which is suggesting that money is not moving out of the stock though the stock price is moving down. This indicates that the stock will move up in the coming days.

Watchlist: BIDU

Baidu Inc (BIDU) has sold-off after a failed break-out attempt. Subsequently, it has violated the 20 day EMA. The break out support area is at $76.00. If this fails, one can expect it to close the gap. Currently, the 50 DMA is at $70...so one can expect this to offer some support.

Another interesting aspect is that the OBV indicator is declining.

Good Luck.

Redback Network (RBAK) breaks down

Redback Networks (RBAK) broke below its support level of $20.49 on high volume. I had alerted about this possibility on my earlier article on May 23. Watch for support at $17-$18 area. The next area of support is $15 and may possibly close the gap.

SmackBook from Aaple

On the lighter side..!

Nasdaq: Strong Reversal possibility

Nasdaq's Charts indicate that the bull took control from the bears by mid day today, therefore forming a bullish hammer. Hammer is usually signs of a reversal. Since the trend was negative so far, the reversal means that traders can expect the nasdaq to turn around. This theory is emphasized by the volume.

Volume speaks V O L U M E S.

This shows us that it is not just the retail investors that are buying but its the mutual funds, institutional investors, hedge funds guys along with the retail investors.


Theoritically, the bullish hammer reversal must be followed by another UP day.
Based on experience and the market behavior, I can say with reasonable amount of confidence that the market has reached the bottom. It will be interesting to note the markets reaction to major resistance areas like the moving averages.

This is the same story on the other indices as well. Read my analysis on today's stock market U turn.

Good Luck.

Subscribe to my FREE newsletter for market updates.

Stock Market's U turn

Today's Stock market action was fun (Thats probably because I made some money.. :D ). The investors were taken for one big roller coster ride. Take a look at the widely followed indices: DOW, Nasdaq and S&P. All of them started the day badly, moved south (as usual) and by mid day, changed course. All this means is that the bears had a good run until mid day and the bulls took control from there.

Boeing's Chart Setup II

In my earlier article on Boeing (BA), I had mentioned that the 50 DMA may prove to be a resistance and it can move to $78-79 area. Well, my prediction did come true. Today's action with the overall market reaction is an interesting one. We were taken for one hell of a ride.

Anyway..coming back to BA, it has formed a bullish hammer. What does this mean? A formation of this nature during a downtrend (coupled with a confirmation day) bodes well for the bulls. This typically means a reversal. Since the volume is almost double to a normal day's volume, it adds more significance. As I had mentioned, a confirmation day with positive close is needed to confirm the trend.

As a watchful trader, you will have to watch out for resistance in the form of 50DMA or 20EMA and indicators such as Stochastics and RSI among many.

Subscribe to my FREE newsletter for market updates.

AAPL rebounds

Aaple Computer Inc (AAPL) moved up on big volume today. The $58 area
is a major support area and it was respected. Looking at the charts, a
bullish engulfing pattern can be noted. It is notable that this has
come in almost double the normal volume. It is suggested that a
bullish engulfing follows a confirmation.

Watch for resistance in the form of 50 and 200 DMA as AAPL progresses.

Nasdaq: Are we there yet?

Are we there yet? Are we there yet? Are we there yet?

This question may be going through many of our minds..! I thought I could present my analysis on Nasdaq's action.



This is the near term picture of Nasdaq. It has fallen below the 200 DMA and retested this significant technical resistance point at 2235 earlier this week. It is finding some support at the bottom formed earlier at 2160. Does this mean that Nasdaq has reached the bottom.? Are we there yet..!?! May be yes..! May be not..! ok...Lets analyze further.

This chart below is a 3 yr chart. The long term trend line shows that Nasdaq's current area is a significant support area. If Nasdaq is able to bounce back with considerable volume and clear the 200 DMA, I would say, we are on our way to a rally but on the flip side, if it cannot hold support at 2150 area - a breaks below the trend line will be nasty. Be prepared for a turbulant ride.

Watchlist: SHLD BIDU

Sears Holding Corporation (SHLD)

Sears Holding (SHLD) is currently testing 52 week high. It has performed well during the past 2 days keeping in perspective the overall market performance with the Nasdaq and Dow plunging after remarks from Mr.BB (Ben Bernanke). I wonder if the chart indicate the 'Cup' in the 'Cup and Handle' formation?

Baidu.com Inc (BIDU)

After tight range bound consolidation, BIDU closed above the near term and long term resistance as shown in the chart above. Watch out for more gains.

Chicago Mercantile Exchange (CME)

Chicago Mercantile Exchange's (CME) chart pattern shows it has broken the recent uptrend and is currently near the 50 DMA (possible resistance). This also coincides with the trendline of the recent downtrend. Will be intersting to watch its next move.

Subscribe to my newsletter to get daily updates on the posts.

Boeing's Chart Setup

Boeing(BA) is currently at $83.80 and just above the 50 DMA. The stock broke below the positive trendline and is currently following the negative trend. It would be interesting to note the direction it takes. If it breaks below 50 DMA, expect support around $78-79 area.

Subscribe to my newsletter to get daily updates on the posts.

Watchlist: ISE

International Securities Exchange Inc (ISE) is currently at $39.70. The long term trend line seems to have provided support and the volume to the upside seems to have picked up. Meanwhile the short term trendline is downwards and currently coinciding with the 50 DMA and its current price.

The stochastics indicate that it may give up some of its recent gains. It remains to be seen if it continues or breaks the long term trend.

Subscribe to my newsletter to get daily updates on the posts.

Watchlist: OVTI

Omnivision Technologies (OVTI) has recovered 5 points since touching an intraday low of $25.85. Technically speaking, it now faces some resistance at current levels. It would be interesting to watch Monday's action.


Subscribe to my newsletter to get daily updates on the posts.