Stock Markets are Set to Break Out
Stock-Markets / Stock Index Trading Sep 10, 2009 - 08:36 AM GMTBy: Mark_McMillan
We were able to add QQQQ puts but our limit prices were never achieved for the SPY or DIA positions. The market has moved into uptrend mode overall with the Dow and S&P-500 on the cusp of entering that state (note that we have shown them in up trends in the table below but left the background color yellow which is neutral. The semiconductors have achieved and new closing high as has the NASDAQ-100. We have been looking for them to lead the markets higher and we expect the Dow and S&P-500 to follow them higher.
As noted yesterday, we are bullish on the semiconductor but we didn't enter a long position yet as our trading style is to enter on reversals/pull backs. If you are comfortable with a momentum play, you can enter a trade and we will warn you of a top in the semiconductors which would be your queue to protect your position or to take profits and wait to enter when we do so.
Our short TLT position closed at $94.43 on Wednesday, which represents an incremental gain for us but TLT actually moved higher through the day after a lower open. We expect to have our patience tested over the remainder of the week but will remain short. Set your stop at $96.00 to protect a small profit and we will look for a renewed move lower by next week. We are still looking for support to be broken at the $94 level.
Trade Recommendations:
None at this time.
Daily Trend Indications:
- Positions indicated as Green are Long positions and those indicated as Red are short positions.
- The State of the Market is used to determine how you should trade. A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will.
- The BIAS is used to determine how aggressive or defensive you should be with a position. If the BIAS is Bullish but the market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance. The BIAS tells you to exit that trade on "weaker" signals than you might otherwise trade on as the market is predisposed to move in the direction of BIAS.
- The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.
Commentary:
Stay tuned for new trade recommendations as we continue to update you daily. We don't tend to jump in on trends but rather enter at reversals so we are sitting out the run up in semiconductors (yeah, I would rather be in a long trade here but we are remaining disciplined).
We hope you have enjoyed this edition of the McMillan portfolio. You may send comments to mark@stockbarometer.com.
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By Mark McMillan
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