Market Commentary for Friday, February 15th:

^{The Point} - The Trend is Down. Sell and Short

^{The Story} - All indicators currently point lower and we are in a very good position.  If you go to askresearch.com and look at the 7 day EMA (exponential moving average) and a 21 day EMA on the current markets you will see a distinct trend.  First, the markets tend to follow the direction of the most recent moving average cross.  The 7 day EMA is currently below the 21 day EMA on the major market indexes indicating a downtrend since the 2nd trading day in January.  You will also notice that the price of the markets has stayed below or at the 7 day EMA as the market as run lower and it has come above the 7 day EMA and around the 21 day EMA on corrective bounces.  We currently suspect the market to be resuming it's downtrend which allows for a very easy trade with extremely low risk.  If the markets rise above the 7 day EMA we will exit our trade as per the stop loss levels indicated below.  This is another good entry point with strong profit potential and minimal risk.  (10+:1 reward to risk ratio)

The Nasdaq, Dow and S&P are still entrenched in their downtrends, but coming off a corrective bounce.  Despite the small rally of the past 3-4 weeks the markets have not made a moving average cross and seem to be resuming their downtrend.  The moving average crosses, MACD levels and stochastics all point to a lower trend.  We are simply following the markets direction until it shows us differently. 

^{Trade Recommendation:}  If you do not own QID (Double Inverse ETF of Nasdaq 100 - basically, it goes up in value twice as much on a percentage basis as the Nasdaq 100 goes down) you can purchase it and place a stop loss at $50.50.  If the market goes against us it is only a 1-2% risk of your capital and if the market trends lower the Nasdaq should lead the way providing some nice profits with QID.

^{The Goal:} We are looking to be very specific about the market direction on a daily basis.  Do you have a different opinion?  Please post it and give feedback.  Investing as a team can help us all improve on our knowledge and skills.  You can read back on over 2 months of market analysis and recommendations via this Forum.  Please give your feedback and make this Zecco's most profitable Forum.  We are very interested in your thoughts and responses. 

^{Current Position:} QID @ $50 (stop loss raised to $50.50)
                            SPY Bear Credit Spread (Bot SPY 136 Calls and Sold SPY 134 Calls)

^{Items on our Agenda:}
1. Add Performance Information on General Market Recommendations made on this Forum.
2. Develop a Watch List of strong stocks to begin investing in when the market turns positive.

Safe Trading!!!

^{Performance of Recommendations} - Below, the performance details of our trading recommendations are posted.  General Market recommendations were listed as Short, Long or Cash.  This does not include individual stock purchases.  Performance of the general markets are given in parenthesis.

Dec. 17th, 2008:   Short   (market rose 2% after recommendation)
Dec. 21st, 2008:   Cash
Jan. 3rd, 2008:  Short   (market fell 10% after recommendation)
Jan. 23rd, 2008:   Cash  
Jan. 24th, 2008:   Long   (markets rose 2% after recommendation)
Jan. 25th, 2008:   Cash
Feb. 5th, 2008:   Short   (markets fell 3% after recommendation)
Feb. 7th, 2008:   Cash  
Feb. 12th, 2008:   Short   (performance to be determined)

Stop Losses are used on all trades.  Performance results can be increased via index funds. 

Safe Trading!!!

Hello I saw that you were posting to get people to read and post here to share their views.

Have you ever read the message boards on clearstation,investors hub or silicon investor to get other peoples views?

Good Luck

Market Commentary for Tuesday, February 19th, 2008:

^{The Point} - The Trend is Down. Sell and Short

^{The Story} - The Dow, Nasdaq and S&P all have their 7 day EMA below the 21 day EMA, stochastics pointing lower and negative MACD's.  The trend continues to point lower as nine of the nine indicators that we follow indicate a downward trend which more than likely will conclude with a test of the lows or a new low in the markets

^{Trade Recommendation:}  Today's gap opening would have been a nice day to add QID.  I unfortunately put my stops a little too tight and got stopped out of QID on the gap opening.  I was considering adjusting the trade and watching the market, but didn't make the change.  I have gotten a little too cute with the tight stops and have exited some good trades early.  A little more discipline would be helpful.

^{Current Position:}  1. SPY Bear Credit Spread (Bought SPY 136 Calls and Sold SPY 134 Calls)
                             2. Looking to Add QID again to our positions
                           
^{Items on our Agenda:}
 Develop a Watch List of strong stocks to begin investing in when the market turns positive.

Safe Trading!!!

Market Commentary for Wednesday, February 20th, 2008:

^{The Point} - The Trend is Down. Sell and Short

^{The Story} - Despite todays gap lower and reversal, much of the story will still be the same.  I am in no way an expert charter reader, but the Dow, Nasdaq, possibly the S&P are developing a triangle pattern with points at the January lows and the early February highs.  I imagine that this pattern would result in a drop downward which would complete our downtrend over the next few weeks.  If there is in fact a triangular pattern being formed, it would probably conclude with the markets falling to the downside over the next 1-4 days.  Triangular patterns often exist just before the final action in a trend.  If case the triangle pattern is incorrect we will keep our stops to ensure a safe trade.  The Dow, Nasdaq and S&P all have their 7 day EMA below the 21 day EMA, stochastics pointing lower and negative MACD's.  The trend continues to point lower as nine of the nine indicators that we follow indicate a downward trend which more than likely will conclude with a test of the lows or a new low in the markets

^{Trade Recommendation:}  Still suggesting QID, SDS, or DXD to participate in a likely fall in the financial markets.  Be sure to incorporate a stop loss.

^{Current Position:}  1. SPY Bear Credit Spread (Bought SPY 136 Calls and Sold SPY 134 Calls)
                             2. QID with a stop loss at $48.50
                           
^{Items on our Agenda:}
 Develop a Watch List of strong stocks to begin investing in when the market turns positive.

Safe Trading!!!

Market Commentary for Thursday, February 21st, 2008:

^{The Point} - The Trend is Down. Sell and Short

^{The Story} - Another gap up and a subsequent fall.  It seems like the markets of late are sporting sizeable gap openings followed by reversals and large moves in the opposite direction.  Our triangle patterns are still a possible scenario.  If this is a triangle pattern we should see a strong move downward as early as Friday or by the middle of next week.  Solidly breaking below (1 % or more) the lows on Tuesday should begin another sizeable drop while a break above recent highs might signal that we have a little more bounce before we fall.  I expect to see the decline because all indicators are pointing lower for all three indexes.

^{Trade Recommendation:}  Still suggesting QID, SDS, or DXD to participate in a likely fall in the equity markets.  Be sure to incorporate a stop loss.

^{Current Position:}  1. SPY Bear Credit Spread (Bought SPY 136 Calls and Sold SPY 134 Calls)
                             2. QID with a stop loss at $48.50
                           
^{Items on our Agenda:}
 Develop a Watch List of strong stocks to begin investing in when the market turns positive. (currently keeping an eye on RIG, MA, ISRG, WDC)

Safe Trading!!!

Market Preview for Monday, February 25th, 2008:

^{The Point} - The Trend is Down. Sell and Short

^{The Story} - On Friday it seemed like we were starting to see the market entrench in another steep downtrend after breaking out of what looked like a triangular pattern on it's bounce from January lows.  The coming price movement could possibly finish off the declines we have seen over the past few months.  However, as the market has it stops and starts, we got an explosive end of the day rally and ended up positive.  All indicators continue to point lower, but the moving averages in the Dow and S&P are very close and a strong up day could mean that we have a little more bounce in the market and we should move to cash before we see another decline.  Be sure to use a stop order in case of a bounce, but the trend is still down.   

^{Trade Recommendation:}  Hold QID, SDS, or DXD with a stop order in place

^{Current Position:}  1. SPY Bear Credit Spread (Bought SPY 136 Calls and Sold SPY 134 Calls)
                             
                           
^{Items on our Agenda:}
 Develop a Watch List of strong stocks to begin investing in when the market turns positive. (currently keeping an eye on RIG, MA, ISRG, WDC)

Safe Trading!!!

The trend of the S&P 500 looks to be taking shape. The A/D Ratio continues its advance , while the A-D MA chart has made a bullish cross. The S&P 500 trend using the S&P 500 moving average chart shows consolidation in process

While I cannot claim to know what will happen this week, or the week after, one thing remains clear. As the markets rise, you (as an active investor) should seek to maximize the value created by the market. For example, if you are a long term investor you should do nothing as the market rises. If your investment horizon is a little shorter, then as the markets rise, you should unload some of your holdings.  And if you are a long term investor, then as the market falls you should buy more.  Conversely, if you are a short term investor and you see the market falling, you could sell short.
The A/D Ratio is only at 1.39, and today’s ratio was above average (Today: 3.15). The expectations that a move lower in the price of the S&P 500 is greatly increased as the ratio deviates in a positive manner from the current A/D Ratio of the New York Stock Exchange (NYSE).  However the trend is up.  I repeat, the trend is up

Read the rest of my analysis @ S&P 500 Trend

Good Luck,
Scott

^{Performance of Recommendations} - Below, the performance details of our trading recommendations are posted.  General Market recommendations were listed as Short, Long or Cash.  This does not include individual stock purchases.  Performance of the general markets are given in parenthesis.

Dec. 17th, 2008:   Short   (market rose 2% after recommendation)
Dec. 21st, 2008:   Cash
Jan. 3rd, 2008:  Short   (market fell 10% after recommendation)
Jan. 23rd, 2008:   Cash  
Jan. 24th, 2008:   Long   (markets rose 2% after recommendation)
Jan. 25th, 2008:   Cash
Feb. 5th, 2008:   Short   (markets fell 3% after recommendation)
Feb. 7th, 2008:   Cash  
Feb. 12th, 2008:   Short   (markets rose 1% after recommendation)
Feb. 26th, 2008:  Cash

Stop Losses are used on all trades.  Performance results can be increased via index funds. 

Safe Trading!!!

The trend of the S&P 500 is almost confirmed for the short and medium term to be bullish. The slight pullback today is a welcomed sign that the index isn’t advancing at an unsustainable rate. I will be holding my portfolio until the A/D Ratio is nearing 2.0, and that may take a while. However, I may cash out my short term positions this week to take some profits to avoid unnecessary risk.

The values I spotted this week were Google (Goog), and Cisco (CSCO). These positions have generated some nice short term profits, but they may become overvalued in the short term. Verizon (VZ), on the other hand, is a value stock that I will hold for the long term. I am still well positioned in Ford (F), and I have some minor positions in Himax (HIMX), Capstone Turbine Corporation (CPST), E*Trade (ETFC), and Forgent Networks (ASUR)

Good Luck,
Scott
S&P 500 Trend

^{The Point} - The Trend is Down.  Add Short Positions Bounces.

^{The Story} - The 7 day EMA has clearly crossed below the 21 day EMA, the stochastics have turned lower, and the MACD is negative and dropping for the S&P, Nasdaq and Dow.  The trend is lower for all three indexes.   

^{Trade Recommendation:}  Consider QID, DXD, or SDS.  QID seems to be the best participant as it is a Nasdaq inverse fund and the Nasdaq has been the weakest index for a while now.  I am looking to do Bear Credit Spreads as well.  

^{Current Position:} Cash - looking to establish positions on any bounces.

^{Items on our Agenda:}