Wednesday, November 28, 2012

Stocks Heading Higher

I was skeptical that the bottom for this correction was put in just before a shortened holiday week. But the move higher the last few days and today have been strong.  Below is the Summation Index.
The Summation Index is a market breadth indicator.  Notice that it has crossed over the moving average and is heading higher.  This is a positive sign and signals higher prices ahead for stocks.  
The chart above is short and long term bullish as the index trades above the 10 day moving average and the 200 day moving average.  A test will occur just above at the 50 day moving average.  Otherwise today was a rather strong day for the markets with decent volume.  

Bottom Line:  The markets are looking poised for higher prices in the near term.  The index is trading above the 10 dma and the 200 dma, with a test coming above at the 50 dma.  The summation index has crossed over the moving average which is bullish and signals higher prices ahead for stocks. Thank you for reading.
 

Sunday, November 25, 2012

NOKIA - Before and After

We showed the technical pattern that NOK was displaying last weekend on November 17th below with a price target around $4.00.
The chart below, just a week later shows the break of the symmetrical chart pattern to the upside with heavy volume.  
Although our price target has not been reached yet, the move higher has the stock quite overbought in the short term and a pause if not a pullback would be necessary if higher prices will be seen in the weeks ahead.
The overall market eclipsed our correction targets of the 200 dma and the 50% fibonacci retrace above.  Although this looks like an oversold bounce higher with heavy short covering on a holiday week, we are giving the low, the benefit of the doubt for now.  

Bottom Line:  Even though NOK has not reached our preliminary price target yet, the stock is on a parabolic move higher, that does not look sustainable in the short term.  So we may use a stop or take profits after a +30% gain in just a few short weeks.  The overall market has eclipsed our price targets to the downside, and has put in a nice oversold bounce last week during a shortened holiday week.  Thank you for reading.
 
 

Saturday, November 17, 2012

Nokia Technical Pattern

Nokia (NOK) is one of the stocks we currently own.  I mentioned in a prior post the release of their new smartphone the Lumia 920 just this past week, which has received strong reviews.  The chart is showing a commonly known "symmetrical chart pattern".
From the above chart.  The symmetrical chart pattern is one that gets narrow as time goes on.  The volatility of the stock decreases.  Another characteristic is that volume also decreases as the triangle extends, which it has.  The potential breakout (higher or lower) of the triangle should include high volume.  The target price on a break out higher would be around the $4.00 area, or the width of the pattern when it started.  

Bottom Line: We hold NOK as a turnaround story, based on the release of their new Lumia 920 smartphone with Windows 8 as the operating system. Buying the stock from a technical pattern when it breaks out of the triangle would be a play for traders looking for a technical edge to the upside with an intermediate $4.00 price target.  Thank you for reading.
 

Saturday, November 3, 2012

Weekend Update

Fridays non-farm payroll report (+171K) was a positive report that the market originally liked.  But after an hour or two the markets gave way to lower prices and finished at the days low.  If the jobs report was positive, than what led to the sell off?  Below is a chart of the SPY and UUP (US Dollar ETF).
The above chart shows the inverse correlation that the US Dollar has with the S&P 500. Another words, as the dollar gains strength, the S&P 500 trades lower.  The US Dollar gained strength due to the positive job creation report before the markets opened and held that strength throughout the day.  
The chart above is the S&P 500 trading ETF with the 200 day moving average just -3.24% below.  Volume on the decline Friday was mild.
  
Bottom Line:  Regardless what the media attributes to the market being lower on Friday, or any day for that matter, it is really very simple.  Stronger dollar equals lower prices for the market as illustrated above with few non-correlation days in between.  Thank you for reading.

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