Volatility Reigns

Volatility has been running high this week as the dollar more than anything is playing havoc with the markets. None of this volatility negates the uptrend that we are currently experiencing.  Technically, the markets are oversold at present in the short term.  Couple of charts below.

The S&P above shows a lot of volatility, but uptrend remains intact.

The TRIN is oversold significantly, and should retrace.  Thank you for reading.

Bottom Line:  What's moving the market is....
A)  US Dollar daily swings.
B)  Option expiration week.
C)  Subpar corporate earnings releases.

Normal Pullback Nothing to Fear

Using the last two pullbacks as history, a -4% move lower would be healthy.  Chart below.

Bottom Line:  Markets need these -4%-6% pullbacks while keeping the uptrend intact.  The last two pullbacks were -3% and -4% since implementing QE3 fully in September.  So I am looking for a similar move lower which would keep the uptrend intact and lead to new highs in the weeks ahead. Thank you for reading.

ACAD Up +50% Premarket

We originally bought ACAD around $6.00 per share here ACAD Pharmaceuticals - ACAD.  ACAD is up pre-market 50% to around $12.00 on news that it will seek FDA approval for Pimavanserin a Parkinsons disease psychosis drug.  After meeting with the Food and Drug Administration and based on data from a successful phase III study already completed the company will no longer conduct a confirmatory phase III study that was planned to start this month.  The company is currently targeting NDA submission (new drug application) by the end of 2014.
Bottom Line:  The phase III study that was released last November was statistically significant.  Having the opportunity to skip a second phase III study will eliminate approximately a year or more from potential approval to drug to market.  The company is a strong candidate for acquisition by large pharma as the patent  coverage for Pimavanserin is 2028.  Thank you for reading.

Nokia Trend Reversal

Nokia has had a couple of good days in a row, and has the look of displaying a trend reversal pattern shown from the charts below.

The daily chart above has been trading below the 20 day exponential moving average for over the last few months, but has cleanly broken above the moving average on higher than average volume today.

The weekly chart above, is shown with fibonacci re-tracement levels.  Typically a healthy pull back for a stock would be to move down to the 50% level.  Nokia did just that and has bounced off that level nicely.  The moving indicators are still bullish (green above purple line) despite the 50% re-trace over the last few months.

Bottom Line:  Nice technical picture developing with NOK, as it is trading above the 20 day ema, has volume above average, indicators still bullish, and bounce off the 50% retrace fibonacci level.  Thank you for reading.

Resilient Market

After a Friday jobs report that came in below expectations, the market has showed its resilience and has had a strong bounce back.

The chart above shows how the SPY pulled just below the 20 day exponential moving average (green line) similar to the last two small pullbacks and has headed higher since.  New highs should be attained soon.  

Bottom Line:  Many have been calling for a market correction to occur, but there is a continued bid under this market that has kept this uptrend. I am looking for new highs in the coming days to weeks.
Thank you for reading.

Ominous Market Signs Part II

A few charts to confirm what I have been seeing during the last few weeks in the market.

The NYSI Summation Index above is trading below the moving average. This is an intermediate term indicator.  In other words, the market may not necessarily track this on a day to day basis, but what's important is the trend and that it is has moved below the moving average signalling weakness.

The New High / New Low chart above has spent 2013 above the zero line but is trending down toward the zero line now which means the market is getting more balanced out.  As this indicator falls, we should see more value in some specific stocks.

The above chart is a ratio of high beta stocks / low volatility stocks. When the black ratio line falls below the  moving averages, then risk is subdued, and when the ratio line is above the moving averages then traders are more in the risk taking mood by buying the high beta stocks vs. the low volatility stocks.  

Bottom Line:  We are staying fairly conservative holding a high cash position to take advantage of any significant pullback we may see.  The Friday's Non Farm Payroll will be in the spotlight, and as usual expect plenty of volatility when that report is released.  Thank you for reading.

Ominous Market Signs

The market is displaying some signs that could indicate market weakness in the coming weeks ahead or perhaps a correction in the making.

The $TICK (short term) indicator above sold off from the start of the day and continued weak throughout the day to end in oversold territory. Typically we would like to see a bounce from the oversold territory as buyers step in.

The NYSE advance / decline line has been falling on a longer term basis for much of this year. This merits something to watch on a daily basis.

Leadership stocks like AAPL have sold off.  Apple has sold off the past four trading sessions and is heading toward it's 2013 low.  Let's see if a test of that low holds or does the stock create a new 2013 low in the days ahead putting pressure on the overall market.

Bottom Line:  Friday we have the release of the Non-Farm Payroll data, which tends to create a market reaction either way.  So perhaps that has the market on edge today as the short term $TICK indicator was weak throughout the entire day, and other intermediate term indicators have been looking rather weak over the past month.  Thank you for reading.