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Tuesday, May 8, 2012

A strange day of trading. Focus back on Greece default.

In past 6 month, whenever ECB printed money, most of the time market have rallied upside eventhough chart were pointing toward sell off. Based on the chart, today market was expected to sell off but since ECB was printing money market was expected to rise. There were so many strange things that happened today. Greece is having problem of forming government and it may have to conduct another round of election. Greece has 5 week from now, before it's cash will be over. So, Greece is not in a position of another round of election. Either, Greece have to exit eurozone or it has to officially default. Merkel commented to France President Hollande that there will be no negotiation on European union fiscal pact. Both this problem existed yesterday but the market didn't sell off but today it became main issue for sell off. Dow was down 196 and then it rallied up 126 point and S&P500 was almost down 22 point and it rallied up 16 point.

Based on the chart, tomorrow Dow and S&P500 is expected to rally upside as its back into bullish zone.

The first level to check on Tomorrow in Dow for upside is 13000 followed by 13032 which is important break point for the upside. While for the downside, Dow needs to break 12908 followed by 13865.
The first level to check on Monday in S&P500 for upside is 1372 followed by 1375 which is important break point for the upside. While for the downside, S&P500 needs to break 1358 followed by 1355. 

Use technical indicator 20 (simple moving average) sma and 50 sma to better visualise uptrend or downtrend in this manipulated market. If 20 sma crosses 50 sma and 20 sma is up, then the stocks will go higher, if 50 sma crosses 20 sma and if 50 sma is up, then stocks will go lower. In the chart red circle is bearish sign, blue circle is bullish sign. Green line is represented by SMA(50) and red line is SMA(20), while blue line actual stock value. To learn more about SMA check out http://www.freefdawatchlist.com/2012/04/understanding-simple-moving-average-sma.html

Dow zone started in bearish zone but at the close its back into bullish zone and tomorrow market is expected to rally upside or atleast end up flat.

Dow 1 month chart is still in bearish zone but at a breakpoint where it could go higher.

S&P500 started in bearish zone but at the close S&P500 is back into bullish zone and its expected to rally upside tomorrow or atleast it could end up flat

S&P500 1 month chart is in bearish zone but at a breakpoint where it could go higher.
The only economic data coming out tomorrow is Oil inventories at 10.30 EST, a built up in inventory is bearish sign, while a decline in oil inventory is bullish sign for ERX or any oil related companies.
Earnings before market open: AOL, ARIA, DF, DTG, FXCM, IHG, KELYA, M, SVNT, TEVA, TM, SODA

Earning after market close:  JOBS, ATVI, ELON, MNST, OXGN, MALL, PSDV, PCLN, SGI,PANL, TSLA, WR

After hours big gainerVTSS, HIMX, QSII, AMED, SKYW

After hours big loser:  STEC, GPOR, AMRS, WPRT, PTRY

For day trading watchout BIDU, AAPL, PCLN, MA, V, FAS, FAZ, TZA, TNA, TVIX, XIV, SVXY, UVXY, VXX, SPY, DIA, GLD, AGQ, INFY (remember volatility is not a long term investment option use it for strictly day trading) VIX is still in contango so any rally in it would lead to sell off at close. So becareful with UVXY, TVIX, VXX.

Remember May 15th and May 17th are two important date in Eurozone. Don't keep all your money invested in stock, keep cash in hand to take advantage of any sell off. Good luck




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