Wednesday, September 30, 2009

Divergence - am I coming or going?

When I write about stock market sectors or individual stocks, I generally give an overview of the fundamentals. On the other hand, all the BUY SELL signals we offer at Alert HQ are strictly based on technical analysis.

Whereas the Alert HQ methodology primarily looks for technical indicators that are in agreement in order to generate its signals, there is an important school of thought that says that it is important to note when indicators are not in agreement. This is known as divergence.

More precisely, divergence is when the price of an asset (a stock or ETF, for example) and an indicator, index or other related asset move in opposite directions. An investor looks for those instances where the trends begin to head in opposite directions. This is interpreted as a signal that a turn in the asset price is imminent.

The difference between stock or index prices and MACD is one of the more common divergences that investors watch. Others involves prices and either stochastics, Money Flow Index, RSI, accumulation/distribution or advance/decline.

Sometimes an indicator itself is based on the divergence concept. Moving Average Convergence/Divergence (MACD ) is an example.

Let's see how it works --

The best way to illustrate how divergences work is to look at a chart and walk through some analysis.

Luckily, our friends at Market Club are presenting a new video on the S&P and Divergences.

In this short video, they share with you some divergences that are taking place in the S&P 500 right now. In the course of the analysis they will also show you divergences that didn't work out, what you should look for, and how you should act when a divergence does not work.

So check out the video, it's free and there are no obligations. If divergences weren't on your radar before, it will help you become more aware of when divergences are developing. This can be one more important tool you can use to prepare for turns in the market or in individual stocks.



Tuesday, September 29, 2009

Tuesday Swing Signals, Trend Busters, Trend Leaders and Gap Signals for Sept 29, 2009

This post is announcing that Tuesday's Swing Signals, Trend Leaders, Trend Busters and Gap Signals are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 27 Swing Signals -- 16 BUY signals and 11 SELL Signals.
  • 353 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 128 stocks that are new additions to the list and 113 that fell off the previous list.
  • 15 Trend Busters of which 8 are BUY signals and 7 are SELL signals.
  • 318 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Our signals at Alert HQ are beginning to indicate a slowing in the negative momentum and perhaps a preparation a resumption of the up-trend. Let's look at each signal in turn:
  • I've noted before that we look to the Swing Signals to give us early warning on market turns. We've had SELL signals outnumbering BUY signals for a couple of weeks but today we see that situation reversed. This increases our expectations that the market is poised to move up.
  • I've also said that the Trend Leaders provide confirmation to the more short-term signals like the Swing Trading Signals. Our Trend Leaders list has been knocking around at rather low levels around 300 for a week or so now and we have seen the number of stocks falling off the list generally outnumbering the number moving onto the list. As of today, that situation has reversed. This is welcome news which implies that the tide could be turning in a positive direction.
  • With respect to our Trend Busters, the bullish signals hold a slight edge over the bearish signals
  • Our new Gap Signals are showing 170 bearish signals and 148 bullish signals. This category isn't doing much to support our bullish thesis. On the other hand, including a full week's worth of signals may be skewing our results when we are trying to look forward based in recent data.
  • Inverse ETFs are much less in evidence among our BUY signals today than they were last week.
So, in aggregate, the number of bullish signals suggests the market may be recovering sooner rather than later. Be sure to check Alert HQ for stocks that are poised to benefit.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Monday, September 28, 2009

Semiconductor equipment makers rising from the dead?

One of the hardest hit sectors in the downturn has been semiconductor equipment. With plunging demand for semis and rampant over-capacity, manufacturers of chip making equipment have been the zombies of the tech world. Are the dead beginning to come back to life?

Today Applied Materials (AMAT) was upgraded by a Citi analyst based on strength in orders for equipment used to make photovoltaic cells. Analyst Timothy Arcuri believes that Applied Materials is about to sign a "significant" second wave of orders for its SunFab solar production equipment, including four new lines of about 300 megawatts in India. Winning solar contracts in areas beyond China and Taiwan is indeed a positive development.

Last week KLA-Tencor (KLAC) was upgraded by an Oppenheimer analyst who said that said there are "early indications the cyclical recovery ... is blossoming into a real upturn."

A quick look at the fundamentals --

We'll start by looking at a chart of the financials for AMAT:

Explore more AMAT Data on Wikinvest


You can see that revenue and gross profit are slowly beginning to improve after hitting lows earlier in 2009. What is more notable is that margins are increasing rapidly. This is the result of the company aggressively reducing costs during the downturn. Going forward, even modest increases in sales should yield proportionally larger earnings.

This next chart looks at KLA-Tencor.

Explore more KLAC Data on Wikinvest


Improvement in KLAC seems to be slower to arrive that it has been for AMAT. The significant market share in solar equipment enjoyed by Applied Materials is clearly paying off as AMAT seems to be first to recover. Nevertheless, KLAC is showing the same kind of margin improvement and this can't hurt future results.

From an industry-wide perspective, SEMI recently released the August 2009 preliminary book-to-bill ratio. The following chart, going back to June-2008, shows a slight dip in August compared to July; however, the important feature is that orders (the "book" part of the ratio) are increasing and that is a welcome sign.


Conclusion --

The semiconductor sector is often a leading indicator and it has been on a tear lately, bringing the rest of tech along with it. Finally, the semiconductor equipment sector is jumping on board.

General trends favoring the semiconductor equipment makers include the move to smaller chip geometries and increasing focus on solar production. I have read accounts that some chip making facilities have been retired or scrapped during the downturn. If the economy continues to rebound and tech demand fully recovers, lost capacity will have to be replaced. These two stocks could be the first beneficiaries.

Disclosure: no positions



Sunday, September 27, 2009

Gaps - In the spaces there's meaning

Many traders treat gaps as serious indicators. At Alert HQ we are now bringing gaps into our technical analysis. Here's how.

In an effort to further reduce false signals in our Swing Trading Signals, we now take gaps into account. We avoid declaring a BUY signal if the stock has had a gap down within the last two weeks unless the gap has been closed. For SELL signals, the processing is the converse.

New Feature at Alert HQ: Gap Analysis Signals --

The big news, however, is that we have developed a new screen that is focused on gaps. As we scan 7000 or so stocks three times a week, we now log all the gaps we detect and create the following four signals:

  • Bullish - Gap Up: a gap of more than 3% to the upside
  • Bearish - Gap Down: a gap of more than 3% to the downside
  • Bullish - Closed Gap: after a gap to the downside, the stock subsequently moved up so that the most recent closing price is above the original gap level
  • Bearish - Closed Gap: after a gap to the upside, the stock subsequently moved down so the most recent closing price is less than the original gap level
In all cases, the most recent incident within the last five trading days is logged.

Now at Alert HQ we are providing a page specially devoted to the gap screen, the TradeRadar Gap Analysis Signals page. This feature is so new it is not yet accessible from the TradeRadar menu.

Today's gap results --

This first offering of our Gap Analysis Signals provides a big list of stocks and ETFs. There are a total of 294 signals broken down as follows:
  • 128 Bullish - Gap Up signals
  • 144 Bearish - Gap Down signals
  • 5 Bullish - Closed Gaps
  • 17 Bearish - Closed Gaps
Two observations:
  • The bears have an edge over the bulls in this list but, given the fact we have had three straight down days in the market, that is no surprise. What is surprising is that there are so many bullish signals despite the declining market.
  • Low volume stocks, especially those that are low priced, seem to be prone to gaps of more than 3% without exceeding their volatility envelope.
Conclusion --

Our Gap Analysis Signals page will be another good source of ideas for your short to intermediate-term trading. As always, it is free. I expect to get the page integrated into the TradeRadar Alert HQ menu soon but until then, you can use this post to access the page.

Feedback is welcome. Check out our new Gap Analysis Signals page and leave a comment to let us know what you think of it.



Saturday, September 26, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for September 25, 2009

This post is to announce that the weekend's stock signals are available from Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - just like it says, a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Trading Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
The view from Alert HQ --

This week the most speculative segments of the markets fell the most. The small-cap Russell 2000 led the week's losses, dropping 3.1%. The NASDAQ and S&P 500 each fell roughly 2% and the Dow dropped 1.6%.

Investors had a plethora of data to sift through this week. Some data was OK but there were several reports that spooked the market and set the stage for the week's declines. Primary among this latter group were new and existing home sales for August, neither of which met expectations. Then there was the Durable Goods report. One the recent "green shoots" has been the manufacturing sector. When new orders and shipments were both reported well below expectations, the sell-off intensified.

At Alert HQ, we see the effects of the decline. Our Trend Leaders list, not so long ago holding over 1000 stocks and ETFs, has been whittled down to one third that number. SELL signals out number BUY signals on many of our other lists. For now, we are clearly in a down-trend.

Optimistically speaking, however, the decline has been orderly with no signs of panic selling. This suggests that there will be opportunities for trades on both the long side and the short side as stocks find their level of equilibrium. Alert HQ has plenty of ideas for either type of trader.

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 2 Alert HQ BUY signals and 26 SELL signals
  • Based on weekly data, we have 4 Alert HQ BUY signals and 7 SELL signals
  • Based on daily data, we have 338 Trend Leaders. 36 new stocks joined the list since Thursday and 281 fell off the list since Thursday.
  • We have 84 Bollinger Band Breakouts based on daily data and 231 Breakouts based on weekly data.
  • We have 795 Cash Flow Kings
  • Based on daily data we have 38 Swing Signals of which 10 are BUY signals and 28 are SELL signals.
  • Finally, we have Trend Busters with 28 signals based on daily data (18 BUY signals and 10 SELL signals) and 51 based on weekly data (13 BUY signals and 38 SELL signals).
Using our signals --

Visit Alert HQ and view or download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.



Friday, September 25, 2009

So far, just a speed bump for tech - Durable Goods for Aug-09

The Durable Goods report for August came out Friday and landed with a thud. The headline number for new orders fell a surprising 2.4% month-over-month after a better than expected July. How did things go in the tech sector?

Shipments --

We'll start off looking backwards at Shipments in the month of August. This first chart shows the results for Computers and Electronics Products which is the summarized category encompassing most high tech hardware manufacturing including computers, peripherals, storage, semiconductors, communication and networking equipment.


It's clear that tech hit a speed bump in August as shipments fell 2.6%. It is apparent, though, that shipments data shows considerable variation month to month so August's decline, though worse than expected, is still somewhat within the norm and doesn't yet signal the approach of new lows.

This next chart shows shipments for the Computers and related products sub-category.

Now here we have trouble. Shipments fell 4% and we're not far from a new low. This measure was just barely beginning to turn up and August's decline really hurts. With companies like Intel projecting improving sales, however, an optimist would advise that patience is necessary here.

I don't usually present the chart for Communications Equipment but here it is today. The numbers include both defense and non-defense equipment. Shipments is this sub-category fell 2.6% but, after two strong months, August's decline is hardly alarming.


This next chart shows Semiconductor shipments.


Here, shipments fell a whopping 9.9% but the increase in July was so big (over 50%) that the August decline doesn't really dent what looks like the beginning of an up-trend. Note that Semiconductors exhibit lots of variability month to month so August's decline appears to be no big deal.

New Orders --

Now for the forward looking measure. This next chart shows New Orders for the tech sector as a whole.


This chart shows that new orders were down in August by 0.7% This is the first decline in four months and it's really a pretty minor decline.

Our next chart shows new orders for the Computers and Related Products sub-category.


New orders have now declined two months in a row. With July new orders down it is not surprising that, subsequently, shipments in August were down. This does not bode well for shipments in September.

So as not to end on a down note, new orders for Communications Equipment are presented below.


This is the only chart we have today that shows an increase from July to August.

Conclusion --

Last month, we concluded that all the charts were showing a clear bottom and tentative up-trends were unfolding. So after taking a couple of steps forward, tech took a step back in August.

Are we heading for new lows? The charts don't paint a picture quite that dismal. Is the up-trend going to be smooth? Hardly. As our charts show today, it will be a jagged and uneven path for tech manufacturing as it recovers from the depths of this downturn.

How to play it --

These charts don't single out any particular company. Note that communications equipment put in the best showing and that the overall tech category also showed continued strength. The way to play the recovery in tech could be through ETFs. General tech ETFs are: S&P Select Sector SPDR Fund (XLK), iShares Dow Jones U.S. Technology Fund (IYW) and Vanguard Information Technology VIPERs (VGT). Some would add the Nasdaq 100 Trust (QQQQ) though it also holds some non-tech stocks. In the communications area, the following ETFs are available: iShares Goldman Sachs Networking Index Fund (IGN), PowerShares Dynamic Networking (PXQ) and the Merrill Lynch Internet Infrastructure HOLDRs (IIH).

Disclosure: long IGN, ROM and USD



Thursday, September 24, 2009

Topped out - Thursday Swing Signals, Trend Busters and Trend Leaders for Sept 24, 2009

This post is announcing that Thursday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 96 Swing Signals -- 16 BUY signals and 80 SELL Signals.
  • 583 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 83 stocks that are new additions to the list and 545 that fell off the previous list.
  • 24 Trend Busters of which 12 are BUY signals and 12 are SELL signals.
The view from Alert HQ --

Last Thursday I said "OK, now I'm really worried." Our signals suggesting we were at or very close to a top. The last two days seem to confirm that.

Our Swing Signals had been skewing negative with SELL signals are outnumbering BUY signals. Today's results are similar but almost all the BUY signals are for inverse leveraged ETFs. There are a ton of SELL signals and they are spread across all kinds of sectors

Our list of Trend Leaders has been hanging at a level that was pretty close to historical highs. Today, the list got cut in half.

Our Trend Busters list looks a lot like the Swing Signals list with, again, most BUY signals coming from inverse leveraged ETFs.

Two days of losses have resulted in the S&P 500 being down roughly 2%. We now have an interesting setup on the chart below


In looking for support levels, it appears that Fibonacci lines fit the recent price pattern pretty well. You can see the first support level coming up quickly at $1039, but I suspect we'll get down around that 50% retracement line at $1027. I would be surprised if it went much below that level.

All in all, that would be a modest pullback, something that should be considered to be a healthy pause after such a strong run-up. The takeaway then is that if you are bullish, there is no reason to unload your positions and if you are bearish, this could be a short-lived opportunity so grab it while you can.

So keeping checking our site. We're finding plenty of opportunities and we post them three times a week.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Wednesday, September 23, 2009

Citi's Levkovich - cautious optimism that growth is returning

Back in June of 2008 I wrote a post that featured the opinions of well-known Citigroup strategist Tobias Levkovich. At the time he was declaring that it was time to buy banks. He was 9 months early in that call. What does he have to say these days?

It seems that Mr. Levkovich is reasonably positive on the state of the U.S. economy. He is projecting GDP growth a hair over 1% in the 3rd and 4th quarters of 2009 and 2.1% in 2010.

As indicators that modest growth is in store, he points to the following developments:

  • Companies have cut back production and orders to an excessive extent.
  • Though demand remains weak, companies are now finding it necessary to increase production.
  • There has been improvement in the credit markets
  • Yields of junk bonds have dropped by 10%
  • Banks received government guarantees for their loans and have stabilized.
  • The need to cut inventories is waning and demand remains stable
Levkovich's main point, however, revolves around the supply - demand equation. Among the ideas listed above, he makes the point that production was cut too severely in the face of slowing demand. Any increase in production can be expected to show up as an improvement in GDP and lead to a rise in the price of raw materials and in the price of transporting them. This is a process that helps to reignite the economy and encourages factories not to lay off more workers. The caveat is that it may not be enough to actually generate new jobs to replace those that have been lost in the downturn.

How to play it --

According to Levkovich, Citi is favoring energy, raw materials, industrials and financials. They suggest lightening up on defense industries, health services, software and computer services.

Do I agree? Only to a certain extent. Certainly we've seen materials and energy putting in a good performance these last six months. On the other hand, I continue to be way bullish on tech. I am still suspicious of the financials but the market seems to be positive on the sector.

So take Mr. Levkovich's opinions for what they are worth. At the least, it is another welcome data point supporting the bullish case.


Sources: TheMarker (Israel)



Tuesday, September 22, 2009

Regional banks making a comeback?

In looking over tonight's Swing Trading Signals, one sector seemed to be standing out. There were a bunch of BUY signals for regional banks.

Out of 13 BUY signals, there were 6 that were regional banks:

  • City Bank (CTB)
  • The Elmira Savings Bank, FSB (ESBK)
  • First United Corporation (FUNC)
  • MERCANTILE BANCORP, INC. (MBR)
  • Old Second Bancorp, Inc. (OSBC)
  • United Western Bancorp, Inc. (UWBK)
In addition, there was a large money center bank on the list: MITSUBISHI UFJ FINANCIAL GROUP, INC. (MTU).

After three down days, financials certainly spiked upward today. Interestingly, the Financial Select Sector SPDR jumped 2.27% while the KBW Regional Bank ETF (KRE) only moved up 1.33%. Some of the banks on our list did much better than KRE and some only matched it.

In looking at the charts of these stocks, I have to say that some of them look pretty dismal. For the most part, I believe we are seeing short term signals here as the longer-term trends are not yet looking like they are quite ready to break to the upside. Still, most of these stocks could be candidates for a modest move that continues to the vicinity of the upper Bollinger Band. As such, there could be a few dollars to be made.

Disclosure: no positions



Can't keep this market down - Tuesday Swing Signals, Trend Busters and Trend Leaders for Sept 22, 2009

This post is announcing that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 35 Swing Signals -- 13 BUY signals and 21 SELL Signals plus 1 Strong BUY.
  • 1045 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 122 stocks that are new additions to the list and 229 that fell off the previous list.
  • 17 Trend Busters of which 14 are BUY signals and 3 are SELL signals.
The view from Alert HQ --

Momentum seemed to be slowing over the last few days but stocks moved higher yet again today. With the dollar weakening, commodities rose as did gold miners and many country ETFs that are tied to the commodities story. Tech lagged a bit while financials, energy and materials led the charge. Despite some nervousness over tomorrow's statement from the FOMC, investors worked to get the rally back on track.

At Alert HQ, we look to the Swing Signals to give us early warning on market turns and the Trend Leaders to provide confirmation.

Lately we seem to be suffering a divergence. The list of Trend Leaders has stayed at levels that are pretty close to historical highs, confirming the strength and broadness of the upward trend. On the other hand, the Swing Trading Signals are showing mostly SELL signals, suggesting the market is due for a pullback.

What we seem to be seeing is a situation where the slowing momentum is affecting our Swing Signals but not enough to really hold the market back. Sector rotation keeps our Trend Leaders list full of new stocks while others drop off. I continue to think this phase of the rally is getting long in the tooth but, for now, it seems, you can't keep this market down.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Monday, September 21, 2009

Analysts missed the downturn, are they getting it right now? Why it matters

If you've ever distrusted the earnings estimates of stock market analysts, it looks like you've had good reason to be skeptical.

The following chart shows an interesting pattern. At the top left, we see global stock prices plunging roughly three months before earnings estimates began to come down. Doesn't inspire confidence in analyst opinions, does it?

Global Earnings Momentum
Now take a closer look at the lower right hand corner of chart. Here we see prices and estimates playing out the same way, only in reverse. In other words, prices are heading up and analysts are only now, three months after the trough in prices, beginning to raise earnings estimates.

How to play it --

Citigroup has looked at global estimates divided them into two buckets: developed world and emerging world. You can see the results in this next chart:

12-Month Forward EPS

It is clear that analyst expectations for emerging market stocks are much rosier than their expectations for stocks in developed economies.

Conclusion --

Stock prices are leading analyst estimates again, this time in a positive direction.

The charts above show that earnings estimates, in aggregate, provide something like a smoothing function to underlying price action. Estimates lag prices by roughly three months and don't exhibit as much volatility as prices. This interaction of prices and estimates does seem to mark turning points in the stock market.

Worried that you've already missed a big part of the rally? Then go where the expected earnings momentum is highest: emerging markets. There's still time to go out and buy an emerging market ETF . Here is a quick list to get you started:
  • iShares MSCI Emerging Markets Index Fund (EEM)
  • PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)
  • SPDR S&P Emerging Markets ETF (GMM)
  • Vanguard Emerging Markets ETF (VWO)
  • ProShares Ultra MSCI Emerging Markets (EET)

Sources: this post is based on an article in Toronto's Globe and Mail.

Disclosure: no positions



Friday, September 18, 2009

No posts this weekend...

I'll be out of town this weekend so there will probably be no posting to the blog.

Despite my absence, I still intend to have Alert HQ updated with the latest BUY and SELL signals. My intern (my 15-year old son) will be handling the update duties. Be sure to check it out sometime Saturday afternoon.

Have a good weekend, everyone. See you soon!



Thursday, September 17, 2009

At the tipping point - Thursday Swing Signals, Trend Busters and Trend Leaders for Sept 17, 2009

This post is announcing that Thursday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 40 Swing Signals -- 15 BUY signals and 25 SELL Signals.
  • 1103 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 308 stocks that are new additions to the list and 53 that fell off the previous list.
  • 36 Trend Busters of which 34 are BUY signals and 2 are SELL signals.
The view from Alert HQ --

OK, now I'm really worried.

On Tuesday the list of Trend Leaders had grown to a level that was pretty close to a historical high. Today it has hit what is pretty much the maximum level we have seen at short-term or intermediate market peaks.

Our Swing Signals are now skewing negative. SELL signals are outnumbering BUY signals. This has often been a leading indicator of short-term weakness.

Still keeping the faith is our Trend Busters list. We continue to see a preponderance of BUY signals.

Today's market action was only slightly bearish. Really, stocks didn't fall all that much since most of the economic news was pretty decent. Our signals, however, suggest we have seen the highs for the near-term and that a modest pullback could easily be the next phase in this market. Nevertheless, I'd be surprised if stocks fell more than 3% or 4%. In other words, I remain bullish and this could be an opportunity for dip-buyers.

So keeping checking our site. We're finding plenty of opportunities and we post them three times a week.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Wednesday, September 16, 2009

Did Oracle whiff?

Oracle released earnings after the close today. The stock immediately fell several percent after hours. Was the sell-off justified?

The company indicated that profit rose 4% which was in line with analyst estimates. The top line, however, was a source of concern for investors.

The following chart shows Oracle's three primary revenue sources.

Oracle Revenue Sources, F1Q2010

(Data courtesy of Gridstone Research and Seeking Alpha)

As usual, the Updates and Support category showed sequential growth albeit very modest growth. This number includes the software maintenance revenue that tends to provide a solid underpinning to many enterprise software companies.

The bad news kicks in when we look at the other two revenue sources. Services has been a huge money maker for companies like IBM and HP. Investors were not pleased to see that Oracle's Services revenue declined to levels not seen since 2007.

Worst of all, revenue from New Software Licenses fell to $1 billion, below analyst expectations and down to levels last seen back in 2006. This is serious because it's the new licenses that lead to new support contracts which are the cash cows of the software industry. New licenses are the harbingers of growth.

While we have recently seen other tech companies show the kind of growth that indicates the worst is behind us (think IBM, Intel, Cisco), Oracle's contrasting drop in new license revenue is alarming.

So did Oracle whiff? Today's quarterly results feed the bear case that says that enterprise demand has not yet returned and that the rally in tech is over-done. Bulls might say that this is company specific. In any case, don't be surprised if tech lags tomorrow. On the other hand, don't be surprised if the entire market falls and analysts point to Oracle as a catalyst.

Disclosure: no positions



Tuesday, September 15, 2009

The bulls run again - Tuesday Swing Signals, Trend Busters and Trend Leaders for Sept 15, 2009

This post is announcing that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 39 Swing Signals -- 31 BUY signals and 7 SELL Signals plus 1 Strong BUY.
  • 848 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 244 stocks that are new additions to the list and a mere 31 that fell off the previous list.
  • 60 Trend Busters of which 56 are BUY signals and 4 are SELL signals.
The view from Alert HQ --

The list of Trend Leaders has now grown to a level that is pretty close to a historical high. Our Swing Signals and Trend Busters are overwhelmingly full of BUY signals. Things seem like they just can't get any better. That's why I am increasingly cautious. In the meantime, the market seems to keep clawing and scrabbling its way to gains every afternoon. We've got a good batch of signals tonight so let's enjoy this rally while we can.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Monday, September 14, 2009

How long does it take Swing Trading Signals to achieve profitability?

We offer free Swing Trading BUY and SELL signals. This post looks into performance over time of the BUY signals.

Quick background. The TradeRadar Swing Trading Signals are primarily based on Bollinger Bands. For the BUY signal, we look for the closing price to dip below the lower band and then pop back up above the lower band. We apply a proprietary set of criteria to ensure that the "pop" was strong enough to suggest a viable BUY. We also use Williams %R to check whether the price is in the process of recovering from an over-sold condition.

The analysis --

I took the signals that were generated over the weekend on Saturday mornings as well as all the signals that were generated on Tuesdays and Thursdays. I looked at each set of signals separately and charted the results.

I looked at how many BUY signals were profitable after 1 week had elapsed, after 2 weeks had elapsed, after 3 weeks, etc. I used a weekly increment because we only run our tracking program on the weekend. This gives us a week-by-week status on our picks. A percentage (the left hand axis in the chart below) is generated by calculating the number of profitable signals divided by the total number of signals. (Yes, I admit it: not every single signal is profitable.)

This chart shows the results:

Swing Signals - Weeks To Profit
For Thursday and Saturday signals we start out with about 40% of the picks being profitable after one week. After four or five weeks, though, we are seeing that roughly 70% to 80% of picks are showing profits. Not a bad track record.

For the Tuesday signals, more stocks are profitable within the first week and the performance is more consistent as the weeks go by.

Final thoughts --

The analysis above leads to two questions:

  1. This analysis does not imply that every BUY signal works out the same since, obviously, not every stock is the same. Frankly, though, I was surprised by the results. I had expected that most picks would see profitability attained after 2 or 3 weeks and then the number showing profits would decrease. What's going on here?
  2. Many explanations of Swing Trading suggest that the typical holding period is a few days to a few weeks. The analysis presented above implies that stocks should be held for a somewhat longer period. Why might that be?
I suspect the answer to both questions has to do with how the market has been trending. Since March, we have had a strongly trending bull market. It has enabled the BUY signals, which were bets on the price cycle of the stocks in question, to continue to show gains over a longer period. The expectation was that the stocks would oscillate between their upper and lower Bollinger Bands but a general lift in the market is allowing many of picks to continue showing gains over the course of months.

This is another sign that for the last six months it's been a pretty good environment for investors.

If you're interested in following our Swing Signals, they are refreshed three times a week: every Tuesday and Thursday night and on Saturday.



Sunday, September 13, 2009

I'm not really bearish but stocks could get tripped up here

Running late tonight but I wanted to publish the two weekly Alert HQ charts, especially since I skipped last week.

By way of background, this past week had no news events of special importance but stocks returned to their winning ways. Looks like we are only allowed one bad week in a row before the bulls return.

The question is, will the bulls hang around this week? The Nikkei is down hard as I write this. China was up but is now falling, as well. Will U.S. stocks catch the same cold that Asian stocks seem to be suffering from?

We look for clues in some of the charts that follow.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:

SPY vs the market, Moving Average Analysis, 09-11-2009
The above chart, illustrating our moving average analysis, is at a bullish level now but I think time is running out. There are no obvious bearish signs here, just a situation where it looks like stocks have been running for long enough so that the time is right for a breather. This is just a rough estimate that there is a cyclical component to the movement in the market and the chart above suggests that we've had two peaks close together and a bit of a downdraft should be expected.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

SPY vs the market, Trend Analysis, 09-11-2009
The same analysis applies to this chart. No bearish signs; indeed, bullish signs are quite strong here. Nevertheless, there are worries. The number of stocks in strong up-trends has not surged as strongly as the number of stocks showing strong moving average action as illustrated in the first chart. And that cyclical aspect also seems to be at work in this chart, implying a potential pullback.

Conclusion --

Caution, caution, caution. Not only do the charts above suggest stocks are due for a rest, there is plenty of event risk on the horizon. By this I mean that there are a ton of important economic reports coming out this week and an unanticipated failure to meet expectations could be the catalyst that initiates a slide in stock prices.

To be specific, this week's reports include: PPI, retail sales, NY Empire State Manufacturing Index, business inventories, CPI, capacity utilization and industrial production, building permits, housing starts, initial claims, continuing claims and the Philadelphia Fed index.

If every one of these reports turns out to be rosy, well then, stocks would deserve to surge again. Somehow, though, I suspect that is too much to hope for.



Saturday, September 12, 2009

Investors bullied out of leveraged ETFs at exactly the wrong time

Saturday's Wall Street Journal has an article titled "Investors Pull $2.1 Billion out of Leveraged ETFs." What's going on?

The article says assets in ETFs increased by $20.1 billion in August but declined in only two asset classes: leveraged and inverse ETFs.

The article goes on to discuss how the Securities and Exchange Commission and the Financial Industry Regulatory Authority have issued warnings that leveraged ETFs may not be suitable for all investors. These warnings have been especially targeted at retail investors.

The SEC and FINRA, however, aren't the only ones pointing fingers at leveraged ETFs. Let's see how many ambulance chasers have initiated class action lawsuits against the ProShares company:

This list is the result of a quick search on Google and doesn't include any litigation against the folks who bring you the Direxion 3X leveraged ETFs. There are probably more lawsuits in the works out there.

With lawyers and government agencies ganging up on the providers of leveraged ETFs it's no wonder that many investors are pulling back from using these funds.

Unfortunately, this has been exactly the wrong time. As we discussed in earlier posts (here, here and here), 2X leveraged ETFs work quite well in strongly trending markets. Since the March lows, we have indeed had strongly trending markets in the bullish direction and the benefits have accrued to almost every sector. This scenario is the best time to be in leveraged long ETFs yet the frenzy around the warnings and lawsuits has driven many investors away from these vehicles.

As we have written before (here and here), taking a few simple precautions and riding a trend can lead to superior results using the 2X leveraged ETFs. It is unfortunate that "educating investors" doesn't extend beyond scare tactics.

Dislosure: long ROM and USD



Weekend Winners and Losers - Alert HQ BUY and SELL signals for September 11, 2009

This post is to announce that the weekend's stock signals are available from Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - just like it says, a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Trading Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
The view from Alert HQ --

This week was the opposite of the previous week. This one started off positive and ended with a whimper. It was again a slow news week. The Fed's Beige Book held few surprises. Weekly jobless claims were slightly better than expected but still at a worrisome level.

Fed Ex raised guidance. This is generally considered a big positive for the market. When the company's outlook improves it means that economic activity is increasing and more goods are being shipped. This didn't move the market in a big way this week but it is certainly another welcome data point.

We had another "go figure" moment. Two semiconductor bellwethers raised guidance but semiconductors sold off hard on Friday. Maybe investors were "selling the news."

Geithner spoke to Congress and told them that more bailout money for banks would not be needed. The implication that the banking sector is on a firmer footing also helped stocks.

When all was said and done, Friday's losses didn't do much damage to the major averages which all turned in reasonable gains. The Dow lagged with only a 1.7% gain while the Russell 2000 logged a 4% gain.

At Alert HQ I am swinging from bullishness to near-term caution. Last week I wrote that the action in our Swing Signals presaged a bullish move in the stock market. That pretty much played out as expected. Our Swing Trading Signals are less exuberant today so, though I am by no means swinging to a bearish outlook, I think the market will pull back a bit here. Our Trend Leaders list has jumped from only 92 last week to 635 this week and we are getting a big number of bullish Bollinger Band Breakouts. These are intermediate term bullish signs but also quite possibly signs the market is a little "toppy" at this particular moment. This implies that this coming week might be a good time to focus on stocks as opposed to sectors. And we've got plenty of companies for your consideration at Alert HQ.

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 27 Alert HQ BUY signals and 12 SELL signals
  • Based on weekly data, we have 2 Alert HQ BUY signals and 7 SELL signals
  • Based on daily data, we have 635 Trend Leaders. 165 new stocks joined the list since Thursday and 15 fell off the list since Thursday.
  • We have 177 Bollinger Band Breakouts based on daily data and 297 Breakouts based on weekly data.
  • We have 810 Cash Flow Kings
  • Based on daily data we have 30 Swing Signals of which 21 are BUY signals and 8 are SELL signals. We also have 1 Strong BUY.
  • Finally, we have Trend Busters with 46 signals based on daily data (43 BUY signals and 3 SELL signals) and 58 based on weekly data (35 BUY signals and 23 SELL signals).
Using our signals --

Visit Alert HQ and view or download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.



Friday, September 11, 2009

Chinese stocks - bear market over?

Chinese stocks engaged in a furious run-up earlier this year but recently plunged more than 20%, prompting some observers to note that China is now in a bear market.

We are seeing signs of a resurgence.

In Thursday night's TrendBusters list, we saw 9 Chinese stocks and ETFs generate BUY signals. This means that they moved up above a previously downward sloping trend line and are now showing signs of an upside breakout.

Here's the list:

Symbol Name
CEA CHINA EASTERN AIRLINES
EWH ISHARES MSCI HONG KONG INDEX
FXI ISHARES FTSE/XINHUA CHINA
GCH GREATER CHINA FUND
GXC SPDR S&P CHINA ETF
HAO CLAYMORE EXCHANGE- TRADED FUND/ALPHASHARES CHINA SMALL CAP ETF
PGJ POWERSHARES GOLDEN DRAGON HALTER USX CHINA PORTFOLIO
XPP PROSHARES ULTRA FTSE/XINHUA CHINA 25
ZNH CHINA SOUTHERN AIRLINES COMPANY LIMITED

Is it justified?

Some numbers were just released. Last month, output at China's factories gained 12.3% from a year earlier. Retail sales climbed 15.4% in August from a year before. The government contends the country is on track for economic growth of 8% this year.

Much of this is the beneficial result of stimulus efforts by the Chinese government. Premier Wen Jiabao has been quoted in today's Wall Street Journal as saying that the government will continue stimulus efforts because, despite the better than expected growth numbers mentioned above, the recovery in China remains "unstable."

It can be argued that China, with it's top-down command structure and deep pockets, has seen the best effects from its stimulus efforts. Certainly, the U.S. has not been able to register the kind of growth China is showing despite pouring billions into banks, auto makers and other areas of the economy.

So it might make sense to assume that Chinese stocks got over-heated, plunged and, now that economic growth is truly visible, are heading back to somewhere around fair value. The list above is a good place to look for a few candidates for your watch list or your portfolio.

Note: Chinese symbol at the top of this post means "strength"

Disclosure: no positions



Thursday, September 10, 2009

Thursday Swing Signals, Trend Busters and Trend Leaders for Sept 10, 2009

Here are the results for Thursday's Swing Signals, Trend Leaders and Trend Busters. All are now available at Alert HQ and are based on daily data.

Today we have the following:

  • 54 Swing Signals -- 42 BUY signals, 9 SELL Signals and 3 Strong BUYs. Our most bullish situation ever!
  • 485 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 359 stocks that are new additions to the list and 20 that fell off the previous list.
  • 50 Trend Busters of which 42 are BUY signals and 8 are SELL signals.
The view from Alert HQ --

Light volume but stocks are up five days in a row. Say what you will, gains are gains no matter the volume.

Thursday means initial jobless claims and today's results were slightly better than expected. More notable was an upgrade of Yahoo! that helped tech stocks advance. A treasury auction went off well today. Geithner gave comforting testimony on Capital Hill. Semiconductors showed a muted reaction to last night's improved guidance from Texas Instruments. Network stocks again had a good day. All in all, there was no earth shaking news but stocks put together another modest rally. The more people call for a pullback, the higher Mr. Market pushes stock prices.

With respect to Alert HQ, we are still reflecting the bullish action. We now have the list of Trend Leaders and the list of Trend Busters both growing nicely. We still have a lot of bullish Swing Signals but not quite as many as we had on the last few lists. With the Swing Signals decreasing and the Trend Leaders increasing, we now have the leaders and the laggers beginning to signal that the current up-trend is beginning to tire a bit.

Is it time to throw in the towel on this market? Not yet! We're in "climbing the wall of worry" mode and we could easily see stocks higher a week from now or a month from now.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Tuesday, September 8, 2009

Local.com - trend reversal alert!

I love this chart!

Just take a look at this. What a well-defined downward trend we've had for over a month now. And look how clear the upside breakout appears to be.

LOCM, Sept 8, 2009
The stock in question here is Local.com (LOCM) and it showed up tonight on our Trend Busters list. The stock opened on Tuesday very strong but was unable to hold onto all its gains; nevertheless, it ended up with a nearly 2% gain on the day.

Also notable is the rising 50-day moving average. The stock just touched the 50-DMA and strongly bounced up. This is another positive sign.

Background --

The company's claim to fame is embodied in its name. Local.com specializes in local search and provides detailed relevant search results for local business, products and services, and sponsored listings. There are some observers of the Internet who feel that this kind of localization of search and advertising is the next big frontier and that Local.com is a pioneer.

Being on the cutting edge, however, often means that profits are lacking. It's no different for Local.com. The company is somewhat of a financial basket case. It's PE is meaningless, it isn't cash flow positive, it doesn't even have positive EBITDA.

On the other hand, quarterly revenue growth y-o-y is 42% and there is no debt. This is the classic start-up struggling to get to profitability. They've got a great idea, they've staked their claim on a portion of the Internet, they're growing but they haven't quite proven themselves.

In any case, the chart looks like a classic trend reversal so you can't ignore this stock. And the company has been talked about as a take-over candidate. This is not a value stock and it's not for the faint of heart but it sure looks like a good pick for a swing trader.

Disclosure: no positions



Tuesday Swing Signals, Trend Busters and Trend Leaders for Sept 8, 2009

This post is announcing that Tuesday's Swing Signals, Trend Leaders and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

  • 158 Swing Signals -- 142 BUY signals and 10 SELL Signals plus 6 Strong BUYs.
  • 146 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 64 stocks that are new additions to the list and a mere 10 that fell off the previous list.
  • 21 Trend Busters of which 15 are BUY signals and 6 are SELL signals.
The view from Alert HQ --

Stocks registered losses last week but a strong finish caused our Swing Trading Signals to really perk up. So, though this market seems to have no particular reason to keep climbing, I wasn't surprised to see stocks gain again today.

Tuesday's signals continue the theme. Plenty of BUYs again on a long list of Swing Signals with very few SELL signals. The Trend Busters list has a similar look. The additions to the Trend Leaders list greatly exceed the number of stocks that fell off the list.

One sector we see showing vigor again is commodities. Our Swing Trading Signals are showing a lift in a good many commodity and energy stocks and ETFs so I would suggest taking a look at some of these guys right away.

So our signals seem to be reflecting continued strength. The NASDAQ hit a closing high today and I suspect we will see the same from the other major averages before the current move exhausts itself.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.



Sunday, September 6, 2009

Gold mining stocks - breaking out all over

This blog generally focuses on analysis of tech stocks, ProShares ETFs and economic reports. So why am I talking about gold today?

This weekend's Alert HQ process generated the usual list of Bollinger Band Breakouts. These are stocks and ETFs that have exceeded exceeded either their upper Bollinger Band or their lower Bollinger Band.

What is so unusual this time is the large number of companies related to gold or silver mining that showed up on the list as Bullish Breakouts. In other words, all of these guys have popped up above that upper Bollinger Band.

The following list shows all those gold or silver-related stocks, 27 in all, as extracted from the total list of 103 breakouts:

SymbolName
ABX BARRICK GOLD CORP.
AEM AGNICO-EAGLE MINES LTD.
AGQ PROSHARES ULTRA SILVER
ANV ALLIED NEVADA GOLD CORP.
AXU ALEXCO RESOURCE CORP.
BVN COMPANIA DE MINAS BUENAV.
EXK ENDEAVOUR SILVER CORP.
GDX MARKET VECTORS GOLD MINERS ETF
GRS GAMMON GOLD INC.
GRZ GOLD RESERVE INC. CL A
GSS GOLDEN STAR RESOURCES LTD.
HMY HARMONY GOLD MINING COMPANY LIMITED
JAG JAGUAR MINING, INC.
KBX KIMBER RESOURCES, INC.
MGN MINES MANAGEMENT, INC.
MMG METALLINE MINING CO
NEM NEWMONT MINING CORP.
NXG NORTHGATE MINERALS CORPORATION
PLM POLYMET MINING CORP.
PMU PACIFIC RIM MINING CORPORATION
SLW SILVER WHEATON CORP
SVM SILVERCORP METALS, INC.
THM INTERNATIONAL TOWER HILL MINES, LTD. (CANADA)
UXG U S GOLD CORP
VGZ VISTA GOLD CORP. NEW
GOLD Randgold Resources Limited
SSRI Silver Standard Resources, Inc

I will be the first to admit that I am not an expert on gold nor am I a gold bug. Having dabbled in a gold ETF once I barely got out without a loss. What is intriguing to me, however, is the fact that so many of these companies and ETFs have surged ahead in unison.

The last time I saw something like that happen, the sector in question made a strong move upward. Back in mid-July, our list of Swing Trading Signals showed a big contingent of commodity ETFs with BUY signals. Many of them subsequently ran up 10% to 15% in the span of about two weeks. Not bad for a trading gain.

With gold and silver stocks and ETFs suddenly showing higher than average volatility and breaking sharply to the upside on higher volume, I am wondering if this time the surge will stick. The following chart shows GDX, one of the ETFs listed above. This is as good a proxy as any for the entire sector.

GDX
You can see that moving averages, MACD and DMI are all moving in bullish directions. The question is, is there enough strength to get beyond the old high at $45 that was established back in early June?

RSI and William's %R all indicate that GDX is now over-bought. But the momentum is undeniable. Making a new high this week would go a long way toward vindicating the gold bugs.

Over at Market Club, they have a free video that gets into the technical aspects even deeper than I have. You'll need to see this video if you want to know why they think gold is poised to go even higher.

Disclosure: none



Saturday, September 5, 2009

Tips for users of version 4.2 TradeRadar stock analysis software

It's gratifying to see that the new version of TradeRadar is getting downloaded at a good rate. This post will provide a couple of tips for new users and those who have upgraded from a previous version.

The AUTO checkbox --

I have previously written about the AUTO checkbox and how it seeks out the ideal setup for the signal you are looking for. In other words, if you select a BUY signal, click the AUTO checkbox and hit the Update Chart button, the software will automatically adjust the Start Date and the Signal Filter setting. The chart will be displayed with the slope lines, the trend line, the moving averages and the Fibonacci retracement lines in the top half and the TradeRadar signal indicator in the lower half.

So far, so good. If you want to do further adjustments of the chart, changing Start Date, for example, you need to uncheck that AUTO checkbox. Otherwise, your new settings will be over-ridden by the automatic setup process.

Missing Info Message Box --

If you updated from an earlier version of the TradeRadar software, you will get the dreaded Missing Info message box. This is because the older versions did not use Opening price data but the new version does. To make the message box go away there are a couple of different ways you can go:

  • While viewing the chart, look at the earliest bar of price data. Note the date. Close out of the chart, go back to the main screen and load new data starting with the date of the earliest bar. This will refresh the data and include Open, High, Low and Closing prices for each day.
  • Here is an alternative approach. After selecting a stock on the main screen, stop. Do not load the chart. Instead, click the First Record button. Note the date listed on the right side of the screen. Now load new data starting with the date of this first record. As described above, this will also refresh the data and include Open, High, Low and Closing prices for each day.
This process will need to be done for each stock in your database whenever you want to review that stock's chart. There is no hurry to do it. It doesn't need to be done until you actually want to view a chart.

Related posts --

For those who are new to the software, I have created a slideshow that walks you through a typical chart viewing session. I encourage you to check out the post entitled "How to use the TradeRadar software - new slideshow gives you all the basics." It includes a demonstration of that pesky AUTO checkbox. The slideshow has not been updated to show the newest version's chart display but all the concepts are the same.



Weekend Winners and Losers - Alert HQ BUY and SELL signals for September 4, 2009

This post is to announce that the weekend's stock signals are available from Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • Bollinger Band Breakouts - stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band
  • Swing Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
The view from Alert HQ --

This week started out in a pretty dismal fashion with the market extending its losing streak to four days in a row. Thursday, however, saw the losses end and Friday saw a sizeable bounce. Despite the slambang finish, major averages registered 1% to 1.6% losses with the NASDAQ as the standout with only a 0.5% loss.

Stocks initially fell on decent economic news but worrisome foreign stock activity. Then they ended up rising on so-so news. We started off with a plunge in the Shanghai stock market that pressured stocks worldwide early in the week. Then we had the retail sales reports for August which were fairly bad but in some cases better than expectations. The ISM manufacturing index actually crossed into growth territory while the ISM services index continued to show contraction but still came in better than expected. Friday's non-farm payroll report showed job cuts slowing markedly but the unemployment rate rising. Investors must have decided it was time to climb the wall of worry again and stocks were off to the races.

Friday's rally was a relief to me as I had gone out on a limb to be especially bullish in my post announcing the Thursday evening TradeRadar Swing Trading Signals. That report was brimming with BUYS and Strong BUYs and I proposed that the market was at a turning point and that it was headed to the upside. Today's set of Swing Signals confirms Thursday's expectations and we have another big set of BUYs. Even our Trend Leaders list is starting to perk up again.

Not everyone is as outright bullish as I am. Our friends at the Market Club affiliate have an in-depth analysis of the technical situation in the NASDAQ. The video explores where the NASDAQ has been and where it might be going. Click here to check it out, it's highly recommended.

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 9 Alert HQ BUY signals and 15 SELL signals
  • Based on weekly data, we have 4 Alert HQ BUY signals and 21 SELL signals
  • Based on daily data, we have 92 Trend Leaders. 32 new stocks joined the list since Thursday and 19 fell off the list since Thursday.
  • We have 103 Bollinger Band Breakouts based on daily data and 182 Breakouts based on weekly data.
  • We have 823 Cash Flow Kings
  • Based on daily data we have 191 Swing Signals of which 168 are BUY signals and 4 are SELL signals. We also have 19 Strong BUYs.
  • Finally, we have Trend Busters with 11 signals based on daily data (6 BUY signals and 5 SELL signals) and 28 based on weekly data (6 BUY signals and 22 SELL signals).
Using our signals --

Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders and Trend Busters on Tuesday and Thursday nights.



Thursday, September 3, 2009

Semis on the mend?

Many observers have noted that semiconductors led the recent rally but have lately been underperforming. Are semis in a downtrend or are they on the mend?

Tracking an ETF --

Here is a screenshot I grabbed from the TradeRadar software. It shows the SELL signal analysis for the iShares Semiconductor ETF (IGW). Note that the SELL signal (in the bottom chart) has not been consummated. In the top chart, the price is well above the trend line and is now solidly above the 20-day moving average. If this ETF can't dip significantly below even the 20-DMA, it is hard to say that semiconductors are in too much trouble.


Tracking a couple of bellwethers --

It is a common technique to look at the performance of a couple of bellwether stocks in order to judge the state of an industry sector.

A week ago, Intel (INTC) announced that their outlook for the second half of 2009 was measurably better than what had been communicated in earlier forecasts. That good news was enough to incite a rally in tech stocks and semiconductors in particular.

Today there are two pieces of data related to a company that partners with Intel: Taiwan Semiconductor (TSM). TSM is one of the biggest contract manufacturers of semiconductors in the world so what they have to say can be significant.

Today, Barron's Tech Trader Daily blog featured a post titled "Some Chip Makers Cut Wafer Starts." The post highlights TSM and says that a number of U.S. chipmakers have reduced orders. Offsetting this, however, the author quotes an article from DigiTimes that says TSM is getting greater volume from several other semiconductor houses. He wonders whether this is a result of poor demand on the consumer side.

TSM itself says that it is seeing better than expected sales demand in the third quarter. The company is sufficiently bullish that it has increased its capital expenditures twice. An analyst at Barclays estimates that a projected 20% increase in sales is on the way to becoming a 25% increase. In terms of product mix, it appears that computing/graphics chips are showing the greatest demand, followed by communications and then chips for the consumer market. This seems to confirm the suspicions of the Tech Trader Daily blog that the consumer, especially in the U.S., is lagging.

In the meantime, TSM is proceeding with their technology roadmap, moving to smaller chip geometries. This is meaningful because the more advanced chips can command a higher average selling price.

How to play it --

Charts look good and bellwethers are signaling better times ahead. Now is not the time to give up on the semiconductors.

There are several ETFs that track the sector but the two that I follow are the iShares ETF with symbol IGW (highlighted in the chart above) and the ProShares Ultra ETF with symbol USD.

Disclosure: long USD



Holy Cow! - Thursday Swing Signals running wild

OK, markets hit a rough patch over the last few days but managed to put together a bit of a bounce today. Yes, we had the obligatory "stick save" at the end of the session. The result, though, is that a whole bunch of stocks are now perfectly matching the criteria we need to generate bullish Swing Trading Signals.

Here are the results for Thursday's Swing Signals, Trend Leaders and Trend Busters. All are now available at Alert HQ and are based on daily data.

Today we have the following:

  • 129 Swing Signals -- 110 BUY signals, 4 SELL Signals and 15 Strong BUYs. Our most bullish situation ever!
  • 79 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have a paltry 14 stocks that are new additions to the list and 114 that fell off the previous list.
  • 19 Trend Busters of which 9 are BUY signals and 10 are SELL signals.
The view from Alert HQ --

Thursday's signals always coincide with the release of initial jobless claims. Today's results didn't move the market though the numbers were certainly nothing to be happy about. On the other hand, minor improvements and more of the "less bad" them is preferable to horrible. Retails sales were also disappointing but a few bellwether companies beat expectations so stocks tacked on some gains.The ISM Services index was actually a pretty good piece of news and stocks plunged when it was released and then finally recovered. Go figure...

With respect to Alert HQ, we have a situation that is the opposite of what we saw last week. Then, we summarized it as Swing Signals down, Trend Leaders up. Today the tables are turned.

Our Trend Leaders typically show a bit of a lag while the Swing Signals are usually the early warning signal. Today's Trend Leaders list, smaller than it has been in months, shows the effect of the recent weakness in stocks. Our Swing Trading Signals, however, show that many stocks have been able to shake off the weakness. The larger than usual number of Strong BUYs shows that a good number of stocks have not violated their up-trends during the downturn of the last few days and are now clawing their way back.

When we get big reactions in our Swing Signals, it has been know to mark a turning point. If that is true today, you should be prepared to buy some stocks! And I might mention the emerging market ETFs seem to be in a resurgence so don't be afraid to look abroad.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas.




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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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