Momentum Rider Trading: support

Thursday, June 7, 2012

Managing Your Portfolio | Big Short Squeeze

Big Short Squeeze on Rumors | MR Investor Chart

The week started out badly on Monday as the S&P 500 sold down very close to our Sunday newsletter bounce forecast near 1260. It actually reached a low of 1266 so it didn’t quite get as low as we predicted but the market was technically way oversold and was ready to bounce up. There were far too many down days in May and the short sellers for the markets and the Euro currency had overstayed their time.

The big question was how the S&P 500 was going to act around the 200 and 250 SMAs which were very close to each other near 1283. Tuesday the market tested 1283 and closed at 1285. It was basically a pause day day but it had the shorts nervous. Then once the rumors of secret meetings between the US and Euro leaders hit Europe, along with some ECB rhetoric, the short squeeze kicked into action.

The rumors had nothing concrete or specific but the snap back up from being oversold and the auto-program technical buying and investor buying above the 200 SMA did the rest. It was a perfect environment to get a big technical bounce day. And as the day wore on, the Republican Governor blocked a pro-union recall vote which spurred on hopes of a Romney Republican boost for President. It was probably small but it could have added a bit to the rally.

It was a good tradeable rally for long swing traders as everything bounced across the board. But you need to put the one day move up in perspective. MR recommends using our MR Investor Chart (invaluable planning resource) to better help you navigate these news’ driven markets (see below). Note how the markets were on the brink of a major investor sell signal on Monday well below the 200 and 250 SMAs. The shakeout worked and the oversold bounce led to investor buys and auto-program buys today after getting above the 200 SMA. The subsequent short squeeze pushed the markets up much higher just underneath the 150 SMA level near 1,318 (2nd chart below).

Momentum Rider’s Key Investor Chart (Managing Your Portfolio vs. Moving Averages)

The S&P 500 closed today below its 20 and 150 SMA which are both near 1,318. Being below the 150 SMA on the S&P 500 is still bearish and it is also 46 points below the critical 50 SMA. Even a move back above 1325 is still in a caution area for investors with a recommended reduced equity exposure level (i.e. still below the 50 SMA)

The bulls will try to spin the Fed’s comments positively to push up towards the 50 SMA near 1360 and the bears will try to take the market back down to its 200 SMA at 1283 to erase today’s gains. The 20 SMA (1,318) can be a strong resistance trendline, especially when joined by another big moving average like the 150 SMA. It will be interesting trading in the next few days and into next week.

Investor Chart with Technical Analysis and Key Battle Levels:

Nothing fundamentally changed today except for a technical market bounce based on several rumors. Until details are provided by the Fed about QE3 or specific details are released about a European plan for their debt and banks, MR’s defensive and cautious position won’t change. For now, it was only one big short squeeze day from a very oversold condition that probably won’t have any legs. Only time will tell.

Investor Notes:

Gold and silver had strong bounces late last week and they may have higher to go in the short term. Oil is still looking for a bottom and investors can scale in on any more weakness a little at a time.

The caution alert for retirement accounts and investors is still present. Selling more equities to protect from more heavy selling is prudent at this time, especially if you can take advantage of selling at higher prices during a market bounce. Make sure to be ready to sell even more in case the Euro completely unravels and takes the markets down hard.

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Check out our FREE promotional offer called the MR Market Crusher Pack for 2012 (click link). It includes 5 very valuable investor products worth $600 to get you started with a bang in 2012 for your retirement account.

Another exciting pack for our subscribers and new customers is our MR Power Income Pack for 2012 (click link). It has 5 high income and retirement products worth $400 with some unbelievable dividend stock picks with both value and good growth.

To find out more about why our subscription services continue to crush the market since we started in 2004, go to www.momentumrider.com.

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Good luck in your trading and investing,

Keith Hugenberg

CEO Jalexa Trading Consultants, LLC

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© 2012 Jalexa Trading Consultants, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the internet), in whole or in part, is strictly prohibited without the express written permission of Jalexa Trading Consultants, LLC.

Monday, February 13, 2012

Technical Analysis | Overbought Markets | Top Agriculture Stocks

Technical Analysis Lesson - Top Agriculture Stocks

The Momentum Rider investor series continues as we take a look at the coming week's action and also more areas to look for in finding top value stocks. This week is going to be focused on value stocks in the agriculture sector. Many of these stocks are working up out of long consolidations. The agriculture stocks were hit very hard in 2011 and should offer patient investors very good profits from these levels.

The agriculture stocks have good valuations and should see substantial moves up as the world economies recover and they can be viewed as both good trades and good investments. The middle class growth in emerging economies, especially in China and India, will keep the farm products and soft commodities climbing for years to come.

This week is still setting up for more selling after being very extended in the chart technicals. The markets may get an initial bounce tomorrow based on Greece passing the austerity measures but that may be it for the week.

In today’s newsletter, we wanted to show you some of the charts that demonstrate why the markets are so extended. The premise for a pullback is based on what is called a “reversion to the mean”. Whenever the statistics get too far away from the mean, the markets will work their way back towards the mean.

In this case, the markets are in a very overbought state based on many of the technical indicators we look at. In order to work the markets back to the mean, they require a pullback or selling to get closer to the mean of normal price action. As we show below, the market is still well above its 20 SMA. In addition, the oscillator indicators are all pegged up near their overbought regions. The chart demonstrates the Wilder’s RSI, Stochastics, and the Ultimate Oscillator. The RSI is very close to 70, the full Stochastic is well over 80 at a 91 reading, and the Ultimate Oscillator at a 73 reading above the 70 benchmark.

Markets can stay overbought for an extended period of time so it is dangerous to only use the overbought readings of oscillators. For example, these 3 oscillators have been overbought for most of 2012 and the last 20 days. That is why it is important to look at a few other charts and to monitor key resistance levels where pullbacks occur.

So two other important charts that we monitor are the McClellan Summation Index and the percent of stocks above the 40 SMA. These are charts that some big institutions look at so you should be aware of them. Because their big buy and sell decisions are affected by charts like these, it is educational to review them. It is easy to look back at important past turning points in the market to see how well an understanding of these charts would have dramatically helped trader and investor decisions.

Finally, we will show you the volatility index chart that is supporting an impending pullback. The volatility of the market has been going down for months and this last week it bounced off of strong support near the 16 area. And, on Friday, it brokeout from a four month downtrend line. (see chart below).

At this point, Greece’s passing of their austerity agreement is only a temporary patch. The market’s bulls are getting tired and even the “King of Tech”, Apple Inc, is extended in its great start to 2012 (see our blog on Apple posted earlier today).

The bottom line is that Momentum Rider remains cautiously bullish after this expected pullback is complete. There have been dip buyers on very small pullbacks this year. So the 20 SMA near 1320 is a likely target this week for a bounce. The reaction to a market pullback will be a good gauge on whether the 2011 S&P 500 highs of 1370 will be tested in the first quarter or not.

Using the Power Stocks Table:
(1) Risk: Conservative (Cons); Moderate (Mod); Aggressive (Aggr); Speculative (Spec)
(2) Stop: Typically use a 3 to 4% closing stop below the entry price
(3) Trailing Stops: Use the 10 EMA (Swing) or 20 SMA (Short Term Trader) for protecting gains once above it; SMA = Daily Simple Moving Avg; EMA = Daily Exponential Moving Avg.

Value Stocks - Agriculture Stocks
Today’s stock picks will be highlighting another beaten down commodity sector from 2011 but one that should rebound in 2012. There are many different ways to invest in the agricultural industry. There are stocks in food equipment, supply, biofuel, chemical, farm products, and fresh produce companies, just to name a few. Many of these stocks have formed strong bases and have had recent consolidation breakouts.

Agriculture stocks is one of our favorite investment areas as emerging market middle classes expand and the world population continues to grow. Any pullbacks like this should definitely be taken advantage of by savvy investors. The first set of stocks today will be the top income and larger cap stocks. Our next newsletter will provide some of the ETFs and more speculative agriculture stock plays. The prices are factoring in a bit of a market pullback.

Top Agriculture Stocks:

Investor Notes:
Check out the blog on “King of the Tech” for why Apple should be purchased on any pullback in the stock or market. (click here to read it)

The issue of Italy’s very big debt payment in March is going get a bigger focus now that the Greece payment is temporarily off the table. But Greece unrest will continue for years the way this is going.

Check out our newest FREE promotional offer called the MR Market Crusher Pack for 2012 (click link). It includes 5 very valuable investor products worth $600 to get you started with a bang in 2012 for your retirement account.

To find out more about why our subscription services continue to crush the market since we started in 2004, go to www.momentumrider.com.

Advertisement:
Investors can take advantage of our best investor services in our premium Gold Investor Membership. Get access to the top Momentum Rider investor portfolios, Special Reports, and stock picks by trying it out risk free for a few months. Get instant access now to the MR “Gold Investor Membership”… get more info

_________________________________________________________

Good luck in your trading and investing,

Keith Hugenberg

CEO Jalexa Trading Consultants, LLC

________________________________________________________________

This BLOG POST is brought to you by the publishers at Jalexa Trading Consultants, L.L.C. Nothing in this post should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. Any investments recommended in this blog post or through any of its advertisements should be made only after consulting with your investment professionals and only after reviewing the financial statements of the company or investment.

© 2012 Jalexa Trading Consultants, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the internet), in whole or in part, is strictly prohibited without the express written permission of Jalexa Trading Consultants, LLC.