Actionable Trades: SPY, AAPL, BAC, AMZN, GLD, SLV,

All eyes are on the Jackson Hole Fed summit tomorrow.  Will Bernanke lay the groundwork for a QE3, or the FOMC just stay the course after the "failure" of QE2?  On a micro time frame, the SPY stalled at the macro downtrend line and gave a short term sell signal when it pushed through yesterday's high of $118.24, espcecially after a three day up-move.  On a macro time frame, the lower wedge is still intact but you don't want to see such a strong "distribution" day a few days into the new fledgling rally.  Traders should stay on their toes, and it's difficult to commit capital aggressively in either direction right now.          

Below is a short term view of the S&P.  So far the 1101 low has not been violated.  The S&P did hold the 1250-1255 area, which was important for bulls.  If we see a close below 1140-1145, this will be troublesome.




As traders, we know that it is best to 'sell the excitement' and 'buy the fear'.  Today we saw two perfect examples of that statement with BAC and AAPL.

AAPL continues to trade within the upper wedge on the daily chart.  This morning AAPL was gapped down about 2% (almost 7% at one point overnight) on the news that the company's visionary CEO, Steve Jobs, had resigned. However the stock took the news in stride.  AAPL did not close positive, but it was able to rally off lows to close the day down only 0.65%.  It would be constructive to see some sideways action before suggesting a new trade set-up.    



There had been relative strength in the financials this week, and when news that Warren Buffet was investing $5 billion into the company, it sent the banks soaring just before the open of trading today.  As traders, we don't buy the excitement, but rather sell into it. BAC was a perfect example of that.  It will be healthy to see BAC hold higher after this recent news to gain conviction on continued strength.  



AMZN had a strong reversal bar earlier this week as it started trading into the $175 support zone.  AMZN will need more time to set-up a better trade as there is no clear chart pattern for now.  AMZN is still holding above the 25% retracement level of the move from Tuesday.  To keep the upside momentum in place, it will be good to see AMZN stay above $187.




Gold was down this morning, but the weak stock market intraday sent investors back into Gold.  Yesterday SLV was the weakest of the precious metals, but today it was the strongest.    

GLD is a strong ETF, so after 3 days down into the 21-day moving average, it was prudent to cover shorts.  Some short-term active traders even bought this into support for a reversal trade.  GLD closed positive and on highs of the day.



Strong day for SLV, closing the day up 3.01%., but traders' focus should remain on GLD.

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Actionable Trades: SPY, AAPL, JPM, RIMM, LVS, SINA, GLD, SLV

Markets bounced around in a choppy trading session today, but posted the third straight day of gains.  Equities rose after a stronger than expected increase in July durable goods, faded mid day, but then rallied again to close on highs. SPY closed the day up 1.41%.  Technically speaking, it was constructive action to build on yesterday's gains.  Traders and investors are still waiting to see what the results will be from Bernanke's speech and whether he could being laying the groundwork for QE3.
    

AAPL was a good negative to positive trade this morning.  Yesterday AAPL had a strong move to the upside and played by the rules this morning when it went from negative to positive and pushed higher.  AAPL was a buy above $364-$367 with a target of $375-$378.  That target was reached today as the high of the day was $378.96.  It is important to take trades.  It would be constructive to see some sideways action in AAPL before breaking out of the upper wedge pattern.  



The banks actually helped the markets today for the first time in months.  That does not mean get aggressively long, however it is something to note.  JPM is acting best in the sector.  Yesterday it gave traders an 80/20 entry ($33.35) once it traded back through the previous day's low.  The stop was $32.31, which was the current low of the day.  80/20 trades give calculated, strategic entires when stocks become over extended on the short side or the long side.  Today JPM extended on the previious day's gains, closing up about 3.9%.  



RIMM Is highlighted as a buy through $27.50-$27.80.  This stock has been hammered on the downside this year, but it had surprisingly held up decently after crossing the mini downtrend line at $25.  RIMM is a laggard play, but that doesn't mean you can't make cash flow when it sets up.  Something to note, this is the first time RIMM closed above the 50-day moving average since April of this year.    



LVS gave traders a gap fill play today after a few days of consolidation.  It is trading below the 200-day moving average ($44.45).



SINA showed relative weakness to the market today as it closed down 4.52%.  It is still trading within the marco wedge and the range is getting pretty tight on the daily.  This should resolve soon.



It was a large down day for precious metals, as investors take profits ahead of the Fed meeting in Jackson Hole on Friday.  GLD and SLV were targeted on the Morning Call for follow through trades below the previous day's low.     

If you took the short trade today through $177.50, look to cover as the next support area for GLD is the 21-day moving average at $168.50.  This down move was fast and furious, however when you are in the right trade, you get rewarded. Margin requirements have been raised which is contributing to intensity of the sell-off.



SLV was weaker than GLD.  SLV closed down 4.43% whereas GLD closed down 3.39%. Avoid the lagging metal for now.

Gold Speculators Lead Yellow Metal to New Highs, Gold and Silver Miners Surge

This past weekend I was watching Wall Street 2 on HBO. During the course of one of his monologues Gordon Gekko, played by Michael Douglas, said, “Bulls make money, Bears make money and Pigs get slaughtered.”

Did Gekko spell pigs P-I-I-G-S?

Over the past several months the world markets have closely watched the soap opera regarding European debt play out. Perhaps we have mistakenly fixated on the Greek and Portuguese characters when we should have focused on the 800-pound gorilla, Italy.

One group of people who did have their eyes on developments in Italy were safe haven investors, i.e., gold speculators. Physical gold and its exchange-traded funds had a strong surge, pushing gold above an important resistance level at $1,550.

This group of investors led gold to new euro/gold highs (something I mentioned previously in Silver Is Now a Value Buy). This was all before Tuesday’s news of the downgrade of Ireland and the possibility of another round of quantitative easing by the Fed. That's when the whole world started piling in.

Gold surged again, seeking out the all-time highs of $1,577.40 and falling just $10 short.


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SPDR Gold Shares (GLD) saw a similar surge, which may well continue in the days to come as the market begins to price in the Irish default and a possible QE3. The ETF is forming a short-term bull flag and holding well above the 210-day moving average. But with rapid price spikes come rapid declines. SmartStops has the short-term and long-term stops for GLD at $147.52 and $142.55. It is very likely GLD will take out the all-time highs of $153.61.


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A surprise development from Tuesday’s news was the revival of the gold and silver miners. For several weeks, during the commodity sell-off, which was sparked by increased margin requirements for precious metals, the miners were in decline and then range-bound. Silver Wheaton (SLW) was trading below its 210-day moving average, a fairly bearish indicator, as was the Market Vectors Gold Miners ETF (GDX). But on Tuesday that pattern may have changed. If SLW continues to rise it may keep going till the next resistance point at $42. SmartStops has the short-term and long-terms stops for SLW at $33.16 and $29.94.


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I’m less confident about GDX as it still below the 210 moving average but a few component stocks of the ETF, Goldcorp (GG) and Barrick Gold (ABX), saw impressive runs on Tuesday.

Editor's Note: For more, visit SmartStops.net.

Actionable Trades: SPY, MCP, BIDU, YOKU, INTC, V, SLB, SLV, TZOO

SPY is holding the $133 level for now.  There are a lot of strong earnings from market leaders, but it is waiting on a resolution to the debt ceiling.  The chart still looks constructive as we flag in front of resistance and hold above key moving averages, but the action right now is very headline driven. While most expect a deal to get done at the 11th hour, it is important to stay plugged in.  Tonight we saw positive earnings from AMZN and LVS.  

Trade Update:  MCP has been a good focus in the past week with the first entry at $55 with an additional add-on buy above $61.  It closed strong today, +6.25%.  Use your own trading rules to take profits.    

 

BIDU has been another good targeted trade as it made a strong move into earnings.  Positive earnings were released last night.  BIDU gapped above 52-week highs and looks good for higher prices.  Wait for a few days of consolidation of this big move as it is extended from previous buy entries.

 

The Chinese internet sector showed relative strength to the market today after a strong earnings report from the leader in the sector, BIDU.  YOKU is a laggard play in the sector, but has a decent chart set-up and closed the day +9.50%.  Today was the first day up in this stock, look for continuation over today's high of $37.45.   

 

The semiconductor chip makers have had solid moves from stocks like IBM, MSFT, and INTC. The stock is a bit of a slow-mover, but a close above $23.25 in INTC could trigger a move to new highs.   

  

The credit card sector is performing well.  Visa has earnings tomorrow, Wednesday, July 27th, after the close.  It could have a run into earnings or wait til after to make a move.  Look for a momentum play above 52-week highs of $90.83. 

 

SLB, an oil stock, posted earnings last Friday, July 22.  It is holding the gap-up and consolidating in front of 52-week highs of $95.64.  This could have a momentum move through those highs.  Watch the price action in this stock.

 

SLV is holding above the 3 month range.  An additional buy is above $39.90-$40.  Also look to the chart of FXE which looks good for higher prices, which has a positive affect on commodities.  

For the active trader, TZOO is setting up for a quick trade.  Although, it had a big gap down on earnings, it is holding up well and the range is getting very tight.  Look for a move above today's high of $61.60 with an add above $63.27 to fill some of the earnings gap.  First resistance is $67.28.   

 

Are Precious Metals Ready to Break Out?

By Raghu Gullapalli


Over the past eight days, the market is up 7% and seems ready for a pullback, especially on the news of poor non-farm payrolls. But one element of the market that seems to be gathering momentum right now is the precious metal segment, namely gold and silver.

Silver -- which, in the humble opinion of this trader, was being accumulated -- looks ready to break out above the $5 dollar range it's been bound to over the past two months.


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iShares Silver Trust (SLV), the exchange-traded fund, is approaching the reentry level set bySmartStops, at $36.71. This may prove to be a great setup in terms of risk reward, as short-term stop on SLV is $34.34 and the long-fterm stop is $33.79. The upside on this trade is substantial, as SLV may well seek out the highs from late April in the days to come. Part of my bullish bias on this trade comes from the fact that during this eight-week period of accumulation the ETF never dropped below its 210-day moving average.


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Gold, on the other hand, has been testing the $1550 level, and now it seems like the perfect storm of variables are brewing to push the metal through this level and possibly even to the $1600 year-end price target set by many market technicians and gurus.


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The depressing US jobs number, the downgrade of Portugal, and the increasing fears of a default by one of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) are the catalysts for this new drive up. The rest of Europe and their myriad of financial institutions have tremendous exposure to these countries' debt, and a single default by one of these countries could set off a domino effect. This would make Lehman’s collapse look like a tempest in a teapot. And in the midst of any storm, people flock to anchors to keep them secure. In these tumultuous markets that anchor is gold, and by proxy, silver.

SPDR Gold Trust (GLD) just like SLV has held strongly above its 210-day moving average and is also offering a good risk to reward trade. SmartStops has the short-term and long-term stops at $146.64 and $145.75 with a reentry into GLD at $151.86


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Silver Is Now a Value Buy

Value investors, such as Warren Buffet, William O’Neil and Jordan Kimmel are all big proponents of the idea of buying low and selling high. All these extremely experienced investors also look at historical patterns and are always on the hunt for bargains.

Or as traders refer to it, “buying into a pullback.”

Since its ballistic drive up in late April to create new historic highs, silver has plummeted down and the market saw the kind of volatility many traders thought gone in the post-financial crisis era. But rather than continue its free fall to price levels that this writer thought were more in keeping with its historic norms, silver defied expectations and has consolidated in a $5 range over the past seven weeks.


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Some peers of mine who are absolutely first-rate technicians believe silver is maturing into a Bear Flag and may indeed seek out historically normal price levels in keeping with the 1:60 ratio of Gold and Silver. Time may prove their premise correct.

As a trader who keeps his eyes on the price action of the players in a sector, I am of the belief that this range has allowed a few savvy investors to accumulate silver at price point they are comfortable at. If you look at the charts of the silver exchange traded fund, iShares Silver Trust (SLV) you will see that it has held above the 210-period moving averages. The first check in favor of a bullish bias.


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With the uncertainty in the markets over the future of Greece and the effect events there may have on other similarly indebted nations, do not be surprised if investors in Europe rally to precious metals before people in US markets do.

Another check in the favor of the bullish scenario is that from a historical perspective gold and silver prices rise in the latter half of the year. This price jump is spurned on by demand from India as my kin buy mountains of the metals to celebrate religious festivals and the peak of the marriage season.

SLV will languish down here only a while longer and may then seek out the $40 price point. Don't be too surprised if silver is back at the highs by year's end. Smartstops has the reentry price for SLV at $37.72 and the short term and long term stops at $32.33 and $31.42.


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Editor's Note: For more, visit SmartStops.net.

The Bubble Has Popped -- Now What?

A rare halt in oil trading Wednesday triggered a sharp selloff in commodities and equities in markets afraid of an encore of last week’s commodity plunge. The last halt in oil trading occurred in September 2008, a week after the collapse of Lehman Brothers.

Sliver lost 9% in the selloff, erasing gains in the previous couple days and was down another 6% as of this writing. It has yet to find a bottom -- or as Bob Barker of "The Price is Right" might say, “Down, down it goes -- where it stops no one knows.”

Now with the increased margin requirements driving a number of speculators out of the market, the precious metal may seek out price levels more in keeping with historical norms. Those prices are calculated by seeing how many ounces of silver are needed to buy an ounce of gold. Over the past 10 years the ratio has been roughly 60:1. If silver were to return to a similar ratio, it could go down as far as $25 an ounce. iShares Silver Trust(SLV), the proxy we use in lieu of silver at Smartstops.net, has the short-term stop at $31.97 and the long-term stop at $29.37.

If that wasn’t enough to make you reconsider being long commodities, the Powershares DB Commodity Index Tracking ETF (DBC) has formed a head-and-shoulders. A pattern associated with a change in trend direction. The neckline/support of the pattern coincides with the Smartstops.net short-term stop at $28.16 and the long-term stop at $27.30.

SmartStops provides effective, easy-to-implement risk monitoring for investment professionals and individual investors to optimize profits and minimize losses.

Is the Rare Earth Bubble Ready to Pop?

The weakening dollar has helped erase some of last week’s weakness in commodities.

Silver lost nearly 30% and gold 10% of their respective values, leading many experts to believe the commodity bubble has popped. But after a rather tumultuous week, the precious metals have started their upward trend again. Many could argue that the gold bubble has been building for nearly 10 years now and that silver’s explosive recent growth was a result of the high cost of gold and the strong industrial implications of the metal.

This leads us to ask if the bubble includes all commodities. The rare earths sector has seen incredible growth over the past year.  Molycorp (MCP), which has earnings after the close today, has gone from $15 to as high $79 all in the past year. Many investors are no doubt wary of entering such an extended and possibly overbought company, especially given the drubbing many people took with silver (SLV) in the past week. It's good to be cautious but try not to let your fear override your ability to make sound judgments. MCP has had several strong run ups over the past year and then pulled back, allowing the stock to rest before its next surge up. If you take into account the measured move, it could possibly rise another $20 in the next surge.

If you keep yourself protected, you can always take on higher-risk stocks. Now that MCP has enough history, my firm has added it. We have the short-term stop for MCP at $62.98 and the long-term stop at $57.58. Make sure to always keep your exit strategy in play even if you aren't yet ready to set proactive stops.
Editor's Note: This content was originally posted on SmartStops.net.

Russian Roulette Anyone?

By Raghu Gullapalli 



After an extremely volatile week, what can we expect from silver in the week ahead? If you’ve read some of the same reports in the blogosphere as I have, you may want to try your chances at Russian Roulette -- your odds of success are higher.

There are a couple of metaphors I especially enjoyed:

• “Dead Cat Bounce”
• “Gap and Crap”
• “Silver takes the stairs up and the elevator down”

At the end of its move up, silver was on a rocket. The entire world was in a frenzy, from the taxi drivers to my mother. That was the big clue.

“Sell on excitement”

That’s exactly what George Soros and Carlos Slim -- among the most notable -- did. They started exiting their silver position when it made new all time highs. In some ways the death of Osama bin Laden may have been the catalyst many experienced investors sought. One last spark to bring the market to a fever pitch.

Now what?

Well after a week where silver lost almost 25% of its value, it's hard not to take the value of Risk Management seriously.

This morning Silver Wheaton (SLW), the miner, came out with its quarterly earnings. According to SmartStops.net, the short-term stop is $33.81 and the long-term stop is $31.73.

iShares Silver Trust (SLV) may experience the aforementioned “Dead Cat Bounce” wherein the price bounces up from last week’s lows, making a woeful attempt to break the downtrend and then continue downward.

Editor's Note: This content was originally posted on SmartStops.net.

Silver? To Buy or Not to Buy, That is the Question

By Raghu Gullapalli 


In the past four trading sessions silver has come off more than 20%, leading some to believe that silver’s bullish run is over. After all, some of the world’s savviest investors, like George Soros and Carlos Slim, have been selling their stakes in silver.

Why the sudden reversal? Part of the reason is the new margin requirements instituted last week, and the other part is silver’s correlation to crude prices and the larger market.

I tend to think of this pullback as a long overdue correction for an investment that was getting a little too vertical for comfort. Or to be technical, overbought.

This correction and the new margin requirements should drive the pretenders and speculators out of the market. This sharp move down will no doubt cause substantial panic among those who bought near the top, allowing value investors an opportunity to take advantage. Silver is not just a precious metal but an industrial one as well. It's the top choice of solar companies -- like JinkoSolar Holding (JKS), First Solar (FSLR) and Trina Solar(TSL) -- for use as conductors.

A value investor could look to possibly invest in silver in the days to come after the correction ends. But make sure it begins to trend upwards again before you enter the trade. We never want to try to pick the bottom or the top, that is almost always a lose-lose strategy.

That’s why its always important to have an intelligently adjusting risk strategy to protect your profits and minimize your losses. According to the charts at SmartStops.net, the short-term exit alert came on May 2, 2011 at $43.60 for SLV. Given today its trading at $35.78, that’s already a $7.82 per share protection of profits. If one were to see the trend starting to reverse and wanted to play this bounce, it would be paramount to have stops in place . SmartStops is showing that the optimized exit point for today’s market (it adjusts daily) for SLV in the short term is $36.69, and long term $33.53 dependent on one's investment horizon.

Editor's Note: This content was originally posted on SmartStops.net.