Dollar, Euro, the market and the commodities

There are conflicting signs in the market.  The news is very bearish on the Euro with Greece in the headlines nearly every day.  A drop in Euro would indicate that a rally in the US Dollar which is bearish for commodities.  But looking at commodity producers (e.g. copper), the charts are indicating a strong underlying buying pattern while the stocks are in a base (pretty much the same across the board for multiple stocks).  Just looking at those charts, I would speculate that a big rally in commodity stocks is expected and some big players are loading up on the stocks.  Yet a rising dollar is bearish for commodity stocks.   This market is getting confusing.  Yet I still think I am right about the 5th wave being under way.  That would set the near term (<6 wk) target for the DOW to reach 11,500-11,700 range with 13,000 being a distinct possibility.  I still like Chipotle (CMG) and have a price target of 140.00.    Assurant (AIZ) has overcome resistance at 32.75 and started moving up.  I would expect a price target of mid 40s if the market does not peak in the meantime. CELG is showing a short term peak, yet the long term trend seems to be intact at the moment.  I have a price target of 70 on CELG with 75 a possibility.  There were big rallies in overseas markets, and I expect that to carry into the US markets today.

(Please note that I own all the stocks whose tickers I mentioned above).

ETrade - ETFC

Ah, the stock that so many hopes are pinned upon.  ETrade recently announced a reverse stock split (10 to 1) that is to take place, if approved, sometime in the future.  I generally tend to divest any stocks that announce reverse stock splits, just because it allows short sellers much more room for profits.  In my personal experience, all my stock holdings that announced a reverse stock split are no more (e.g. Vertical net (VERT), Nortel Networks (NT), etc.).

But the chart for ETrade looks interesting.  Indicators are showing a positive bias at the moment (in long term charts) The stock bears watching closely.  It is in a triangle formation.  A break to either side can be strong and big (up or down).  Short term charts don't seem to be very bullish.  But the weekly charts are signaling a bullish bias to the stock with a lot of buying.

The Psychology of Stock Ownership based on Technical Analysis

Have you ever wondered why is it that when you are looking at a stock to buy and evaluating the charts, everything looks good and screams a strong buy.  But as soon as you buy the stock, and the stock stops moving up, all indicators look like you should get the hell out of your position?   It is the opposing forces of greed and fear that drive this emotion.  When the stock is moving up, greed takes over and everything looks good so you pull the trigger.  If then the stock pauses and stops moving up (even if it goes sideways), all of a sudden the fear starts dominating and everything starts looking negative.  For this reason, you should write down why you entered a position and what is your expected time horizon.   For you can enter the position with a 3 month price target, yet close the position a week later because your "gut" tells you to do so.  Sometimes you will be right, but often you might be wrong.  Case in point, I entered a long position on HIG (Hartford Financial Services Group) around mid July 2009 around $11 per share.  (1000 shares).  I started second guessing myself when the stock didn't move for 2 or 3 days and ended up selling 10 calls for $1.00 each.  Then I watched the stock take off and work its way to $20+ while I netted a measly $1 per share.  Don't get me wrong, I made money, but I missed out on a lot more money I could have made due to the butterflies in my stomach. 

Currently, I am experiencing this effect with CSTR (CoinStar).  I bought it knowing that the move could be small yet rewarding in the short run.  Today when I see the market moving up and CSTR barely registering a move, I start sweating the potential pull back the stock faces once it runs into resistance.  I guess I will have to wait and see how it pans out and whether I decide to sell my position.  I went thru the same jitters with ORBK.  Bought the stock with a longer term horizon and somehow kept myself from selling it in spite of the small pullback and the jittery feeling.  As of today I am up around 8%.  I initially thought the stock had the potential to move to $16-17 which is why I bought it, yet now I find myself wondering if I should take my gains and run.    Such is the battle that goes on in our head, between greed and fear...

New Picks

Well, my portfolio holdings of Ford (F) and Celgene (CELG) continue to perform well.  I also added a position of CoinStar (CSTR) today.  CSTR is a vendor of the coinstar machines (change) and the popular RedBox DVD vending machines.  RedBox has been so successful that hollywood recently requested RedBox to not rent movies in the RedBox kiosks for 30 days after a DVD is released.  The chart shows some room to run.  Stock will run into some resistance at 35/36 area.  I do plan to take profits at that time and wait for the stock to breakthru the resistance before retaking the position.

Market shows strength

After spending most of the day in the red, bulls finally took charge and the market (DOW) pushed into positive territory before the close.  Nasdaq also rallied but closed with a small loss.  The indicators still show a bullish bias, and I still think wave 5 is in the works.

A new stock that has shown up on my radar is POWI (Power Integrations, Inc.)  It has managed to break thru to the upside from a fairly long base.  If I wasn't so convinced that a near term market top is imminent, I would have added it to the portfolio.  But I will keep an eye on it to see if a trading opportunity presents itself.

EMC

EMC has recently broken out of a very long (2 yrs) base.  Indicators seem to be confirming the move.  Next target would be the $24 price point.  EMC is currently trading at 18.78 

EMC has really expanded their portfolio of products in the last few years.  Notable purchases include VMWare (trades as a sep. stock but is around 90% owned by EMC), Document Sciences (premier provider of output solution, Captiva (provider of image scanning and recognition).  In addition, EMC rules the space of Enterprise Storage.  However, this stock moves pretty slowly.  So it would do better as a hold in a long term portfolio than as an options play.

Market taking a breather

After the market broke to the upside thru resistance on Friday, its been taking a breather and just biding its time.  I cannot reiterate often enough that this market bears close watching.   A strong wave 5 move can easily take the DOW to 11,700.  A failure to make this move could result in a double top.  If you subscribe to the Elliott wave theory, then Wave 5 is still in its infancy and can easily go to 11,700 or higher.  But if the market does reach that point, I intend to start raising cash.  The dilemma here is that several leaders are showing topping signs yet other stocks are making sound bases.  Lot of stock bases are now 6 weeks or shorter which also indicates that we might be approaching a market top.  Yet over time I have learned that when its time, you need to watch the market closely and not hesitate to pull the trigger if it turns against you.  But moving out prematurely can lead to missing out on solid gains.  (Remember, wave 5 moves are fast and furious, netting significant gains in a very short time).