Shippers

If you happened to miss GNK (click to view) when it broke it's neckline on June 9th, you may have another chance. Often, after a H&S pattern has been validated, a retracement back to the neckline can provide a low-risk shorting opportunity. In this case, entry at current levels, with a stop above 64.50 would provide such an entry.

Here's a look at the competition to get an idea of the health of the sector.
DRYS
EGLE
EXM



Create alerts for the following:
GOOG - go with the direction of the breakout
CVD - short on a close below 78.50
PG - short on a close below 64.72
ADBE - short on a close below 40.51

I'll try to find some longs to balance this out but most of my charts are pointing down in the short-term .

Trading for a Living
When the slope of MACD-Histogram moves in the same direction as prices, the trend is safe. When the slope of MACD-Histogram moves in a direction opposite to that of prices, the health of the trend is questioned. It is best to trade in the direction of the slope of MACD-Histogram because it shows whether bulls or bears dominate the market. The slope of MACD-Histogram is more important than its position above or below the centerline. The best sell signals are given when MACDHistogram is above its centerline but its slope turns down, showing that bulls have become exhausted. The best buy signals occur when MACD-Histogram is below its centerline but its slope turns up, showing that bears have become exhausted.
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Playing both sides

Consensus is calling for sideways action in the broad markets (138-145 for SPY, 46-51 for QQQQ) for the next few weeks but that doesn't mean you have to sit on the sidelines. I still like the idea of selling OTM credit spreads on SPY and ETFs, for example, but there are a lot of other opportunities out there on individual stocks. Here are a few thoughts for the short-term...

Apache Corp (APA) - breakout
Devon Energy (DVN) - breakout
AK Steel Corp (AKS) - breakout / recent bounce off 20 day MA
Research in Motion (RIMM) - breakout, possible consolidation before heading higher
Apple Inc (AAPL) - pullback / found support at 20 day MA
Halliburton Inc (HAL) - breakout
Exxon Mobil (XOM) - ascending triangle




Valero (VLO) - in a downtrend / overbought
Lehman Bros (LEH) - breakdown
Dryships (DRYS) - broke trendline / look to the 20 day MA for support - still very strong, just got overextended.







I like AAPLs chances of revisiting 200 by Q3. Consider picking up some OTM OCT Calls.

SPY

The S&P finally broke out above an important technical level and closed above it's 200 day MA. SPY closed at 142.55. While this sounds bullish - remember tomorrow is expiration day and most of the market has become wildly overbought. SPY has a 2 day RSI of almost 97 and so does much of my watchlist. Some key levels, going forward, for the SPY at least, are 144/145 to the upside and 138 to the downside. I recommend getting out at either of these levels should we get there. Further, if we do get as high as 144/145 I recommend selling some OTM credit spreads or ratio spreads on SPY (or similar behaving ETFs) as I think some pullback is imminent. I don't recommend buying Puts, since overbought doesn't mean the stock's going down, it usually represents exhaustion and/or overextension which equates to either a pullback or simply sideways movement until overbought conditions are worked off. This is why a ratio spread can be a good idea. If done right (usually means you have to go a few months out) you will profit on a move up, down, or sideways and only lose from a huge move up. They are similar to selling OTM credit spreads except you have a greater range to make a profit but it does carry more risk should the stock continue past your long leg.

Here is a short list of stocks with their 2 day RSI above 99: MDY, DRYS, IJH, VMC, NAVS, VRSN, DOV, CRS. I believe statistically it's more profitable to go long on oversold stocks (i.e. 2 day RSI less than 05) than it is to go short on those with 2 day RSI above 95. Overbought stocks seems to have more staying power. Either way, some of these, you will find, are otherwise nice looking charts and they should stay on your watchlist - there is a reason why some of these are overbought...

SPY | RIMM | LEH | IBM | HAL | FLR | DRYS | DOW

Another close above 1400 today - a meaningless milestone. The S&P has been chopping through this level since April 28th so it doesn't seem to be as significant as once thought. While the roundedness of 1400 may get a lot of attention, perhaps the trendlines shown below will prove to be more significant.


Here are some more thoughts...









A lot of nice setups but some will require patience. I would wait for a small pullback in DRYS, for example, before going long. Same with RIMM (especially with what's happening in after hours). These are up 5.5% and 7% today respectively, so while the setup still looks nice it's probably not the best point for entry. DOW is also getting overbought (2 day RSI of 93.5). I'll have some specific trade suggestions as this week unfolds.