Stocks above their 50 day MA

This chart shows the % of S&P 500 stocks above their 50 day MA.

A bounce is coming. It should have come today and it should come tomorrow - the problem is that this is hard to time under normal market conditions.

Note: it will be interesting to see if the short-sale ban actually gets lifted tomorrow and the effect it will have.
I would like it to get lifted because I think it will slightly help reign in option prices and bid/ask spreads.

Below are a few stocks to keep on the watchlist. You'll have to excuse the long-term charts but when so many securities are making global lows, it's necessary to zoom out to gain some relative perspective.


AAPL
AMZN
GOOG
JNJ
MA
RIMM
OXY
CHK

QQQQ - bearish diamond pattern

QQQQ - presenting a low-risk setup

Look for a short-term bounce in oversold stocks... similar to the following:

X

OIH

OXY

Ag stocks are all now comfortably under their 200 day MA but may also be due for a short-term bounce.

And to the immediate downside, I like TIE back down to ten.

OptionSpot

RIG: leading the pack?

I think there is a good chance it is. Even though it appears that OIH, OXY, and DVN will bounce off of support as they have been, don't be surprised if they don't - see RIG. Also, often times when stocks snap back to their trendline steeply/abruptly, said trendline is unable to hold up against the momentum.

RIG

OIH

OXY

DVN

FSLR

I like FSLR on the long side here. Short-term. Use stops.

Shorts: FXP, ICE, NMX, MA, CSCO, PCX
Longs: GLD, FSLR, DBA, OXY, BP

OXY and OIH

OXY and OIH have a correlation of 0.81. Notice the similarities between the two graphically, below.

Is OXY 'forecasting' where OIH is heading, with regards to its long-term trendline?
How would it work to buy OXY while shorting OIH?

Pairs trading is a popular strategy that can be quite lucrative, even though I don't recommend trying it with options. If you'd like to learn more and play around with this concept check out a spreadsheet I developed here: http://www.strategicmodeling.com/Models.htm
Scroll down to 'Correlation Analysis' and click the icon.

OXY (click graph to englarge)

OIH (click graph to englarge)

SPY | VIX | OXY | SMH

As a follow-up to yesterday, we certainly didn't fill any gaps - which was somewhat predictable since the gap was above and beyond yesterday's trading range. Follow this link if you don't remember: http://blog.afraidtotrade.com/three-types-of-morning-openings/
That of course isn't real helpful to those who were holding positions overnight and got burned from the gap up - but unless you liquidate all of your positions every night there's not much that you can do about it. About the only thing you can do is play the odds that, after you've analyzed the gap, realize it's not likely to fill and adjust/repair your position accordingly.


<---- SPY










Here's a chart of the VIX. I'm not convinced that technical analysis can in anyway be applied to the VIX, for the fact that it has no underlying security that can be bought/sold but I still find the chart intriguing. Enough people follow it that there may be at least some sort of self-fulfilling prophecy thing going on.





I pointed OXY out a few days ago. I hope I wasn't the only one who completely missed the boat on this. Maybe I'll get another chance on a pullback toward 80.








I still like SMH as a longer-term play on a slight pullback - I'm especially fond of its angle of ascent. Securities that ascend at around a 30-45 degree angle won't make you rich over night but generally provide nice predictable directionality. Consider buying long-term calls (use tight stops under the trendline) or sell OTM put credit spreads below 27/28. Use caution around 32 - as last year's support will, at least temporarily, provide resistance.

Setting up

Over the next couple weeks I will looking at some potential setups for longer-term trades. These are not yet recommendations, just stocks I recommend keeping an eye on. Wait until after a week or two of Q1 earnings to see how the markets react to said earnings.

First up: OXY, RIMM, USO. All of these are setting up nicely for a move upward (ascending triangle pattern) just as X recently did - see March 31st post. Take a look at it now.

Also, like everyone else, I like AAPL but don't touch it until it makes a decent pullback.

SPY, X, OXY

SPY: 50 day MA continues to act as resistance, low volume, lots of data coming out this week.




Keep an eye on the following - US Steel (X) & Occidental Petroleum (OXY)