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The stock market got slammed on Friday after a worse than expected jobs report, weak China PMI report, and continued fears out of Europe.  I am back to the drawing board this weekend trying to figure out the levels to watch next week and where I think a potential short term bottom is for the stock market in 2012.

First look at the $USHL - The USHL is a great tool to use because it tracks new highs and new lows.  $USHL updates each day after the close.  As you can see from the chart, we've seen a huge rebound over the last 2 years when $USHL dropped below -300.  When the $USHL drops below -500, there is usually a crash followed by a massive rebound.  The $USHL closed at -277 on Friday.  To me, this indicates that we are nearing a short term bottom and a bounce can happen at any time.  If we don't get the bounce we may be setting up for a short term crash.



S&P 500 Support Levels - The S&P 500 is nearing a thick are of support between 1267 -1278.  These two price levels were tops in November and December 2011.  They should now act as support on the downside, or, a level where buyers will likely step in.  If the S&P 500 closes below 1267 next week, watch 1240-1250 but we will have to dig even deeper into the numbers.

Tags: $ushl, 2012, analysis, bottom, levels, market, opinion, stock, ushl, where

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I'm not "predicting future lines". I'm posting a chart with some trendlines drawn. Trendlines can be drawn in many ways. In this case, you see that they are drawn through (some of) the extreme lows and highs on the daily chart. What they show is if we fall or rise to an extreme, we might stop against the line. But there are many lines not drawn here. On the general market page, I showed another graph with slightly different trendlines, using different connecting points. As well, the simplest way of drawing such lines is horizontally. Interestingly, the market stopped exactly around one of those lines on Friday: SPX 1335. Remember how I said two weeks ago that if we break that from the downside to the upside (before the big move to 1363), I would not go anywhere near TVIX? Well it was because of that line. It looked important. A similar line can be drawn at 1325, 1308, 1300, 1290... [...] 1208, 1150 etc. And if you day trade, you will find further lines in between. And, this is just looking at the downside. Each time the market retraces a bit, it tends to hold and try to bounce or change trend at a line it stopped at in the past, or according to a statistical model (fib percentages). The reason we can't know what will happen is (a) we don't know whether the market will go up or down and (b) we don't know when the lines will be reached. What we do know, is we very often stop at a line along the relevant timeframe (looking at a given day, hour, 30mins, 15mins, 5mins, 2mins). We also know if we break the line, we will fall or rise to the next line if we are looking at the chart from the appropriate timeframe. But each time we stop at a line, we can change our trend. What dictates whether we change our trend is (a) speed/momentum as we generally don't stop on a dime, (b) news as it can trigger us, and (c) a bunch of other stuff (if we are oversold; wave patterns; the percentage we have moved thus far from a top or bottom; buying/selling volume etc. etc. etc.) Seeing as we are presently at 1335 and appear to be in a downtrend in the short-run, assuming Friday was just a mini bounce, we could actually hit 1290 next week. Right now, the super immediate trend is up as we were up on Friday. But that looks like a mere bounce. So people are guessing we resume down. If we do, we have the levels I mentioned to try to hold us. We can go sideways as well between those levels. But the above graph says that if we fall below 1325 and 1308, we could bounce around 1290 might provide us support to move up again. But that is a guess. It could be at another line. But the graphs help us with our guesses regarding where the strongest floors and ceilings are.

http://etfdailynews.com/2012/06/18/19-reasons-why-it-is-time-to-sta...

this is scaring me, i really hope i can get out with some profits and wait on the sidelines if we do get a meltdown in the fall again

They always post these stories in summer, as it tends to be bearish. Which is self-fulfilling. Nizmo, you can't trade on fear. If you do, you will lose money because you will be reacting. The trick is to buy when people are selling and sell when people are buying. And if you are nervous, you should just put your money somewhere safe and preserve your wealth. Sane people are nowhere near the markets now. It is too volatile, precisely because of those dumb alarmist articles. The fact is the global economy is ironing stuff out these days. But, it always will be. Arguably, things were worse in the 2000s with tech, housing, lending, and market bubbles. The only difference now is that we are trying to fix it out of fear as opposed to profit off of it out greed. It's all psychology. And this is precisely a failure in confidence. If you and everyone were confident, the consumer confidence and market confidence would be up, and thus the economy and market.

i do hope the market free falls soon , so that i can go bargain hunting, grab everything on sale

rhee im not bad at this game but id go nuts if we had a repeat of 08 which we hopefully shouldnt this year

i have stocks in Nike, CAT, Panera, SBUX, TGC, LVS, Citigroup, TZA, VRINGO

other than my kog all those stocks are down about 2-5%  im hoping they rebound a little higher sometime in july so i can get rid of them and have the money on sidelines and wait for a major pullback to happen so i can load up on kog and others

CAT , SBUX , NKE and TZA should surely rebound along with maybe VRNG . CITI might run down a bit more.

 

i dont think this rally is to be trusted . I think the market might rise another 1-3% soon and then we might see a big drop again.

They all have.good potential for 2013 as long as we don't get a huge crash but is lovel to buy all.these stocks at s much lower price which is why as soon as I see little profits I'm screwing
Ya ima check it out ... Im reading .too much .bout 3 dollar gas this fall I.have a feeling we .will see a repeat of last years october crash

Or not. That's the thing. It's all speculation.

Where are we headed from here?Are we going higher or sell off?

NT, we're just chopping around in an upward channel or wedge, depending on how we draw it, which can include lower closes. If we do not break the red dotted upward line, it would indicate decreasing momentum, in which case we will not make it to 1405. The market does not have much conviction right here. Jobs want us to try to the downside, thus this down move, but earnings might try to pull us up by the bootstraps. Of course, if they disappoint that would merely confirm a reversal in short-term trend.

(chart: EW Trends and Charts)

And, the idea is to continue to hold that second last fan line so we don't have to fall to the last one. The timeline for losing our present line is unclear. You can back-test by looking at the chart to see how long these moves play out.

(chart: EW Trends and Charts)

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