Stocks to Buy 1/31/13 - January 31, 2013

Comment

Comment by Rhee on February 1, 2013 at 5:12pm

Well. You can call it a house of cards, and we are certainly overstretched again here with the $USHL at a level where people should be taking quite a bit off the table. But, notice how our GDP number was down. Immediately, pundits began saying two things: (1) while public sector growth is down due to the cuts in defense, consumer confidence and business indicators are up; (2) the lower growth means the Fed must leave QE on the table. My thought was the big boys want their seasonality. They want up. Mark my words that had it been June or September, everyone would have been emphasizing the poor growth number and the effects of the sequester. Just like magically Europe occupies the headlines in summer. Also do note that the fundamentals of the economy are the strongest they have been since W left office.

Just so you know, Februarys are historically flat, with a slight bear bias. The most bullish month is April. Also see below. We broke a trendline on our 5th try. Bulltrap or breakout? In any event the blue median line is very firm resistance.

(chart: EW Trends and Charts) 

Comment by Brian Augustine on February 1, 2013 at 1:20pm

Rhee, you are sensible :)  I agree with Terry, S&P should just take a nose dive...the big boys can pig out on the down side too!  Where are the bears anyway?? Oh wait, they are all over at AAPL...maybe we should call a few over to S&P hahaha.  I still say this is a house of cards, one loud sneeze and the whole thing can crumble. 

Comment by Terry H on February 1, 2013 at 1:04pm

Well you've been a good ump, Rhee! What would be poetic justice for the bears, though, if the S&P just dropped straight back down to 666 without bothering with retracements (to make up for lost time, haha...). ;)

Comment by Rhee on February 1, 2013 at 12:45pm

Hey guys. As I've said before, I just call balls and strikes. The bears had a tiny window after the FOMC, but there was no break of support and follow through. Thus, we tried the other side (jobs #s were a catalyst but not a necessity, as the bears had already relinquished the baton.) Volume is irrelevant. Sorry. Levels and momentum are all that count.

Regarding the monthly, be very careful! It's a monthly chart. That means it takes months for those waves to play out. We could overshoot to 160, trap all bulls up there, with two shoulders at 155, and then pullback to 137, and then retest 160, before crashing in a few years. Alternatively, China could flop apart at the seams tomorrow, and we go straight to 146 overnight. Who on earth knows. 

Focus on the 60min and daily chart. The rest is academic. The daily has been easy to read. The trend is up until momentum stalls and we begin making lower lows. Presently, we are still making higher highs and higher lows. And the big boys are pigging out within this window prior to the next debt ceiling showdown.

Comment by Brian Augustine on February 1, 2013 at 10:53am

hahahaha yes!!! You are right, Terry..."AND" :)

Comment by Terry H on February 1, 2013 at 10:53am

SSO (double SPY long) at resistance on the 5 min.

Comment by Terry H on February 1, 2013 at 10:51am

Not "but," "and"  ;)

Comment by Brian Augustine on February 1, 2013 at 10:40am

But if you look at the monthly (and daily) chart on SPY, there is huge negative divergence on volume...also just looking at today's volume it is really low. 

Comment by Terry H on February 1, 2013 at 10:35am

Another tipoff for EW traders is that the rally really was a compilation of countertrend structures, no doubt in my mind about this, so it is not a motive wave, which is why we're all so frustrated...lesson learned, wave 2's can be really, really, really strong.

Comment by Terry H on February 1, 2013 at 10:30am

Certainly true, Rhee. The only caveat, solely from an ew perspective, is that if this uptrend since 2009 is to be labeled a wave 2, it is not allowed to go above the wave 1 high for whichever index. This is a real nail biter for ew people, haha.

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