Even St. Paddy Is Long

irish babe flag 256x300 Even St. Paddy Is Long

“Murphy told Quinn that his wife was driving him to drink. Quinn thinks he’s very lucky because his own wife makes him walk”.–A Leprechaun somewhere

It was a fun week, the indices ripped, the S&P closed above 1400, $AAPL tagged 600, the transports (IYT) found a bottom and the financials exploded through resistance.

All is well with the world as we find ourselves back in the land of Pandora where everything works. Yes, I am tongue in cheek, but the tape is strong. Two signs of strength for me is that I’m a seeing an “up” tape on strong dollar days. A rarity in the past. Also the transports, which looked like death for a spell, reversed higher this week.

Going forward (at least for the next two weeks) I think the tape rips higher. Why? Because every vanilla fund manager that has been waiting for the pullback (that never came) will have a howitzer pointed at his head by his boss to be long. The dip they wanted to buy never materialized, so the only option for them now is to recklessly chase performance and tack on some alpha. This will push price higher short term.

I’m long some boring stodgy names in front of this because that is what they will buy. I also bought a pant load of coal and steel stocks early last week because the group is in the dirt and they may be next. The fertilizers also looked awesome on Friday.

The S&P has already reached the “year end” target of the majority of the “gurus” in just three months, so they either have to raise targets soon or start selling. I doubt they will do the latter.

I just launched a ten hour corned beef and cabbage dinner with carrots, onions, potatoes and spices in the slow cooker. The top comes off around 6PM. I may pop a picture up of this beauty later.

We have had an awesome couple of weeks on my site as well as in my chat room. So stop on by.

 

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The Transports Bottomed

iyt 300x197 The Transports Bottomed
DOW TRANSPORTS

The other night, I did a post about the power of trendlines, specifically “uptrend” lines that were broken, leading to much lower prices. Tonight, the focus is on downtrend lines that get broken to the upside. Very powerful, especially if the trend line is broken with significant volume.

There is no better example of  a downtrend line reversal than what happened today with the transports. $IYT exploded today, broke its downtrend line with massive volume.

The actual ETF for the transports is highlighted above, with specific stocks within that group listed below. This trend change is importnat for the continued success of this rally. Stay tuned

For more specific analysis and daily setups you can subscribe here.

$CSX

 

csx 300x198 The Transports Bottomed
CSX

$NSC

nsc 300x204 The Transports Bottomed
NSC

$UNP

unp 300x197 The Transports Bottomed
UNP

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Why I Draw Trendlines

Sometimes trend lines and moving averages work the same way. Occasionally I will draw an uptrend or downtrend line and notice that it is amazingly close to a key moving average. So on the charts below I took out the moving averages to show just the trend line. Less noise. Many times it can be more powerful.  A break of a trend line can imply just that, a change of a trend.

Sometimes an uptrend line will break lower,  you get all jazzed up to short it, then it whips higher for a day or two. The “street” will overthrow the trend line to shake people out, squeeze your short, only to kill it a day or two later.

Stocks that break an uptrend line with volume can be great shorts. Here are a few basic examples.

$ANR is a good example of a stock that did a great job of holding its uptrend line….until it didn’t. As you can see 0n 2/22 it finally broke and closed below the uptrend line, but rallied hard the following two days. The stock didn’t hold, and was good for five quick points to the down side.

anr2 300x198 Why I Draw Trendlines
ANR

$HPQ successfully tested its uptrend line four times before the lights went out.

hpq1 300x198 Why I Draw Trendlines
HPQ

$FSLR has been a waterfall of bear flags since back in August. It broke its recent uptrend line though in late February. That’s all she wrote.

fslr3 300x188 Why I Draw Trendlines
FSLR

Those are just a few examples. This is very basic stuff, but if used properly it can save or make you some real money.

 

 

 

 

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