3/10 Watchlist

The exchange traded fund SPY, which tracks the S&P 500, is trading at $115.14 at this moment (2:28 p.m. Eastern), exactly the level of the Jan. 14 high that ended, for the moment, a 10-month rise in the market.

The price pierced the $115.14 resistance level several times during the day, peaking at $115.28 at 11:03 a.m. Each time it drew back to and below resistance.

---

The Option Trader Handbook: Strategies and Trade Adjustments (Wiley Trading)

I'm reading this book, and it is so excellent.

---

At no point so far today that I can discern did $115.14 become a support level. And that's really the key to judging today's action, for $115.14 must be transformed from resistance to support for today's move to truly count as a higher high and resumption of the bull market that began in March 2009.

What SPY needed was some alchemy to change resistance lead into support gold.

3/9 Watchlist

Blue chip stocks (SPY) pushed up to within 15 cents of the Jan. 14 high, close enough that if you squint your eyes, it counts as a 100 percent retracement of the decline from $115.14 down to $104.58 on Feb. 5.

A move above $115.14 creates a new high and confirms continuation of the uptrend that began in March 2009 at $67.10.

For SPY, all skies as sunny, all rainbows bright and all technical signals are bullish, at least the ones that I follow.

The long-term Treasury bonds (TLT), by contrast, continue to soak under a chilly drizzle of the sort found only in the Pacific Northwest in a March where the promise of spring-to-come remains unkept.

3/8 Watchlist

The markets are marking time today. There's little change in my indicators since this morning. I've added the telcom company AT&T to the Watchlist, as well as to my holdings, and kicked Texas Instruments off the island.

The watchlist.

3/5 Watchlist

A very late posting because of connectivity problems earlier today.

Blue chip stocks (SPY) traversed 1.1% low to high today after gapping up at the open. Today's high was 1.4% above yesterday's.

The move propelled SPY to within 0.8% of the $115.14 high that ended a 10-month run-up beginning at $67.10 in March 2009.

3/4 Watchlist

The indicators continue in the paths they entered at the open. Just another day in low-volatility paradise. (I, however, am a high volatility person. This little touch of Heaven, for my style of trading, reeks a bit like Hell.)

The watchlist.

KFT psar bull signal

The processed food company Kraft (KFT) is showing a psar bull signal.

The price is in an extreme sideways pattern, bound by $29.25 and $28.50 or so. This is not the stuff of which great directional trades are made.

2/10 Watchlist

The price of Treasury long-term bonds (TLT) is down 1.2%, high to now, and has reached a near-term support level ranging from $90.50 to about $89. The macd is giving a bear signal, as is Person's Proprietary Signal. Falling bond prices means traders expect higher interest rates ahead, and the Federal Reserve has been looking at how to exit from the current very low interest environment.

Corporate high-yield debt (JNK) is also down considerably. It is in part influenced by the federal interest rates, but also by expectations of corporate default. Traders may well judge that higher rates would stop the present recovery in its tracks, so JNK would suffer on two counts.

The other indicators I watch are trading in the ranges set yesterday.

To the scans! Here's what's interesting in high-volume . . .

1/5 Watchlist

The Treasury long bonds (TLT) continue to show a potential pps bull signal on a rise from the open today of half a percent. Rising bond prices means falling interest rates (an amazing idea, given how low rates are already). I need to note that this etf fails the trend test. It has been trending mainly downward for a year. On the other hand, the macd and stochastic indicators are pointing in a bull direction.

The yen per dollar currency pair (USD/JPY) continues to show a bear flag, meaning stronger yen/weaker dollar, on a decline from the open of 0.9%.

Other movers today among my indicators and holdings:

• Corporate junk bonds (JNK), up 1.2% (meaning falling rates)
• LVS, a holding of mine in the form of a January covered call (-c16) is up 6.5% from the open after an overnight gap, a rise of similar magnitude, and another gap over the New Year's holiday. New reports are crediting gambling revenues in Macau, where Las Vegas Sands also operates. (What happens in Macau stays in Macau -- you betcha). I'll profit, but I would have profited more with a straight bull position without the covered call.
  
• KO has fallen 2.4% the last three trading days and sits nicely in profitable territory on my iron condor (p50/-p52.5/-c57.5/c60)
• SBUX, a bull holding,  jumped 4.5% from the open, although it has pulled back a bit. This is on the third day since a pps bear signal, with no new bull sig. Earnings is Jan. 20.
• SMH, a bull holding, is down a percent from the open.

Here's what else is interesting among high-volume . . .

. . . exchange-traded funds (etf):

• XLE, the energy etf, is up 2.2% in two days, with the pps, macd and stochastic all in bull mode. The 20-day moving average is slightly below the ma50, and poised for a crossover, restoring the standard 20-50-200 bullish order.
• FXI, the etf that tracks London's FTSE index, gapped up this morning and is trading 2.6% above yesterday's open. The issue fails the trend test -- it is a sideways meanderer -- but the macd and stochastic are in bull mode. The ma20, however, is trading below the ma50 and is trending downward, giving a bearish cast to the chart.
• KBE, which tracks a banking index, is up 2.7% from yesterday's open, the day after a pps bull signal. The trend is sideways, but the macd and stochastic are in bull mode.
• EWM, the Malaysian market etf, showing rise-gap-rise-gap-rise (the infamous rgrgr -- or roger-roger -- pattern, known as the inverse Asian Tiger roar). The trend is rangebound between about 10.40 and 11.20; pps, macd and stochastic all in bull mode.
  

. . . corporate stocks:

• JPM continues its rise after yesterday's pps bull signal
  
• KFT gaps up, and signals, on news.
• T drops below the point where it gave a pps bull signal yesterday. The chart shows a nice uptrend, though.
• CHK breaks past previous upside resistance with bull signals all around (but a sideways trend).
• QCOM gaps up with good trend, macd and stochastic in what appears to be an inverted head and shoulders pattern, which is bullish. Nice uptrend since mid-December and the all indicators are in bull mode. My problem is, when everyone sees the pattern, it kills the uncertainty and therefore the potential for profit.
• DOW with a nice rise through resistance after a pps bull flag yesterday, preceded by macd and stochastic bull signals
• CAL, large rise and a new pps bull flag, confirmed with the macd and stochastic, on a move through resistance and rising trend, and on news about revenue data. So the good news for the bottom line is no doubt already in the price.
• WMT, with a sideways trend, is showing the famous double whiplash pps signal, a bear, a bull and a bear within three days. The macd is heading toward bull territory, and the stochastic toward bear. Confused puppy mode, for sure.
• No new signals on MRVL, but it has a picture-perfect upward trend since late November and is blue sky (no resistance).

Topics:

Treasury bonds, Coca-Cola, Las Vegas Sands, gambling, resort, Starbucks, coffee, semiconductors, dollar yen forex, petroleum oil energy crude, London United Kingdom U.K., banks financial KBW banking index, Malaysia, J.P. Morgan, AT&T telecommunications, Chesapeake Energy, Qualcom, Dow Chemical, Continental Airlines, Wal-Mart retail, Marvell Technology semiconductors.

Monthly Breakouts

I'm following up my discussion on Dec. 31 on long-term trading.

In my year-end review, I showed the blue chips (SPY) on a chart showing prices by month and analyzed them using a 12-month simple moving average.

The result showed that four trades based on that method would have turned what was a 23% loss for the decade of the 20-zeroes into a 78% gain.

The rules are:

• If  the bar (or candlestick) during a month crosses the 12-month moving average, then 
• Open a bull position if the closing price on the last day of the month is above the moving average.
• Open a bear position if the closing price on the last day of the month is below the 12-month moving average.
• Close the position under one or more of these circumstances:
  
• The price closes on the opposite side of the moving average from the price at which the position was opened.
• The price crosses a stop/loss set at a distance from the opening price of twice the average trading range over the last three months.

I scanned the high-volume etfs and company shares for new signals:

• etfs:
• TBT, bull
• shares:
• XOM, bear
• KR, bear
• RIMM, bull

I also scanned for etfs and shares that, having given signals within the last nine months, were trading around the entry price:

• etfs:
• EWJ, bull
• USO, bull
• shares:
• WFC, bull
• MS, bull
• WMT, bull
• USB, bull
• KFT, bull

I haven't done a rigorous back-testing of this method. It looked like a pretty good match on SPY, but any moving-average crossover method will give whipsaws on occasion, and of course entering months after any signal is a riskier proposition.

Still, I think it's an interesting approach, and one worth looking at if you have some money that you're wanting to park for the longer term.

One ideal use would be to enter and exit a high-dividend fund, like JNK, which tracks junk bonds and is presently yielding 11.18% in dividends, or AOD, which also seeks dividend income and is yielding 16.14%.

You would profit from the dividends during bull periods, as well as, in theory, from capital gains, and also avoid the capital losses that wipe out dividend profits.

(I own both AOD and JNK for the longer-term money that I don't use for trading. My entry was after the bull signals, with little price gain between signal and entry for AOD and an 11% gain for JNK.)

Topics: Exxon-Mobil, Kroger, Research in Motion, Wells Fargo, Morgan Stanley, U.S. Bancorp, Kraft, oil, petroleum, groceries, Blackberry, bank, bonds, Ultrashort Treasuries, SPDR, Spiders, S&P 500, 401(k), IRA, Individual Retirement Account.