Market breadth data is exhibiting an extreme near term oversold condition for both the NYSE and Nasdaq. A bounce in the coming days, particularly with options expiration on Friday and a high put/call ratio, is to be expected. The Nasdaq has thus far held its 50% fibonacci retrace of the September to January rally and that may be all that is needed to prompt some buying in the coming days and give us a decent sized bounce here. If the market is to bounce now is the time for an Asian storm is brewing and could hit the markets in a few weeks. A pump by the Street to unload positions on Joe Average is just what traders should expect.
The mainstream media’s absence of coverage of the looming Japanese crisis continues to amaze us (well actually it doesn’t). It seems quite evident that the media is yet again failing to do at least a half-way decent job of reporting news that could potentially derail the market here. For those who are unaware, deposit insurance in Japan is scheduled to END on March 31st. So what you may say. Who cares about Japan, its old news! That is same reasoning behind the poor media coverage of this upcoming event. Unless traders have been living in a hole over the last week they should have noticed the dramatic run-up in gold prices and the strange trading activities in the currency markets. The excuses used to explain these moves by the CNBS clowns centered around the drop in the US markets. Very little mention has been made of the large pickup in gold buying by the Japanese as the March 31st deadline approaches. Japan’s banks are sick and until some of them ! collapse the situation there will not improve. A Japanese banking crisis has the potential to spark another Asian Crisis. While the odds of this occurring are low, traders still should be VERY mindful of the potential for disaster. Bank shares did pop late last week on rumors of a Bank of Japan bailout package. The large moves were more of a short covering move than anything else. Traders should keep a very close eye on Japan and the Nikkie.
Last week some of the top Japanese banks had their credit rating cut by Moody’s and S&P, an ominous sign of things to come.
biz.yahoo.com
Here is a great article that sums up exactly what may be in-store for us in the next several weeks and explains in simple words what is going on:
aei.org
Weekly Swing Trade:
This weekend we bring you a new feature, The 10% Swing Trade. Every week we will bring our subscribers a profile we believe will return 10% during the next week. Our first 10% Swing Trade is SUNW. SUNW closed on Friday at $9.75. We are targeting a move to $10.73 this week. Using the recent high of $14.41 and Thursday low of $9.17 we get a 38% fibonacci bounce of $11.17. With the market looking like it will bounce higher next week SUNW makes for a logical play.
SUNW chart to consider:
stockcharts.com[h,a]daclyiay[pb200!b30!f][vc60][iUb14!La12,26,9]&pref=G
As a bonus we have also chosen ELN as another 10% Swing Trade for the coming week. ELN closed on Friday at $14.80. We are targeting a move to $16.28 in the coming week. Late on Thursday the SEC announced it was investigating the accounting practices of ELN. Initially, the stock reacted negatively, dropping to an intraday low of $12.50, where ELN successfully put in a double bottom and bounced nicely higher into the close, ending the day at $14.80. Short covering has only begun here and a 10% pop should be easily attainable in the coming week. ELN should trend higher over the near term and a re-visit to the $20’s is a possibility. After all, only one month ago analysts pegged the buyout price for ELN at $18 billion.
ELN chart to consider:
stockcharts.com[h,a]daclyiay[pb200!b30!f][vc60][iUb14!La12,26,9]&pref=G
buysellshort.com |
