AMZN and BIDU target price

AMZN and BIDU both experienced stellar bullish run since November 2008, however, just like Netflix, stocks go up and down, both stocks have pulled back recently, and the magnitude of these pull backs indicate their bullish runs that lasted for 3 years are over.  For AMZN, it dropped from 245 to 170,  my gut feeling is that it will go sideway for sometime at around 170 price level, then go up to above 200 level, go sideway for a few months, then go down again dropping through 170 towards final price target of this down trend which is 122, I estimate the time of reaching that price target is October - November 2012.  For BIDU, the chart looks uglier, it looks the price target is around 40 level in just a few months time frame.

Monthly Intraday Charts for SPX and SSEC: 2011-12

This is a monthly series of intra-day charts for S&P 500 (SPX) and Shanghai Index (SSEC) for Dec. 2011.
SPX

SSEC

Monthly Intraday Charts for SPX and SSEC: 2011-11

This is a monthly series of intra-day charts for S&P 500 (SPX) and Shanghai Index (SSEC) for Nov. 2011.  

SPX

SSEC

Monthly Intraday Charts for SPX and SSEC: 2011-10

This is a monthly series of intra-day charts for S&P 500 (SPX) and Shanghai Index (SSEC) for Oct. 2011.  

SPX

SSEC

Yesterday was Successful retest of early August low?

The day before yesterday on Monday, SPX closed at 1099, at the low of early August crash (1101), bull-bear market 20% line is just 10 points away at 1090.  Yesterday during day trading, that line was crossed, market once reached bear market territory at 1074, then bounced back strongly and closed convincingly above 20% line at 1123. Yesterday's low was the low that SPX futures reached in early August at night-time trading, but was never visited during day-time trading until yesterday, this fact shows that the lack of rally since August drop was due to the lack of a successful retest of August low (not only the day time low, but also the night time low as well)

Monthly Intraday Charts for SPX and SSEC: 2011-09

This is a monthly series of intra-day charts for S&P 500 (SPX) and Shanghai Index (SSEC) for Sep. 2011.  


SPX

SSEC

Market Opinion: Euro and Europe is driving markets down

The real problem here is Euro and Europe at the moment.   Dollar is breaking out from resistance, Euro is breaking down from support.  Are these real or fake moves?  The answer depends on whether the Europe crisis will lead to a Lehman II event or not. Yesterday WSJ ran an article titled "Feds prepares to take action", with detailed thought process and options followed by Feds right now.  This can be Bernanke's intentional leak of their plans and to get WS's feedback to help them make the choice on Sep 20-21 meeting.

With VIX at 40, TLT at 113, German DAX index close to 5000 key support level and Shanghai Index at 2500 bargain level, my gut feeling is leaning towards a bottoming scenario rather than "Lehman II" scenario.  Nonetheless, as always, prepare for the unexpected!

Get ready for a short-mid term rally soon

It looks today is a pretty good chance to build your long positions for the soon-to-come leg up starting after labor day weekend.  Market indexes look close to an upside breakout soon, for example, FTSE and CAC indexes have formed ascending triangles, crude oil (USO) formed ascending triangle as well.  Solar stock Trina (TSL) has is testing its low with low volume, if successful, will soon rally strong as it finishes a reverse head-and-shoulder bottom.

Use high yield bond fund to time market and economy

As you might know, stock indexes are like chained pets walking with owners, sometimes they go too far, sometimes they stay too close, but they will stay in the course of their owner, which in investment cases are moving averages or trend lines.  So the day-to-day movement of stock indexes are mostly noise controlled by animal spirit, not driven by economic forces, so is there such a rational trading vehicle that moves slowly daily, has minimal day-to-day animal spirit driven noise, and sticks to ecnonmic force driven trend? The answer is yes, and they are high yield bond funds (HYBF).

Due to the fact the HYBF are more rational, they usually are good warning signals for stock market, as in good times, animal spirit tend to be overly optimistic, driving stock indexes to new highs as economic conditions starts to deteriot; while in bad times, animal spirit tend to be overly pessimistic, making stock indexes stay low for too long as economic conditions already starts to recover.

As HYBF day-to-day price actions are more rational than those of stock indexes, HYBF's moving averages are more reliable indicators in terms of avoiding day-to-day noises, and following underlying economic trends.  Such events as short term moving average, such as 50 day moving average, crossing over long term ones, such as 200 day moving average, usually indicate economic turning points.

Let's backtest our model, using JP Morgan High Yield Bond Fund (OGHBX), looking at 2007-2009 time frame.  In early June 2007, OGHBX topped at 6.31, 4 months earlier than stock market top in October, its 50D MA moved under 200D MA in Aug 2007, confirming economic deterioration; In mid Dec 2008, OGHBX bottomed at 4.39, 4 months earlier than stock market bottom in March 2009, its 50D MA moved over 200D MA in May 2009, confirming economic recovery was starting.

OGHBX chart from 2007-2009

Using this model, if we look at OGHBX chart now, although we are not certain whether 8.22 high in May 2011 was the near term top or not, 50D MA did move under 200D MA in August 2011, confirming economic weakness.

OGHBX chart from 2009-2011

Based on the above information, the following 4 scenarios are layed out:

• Scenario 1: OGHBX will make a lower high in next 4-6 months before heading down to lower low, at the same time stock index will make a higher high.  Probability: 40%.  Reason: this round of stock index correction is sharp, yet is still within 20% bull market correction range, therefore possibility of making a higher high remains.
• Scenario 2: OGHBX will make a lower high in next 4-6 months before heading down to lower low, at the same time stock index will make a lower high.  Probability: 30%
• Scenario 3: OGHBX will make a higher high in next 4-6 months (true top), stock market index will make a higher high.  Probability: 25%
• Scenario 4: OGHBX will make a higher high in next 4-6 months (true top), stock market index will make a lower high.  Probability: 5%

Monthly Intraday Charts for SPY and SSEC: 2011-08

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for July 2011.  


SPY

SSEC

How to parse jobless claims message

WSJ ran a educational piece on 8/11/2011 on how to interpret jobless claims messages:

Perhaps the most important data release this week is Thursday's report on jobless claims. These Labor Department figures have a remarkable track record for pegging economic turning points.
They also can signal where stocks are headed.
Lately, claims have sent a mixed message. The outright level of jobless claims remains uncomfortably high; the four-week average stood at 407,750 as of July 30.
By contrast, two years into the last economic recovery, claims had fallen to about 360,000.
Still, the pace of newly filed claims has slowed a bit lately. The four-week average actually peaked in mid-May at about 440,000, and its improvement since did foreshadow the better tone of July's employment report.
There are a host of reasons now to suspect that the improvement may not last. First is the jump in layoff announcements of late. These hit a 16-month high in July, according to Challenger, Gray & Christmas, thanks to major cuts from large companies like Cisco Systems and Merck & Co.
Second is the sharp selloff in stocks, which has undermined confidence and deepened concerns about economic growth.
Third, Japan-related disruptions to typical auto-plant shutdowns this summer may keep claims artificially low.
All this may put upward pressure in the weeks ahead on jobless claims. The key, though, is whether they surpass year-earlier levels.
As John Lonski of Moody's Analytics notes, the last three recessions occurred after jobless claims posted significant year-on-year gains. For now, their level stands about 10% below where it was at this time last year.
"It is imperative for financial markets and for the economy that we avoid another upward trend," Mr. Lonski says.
There are glimmers of hope: The number of U.S. job openings edged higher in June, as separate Labor Department figures showed Wednesday. The ratio of unemployed to openings has now fallen from a high of over 6 to 1 to about 4.6 to 1.
Even so, it will be a long wait before openings, currently about 3.1 million, return to the 5 million level seen before the recession started in December 2007.
The labor market's rebound has so far been halting. It will need to take more than baby steps for the U.S. to get up and running again.

True Capitulation? 80%, Bottom to be revisited? 50%

From April 29's high 1370 to yesterday's low of 1119.28, S&P 500 index retraced more than 18%, a severe correction, on the verge of 20% definition of bear market.  This magnitude is greater than 17% correction in summer of 2010.

According to Investopedia.com, Capitulation happens:

When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.  

The term is a derived from a military term which refers to surrender. 

After capitulation selling, it is thought that there are great bargains to be had. The belief is that everyone who wants to get out of a stock, for any reason (including forced selling due to margin calls), has sold. The price should then, theoretically, reverse or bounce off the lows. In other words, some investors believe that true capitulation is the sign of a bottom.

Some other investor professionals also require more than 10% drop in major company's stock price or better, major indexes, yesterday Bank of America's price dropped more than 20%, Financial ETF (XLF) dropped more than 9%, S&P 500 itself dropped 6.66%, Nasdaq dropped 6.9%.  All these factors plus the fact that S&P is on the verge of 20% edge that distinguishes bull market correction from bear market.  It's very likely yesterday was the true capitulation i.e. the bottom, the likelihood is 80%.

Now the next question is will that bottom be revisited in the near future?  I give it a 50% chance right now.

Monthly Intraday Charts for SPY and SSEC: 2011-07

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for July 2011.  

SPY

SSEC

US Stock Index Update

Even though last week was dubbed the best week in 2 years, the following charts show that the major indexes were just on track to get back to the upward trending channel dated back to September last year, and in fact, Dow is already in the channel, NASDAQ has touched the lower end and reversed, and S&P has not yet touched the lower end of channel yet.

DOW

NASDAQ

S&P 500

Monthly Intraday Charts for SPY and SSEC: 2011-06

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for June 2011.  

SPY

SSEC

S&P 500 and Amazon Inc. (AMZN) Chart Analysis

Early last July, S&P 500 and AMZN both ended their correction and started their 1st leg up, after 5 leg run up, S&P 500 were up 33%, AMZN was up almost 90%.  Interestingly, AMZN ended the run-up in mid-Jan, one month earlier than S&P 500.

S&P 500

AMZN

Monthly Intraday Charts for SPY and SSEC: 2011-05

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for May 2011

SPY

SSEC

bull market started in 2009: the past and future

The bull  market started in March 2009 is very strong, impulsive, and fast in nature, with the goal of completely reversing the 2007-2009 bear market damage in about 3 years.  This post is intended to review the 2 years track of this bull market and based on that, lead to forecasts on likely timing and levels of future pivot points.

The bear market from 2007 to 2009 lasted for just less than 2 years, but it ran pretty fast, with the most of damage done in its 3rd leg down from May 2008 of S&P 1440 to Nov 2008 of S&P 741. Using Oct 2007 high and Mar 2009 low, the fibonacci levels provide excellent hints on the ensuing bull market pivot points.

The strong bull market started in 2009 fueled by historically low interest rate lasting for extended period of time will also have 5 legs.  Its first leg took 13 months and ended right on 61.8% retracement of entire 2007-2009 bear market drop: 1228 level in April 2010, then 2nd leg ABC correction lasted for a little over 2 months, clawed back 17% on S&P 500, ended on 38.2% retracement of 2007-2009 bear market drop: 1014 in early July 2010.  Then the 3rd  strong up leg took S&P 500 up 33% to 1344 in 6 and half months.  The 4th correction leg should have ABC pattern, started in mid-Feb, it corrected 6% to 1260 level, and had an upward bias.  After this correction 4th leg, the 5th up leg will have 5 sub-legs, to forecast the possible levels of these 5 sub-legs, we will divide the range from 1200 (the 61.8% retracement of bear drop) and 1576 (the bear market top) into fibonacci levels: 1344 - 38.2%, 1388 - 50% and 1432 - 61.8%.  

One possible scenario is: 1 sub leg will last 2 months and end at around 1440 level, 2nd correction sub-leg will correct 5% to 1388 level, then 3rd up leg will start aim at around 1523 level, and also last for 2 months, 4th correction leg may touch 1440 level, then final 5th up sub-leg will reach 1576.

Solar and Bank charts on watch

Just a few days ago, shared charts of 2 solars: TSL and LDK, since then, LDK has broken down from 61.8% retracement level $8.84 and is now at $8.20, and TSL has broken 50% level and is now sitting on 61.8% retracement level at $21.71.  Another way of viewing it is that TSL is testing support of last August, and LDK is testing the September breakout level as support.  Adding to solar perspective, FSLR has broken down the 61.8% level early May as well, it is testing the lows in last August and December, and is forming a downward wedge (2/3 chances of being bullish).

Canadian Solar is in a similar shape:

Going to banking sector, Bank of America is doing a similar thing:

Trina Solar (TSL) and LDK Solar (LDK) chart update

LDK and TSL both are selling off today, TSL is sitting on 50% retracement level of July-Dec rally, LDK is sitting on 62.8% retracement level of July-Dec rally.  The sell-off recently was sparked by Italy's withdrawing subsidy impacting the industry's fundamentals.  Are investors over-reacting?  Are the worst news already priced in?  If these levels will hold, then yes, otherwise no, we will find out in next few days.

TSL

LDK

US market charts update

Today major US indexes except Dow are sitting right on the support dated back to last September, it's also the lower end of upward trending channel.  Dow is in a better shape, but is also sitting on 50 day MA.  Is a strong rally about to start?

NYA

S&P 500

DJIA

NASDAQ

US market chart update

Update to previous analysis: it seems the recent term target of major indexes is to reach 50 day MA.

S&P 500

NASDAQ

Dow

US market chart analysis

Chart analysis of Dow 30, NASDAQ and S&P 500 indexes of US market.  While mid-March low proved to be lower end of upward sloped channel dated back to Sep'10 for all indexes, developments after mid-March differ for different indexes.  The recent new high reached in early May was at the upper end of upward trending channel for Dow, but was at the mid-point of channels for S&P 500 and NASDAQ.  We will keep a close eye on the next dip before bullish breakout.

Dow 30

S&P 500

NASDAQ

S&P 500 Volatility Index (VIX).  Since 2008 crisis, VIX has been trending in a descending triangle, will this correction lead it to go up and test the upper end of the triangle.  We should keep a close eye.

Silver ETF (SLV) chart analysis

Possible scenario: going to form a flag pattern, recent high at $48 is the flag pole, recent descent is in search of lower side of flag.  Significant levels to watch in next couple of days: $36.4 and $32.71

Monthly Intraday Charts for SPY and SSEC: 2011-04

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for April 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-03

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for March 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-02

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for Feb 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-01

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC)

SPY

SSEC

TLT chart analysis

TLT is bounced back from recent high of $94.7 and is attempting to form a bottom with a higher low.  Also the recent lower low of $90.16 is accompanied by flat MACD (13,34,9), a bullish divergence.  In addition, people are calling for ten-year yields to go back to 2.8% level, while it's now at 3.4%.  Should TLT successfully form higher low and breaks downward resistance line above, it's a good long candidate

Intel (INTC) Chart Analysis

After it hits 50% retracement level in September at $17.4, Intel is now below 50 DMA but above 200 DMA, expect a sideway pattern before a few chances of fast price appreciations, ultimate price goal is $30

Trina Solar chart analysis

Trina Solar broke out from 1.5 month consolidation and if it clears down trend ahead, it will be a long candidate.

From a longer term perspective, TSL has been consolidating between $15 and $30 for a year already, should it break out to upside, it may rise quickly.