"Market Condition remains sideways with a lack of bias and low energy.

Let’s look at our little group of study stocks from a couple of days ago. This group is a homework assignment designed to help you learn to choose watchlist stocks.

We’re going to look at the monthly charts to see the long term or primary trend.

AEP is in the electric utilities sector and has been in a trading range since its IPO. The range is very wide with a surprisingly steady high so that gives position traders a more defined high to target IF it passes other tests. Volume has been rising out of this recent low.

AEP is a 5 year old stock that has never gotten above $7.50 dollars. This stock probably never will. Notice the low number of institutions holding this stock. There are a lot of small cap stocks that never amount to much. AEZ is in the independent gas and oil sector which means usually a gippo (not a negative phrase) gas or oil company that is searching for a rig or field that has been overlooked. These generally do not have good revenues and tend to only move up on speculation and news. So this one is a discard for me.

ALXN is in the small drug company sector. It is right near its all time high which is strong resistance. I won’t discard right away but will set it aside to check guidance for 2010 and other fundamentals. It may shift sideways. The peaks and valleys trendline has kept it moving up well despite the speed of its ascent. Volume is a little low.

ATHR came to IPO at the worst possible time for its industry. The question is whether or not this firm represents new technology or a company who came late to the semiconductor integrated circuit Product Cycle. So a bit of research is needed. Right now it is about 10 points below the triple top. Volume is good..."  Martha Stokes, C.M.T.

Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
Martha Stokes, C.M.T. (c) copyright 2009 all rights reserved.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service.

"S&P 500 1100 Mark

All the hoopla earlier this week about the S&P500 finally breaking the psychological barrier of the 1100 mark was just that hype. A follow through move is required to make this official breaking of resistance technically. Without the sustained move up and continued move up this is not a true breaking of strong resistance. Volume to the upside remains low for a true rally.

False rallies can be just as exciting as true rallies. The difference is that a true rally gains ground and keep it and continues to build momentum, volume aka energy as it moves up.

False rallies are speculative moves that are not grounded in fundamental strength but in pure greed and emotion and uninformed investor buying frenzies and therefore are subject to weakness and bad news. This means you can get into a trade late and then have it whipsaw on you. Swing traders need to be really on top of technical patterns to trade successfully.

High Frequency traders were sitting waiting and moved in early this week heavily. They tend to trade a stock only one day so follow through price seldom occurs on these stocks. These runs and moves are “gottchas” for the uninformed, late comers to the move up. Mostly the large lot pro traders have figured out how to lure in smaller traders and set them up so that they can take high profits from the smaller trader.

This is the scenario that is going on right now. So swing traders, this is your kind of market but you must be wise and careful and not let the news send you into euphoria. The S&P 500 move earlier this week is no big deal. A 9 point move over the 1100 mark is nothing. The Media loves this kind of stuff because it sells news. The hype gets the little investor all excited and eager to rush to buy assuming that the “worst is over”. Reality: the retail numbers were skewed due to the auto sales that were created by stimulus. Regular retail didn’t do so well when you remove the auto sales from the equation. Retail rose a limp .02 which is not good given the time of year.

We have a speculative market running predominantly on small retail trader and small fund buying while large lots quietly are selling.

Does that mean the stock market won’t move up? No, it can run up due to small retail trader and small fund activity and small investor activity. And you can reap some profits from it short term. But remember that the large lots are on the sell side. So you must be prepared at all times to exit with them and not get caught up in a euphoric attitude. And then switch to selling short as the market continues its trading range pattern.

The indexes move up on weak green volume. Red volume is much stronger. This is indicative of large institutional investors in a distribution mode quietly exiting or lowering their share size in stocks while small traders push price up.

So long as you are totally aware of the environment you are trading in, and you are making good short term swing profits, you are fine. But if you are getting whipsawed out of trades, then you need to go back and check your entry, risk to reward, and RUN GAIN potential.

Position traders can continue to hold for now but watch for weakening platforms so that you can prepare to exit if need be. Keep an eye on the institutional accumulation/distribution indicators BOP, etc. If red BOP occurs and remains while a stock moves up, you have quiet distribution going on while small traders are buying in. This eventually will turn to a topping formation either short term or longer..."  Martha Stokes, C.M.T.

Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
Martha Stokes, C.M.T. (c) copyright 2009 all rights reserved.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service.

"Market Condition remains sideways with moderate energy.

A reminder on how to use Twitter premarket report: the pre-market report is to guide intraday and swing traders as to what to expect as the market opens and how price is likely to behave the rest of the day. It provides alerts at extreme patterns and general market conditions. It is NOT intended to follow the index action. Index action is totally its own thing and has little to do with how the nearly 8000 non listed stocks are going to behave. Indexes move on news and uninformed investor sentiment. Underlying stocks move on large lot transactions. In these uncertain times, these two very different groups are going to often move in opposition to one another. So do not compare the market condition, bias, and energy to what the indexes are doing. It can be very different. Just because the Dow moves up doesn’t mean we have a rally or that you can make profits on swing trades.

I want to thank all of you for your patience this week as we moved our corporate offices. We should be back to normal Monday with all services in place.

I was asked to analyze GMCR.

GMCR is a coffee roaster hoping to give Starbucks a challenge. The monthly chart shows a W bottom that completed and the stock zoomed upward at an angle of ascent that was unsustainable and has begun to shift to a sideways pattern recently. Volume exhaustion has occurred also which will slow down the price action. It really needs to go sideways for a while to build a platform to avoid a deep correction.

The Daily Chart exposes the summer and fall sideways pattern for this stock, this is a trading range pattern not a platform folks and you need to get used to this pattern as we are going to see more and more trading ranges for a while mixed in with platforms.

Yes, it has made modest higher highs and higher lows but ultimately this is very sideways. Good news is that for now, this is still a quiet accumulation pattern. Red distribution is very light and mostly looks like smaller funds who are not savvy on selling short and some profit taking.

Remember: not all funds are created equal and not all are run by experienced successful managers. Smaller funds such as your local teachers’ pension fund, fireman’s fund, municipal employee funds tend to be managed by less experienced managers. They make plenty of mistakes because they lack a strong education in technical analysis..."              Martha Stokes, C.M.T.

Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
Martha Stokes, C.M.T. (c) copyright 2009 all rights reserved.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service.

"When this recession was announced many months ago, I warned that I was estimating the unemployment rate would reach somewhere between 10- 10.5% before tapering off and the level would then begin to drop. We are currently at a 10.2% which is about where we might expect it to start tapering off. So the unemployment rate is reaching or has almost reached its trough in its cycle which lags behind all other economic cycles.

However the economic cycle is going to recover slowly. So that means we will be dealing with lots of sideways activity, some platforms and probably some trading ranges, especially for the indexes.

Often times during a correction or during a weak energy market, stocks will slip slide down in price. This is due more to a lack of buying than energetic selling short, or panic selling.

MDT is a good example of this kind of slumping price action. The platform sags downward until it finds support from the June highs.

There is nothing really wrong with this company’s financials.

But a lack of buying caused the price to slump or slide down. Notice that price catches and moves up suddenly reclaiming lost ground quickly.

A weekly chart shows that MDT moved into a resistance level and then retraced..."          Martha Stokes, C.M.T.

Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
Martha Stokes, C.M.T. (c) copyright 2009 all rights reserved.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service.