"December is likely to be a choppy month with slower advances. There will also be the periodic speculative run on stocks in speculative mode such as Gold and Oil and the dollar when these work in opposition. Gold is currently under profit taking due to a rise in the dollar’s value. This appears at this time to be a momentary thing and not the final peak to trough pattern.

As gold nears its peak gurus will begin to predict totally off the way values. It would not be surprising to hear some famous guru claim gold will reach 2000.00. During the oil speculative run a big tip was not only the chart pattern but the sentiment and mood surrounding oil. It went through several dips due to profit taking and surged higher and higher. Then I heard that traders were buying tankers of oil off shore and storing the stuff everywhere and gurus began predicting a move to 200.00 a barrel or higher. The chart pattern indicated to me that that price was simply not going to be plausible.

Speculative runs are like airplanes ascending too fast. The stalls are always deeper than the pitch or angle of ascent upwards and far faster. If you have ever piloted a little plane, mine was a darling yellow Cessna, then you know that a stall happens very fast and steeply until the plane can catch the air under its wings again. This is how I see price in speculative modes, like a stalling airplane. After a few million charts, it becomes fairly easy to determine approximately when that will happen.

Gold is not there yet and could go another up further before finding its peak price just as oil did. We will be monitoring this event until the collapse begins. This is no place for beginners. The problem is that falling prices move so quickly and can gap down so fast you can’t get out with profits. If you are holding gold stocks, pay attention and do not get all euphoric and glassy-eyed thinking this is your key to great riches. It is only a rather boring and ordinary speculative run, nothing more. Always be ready to exit. Always take profits before you think the final run is underway. You will not be able to exit precisely at the top. That privilege is reserved for NYSE pro traders who have far more buying and selling power and speed than you do.

The RSI scan has been quiet for a long time with very low numbers. In the past couple of days it has been rising which means usually, that platforms and or consolidations are building strength in both price and volume.

Monitoring this can give you some stocks to trade short term.
Example JDSU had a big speculative velocity move up recently back to it previous high for this 2009 year. Then it hovered in a choppy sideways pattern with rising BOP and steady flow of funds and large lot volume.

JDSU has a very nice W bottom formation that is textbook classic pattern with a retracement in June and a completion in September. Resistance around 11 is moderate and easily overcome IF fundamentals are improving.

Below I have tried to draw a line to show you that volume is LEADING price. I hope this clarifies this definition for some of you. Bollinger Bands are ideal for this kind of pattern and show a compression going on right now..."

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 serivce.

"Institutional Scan numbers: what it means at this time: How to interpret what is going on.

For the past couple of days the Institutional scan has suddenly surged in numbers. It is rather normal for a strong up market day for this scan to rise in numbers. It will always be very low on big down days as it is a scan designed specifically for quiet accumulation and institutional trader activity monitoring.

Mostly I look at this scan seriously when the market is really flat, meaning the indexes don’t move up much or down much that day. Looks like today is going to be another flat day as was yesterday.

You can look at the scan a variety of ways to get an interpretation of what is going on.

You can look for volume surges which will tell you institutional traders were high frequency trading.

You can look for quiet accumulation patterns in stocks over 100,000 shares traded that day indicating large lot big institutional investing going on.

You can look for accumulation patterns under 100,000 and see if it is the smaller funds buying up.

You can check out which sectors are being bought heavily and which are being ignored all together.

So there is a variety of ways to study the information in this scan. It rarely goes over 300 except during velocity market action. Periodically during trading range markets we will get some velocity moves due to high frequency trading, either up or down. But often trading range markets are markets you really need to be on top of to maximize your profits.

The first thing I checked out since I am working on the Sector and Industry Report for 2010 for you, is the sectors.

Drugs: biotech, other generic, and manufacturers were the largest group (excluding ETFs). That is no surprise as most of the market believes if a healthcare package passes it will benefit drug companies a lot.

Next can Electronics: semiconductors specialized and broad. This is no surprise since this industry is trying to reinvent and has been down over a decade now and is ripe for a recovery period.

Gold Stocks came up heavily due to the speculative boom going on in gold. These stocks are being traded short term for expected profits by smart traders with lots of money to short term trade.

The ETFs that came up under Financial Services were all speculative trading action an no real long term investing here. ETFs have really shifted emphasis to the short term trade in recent years. Gold ETFs were of course rising like rockets.

And I see some bottoming patterns in some Utilities that were oversold.

So mostly what occurred yesterday and today was short term large lot traders moving into speculative positions on many stocks, ETFs and ETNs to take advantage of the smaller buyers who are buying at the end of runs as many sectors near a topping or correction area.

So many stocks are now at or near resistance levels of significance and the price action is slowing down with weaker volume and follow through that we can begin to anticipate what January is likely to be like.

Many pro traders are assuming that the smaller fund and retail trader is going for a “Santa Rally” which may or may not occur. Not every wish comes true in the market. December is likely to continue the trading range pattern with speculative runs followed by weak action and if you are new to short term trading this will all seem so volatile. There is some sense to it but it takes a bit more effort and experience to sort it all out..."  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 serivce.

"Trading condition has a bias to the upside with moderate energy. Many underlying stocks are near resistance. With good volume they could break above moderate resistance areas. Indexes had a resting day but the longer wicks show short term selling pressures entered. This is typical to a Trading Range Market Condition.

Gold is on a speculative run right now. Caution is advised especially since TV gurus are saying they are “bullish on gold stocks” which means they are fully vested and ready for the uninformed to buy and push price up so they can make even bigger profits when they sell out. Gold is NOT a safe haven. It is highly volatile and speculators are in control of price. Brokers will get on the phone and call clients trying to get them to buy in as the excitement escalates. Everyone will lose their common sense and greed will infect the crowd pushing price up further.

I have mixed emotions about these kinds of runs. First they provide an excellent training tool for me to use for students to watch firsthand how speculation and extreme booms occur and collapse. (They ALWAYS collapse). But secondly I am frustrated that so many uninformed will lose their life savings on a gamble and there is nothing I can do to stop it. So I am going to do a series on the Gold Speculative Boom that is occurring right now so you can watch and see the pattern unfold, rather than watching it after the fact when everyone claims they “saw it coming” guru guys.

Below is the weekly and monthly charts courtesy of Omega Research © 1997 with our thanks. As you can see, the gold commodity chart shows clearly that speculation is underway. What typically happens that really gets the little uninformed investor is the fact that this run will move up hugely, then profit taking will cause a minor retracement, forming a stairstep pattern on this chart. The minor step backs in price cause people to believe they are getting a “bargain” because they are “buying on the dip”.

What the little investor fails to realize is that this pattern is heading for a collapse at some point. Not soon, but they will hold and hold believing that every dip is a buy opportunity. And when gold starts the downside V they will think it is just another buy on the dip opportunity. And that is where the losses come from. Gold right now is no place for a novice or newbie but that is who is buying right now. Savvy experienced commodity traders got in a long time ago and are taking profits and having a great time. Small investors are buying at extreme patterns which is most likely to cause losses. The problem is that when this thing drops, it will fall so fast selling out at a reasonable price will be very hard. Stops will be jumped over and missed and the thing will keep falling..."             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 serivce.