The V-Arc Reversal on Google GOOG

May 11, 2009: 11:28 AM CST

Google has formed a very rare and interesting pattern, known as a “V-Arc Reversal.”  Let’s look at this pattern and what the current daily structure of Google (GOOG) looks like.

Google along with other some other technology stocks bottomed in late 2008 and have been rising ever since.  Google is currently 65% higher than it was at the November low.

What I wanted to highlight was the arc pattern (officially a V-Arc) that has formed off the March 2009 lows.  Look closely to see the slide down into the $290 lows and then the subsequent – almost equal arc – rise off this level to the current $410 highs.  It’s an impressive pattern showing remarkable symmetry.

If the arc continues, the peak comes in at the $410 or $420 level, so watch those price levels closely.  Also, a negative volume divergence has formed since the March lows.  With the exception of two large-bar days, the trend of volume has been trailing lower.  This is a non-confirmation of higher prices and warns that a retracement is perhaps more likely than further continuation.

Still, the trend is up and the moving averages just flipped into the ‘most bullish orientation possible’ (as in 20 above the 50 which is above the 200).

I always enjoy highlighting interesting patterns in stock prices, which reflect the ‘battle’ of supply and demand played out on charts.

Corey Rosenbloom, CMT

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NewsFlasher Editor’s Picks for May 10 2009

May 10, 2009: 10:25 PM CST

Here are the weekend’s “Editor’s Picks” from the NewsFlashr Business Blog site:

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Top Stocks Extended from their Moving Average May 9

May 10, 2009: 7:56 AM CST

From time to time – and especially after a large rally in the market – I like to take a look at the stocks that have overextended themselves far above their 20 day simple moving average.  This gives me a reading on what stocks might be ripe for a pullback should the market experience weakness – a strategy common for ‘faders’ or ‘mean-reversion’ traders.  The list can alternately be used as a means to find stocks that have shown remarkable strength in the short term and might do so longer term (provided you do further analysis).

Let’s take a look at the top 10 stocks in the S&P 500 that are most overextended above and below their 20 day simple moving average.

Another way you can use this list is to find out if there’s a particular cluster of stocks in a given industry or sector.  In this case, there is – Financials.

Most of the top extended stocks are Financial Companies, like Fifth-Third Bankcorp, Prudential Financial, Capital One, and others.   Bank of America just missed the top-ten, coming in at #11.  Take a look at these stocks to get possible trading ideas as to whether you “fade the recent strength” or “go with it.”

Now, let’s now look at the Top Ten S&P 500 Stocks that are most extended beneath their 20 day Simple Moving Average:

Stocks that make the bottom of the list are extended less from their moving average, which reflects the recent market strength during the rally (the skew can help you see market strength).

Stocks in a list like these can give you additional trading or investing opportunities you might miss otherwise.

Corey Rosenbloom, CMT Continue Reading…


SP500 Elliott Wave Update: Competing Interpretations

May 8, 2009: 12:21 PM CST

Let’s take a quick look at the updated Elliott Wave Counts for the S&P 500, noting one ‘ultra-bullish’ interpretation and one ‘ultra-bearish’ interpretation… and a moderate interpretation thrown in for good measure.

The top-view is that we are in a large-scale “Three-Wave ABC” correction of Wave 4 that began in 2000.  Wave A was 2000-2003; Wave B was 2003-2007; and Wave C began 2007 – ????.  With that in mind, let’s see how Elliotticians are interpreting the current 5-wave “C” Correction we are in currently.

First, the “Ultra-Bullish” Count, which implies “Wave C” has ended and now we’re in Wave 1 UP of a Large-scale Wave 5 (aka beginning of new multi-year bull market).

This implies that the Bear Market is over.  In Elliott nomenclature (and wave characteristics), a “Wave 1″ will form when the prevailing sentiment is negative.

Wave 2 will be a “Told You So!” decline that fails to make a new low and surprises everyone when it turns up.

It’s only on the upswing into Wave 3 that people begin to realize “Oh my gosh – we’re in a new Bull Market.”

Let’s now move to a “Moderate” Elliott Wave count which would imply further potential for upside, but eventually target a retest of the March lows at a minimum or a slight breaking of those lows perhaps later in the year.

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Hewison:Technicals Fundamentals & Stress Test Video

May 8, 2009: 10:34 AM CST

Adam Hewison’s back to work!  This morning, he released a free 5-minute market update video in which he managed to discuss the recent rally from a technical analysis standpoint (trade triangles have continued to be bullish), fundamental analysis viewpoint (are things ‘really’ ok?), Obama’s “Honeymoon,” and finally his thoughts on the Bank Stress Tests – ambitious for such a brief video!

(Clicking the image opens the video page at Market Club)

Officially entitled “The Bank Stress Tests – Do You Believe Them?“, Hewison writes in the introduction to the video:

“Since my return from holiday, I have been scratching my head wondering why the market (in this case the S&P) has moved so high for little or no reason. The economy still appears to be very much on the defensive with unemployment rising and the business environment still on a slippery slope.  I made this video before the stress test was announced and I suspect that all of the stress test leaks have already being discounted by the market.

My new video is a follow-up from my April 14th video that I made before I left for New Zealand. If you have a few minutes, please take the time to view it. I think you will find it interesting that my observations may conflict with current market trend.  With the Obama honeymoon coming to an end, we are going to see how the markets move without government influence. There has never been a government that was able to dodge a major business cycle… and this one sure is a doozy.”

The Market Club “Trade Triangles” are a proprietary combination of technical indicators, but from what I can tell, they’re mostly based in a Trend Following Methodology (whose goal is to have you assess the larger timeframe trend and align yourself in that direction with signals – signals continue until a confirmed reversal is shown).

Certain indicators fare better in different market conditions, and in run-away trends like this, standard oscillators (as I use) tend to fare poorly, giving lengthy overbought readings and false divergences.  The key is sticking to a consistent methodology and not jumping all around with every sort of technical indicator in my opinion – know the strengths and weaknesses of your indicators and when to take certain signals (as in divergences in a run-away trend) with a grain of salt.

Anyway, Hewison shares his thoughts on the current state of the market and gives a few tidbits for you to think about going forward.

Corey Rosenbloom, CMT

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