The Rogue Investor » supply

Stock Pick: Supply in UUP

Alex — Mon, 21 Dec 2009 08:37:36 +0000

Just after doing a post on bullish volume in UUP, supply showed its wicked face as major weakness is now apparent.

The weakness comes after UUP made a significant advance on Friday but closed even, on the low. Not only was the price action terrible, but volume was through the roof signaling that the professionals had their hand in this event.

As always, wait for some confirmation on Monday, but the fundamentals are there to think that the dollar could resume its fall.

If the dollar does being to slide, it could cause the perfect storm that could bring the market to its knees. Keep your eyes open and be nimble on your feet.

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Markets Gap Higher but Close Off Highs

Alex — Tue, 24 Nov 2009 03:18:53 +0000

After a lackluster end to last week, the markets jumped right back with the S&P 500 closing up 1.36%.

The number by itself is pretty impressive but the price action says different. All the major indexes closed pretty well off highs signifying supply in the market.

When we add volume to the mix, the day’s significance drops. Volume was close to the low for the last two months.

If things stay consistent, it wouldn’t surprise me to see the markets drift back to the previous highs and then fall off on increased volume.

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Markets Push Higher After Down Most of Day

Alex — Thu, 15 Oct 2009 21:50:34 +0000

The major indexes struggled to keep in the black just a day after roaring to new highs since the bottom back in March. There were some good things and some bad things that I’d like to point out.

First, it is a bullish move to see the markets come back from being down on the day to finish on the day’s highs and to do so on above average volume. If you are long the market, the last thing you want to see is a down day after such a strong move yesterday. By finishing on the highs, we know that what supply had entered the market was consumed and overcome by demand.

The bad that I saw was that we were only able to muster up a 0.42% gain in the S&P. This is not me being greedy, I would have no problem if this price move came in the middle of a rally, but to see this sort of gain follow what is supposed to be major buying makes me question how strong yesterday actually was. If we were only going to move up or fall slightly, I would have liked to see much less volume to know that the day was less significant.

After looking at the day, I think that the uptrend will still continue but I am cautious until we see more strength to know that the professionals are ready to keep things rolling.

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Stock Pick: Short on CBE

Alex — Sun, 13 Sep 2009 00:05:13 +0000

Well, just a couple days after getting out of a long position in CBE, I jumped into a short position with multiple indications pointing to lower prices.

I’ve got them all pointed out on the chart but let’s run through them to get a little more in-depth. First, CBE formed an inverted hammer as it closed almost 3% off highs. Combining this with that huge volume spike a couple of days ago makes me suspect a lot of selling here.

Taking a look at the price, we see that CBE has advanced over 11% in the last 5 days and the RSI is right at overbought levels. That is a lot of movement in a little amount of time and combined with the resistance, I expect to see the stock reverse and head lower.

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CBE Sold, 4% Goal Met

Alex — Wed, 09 Sep 2009 23:00:16 +0000

Today I got out of CBE for a 3.86% profit. I expected to make close to 4% and was very happy with the outcome.

To explain my chart a little further, in VSA you want to see healthy volume. What this means is that the volume should increase in amount relative to how long the stock’s range is. If the stock’s range was about twice as big as normal, you want to see volume about double to know that the move is supported and healthy.

The problem with CBE is that yesterday, the range was wide, but the volume was very excessive and unhealthy. This signals to me that there is selling mixed in with the buying and the supply really came out in today’s price move.

I will continue to watch this stock, but I don’t expect it to move above the resistance.