Bull Market Beginnings Versus Short Covering 3-7-16

The bears are trapped, there can be no denying it…

Every resistance level they needed to see selling vanished. So the question on the table is simple: Bull market beginnings or short-covering off the $SPY 181 lows?

Bull Market Beginnings Versus Short Covering 3-7-16

CLICK IMAGE TO ENLARGE

What’s the difference? This is a good question. To the newbie trader they both look like a rally. No difference. Here is the way I explain it in the mentoring room..

If I say I want to get healthy and fit, this is different from me saying I am tired of being fat, so I eat less pizza. Sounds the same but the intent is different.

Short-covering is fast. Shorts are trapped and NEED to cover (buy back the stock). PLUS, new longs get in. The stock market now has two sets of buyers. Short-covering is usually short-lived and violent. The “V” bottom you see in the trading books.

Bull markets start slowly. the smart money doesn’t want you to notice. They accumulate shares on the bid until the supply dries up. Only then do they start to aggressively buy.

Which do you see on the charts? Quiet buying or a violent bottom?

Great traders look for clues, not the answer. Which are you?

If you need some help leave a comment below…

Pete

Follow Tim Anderson on Twitter@TJAnderson1

Trading Podcast Downloads

Pete’s  Day Trading Notes:

  • Retail type stocks having a nice run.
  • $GLD flight to quality?
  • Stock market setting up an inside day. This means you need to be very stock and industry specific for conviction.

This bull market gets no respect…

The current bull market — barring some sudden market catastrophe — is looking to celebrate its seventh birthday on Wednesday. But what it has in longevity, it lacks in love.

So far, the current bull market has lasted 1,762 trading days. Should it last another 29 trading days, or until April 15, it will surpass the bull market that lasted from June 1949 to August 1956 in length. The longest post-war bull market was the monster that lasted for nearly 10 years until March 2000, or for 2,389 trading days.

The current bull market has taken a beating lately, most recently right at the beginning of 2016. Recently, however, the market’s bounced back with stocks ending Friday with a third week of gains The Dow Jones Industrial Average DJIA, +0.37% was up 2.2% on the week, the S&P 500 Index SPX, +0.33% gained 2.7%, and the Nasdaq Composite Index COMP, +0.20% climbed 2.8%.

Curiously enough, one of the few similarities between the current bull market and the one of from the 90s is that they are around the same percentage gain, about 200%, on their seventh birthdays. However, they took different routes to get there.

Continue reading on marketwatch.com

Stock Market Today: Map of the S&P 500

(click the map for a full view)

Bull Market Beginnings Versus Short Covering 3-7-16

Bull Market Beginnings Versus Short Covering 3-7-16

S&P 500 Futures Signal Lower Open After Stocks’ Three-Week Bull Market Rally

U.S. stock-index futures signaled equities will fall from a two-month high as investors assessed Chinese growth prospects.

S&P 500 Index contracts dropped 0.4 percent to 1,987 at 6:39 a.m. in New York. Equities rose for a fourth day Friday, the longest rally since October, as investors shrugged off disappointing wage growth data to focus on a surge in hiring as proof the world’s biggest economy is strengthening. Dow Jones Industrial Average futures retreated 47 points, or 0.3 percent, to 16,920, today.

“What we have seen in the markets last week was nothing more than a dead cat bounce,” said Daniel Weston, chief investment officer of Aimed Capital in Munich. “For now, we don’t see signals of improvement in our expectations of growth or inflation moving forward around the developed world. So it’s hard for stocks to hold gains without much fundamentals.”

Continue reading on bloomberg.com

Chart Reading the SPY ETF

$SPY consolidation between $200-202 would be very bullish if it occurs on light volume.

(click the chart for a full view)

$spy CHART

Technical Analysis | Charts of Interest

$NFLX on finviz.com

Netflix makes a nice run into the $100 level. Next target is $105.29

Netflix Poised to Grow Again as New Report Shows How Its Beating the Competition

Americans watch a lot of TV. Studies have shown that the average U.S. citizen spends about five hours per day in front of the tube. And that number is even higher for retirees.

What is everyone watching? They’re glued to cable networks such as those owned by media giants like Comcast, Scripps Networks Interactive, and Walt Disney. But they’re also streaming content from Netflix (NFLXGet Report) , a company for which a recently released report is still forecasting incredible growth.

(click the chart for a full view)

NFLX CHART

Stocks to Trade 3-7-16

Short-Term Trading Momentum:

Positive the last 20 and 5 trading days | closed 2% higher from the open: SM, MUR, GLNG, COP, APA, MDVN, WMB, APC, RRC, HP, SWKS, NFLX, IONS, JWN, LYB, NEE, YUM, DD, CHRW

Negative last 20 and 5 trading days | closed 2% lower from the open: myl, mnk, ar, vrx, eqt

Quarterly Order Flow:

Bullish Stocks to Trade: APA, HP, ADSK, NEE, YUM, DD, TGT, CHRW, CAT, ITW, DE, TMO, UPS, KMB, AMT, GPN, MMM, EIX, HCN, TJX, HON, KORS, DHR, JNJ, CBS, PSX, CCI, ROST, LVS, WYNN

Bearish Stocks to Trade: vrx, ar, mnk, myl, endp, data, rh,

2x Normal Volume: RRC, SM, SCTY, MPLX, MDVN, EQT, CERN, DATA,

Inside days: csco, jd, v, aal, mrk, sbux, lvs, jnj, teva, wynn, mcd, bxlt, data, nvda, ctrp, aer, rost, csiq, gme, nuan, cost, lvlt, hcn, chtr, expe

About the Author

Pete is a full-time trader and mentor since 2000. Author of Equity Trader 101 and the Order Flow Method. He is dedicated to help self-directed traders to bust through the six-figure level.

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