Tuesday, April 10, 2012

Tuesday Evening Thread

It's a bear day in the market when ... the sectors that are green are either bonds (TLT) or precious metals, and everything else is down 1% or more. Gold miners (led by GDXJ with GDX and SIL) were also green. Goldman Sachs upped 2 homebuilders (TOL and PHM) this morning, and the group (XHB) still finished dead last on my list today, down over 4%. Hopefully all the bloggerz protected their capital and will live to fight another day.


Tuesday Noon Thread

We are at a critical point for the SP500. 1370 was the 2011 high, and the 50 day moving average is about 1371. In addition, we have not closed below the 50 day moving average since December 19. Don't everybody hold your breath at once. Breath. Breath.

Tuesday Morning Thread

Gator's Chart of the Day - SNDK
SNDK - Weekly Chart

SNDK - Daily Chart
Sandisk warned last week that they were seeing weak demand and that the quarter may be disappointing. You can see the market response on the daily chart. Looking at the weekly chart there is no nearby support.

There are two trades here with different time frames. For the nimble there is a very short term bounce that is likely as the stock has spent the last 3 days below the lower Bollinger band set at 2 standard deviations and 2 days outside the 3rd standard deviation band.  (Fitz says the 2nd standard deviation should contain about 90% of all data points and the 3rd should contain nearly 99%.)  I expect to see a bounce back inside the tighter band (2 s.d.) which would be above 44.82.  It is not likely to last though.

On a longer term (given the outlook from the company) we could see the "Drop Dead Gorgeous" pattern developing.  That's when the stock drops and then doesn't make much of a recovery  and grinds sideways for a short interval and then takes another leg down.  This trade could set up very quickly following the bounce trade.  Wouldn't it be sweet to have the stock pay you off both ways?  It could happen.