Greece, Markets and Dow Jones below 200d SMA - Mid week update - Blog Trucharts.com Stock Blog

Mid Week Update - Trucharts.com Stock Blog - Will Grexit be a reality and stocks to trade and China stock markets

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What a week - sorry, we could not post over the weekend and then we had huge market movements in China, US and then the Greek referendum. 

China markets were down over 30% and the Chinese government made or passed laws to arrest folks who were aggressively short selling, then increased margin leverage, forced brokers to plead a measly 120B Yuan to buy stocks, banned companies from selling their own stock and I am not sure when this list will end. Well in response to all these wonderful government interventions, the markets rebounded yesterday to the tune of 200 points and everyone was getting excited. We are non-believers of this rally and think it will still take its own course eventually - we believe the China growth engine is slowing due to their shadow banking and debt problems of the state owned entities. We expect the Chinese GDP growth to drop to below the 7% number and the Chinese are very concerned. We stated that the world is mired in overcapacity and China is at the root of this overcapacity. We expect a slight bounce in the markets here, but the downtrend should resume - timing not clear. When you are minting a billionaire everyday, you will eventually have more billionaires than anywhere in the world... Bubbles, bubbles and more bubbles and the Chinese government does not know how to handle bubbles - amateurs. And they have been printing money non stop - this will come to haunt them someday.

Now Greece - well the referendum passed with an overwhelming NO to the Eurozone and it is not clear what the Grexit will look like - we believe the Eurozone members Germany and France are extremely concerned about the future of the Euro zone if they allow Greect to exit - this is called dismembering - if one falls will others follow - Italy, Spain, Portugal and who else!! That is the reason the Eurozone leaders are scrambling to prevent Greece from exiting - we still expect that this is inevitable.. 

US markets - We stated in our previous blogs that the markets were exhibiting topping action and sure enough we had the markets trying to hold levels of 18000 for the DOW, 2100 for the SP500 and the 5000 level for NASDAQ. This topping action was ongoing for 4-6 weeks with 3 digit moves every other day. Eventually the markets broke down and now the earnings season is in full bloom. Markets broke 200D SMA for DOW and we are closely watching the 17700 level now as resistance and 2070 for the SP500. VIX is elevated and we have to be on our toes. 

We had earnings report from Micron, which were lower than forecast and their outlook was grim. AMD re-enforced the slowdown in the PC markets and we expect the same from the overall semi sector. We stated to go short INTC or SMH and overvalued stocks such as AMBA, SWKS, NXPI and AVGO. We believe INTC buying ALTR was a desperate move from INTC and they paid a hefty premium for this. And as did AVGO buying BRCM for a hefty premium. There is no questions there is a major slowdown in this sector and we do not expect any major driver for this sector. Overcapacity is a definite issue and the phone markets are getting severely saturated in China and India.

Some good reads from this and the past week:

http://www.marketwatch.com/story/why-beijing-cannot-let-its-bull-market-die-2015-07-05?siteid=yhoof2

http://finance.yahoo.com/news/zeroing-empty-homes-china-throws-developers-lifeline-210739138--sector.html

http://www.zerohedge.com/news/2015-07-04/feds-full-normalization-will-crush-casino

http://www.zerohedge.com/news/2015-07-05/volatility-confusion-reign-pboc-intervenes-chinese-stocks-surge-then-tumble

http://www.zerohedge.com/news/2015-07-06/tumbling-futures-rebound-after-varoufakis-resignation-most-china-stocks-drop-despite

http://www.zerohedge.com/news/2015-07-05/hillary-ropes-everyday-reporters-creates-media-spectacle

http://www.zerohedge.com/news/2015-07-05/china-crosses-rubicon-stock-bailout-bofa-says-pboc-risks-hurting-its-credibility

http://www.zerohedge.com/news/2015-07-05/nightmare-euro-architects-coming-true-jpm-sees-grexit-base-case-split-eurogroup-comi

http://www.bloomberg.com/news/articles/2015-07-05/china-brokers-dust-off-wall-street-s-playbook-from-crash-of-1929?cmpid=yhoo

http://www.huffingtonpost.com/stacey-alcorn/inside-the-tank---mr-wond_b_7726504.html?ncid=txtlnkusaolp00000592

http://www.bloombergview.com/articles/2015-07-02/china-s-boom-has-world-bank-worried?cmpid=yhoo

http://www.bloombergview.com/articles/2015-07-04/ritholtz-s-reads-401-k-s-are-horribly-flawed

http://www.fool.com/investing/general/2015/07/01/greedy-drugmakers-change-could-be-coming.aspx?source=ihpsitota0000001&lidx=2

http://finance.yahoo.com/news/big-banks-spending-even-more-than-vcs-on-future-of-finance-145337246.html

http://finance.yahoo.com/news/chinas-stock-market-crashing-chinese-095900183.html

We are long BIDU,CYBR with covered calls written and short INTC,SWKS,AMBA. We went long WBA today for a short term trade. 

We recommend that you hedge your positions by buying some put protection and selling some covered calls. 

Check out some new features on our site and help us spread the word - we rely on word of mouth advertising - we focus our funds on driving development of our site. 

Here are some charts for DIA, SPY, and QQQ - weekly: 

 

Keep an eye on 50 week SMA for all the above symbols - these are critical support. In addition, watch IBB to see if it closes this week below 13 week SMA - if it does - it is ripe for a short.

Best of luck trading.

Trucharts team.

Markets Direction - Up or Down? Where are we headed? Trucharts.com Blog Update

Markets Direction - Up or Down? Where are we headed? Weekend Blog Update week ending 5/29/15

We have not had a chance to do a weekend update due to the jet lag from travel and other pressing matters. Finally getting some time to put my thoughts down related to the markets from the past 3 weeks and heading into the summer session.

Well NASDAQ hit a new high, markets moved higher and many earnings were reported. Avago bought Broadcom - a $37B acquisition (we think they paid too much - almost 5.5x sales) and then we have Intel buying ALTR this week - from an earnings we had HD, LOW and many other companies that reported earnings in the past couple of weeks. ULTA also reported but the stock reversed after reporting its earnings as did HD. There is talk of additional mergers in the semi company space - here are the companies that we think are ripe for consolidation - MXIM, IDTI, TXN, SLAB, MCHP, ADI, NVDA, AMD, SWKS, MRVL, XLNX, AMBA and probably many others we are missing.  Keep an eye on these stocks. NXPI, AVGO, INTC and other big semi companies would be possible acquirers. With the AVGO and BRCM merger - the merged company will be the 3rd largest semiconductor company after INTC (1) and QCOM (2).

Our drug stock picks LLY, MYL and TEVA still holding strong. The biotech sector has been holding the NASDAQ up and we expect that this sector will eventually fall - we just cannot predict when - there is technical weakness in the ETFs in the biotech sector.

We are very concerned about the underlying weakness in the markets - structurally. We are seeing many stocks breaking down in the DOW and S&P500. In addition, stocks are reversing after reporting earnings - check HD, ULTA. Housing stocks are dropping - indicating that the markets are anticipating rate hikes from the Fed. We think the Fed sees an asset bubble and are being left with no choice but to start raising the Fed funds rate. Housing prices are moving up. unemployment is down to 5.3%, homes on the west coast are selling at prices higher than asking - and this has been the longest period for the rates being at near zero - now close to 6+ years and over the past week we posted an article on FB and G+ where Byron Wein discusses how the Fed has pumped over $3T into the markets - we concur. And then we see this article over the weekend:

- http://finance.yahoo.com/news/robert-shiller-bubble-element-were-140322037.html 

All these are pointing to over valuation in the markets and the complacency is remarkable. The VIX was down last week and we expect this to spike higher in the coming weeks. We stated that we would take profits here and hedge positions with calls and puts. Adding some shorts is in our plan for the coming week.  We are long BIDU, TWTR, Z (all hedged with covered calls) and are looking to short MSFT, and possibly IBM. 

Just take a look at the stocks that popped on our sell signal strategy here:Just sort the page by volume from highest to lowest by clicking on the volume column twice: 

http://www.trucharts.com/FilteredStocks.aspx?ConditionId=8174,8175,8176

Watch for our regular daily posts and positions updates on Twitter and FB.

Again - watch the Greek situation, China stock bubble, and sell here to take some profits and wait for a better opportunity.

Good luck trading. Check out our special subscription rates and we offer the best feature set on the web for our lowest subscription rates - here is the link: 

http://www.trucharts.com/truCharts_Services.aspx

Do checkout our backtest feature - it is the fastest on the web and ummatched by any site.

Link is: Backtest feature - play with it and you can use it to try some paper trades.

Please help by spreading the word of our site.

Trucharts founder and team

Backtest feature at Trucharts.com

Backtest feature at Trucharts.com:

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Check this customizable backtest feature on our site - we show here an example run for SMA cross with a 10day exit after the event occurs and you can see over 1000 bars the profit was 165%. SMA crossover is 5d crosses above 9d SMA. You can customize these for long or short events for any stock. Green color transactions point to profitable trades.