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Extreme Caution Warranted

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Jack Steiman,, on Extreme Caution Warranted

In the end, Monday was not a good day for the markets, but not a terrible one either with lots of risk out there still remaining. The bulls can feel good we didn't crash out but they shouldn't feel too good as a market crash or something at least very bad could occur if the package isn't done correctly for the rating agencies. They won't hesitate to downgrade our debt -- so buyer beware for now.

The market is trading in between strong support at 1330, a gap just taken out by the bulls, and 1345, a massive gap the bulls have yet to take out. It's a small 1.1% range for the short-term. If we can take out 1345 with a bit of force, then we can try to make a move up to 1356, and then 1370, the old highs. If we lose 1330, then 1315 is on the table, and ultimately 1300. The news of the day is more helpful to the bullish case thus far.

Bad news is not killing things down as we thought would happen last night. 1330 S&P 500 is finding a way to hold for now. The first bit of good news it seems will allow us to break through that resistance at 1345. Don't forget that the wrong news, and it's out there, can take us down very fast and very hard, so yes it seems the market wants to take out 1345 before it loses 1330, but you can't call it a slam dunk by any means.

Once again the banks and the financial stocks couldn't get out of their way on Monday. The semiconductors weren't great as usual either. However, the news was such that the financials/banks could have gotten hit much harder than they did.

The semiconductor stocks also are still weak in their pattern, but the pattern is improving. The short-term charts didn't look great, and thus some selling there Monday. However, after hours, Broadcom Corp. (BRCM) knocked the cover off the ball, although Texas Instruments Inc. (TXN) struggled some on their report. If Texas Instruments can recover, and we don't gap down on bad news overnight, the semiconductors should perform well on Tuesday.

The market is as uncertain as I've seen it in many years due to the political effect currently in place. I hate it when technicals to some degree get trumped by outside politics. No one likes this as it's tough to have faith in anything you do as a trader either way. News keeps coming out all day long and the market moves on it. For now, some exposure long seems best based on current market behavior, but you have to be prepared for anything to hit at any time -- thus, extreme caution is warranted.

Jack Steiman is author of SwingTradeOnline, a journal of his market analysis and stock trading alerts. Jack had 94 winning trades out of 145 2010 (171% total return) -- and has a 44% total return so far in 2011! Sign up for a Free 21-Day Trial!

Mike Paulenoff, of, on Bond Market's Lack of Reaction (Yet) to Debt Impasse & Dollar Weakness

On one hand, my JP Morgan (JPM) versus ProShares UltraShort 20+ Year Treasury (TBT) comparison chart is sending early warning signals that the climb in JPM pre-dates a period of climbing longer-term interest rates. On the other hand, the TBT's remain stuck in the mud, despite weakness in the Dollar and the prospect of a disruption of the Government's ability to pay its bills on time. In other words, the issue of confidence in the efficacy of the U.S. Government is on the front burner, yet the bond market exhibits a glaring lack of concern.

Purely from a technical perspective, JPM's sharp rally last week inflicted some serious damage to its Feb-Jul downtrend, which it has hurdled and sustained. The price structure is consolidating above its prior down trendline, and so far has the look of a continuation pattern that should resolve to the upside in another thrust that projects next to the 44.00-44.40 target zone.

Meanwhile, the TBT pattern is badly lagging the upmove in JPM, which is not unusual. In periods of strength for both JPM and the TBT, JPM usually finds its bottom first.

That said, the behavior of the TBT's should be very interesting in the hours and days directly ahead, especially given the "uncertainty" created by the debt and deficit impasse in D.C. AND the weakness of the U.S. dollar, which typically elicits a "defensive" response from the back end of the curve (higher rates).

So far, however, the TBTs remain within the confines of the dominant downtrend, which will require a climb above 34.00 to initiate some upside traction.

Mike Paulenoff is author of, a diary of his intraday chart analysis and trade alerts on both ETFs and key ETF component stocks. He had 162 winning trades out of 260 in 2010 (125% total return) and is 98 for 164 in 2011 (66% total return)! Also Features Member Discussion Board! Sign up for FREE 15-Day Trial!

Harry Boxer, of, on 4 Charts to Watch

The market had a tough day on Monday, but quite a few stocks that we traded did great.

Atrinsic, Inc. (ATRN) did great on Monday, opening at 3.67, and running all the way up to 6.15 at one point, and then settling back in the afternoon to 4.69, up 1.43, or 44%, on 5.3 million shares traded. It had a huge pop across resistance line and a pullback at secondary resistance. There may be some further upside to test the 7 - 7 1/2 range short-term. Keep an eye on this one. Limited (CYOU) had an excellent technical day on Monday, up 3.24 to 49.20, or 7%, on 830,000 shares traded. That was the heaviest volume since April. More importantly, the lateral price resistance was taken out. The rising channel here is looking for a mid-40 target.

Fusion-io Inc. (FIO) is developing well after the 5-wave decline. It snapped back off of the bottom of that channel, up 1.00 to 31.00 on Monday. Look for a move to 33 with volume, then back up toward 36 - 36 1/2 short-term.

Quepasa Corp. (QPSA) has also been developing well with good volume and nice technicals. After popping and pulling back for a couple days, it surged again on Monday, reaching 10.42 before backing off to 9.81. It's still up 48 cents, or 5%, on 2.7 million shares traded. Look for a move that gets this up around the 11 1/2 - 11 3/4 zone.

Other stocks in our Charts for the Day are Wowjoint Holdings Limited (BWOW), China Advanced Construction Materials Group, Inc. (CADC), Caribou Coffee Company, Inc. (CBOU), Datalink Corp. (DTLK), Elan Corp. plc (ELN), E*TRADE Financial Corporation (ETFC), FriendFinder Networks Inc. (FFN), Giant Interactive Group, Inc. (GA), Idenix Pharmaceuticals Inc. (IDIX).

View Harry's complete Charts of the Day video.

Harry Boxer is author of, a real-time diary of his day and swing trade alerts, including live audio-video of Harry discussing his charts throughout the trading session. Sign up for a Free 15-Day Trial!

Sinisa Persich,, on Free Stock Pick: NRG

NRG Energy, Inc. (NRG) on Monday jumped 66 cents, or 2.67%, after Bank of America Merrill Lynch upgraded the company to buy. The stock broke above its May highs and closed at 25.41, the highest close since December 2009.

If NRG breaks Monday's high at 25.66 in the next couple of days, the stock could see a further move into 26.80-27.50 area. Preferred entry (buy stop) price is at 25.70, with a stop at 24.85.

Sinisa Persich is a technical analyst and author of TraderHR, our newest AdviceTrade service, featuring day and swing trade set-ups for yielding profits in both up and down markets. He has 54 winning swing trades out of 76 so far in 2011 -- and has just launched a new Trading Room with customized alerting for his recently added day trades! Sign up for a Free 15-Day Trial!
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