TCM Notes : 5/15/09

• The bearish engulfing pattern has played out thus far and is starting to take the wind out of the rally and the indices are finding themselves in between a 9dma and 20dma sandwich. While Thursday was an up day it came on lower volume and the indices resisted the 9dma to the upside. This doesn't necessarily concern me as much as it is confirming for me that a retrace is underway. The SP500 is approaching a 23.6% retrace (86.94 on SPY.) This could provide a nice level of support and offer a bounce, but I'm thinking it may be short lived. The level of dilution coming into many issues is causing hesitation now in the markets. Why buy now if you can buy lower? This is starting to replace the thought of "damn this market is running off without me!" We'll have to see how the market behaves Friday. If we can reclaim the 9dma to the upside that will be a bullish resumption to the upside and the 200dma. Failure to reclaim the 9dma and a violation of the 20dma to the downside is gonna embolden these bears to push hard to the downside making our retracement of 38.2 to 50% more likely. UYG is already approaching the 38.2% retracement, and since financials have a major influence on the markets direction I expect the SP500 to follow suit in whatever they do. That said the action in the financials was encouraging from a candle pattern perspective as I believe Thursday's action resulted in a piercing pattern. Mr. Market will tell us soon enough what he wants to do.
• I promised myself recently that I would never touch another penny stock again, but damn if this one doesn't keep haunting me. I'm speaking of ZAGG.ob. This thing broke out from under a dollar and has trended higher on increasing volume and Thursday saw a 20% pop on 1.4m shares bringing it up to 4.56. The type of wide moves it's seen in the last 6 sessions I believe is indicative of big money cashing out. I haven't heard any chatter about it, but just by chance typed it in while going through charts tonight and was astonished to see it still moving higher. It's extended without a doubt, but you never know it may offer another trade set up if it pulls back into it's 20dma currently at 3.27. Scratch resistent invisibleSHIELD cover for smart phones. There was a similar "fad" stock like this that made protectors for the ipod when it came out. The ticker escapes me now, but rest assured it ended in a disaster. Most fad stocks do. Remember CROX?http://www.zagg.com/
• Emini Monkey over at our sister site TickerMonkeys.blogspot.com has scalped his way to a 404% return ytd. Great job Emini Monkey! His goal for the year is a 1000% return, and he is well on his way. This is what staying focused, having daily/weekly/monthly/yearly goals, an eagle eye on the P&L, and eliminating losing trades immediately with a stop can do for you. Letting losers run does nothing but impairs your mental capital and distracts you from capitalizing on other opportunities that present themselves. There's an old trader's saw that goes : "if you take care of the losers, the winners will take care of themselves." So get out there and act like a monkey already!