Category: Trading Articles

Can you handle 130 points down on the S&P 500?

In most things, it doesn't matter what the answer is if you aren't asking the right question. The most significant question no longer is whether a correction is going to unfold. We already have that answer. The probabilities favoring a "yes answer" are quite high and have been for a while. For those interested refer back to The Market is Ripe for a Fall for the correction scenario as most recently outlined. The question one should be asking as we plod along towards that seemingly inevitable outcome is a) how do we get there and b) how long will it last and c) how far might it take us? Let's deal with each of these.

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  • Written by LA Little

Category: Trading Articles

The real danger in buying stocks now

A couple days back, I had the privilege of speaking with The Financial Exchange host Barry Armstrong of WRKO in Boston who was interested in the recent MarketWatch article "The stock market is ripe for a fall". That was a follow-up article on the continuing pressure that has been building in the Russell 2000 to the downside. Over the last couple of months, our Russell 2000 canary has been singing the same tune over and over - lower still! The problem however, is that despite how hoarse this canary must be by now, yesterday's trading action appears to set the stage for yet another bounce -- before the expected flush.

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  • Written by LA Little

Category: Trading Articles

Charts: Japan's Nikkei Is Showing Signs of a Larger Decline Coming

Markets usually require a push for a larger move - up or down. They don't just run higher or crash lower without a reason or at least without the perception of a good reason. So, if we ask ourselves what that reason might be, there are many possibilities but overriding theme now seems to be a lack of further Central Bank quantitative easing. Given that these markets have flourished on the free money for so long, one would have to think that without more free money they will not fare as well.

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  • Written by LA Little

Category: Trading Articles

The stock market is ripe to fall

For a good two months the strong indexes have been trying to break higher while the weaker ones have been building the case to break lower. Yesterday they did both - on the same day! It has become just that bifurcated. Throughout this period there were range trades that could be made trading long the strong and short the weak. All the while, the wolves were gathering for the kill. Now it is time.

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  • Written by LA Little

Category: Trading Articles

Two ideas for a market going nowhere

In a market going nowhere fast, post earnings trades are a place where some of the frustration can be avoided. Only some of the frustration though because as we all know, if the general market can't move, most stocks won't move either. But post earnings plays at least provided a higher probability of success and in a market that's going nowhere fast, if you are going to put money to work on the long side, you need to do in places where others have already indicated that they are willing to pay up and that's what post earnings plays are all about. Here's a couple of examples.

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  • Written by LA Little