Buyer Beware
The market moved higher today led by strong showings from transports and basic mat.
Basic materials were up today following BHP's take-over bid of Potash. The offer today, which was rejected by Potash came at a 20% premium. The story is far from over and it is likely to provide a boost to MON, AGU, and CF. This would have been a huge merger and showed that new capital is chasing agriculture. In addition to the obvious stocks, we follow two great Chinese ags, CGA and CAGC.
The bulls won the day, but not the trend. Resistance areas in the 1100, 1115 and most of all 1130 need to be taken. First things first, the bulls need to protect 1085 this week.
Being a volume guy, this past month has proven difficult to predict. Bullish reversal days, like today, occurred on light volume. Volume, especially in a reversal pattern, provides some measure of safety to a new trend. When trend reversals occur on low volume, it is less reliable, and can result in losses. Volume will remain low for most of the month, and we'll just have to trade around it.
Moving averages and S/R levels are a few ways. The 50 and 200 day moving average are the best/easiest to use for analyzing trend. At the moment, the 200DMA is above the 50DMA, which is bearish, but both averages are trending higher, which is bullish. The 1085 area on SPX is a must hold for bulls and 1130 is resistance from bears. The bulls need to take 1100 tomorrow and make a run at 1115 this week. In doing so, the SPX stands a likely chance of rallying beyond last week's highs early next month. The bears need to take back today's open.
The Chart of the Day
CAMAC (AMEX: CAK)(CHART)
finished the day 12% higher.
The stock may be in the final phase of a bull flag break-out.
Such a break would take shares to $7.50 by this time next year. While the
long-term view is very bullish, the short-term can be equally as rewarding.
Shares have stabilized around $3 on huge volume. The stock is preparing for a
big move. Although lower lows have been made, which is a sign of bearish
trend, RSI did not confirm the lows. Additionally, trade was extremely
bullish today, and that suggests a move back to channel resistance near $4 as
early as next week.
Watch List
The
TradeMaster Daily Stock Alerts' watch list was all higher
today.
Leading the way higher were the Chinese stocks that I have been bullish on
all month Rino (Nasdaq: RINO) China Origin (Nasdaq: SEED) China
Agritech (Nasdaq: CAGC) China Agriculture (Nasdaq: CGA) and Tri Tech (Nasdaq:
TRIT).
Send comments anytime editor@trademasterstocks.com
