You know the feeling. You’re on a roller coaster, just coming over the top of the highest point. There’s that brief moment you experience weightlessness.
Nearly every major index or sector ETF chart I look at looks the same. The one I’ll focus on is SMH, the ETF based on the semiconductor stocks. SMH is approaching the 2007 highs, although on much lower volume.
Like nearly every other index and ETF, SMH’s Stochastics are scraping the top of the chart. Back in late January/early February, when it last did this, it lasted about a month before the price, and the Stochastics, pulled back.
Notice that SMH is further away from the 50-day moving average than it was back in February. In fact, if I go over the past year of SMH movement and its relationship to the 50-day MA, I see that SMH’s distance from the MA is in the 99 percentile of all the times it was above the MA.
If I focus on the 20-day MA, SMH is in the 96 percentile of closes above the 20-day.
With a roller coaster, I can see when the car I’m in is just reaching the top and about to curl over and plunge. I have no such ability to see that in the stock market. But my stomach is getting that feeling, that weightless feeling.
In today’s Seasonal forecaster I cover one of the best short trade setups I’ve seen in a while. With a potential 7 to 10% gain over the next two months, an obvious stop-loss level that is close by, a seasonal track record supporting strong pullbacks this time of year, and a recent lousy earnings report, it represents the type of trades that may make sense right now.
Of course, there’s much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, type in www.markettamer.com/seasonal-forecaster
By Gregg Harris, MarketTamer Chief Technical Strategist
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg’s passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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