MarketWatchers LIVE

5/3 MarketWatchers LIVE Show Recap - Agree or Disagree? - Anatomy of a Trade

Erin Swenlin

Erin Swenlin

Co-Founder, DecisionPoint.com

 

Welcome to the recap of Wednesday's MarketWatchers LIVE show, your antidote for the CNBC lunchtime talking heads. Listen and watch a show devoted to technical analysis of the stock market with live market updates and symbols that are hot. Be sure and sign up below to receive email notifications when the blog is published.

Information abounds in our Monday/Wednesday/Friday 12:00p - 1:30p shows, but we will try to incorporate a few charts that you found the most interesting during the show (or that we found most interesting!). Your comments, questions and suggestions are welcome. Our Twitter handle is @MktWatchersLIVE, Email is marketwatchers@stockcharts.com and our Facebook page is up and running so "like" it at MarketWatchers LIVE.


What Happened Today?

Market Update/Economic News/Earnings:

Every Wednesday, Tom and Erin start the show off with important earnings announcements, economic news and developing news in the major markets. Today, Tom started off with looking at Facebook which is scheduled to report earnings after the close today. Both Erin was cautiously bullish on Facebook while Tom was bullish overall, but both agreed a pullback would give the best opportunity.

 

Market Update: Erin reviews the intraday action of the major indexes and goes over her DecisionPoint indicator suite. Today she talked about using the $VIX as an overbought/oversold indicator to look for very short-term "pops". Using an inverted VIX scale, note that when the VIX penetrates the upper band, the market gets too bullish and that is generally a set-up for a quick decline. Right now the VIX in sitting above the average but below the upper band. This suggests a bullish outlook among investors. Without an upper band penetration I'd consider these readings bullish.The green vertical lines represent bullish lower band penetrations and the red are bearish upper band penetrations. Clearly not correct every time, but seems to work fairly well overall, especially when it coincides with climactic breadth readings.

 

Agree or Disagree? In this regular segment, Tom and Erin will look at two charts and agree or disagree. Erin posts the Agree or Disagree polls on Twitter to find out what you think. The current Twitter poll is here.

Tom and Erin looked at two symbols. One was Facebook. We agreed that the chart is bullish, though Erin was cautiously bullish. The second symbol was $DJUSHB. In this case, they disagreed. Tom was bullish based mostly on the weekly chart, but Erin didn't like the set-up. 

Erin: "The only real positive here is that intermediate-term support may have been found. However, all of the indicators look poor to me"

Tom likes that support is holding on the weekly chart and although RSI is declining, he sees that as a positive right now.

Ten in Ten Before One: In this regular segment, Tom reviews ten charts in ten minutes with Erin's comments and comments from the Twitter "peanut gallery" peppered in there. Send in your symbol requests via Twitter (@mktwatcherslive) before the show and we'll try and add them. If we missed them this show, we have many of them in the queue for Friday. Erin and Tom both looked at TSLA KHC MELI TWTR CVE GDX CVX MYGN MRK SVXY. Tom looked at CVE and decided although it is at support on the weekly chart, it doesn't show any positive momentum yet.

Erin pointed out that the Energy sector has continued to be hit hard. She went to her last blog article that discussed the new Long-Term Trend Model SELL signals that were just generated on both XLE and RYE when the 50-EMA crossed below the 200-EMA. Read her article here.

Anatomy of a Trade: Tom went through how he picks candidates to trade using a combination of sector analysis, earnings and seasonality. Erin uses PMO scans to narrow down candidates. Both Tom and Erin liked UMC. Although both warned that it is a very volatile stock and probably not for beginning traders or the faint of heart. It's a nice set-up.

Mailbag Segment: Each show Erin and Tom answer questions received via Twitter, Facebook and Email. Today they were asked what books on trading do they recommend. Erin pulled up the link to the StockCharts.com Bookstore and they discussed their favorites. Remember, if you take the test and become a Certified ChartWatcher, you get a 50% off coupon to use for all future purchases in the SCC Bookstore! Here's the link

Erin recommended books by Alexander Elder if you wish to learn more about the mechanics of trading using technical analysis and learn about psychological discipline when trading.

Tom recommended basically any book written by John Murphy, although Erin and he both agree that his classic book, "Technical Analysis of the Financial Markets" could be considered the "bible" of technical analysis!

It's a Wrap! In closing Erin discussed the Twitter viewer poll from Monday. The results are below. Look for our Twitter polls at @mktwatcherslive

Looking Forward:

Tune in on Friday at 12:00p - 1:30p EST on 5/5! The popular Ten in Ten to One segment is on tap. Tom and Erin talk sentiment and will concentrate on answering mailbag questions you've sent in!

 

 

Erin Swenlin
About the author: is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master's degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor's degree in Mathematics from the University of Southern California. Learn More