Today's Chart

The markets are a bit overbought and that could bring some weakness tomorrow but if it doesn't, then this chart may work out. PLXS is almost ready for a breakout of this box. If the markets don't continue today's selloff then the buy point is somewhere from $22.90 to 23 or so. Look for unusually heavy volume as this happens. If other traders see this box then the move up could be quick and leave you behind. If the stock breaks out but the market sells off badly, then this could come back below the buy point so be sure to measure your risk and decide what to do if it happens. Support is around $21.45 so don't let this one fall too much under that.

The Fed Did It Again

Or did he? We already knew there was going to be a rate cut. The question was for how much. Half a percentage point is what the markets wanted but as you saw the markets sold off towards the end. That's not exactly a good reaction to a measure that was supposed to help the economy and in turn the markets themselves.

I have noticed that since the markets topped recently, the volatility went up a lot and the markets had a delayed reaction to any positive Fed news. That could mean that the markets rally at some point tomorrow or that today's failed rally was it. I would have preferred that the markets didn't rally today and waited for tomorrow but we know what happened. On the other hand as of yesterday, the markets were already slightly overbought so this selloff was not a surprise. What we need at this point is positive earnings reports from the leading companies to save this market from any further selloff.

Chart Play

This following pick is a purely technical play. SOLF was a previous high flyer that doubled soon after a recent breakout all the way to $40. The market's recent breakdown and the stock's over speculation made it fall all the way to under $15 the past couple of days. The solar group itself suffered some very bad loses recently but some stocks in that group have found bottoms and are coming around. SOLF is one of them and as you can see it has made a significant stochastic crossover and will probably breakout of this box I highlighted. Buy point is now if the markets can get going tomorrow. I put no targets on stocks since it's not a good idea to sell a stock that's going up but SOLF will probably find resistance somewhere around $22.

Great Day On Fed Wait

Another good day as we await for the Fed decision tomorrow. The Dow is about to breakout above a very significant level just over today's high. Tomorrow should the Fed say something that pleases the markets, we will see a possible resuming of the previous uptrend. 12500 is major resistance for the Dow Jones. I think it will probably be broken tomorrow. Yahoo's earnings report did not go well with investors and the stock is down after hours. Many others are also going down in sympathy. I don't know why anyone cares about Yahoo as a leader at this point but tomorrow it will pressure the markets. If the Fed pleases, then Yahoo's bad news will be forgotten. The solar group is on the move and breaking out. I will have some picks later on today.

Western Digital

WDC has risen after posting earnings and may be ready to move shortly. Typically I would wait 2 or more days to build a base but it may not wait that long. If the markets get moving tomorrow or after the Fed announcement, WDC may climb to recent highs. Buy point is over 27.50 but if you can take the risk, then you could buy now. Chances of failure are greater if you buy earlier than recommended. Resistance is around 29.50 and 31.20. Waiting for a breakout is best.

Market Waiting For Fed

The markets moved up nicely today validating even more the short term bottom from last week. Looking at the charts we can see that the Dow, S&P, and Russell 2000 are setting up to move higher. That means that chart setups have a higher chance of working out. NITE and XLNX are continuing after a brief pause yesterday. If you didn't sell WFR yesterday then the turnaround today is positive. PETS is still hanging on but could breakout shortly. I will have some setups later today.

Another Nice Flag

Here is today's pick for Monday: PETS. Recent earnings news has awaken PETS for a possible move to the upside. Look at how the volume has picked up recently. That's a classic sign of renewed interest in this stock. There's a nice looking Bullflag in the making. If it can hold at this level and not break Friday's low, then it may run. Buy point on this one is somewhere above 13.35 on heavier than usual volume. This stock is a slow mover so don't expect big gains in the short term. Also keep an eye on SAY and BOLT since those too are making possible flags. Remember this market may have wild swings until this whole Fed/Sub prime situation gets sorted out. If you enjoyed this and previous posts then please leave a comment and let me know what you think or suggestions to improve this blog. Thank you.