Monday, May 19, 2008

Trading Insights to Start the Market Week

* Breakout in Sentiment - Here is a five-minute chart from today's market. The candlesticks represent the S&P 500 Index (SPY; left axis), and the blue bars represent the NYSE TICK (right axis). At the 12:55 CT bar, you can see that the TICK broke out of its range to make a dramatic new low for the trading day. I've generally found that such TICK breakouts represent an intensification of buying (if the breakout is to the upside) or selling (breakout to the downside) sentiment that can lead to short-term trending moves. Note that even after the TICK breakdown, SPY headed significantly lower before rebounding late in the day.

* Solid Trading Insights - Earlier today I had the pleasure of talking by phone with Evan Lazarus, who heads up the T3 Live blog and the T3 Live multimedia site for trader education. The material for both resources is contributed by successful active traders at an established proprietary trading firm. Both are excellent ways of seeing what some of those traders look at when they trade.

* Useful Research - Bespoke Investment Group does a great job of tracking market themes and patterns. Here's their work on the relative performance of value and growth stocks over two time periods. See also their breakdown of the transport stocks, which recently hit a bull high.

* More Fine Research - CXO Advisory examines guru stock picks and what happens to them after they're issued. See also their summary of research on inflation shocks and stock performance.

* Links - Welcome back to Abnormal Returns, who start the week off with some sound advice.

* High Five - The market makes a fifth consecutive high, but Quantifiable Edges finds it tough to locate an edge here.