Market Numbers @ Close:
DOW: -514 to 8,519
S&P: -65 to 889
NASDAQ: -81 to 1615
RUS2K: -30 to 500
TSX/S&P: -535 to 9,260
VIX: +
Internals:
Core Sector List: 16/0, gold down 30 an oz. Many down 4-5 % or more
NYSE
TRIN: 0.5
A/D Line:2175
Breadth: 27/1 Negative
NASDAQ:
TRIN: 1.17
A/D Line:2060
Breadth: 21/1 Negative
Today on the Marketbeat: Bringing back the woodshed
The day began with an ominous gap below the second pivots point on the ES and YM. With such a big drop to begin the day, we as traders can pretty much tell this gap wasn't gonna fill, ie: professional runaway gap. One thing we can keep in our minds is to watch the point of the gap in the case that we see a bullish bounce in the near future, for if the price action gets close to it, it should fill relatively easy, of course this is assuming that the bullish action will come in the near future. But with internal readings and a a down +500[Dow]/65[s&p] day, one could assume to see a fair amount of continued volatility and bearishness as this crisis is far from being over.
Internals (Click to enlarge):
Under the hood as mentioned prior, the internals were extremely bearish today, even when the price action was confined in a decent channel most of intraday, they still were overly bearish. But as with the neutral to bullish early week, one could imagine we would be seeing a bearish flush in the near future. An overview of the market internals reads like this : the Breadth closed in at 27/1 on the NYSE and 22/1 on the NASDAQ. The TICK spent essentially the whole day below zero, giving traders an idea to stay short unless looking at inverse stocks. And the A/D lines tacked on -2175 and 2060 ticks to the downside today.
All together, today's price action although bearish was essentially contained between pivots S2 and S3, that is until the heavy sell off towards the end of the day, which was quickly rebounded from the short sellers taking some profits. We remain bearish, with caution as we all know the equity markets today are a minefield at best.
Starting From Scratch:
Today I wish to speak about fundamentals on stocks. Now Id be the first to admit that I have more of a technical approach tot he markets, but I do account some macro aspects when in more of a defined bullish market. Id like to run through some of the fundamentals I might look at on a stock I'm looking to go long on, whether with options or just the stock, if I'm going long for a swing trade, its good to know that the company has solid fundamentals to back up the trends, like taking a car for a ride, if your going across the country your gonna make sure its running
smooth, but even if your only going to the supermarket down the street, you want a car that isn't gonna die at the first sign of a problem...the same goes for stocks and fundamentals....technical signs are great for entry and exits ideas, but the fundamentals tell you if its worth looking at it.
1) The first thing I'm looking at is the chart, to see if there is a clear trend, after finding a stock with a clear established trend, Ill check out how it places in relation to its industry group and how does it stack up against it, this can be done with most stock sites by doing a comparison graph (shown below)
Comparison Graph
2) Secondly, I'm looking at the fundamentals for the stock itself, which most stock chart/quote services should have access to, I use Investools for this as they have all the Fundamentals lined up in a box for easy viewing. The key aspects in this that I'm looking at are: Acc Dist Current, and for this I'm looking for a reading above 70, to show that the money is coming into this stock, If you perhaps see a growth in acc dist and no price correlation keep you eyes peeled because you might see the price action catch up.
3) Next I'm looking at Phase 2 numbers, for this you generally wanna see decent numbers, over 3.25 for F/E Score, over 2.5 for price pattern, these are just scores that crunch all the numbers and give you a score based on 4. Volatility is a personal thing, if you are comfortable with a volatile stock then use discretion.
4) The last thing I might look for is any recent news that could be affecting the stock, If you don't see any then that's OK, however, if you do then try to see if/how that news impacted the stock, if it did was it in favor or against the trend?
There are of course numerous other ways to scope out fundamentals, these are just what I have been trained to watch out for, I don't spend too much time on these, however if I'm going long then i wanna have a good idea of what I'm getting into, other good things to watch for are P/E Ratio and group rank. Try it out and develop your own ways of watching fundamentals.
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