Here’s the weekly chart analysis cha cha with my man JC Parets.
From the big ugly bearish engulfing monthly candle on the industrials to the bottom in bonds to the Glengarry S&P 500 levels, we got it all for your viewing pleasure:
$DX_F $UUP $ZB_F $TLT $DIA
Blu has an amazing capacity to integrate multiple complex factors in his analysis and somehow manages to clarify Fed tapering, housing, rates, emerging markets, Syria and crude in this short video. Great takes…
$ZB_F $CL_F $FED
I just spent some time discussing Hyperloop, Tesla & transportation disruption with Terra Joule’s awesome Gregor Macdonald.
This is smart stuff and and if you are seriosuly interested in the transport or energy infrastructure space, I am thinking you will enjoy:
$TSLA $FM $F
Here’s this week’s interview with JC Parets. We run through a bunch of the charts you will want to be watching this week ahead and what you will want to be looking for.
We cover much ground swiftly including:
1. Ralph Acampora’s shift from bullish to bearish.
2. A comparison of the damage done on The S&P 500 vs. The Dow Industrial Average
3. Herbalife.
4. The Homebuilders including names like Home Depot & Lowe’s
5. The potential for a rally in the 30 Year Treasuries
Have a look:
$SPY $ITB $DIA $HLF $TLT
I’ve been at the beach and so am out of the loop a bit about what’s going on in the market. I did see this about the NASDAQ outage and, as I check around, note that everyone is talking about it ad nauseam,
If Fischer Black were alive today, I’m sure that he would be laughing hysterically or perhaps he would be unable to stop throwing up.
Two points:
1. The market is not broken. NASDAQ is having some serious issues but they will get them squared and then everything will proceed as they were previously. Recall when the AP Twitter account was hacked and the market dropped for a minute and all the pontification during and afterwards. Meanwhile, that occasion was barely a blip in the larger scheme and $NDAQ is probably a buy if its down 5%…
2. If you spent the afternoon attending to this instead of your portfolio, then you were just wasting time on the noise of the day.
Sometimes, traders try to do many different things. Trade intraday, swing trade, short parabolic moves, buy break outs. Most of the time, its too much.
If you can find one or a few things that fit your personality and that give you an edge and you hone like crazy, practice and get better, you will find success.
So its no surprise that many of the best traders I know do a small number of things exceptionally well.
A couple years back, we wrote a book on the topic called The StockTwits Edge and it has tons of go to and in depth setups from some of the best of the StockTwits community.
More recently, I asked a few pros to share their bread and butter trades and here’s their responses…
@upsidetrader – One of my all time faves is buying the 200 period moving average on the daily or the 10 minute chart. It’s also a great place to get short for a trade on the pother side on those same two time frames when the moving average acts as resistance.
@Ivanhoff – One of my favorite setups involves scanning for relative strength on weak market days. Here are the specific characteristics I look for:
@HarmonGreg – Contrary to what many may think, from the short term trades I post on StockTwits, one of my favorite trades is focused on the oversold bounce on a long term position. One that I adjusted this week was in Campbell’s Soup, $CPB. It has a strong uptrend and a good dividend which makes it an attractive long term position. Despite the good dividend yield it also occasionally offers the opportunity to add income. As it gets extended from the Simple Moving Averages (SMA) it generally pulls back and finds support. That is when the trade adjustment kicks in.
The 1×2 Call Spread
Last week Campbell’s Soup pulled back hard to the 50 and 100 day SMA. When this happens with a stock I like to look for an opportunity to add a 1×2 Call Spread. This is like buying a Call Spread for the rebound and also selling a Covered Call. What makes this trade one of my favorites is that it can often be put on for free or a small credit. For this stock I was able to buy a September 47/48 1×2 Call Spread, buying one September 47 Call and selling 2 September 48 Calls for a net credit of 3 cents. If the stock rises above 48 by September Expiry I will get called away but also collect $1 for the Call Spread along side the Covered Call. Anywhere between 47 and 48 I sell the Call Spread for what I can get and let the Covered Call expire. Below 47 at expiry everything expires and i still own the stock. For a long term position this is a win only trade!
@reddogt3live – The 80-20 Red Dog Reversal
@kimblecharting – My strategy is called TB&M which stands for “Tops, Bottoms and NO Middles” I strive to find key turning points (at support or resistance) when sentiment is at extremes.
@kiddynamiteblog -THE KNIFECATCHER! (Editor’s note: Kids, do not try this at home. :))
@RyanDetrick – “Looking for trades that move higher (or lower), amid negative (or positive) sentiment. This shows there is still potential buying (or selling) pressure. If there’s been significant put buying on an outperformer and it pulls back to an area of technical support AND big put open interest, that is a low risk/high reward entry.”
@allstarcharts – My Bread and Butter trade?
It starts with sentiment leaning in one direction. It’s the potential unwind of that sentiment that gets me to look a little closer. So in a downtrend, for example, the extreme bearishness would first catch my attention. New lows are put in to extend the downtrend, while momentum (I use RSI) puts in a higher low. This divergence between price and momentum is bullish and sets up the risk/reward opportunity that I’m looking for. You can make the same argument and trade with extreme bullishness in sentiment while a security is in an overextended uptrend that is not confirmed by momentum. In that case, I would look to short it.
The Euro and European stocks in summer of 2012 are a great example. Remember last summer when Greece was no longer going to exist and the Euro was being called, “an experimental currency”? Attached is the bearish cover of Barrons July 16, 2013 representing the sentiment at the time. Momentum was putting in higher lows as prices of the EUR/USD and Euro Stoxx 50 were making lower lows into July.
Well European stocks bottomed out the week after the Barrons cover to rally over 40% in the next 6 months and the EURUSD also bottomed that same week and ralled 14% over the same time period.
This is my favorite trade setup. And I was writing about it as it took place. See here and here.
@alphatrends – After a stock in an uptrend has pulled back for 3-5 days I look to the intraday chart (usually 10 days 10 minutes) and watch for the short term pattern of lower highs and lower lows to be replaced by sideways price action. As the stock becomes neutral on short term, the 5DMA begins to flatten out and I then look for a short term higher high (again identified on 10 minute timeframe) and then purchase at that level.
@RiskReversal – An options trade that I like to employ when I can identify a catalyst for an individual stock is a calendar spread. Recently in FB my thought was that $38 IPO price would offer fairly significant short term resistance after the stock’s 45% rise following better than expected Q2 results. I am also of the belief that if the company is able to report better than expected results when they report Q3 earnings in mid to late Oct that the stock has another leg higher, possibly to the highs made on its iPO day back in May 2012.
$DTO $CPB $FB
If you are dedicated to growing your blog traffic, then you will want to take a good look at the following chart from Moz Blog and ponder the implications.
Basically, the more +1’s you get, the more highly ranked your site will be in Google search.
Moz also speculates that posting your links to G+ has a causal relationship with search rank and not just a correlation. This is profound and very smart by Google because over time, as content creators come to recognize the importance of G+ to their traffic, they will HAVE to use it.
So Google is leveraging search dominance in order to increase G+ usage.
If you are a financial content creator who is serious about building traffic, go and read the full piece. Also, be sure to read through the thoughtful and smart comments section.
$GOOG
My pal Jay understands this series of tubes that is the internet better than me and probably you. He pinged me 5 or 10 minutes into today’s Amazon outage telling me that if this goes on more than 15 or 20 minutes then its probably some kind of fairly large attack. So a few minutes later we hopped on the Google Hangouts and began talking about Amazon but wound up meandering to Google’s recent outage, the Zuckerberg hack & then onto a story about Lockheed & the Chinese Military…
Pretty cool stuff…
$AMZN $GOOG $LMT $FB
I have no idea idea what that title means but I am reminded of a time in college when I had the chance to hear Vasily Aksyonov speak.
For those of you who do not know, Aksyonov was a great Russian author who penned a book called The Island of Crimea. This is top notch reading you’ve probably never heard of, btw, especially for those of you who are interested in dystopian literature with this whole Snowden/NSA thing.
Aksyonov, a Russian then living in Washington DC, remarked that no country reminded him of the USSR more than the US. I don’t think I fully got that at the time but now as I sit thinking about the Fed’s proximate move, I think of his words.
I am looking to see if the Fed steps up the dovish propaganda this week or soon. This will tell me a couple things.
1. If we start hearing dovish chatter from the Fed, it means they are at least concerned by the accelerating rally in Treasury yields.
& 2. If bonds fail to rally on such chatter, then the Fed is at least temporarily impotent.
Dasvidaniya comrades…
Great little Google Hangouts with JC All Star Charts Parets.
We covered much ground including:
1. Seasonal weakness for the next year in the presidential cycle.
2. The possibility that $IBM is breaking down and the implications of that.
3. Coffee bottoming.
4. The deterioration in the percentage of stocks above the 200dma.
5. Implications of the recent breakdown in the correlation between regional banks and housing stocks.
6. The relationship between crude and natural gas.
Check out the vid:
$IBM $KC_F $KRE $XHB $CL_F $NG_F $SPY