Friday, June 29, 2012

Weekend Thread

California
S&P futures bulls kept the pressure on all day after a quick 5 point dip off the cash open. Last minute month end / quarter end action pushed it up to close about 1358... which is a point higher than the high from last week. Naz futures played some catch up after under-performing the last few days and Russell futures are firmly above the 785 area that a lot of traders were watching (currently trading about 797ish).

Overall, it appears the bulls are firmly in control again.... although they still have some tough resistance above. You can see on the chart below that the SPX has a high volume zone from 1360-1370... and then again at 1398-1408. The bulls have created V-shaped recoveries before by working on the futures at night in order to gap it up and over high volume zones... so I'll be keeping an eye out for that next week.
SPX Daily
You can see where my priorities are on a Friday afternoon by the size of these post images... :-) I am going to zone out on that California picture for a bit and try to decompress after a wild week. I hope everyone has a safe and happy weekend!

Friday Afternoon


After a gap up on (what else) European headlines the indexes have been grinding around with little up or down movement.  Next week is screwed up with a holdiay in the middle (Tuesday is a short session too) and with today being the end of the 2nd quarter and 1st half ... perhaps everyone is just looking to close up shop and start the weekend.  I know I am.

Friday morning


Another long week is (almost) in the can.
Hang in there.

Thursday, June 28, 2012

Thursday Evening

S&P futures bulls stepped up at the red zone again (1300-1308). They jammed it up above 1320 during the last hour, and it looks like some big players are pulling out all the tricks. That last hour "save" closed it right at the 20day WMA (1323ish).

Thursday Afternoon

I'll be darned.  It was a tax.
Even though our President said repeatedly that the Affordable Care Act was not a tax the Supremes said, it walks like a duck and talks like a duck so it's a duck.

Thursday Morning

Gator's Chart of the Day: XIDE
Once upon a time on a blog far far away Exide Technologies was the stock of the week.  I think it looks pretty good right here and right now. 

XIDE reported earnings June 8th and now sports a ridiculous P/E of 4.8 and only 4.2 on a forward basis.  Just over 8% of the float is short and it takes almost 10 days to cover.  The target price is 4.93 and Wednesday it traded 28% above average volume.

Price has moved up about 40% over the last 3 weeks so we aren't catching this as early as I would like but it looks to have more upside left.  It just closed above the 200 day for the first time in over a year and has moved into the February gap.

The Trade
I wouldn't chase the open but I would want to get a small piece shortly after the "market on open" orders are filled.  If the stock pauses or pulls back a little I would be ready to add.  I think 4.00 is a reasonable target and that would be about 20% upside.  With a stop just under Wednesday's low of 3.16 you'll have the 200 day above your stop and if it does trip you can watch for a bounce from 3.00 to buy it back if you like.

Note: All statistics from Finviz

Wednesday, June 27, 2012

Wednesday Evening

S&P Futures Hourly
The bulls put up a fight again on Monday-Tuesday at the red zone (1300-1308). Today they were able to push up and hold the 1320ish level... and I'll be watching that level closely if we get some downside action tomorrow. The 1340ish level is the next major resistance area above... and the volume profile suggests it might be tough for the bulls the first time up there.

Wednesday Afternoon

Parabolic - par·a·bol·ic

PCYC Daily Chart
Enjoy it while it lasts.  Seems like a reasonably tight stop on at least part of a long position is appropriate. 

Wednesday Morning

Gator's Chart of the Day: UPL
Lots of chatter on the blog about natty gas in general and UPL specifically.  If that wasn't enough it appears that Tim Collins may have mentioned it in RM Pro (that's unconfirmed) but I know he gave Cramer some charts because JJC used them on his show Tuesday night.  I confess I half payed attention and Cramer did a decent job of explaining Tim's work.  All of this to say there is plenty of hype around this one so just be aware of that.

The chart is confirming UPL has bottomed and is now starting a new uptrend.  This is evidenced by the turn in both the 20 and 50 day simple moving averages and now the 20 has moved above the 50.  When choosing an entry, adding to the position or even holding on for a move higher it's important to pay attention to natural gas prices.

The Trade
Starting a position right here and right now seems reasonable (check natgas price to be sure it's not moving down) and a stop just under Friday's low of 20.37 should be adequate wiggle room without being too costly.  Since this would be a breakout trade you may want to add quickly if the stock is moving higher and volume is strong.  If volume dries up the breakout is likely to fail.  Keep moving your stops up so that a sudden shift in commodity prices that may be triggered by a strong $US spike won't wipe out your profits.

Tuesday, June 26, 2012

Tuesday Evening

Too soon for this?

Tuesday Afternoon


Write Your Own Post

Tuesday Morning

Gator's Chart of the Day: DNKN
Dunkin' Brands Group, Inc. made it's all-time low (not shown on chart) back in mid December.  Since then it's been moving steadily higher and now sports a somewhat lofty 68 P/E.  The forward P/E is a bit more reasonable 24 but the PEG ratio is over 4 so it's by no means cheap.  The short ratio is under 3 so it's really not a short squeeze candidate either.  With a yield of only 1.7% you really can't expect that to provide much support.  So why am I looking at it?

After consolidating around 32 for 6 weeks the stock put on another leg higher during June and reached what looked like a climax top last week.  After three days of a pullback it gapped down on Monday and bounced from support around 33.50 and printed a pretty green hammer in an ugly tape.  Volume was a bit light but that may have been more a reflection of few sellers than a lack of buying interest.

The Trade
Noting the hook in the bottom Bollinger band I don't think you have to rush to buy as this usually indicates volatility is subsiding but if you don't own it and want some (who doesn't want a Dunkin' Donut?) this is not a bad place to take a small bite.  Since a stop would be back in congestion (32.50ish) it is likely you can get some more a bit lower in the next few days but it could just keep moving back toward 37.  In that case you would be glad you picked up a dozen to go.

Monday, June 25, 2012

Monday Evening

Monday Afternoon

SPY Daily Chart (11:35AM)
Better housing numbers couldn't do anything for the market.  News of made up numbers from China and bickering in Europe have the markets headed lower.  The Supremes dealt the President a blow with their immigration decision and failed to announce anything on Obamacare so there really is nothing to hold the market up.

SPY is back in the box and looks to be headed for a test of the 200 day and maybe even the bottom of the box.  If it gets down there it would be a lower "relative low" as it would take it below the lower Bollinger band. 

Monday Morning

Gator's Chart of the Day: MJN
The market has been jerking traders around and many have been crying .... so .... I've found an appropriate chart.  Mead Johnson Nutrition Company makes .... wait for it ..... baby food.  Spun off from Merck in 2009 they have the whole world as their market.  Exposure to many currencies may be an issue but as long as populations continue to increase their consumer base grows.

Recent buzz in Forbes and an upgrade from S&P may be the cause of the volume spike on Friday.  The price has moved up from 78 to 88 without a significant pullback so it is a bit extended as it closed at an all-time high.  The Bollinger bands are still expanding and the 20 day is about to cross up through the 50 day simple moving average so it probably has more upside but maybe it's real virtue is it may not fall much if the rest of the market does correct.  Input costs should be going down but I have not disected their balance sheet.

The Trade
I don't suggest piling in right here right now but if the stock opens higher and holds it may be right to take a small (25%) piece of the desired position.  I would be looking for a small pullback to test the break above recent resistance but that may just be some sideways movement as some take profits and others recognize an opportunity to get in.  I would hold the initial piece as long as the stock stays above 84ish and add on a bounce from any pullback.  Volume will be important and if it dries up I would lose my enthusiasm for the stock.

Friday, June 22, 2012

Weekend Thread

Hope everybody has a safe weekend

Friday afternoon


A handy checklist for evaluating a potential trade

Trend
On your primary (or higher) timeframe - is the trend up, down, or sideways ?  (the technical term for a sideways trend is “junk”, lol)  It is much easier to trade with the trend than against it.

Void
Is there a relatively empty area on the chart (i.e. lacking in nearby support or resistance) for price to move into ?  Price moves easier when it has clear areas to travel through.

Entry
What is the entry signal ?  For instance, trading outside of the previous bar, or perhaps hitting an obvious support or resistance level.

Stop
Where is the natural stop-loss point ?  For instance, the prior pivot low or high.  If the stop is too wide, the trade should be avoided.

Target
How far is the stock likely to go if it moves in the trade direction ?  This would generally be the next support or resistance level.  If the ratio of target size to stop size is too small, the trade might not be worth taking.

Market internals
Things like A/D ratio, $TICK, up/down volume, $VIX.  In a very strong market, shorts have lower odds of paying off.  In a very weak market, longs have low odds.


Friday Morning


Thursday, June 21, 2012

Thursday Evening


Thursday Afternoon

S&P futures bears stepped in right off the cash open at the 1352 level... and have pushed it down about 20 points. 1334.50 is the LOD so far. The bulls have some work to do to regain control over the 50day SMA on SPX (1346ish)... but I'm trying to give them some room.

Thursday Morning

59 Minute Trade Opportunities: BBBY and RHT

Both of these stocks reported earnings after market on Wednesday and they sold off hard.  This is the kind of move that sets up for a 59er.  If you have never tried it before and you want to give it a go read (below) about the SMG trade.  I don't recommend that you try both unless you feel comfortable and can give them your undivided attention.  If the market isn't crazy from overnight news either one (or both) can give you a very nice return.  Below is the 3 minute chart of SMG on 6/13.


The Trade   (If it does not set up don't force it.)

As trading begins you are watching for the opening print and the low. Make note of both of these figures. When the first green candle prints hit the buy button. You would be in here under 36. Since this is a bounce trade it is expected that the low of the day has already been made and the stop should be just below that.

This trade will likely move very quickly so be ready to add. If the stock has not yet cleared the opening print (this one did) then wait for it to clear that level and then add aggressively. If it continues to move higher then fill out your position if you have not already done that with the first two buys. As each successive buy is made place a stop just under that buy point and watch.

When volume begins to slow be ready to take some profits (I like to sell 1/3) but let the rest run. Unless you want to hold the stock longer than today I think it's best to move your lowest stop up to insure you will have profits.

As the name of the technique suggests this trade is likely over in the first hour as the sellers have dumped and the bounce buyers have gotten their fill. I have used this method many times and it's one of my favorites. The risk is very low if you put that stop in as soon as you make the first buy and then respect it.

Wednesday, June 20, 2012

Wednesday Evening

New Zealand
S&P futures closed exactly at the level from yesterday... 1350.50. If you were not watching the markets, it would appear we didn't do much today. The reality was, it was a day trading market and we were movin' fast. After a test of the 50day SMA on the SPX (1346ish), the bulls rallied the futures up almost 17 points from the LOD to the HOD. The bears then took over and whacked it down 15 points to test the 50day SMA on SPX for a second time. Then, the bulls stepped up again and rallied it into the close about 11 points. The bullish side of all the back and forth action is that it did work off some of the short term indicators... and that opens up the possibility for a push up towards 1370ish on SPX (1364ish on the futures). The bearish side is that we are still stuck under the 1360-1370 zone... which is obviously tough resistance.

Wednesday Afternoon


I wanted to zoom out a bit and take a look at the daily chart of the SPX. You can see the high volume zone showing potential resistance at the 1360-1370 area. There are a few short term indicators suggesting we could pull back in the days ahead. The first level of potential support is the 50day SMA... currently at 1346ish... which also matches up to the futures gap from Friday at 1340ish. If the bears push below that, I'd expect the bulls to make a more firm stance around that 1320ish high volume zone marked on the chart.

Wednesday Morning

The New Government Symbol
The government today announced that it is changing its symbol from an Eagle to a CONDOM, because it more accurately reflects the government's political stance.... A condom allows for inflation, halts production, destroys the next generation, protects a bunch of dicks, and gives you a sense of security while you're actually being screwed!

Damn, it just doesn't get more accurate than that!

Edit: Sorry there is no chart this morning.  Seemed pointless since it's Fed day.  Mrs. G received this from one of her friends so don't be surprised if it shows up in your e-mail sometime.  I think it's gone viral.

No chance of a virus from this post/pic.  It is a "snip it" screen shot of the e-mail.

Tuesday, June 19, 2012

Tuesday Evening

Australia

The bulls put the squeeze on today and pushed up into the 1360-1370 area on the S&P500. There were some heavy sellers in the S&P futures that started at about 1352 (1358ish SPX). Several short term indicators are looking ripe for selling... and the futures just closed at about 1350.

Tuesday Afternoon

Bulls are pushing up into the 1360-1370 SPX zone today.

Tuesday Morning

Gator's Chart of the Day: TSLA
I'll probably never own one of their vehicles but I just might buy some of their stock.  There are several ways to look at the chart and draw trend lines but I think this is busy enough as it is.  After rolling over and gapping down in early April TSLA went searching for support.  Now it has a nice double bottom followed by a series of higher highs and higher lows.  Volume has been light until Monday when it moved smartly higher from the down trend line (now support) and closed above the 50 day simple moving average.

The Trade
There are a several of ways to approach this one but I like to start by taking a small position and planning on an add as it does either of two things: 1) comes back to test the breakout at about the 200 day and bounces ....... OR ..... 2) add as it continues moving higher with volume.

Tuesday would be day 3 of the move through the trend line so any add to the initial buy in the second scenario would have a tight stop just under the 50 day.  I would expect some resistance a little under 35.

Monday, June 18, 2012

Monday Evening

Oahu

Monday Afternoon

SPY Daily Chart (11:45AM)
Looks like the box is tougher to break out of than some thought.  After sticking its nose up to R1 (134.57) the SPY quickly retreated back inside.  If it can't close above it today what news can push it back up later this week?  It won't be a leadership speech from Washington, D.C. and that leaves us looking to Angela Merkel.  I may play some golf this week.

Monday Morning


Gator's Chart of the Day: FIO
I've got a heavy weight on my line ... I'm going bottom fishing.  Clearly the stock is in a bearish configuration with the 20, 50 and 200 day simple moving averages all above price.  I posted last week that I was waiting for a green candle and that happened Thursday.  If we had not been going into such a newsy weekend I would have started my position Friday.  Daily volume was not impressive but it did pick up in the last 20 minutes and the stock closed with good momentum.  (A five minute chart gives a good picture of this.)

The Trade
It looks like the market is going to open higher Monday and I'll be looking for an early entry.  If the stock gaps up I won't chase but instead I'll look to buy an intraday pullback and bounce.  If the stock does not open higher I probably won't take the trade at all.  I don't think the 20 day will provide much resistance and I'm looking for the upper Bollinger band as a near term target.  I think the stock can challenge the 50 day before it needs much of a rest.  If I can get my entry I'll add if/when it clears the 20 day and I'll likely have a full position with that first add.  My stop will be very tight.  I'll be using Friday's open (18.70) for my stop on the initial buy and for adds the stop will be similarly close.

Friday, June 15, 2012

Weekend Thread

 Austin


A special Happy Father's Day to all the dad's out there!!

Friday Afternoon

ES Hourly
S&P futures have pushed up into the gap zone from Sunday night. Kind of in no man's land here... but until the bears break below that high volume zone in red (1300-1308ish) the edge is with the bulls.

Friday Morning

Thursday, June 14, 2012

Thursday Evening

Maui... 'nuff said

Thursday Afternoon

NSM Daily Chart (11:50AM)
This is a relatively new issue that I've been watching and reading about in IBD.  If you're not afraid of the mortgage business this might be a nice stock to tuck in your portfolio.  Forward P/E is under 9 and it is optionable. 

Thursday Morning

Gator's Chart of the Day: SMG
Dan Fitzpatrick taught a course called "59 Minute Trader" and some of the bloggers (me included) took the class. I've seen other similar techniques discussed on other free and pay sites. Wednesday SMG was the perfect 59 Minute trade.  I use a combination of these ideas for my version of the 59er.

This trade sets up following an "event."  In this case it was a disappointing earnings outlook.  The 3 minute chart is shown above with the yellow line marking the previous close.  We need a minimum move of 8% but it works better with 10% or more.  In this case the drop was 16.7%.

The Trade

As trading begins you are watching for the opening print and the low.  Make note of both of these figures.  When the first green candle prints hit the buy button.  You would be in here under 36. Since this is a bounce trade it is expected that the low of the day has already been made and the stop should be just below that.

This trade will likely move very quickly so be ready to add.  If the stock has not yet cleared the opening print (this one did) then wait for it to clear that level and then add aggressively.  If it continues to move higher then fill out your position if you have not already done that with the first two buys.  As each successive buy is made place a stop just under that buy point and watch.

When volume begins to slow be ready to take some profits (I like to sell 1/3) but let the rest run.  Unless you want to hold the stock longer than today I think it's best to move your lowest stop up to insure you will have profits. 

As the name of the technique suggests this trade is likely over in the first hour as the sellers have dumped and the bounce buyers have gotten their fill.  I have used this method many times and it's one of my favorites.  The risk is very low if you put that stop in as soon as you make the first buy and then respect it.

Wednesday, June 13, 2012

Wednesday Evening

ES (Sep) Daily
The bulls stepped up in the last few minutes right at the 20day WMA. The LOD was 1303.50. 1300-1303ish is an important level for the bulls to hold... next level of potential support below that is 1280ish.

Wednesday Afternoon


Wednesday Morning

Gator's Chart of the Day: OREX
This one popped up on a scan following Tuesday's trading.  Some of you may recognize it (but I don't remember who first brought it to the blog) as a rocket stock we've traded before.  Their big money maker is an anti-obesity drug and that's a fat target market.  (Pun intended.)

The stock started moving up from the bottom Bollinger band on Friday and popped through the 20 day simple moving average Tuesday with a close above the 50 day.  It looks to me like it has more upside.

I'm already over invested in bio tech (SGEN) so I probably won't trade this one.  As with all rockets if you aren't going to stare at your screen you need to manage your risk with a combination of position size and stops.  Good luck.

Tuesday, June 12, 2012

Tuesday Evening

Tuesday Afternoon

ES (Sep) 15min
The bulls have been defending the 1300ish level since last night... and have pushed out of the high volume zone from yesterday marked in red. The 1308ish level is being tested as I'm typing this... and so far it appears the bulls are trying to hold it and the bears are drying up.

Tuesday Morning

FIO Weekly Chart
FIO Daily Chart
Fusion-io has been a disappointment to say the least.  Since late April the stock price has dropped about 40% and nearly 60% since hitting it's all-time high in November.  It has only closed twice (9/21-22) below Monday's last trade of 17.61.  It still has a lofty P/E of 55 based on forward estimates and the last daily candle was a bearish engulfing beauty.  Not a pretty picture.  Analyst estimates range from 20 to 35 so everyone is wrong so far.

On Monday FIO announced they now have CSCO as a customer.  That list also includes ORCL, HPQ, IBM, DELL, AAPL, SMCI, FB, SAP, RHT and CTXS among others. 

The short interest is nearly 20% and on average trading it would take more than 5 days to cover.  I can't say it's a buy right here right now but it sure is tempting.  I'll be keeping it on my screen and a green candle is about all it will take for me to dip a toe with a tight stop.

(Short interest information is from Finviz.)

Monday, June 11, 2012

Monday Evening


ES (Sep) Daily
ES (Sep) Hourly w/Fib
ES (Sep) 30min

Monday afternoon



After determining that a potential trade has an acceptable risk level, we also need to figure out whether the possible reward is worth the risk.

What is the possible reward ?
In other words, if the trade moves in our favor, how far is it likely to go ?  Absent a shock of some sort, stocks tend to move between support and resistance.  One way to pick an initial target is to locate a point just inside the next level of support or resistance.  The distance between that point and the entry is the “likely reward”.  The potential reward could be much greater, but in this step just figure out what’s probable.

Is the likely reward worth the risk ?
Unless you have a really high batting average (say 70% +), it seldom makes sense to take a trade which has more risk than the probable reward.  The lower your batting average, the greater the possible reward needs to be relative to the known risk.  A lot of traders (myself included) like to have at least a 2:1 reward / risk ratio before taking a trade.  At that rate, you only have to be right half the time or less to be profitable over time.  A 3:1 or higher ratio is certainly desirable.

Profit = Gains - Losses
Profit = ( %wins * average win ) - ( %losses * average loss )

So, for a 55/45 hitter with 2:1 reward / risk average
Profit = ( 0.55 * 2 ) - ( 0.45 * 1 ) = ( 1.1 - 0.45 ) = 0.65 risk unit profit per trade, over time

(this is the expectation formula.  I will likely revisit it in the future, and it will be on the final exam, lol)

Monday Morning

Gator's Chart of the Day: SP-500
Well it looks like Spain is saved (for the moment) and China had some strong trade numbers.  As I write this on Sunday night the futures are up about 16 points.  If that holds it will put the open right on the lateral resistance line (green arrow) and that is what I expect to see; resistance.  The upper Bollinger band and the 50 day simple moving average are just above that level so even if we clear the lateral line it looks like that's as high as we can expect the average to move in the near term.

There are likely to be a lot of shorts that need to cover so keep your eye on the opening rotation (first 20 to 30 minutes) and when the red candles start to show on the 2, 3, and 5 minute charts you may want to take some profits.  Watch for support to be established on the pullback and we should see a new trading range. 

We have a quadruple expiry week so expect lots of volatility and next weekend Greece will make another attempt at selecting a government.  I plan to be very heavy in cash by Friday evening.  Good luck.

Friday, June 8, 2012

Weekend Thread

SPY Daily Chart (4PM)
We had a green week and moved from the bottom to the top of the box.  Volume on Friday was below average but the close was strong (and at 4:10 it's still climbing.)

In my opinion the headlines (and rumors) from Europe are driving U.S. equities.  It's still another week before the Greek elections and I hear the lady wants a rematch with the jerk that punched her.  Could be a pay-per-view steel cage event with the proceeds going to buy baklava for all.

If it weren't for FB we'd likely be more focused on Spain but all the talking heads seem to scream about how badly everything went and point fingers everywhere.  We're short on adults ... as usual.

Friday Afternoon

SGEN Daily Chart (11:35AM)
Seattle Genetic is a biotech and I don't usually do biotech.  I saw the CEO on MM early this week and mentioned it on the blog but did not follow up.  The company says they have a series of drugs that target cancer cells and do not harm healthy cells.  (That's as biotechie as I get.)

I liked the sales pitch and like the chart even more.  Nice volume this week and all green candles.  No position.  (Darn it.)

Friday Morning


Thursday, June 7, 2012

Thursday Evening




















Equity markets held up ok today... all things considered. The bears had a similar setup in short term indicators last Tuesday, and we all know what happened after that. So, given the big move up we had yesterday, some consolidation after a gap up this morning is probably a positive for the bulls going forward.

With the mention of Fiji, I thought it would be nice to see a Fiji sunset to finish the day. I encourage everyone to imprint this picture in your head... close your eyes... and try to put yourself right there on the beach for a moment. Meditation is new to me in the last year or so... but it has really helped with relieving stress. Trading is definitely a stressful job, and imagining the sounds, smells, and wind blowing as you sit on a beach in Fiji can do wonders... even if it's for just a few minutes.

Thursday Afternoon

S&P Futures Hourly Chart
The bears stepped in this morning right at the purple trendline that was broken last week. So far the bulls have been attempting to defend the 1317ish level (top red Fib line). The short term indicators are getting worked off... but still have room for more selling. The action looks fairly positive for the bulls so far, but they have a lot of work to do in order to keep the selling contained the rest of the day.

Thursday Morning