Low priced stocks with the potential for a high percentage gain in the next trading session. Each has a bullish setup on the daily chart and includes the price point which may signal a possible start of a move higher. Our objective is to find 3-5 with the best price/volume action and trade them.
Absent any surprise headlines or statements from Ben, I expect the market will remain range-bound. Following my daily chart review, however, I am not seeing a great amount of compelling long setups. If anything I am seeing more overbought charts starting to put in tops and show signs of correcting/retracing.
LONG Setups:
SHORT Setups:
The market continues to trade in a narrow range very close to the all time highs. Today’s action was similar to yesterday’s in that the S&P 500 once again attempted to hit new highs only to see profit taking into the close. The range of trading was also wider than yesterday and, for the first time this month, the S&P briefly went below yesterday’s lows.
In the grand scheme of things these are fairly useless observations and simply signs of a market in a sideways consolidation. The market is basically in a holding pattern, waiting for clarity from the Fed regarding the QE program before making the next big move, which should come as soon as tomorrow.
However, should the S&P close below 1660-1662 range then we can talk about a possible composure change and the need to be on the lookout for a bigger retracement. Until this happens there is no need worrying about it.
For us, this was almost a repeat of yesterday. Of the twelve trades we did, only one (FXEN) reached all the measured targets and all other winners were salvaged through our aggressive trade and risk management. Aside from FXEN, notable winners were EGLE, ANR, NUGT, and JRCC – 2nd trade, while the losers were JRCC – 1st trade, DDD, TNA, PCLN, and GOOG short.
The last two large-priced “point” trades in PCLN and GOOG, resulted in a roughly -1.50 point loss, so we have one of those days when percent return for the day is positive, but point return negative. (As you know from our previous posts on this theme, trades in high priced stocks are negligible from a percent/portfolio standpoint, but have a disproportionate impact on points.)
For more details on today’s trades, please see the attached log.
Low priced stocks with the potential for a high percentage gain in the next trading session. Each has a bullish setup on the daily chart and includes the price point which may signal a possible start of a move higher. Our objective is to find 3-5 with the best price/volume action and trade them.
Today’s action represents continuation of the bullish trend, it was simply a day of rest. The downside for us was that momentum leadership was not as broad and we ended up with a good number of trades that went nowhere.
Impossible to tell where we go tomorrow, but it is important to note that the market seems to be getting a tad more sensitive to potentially negative headlines especially as it relates to QE expectations, so it is wise to be cautious and alert.
LONG Setups:
SHORT Setups:
Familiar morning pattern: the markets opened slightly lower then shook off the weakness and resumed the march higher. By mid-day, the S&P 500 was around 1675 and, more impressively, the Russell 2000 reached the 1,000 level for the first time in history.
Composure changed somewhat in the afternoon following some comments from one of the Fed Bank Presidents that were interpreted as a sign the Fed may decide to reduce QE sooner than expected. The markets pulled back somewhat as a result and closed flat.
Despite this and the VIX closing up some 4.5%, nothing has changed in the markets. All indices and the majority of stocks remain in clear uptrends and the reasonable expectation is that this will continue.
Today was a fairly challenging day for us. To be sure, there was a fair number of momentum opportunities out there. However, the ones that we chose to focus on largely resulted in at least one tranche/piece of the trade being stopped out. Of the sixteen trades we made today, only three reached their profit targets (PCLN long, CSIQ, and RSOL – 2nd trade). Of the remaining thirteen, four were losers (two PCLN short, RSOL – 1st, and PRKR). We managed to steal profits from the remaining nine and post a profitable day only because of our habit/system of booking partial profits and keeping stops tight.
In hindsight, this would have been an easier day if I focused more on the solars, the sector with the best momentum today, and less on PCLN, where we wasted time on three fruitless fade attempts.
For more details on today’s trades, please see the attached log.
Low priced stocks with the potential for a high percentage gain in the next trading session. Each has a bullish setup on the daily chart and includes the price point which may signal a possible start of a move higher. Our objective is to find 3-5 with the best price/volume action and trade them.
As I mentioned on Friday, this market remains incredibly strong. The strength in the major indices seems to be fully backed up by the majority of individual stocks which remain in clear uptrends and continue moving higher.
This has been an incredibly rewarding market for everyone on the long side. It has also been a very benign environment for momentum traders and technicians. Charts are behaving just as the theory of technical analysis says they should: They break out from well defined consolidation areas, make a strong move higher, then they pull back to support, consolidate and break out again. There are many periods in the markets when this is not the case, so as long as this environment persists we should respect it and trade accordingly.
LONG Setups:
SHORT Setups:
The incredible strength in the markets continues unabated. Any hope yesterday’s afternoon sell off may have offered to the bears was cruelly extinguished today and the market wasted no time blasting to new highs. The S&P 500 tacked on 1% as did the other major indices, and the VIX acted accordingly and dropped almost 5%.
At this point the S&P is through all targets, channels and trendlines on multiple timeframes, yet it closed the week on the highs and this tells me we will very likely see even higher levels next week. We can’t be surprised to see the S&P melt up to tag 1700.
The only way a runaway-train move like this ends is when the few remaining bears capitulate and throw in their bloody towels and bulls run out of capital to put to work. Then the market will put in what is known as a blow off top, typically a spike higher on very high volume, followed by a strong reversal in the other direction. Impossible to time it accurately of course, but we should be able to recognize it once it happens.
Until then, don’t fight the trend and enjoy the ride, but don’t fall asleep or get complacent either.
Today was another abbreviated session for us. As I did on last Friday, I wrapped up trading after the first hour, expecting the rest of the day to be a sleepy summer Friday. Unfortunately for me, this does not seem to be happening, as this is an unusual market in many respects, so I may need to revise my Friday trading plans accordingly. As much as I like giving myself time off after a productive week, it makes little sense to leave if there are solid momentum setups out there as was the case with RSOL today.
Today’s winning trades were JRCC, PCLN short, and VNDA – 2nd trade, while the losers were VNDA – 1st trade and HIMX.
For more details on today’s trades, please see the attached log.
It’s hectic season on this end with kids’ end of school year activities, so once again I am doing the abbreviated prep post. Good luck today.
LONG Setups: SRPT, UNXL, SFUN
SHORT Setups: PCLN, NFLX, GS, VRSN, STX, OVTI, LVLT, V, DISCK, SKYW, WHR
LO-HI Setups:
