Rally Resumed

2-26-18

- Overall Market -

Fridays session ended on a very strong note, earlier in the session price was restricted and range bound as techincals tightened waiting on FED. After some dovish remarks from chairman Powell, the market was off the races. 

SPY (S&P 500 spider) - Technical breakout with fundamental backing. Over all the market looks very strong and is currently trading up in the futures market. I would look to see us hold above 273 for continued strength. 

VIX - (volatility) quickly coming back into acceptable range after Fridays strength. VIX currently at 16.50+- which is still higher than our average for the last 18 months but look to continue lower. We may have seen the end of our volatility trade for now. If the market is recovering I would look for VIX to settle in the 13 spot range and market bulls to rule the day again. This is all purly speculitave on my end, there are still a number of factors that could send this flying again but the market is strong. 

- Trend Watch -

APPL (apple) - looking bullish, this market monster showing great strength. 

AMD (Advanced Micro Devices) - This price is breaking out for a potential retest, last weeks price looked bearish, however after the rally on Friday we broke above a short term down trend resistance, potential to retest $13+- spot if fridays strength was true. 

XLE (Energy sector) - Technical heating up on the daily chart. Looks poised for a sector wide breakout. Look for energy related plays to potentially take advantage. 

HL - (Helca Mining) continues to trade down with trend, testing upper trend on down channel. A breakout above current falling resistance may signal a strong breakout to test neck line of this pattern. Should we fail here, a triple bottom may be in order. 

-  Bitcoin -

Bitcoin looks choppy to me. Yes, I understand there are many other "alt coins" but I only track bitcoin as a general "health of the sector" kind of thing. Although the euphoria surrounding most coin plays has died down, be mindful that get rich quick traders are still looking for the next big move to the upside. (if it ever comes). $GROW traded well in recent days, continue to watch this name for upside potential.

 

-  Low float watch -

$MOSY (Nice short term momentum, breakout watch) update - perfect breakout called here, on watch for continuation of this move. great strength, high risk
$APHB update - we got our gap and profits, congratulations to all swing subscribers. closed this last week. Keep this on watch for a rerun. 
$BSPM update - looks to be trying to find some legs here, techincals still need time to cool off, potential weak reversal candle on daily chart. Watch for signs of a move to the upside with volume.

-  Day Trade Watch 2/26/18 -

$EKSO - Attempted to buy this on a swing Friday, however volume and price moved faster than anticipated. Keep this on watch for a continuation, this name is a former running and low float. 

$NXTD - gaping up premarket with some volume, this name has been active in recent trading. keep on watch for a high volume breakout today. 

$BNSO - unusual price action, low volume. keep on watch.

$RNN - potential bottom, low float on watch for volume and move off lows. 

 

-  Closing Thoughts -

Bulls may have have finally one our short term stand off. I would not be very surprised to see in the coming weeks the market retest highs. Personally I still have concerns about the overall length of this current bull cycle. Some of those concerns have been quieted  by our strong pullback. Given that market technical have been given sufficient time to cool off, it seems only natural for a retest of highs to take place. 

We are headed into the end of the month, watch for day traders to put their foot to the gas in these few sessions. The month has been a bit choppy and not as profitable as past months for most traders. This may signal some agressive trading for many greedy indvduals. look to capatilize on momentum. 

 

Stay Hungry and Humble Team, Thank you!

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

To the point

2-20-18

- Overall Market -

In an effort to clean the blog up and make it easy to follow and read for our new members. We will keep focus on a hand full of market indicators and a few trending tickers. As the market continues settles in this week we will expand our focus and outlook.

SPY (S&P 500 spider) - Price action showing great strength for a rebound after our correction. Note that we are now consolidating in the upper trendline of our precious channel on the weekly. This is a good sign for overall health. Price may get choppy and we may yet trade lower from here. However, I am hopeful that any selling will be orderly and less panic stricken. Key price levels I am watching 270 to the low side and 275 to the high side. How price acts at these levels will be telling.

 

VIX - (volatility) During last week price settled into the previously mentioned 18 spot. I do not foresee us heading back to historically low volatility levels any time soon. We are currently above 20, continuing to show potential for some volatility trading in the next 30 days based on S&P option implied volatility. Over the coming weeks it would be nice to see this settle into around the 15 area. This will provide good trading opportunity for both sides of the market. 

- Trend Watch -

APPL (apple) - looks to have recovered nicely. This may be a buying opportunity for me if price continues above 170 level.

AMD (Advanced Micro Devices) - Price action is showing a bear signal with potential geometry down to $10.50 level. The semiconductor space has gained momentum and this name is losing some steam. Keep on watch for a potential short.

XLE (Energy sector) - Price here looks to have potentially found a new base, we are well off recent highs. I will look to see if we hold this level. Should the sector find legs, some value buying in energy plays may open.

VALE - very bullish chart, pushing to new highs. Opportunity for both bulls and bears to day trade this ticker. Weekly is over bought, daily chart has room to move higher. Very interesting for intraday traders. 

HL - (Helca Mining) as discussed in our video. I like this double bottom potential play. Keep on watch. 

-  Bitcoin -

Bitcoin is recovering in price, I expect to see some stock side sympathy with known block chain names. $GROW is showing some strength in recent session, keep this ticker on watch for a breakout.

 

-  Low float watch -

$MOSY (Nice short term mometum, breakout watch)
$APHB (slowly grinding higher, needs heavy volume to breakout)
$BSPM (choppy but overall has seen recent strength)
 

-  Closing Thoughts -

The market has been challenging this month. Trend following has seen its legs chopped and value buyers may have capitalized on a well needed pull back. Be patient and let the market settle in after a long weekend. 

Continue to keep risk at the center of your focus for all trading activity. Cut losses and let winners trade. Blog will continue to become more robust as trading this week will provide some clues for market sentiment.

Stay Hungry and Humble Team, Thank you!

 

First Video Lesson

Hello Traders!

I am happy to post our first private video for members on the blog. There are still some kinks for me work out with the audio and I am far from perfect with production but I am pleased to present this to you guys.

Please leave feedback on the video or send me a message. I would love to continue to produce content for our members. Just like trading, I will look to always make these better, your comments will really help in that department. Quality and easy to use is my goal.

A full standard blog will be released. For now enjoy this video.

More indepth videos and lessons comming on all topis related to trading.

Thank you all very much.

 

 

CPI Potential & Importance

2/14/18 (Long educational post today)

- Overall Market -

U.S stocks appear to have stabilized on lower volume trading for the time being. Dovish comments from new Fed Chairman Jerome Powell echoed Janet Yellen's position regarding liquidity when he said the Fed will "remain alert to any financial stability risks."

Many media outlets have been discussing the CIP (Consumer Price Index) and its significance. I feel this is an important topic to touch on and why traders should be alert.

There has been some money on the sidelines that has yet to buy this dip, why you may ask? Because the impact of this report may give clue as to a potential market shift and it's timing. To better understand the significance on why this monthly report is critical and more directly this reports results. 

- What is the CIP? -

So what is the Consumer Price Index? The text book answer... consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by households. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.

The simple answer; the CPI measures goods and services that you and I pay to live. It tracks how these costs rise over time and is released as a monthly report for public use. Remember the last time you were at the food store and said something akin to " X item is way more expensive than just last year". You may not actually say that but the point remains. 

The CPI is an attempt to measure over a broad picture (without getting into the macro of each market) how costs are slowly rising. 

This may be confusing on the surface as to why the report is important but it has a very deep tie to the heart of two things that impact equity markets. Those two topics are inflation and the central banks obligation to adjust interest rates. 

- Milk cost .0034 more this month, so what! -

While you may not care about incrementally increasing prices slowly over time, you should. Investors and economists are always looking to say ahead of the trend, to look for and identify potential shifts or changes in the market before they happen.  

This leads us into the next topic INFLATION. Few understand its far reaching impact and why it is so critical.

Inflation—the rise in the price of goods and services—reduces the purchasing power each unit of currency can buy. Rising inflation has an insidious effect: input prices are higher, consumers can purchase fewer goods, revenues and profits decline, and the economy slows for a time until a steady state is reached.

For quite some time inflation has been low and prices have remained stable. This keeps consumer spending high, propelling economic growth. As inflation remains low, interest rates also remain low (we will discuss why in our next section). When interest rates are low, bond yields are low, money is cheep to borrow. This skews risk reward in the favor of stocks. As you have seen a low rate environment can push stocks to incredible highs as we have recently experienced. 

Inflation occurs naturally over time as the cost of business rises it is passed on to the consumer. The fear becomes when jobs data (wage earning, wage increases, unemployment ect..) is no longer out pacing inflation. This is where central banks come in.

 

- A Necessary Evil -

Central banks receive a lot of heat and scrutiny, some of it is warranted, some not.  The duty of a central bank is massive in scope and a few miss steps can cause a country or global collapse. (yes central banks had a hand in the 2008 crisis.)

To oversimplify the central bank here is a very condensed list of duties.

  • implementing monetary policies.
  • setting the official interest rate – used to manage both inflation and the country's exchange rate – and ensuring that this rate takes effect via a variety of policy mechanisms.
  • controlling the nation's entire money supply.

In a nut shell, it is the central banks obligation to keep in check inflation and the value of the dollar. (some believe central banks should be removed and let the free market work itself out on its on.) 

As inflation starts to rise through measurable means as the CPI, the fed is forced to respond with monetary policy changes. The most common solution to inflation is to increase rates. Why? because in effect it can slow down the economy and keep inflation from getting ahead of itself. 

The broad idea behind this is simply put; debt becomes more expensive to leverage. Companies do not expand, rents go up and people are forced to buy homes to protect from rising rates, margins are reduced, over heads increased. The effect is the economy cools off for a bit and in theory individuals save more as rates make saving and bods more attractive. This  allows inflation to slow. 

wither you agree or disagree with this policy is irrelevant, it is a fact of our central bank and we must live with it. As investors or traders we must use every tool at our disposal. Keep in mind that CPI is a trade-able event for most currency traders. 

- Why this report is so critical -

The Fed has given statement in recent FOMC for the need to increase frequency of rate hikes. Now all they need is a reason to do so. Last weeks job report was less that stellar and called a contributing factor to the sell off. 

Should the CPI show inflation increasing above expected rate, there is cause for the fed to react and the market to respond in kind.  

The likely reaction in the case of inflation increase would be for fed to accelerate rate hikes or have larger basis point increases. As discussed risk reward on equity markets could slowly shift causing less buying overall. 

 

- Putting it all together -

While I have barely scratched the surface of the impacts of these topics and how they tie in to other aspects of the financial markets and economy, I do hope this helps provide clarity on why there is so much talk about this event today. 

Yes, it is true. You and I have little impact on the market when we buy or sell individually but fund managers and market analysts do. Sifts in the market come quietly in reports like this, when sentiment changes ever so slightly. Add up a few reports and fed statements, you can see how market cycles begin to form and price action occurs on a larger time-frame and scale. 

Typically by the time "dumb money" or retail traders realize what is happening the market is already made a major fundamental shift and are left holding the bag for smart money. 

None of this information will make you rich or provide you with a winning trade but I truly hope it opens your eyes to the importance in the little things that have huge impacts. the difference between .02 and .03 in this report may be all is needed to strike a uneasy tone in the market. 

I will look to capitalize on this in the short time with volatility. As you may well know by now, I am big on short term volatility trading during appropriate moments. Just be aware volatility trading has massive risks and should never expose large amounts of capital to. 

 

Keep risk at the forefront of any strategy you trade. Remain confident in your ability. If you have not traded in a correction before, take your foot off the gas and observe how the market trades.

Thank you again, and remain hungry and humble!

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

 

Correction Corrected?

2/12/18

- Overall Market -

U.S. stocks plummeted 5.2% last week, Strategists pinned the drop in part on the need for a healthy correction after the run-up of the past few months, and on rising bond yields, which ticked up on sign of impending inflation. The higher yields lured money out of equities.

Market bulls aren't throwing in the towel yet... Futures trading has shown strong bullish action since Sunday evening open. As of this morning e-mini futures have traded up to 2,650 level. This has been a reaction zone in previous sessions. 

Last weeks sell off was blamed on nearly anything you could throw a dart at. Many were screaming that volatility traders started the sell off with the inverse volatility trade that saw a 95% drop in a matter of hours. Others were blaming inflation and bond yields. Others screaming that the jobs number starteled the market. Even so far as to say the economy is "over heating".  In my very simple opinion, it is something far more straight forward than that.

Simply put the market has not has a real correction in 18 months, nothing more nothing less. Yes, there were contributing factors to this broad selling but things were simply way to expensive and forward pricing was upwards of 18 times earnings on some names, just far to much to pay.

From the technical side of this correction, it has been easy to see coming. Moving averages were extended, trend and strength indicators such as our previously mentioned RSI reading on the SPY over a whopping 87! volatility had diverted from price action; Something had to give.

In an age of algorithmic and high frequency trading it is easy for things to go up and down rapidly.  While Our pull back was fast and incredibly violent, it remained relatively orderly through most trading. 

- Looking Ahead -

Looking forward the question becomes, what does this mean for the market? I personally see this as a buying opportunity for long term positions and as previously stated have received phone calls from many financial professionals stating the same. The overall state of the economy appears strong, key metrics for growth and stability are also solid. 

As shorter time frame swing traders may have seen the end of the "easy money" bull market. Most likely we will now resume choppy trading from these levels. Proper technical analysis and stocks grounded in strong fundamentals will be key to success in an environment like this. I do not see it likely that we zoom back to all time highs in a few day. 

Be mindful that this correction can still technically go another 2%-4% however if volume is to be any indicator, it looks as though at least for the time being a swing low of this move has been established.

- Keeping a level head -

I receive many emails, messages and questions through social media and our students. Do not be discouraged if you personally are experiencing reduced performance or some mounted losses. The last two weeks have provided great opportunity in volatility trading and those who were bearish on commodities saw some incredible profits as both oil and natural gas saw heavy selling. For everyone else, it is likely you experienced some significant losses in unrealized profits or realized losses. Much wealth was destroyed in last weeks rout of the market. 

For those of you new to the market it is typical that once a year we see a correction of some type. Recently they have been very short lived lasting less than a week. Historically a pull back takes place over the course of 3 months. Your best chance to grow your wealth by leaps and bounds is buying while fear is high. In this case buying pull backs or eventually the end of the next bear market, which will eventually come to pass. 

While I rarely give financial advise, I will say this.. If you own long term investments in a 401k, IRA or other avenue for retirement. ALWAYS speak with a financial professional to get a better understanding of things. Yes, I know they are not traders but they are well versed in knowing how different markets, interest rates, global events interact and can provide insight into historical data that few retail traders even know exist.

- A higher interest rate environment  -

Understanding that rising interest rates is a coming reality, can help us look for some longer term vehicles to trade. As would be expected the financial sector tends to do well in a higher rate market. Financial sector components see margins expand as rates climb, financial entities such as banks, insurance companies, brokerage firms have historically benefited from higher interest rates.

A short list of bank stocks to consider that have historically benefited. 
Bank of America Corp. (BAC); JPMorgan Chase & Co. (JPM); Goldman Sachs Group Inc. (GS); Citigroup Inc. (C)

If you trade on a full service platform and utilize margin to trade, you can guess that money from your broker will become more expensive to borrow. Similar to banks, we have a chance to see some correlation. Some of the most well know brokers to consider

E*TRADE  Financial Corp. (ETFC); Charles Schwab Corp. (SCHW);  TD Ameritrade Holding Corp. (AMTD)

Insurance companies also see a high level of correlation to rising rates. This industry is large and includes some good and poor companies. Below is a list of some names I have traded in the past.  

(PGR) PROGRESSIVE CORP-OHIO; (ITIC) INVESTORS TITLE CO; (SNC) STATE NATIONAL COS INC; (ALL) ALLSTATE CORP

Make sure to do your own research for the above financial sector names, be mindful that as interest rates rising is good for these stocks, it is often times not great for the overall economy. There is a balance between good rates, good inflation and over inflation. In a situation where lending slows down, any financial institution can become a risk, regardless of interest rates. Think of 2007-2008 financial crisis as an example here. 

 

- Trading -

You will find that many large cap stocks have pulled back to 100 or 200 day moving averages. This is due to them broadly following the indexes. Be mindful that many technical indicators will be giving false signals for some time, potentially even the next few weeks. 

Focus for me will be on buying value. This means buying only stocks that were in a strong uptrend prior to last weeks sell off. Any stocks that have shown prior weakness have a potential to continue bearish, at some point price action will cause traders and computers alike to sell lower.

If you are risk adverse or do not trade well in high volatility environments, it may be prudent to avoid trading until the market suits your strategy. 

Keep in the front of your mind the ability for the market to change rapidly. If you are a trader this will mean locking profits and looking to renter, if you are an investor most likely nothing changes for you.

 

 - Market - 

As price action has caused many erratic changes, I will avoid technical notes on individual stocks. Many indicators will be giving false signals for quite some time. potentially even the next few weeks. Instead I will focus on sectors as a whole to identify potential value.

VIX (Volatility) Spiking to a high of 40 on the volatility index during fridays session. As buyers entered the market and volume appeared to find a bottom, this slowly eased off. We are now seeing this index at 26. I would like to see this down to 14-18 spot. Numbers this high are continuing to show some genuine fear in the market. Watch for this to come down into a more acceptable historic range.

XSD (S&P Semiconductor Select Industry Index) Sector trading under 200dEMA, a strong flush under this level seen last week. Two closes below this key level. Price must now retest from the lower side of the moving average. May be a bearish signal for the sector or at the least some weakness showing.

XLE (SPDR S&P energy)Sector trading well under the 200dEMA, Oil and natural gas both giving back recent gains and continue to show weakness. This is holding down most energy sector names. Historically energy does not fair well in a higher interest environment. We may see money start to flow out of this sector. 

XBI (SPDR S&P Biotech)Sector looks to retain its strength. Biotech has been strong since President Trump was elected. Price action never touched the 200dEMA and is trading well above. Resistance now looks to be the 50dEMA which is currently being tested from the low side. I will watch for strength to continue here should the market hold. 

XLF (Financial Select Sector SPDR Fund) Sector with great strength during the correction. This is to be anticipated as we have discussed the possibility of higher interest rates. I would look to see this sector experience positive inflow as traders and investors may attempt to position ahead of any coming rate hikes. 

XLV (Health Care SPDR ETF) Sector holding above 200dEMA but showing weakness as we closed once below and probed even lower during Fridays session. Price has recovered and closed above the 200dEMA which is a good sign. We must remain above the 200 day for any real strength here. 

BITCOIN/CRYPTO

 Be mindful that crypto prices are attempting to break a down channel we have traded in for the last month. If we breakout of that channel to the upside we may see some sympathy in former names $GROW, $TEUM, $SRAX, $RIOT, $MARA, $DPW, $XNET

 

Fire watchlist for market day 2/12/18

  • TWTR
  • AMD
  • NVDA
  • UVXY (long vol)/SVXY (short vol)
  • CTRV
  • DGAZ

Low Float/Small Cap momentum-

Give momentum some time in low floats to come back to life. Last weeks panic selling really upset the apple cart. Ideally I would love to see a multi bagger get retail excited again. Take your time on this critical Monday and let the market dictate how to trade. Do not try to force huge gains out of a situation where they may not exist.


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

Relax and take a deep breath. There is no reason to panic or become frustrated with the market. While I believe we are in a bull market for some time to come, temper your expectations. The period of expansion experienced in the last 12 months has been incredible. 

Not only is it unsustainable but it is historically unhealthy for the markets to continue the way they were. Be thankful the correction came at a time when the economy or we may be having a totally different conversation today. 

Keep risk at the forefront of any strategy you trade. Remain confident in your ability. If you have not traded in a correction before, take your foot off the gas and observe how the market trades.

Thank you again, and remain hungry and humble!

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Small Recovery

2-7-18

A Small Recovery Stalled at resistance

Premarket trading for yesterdays market was posting an implied dow open of -800 points! Thankfully at market open things remained orderly, buyers stepped in to save the market and selling pressure subsided as value buyers showed conviction. 

 

Futures trading has stalled at the mentioned 2700 level that was previous support. Premarket trading is low volume and showing very choppy. Today's trading will be key to break above and hold this market level.

Due to the violence of the recent sell off most charts are not sound for technical trading.  Many large-cap stocks have pulled back to their 50 day moving averages. This is an opportunity for Value buyers to step in and acquire shares at a lower price. 

I do not believe in a market crash, while there is weakness and we may have seen the end of the slow and steady grind higher daily. I still believe we are in a bull market.

Some key things to keep an eye on in the coming days and weeks. Interest rates or news from the fed, higher interest rates are typically bad for the market. Bond yields are a big deal here, if bonds become more attractive as rates move higher we can start to see the beginning of the end. Many are looking for an "inverted yield curve" this has preceded nearly every bear market, technically we are anywhere from 12 to 24 months before this yield curve. 

Continue to remain bullish for now but watch 2700 closely. We may have trouble with this price level.

 

I will refrain from tracking individual stocks this week. There is too much noise in recent price action. 

If you have a stock you love in the long term, we may be seeing a good buying opportunity. I personally received 4 phone calls from financial "professionals/advisors" yesterday begging me to buy.  These conversations all went back to ETF's they are hot right now. A pullback like this offers a broad buying opportunity and sector ETF's are a great way to buy and hold larger portions of the market such as health care, energy, financial, retail or other sectors. Most brokers have a list of ETF's you can trade on their platform. some even commission free. 

 

I will begin to track individual positions again as volatility lowers and price action settles in. I anticipate the price to settle by the end of the trading week. This weekend will be a large blog full of value and ideas to take advantage of this recent market event.

 

Continue to protect your capital.

Trade safe, remain hungry and humble.

Thank you!

 

 

From the Sidelines

2-5-18

Wait and see....

For Today's blog I will not be focusing on price action of individual stocks but rather a strategy in how to approach the market during this sign of weakness. We may have a very quick pull back, less than a week or we could start to see some extended chop. Either way trading the market solely to the long side would be a mistake at this time. I personally expect to see some profit taking and bears enjoying a period of profitability.  

Low-float momentum may remain unaffected for the time and profits may still run hard in that space. Just be mindful as the market sell and panic starts, retail can act very unpredictable. During our last real pullback in 2016, momentum slowed to a sickening crawl and many retail traders turned to volatility trading at the height of the slowdown. Use caution trading volatility if you are unfamiliar with its extreme moves. (Lesson on volatility below)

- Overall Market - 

The Dow plunged more than 660 points, while all 11 sectors on the Standard & Poor's 500 dropped, led by a 4.1% plunge in the energy sector. That was after ExxonMobil (XOM) disappointed investors with weaker-than-expected earnings, while Chevron (CVX) came in above analysts' views.

While earnings weighed on Friday, markets were wobbly all week after a hawkish Federal Reserve statement coupled with strong labor data raised concerns about climbing interest rates, sparking selling in bonds that pushed yields on US Treasuries higher.

The Labor Department reported an increase of 200,000 in non-farm payrolls and 0.3% gain in average hourly earnings. The data drove the 10-year yield to a four-year high of 2.85% and the Dow below 26,000. The last time the Dow posted a decline of more than 600 points was in June 2016.

Expect weakness to continue, remember we also still have a looming government shutdown that was only placed on the back burner and must be yet resolved.

Bear market? most likely no. Pull back? absolute. The bigger concern is where does this pull back end. To avoid any wide spread hysteria lets start with the basics. Should the market show weakness beyond the below price levels, we can talk about preparing for a shift in market sentiment. 

I will continue to assume we are in a bull market and are seeing a healthy pull back. No reason to go full on bear just yet. The mindset now needs to be finding value and being ready to pull the trigger when the time comes. 

- Finding the "bottom"

SPX - For trading levels, we're watching 2,765 (minimum retracement from Aug. low) followed by support at 2,715 (50-day m.a.) and 2,700 (Dec. high /38.2% retracement) These levels will be our first line of defense. The market may very well blow through all of these. I expect at the least the convergence of the 50dMA and retracement from December to provide a target most traders will be watching to see if the market catches a bid.  

I typically track the SPY for most trading days however, For the time being I will use the SPX, it is more exact in terms of value. 

Should we break through these targets we will discuss monthly resistances, slower moving averages and larger retracements. For now focus on the above key levels for clues.

 

Futures - At open last night E-mini futures tanked hard flushing 20 points and probing under 2,740 to a low of 2,733. Throughout the evening a slow and steady grind to "fill the gap" persisted. At time of writing we have rejected Fridays close price, confirming this as resistance (for now). Price action is now selling off and look to be headed back to retest lows. While the futures market is its own animal and low volume speculation that occurred in the last 13 hours can be easily reversed once the volume of the market steps in. We have a good clue that weakness remains. No sign of another -4% day but weakness none the less. 

 

VIX (Volatility) Volatility has been the play the past few sessions for me. These times are great to capitalize on a deeper understanding of the market. Just as this indicator helped us spot coming weakness before price action showed, we can look for signs of strength before price action shows. Be mindful that this classic "fear&greed" indicator has some serious flaws.

I call this an indicator because that is how I use it. By definition is is an index, similar to spx. It is derived by a complicated series of steps. Reading between the lines so to speak, I use price action on this index as a way to track psychological fear and greed hidden in the market.

Smart money and fund managers routinely use this to hedge the market. Small and subtle clues can be inferred by looking at this daily and comparing or overlaying this on charts.   I personally trade volatility futures and occasionally alert TVIX/UVXY calls for swing subscribers. I am often times hesitant to do so as most do not understand the instrument and its incredible price swings. Below is a expanded lesson on VIX, volatility futures trading and the idea behind this index few understand.

- Volatility Lesson - 

As I have made reference to this mysterious index and its value many time, I find it prudent to expand and provide a better understanding of why I track this on a daily basis.

What is VIX?

VIX is an implied volatility index. It measures the market's expectation of 30-day volatility implicit in the prices of near-term S&P 500 options. VIX is quoted in percentage points, just like the standard deviation of a rate of return, e.g. 23.26. Cboe (Chicago board options exchange) disseminates the VIX index value continuously during trading hours.

How is VIX Calculated? (simple answer)

VIX is a measure of expected volatility calculated as 100 times the square root of the expected 30-day variance (var) of the S&P 500 rate of return. The variance is annualized and VIX expresses volatility in percentage points.

The Theory behind the VIX Calculation (just for the finance geeks, Skip this if your not into finance mambo jumbo.)

VIX is obtained as the square root of the price of variance, and this price is derived as the forward price of a particular strip of SPX options. The justification for this derivation is that variance is replicated by delta-hedging the options in the strip. An intuitive explanation of the mechanics of this replication based on Demeterfi, Derman, Kamal and Zou2 is:

  • The price of a stock index option varies with the index level and with its total variance to expiration. This suggests using S&P 500 options to design a portfolio that isolates the variance.
  • The portfolio which isolates variance is centered around two strips of out-of the money S&P 500 calls and puts. Its exposure to the risk of stock index variations is eliminated by delta hedging with a forward position in the S&P 500.
  • A clean exposure to volatility risk independent of the value of the stock index is obtained by calibrating the options to yield a constant sensitivity to variance. If each option is weighed by the inverse of the square of its strike price times a small strike interval centered around its strike price, the sensitivity of the portfolio to total variance is equal to one. Holding the portfolio to expiration therefore replicates the total variance.
  • Arbitrage implies that the forward price of variance must be equal to the forward price of the portfolio which replicates it. Observing that the S&P 500 forward positions in the portfolio contribute nothing to its value, the forward price of variance reduces to the forward price of the strips of options.

Performance of VIX Futures

VIX is more volatile than most assets, and traders can expect VIX futures to be among the most volatile futures contracts as well. To illustrate, from May to November 2004, a period of relatively low volatility, the daily percentage variation of nearby VIX futures ranged from 0.06% to 7.12% and averaged 2.13%. The daily dollar variation ranged from $10 to $1330 and averaged $358 (per contract). In turn this makes ETS's that track VIX just as dangerous if not more so when discussing 2x or 3x leveraged daily return (UVXY/TVIX and their inverse)

Trading the Direction of Implied Volatility

The most straightforward application of VIX futures and options is to trade implied volatility. While implied volatility can also be traded with straddles or by unwinding delta-hedged option positions, VIX contracts offer a cleaner and less costly exposure which does not need to be adjusted when the market moves. Another attractive feature is that VIX is relatively simple to track and that it can be forecast from several readily observable variables: the current deviation of VIX from its mean, past realized volatility, the performance of the S&P 500, and even the month of the year.

Hedging Implied Volatility Risk

Because VIX futures settle to the implied volatility of the S&P 500, they are natural to hedge the "vega" risk of S&P 500 options. VIX futures are also effective to cross-hedge the vega risk of stock options and stock indexes correlated to the S&P 500, whether these are exchange-traded or embedded in other assets. For stock only traders the same scenario applies with the use of leveraged ETF's.

Characteristic Patterns of VIX

VIX has been calculated since 1990, covering a period in which financial markets not only passed through several bull and bear cycles but were impacted by three major financial crises. The history of VIX throughout these events may provide useful background information for trading VIX contracts. Or a potential insight into historical repeats.

Relationship between VIX and Other Assets

VIX and the S&P 500

VIX moves inversely to the S&P 500, and more significantly when the S&P 500 declines, which is why it is called the fear gauge. In fact, this inverse correlation has become stronger since 1990. From 1990 to 2004, daily returns of VIX and the S&P 500 had a correlation of .56 for down S&P 500 moves and .40 for up moves. Over the same period, a 1% decrease of the S&P 500 was accompanied by a 4.26% average increase in VIX while a 1% increase of the S&P 500 was accompanied by a 2.30% decrease in VIX.

Bringing it together

You can see why this index can become a powerful tool when utilized properly. It does take a bit of previous knowledge and experience to spot some of the subtle details in its movement. The great thing is, with today's charting software, you can look back and overlay the price action of this instrument and the S&P chart of your choosing.  Take some time and study this index, learn to use it. While hardly the holy grail of trading, it can and will be wrong from time to time. It is just another tool we can use to help consistently extract money from the market.
 

- Closing Notes -

I will remain calm and not attempt to act like I know what the market will do next. There is a chance by market close all of the recent loss in the market is undone, unlikely but remember we are in a bull market. 

When the market catches a bid expect money to pile back in and everyone on social media will be screaming about how they "#BTFD". I do believe there is a dip buying opportunity coming, just not sure when. Let the market tell us, you will never tell the market. 

Just as I used fear to advantage when others were in extreme greed, I will look for the opportunity to be greedy when others show extreme fear. We are somewhere in between right now. I will not be a pig. 

Bulls make money, Bears make money, Pigs get slaughtered... Try not to play the part of dumb money in the market. 

Remain hungry and humble!

Thank you again, lets go team! 

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Market remains shaky

2-2-18

Overall Market-

U.S. stocks were higher at session's half, tracking rising global bond yields despite underwhelming economic data, as a corresponding move in the 10-year note off 2.75% eased investors' worries about higher borrowing costs. Record highs in shares of component stocks Boeing (BA) and Microsoft (MSFT) helped offset heavy losses for DowDupont (DWDP) after the chemical giant reported upbeat Q4 expectations but cautioned seed and pesticide sales could be negatively impacted by challenges in the farming industry.

In economic data news, Q4 non-farm productivity showed an unexpected contraction, its first quarterly decline in nearly two years. The slower pace of production corresponded to a significant increase in unit labor costs of 2.0%, more than twice what was expected.

Weekly jobless claims slid 1,000 to 230,000, while continuing claims increased 13,000 to 1.953 million.

Non farm pay roll released this morning may add further fuel to the fire should they prove weak.

While I am not saying we are in a bear market, I do believe we are in the start of a much needed correction. The issue here? If we are in a correcton, we could be looking at a very large one indeed. The market has not pulled back in any real capacity since January 2016. This could get painful and panic stricken very quickly. Given market euphoria continues to remain high, I personally expect this to "come as a shock" to many investors. 

SPY Futures and premarket trading has this trading below $280 level, which in my opinion was a very key short term level as we displayed much trouble breaking over this level in weeks past. I expect to see this continue to bleed as profit taking should trigger if we break below $270. 

VIX (Volatility) Volatility is most assuredly back. This indicator continues to show signs of a broad market move to the down side. Look to capitalize on continued weakness using short term leveraged instruments. TVIX, UVXY are two of my favorites. Please note that this tends to follow the market but the calculation for volatility is largely based on options. There is a time when this does not move with the market, those divergences are typically a key notion for some action. In the past weeks we have seen prices rise in this indicator while the market was also rising. A sign of things to come? perhaps... 

NVDA (Nvidia corp) Inverted hammer on the daily, sign of some weakness here. Would not be surprised if this comes down hard. This has held up surprisingly well given the markets weakness. A change for this name to play catch up and bears to gain hold? I believe so.... I have been wrong here before, take my statements with a grain of salt, I am bearish on the price levels this high. 

AMD (Advanced Micro Devices) I can not get on board with this recent rally. Looking at the daily, I still believe this is in a down trend, we continue to make lower highs since march 2017. The big picture is my focus. Short term price action is clearly bullish. Gap here is basically filled, what happens next will decide direction. We very well may break to the upside but I can not unsee what the chart is showing. The weekly chart may also help explain what I am trying to say. Take a look and do your own research before initiation of any positions. 

SOXX (Semiconductor ETF long) Inverted hammer here was well, potential to continue short term weakness in sector. If the market pulls back, this should follow in toe.

 

XLE (SPDR Sector energy) Holding OK for now, no positions, market showing to much weakness to enter. (Update, called this one nearly perfect, sector pulling back to weekly down trend resistance. Need to see if this level holds before initiating long positions in this sector.) Sector looks to be setting up for a pull back. Should oil reject current price levels, expect the sector to follow.

FCX (Freeport) (no change see XLE notes)Nice earnings but price remains stalled below $20.00. Price indicators showing a pull back, I am a buyer on a pull back to the 50dEMA $17.75

CHK  (Chesapeake) Bears crushed this ticker, weakness and some material news leading to a massive push down side. Levels to low to short for me and to week to join long. On watch for a potential short in comming days weeks. 

MRO (Marathon Oil) (no change see XLE notes) Price upgrade has not helped move this higher, looks like a pull back will be needed before buyers step in. I will be looking for a pullback similar to FCX here, 50dEMA $16.90

SLB (Schlumberger LTD) (no change see XLE notes) Indicator showing a bearish breakout on MACD as we exit RSI oversold levels. This supports a pull back broad across most energy sector stocks we are following. Will look for a place to add, assuming I am not stopped out on final shares. 

Natural Gas (FEB 18 contract): Price action now firmly under $3.00 spot, potential here to retrace this down move. Overall bearish, short term bounce potential before adding short.

 

SNAP (snapchat) Options action showing some high implied volatility, may be the signal we need to get this moving under $13, only one way to find out... let it trade. profit stops in.  (Update 1/31/18, short remains highly profitable, market most likely helping this short, note that price was unable to test or flush below $13.00, bulls my step in here to test conviction of bears. Stop on final shares unchanged, longer term hold for me until proven wrong.)(Update 1/29/18 I remain bearish long term on snap, short term could go either way here, no real conviction from bears or bulls.(Update, twitter announces "storys" as well, see if this moves price.) Short position on this name remains active on final 1/3 position. I remain bearish on this name in the long term. Should price action close or gain strength above $14.50 bulls will have control again. Stop is in place on final shares at $14.80

 

Swing Positions (Details are intentionally vague, in respect of paying swing subscribers)

  • $IMGN final shares running, great entry from $6.00 price
  • $SNAP Short (in profit, final shares stop is just above break even.)
  • $PED long (set and forget, defined risk)
  • $PLUG long (RSI extreme over sold bounce, needs to close above $2.00 for strength)

Note all other swing positions have been closed. Speculative plays closed for very small loss or flat. losses accepted on DSW and CHK. 

Robinhood Challenge: Bought 2,000 shares of AKER yesterday, sold half position at push to high of day .39 area. Holding final 1,000 shares. Account value premarket as of writing $989.37

 

Low float watchlist plays

  • PIXY flush, no entry, no siginal for long. On watch for one or two more sessions before removing.
  • VTGN price back to 50dEMA, potential bearish breakout forming on MACD. I am bullish on this but need to see technicals better before entering.
  • GALT Major dip buying opportunity here yesterday. flushing to $3.70 support and recovering nicely, continue to watch for a move higher from here. 
  • DRNA nice bounce here at key moving averages, potential trend following trade here.
  • REXX Price looks to have clearly rejected the 50dEMA, this one looks to be in bear control.
  • DCIX nice move here, anyone that profited congratulations. play seems to be over for now.

Please note, while it may be an easy call to short many of these names it is NEVER advised to short low float stocks. It is one thing to be on the bull side and have potential 100-200% gains but to short lowfloat plays in asking for ruin. Waking up to a 100 or more % loss would literally be catastrophic for most traders. 

 

BITCOIN/CRYPTO

Blockchain frenzy has died down in the past week or so. Former names can not be traded with more traditional indicatiors as irrational buying cools off, names to keep on long term watch $GROW, $TEUM, $SRAX, $RIOT, $MARA, $DPW, $XNET

of note in the above crypto names, TEUM and DPW are showing the best consolidation after bitcoin frenzy. No entries yet but those names deserve some extra attention.

 

Fire watchlist for market day 2/2/18

  • DFFN
  • TEAR
  • CHFS
  • TWTR
  • BSPM
  • SKLN

Low Float/Small Cap momentum-

My favorite low float strategy is proving profitable in the past week. I am always on the look out for a low float curl and squeeze over the 50 day EMA. We have seen this work great on both SKLN and AKER watches.

This strategy is one that typically lasts for one to two weeks max. I will look for other tickers showing similar setups. Note that this only works for a short period of time as there is a limited number of potential candidates that are both full of shorts and showing moving averages that have similar appearances. I have made boat loads of money in the past on these squeezes between the 50 day and 200 day moving averages. 

Continue to use caution as with all momentum it works until it does not. At which point you become a pig to slaughter, try not to be greedy. Take the risk and lock in the loss or gain accordingly. 


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

I have been hesitant to enter any large cap swings given the current trading environment. Thank you to our swing subscribers for being patient as we wait for more favorable conditions to arise. Current swing trades are taking place in low float stocks mostly due to their retaliative detachment from the overall market. 

Be sure to focus on building your cushion for the new month and take it slow. 

I hope by now you understand my approach to the market. Slow and steady if always better than fast and hard. The market will destroy you and is literally designed to take advantage of your emotions. You must remove emotion, the best way to do this is reducing size, reduce risk and above all else remain objective as much as possible.

Remain confident in yourself and your trading, it takes years of hard work but it is worth the journey, trust me. as always, Remain hungry and humble!

Thank you again, lets go team! 

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

End of Month

1-31-18

Overall Market-

Market gap down and selling hard for most of the session, led by losses in energy and health care stocks with a broader market sell-off attributed to worries about higher borrowing costs and the weakening dollar.

Selling pressure concentrated in the health care sector after JP Morgan (JPM), Amazon (AMZN) and Berkshire Hathaway (BRK.A, BRK.B) announced an initiative to improve health care for their employees through a joint venture.

A monthly survey by Case Shiller shows a gain in the January consumer confidence index to 125.4, its second-highest in 17 years. (again wide spread euphoria, the theme persist.)

The focus is now expected to turn to the FOMC, while not expected to adjust monetary policy, outgoing Fed Chair Janet Yellen could strike a more hawkish tone to broadcast the Fed's intention to hike rates several more times this year. Look for news released today. 

SPY (Spider, S&P 500, EFT - tracks S&P, used by many traders, you can also track SPX but the numbers are higher, the SPY tends to be easier to reference.) nearly pulled all the way back to the 13dEMA, futures look to be stable and are slightly higher. Be cautious today and wait for the market to settle in. I will be looking for value plays in energy after the huge sell off yesterday. (not really a surprise given the recent run, assume selling was profit taking and not fundamental weakness.)

VIX (Volatility) Several of our subscribers profited from our mentions of the coming volatility squeeze, congratulations. Levels broke above 15 spot on the VIX during the height of panic yesterday. This spike has placed volatility back in its historical range and the highest levels we have seen since August 2017. Be mindful if the market continues its relentless bull charge after this pull back; XIV (leveraged inverse volatility), can become a smart play as well. Just be aware like all leveraged ETF's they have daily re-balancing and are a loser in the long term nearly 90% of the time. These are never buy and hold, no matter how appealing the chart looks in the short term.

NVDA (Nvidia corp) Long continues to prove profitable here, Extended above moving averages and I personally can not buy. Earnings coming on 2/8/18 be mindful at these all time highs, even a good earnings could get crushed, if guidance does not provide large amounts of future value.

AMD (Advanced Micro Devices) Earnings released on this after market yesterday, strong on all accounts, guidance also hinting at continued growth. Price trading slightly higher in pre-market. We have nearly filled the gap in the chart and are approaching oversold levels again. If we approach a double top here and SOXX shows weakness (see below), this may become a strong short candidate. 

SOXX (Semiconductor ETF long) the 50dEMA will be a critical price level to hold for this sector, we failed to make a new high last week even with the market surge. This could be a sign of some weakness in the sector, MACD showing bearish breakout signal on the daily. Will be key to watch the rest of this week. 

 

XLE (SPDR Sector energy)(Update, called this one nearly perfect, sector pulling back to weekly down trend resistance. Need to see if this level holds before initiating long positions in this sector.) Sector looks to be setting up for a pull back. Should oil reject current price levels, expect the sector to follow.

FCX (Freeport) (no change see XLE notes)Nice earnings but price remains stalled below $20.00. Price indicators showing a pull back, I am a buyer on a pull back to the 50dEMA $17.75

CHK  (Chesapeake) (update 1/31/18 locked in a loss yesterday on this name, weakness has been known for some time but letting price action playout is a staple of my trading, may look to go long should $3.50 level hold and energy recovers see XLE notes) conflicting signals forming here after last weeks weakness. Remaining long on a starter position. Will continue to access as price develops. Bears are gaining some conviction as price fails to close above $4.00

MRO (Marathon Oil) (no change see XLE notes) Price upgrade has not helped move this higher, looks like a pull back will be needed before buyers step in. I will be looking for a pullback similar to FCX here, 50dEMA $16.90

SLB (Schlumberger LTD) (no change see XLE notes) Indicator showing a bearish breakout on MACD as we exit RSI oversold levels. This supports a pull back broad across most energy sector stocks we are following. Will look for a place to add, assuming I am not stopped out on final shares. 

Natural Gas (FEB 18 contract): Gap was unable to fill here and price rolling over hard before ever really getting its legs back. Holding just above $3.00 spot at time of writing. ADX is somewhat high on this pullback in the shorter time frame. I will expect price to recover some before restesting $3.00

 

SNAP (snapchat) (Update 1/31/18, short remains highly profitable, market most likely helping this short, note that price was unable to test or flush below $13.00, bulls my step in here to test conviction of bears. Stop on final shares unchanged, longer term hold for me until proven wrong.)(Update 1/29/18 I remain bearish long term on snap, short term could go either way here, no real conviction from bears or bulls.(Update, twitter announces "storys" as well, see if this moves price.) Short position on this name remains active on final 1/3 position. I remain bearish on this name in the long term. Should price action close or gain strength above $14.50 bulls will have control again. Stop is in place on final shares at $14.80

 

Swing Positions (Details are intentionally vague, in respect of paying swing subscribers)

  • $IMGN final shares running, great entry from $6.00 price
  • $SNAP Short (in profit, final shares stop is just above break even.)

Note all other swing positions have been closed. Speculative plays closed for very small loss or flat. losses accepted on DSW and CHK. 

Robinhood Challenge: No positions. Small drawdown, account remains above $800

 

Low float watchlist plays

  • TNDM Stopped and closed position. Great trade over all, very profitable.
  • PIXY price holding above 50dEMA, may look to enter with small size.
  • VTGN price back to 50dEMA, potential bearish breakout forming on MACD. I am bullish on this but need to see technicals better before entering.
  • GALT a pull back 50% of previous move and 50dEMA are converging at $4.00 price level, this may be a potential entry.
  • DRNA continues to pull back, will look to enter on trend eyeing 30 and 50 day EMA's for potential entry points.
  • REXX Price looks to have clearly rejected the 50dEMA, this one looks to be in bear control.
  • DCIX back on watch, showing signs of life. keep shippers also on the back burner.

Please note, while it may be an easy call to short many of these names it is NEVER advised to short low float stocks. It is one thing to be on the bull side and have potential 100-200% gains but to short lowfloat plays in asking for ruin. Waking up to a 100 or more % loss would literally be catastrophic for most traders. 

 

BITCOIN/CRYPTO

Blockchain frenzy has died down in the past week or so. Former names can not be traded with more traditional indicatiors as irrational buying cools off, names to keep on long term watch $GROW, $TEUM, $SRAX, $RIOT, $MARA, $DPW, $XNET

of note in the above crypto names, TEUM and DPW are showing the best consolidation after bitcoin frenzy. No entries yet but those names deserve some extra attention.

 

Fire watchlist for market day 1/31/18

  • BSPM (end of day volume and nice recovery here)
  • IPWR
  • IPCI (higher risk penny)
  • PLUG (extreme RSI oversold bounce potential)
  • JNPR
  • HTBX

Low Float/Small Cap momentum-

As is typical when the broad market is selling and panic sets in, momentum trading slows. Veteran traders know to pile into volatility, as a result momentum buying is at the least slowed. These type of days tend to lead to choppy trading. In turn smart traders will just sit back and wait. No reason to risk profits. 

This is very reminiscent of the selling in January of 2016. During that period the market rolled over and continued to sell off hard. Momentum was hard to find and suffered for several months there after. 

Not saying that will happen in this case, just be mindful of history repeating itself. 


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

Not pushing the panic button just yet but I am very mindful of Oil prices and the weakening dollar. Should the market correlate with these two historical influencers, there is potential for real trouble. Every bull market has been followed by a bear market, yes simple and regurgitated stock market mambo jumbo, just keep it in mind.

We have had an incredible run the last 6 months and personally over the last 18 months I have never seen the market this profitable. I will not be pressing trades until sufficent evdience is presented to step back on the gas. 

While this may seem boring, trading is all about one thing... Managing risk, nothing more, nothing less. 

Sit on your hands if you must, walk away and shut down your trade stations. Just don't give back months or years of hard work. Remain patient and be sure to not change what has made you profitable in recent times. 

Thank you again, lets go team! 

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Final Sessions January 2018

1-29-18

Overall Market-

Record setting session during Fridays session. Fear of Missing out is now be blasted all over media outlets as money continues to pour into the markets. Indicators show no weakness and euphoria persists.

Many investors are very concerned that the stock market has gone up in a straight line, valuations are stretched and technically the market is very overbought. For reference the SPY daily chart currently has the RSI (Relative Strength Index) at a scary 87!!! This reading is an extreme overbought level. We are in dire NEED of a correction. 

My personal fear is when the selling starts, the algorithms that spot and sell weakness will "flash crash" the markets. 

Fanaticism aside, trying to fight the flow of this bull market is not only foolish but down right wrong. There will come a time for bears to rule the day, for now continue to remain bullish. Trend continues to be our dangerous friend here. Be mindful of rise in volatility, (see below)

 

VIX (Volatility) smart money is now placing massive bets against the market, not out right but through volatility. Overall markets continue to rip higher and this fear index is now quietly perking up. As stated before, this indicator is a good idea of smart money placing a bet on the marketing making a large move in the near future. VIX above $12 level at time of writing. (nearly 20% higher then just one month ago) 

NVDA (Nvidia corp) Congraulations to any buyers of the last dip, I was wrong on all accounts here. That said I can not justify an entry at current price levels. Techincals are well overbought and overextended. 

AMD (Advanced Micro Devices) Price upgrade released and pre market appears to be printing $13+ price. Similar to NVDA here for price action. 

SOXX (Semiconductor ETF long) Running hard with the market Friday, reversing some weakness showing last week. Sector remains strong.

 

XLE (SPDR Sector energy)Sector looks to be setting up for a pull back. Should oil reject current price levels, expect the sector to follow.

FCX (Freeport) Nice earnings but price remains stalled below $20.00. Price indicators showing a pull back, I am a buyer on a pull back to the 50dEMA $17.75

CHK  (Chesapeake) conflicting signals forming here after last weeks weakness. Remaining long on a starter position. Will continue to access as price develops. Bears are gaining some conviction as price fails to close above $4.00

MRO (Marathon Oil) Price upgrade has not helped move this higher, looks like a pull back will be needed before buyers step in. I will be looking for a pullback similar to FCX here, 50dEMA $16.90

SLB (Schlumberger LTD) Indicator showing a bearish breakout on MACD as we exit RSI oversold levels. This supports a pull back broad across most energy sector stocks we are following. Will look for a place to add, assuming I am not stopped out on final shares. 

Natural Gas (FEB 18 contract): Contract roll over and a gap down. Bulls seem to have pushed this one too far. Expect this gap to close before heading lower, will look for an oppertunity to go short as I remain bearish on current price action. 

 

SNAP (snapchat) (Update 1/29/18 I remain bearish long term on snap, short term could go either way here, no real conviction from bears or bulls.) (Update, twitter announces "storys" as well, see if this moves price.) Short position on this name remains active on final 1/3 position. I remain bearish on this name in the long term. Should price action close or gain strength above $14.50 bulls will have control again. Stop is in place on final shares at $14.80

 

Swing Positions (Details are intentionally vague, in respect of paying swing subscribers)

  • $IMGN final shares running, great entry from $6.00 price
  • $SNAP Short (in profit, final shares stop is just above break even.)
  • $DSW Long (breakout setup over current levels)
  • $MBOT Long (speculative play, strong entry and managed risk, let it trade)
  • $CYCC Long (speculative play, good volume) 
  • CHK long (sector and dividend)

Robinhood Challenge: Positions on CYCC  & MBOT

 

Low float watchlist plays

  • TNDM (Update 1/10/18 - sold 1/2 position $3.15, stop break-even on remaining shares. great trade here, now holding 3k shares.)
  • PIXY (update, pulling back to 50dema, on watch) this ticker was alerted on the swing service last week for an entry at $3.30, order was not filled. Price is now trading and grinding well. Keep on watch for a squeeze. Pull back opportunity on yesterdays price action.
  • VTGN (update, beautiful call here, great move, watch for continuation) on watch for a potential squeeze as we curl up to test 200dEMA.
  • GALT (update, holding 13dEMA well) forming a flag on daily in this consolidation, on watch for breakout.
  • DRNA watching for pullback entry.
  • REXX potential bottom, on watch for trend reversal.

 

BITCOIN/CRYPTO

Blockchain frenzy has died down in the past week or so. Former names can not be traded with more traditional indicatiors as irrational buying cools off, names to keep on long term watch $GROW, $TEUM, $SRAX, $RIOT, $MARA, $DPW, $XNET

 

Fire watchlist for market day 1/29/18

  • DPW (pre-market mover)
  • TWTR (continuation)
  • CAPR (continuation)
  • TVIX (leveraged volatility)
  • CDTI (potential set up for long)

Low Float/Small Cap momentum-

We are nearing the end of the month, I would normally anticpate a slow in momentum as traders look to protect profits from the first month of the new trading year. Remember for those that trade full time for a living the start and end of each month are a very big deal for psychological reasons. This is particularly true at the end or start of a year.


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

Let the market settle in. Size small and get a feel for market sentiment. We may see some kind of pull back after Fridays remarkable run. 

Do you best to control emotion, start the week strong and finish the month strong. 

Continue to take advantage of this extended period of prosperity but do not get overly cocky or greedy. 

Thank you again, lets go team! 

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Choppy Action

1/25/18

Overall Market-

Trading for the session was choppy during open hours yesterday. Comments from U.S. Commerce Secretary Ross lead to increased tensions over the possibility of a trade war with China.

This topic has come to the front of traders attention as President Trump approved the tariff on imported washing machines and solar cells. 

The question here is, at what point do we cross a line that we can not undo? Continued action like this is sure to bring some geopolitical turmoil to the markets. Bad news for investors, GREAT news for traders.

Welcome back volatility, it has been long over due. How long it lasts? who knows, just know for now our steady march higher has slowed its relentless pace... for now. 

 

VIX (Volatility) healthy spike in the chart, now holding above 200period. We are still low in terms of historical price data. 

NVDA (Nvidia corp) Small pull back, need to see a move to the 9 or 13 day emas to consider entry. 

AMD (Advanced Micro Devices) Very similar to NVDA trading, no fundamental change. 

SOXX (Semiconductor ETF long) entire sector pulling back, given its recent run, this will pull back with the market should broad selling continue.

 

XLE (SPDR Sector energy)Holding up well, even as other sectors show larger weakness, this is due in part to its lagging nature in recent gains. Remain bullish on energy.

FCX (Freeport) Earnings look to be a beat here based on data just being released. This may be the news needed to start trading above $20

CHK  (Chesapeake) Opportunity to follow sector on this ticker, price holds well above $4.00, swing alerted here for a long. 

MRO (Marathon Oil) Price upgrade from Morgan Stanley of $25, this should help propel price above current channel resistance. 

SLB (Schlumberger LTD) Trailing stop in place here, let this continue to work. Price action stalling at $80. Potential pull back and opportunity to add coming.

Natural Gas (FEB 18 contract): No position into inventory report this week. Price action has been strong in both directions in the last two trading sessions. On watch for potential trend reversal should report show bearish. 

 

SNAP (snapchat) (Update, twitter announces "storys" as well, see if this moves price.) Short position on this name remains active on final 1/3 position. I remain bearish on this name in the long term. Should price action close or gain strength above $14.50 bulls will have control again. Stop is in place on final shares at $14.80

 

Swing Positions (Details are intentionally vague, in respect of paying swing subscribers)

  • $IMGN final shares running, great entry from $6.00 price
  • $SNAP Short (in profit, final shares stop is just above break even.)
  • $DSW Long (breakout setup over current levels)
  • $MBOT Long (speculative play, strong entry and managed risk, let it trade)
  • $CYCC Long (speculative play, good volume) 
  • CHK long (sector and dividend)

Robinhood Challenge: Positions on CYCC  & MBOT

 

Low float watchlist plays

  • TNDM (Update 1/10/18 - sold 1/2 position $3.15, stop break-even on remaining shares. great trade here, now holding 3k shares.)
  • PIXY (update, pulling back to 50dema, on watch) this ticker was alerted on the swing service last week for an entry at $3.30, order was not filled. Price is now trading and grinding well. Keep on watch for a squeeze. Pull back opportunity on yesterdays price action.
  • VTGN (update, beautiful call here, great move, watch for continuation) on watch for a potential squeeze as we curl up to test 200dEMA.
  • GALT (update, patent news this morning, on watch) forming a flag on daily in this consolidation, on watch for breakout.
  • DRNA breaking out, long term bullish trend, on watch for entry.
  • REXX potential bottom, on watch for trend reversal.

 

BITCOIN/CRYPTO

Blockchain frenzy has died down in the past week or so. Former names can not be traded with more traditional indicatiors as irrational buying cools off, names to keep on long term watch $GROW, $TEUM, $SRAX, $RIOT, $MARA, $DPW, $XNET

 

Fire watchlist for market day 1/25/18

  • VTGN (continuation)
  • IPWR (continuation)
  • RMGN (news)
  • TWTR (news)
  • LTBR (continuation)

Low Float/Small Cap momentum-

There were some incredible mid day movers yesterday with impressive gains. We may enter a period of grinding all day moves. It seems the frenzy around blockchain names is tempered. Small cap bio stocks seem to be showing signs of momentum once again.


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

The final days of January are here, make sure to take advantage of this momentum and lock in gains as the market makes them available. 

Be sure to protect your profits and most importantly manage risk.

Keep an eye on the overall market as things are starting to once again see choppy action in price. Do no panic should things turn, just remember to keep your losses small. Live to trade another day!

Thank you again, lets go team! 

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Massive Mid Week Update

1-24-18

Overall Market-

Market continues its steady climb after some morning weakness with the Dow Jones Industrial Average slipping from another record high as Wall Street digested quarterly results from component stocks Johnson & Johnson (JNJ), Proctor & Gamble (PG), Travelers (TRV) and Verizon (VZ).

Nasdaq continues to rally, lead by Netflix (NFLX) after the company's Q4 profit and sales grew significantly from a year ago.

President Trump's imposition of steep tariffs on imported washing machines and solar products had initially sparked concerns from investors that the action would ignite a deeper trade war with China, Japan and South Korea, and, in turn, open the door to further tariffs against products from North America and Europe.

Like most concerns in this market they are quickly met by a buying frenzy of bulls. Expect this trend to continue until the next talk of government shutdown in three weeks.

 

 

VIX (Volatility) volatility at an acceptable level for trading. Continue to keep this on watch. 

NVDA (Nvidia corp) Price new all time highs, trend continues. Look to buy a pull back to a 13dEMA or 20dEMA

AMD (Advanced Micro Devices) Strong trend continues, price threatening to push into gap, this is a strong trade for bulls to close the gap before bears can potentially. earnings on 1/30/18

SOXX (Semiconductor ETF long) Trend Continues

 

XLE (SPDR Sector energy) Small pull back on daily, trend remains full on bulls here.

FCX (Freeport) Heavy over head resistance continues to hold at $20 price level. Watching for a pull back and buying opportunity here in the coming weeks or days. earnings 1/25/18

CHK  (Chesapeake) Price action here holding above $4.00, yesterdays trading mirrored the SPY perfectly. This indicates that CHK is now trading with the market. 

MRO (Marathon Oil) Strong bullish action continues. Will be a buyer here at $18.00 on a solid pull back to the 20dEMA.

SLB (Schlumberger LTD) Trailing stop in place here, let this continue to work. Price action stalling at $80. Potential pull back and opportunity to add coming.

Natural Gas (FEB 18 contract): Futures on a breakout after a solid flag and consolidation. Will look to enter short potentially for speculative inventory play, similar to last week. 

 

SNAP (snapchat) Short position on this name remains active on final 1/3 position. I remain bearish on this name in the long term. Should price action close or gain strength above $14.50 bulls will have control again. Stop is in place on final shares at $14.80

 

Swing Positions (Details are intentionally vague, in respect of paying swing subscribers)

  • $IMGN final shares running, great entry from $6.00 price
  • $SNAP Short (in profit, final shares stop is just above break even.)
  • $DSW Long (breakout setup over current levels)
  • $MBOT Long (speculative play, strong entry and managed risk, let it trade)
  • $CYCC Long (speculative play, good volume) 

Robinhood Challenge: Positions on CYCC  & MBOT

 

Low float watchlist plays

  • TNDM (Update 1/10/18 - sold 1/2 position $3.15, stop break-even on remaining shares. great trade here, now holding 3k shares.)
  • PIXY this ticker was alerted on the swing service last week for an entry at $3.30, order was not filled. Price is now trading and grinding well. Keep on watch for a squeeze. Pull back opportunity on yesterdays price action.
  • VTGN on watch for a potential squeeze as we curl up to test 200dEMA.
  • GALT forming a flag on daily in this consolidation, on watch for breakout.
  • DRNA breaking out, long term bullish trend, on watch for entry.
  • REXX potential bottom, on watch for trend reversal.

 

BITCOIN/CRYPTO

Blockchain frenzy has died down in the past week or so. Former names can not be traded with more traditional indicatiors as irrational buying cools off, names to keep on long term watch $GROW, $TEUM, $SRAX, $RIOT, $MARA, $DPW, $XNET

 

Fire watchlist for market day 1/24/18

  • RGSE (solar play based on tariff)
  • FSLR (solar play based on tariff)
  • HMNY (gaining traction, volume, price over $10.00 for short squeeze potential)
  • OPTT (squeeze potential)
  • INSY (bounce set up)

Low Float/Small Cap momentum-

Momentum remains strong over the past few trading sessions. Continue to trade momentum with confidence as no weakness is slowing down retail gains.

Of note in yesterdays trading was HMNY, strong grinder all day on a bullish trend. Expect today's action in this name to invite some volatility and great trading opportunity.


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

I will be working to update the blog in a fashion that will provide a more comprehensive look at profitable sections of the market. My goal is to keep the blog clean and easy to read on a mobile device while eating breakfast. 

I hope this blog has provided you with value of the last months and I want to say thank you to all our students, it is a joy to watch our traders grow and change their lives for good.

The market continues to show incredible strength and is providing an extended period of prosperity for most participants. Be wary that some big time bulls are sitting on the sideline waiting to crush this rally. we are in desperate need of a real pull back, just be mindful and try to avoid complacently. 

The one thing that can hurt even the most seasoned traders is getting to comfortable, over sizing or taking these amazing gains for granted. Try to always remain hungry and humble. 

Thank you again, lets go team! 

 

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Shutdown Averted 

1-23-18

Overall Market-

Less than 1 full trading session and plans have been put in place to avert a shutdown for at least three weeks. 

After this news was released markets roared to new all time highs.. AGAIN.

With earnings season here and some great reports, of note Netflix after hours yesterday, the market appears ready to continue.

Remain cautious on a pull back, we are still over extended but with a drop in volatility price action continues to show bullish action.

 

 

VIX (Volatility) volatility at an acceptable level for trading. Continue to keep this on watch. 

NVDA (Nvidia corp) when you're wrong, you're wrong and I was WRONG. both NVDA and AMD provided great pull back buying opportunity in hindsight. I did not take advantage of either and will be sitting this move out for now. It would be even more foolish of me to chase and buy this all time high out of frustration.

AMD (Advanced Micro Devices) Similar to NVDA above. It is hard for me to stay bullish on something that has had such an incredible run in the last 18 months but who am I to tell the market it is wrong. congratulations to any longs on these names.

SOXX (Semiconductor ETF long) sector new highs and strength to continue this move. Space is still very hot. I would imagine should the market continue to rally this will easily follow in toe. Personally for me there is better value to be had in other sectors where price has not pushed to these extreme levels. That is just me, there is without doubt still value and room to run as an investor but as a trader opportunity is else were in my opinion.

 

FCX (Freeport) (no change - $20 is developing some very strong resistance in the short term. price action tightening, breakout or pull back in the cards) Price stalling at $20 level here, a bearish cross on MACD, RSI crossover at overbought levels. Based on current ATR levels a pullback to the $20dEMA $18.58, may well be in the cards. Conversely should price break over the $20 level with strong momentum we may be looking at one final leg of this incredible move. Overall price action here is well overextended at the least we desperately need some consolidation to build a new base.

CHK  (Chesapeake) (Update 1/23/18 - given price history I feel compelled to short this name, but I will not go against current momentum in this sector. Price sitting at key level, doji formed on daily chart. keep on watch for a bounce over $4.00 to scalp)(Update 1/17/18 - looking to short on this weakness, price structure showing potential short targets $3.81-$3.41, will be watching tomorrows price action for entry) (update 1/15/18 - while I remain bearish on this name, conditions in the sector are too strong to short. Technicals have a potential for a strong bounce, the weekly chart shows at the very least some consolidation after a long downtrend. The 50 period EMA on the weekly chart will be a clue as to long-term price action) I am bearish on this name from a fundamental long-term outlook. Energy space is just too strong to short. No signals have been generated to short this. However, there is a potential for a breakout of the current down channel we are trading in above price $4.17 with volume could be a signal for a technical squeeze to the 200dEMA which currently sits at $4.47. Follow volume and price action on this one, no safe way to predict price action at current levels.

XLE (SPDR Sector energy) and we are off to the races! The downtrend was broken with conviction, price well over $75 spot now. Expect this sector to continue with oil, copper, gold, silver and the overall market. Tailwind is in this sector. Remember to let your winners run!

MRO (Marathon Oil) (No change price action remains bullish)(Update 1/17/18 bulls in full control, congratulations to any longs here.) weekly 200 period EMA $18.98 nearly tested! Weekly chart threatening to break out above the current channel. Squeeze may be on the table here. Watch for volume and price action over $19.00 for hints to next move.

SLB (Schlumberger LTD) (No change momentum showing great strength, may pull back a bit after yesterdays incredible move) (Update 1/15/18 ALL TARGETS REACHED! "trim and trail here" meaning trim position and trailing stop remaining shares. Set and forget this one. let it run.) (update 1/10/18 - continued strength, no reason to exit, the target remains intact.) I am long on this name with a target on the weekly chart 200 period EMA $76.53

Natural Gas (FEB 18 contract): After last weeks report and pull back, price seems to now have gained a higher base, pushing through to a new near term high. I still feel price here needs to re test $3.00 spot but that may not happen given current run on energy. I will look to re-enter short as this moves higher.

SNAP (snapchat) (Update 1/23/18 some support showing up at $13.50 on price action. Price now above $14. This trade may be over for now. - (Update 1/10/18 - need $14 level to become resistance for a move lower, short is still active here.) Alerted a short on SNAP during Friday's session. Stop is a bit tight on this one. Looking to test lows in the long term, $13.00 in the near term.

Trend Watch

  • $IMGN NO CHANGE, let it run on final shares. (update 1/10/18 - major winner here, weekly now sitting at 200EMA, a potential for breakout. swing for subscribers still intact.)(Update 1/7/18 - 3 red candles on the daily, tomorrow will be a critical day for price action. Need a reversal bar or doji for strength.)(Update 1/3/18 - After nearly a month in this position we are finally seeing price action with great strength again, I believe in a target of $8.50 here)(Update 12/21/17 Swing working well, trimmed size on 10% gain. stop adjusted to break even.) (Update 12/13/17 alerted swing to subscribers 12/12/17 at $6.00, stop $5.70, technicals have room to run here, volume and potential squeeze on deck.)(update 12/10/17 most indicators here are bullish, RSI cross midline, MACD strong, patterns confirming. Be on watch for swing alert on this name.)Looking to add above $6.00 for next leg.
  • QBAK (update 1/17/18 - price testing 50dEMA, will sell if closes under this moving average.) Holding 200 shares at $7.40 here, trend continues. Risk is $1.00 +-.
  • $ONCS (Update 1/17/18 - price continues to consolidate above to 50dEMA, like the potential here, on close watch) price consolidating above the 13dEMA, breakout potential remains!

Robinhood Challenge: Positions on CYCC & MBOT

 

Low float watchlist plays

  • TNDM (Update 1/10/18 - sold 1/2 position $3.15, stop breakeven on remaing shares. great trade here, now holding 3k shares.)(update 1/3/18 - A great recovery here, I was fully expecting to be stopped out for a loss here, price action continues to show sign of a run over $3.00, will let price action play out.)Still holding 6k shares here, may get stopped out for loss in the next coming days, will let trade continue to play out.

 

BITCOIN/CRYPTO

"fortunes" are being destroyed as fast as they were created here. use caution with anything bitcoin right now. Price action is bearish in recent trading. Yes, this could aggressively recover but everyone here his discounting its meteoric rise. Price correction on this can still go well under 10k.

 

  • GROW: 
  • TEUM:
  • SRAX:
  • RIOT:
  • MARA:
  • DPW:
  • XNET:

 

Fire watchlist for market day 1/23/18

  • RGSE
  • MNGA
  • CYCC
  • ROKU

Low Float/Small Cap momentum-

Momentum continues to be strong out of the open for opening range breakouts. 

Keep a close eye on solar related plays today. News released yesterday on a tariff on imported solar cells. This will help the cause on many names in this sector. May provide some great price action trades. 


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

I will be reworking the blog to include some new trend watch names and reflect some of our swing trade positions in the alert service.

Make sure to protect any recent gains you may have from the market. January is almost to a close. Lets finish strong! 

Stay hungry and humble team, let's go!

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

DOW 26,000

1/17/18

Overall Market-

After a short pull back at market open buyers stepped in and off to the races we went, with the Dow Industrials back above 26,000 following earnings reports from several companies in the finance sector, as well as industrial production and capacity utilization data.

There’s a major deadline approaching in Washington, D.C. later this week, and Height Securities said Congress is likely prepared to do what many would argue it does best — nothing.

Several fiscally conservative Republicans plan to vote against the current Republican spending bill, likely leaving its fate in the hands of Democrats.

“Republicans have a 51-49 vote margin [in the Senate] and will need numerous Democrats to break ranks to pass a spending bill,” Height said.

So let us tally up the score... Government shutdown 50/50 odds, North Korea and the U.S back in a war of subtle threats, Russia accused of helping North Korea evade sanctions. AND FRESH ALL-TIME HIGHS?!?!?!

Something here is just not adding up here, the market is beyond irrational at this point. In my humble opinion, this is a dangerous sign that euphoria has reached a level bordering on idiocy. If nothing else we are in a period of complacency that will only be broken when many are once again thought to give the market the respect it is well deserved of.

I remain a cautious bull on this runaway freight train. Given an opportunity, I would not hesitate to short the market on material news.

 

VIX (Volatility) volatility is creeping back in the market even as prices rise. This is typically a sign that "smart money" is making a massive hedge on near-term uncertainty. It would be prudent for everyone to keep an eye on this indicator. While not a dead give away to a change in the status quo, it is a useful tool to glimpse if institutional money is betting on the markets chance to make an erratic move. 

NVDA (Nvidia corp) (No change, I am probably wrong on my thesis here but I just can not go against what I feel on this one. Until price action proves me wrong, I will stay out of this chop) My personal opinion on the semiconductor space remains unchanged. This chart is very choppy and is not clean to trade. Going out on a limb here and calling a top on this chart. Not going to short as there are no tradable signals but I will watch for weakness and a smart point to enter. I may end up a fool here but I can not justify the price/value here.

AMD (Advanced Micro Devices) (No change, I am probably wrong on my thesis here but I just can not go against what I feel on this one. Until price action proves me wrong, I will stay out of this chop) Perhaps I am playing the fool here as well but I am bearish on this price action. The weekly chart shows a better picture for long-term action. $10 support is major on this chart, should we get under that level shorts will be in full control. Just watching for now.

SOXX (Semiconductor ETF long) (Sector breaking to new all-time highs $185.04, not sure if this is legitimate or just following the market. This sector is dangerously overextended. 200 day EMA is all the way at down $114.) bearish doji on the weekly chart. Price in this sector continues to stall and confirm resistance at $180+- level.

 

FCX (Freeport) (no change) Price stalling at $20 level here, a bearish cross on MACD, RSI crossover at overbought levels. Based on current ATR levels a pullback to the $20dEMA $18.58, may well be in the cards. Conversely should price break over the $20 level with strong momentum we may be looking at one final leg of this incredible move. Overall price action here is well overextended at the least we desperately need some consolidation to build a new base.

CHK  (Chesapeake) (Update 1/17/18 - looking to short on this weakness, price structure showing potential short targets $3.81-$3.41, will be watching tomorrows price action for entry) (update 1/15/18 - while I remain bearish on this name, conditions in the sector are too strong to short. Technicals have a potential for a strong bounce, the weekly chart shows at the very least some consolidation after a long downtrend. The 50 period EMA on the weekly chart will be a clue as to long-term price action) I am bearish on this name from a fundamental long-term outlook. Energy space is just too strong to short. No signals have been generated to short this. However, there is a potential for a breakout of the current down channel we are trading in above price $4.17 with volume could be a signal for a technical squeeze to the 200dEMA which currently sits at $4.47. Follow volume and price action on this one, no safe way to predict price action at current levels.

XLE (SPDR Sector energy) and we are off to the races! The downtrend was broken with conviction, price well over $75 spot now. Expect this sector to continue with oil, copper, gold, silver and the overall market. Tailwind is in this sector. Remember to let your winners run!

MRO (Marathon Oil) (Update 1/17/18 bulls in full control, congratulations to any longs here.) weekly 200 period EMA $18.98 nearly tested! Weekly chart threatening to break out above the current channel. Squeeze may be on the table here. Watch for volume and price action over $19.00 for hints to next move.

SLB (Schlumberger LTD) (Update 1/15/18 ALL TARGETS REACHED! "trim and trail here" meaning trim position and trailing stop remaining shares. Set and forget this one. let it run.) (update 1/10/18 - continued strength, no reason to exit, the target remains intact.) I am long on this name with a target on the weekly chart 200 period EMA $76.53

Natural Gas (FEB 18 contract): New high and price stalling. I am bearish on price at these levels. We have had an incredible move off lows, momentum carrying this high, Risk/reward in favor of short at these levels. Looking for a pull back to the current uptrend and test of support. I would like to see this pull back to 3.11 or a retest of 3.00 spot. Inventory report tomorrow, price action here will be volitial. Swing alert on DGAZ @ $21.55

SNAP (snapchat) NO CHANGE - (Update 1/10/18 - need $14 level to become resistance for a move lower, short is still active here.) Alerted a short on SNAP during Friday's session. Stop is a bit tight on this one. Looking to test lows in the long term, $13.00 in the near term.

Trend Watch

  • $IMGN NO CHANGE, let it run on final shares. (update 1/10/18 - major winner here, weekly now sitting at 200EMA, a potential for breakout. swing for subscribers still intact.)(Update 1/7/18 - 3 red candles on the daily, tomorrow will be a critical day for price action. Need a reversal bar or doji for strength.)(Update 1/3/18 - After nearly a month in this position we are finally seeing price action with great strength again, I believe in a target of $8.50 here)(Update 12/21/17 Swing working well, trimmed size on 10% gain. stop adjusted to break even.) (Update 12/13/17 alerted swing to subscribers 12/12/17 at $6.00, stop $5.70, technicals have room to run here, volume and potential squeeze on deck.)(update 12/10/17 most indicators here are bullish, RSI cross midline, MACD strong, patterns confirming. Be on watch for swing alert on this name.)Looking to add above $6.00 for next leg.
  • QBAK (update 1/17/18 - price testing 50dEMA, will sell if closes under this moving average.) Holding 200 shares at $7.40 here, trend continues. Risk is $1.00 +-.
  • $ONCS (Update 1/17/18 - price continues to consolidate above to 50dEMA, like the potential here, on close watch) price consolidating above the 13dEMA, breakout potential remains!
  • JP - (Update 1/17/18 watching for this to pull back to the 50dEMA for a buying oppertunity, we are currently sitting at the 13dEMA, it may well continue higher but to much risk for me at these levels.) (Update 1/15/18 - ATR is getting very high here currrently $1.61, risk is upwards of $3+ on any swings based on 2x ATR, there is potential for day traders here, use pivot prices for entrys/exits.)(Update 1/10/18 - Strength remains in this name, trend is grinding well. Be aware for sudden moves in either direction on this name.)(update 1/7/18 Price testing critical FIB level 38.2% $20.73, this could be the end of the bounce here, watch close for a breakdown or breakout from here.) (update 1/3/18 - breakout on volume and a strong bullish daily candle, on watch for continuation. Strong base formed at this level a rally to highs is possible.) watching $18.20 for support to hold. Liking the technical and possibility for a rally.
  • VRX - (update 1/10/18 - $24 level showing resistance, watch price action from here, we may need a pull back before a move higher.) (update 1/7/18 price up nearly 6 points from first mention on blog, strength remains, trend is beginning to show signs of exhaustion, price action my get choppy from here.)(update 1/3/18 - held 13dEMA perfectly, incredible strength in the current trend. I may not get my pull back on this one. Will watch for a set up to new highs.) No position here, will look to buy on support around $18 level.

Robinhood Challenge: KILLED THE RCON TRADE! great trade, sold too soon but 133% gain, not going to worry about leaving money on the table. Currently 37 shares of DGAZ @ $21.55

 

Low float watchlist plays

  • TNDM (Update 1/10/18 - sold 1/2 position $3.15, stop breakeven on remaing shares. great trade here, now holding 3k shares.)(update 1/3/18 - A great recovery here, I was fully expecting to be stopped out for a loss here, price action continues to show sign of a run over $3.00, will let price action play out.)Still holding 6k shares here, may get stopped out for loss in the next coming days, will let trade continue to play out.
  • EKSO (update 1/10/18 - consolidation continues, on watch for entry long.) (update 1/7/18 - price holding at key level, potential consolidation and new base here. No position, ,only watching.) (update 1/3/18 - pin bar formed on daily, potential for reversal, volume was higher and selling pressure consumed by buyers.) price riding the 13dEMA here, techincals are showing short signals. Last level for entry on this is $1.89. watching for potential to retrace previous move.

 

BITCOIN/CRYPTO

"fortunes" are being destroyed as fast as they were created here. use caution with anything bitcoin right now. Price action is bearish in recent trading. Yes, this could aggressively recover but everyone here his discounting its meteoric rise. Price correction on this can still go well under 10k.

 

  • GROW: 
  • TEUM:
  • SRAX:
  • RIOT:
  • MARA:
  • DPW:
  • XNET:

Fire watchlist for market day 1/18/18

  • ITUS
  • DELT
  • WPCS
  • ATOS
  • LEDS

Low Float/Small Cap momentum-

Momentum is still HOT just coming in concentrated bursts. ORPN had a massive intraday move of over 100% only to close the day up less than 2%. This is telling for most momo moves. Lock them profits and move on. Grinders are not playing out.

Protect your gains during this period of explosive up and down moves. Small wins stack up, do your best to not let a winning trade go red, these are moving very fast. Do not worry about leaving money on the table.


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

I will most likely be slowing my trading between now and government shutdown news. I see no reason to expose myself to pre news risk. Should a shutdown occur there will be plenty of volatility injected into the market for opportunity.

We are all in the market for gains but more important than gains is capital preservation. Some may call me too conservative, I believe in compounding as much as I believe in oxygen.

Albert Einstein - Compound interest.

Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it. Compound interest is the most powerful force in the universe.

Stay hungry and humble team, let's go!

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.

Short Week - Volatility potential

1/15/18

Overall Market-

Stocks extended their rally during Friday's trading session, driven by quarterly results from the banking sector and friendly economic data generating another triple-digit gain in the Dow Jones Industrial Average.

I continue to remain bullish on the overall market given price action. That said, we may get an actual pullback should pressure on a government shutdown continue to loom. As stated I personally feel the market is well overdue for at the least a consolidation period. The longer we continue this relentless charge, the higher potential for a dangerous correction becomes reality.

Once again, remain bullish until the market says otherwise, just be mindful of our overextension. In the even of some material news watch the market closely.

 

VIX (Volatility) High options action detected. Not surprising as some government news is giving strong cause for short-term hedging. Continue to watch this market "fear" indicator during the weeks trading.

 

NVDA (Nvidia corp)  My personal opinion on the semiconductor space remains unchanged. This chart is very choppy and is not clean to trade. Going out on a limb here and calling a top on this chart. Not going to short as there are no tradable signals but I will watch for weakness and a smart point to enter. I may end up a fool here but I can not justify the price/value here.

AMD (Advanced Micro Devices) Perhaps I am playing the fool here as well but I am bearish on this price action. The weekly chart shows a better picture for long-term action. $10 support is major on this chart, should we get under that level shorts will be in full control. Just watching for now.

SOXX (Semiconductor ETF long) bearish doji on the weekly chart. Price in this sector continues to stall and confirm resistance at $180+- level.

 

FCX (Freeport) Price stalling at $20 level here, a bearish cross on MACD, RSI crossover at overbought levels. Based on current ATR levels a pullback to the $20dEMA $18.58, may well be in the cards. Conversely should price break over the $20 level with strong momentum we may be looking at one final leg of this incredible move. Overall price action here is well overextended at the least we desperately need some consolidation to build a new base.

CHK  (Chesapeake) (update 1/15/18 - while I remain bearish on this name, conditions in the sector are too strong to short. Technicals have a potential for a strong bounce, the weekly chart shows at the very least some consolidation after a long downtrend. The 50 period EMA on the weekly chart will be a clue as to long-term price action) I am bearish on this name from a fundamental long-term outlook. Energy space is just too strong to short. No signals have been generated to short this. However, there is a potential for a breakout of the current down channel we are trading in above price $4.17 with volume could be a signal for a technical squeeze to the 200dEMA which currently sits at $4.47. Follow volume and price action on this one, no safe way to predict price action at current levels.

XLE (SPDR Sector energy) and we are off to the races! The downtrend was broken with conviction, price well over $75 spot now. Expect this sector to continue with oil, copper, gold, silver and the overall market. Tailwind is in this sector. Remember to let your winners run!

MRO (Marathon Oil) weekly 200 period EMA $18.98 nearly tested! Weekly chart threatening to break out above the current channel. Squeeze may be on the table here. Watch for volume and price action over $19.00 for hints to next move.

SLB (Schlumberger LTD) (Update 1/15/18 ALL TARGETS REACHED! "trim and trail here" meaning trim position and trailing stop remaining shares. Set and forget this one. let it run.) (update 1/10/18 - continued strength, no reason to exit, the target remains intact.) I am long on this name with a target on the weekly chart 200 period EMA $76.53

Natural Gas (JAN 18 contract): use caution $3.22 level is a triple top. Price action is consolidating above $3 spot, this is a good sign we may break current resistance. Be mindful there is a supply glut of natty gas, chances are this can only go so high before getting smacked down by big money players.

SNAP (snapchat) NO CHANGE - (Update 1/10/18 - need $14 level to become resistance for a move lower, short is still active here.) Alerted a short on SNAP during Friday's session. Stop is a bit tight on this one. Looking to test lows in the long term, $13.00 in the near term.

Trend Watch

  • $IMGN NO CHANGE, let it run on final shares. (update 1/10/18 - major winner here, weekly now sitting at 200EMA, a potential for breakout. swing for subscribers still intact.)(Update 1/7/18 - 3 red candles on the daily, tomorrow will be a critical day for price action. Need a reversal bar or doji for strength.)(Update 1/3/18 - After nearly a month in this position we are finally seeing price action with great strength again, I believe in a target of $8.50 here)(Update 12/21/17 Swing working well, trimmed size on 10% gain. stop adjusted to break even.) (Update 12/13/17 alerted swing to subscribers 12/12/17 at $6.00, stop $5.70, technicals have room to run here, volume and potential squeeze on deck.)(update 12/10/17 most indicators here are bullish, RSI cross midline, MACD strong, patterns confirming. Be on watch for swing alert on this name.)Looking to add above $6.00 for next leg.
  • QBAK Holding 200 shares at $7.40 here, trend continues. Risk is $1.00 +-.
  • $ONCS price consolidating above the 13dEMA, breakout potential remains!
  • JP - (Update 1/15/18 - ATR is getting very high here currrently $1.61, risk is upwards of $3+ on any swings based on 2x ATR, there is potential for day traders here, use pivot prices for entrys/exits.)(Update 1/10/18 - Strength remains in this name, trend is grinding well. Be aware for sudden moves in either direction on this name.)(update 1/7/18 Price testing critical FIB level 38.2% $20.73, this could be the end of the bounce here, watch close for a breakdown or breakout from here.) (update 1/3/18 - breakout on volume and a strong bullish daily candle, on watch for continuation. Strong base formed at this level a rally to highs is possible.) watching $18.20 for support to hold. Liking the technical and possibility for a rally.
  • VRX - (update 1/10/18 - $24 level showing resistance, watch price action from here, we may need a pull back before a move higher.) (update 1/7/18 price up nearly 6 points from first mention on blog, strength remains, trend is beginning to show signs of exhaustion, price action my get choppy from here.)(update 1/3/18 - held 13dEMA perfectly, incredible strength in the current trend. I may not get my pull back on this one. Will watch for a set up to new highs.) No position here, will look to buy on support around $18 level.

Robinhood Challenge: (Update 1/15/18 - price action heating up on RCON, continue to hold this positon in the challenege.) (Update 1/7/18 - gap up after and pre market, unfortunately being under 1k and not having I can not sell premarket.) (Update 1/3/18 - If I am being honest I feel as though I may be miss managing this position. I have no reason to take this trade off the table as there is not enough profit or stop loss to justify, however the nature of this challenge is putting pressure on me to complete quickly. I am feeling a high opportunity cost on this trade. I rarely place myself under a time restriction for a trade, that is part of the reason for my success. I need to implement a system here to justify always taking profits perhaps I will look into always locking a 10% gain, I will update everyone with my thoughts as I develop.) $RCON 275 shares @ $1.21, higher risk swing trade.

 

Low float watchlist plays

  • TNDM (Update 1/10/18 - sold 1/2 position $3.15, stop breakeven on remaing shares. great trade here, now holding 3k shares.)(update 1/3/18 - A great recovery here, I was fully expecting to be stopped out for a loss here, price action continues to show sign of a run over $3.00, will let price action play out.)Still holding 6k shares here, may get stopped out for loss in the next coming days, will let trade continue to play out.
  • EKSO (update 1/10/18 - consolidation continues, on watch for entry long.) (update 1/7/18 - price holding at key level, potential consolidation and new base here. No position, ,only watching.) (update 1/3/18 - pin bar formed on daily, potential for reversal, volume was higher and selling pressure consumed by buyers.) price riding the 13dEMA here, techincals are showing short signals. Last level for entry on this is $1.89. watching for potential to retrace previous move.
  • SALT - Trade closed, strong profits and a great trade. (Update 1/10/18 - alert sent to reduce size here. $8 proving to be resistance, stop break-even on final 1/3 shares.) (Update 1/7/18 - first profit target hit here, holding 2/3 position. stop at break even, congratulations to swing subscribers.) (Update 1/3/18 - price action showing some curl action on the daily, with volume this one squeezes, potential for a move to $9 based on geometry but we will need a very strong move for that to take place.) Swing remains in play here, stop $7.15 target $8.00

 

BITCOIN/CRYPTO

(no change here)

Same old song and dance here, pick a ticker and hope for the best? Only kidding. With all seriousness, the below names have lost a lot of their initial traction in the retail space. They are becoming choppy.

However, do not discount anything related to blockchain, retail is still infatuated with bitcoin mania. Just remember this space is a bit played out. I prefer fresh tickers and new catalysts to really drive sustained momentum. 

  • GROW: 
  • TEUM:
  • SRAX:
  • RIOT:
  • MARA:
  • DPW:
  • XNET:

Fire watchlist for market day 1/15/18

  • RCON
  • GALT
  • NETE
  • KBSF
  • ITUS

Low Float/Small Cap momentum-

Last week was fantastic for momentum. FORGET last week, we are on a new week and starting on a Tuesday, use caution and let the market find its legs before jumping on the momentum bandwagon. No reason to assume things will be the same as last week. I will be optimistic on any strong breakouts that are based on daily setups. 

Blockchain and therapeutic mentions were hot last week but VERY choppy, there is some heavy pump and dump going on in that space. Follow volume, do not over size and allow your position to work for you. We are seeing some strong movers but risk is higher on a lot of these breakout plays now as many are overextended.


Momentum disclaimer:
Use caution when trading these low float names, they can crash even faster then they rise. Lock profits and do not look back, never play the "what if" game on these names. You can be up or down several hundred or THOUSANDS of dollars in minutes and in the case of a T12 material halt, you could be in for massive pain or worse be trapped in a position for days or weeks until material evidence is sufficient to remove halt.
 

Closing Notes:

Being a new week and a Tuesday start, I will look to build my cushion for the week. I will be exercising caution considering the number of uncertain news headlines. All and all status quo remains, bulls are running amuck, bears are patiently waiting to step in. Make sure you are not caught in between as a greedy pig.

At the time of writing Emini futures remain stable and in range. This is a good sign as we have no gaps to contend with, should provide clean trading opportunity.

Avoid exposing yourself to extreme risk right now. There are plenty of people on social media claiming to make a fortune, do not compare yourself to their gains. Chances are they are fake or acting a fool with risk management. The goal for our team is sustainable long-term and risk managed gains. Yes, you can make a small fortune going YOLO on some setups but you can also go broke.

Remember no more than 1% to 3% risk per trade MAX, slippage can and will happen, do not let anyone trade make you rich or poor!

Stay hungry and humble team, let's go!

Disclaimer: We are not responsible for losses for any reason. We are just an investing club here, seek financial advise from a professional before acting on any of this information. This information is strictly my opinion and what I am seeing in the market. The information above is not a trade recommendation to buy or sell. I am not a licensed broker, dealer or finical adviser. Trading comes with considerable risk and may not be for everyone. Past performance is not indicative of future performance. Never trade with money you can not lose and paper trade to prove profitability before using real money.