Sunday, July 28, 2013

Stock Market Video - Outlook and Setups for Week of July 29, 2013

Hi traders - hope your weekend is going well.  Market continues to hang in there and although things looked a bit "iffy" at various points this week, the markets are all still holding their nine day exponential moving averages and as such, the right play remains to be bullish and looking for long setups.  If the market breaks down a bit, then change your outlook, but it has yet to do so and the consolidation we're seeing is bullish, particularly on the Nasdaq. 

I made a video for the first time in ages dealing with the setups I am watching this week.  Not all of them are actionable yet - some are potential earnings plays that are consolidating nicely and some are names that should be of interest IF they consolidate and rest.   As always, if you have any questions, just shoot me an email.   Best of luck this week.

Sunday, July 21, 2013

Focusing on Individual Stocks Now Rather Than the Overall Market

We saw the first effects of the earnings season on Friday, as misses by GOOG and MSFT knocked the Nasdaq down at the open and it stayed there for most of the session.  All in all, however, it wasn't a bad day.  The S&P and Russell 2000 held up well, and even the Nasdaq saw little selling after the open, instead moving sideways.  With as much as we have moved over the past few weeks, a gap down like that could have led to more selling, but it is bullish that it didn't.  The bid seemed to be there to support the market from underneath, which is good going forward.

There are a number of big reports coming this week and any technical analysis of the indexes may not matter much because of that.   The nine day EMA is what I will be watching in the short-term and as long as we stay above that level across the board, there isn't much to worry about in my opinion.  We are still a bit extended and could use further consolidation and rest.   However, individual setups continue to be prevalent and those individual stocks are what I plan on focusing on more over the next week rather than the likely noise and confusion we'll see on the overall markets as earnings are reported.   Below are names from my watchlist for this week.

Biotechs have been leaders for a while now and after having a strong pop early last week, many have consolidated nicely now and are setting up again.  I am seeing eight to ten names that look very interesting here.  I have grouped them into lower-priced stocks and higher-priced stocks below.

Lower-Priced Bios
 Higher-Priced Bios

Solars have also been a leading group for a while (top sector group in IBD) and acted much like the biotechs did this past week in terms of pulling back constructively and now
 setting up new potential buy points.   There are four or five that look really good to me here and I will look to trade these in the upcoming week.

CSIQ, JASO, TSL, SPWR

I don't typically buy stocks that have taken tremendous beatings but the commodity/metals/minerals sector is starting to look like it may be putting in a bottom.   I am watching for huge volume surges as a confirmation signal and as of yet, the volume hasn't been as huge as I would like to see.  If nothing else, it pays to keep these names on the watchlist as they may be nice, valuable long-term plays with little downside (but that doesn't mean you ignore stops).

Gold and Metal Stocks

Here are some random cup with handle setups for the week ahead.   LITB is a stock I am holding and will look to add to it if it can breakout to new highs, as this has good growth forecasts and the chart looks excellent.  I thought about adding on the dip Friday and am now kicking myself a bit.  Oh well

LITB, LOCK, PERI, STRZA

Other random setups that don't fit into a specific category are below.

 SFUN, TA, PRLB, ESI
 All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Again, the number of setups I am seeing each night in my scans is keeping my bullish going forward, and these individual names are what I am going to focus on this week.   Earnings may make the overall market a real mosh pit of confusion over the next few weeks, but as long as charts are acting well underneath the surface, I think you have to stay bullish.  As always, if the market breaks down very hard below short-term moving averages on heavier volume, I will change my outlook, which any trader is always entitled to do.   Good luck. 

Wednesday, July 17, 2013

So Far, So Good This Week

If you read this weekend's summary and outlook, you may remember me hoping for a certain scenario to play out this week....

"Good luck going forward - an ideal week of trading would see the market trade calmly throughout the week and move sideways to just slightly lower on the indexes while individual stocks still made nice moves each day underneath the surface."

So far, that's has pretty much been what we've seen this week.   The indices have gone nowhere to slightly higher depending upon which one you are looking at, but underneath the surface, there continue to be a ton of stocks moving intraday and many more consolidating nicely to form new potential setups.  Going into the summer, I didn't expect much at all from this market, but recently this has been about as good a market as you could ask for.  Hopefully that doesn't mean we are about to hit a rough patch.

The Nasdaq and Russell 2000 remain extended and could use more rest, but the S&P has consolidated nicely and has yet to break to new highs for the year.  If that happens in the next few days or sometime next week, we could really see another major push higher, which is amazing.  

 S&P 500

I'm also amazed at how many quality setups are showing up in my scans each night even with the market extended.  Tonight was no different.   Biotechs broke out strong a few days ago, but have consolidated well for the past two days and may be setting up for another pop soon.   This group could use a few more days of rest however to make the patterns better.

PCYC, XNPT, MNKD, ACAD


There are also some high quality, IBD-type stocks with great fundamentals that are not extended and in some cases not even near new highs.   These names are of great interest if they trigger and the market continues to cooperate.   I took an anticipatory position in one of these names today.

LNKD, PRLB, NUS, REGI

Some lower-priced stocks with decent to good fundamentals in most cases are also of interest here.  These setups look very good and have acted well this week, consolidating nicely for a few days.
 
ZLC, TA, MTG, PERI

Although it might not be the ideal place to focus right now, there are even several lower-priced names that are beaten down and could be putting in longer-term bottoms here.   These names are more risky however and it might be smarter to stay focused on names with stronger technicals and fundamentals.  

MCP, CIMT, SKUL, RKUS
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Hope you have find some names above that interest you and you have some luck with them.   Going forward, earnings reports may make the indexes a little volatile from day to day, but as long as individual stocks are moving, I won't complain.  Good luck the rest of the week. 

Saturday, July 13, 2013

Outlook for the Week Ahead With Setups - "Looking for Rest, But Isn't Everyone?"

After another very strong week where stocks gapped up several times but did their best Energizer bunny impression anyway and just kept "going and going and going", it should be an interesting week ahead.   Lots and lots of people are looking for a pullback, either to get into the market more aggressively or simply because it makes sense for how far we've moved in a short period of time. Just because people are looking for a pullback doesn't mean it will happen however.

The Nasdaq has been now been up 12 of the last 13 sessions and is more than 2% above its 9 day EMA for the first time since January 1.   Oddly however, when looking at some of the other overbought indicators that I like to use, the market doesn't look nearly as overbought as it did back then.  I certainly think some rest is overdue and would be good for this market, particulary if the rest is similar to what we saw at the beginning of the year, when the market traded calmly and just slightly lower, which allowed the 9 day EMA to catch up to price and act as support for most of the next month. 

Nasdaq
 RSI(2) Custom Indicator
 T2106 from Worden

I am still seeing quite a few setups that look good and the market timing score is as high as it has been all year, so there is no reason to not take setups as they trigger.   Again, rest would be good and I would not chase extended stocks at all - let those ones set up some flags - but the market can rest and individual stocks can still go up.  Breakouts were a little tricky last week (at least for me) as I saw many that reversed and gave back all of their gains either the same day as the breakout attempt or a few days later, but there were a lot that did work well.  If the market doesn't rest early in the week, I might look at selling into breakouts a bit more, but if we get some rest and stocks breakout well, then holding them tight is the best play. 

ACAD
CZR
HALO
LOCK
MBI
MNKD
MX
NXST
PRLB
RJET
RKUS
SBGI
TRLA
VOYA
ZLC
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Good luck going forward - an ideal week of trading would see the market trade calmly throughout the week and move sideways to just slightly lower on the indexes while individual stocks still made nice moves each day underneath the surface.   Throw in a few nice earnings pops as the season is going to start up again in earnest this week, and we would have a perfect trading week.   Too bad it probably won't happen that way but we can dream.   Take care and best of luck.

Wednesday, July 10, 2013

Many Biotech Names of Interest Here

In the past, I have generally stayed away from biotechs for swing trades as the fear of waking up to disappointing drug news and a 90% one-day drop in my stock was stronger than my desire to make gains in these names.   The group however has been a leading sector for a while now and tonight I noticed several biotech names in my scans, all with similar patterns.  Perhaps this is worth watching going forward.

The first group are more flat, shorter-term consolidation patterns that might work well on potential breakouts.  VNDA however is already at a breakout level and chasing a gap could be tough.

 BIIB
VNDA
HALO

The next group are names that have been consolidating sideways to slightly downward and have some downtrend lines to deal with as resistance.  If they clear these lines, new moves could begin in earnest. 

MNKD
ACAD
 KERX
REGN
 VRTX
Charts from TC2000, Courtesy of Worden Brothers, Inc.

The real problem however as I see it at this particular point is that the Fed spoke tonight and boosted futures a great deal in the after-hours session.  If those gains hold into the open and we get a big gap up, it might set up a perfect "sell the news" scenario considering how this most recent rally has come straight up off the lows with almost no rest.  Of course, I know I am not the only one thinking about this scenario so perhaps it is too obvious and the market will gap and just keep running tomorrow.  We shall see.  


A few other names of interest here on the long side are shown below.   Good luck - the gap (if it holds) is going to make things quite interesting. 

Chart from TC2000, Courtesy of Worden Brothers, Inc.

Sunday, July 7, 2013

Some Recent Earnings Moves to Study as the Season Approaches (Plus a Look at the Week Ahead)

It's that time of year.  Earnings season is about to start and with it will come some very big moves (both up and down) in many, many stocks, some of which you know well and some of which you have never heard.  I thought it would be a good idea to look back at some of the big winners from this past earnings season to get some potential clues as to how to catch and play a few of these big winners going forward.  

If you study the charts below, you will notice a few things.  I included an earnings summary found on Streetinsider.com that I found very useful for comparing the moves these stocks had compared to the reports they put out compared to consensus earnings.  All of these big moves started with a large, mostly unexpected earnings "beat", where the actual EPS was much larger (or in some cases less bad) that was expected by analysts.  In many cases, the stocks shown below also have very high short interest levels which pushed their stock even higher once the move started. 

CCIX
CREE
INFN
INVN
IRBT
LNKD
NFLX
OSTK
TSLA
YRCW
ZLC
Charts from TC2000 and Streetinsider.com

Entering these stocks is always tricky because gaps in the pre-market or after-hours are always difficult to read, even more so in a market where black-boxes and algorithms are having large influences on trading.  In general, I try to wait until a stable pattern has been setup on the pre-market or after-hour five minute charts before taking a shot at entering during one of those two trading periods.  Sometimes this causes a stock to run away from me, but that is something you just have to accept.   In my opinion, it is much better than buying a stock that gaps up 10% as soon as you can in the after-hours session and then watching it reverse to down 10% in a matter of moments.  Give the market a little time to show you that it really does like the earnings and is not just messing around with you.

Here are a few other general observations that I have made over time regarding earnings moves.  Going with stocks that are not as well know and setting up in consolidation patterns from which they can gap up generally give you bigger gains, although these stocks can also reverse easier and leave you with losses.  YRCW is an example of a stock that was not well know, consolidating, and then had a huge gap that ran hard.  On the other hand, stocks that have had two or three earnings gaps in consecutive periods or that are running hard into an earnings release are generally names I try to avoid, as the failure rate on these type of setups are usually much higher. 

Patience is also important with these and this is an area I admittedly struggle at myself.  If you catch one of these names at the right point and they move up quickly, it is easy to get a little scared and sell out, taking a nice 15-20% gain.   Sometimes that actually is the right move (see ACOM back in 2010 I believe), but normally, it will end up hurting you. I caught LNKD at $135 this year and sold a few days later at $160ish.   A great trade but now that it is trading over $200, it doesn't look quite as good.   In general, using the 9 or 20 day EMAs as stop levels work well for these type of trades. 

Don't be scared however to sell out if the trade goes against you.  These trades are not foolproof and most actually do not work well.   If you keep your discipline however, you can usually keep those losses small and by hopefully catching one or two big movers, your account appreciates greatly overall.

In terms of the general market, it's been a pretty typical summer so far filled with low volume, gaps up and down followed by little follow-through one way or the other intraday, and little overall price movement for the indices (Nasdaq up 19 total points since open on June 3).  Friday's action was bullish however in that we didn't see a late fade and the market closed above a key resistance line that hopefully will lead to higher prices.  I don't have my hopes too high because I know how summers are, but I am long several names as of Friday and will hold as I see fit.  

Nasdaq

A few names to watch going forward are listed below.  Good luck.

Charts from TC2000, Courtesy of Worden Brothers, Inc.