Wednesday, April 30, 2014

The Top Five Stocks I Am Watching Right Now

Although the S&P and Dow might say otherwise, the market has been in a downtrend/correction for almost two months now.  For some reason, however, I am a bit more optimistic that we may see a more substantial bounce attempt soon by the lagging Nasdaq and Russell 2000.  I like the fact that the Nasdaq has closed well off of its lows the past three sessions and with the S&P and Dow being right near new highs, it's possible a little rush of panic buying and/or short covering could take place if the market can get going.  In no way am I saying that this correction is over or that we are out of the woods, but since markets can turn on a dime, I have tried to focus my watchlist on a few names that would be in play if the market does indeed rally a bit. 

TSLA still has quite the story to it and has held up better than many other glamour/growth type names during this correction (FEYE, SPLK, YELP, etc). 

VIPS has held up better as well and has great fundamentals.  It doesn't seem to me like too many people were dumping these two names left and right like it does with some others. 

Energy has been a sector that money seems to be rotating into right now and TPLM has good fundamentals and a chart that is attractive.  

Biotech was getting destroyed as of three weeks ago but SLXP has held up well and appears ready to perhaps break out of the base it has formed.  Good fundamentals too.

Solar was hot throughout 2013 but has pulled back like many growth/tech sectors over the past few months.  SPWR however has outperformed most names in the group and looks like it might be ready to move out of a long base.  

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Sunday, March 23, 2014

Following the Leaders Paints an Unclear Picture

The month of March has brought sideways action and a fairly tight range for all major indexes (Nasdaq closed at 4277 on 3/3 and closed Friday at 4276).  Considering the positive move all indexes had during the month of February, consolidation is expected and probably a good thing.  The action of leading stocks, however, has painted a somewhat different picture and is worth watching here.

Below are what I would call the leading stocks of this market, or at least the stocks that I look to on a nightly basis to get an overall impression of how individual stocks are acting.  When you look at these, many have pulled back much more than the overall indexes have done.  I don't take this as bullish.   There are some that are hanging in nicely and consolidating gains much like the market has been doing (KORS and FB would be good examples), but there are a lot more names that have pulled back quite a bit further than the overall market, breaking below key support like the 20 day EMA and the longer-term 50 day moving average (FEYE, SCTY, YELP for example).  This divergence could likely go two ways. 

Charts from TC2000, Courtesy of Worden Brothers, Inc.

If we start to see these leading names act better and move up to regain their moving averages, I would feel much better about the chances of this market breaking out of its current trading range and into new highs soon.  I worry however that what we may be seeing is some names being sold out of before the market shows actual "ugliness" and if that's the case, things could get nasty in a hurry.

I've been in cash for about a week now but made one small purchase on Friday.  I had watchlists ready to go all week and then just didn't see any of the names on those lists act the way I wanted them.  I think caution is warranted here until either the market shows better action than it did last week (where Friday's action was particularly nasty) or the leaders above start moving higher.  One area I may look at this week is the fuel cell names as they perhaps put a little bottom in on Friday (see below) but most of my powder will remain dry until I see better action.   Good luck.

Charts from TC2000, Courtesy of Worden Brothers, Inc.

Sunday, March 9, 2014

Stock Market Video - Outlook and Setups With Some Bottoming Plays - 3-9-14

Hi traders. The market had a little selling come in Thursday and Friday, but overall it continues to hold up very well. A bit more rest is not a bad thing here, as it would allow more setups to emerge. In the video, I highlight the stocks I am watching this week, along with what I look for in a long term bottom in a stock. There are several names recently that I have seen put in this potential clue and they are discussed in the video.  For instance, PLUG showed this same volume pattern late last year and is why I put it on my list of stocks for 2014.  I stupidly sold out however at $3 and then again last week because BLDP had earnings the next day.  Hope the video helps you out. 

Sunday, March 2, 2014

Shakeout or A Warning of Something Bigger?

Friday was a day much like other days this week, with the stock market moving higher and many individual stocks acting very well.  Something happened around 1:30 however and changed things greatly - an approximate 65 point drop in the Nasdaq in about an hour followed by a thirty point rally back up in the final hour is not something you see everyday.  Supposedly this drop had to do with the situation in Ukraine and actions taken by Russia.  Whatever it was, a lot of individual stocks were hit (at least temporarily) and look a lot uglier than they did the night before. 

Ever since February 5, the market has been grinding along with very little rest but since it continues to hold its short-term nine day exponential moving average, it is hard to get very bearish here.  Since Friday's sell-off seemed news-driven, it is even more difficult to put a lot of importance in it.  However, if Friday's lows are broken on Monday or Tuesday, then traders should reassess their outlook and give more credence to that sell-off Friday being a warning sign rather than a shakeout.

Nasdaq Daily

In terms of individual stocks, there are a lot of names out there that have had great runs and are extended (TSLA, VIPS, YY, FB, FEYE, SCTY are your leaders) and therefore not very actionable right now.  A week or so of rest for the overall market would not at all be a bad thing.  There aren't a ton of "easy" setups right now among high relative strength stocks.

Because of this, I went about trying to find stocks this weekend that are NOT extended.  A lot of these names are low-priced stocks that have been beaten down and basing for a long time.  Here's the list I came up with below.  I am definitely looking hard at a few of these names in particular early in the week, although I will be keeping an eye on the overall market as well.

 Charts from TC2000, Courtesy of Worden Brothers, Inc.

Sunday, February 9, 2014

Stock Market Video - "Is The Correction Over?" - 2/9/14

Hi traders. In this video I discuss the positive action we saw from the market on both Thursday and Friday and what it might mean going forward. I also discuss the leading stocks at the moment and the two names I will always be focusing on from here. Some potential setups going forward are shared at the end of the video.

Sunday, January 26, 2014

Friday Was Bad, But It Could Get Worse

Let's state the obvious: Friday was bad.   All you have to do is look at the chart to know that it was bad. 

In terms of breadth, there were 523 4% or higher breakdowns Friday on heavier volume.   That was the highest number we've seen since June 20, 2013, when we 628 breakdowns.  That number (528) confirms what the chart of the Nasdaq seems to show - Friday's action was likely a gamechanger. 

The bad news when looking at the numbers above is that back in June, the market was already oversold at that point and didn't have much further to fall.  It did sell off two more days following the June 20 selloff, but compared to where we are now, it was much worse when the selloff occured.  

This is strictly a guess, but I think we will likely see some more severe selling next week and will get a relief bounce only when we get to very oversold conditions.   That would include the T2106 under at least -200.   We are not near that yet, even after Friday. 

Another indicator that I created measures the percentage below the 9 day EMA an index is, and throughout 2013, 2% below or more was the magic area where relief bounces/grind ups started.   A number that might take us to those levels would be a move to around 4000 on the Nasdaq over the next two or three days.    

All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Again, that is strictly a guess but if we would get there, I would look at buying some things for one or two day swing trades.   Right now I am in cash except for one short position.   A pullback into that 4000 level would give the Nasdaq a five percent correction, which still doesn't count as an intermediate-term pullback.   Therefore, there is a good chance that further selling could come after a relief bounce.  

Going forward, I would be very careful making any trades for the next two or three days until the odds are in your favor.   If we get very oversold and to levels that worked for bounces last year, then you may start getting an edge.   Any trades I make will be very short-term going forward because I think that's the type of market we now have.   The best case scenario from here is probably a month or two of sideways chop.   The worse case is further selling that could give us a 10-15% long overdue correction.  Either one is not desirable for swing trading, so plan accordingly.

If nothing else, we should see clearly over the next week if the "QE Infinity" effect is still in play in 2014.   Good luck.

Monday, January 20, 2014

Stock Market Video - Outlook and Setups for Week of January 21, 2014

Hi traders. We saw a choppy week last week with a back to back seventy point day on the Nasdaq, but the opposing directions of those two sessions made things tough. I am planning on being more selective this week for various reasons and I would really like some stocks to rest a bit more. There are a few names worth looking at on Tuesday and those are discussed in the video.

Sunday, January 12, 2014

Some Biotechs That Aren't Up 1000% In The Past Two Hours and Other Setups for Week Ahead

The big theme last week (which I missed because I was at work....arrgh) was biotechs.  ICPT went from $76 on Wednesday to almost $500 on Friday and the frenzy carried over to many other biotech names, whether they had news or not.   There are a lot of names that are untouchable now because they are so extended, but it is possible that the momentum continues early next week so I looked for some names in this sector that aren't extended beyond belief and could be tradeable.   Here are the names I found.

I was stopped out of many names on Thursday as for the first time this year the overall market seemed to mask worse action underneath the surface for individual names, at least for the names I was watching.  We saw an impressive bounceback Friday however and I added some new names on the long side.   A lot of the names I am watching remain very thin so I am hesitant to just throw them out here but here are some that might be worth watching if we see a breakout attempt on the overall indexes from the two week consolidations they are forming. 


Solars were a leading sector in 2013 and so far have continued their strength this year.   They have consolidated briefly for the past two or three sessions and although I would like to see further rest, some of these names might be in play again so for momentum traders.


3D printers were also big in 2013 and three of my favorite names from that sector are setting up again.  Both XONE and VJET had nice breakouts to start the year and have consolidated those for the past week or so rather nicely.  

 All Charts from TC2000, Courtesy of Worden Brothers, Inc.

One small note of caution: some of the numbers I keep track of on a daily basis in terms of breadth for the market are getting to very very high levels.   For instance, we are now on a streak of twenty straight days (from 12/12/13 to 1/10/13) of positive breadth in terms of 4% breakouts on heavier volume versus 4% breakdowns on heavier volume.   The longest streak we had in the past two years was 19 days (from 12/31/12 to 1/28/13).  We also have 38 stocks up more than 50% in the past month, which is the highest number I've seen since 2/6/12 when we had numbers more than 40.  

These may mean nothing more than we have a really strong market right now, but it's just something I am watching.   If you watched the year opening video that I put out on New Year's Day, you may remember me wondering if the market could rally further for the first two or three weeks of the year (surprising some who though tax selling would come into play and dragging in more retail investors) before finally putting in a long overdue correction.   No way of knowing that it is going to happen and I am staying long until I see concrete evidence that the market wants to correct, but just keep it in the back of your mind.   Good luck next week.

Sunday, January 5, 2014

Stock Market Video - Outlook and Setups for Week of January 6, 2014

Hi traders. The market was a bit weak to start the new year but there were a ton of individual stocks acting very well underneath the surface. I discuss some of those names along with other potential setups for the upcoming week. I also discuss one sector that is looking ripe for further gains after consolidating nicely along with the leading stocks at this juncture.

Thursday, January 2, 2014

A Rough Start for the Overall Market, But a Great Start for Individual Stocks

We saw a very interesting day today on Wall Street.  The overall market saw some distribution, which was not unexpected given the start of the new year and the run the market had in 2013.  What was a bit odd was the number of individual stocks that didn't seem to care that that market was having a rough time and just went up anyway, some a big amount.   Solars in particular were very strong but there was action in a lot of names that has me holding some long positions here.  I have two short positions on as well right now, not necessarily as hedges but as positions that I think can make money based on their charts.   I saw some decent setups in my scans tonight as well so I am not as bearish as you might expect given the overall market action today. 

Here are some names that might be in play tomorrow.   I shared a lot of names that worked very well this weekend (PLUG, VJET, SCTY, ANV, FENG among others) and on Twitter today so hopefully you were able to catch some.   We'll see what tomorrow brings. 

All Charts from TC2000, Courtesy of Worden Brothers, Inc.