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.

Wednesday, January 1, 2014

Massive Market Summary of 2013 and Outlook for 2014

Hi traders.  The year has come to an end and what a year it was.  I made a video that looks back at the overall market action for 2013 and gives a prediction for what I expect to see in 2014. It's been a long while since we have had a decent sized correction and I think that is certainly a possibility early in the year. I also discuss the leading stocks going into the new year along with setups that are looking good at this point.

At the beginning of last year, I made a list of thirteen stocks that I thought looked promising for the year ahead, more for fun than anything else.   This is the way that list of thirteen performed in the past year.

For fun, I am doing the same thing this year, only it is a list of fourteen names for 2014.  I doubt they do as well simply because I think the market is going to have an almost impossible time duplicating the success it had this year as a whole and that will making trading much more difficult.   Here goes anyway.   This is a mix of sectors and stocks, some beaten down, some recent, and some which are current leaders.  My gut tells me that the big winners for the year ahead are going to NOT come from the list of big winners of 2013, so I am looking a bit more for stocks that have been basing and that haven't made big runs.

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

On a personal note, my trading performance was decent I suppose, but I am disappointed overall.  All of my results have been documented in this spreadsheet in as close to real-time as I can get.  My main account was only up 18.2% and that is where the disappointment comes into play.  I take a little solace knowing that since the middle of summer, my account was up about 41% off of its lows, which isn't bad for half a year.  I just couldn't get anything going during the first two quarters.  I wasn't fighting the market, but I was just in a rut.  I would inevitably pick the wrong name or get stopped just by a few cents before watching the same name zoom higher.  It just seemed like the market was against me.  As a trader, you are inevitably going to have these rough periods when it just seems you can't do anything right, but if you stick to it, you will eventually pull through and get back on the winning track.  That doesn't mean of course those rough periods don't suck.  They certainly do.

My performance was much better in my wife and my IRAs, with each up 70% and 79% respectively.  Overall, our accounts were up a combined 36% for the year.   I wish I could have that much higher given the overall market action.   Going forward, being much more selective in my main account is one of my goals as well as showing much more patience with trades in my main account, something that continues to be a weakness. 

Best of luck to you and your family and friends in the year ahead.