Sunday, October 25, 2015

FB Breakout - Again

Welcome Back traders.

We saw a major breakout in many tech stocks last week and the market is once again on fire to the upside.

As you know one of my favorites is Facebook.  Let's try to get an idea of where this move might run its course using 2 different methods.

First lets look at the Fib lines.  With this past week's action, we breached the 161% line at $100.47.  That opens up a move to the next upper white lines at 105.23 and 109.74.  These levels might be the end of the move, or might be just places along the way where prices are deflected back.

The next most important upside level is the next green line overhead at 115.49.

As for the 2nd method, let's try a Fibonacci Extension of the recent high to low move from 99.25 to the recent low at 72.  I did some quick research on whether to us the wick high and lows to measure the move, or to use the high and low of the real body of the candle.  The answer I got is that it doesn't matter which you use just, be consistent.  In other words, if you use the wick high (as I did here) use the wick low and not the real body low.

In either case, we find the 61% of the recent move ends at $115.71 which is all all the far from the upside tree line at $115.49.  No one knows where the move will end of course, but those levels are my best guess.  Facebook earnings are coming up 11/4/2015.

FYI - you can get my Fib Lines lines indicator for Thinkorswim for free, just send an e-mail to

Have a great week ahead.

Sunday, October 18, 2015

FB Breakout

Welcome back traders.

One of my favorite stocks and largest individual stock position is in Facebook.

After weaving back and forth pretty well with the confines of the Fib lines, it seems likely we are going to get a re-test back to the recent all-time high at 99.24.  After that, the next most likely target is the 161% line overhead at about 100.47. Next earnings coming up on 11/4.

I also started a new position this past week in Selective Insurance ticker symbol SIGI.  This symbol popped up on my "New High, Positive Growth Low PE" scan.  With a 5-year earnings growth rate of 27%, a PE of about 12 and a 1.6% yield, the fundamentals are outstanding.

As for the general market, it looks like we have turned the corner and we are not going to get a re-test of the August 24th lows.  So its full steam ahead for the Santa Claus Rally and we can starting building wealth once again.

FYI - you can get my Fib Lines lines indicator for Thinkorswim for free, just send an e-mail to

Have a great week ahead.

Sunday, October 4, 2015

Waiting out the Bear

Welcome back traders.

Well it was a nasty September and we are about halfway through the seasonal rough period for stocks.  If course it could get nasty any time with stocks, but its statistically more likely to occur during September and October.   As a mostly long-side investor, it was downright ugly at times.  Here are a few tips to help you get through it:

1) Look for Strength

As Cramer likes to say, there's always a bull market somewhere.  And for me the action seems to be in high growth stocks.  Autozone (AZO) is one such example, its up 28% for the year and looks unstoppable.  And check out how well is has been reacting to the Fib lines.

Another favorite is Facebook.  I use it every day and I don't think this is a better run social media company on the planet. It is also obeying the Fiblines very nicely and it seems like just a matter of time before it re-tries the 161% red line just over head at about 100.6.  This was a point of resistance above which is partially obscured by the chart label in the upper-left hand corner of the chart.  Facebook has become a monster and I think it has plenty of upside ahead.

2) Consider your alternatives

With interest rates so low, Stocks continue to be the only place to be.  Sure cash is safe, but it doesn't earn you anything and in the long term, high cash levels will eat into your account growth which is a negative.  Remember, a large portion of long term stock returns come in dividends, and you don't get paid unless you are holding the shares or the ETF.

3) Remind yourself of the fundamentals

Keep in mind that individual stocks only report earnings 4 times per year. Sure stocks are thrashed about by the general market, but this causes them to become mis-priced with respect to the the fundamentals.  But don't let the day to day fear and greed to distract you from the fundamentals behind your favorite stock or even the general market.

4) Turn off the monitor.

Several times the past several weeks, I just turned off the monitor because I could not take the pain.  But I know that (as sure as the earth turns) that the worst of it is going to be over a few short weeks.

By the way, you can get my Fib lines indicator for Thinkorswim for free, just send an e-mail to

Have a great week and hang in there.