tag:blogger.com,1999:blog-3723104851714780032024-03-13T07:59:45.500-07:00Money and Markets blogJoin me on my on going journey toward financial independence trading stocks, options and Forex through the TradeStation platform.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.comBlogger359125tag:blogger.com,1999:blog-372310485171478003.post-15548251190807883042016-03-06T15:09:00.000-08:002016-03-06T15:09:15.914-08:00ALXN turning positive<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-COyp4VvLazM/Vty3MoaBleI/AAAAAAAAGBc/Fl-UvUz9iyM/s1600/ALXN-20160306.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://4.bp.blogspot.com/-COyp4VvLazM/Vty3MoaBleI/AAAAAAAAGBc/Fl-UvUz9iyM/s320/ALXN-20160306.png" width="147" /></a></div>
Welcome Back Traders.<br />
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Shares of Alexion Pharmaceuticals have turned positive after a bruising start to the trading year. The shares are down about 24% on a year to date basis.<br />
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Note how the range bands indicator has gone from green to blue indicating that an uptrend is now in place.<br />
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Also note how the awesome oscillator has crossed the zero line to the upside for the first time since 10/23/2015. The last time that happened, it lead to a nearly 20 point rally in the shares. Last years rally was anything but smooth so size accordingly and be prepared for a bumpy ride.<br />
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<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com14tag:blogger.com,1999:blog-372310485171478003.post-80681281633520772772016-02-07T06:07:00.000-08:002016-02-07T06:07:27.165-08:00Facebook Round Trip<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-Vn-jHZBQvVo/VrdLv9i65dI/AAAAAAAAF6s/W_TnUMhiz4I/s1600/FB-Round-Trip.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://4.bp.blogspot.com/-Vn-jHZBQvVo/VrdLv9i65dI/AAAAAAAAF6s/W_TnUMhiz4I/s320/FB-Round-Trip.png" width="309" /></a></div>
Welcome back loyal blog readers.<br />
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This continues to be a year of wealth destruction for the longs in the stocks market. Many observers have noted that the broader market has been decline for some time and only a handful of stocks (often called the FANG stocks - Facebook, Amazon, Netflix and Google) have been holding up the market.<br />
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You can tell the party is over when even those stocks get slammed, and even when they report good news. A case in point is my favorite Facebook FB. After earnings, it gapped up into new all-time high territory, taking out the old high at the gray line just short of 110.50. After that it rallied up to the next gray line at 114.86 and even exceeded that brushing up against a 4th level of Fib Lines which is not currently included in my FibLines indicator. Based on this price action, I may have to reconsider that decision.<br />
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In any case, Facebook then exhibited an almost perfect 3 bar reversal pattern and that level and turned south just to find support at the red line at 103.15 which is the 161% line in the FibLines sequence.<br />
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Next up is Amazon which recently reached an all-time high at $695 a share. Those earnings were not good and the stock sold off hard. The shares currently are trading at about $500 a share, off a stunning 28% from levels seen a mere 10 days back.<br />
<a href="https://1.bp.blogspot.com/-y-rO8vO0I0I/VrdOs3k-n7I/AAAAAAAAF64/aXaNTj5UOeE/s1600/Google-3-Bar-Reversal.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="314" src="https://1.bp.blogspot.com/-y-rO8vO0I0I/VrdOs3k-n7I/AAAAAAAAF64/aXaNTj5UOeE/s320/Google-3-Bar-Reversal.png" width="320" /></a><br />
Next up in Netflix, off 36% from the top made earlier in December of 2015.<br />
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Last up is Google, another company that reported excellent results, and the shares also got spanked. <br />
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Check out how they got turned back at the orange line which was the last of the lines prior to the conclusion of the entire FibLines sequence.<br />
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You know its a nasty market when stocks reporting good news get punished along with those reporting bad news. <br />
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As for now, keep your powder dry its going to a long and nasty year for the bulls.<br />
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And BTW, you can get both the free and paid versions of the FibLines indicator over at my site at <a href="http://fibtools.blogspot.com/">http://fibtools.blogspot.com</a>.<br />
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Have a great week a preserve your capital.<br />
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<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com4tag:blogger.com,1999:blog-372310485171478003.post-78675509799932786832016-01-31T14:37:00.001-08:002016-01-31T14:42:10.435-08:00Announcing Fibtools.com<div class="separator" style="clear: both; text-align: center;">
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<a href="http://1.bp.blogspot.com/-gEUW9JBED20/Vq6NV579XuI/AAAAAAAAF3w/l0O5ZJ_h4y0/s1600/Fibtools-Cover.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="http://1.bp.blogspot.com/-gEUW9JBED20/Vq6NV579XuI/AAAAAAAAF3w/l0O5ZJ_h4y0/s200/Fibtools-Cover.png" width="154" /></a></div>
Welcome back loyal blog readers.<br />
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After many months of working on the FibLines indicator and giving it away for free to members of my Yahoo Group, I am ready to launch the paid version.<br />
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You find find my new site at:<br />
<a href="http://www.fibtools.com./">http://www.fibtools.com.</a><br />
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You can find the online store at:<br />
<a href="https://fibtools.selz.com/">https://fibtools.selz.com</a>.<br />
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FibLines help to identify hidden areas of support and resistance for most major stocks, ETF's Futures and broad stock indices by plotting lines on the chart.<br />
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FibLines are based on the principals of Elliot Wave and Fibonacci. For a complete explanation, see my video Introduction to FibLines.<br />
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Fiblines are available as a both a paid and a free version, both available at the FibLines Store on Selz. Both versions support Thinkorswim and TradeStation v9.1. The free version supports DIA, SPY, QQQ and IWM along with the continuous futures symbols /YM, /ES, /NQ and /TF.<br />
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The paid version supports over 220 symbols include most major stock market indices in the US, the Dow 30, the Nasdaq 100, and a number of key other markets and commodities including Gold, Oil, Interest Rates, Health Care stocks, Select Sector SPDR's, Dollar Index, etc. The indicator also includes a text file with the list of supported symbols, so you can import the text file to create watch lists.<br />
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The paid version costs $99 and includes one year of maintenance. Recall the FibLines are created in part based on human interpretation. Markets change, new symbols come and go, and the lines need to be adjusted going forward for example with stock splits.<br />
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Enjoy the indicator and have a great week ahead.<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com12tag:blogger.com,1999:blog-372310485171478003.post-88089182626725265412016-01-23T08:29:00.002-08:002016-01-23T08:29:51.455-08:00Bottom in Oil?<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/--SvTQbKDPxg/VqOkjs8tRvI/AAAAAAAAF2E/6Umr6rWucAc/s1600/CrudeOil-2016-01-23.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="241" src="http://4.bp.blogspot.com/--SvTQbKDPxg/VqOkjs8tRvI/AAAAAAAAF2E/6Umr6rWucAc/s320/CrudeOil-2016-01-23.png" width="320" /></a></div>
Welcome back loyal blog readers.<br />
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It was a tumultuous week and the markets appear to have put in a least a short-term bottom.<br />
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Wednesday's price action was wild - at one point down 65 points S&P points, just to rally most of the way back. It had the feeling of a panic flush to the downside, a cleanse to shake out the last of the weak longs.<br />
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Lately it seems the price of oil has been leading the stock market, and needless to say its been brutal of those in the oil production business and stocks alike.<br />
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Anyway, I bring it up because the Crude Oil Futures (/CL) is at the 423% line at the bottom of the sequence. So this is an important level at which we expect some type of price deflection off of the line giving some relief for the oil longs and oil stocks. Plus we are approaching a seasonal low in energy prices in mid-February. But given the adequacy of the supply, it could still be quite some time before supply and demand come back into balance and put a bid under energy prices.<br />
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In the meantime, enjoy the low oil prices and good trading.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com11tag:blogger.com,1999:blog-372310485171478003.post-17107939792130687722016-01-17T05:56:00.001-08:002016-01-17T06:01:51.178-08:00Markets on the Brink<div class="separator" style="clear: both; text-align: center;">
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<a href="http://3.bp.blogspot.com/-B7kpVAVmWO0/VpueMO3hzqI/AAAAAAAAF1A/7TRM_23vKmY/s1600/SPX-20160117.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="164" src="http://3.bp.blogspot.com/-B7kpVAVmWO0/VpueMO3hzqI/AAAAAAAAF1A/7TRM_23vKmY/s200/SPX-20160117.png" width="200" /></a></div>
Welcome back loyal blog readers.<br />
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Recall from last week's post <a href="http://fx-mon.blogspot.com/2016/01/welcome-to-2016-chain-sawed.html">Welcome to 2016 - Chain Sawed</a> that I expected the market to find support at the next orange line on the FibLines indicator at about 1880.<br />
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Looking at the chart, the orange level was 1880.42 and we closed the week at 1880.33 just 11 cents from that value! I think that's pretty amazing but I'm not surprised given the accuracy that I have observed with the FibLines indicator in the past.<br />
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Of course you could have come to a similar conclusion by observing that the SPX found support at this level when we had sell-offs back in August and September of 2015.<br />
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So what happens next? I think we have seen the majority of the selling for now and we are overdue for a rip-the-shorts-face-off rally back up to about 1958 on the SPX or even up to the breakdown point at about 2007. Of course is also possible we could plunge another 50 points to the 1830 level to inflict maximum pain on the longs and force some mass capitulation.<br />
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As for now, I have a fairly high cash position. I also have on an SPX March 1175/1170 Put Credit Spread. This was a trade from BIAS that I held off on and ended up getting a better fill than Bruce. After an easy start with BIAS back in late 2015, its been a rocky start to 2016 but I'm going to hold on and learn as much as I can in the process.<br />
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Enjoy your Monday holiday off from the markets and keep your powder dry.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com9tag:blogger.com,1999:blog-372310485171478003.post-31074130927566461162016-01-09T06:01:00.000-08:002016-01-09T06:02:55.342-08:00Welcome to 2016 - Chain Sawed!<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-3eAxOt3LtGI/VpEOMCAJjwI/AAAAAAAAF0M/zhpSS9LIvtQ/s1600/SPX-20160109.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://4.bp.blogspot.com/-3eAxOt3LtGI/VpEOMCAJjwI/AAAAAAAAF0M/zhpSS9LIvtQ/s320/SPX-20160109.png" width="300" /></a></div>
Welcome to 2016 blog readers.<br />
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So far is been absolutely brutal for long-side investors. We got a sell-off straight out of the gate on Monday and it hurt, but was not unlike the sell-offs we have have seen previously.<br />
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Most stock investors are familiar with the concept of "turn around Tuesday" where we get another round of selling on Tuesday morning then find a bottom and stabilize. That seems to happen on Tuesday where at least the selling took a break.<br />
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Wednesday brought another round of nasty selling. That took us down to about the 2000 level on the SPX and not far from the 3rd level fib line support at 2007 which has provided some support in the recent past. At that point, the selling had also reached symmetry with recent sell offs in terms of magnitude so we expected a bounce and some stability.<br />
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<a href="http://1.bp.blogspot.com/-MVR78kOn9hg/VpEQz1N3JaI/AAAAAAAAF0Y/RLyJQXIHZ9g/s1600/NDX-20160901.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://1.bp.blogspot.com/-MVR78kOn9hg/VpEQz1N3JaI/AAAAAAAAF0Y/RLyJQXIHZ9g/s320/NDX-20160901.png" width="247" /></a>Did we get it? No. We had some hopes of stability on Thursday when the Chinese market removed their 7% circuit breaker rule which had seemed to inflame the selling and prevent the orderly working of the market. That seemed to help in the morning and we had some hopes of stability. <br />
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Next up was Friday's employment report which was actually pretty good as should have been the catalyst to rally. We saw a rally in the morning, but it soon faded and we turned negative and accelerated to the downside into the close. Even Bruce from the BIAS service on Simpler Options threw in the towel and conceded it was a worst case scenario for the markets.<br />
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Looking at the larger picture, the next likely level of support is 1880 on the SPX which you can see in the chart above. The NDX fared slightly better and we seem to be at a point of support at the orange line there. We are also found some support at the 261% line on AMZN and the 161% line on AAPL, so I think we have seen the bottom in the Nasdaq for the time being.<br />
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<a href="http://2.bp.blogspot.com/-7GBD_ubd7wA/VpERmCCvbwI/AAAAAAAAF0g/rTV8DHDCij0/s1600/Husqvarna-440e.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-7GBD_ubd7wA/VpERmCCvbwI/AAAAAAAAF0g/rTV8DHDCij0/s1600/Husqvarna-440e.png" /></a></div>
At times like this, all you can do is control your risk and find ways to vent your aggression. In my case, I found comfort in my brand spanking new Husqvarna 440e chain saw. I took it as an opportunity to clean up some fallen and storm damaged trees around my properly. I find being outside and doing physical work to be very therapeutic and the mild winter temperatures are providing a good opportunity to do so.<br />
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As for the FibLines indicator, I am working on some methods to determine, algorithmically, how well the lines work on a given chart. This will open up some objective ways to measure how well they work as well as ways to use them in scans and use them to give trading signals. I'll save the details for another blog post.<br />
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That's all for now. Count your blessings and live to trade anther day. And enjoy these low energy prices.<br />
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<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com9tag:blogger.com,1999:blog-372310485171478003.post-74406229656761587662016-01-03T13:58:00.001-08:002016-01-03T16:43:03.031-08:00Free FibLines for Thinkorswim<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-5rkH9tJTiIQ/VomUMFG3RCI/AAAAAAAAFz8/0JdQBwSlot0/s1600/QQQ-20160103.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://4.bp.blogspot.com/-5rkH9tJTiIQ/VomUMFG3RCI/AAAAAAAAFz8/0JdQBwSlot0/s320/QQQ-20160103.png" width="264" /></a></div>
Welcome back loyal blog readers and Happy New Year!<br />
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2015 was a busy time for your humble blog author as I continue to enhance the FibLines indicator to prepare for an official launch later in 2016. There is much to done beyond just creating the product. So rest assured I have been hard at work behind the scenes to make it happen.<br />
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Along those lines, I decided it would be a good idea to create an introductory video that explains how the FibLines indicator works. So I am pleased to present the video which you can view on YouTube <a href="https://youtu.be/8xOI3hFnLZ8">here</a>.<br />
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Also, I uploaded a new version of the FibLines indicator to my Yahoo group with some changes as follows:<br />
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- Indicator supports only SPY, DIA, IWM, /ES, /YM. and /NQ. This will be the free version of the indicator going forward.<br />
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- Color scheme has been updated as shown in the graphic.<br />
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- Corrected some calculations on the 2nd level (Orange) lines which were incorrect. Thanks to an astute member of my Yahoo group for pointing that out.<br />
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This new version is available to members of my Yahoo group under the name FibLinesFree.ts and the prior version which contained all of the levels has been removed. If you wish to maintain the levels yourself going forward, you can do so using this new file as a starting point.<br />
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In the meantime, check out the video and let me know any comments. <br />
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Also, you can get a copy of the FibLines indicator for free by joining my Yahoo group, just send an e-mail to fx-mon@yahoogroups.com.<br />
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All the best to you and your family for a fantastic 2016! <br />
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And of course good luck with your trading.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com3tag:blogger.com,1999:blog-372310485171478003.post-30453585711982316892015-12-26T06:49:00.001-08:002015-12-27T05:15:54.198-08:00CBPO - New Highs<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-4j7YeJnPrP4/Vn6gw9OOTyI/AAAAAAAAFzU/kpmiqD-c5Uw/s1600/CBPO-20151226.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-4j7YeJnPrP4/Vn6gw9OOTyI/AAAAAAAAFzU/kpmiqD-c5Uw/s1600/CBPO-20151226.png" /></a></div>
Merry Christmas and a Happy New Year to all of my loyal blog readers.<br />
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With this post, one of my long-term favorites, China Biologics (CBPO) has decisively broken out to new all-time highs.<br />
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Recall that I have been in and out of this stock and took profits at the older 423.2% line at about the 120 level. For a prior look at the FibLines, see my prior post <a href="http://fx-mon.blogspot.com/2015/06/more-of-voodoo.html">here.</a><br />
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With this post, CBPO has sold off from the 120 level, then staged a come all the way to the old high at about 125, paused, hesitated, then finally broke out to a new all-time high.<br />
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The chart on the top left shows my new interpretation with wave 1 starting at 61.91 on 12/14/2014 and ending at 101.07 on 4/16/2015.<br />
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Based on that interpretation, we had a nice deflection off the of 161% line at about 125.24 which found support at the next lower orange line. Then it moved sideways for a week or so before heading out into new all-time high territory. Note however that the stock is currently sitting as resistance at the next higher level orange line. At this point, I will avoid a new long-side entry until we can get a pullback preferably to the 161% line in the 125 area.<br />
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This example shows how you can structure longer-term trading decisions around the FibLines:<br />
<ul>
<li>Gives you an overall sense of direction, up in this case</li>
<li>Puts the price action into 1 of 4 categories (anywhere between 0, 100, 161.8, 261.8 and 423.6. In this case we have just exceeded 161.8 and waiting for a pullback to the breakout point at the 161.8.</li>
<li>Prevents you from entering when the chart look absolutely fantastic which can sometimes be the worst possible time to act. I have made this mistake more than once.</li>
</ul>
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Anyway, this new interpretation will be included in my next release of the FibLines indicator due out in early 2016.</div>
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Enjoy your holiday season.</div>
C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com5tag:blogger.com,1999:blog-372310485171478003.post-64867837811240529772015-12-17T07:38:00.001-08:002015-12-17T07:38:46.460-08:00Fiblines New Look<div class="separator" style="clear: both; text-align: center;">
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<a href="http://4.bp.blogspot.com/-fbkuLcCyPEA/VnLUW2rQXgI/AAAAAAAAFzE/_yHq-ACpWPk/s1600/ATVI-20151217.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="190" src="http://4.bp.blogspot.com/-fbkuLcCyPEA/VnLUW2rQXgI/AAAAAAAAFzE/_yHq-ACpWPk/s200/ATVI-20151217.png" width="200" /></a></div>
Welcome back traders.<br />
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I am experimenting with some new looks for the Fib Lines indicator and I have settled on what you see to the left. I changed the color of the secondary lines from green to orange and the 3rd level lines are left unchanged at a dark gray.<br />
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The idea here is to follow the visible light spectrum from red (most likely to raise your blood pressure) to less intense. Orange is a more relaxed version of red, and dark grey fades easily into the background. For Orange, I used the Color.DARK_ORANGE constant in TOS which seems to pop visually more on the screen than shows in the graphic.<br />
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Also, this color scheme seems to fit in nicely with the LBR Paint bars, and the whole combination looks and feels nice, particularly against the black background. The new color scheme will be included in my next release of the Fib Lines indicator in late 2015 or early 2016. <br />
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BTW the chart shown here is ATVI - Activision Blizzard on the NASDAQ which is my single largest stock holding at the moment. According to TC2000, it has a 5-year earnings growth rate of 28% and a PE of 25 which means its reasonably priced on a fundamental basis. That plus an all-time high in the shares makes me a buyer.<br />
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Happy Holidays and all the best to you and your family.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-90989324774158998922015-12-05T07:00:00.000-08:002015-12-05T07:04:56.054-08:00Fiblines make music<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-sPN-_Fny3LU/VmLvkv_XWeI/AAAAAAAAFyI/usvAK03VeBw/s1600/AAPL-Weekly-20151205.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://3.bp.blogspot.com/-sPN-_Fny3LU/VmLvkv_XWeI/AAAAAAAAFyI/usvAK03VeBw/s1600/AAPL-Weekly-20151205.png" /></a></div>
Welcome back Traders and Wealth Builders.<br />
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With this blog post, I am hard at work on my next quarterly release of the Fiblines indicator. It should be due out in late 2015 or early 2016. <br />
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I was surprised to to find that my interpretation for Apple Computer - the single largest capitalization stock out there - was out of date and ready for a refresh. My new interpretation is shown on the left on a weekly chart. <br />
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Updating the levels is a lot of work, but also very gratifying when you find the right interpretation. When you see how prices react to the lines, it just 'clicks'. It can be likened to art or music, when it works, it feels right on multiple levels.<br />
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<a href="http://1.bp.blogspot.com/-YqveC8O8IN4/VmL02W6G4XI/AAAAAAAAFyY/QvjFci2Nd40/s1600/ADI-20151205.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://1.bp.blogspot.com/-YqveC8O8IN4/VmL02W6G4XI/AAAAAAAAFyY/QvjFci2Nd40/s320/ADI-20151205.png" width="239" /></a></div>
Here is a few other things I have been up to recently related to the Thinkorswim platform:<br />
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- Add time frames for the 39 minute and 78 minute bars.<br />
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The reason for this is there are 390 minutes in the trading day and 39 minutes is a multiple as is 78. And since much of the trading world uses 5, 15 and 60 minute bars, this will give you a leg up on market direction in the intermediate time frames<br />
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- Add the LBR paint bars to your charts<br />
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This indicator is named after Linda Bradford Rashke a former floor trader and market pro. I could do an entire blog post on these bars, but they really speak for themselves. In fact the combination of Fib Lines and LBR Paint bars make your charts a thing of beauty, check it out.<br />
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Here's a cool feature of Thinkorswim I just found today. Bring up TOS on 2 separate computers side by side. Bring up a chart on one and watch what happens on the other - cool!<br />
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Finally (and not related specifically to Thinkorswim) I signed up for BIAS - The Bruce Income Advisory Service from the Simpler Options Web site. Bruce is a former Hedge Fund Manager and has been managing money professionally for several years. He aims for 10-20% for year which is a lot less than the 200% plus returns produced by Carter. But unlike Carter, he tells you everything he does with specific trade parameters and opening and closing values. <br />
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BIAS costs $97 per month and I paid for the first month's service with 1 trade on 1 contract lasting less than 10 days. That trade was not typical and his trades usually last closer to 30 days. But since I joined, I did my first Butterfly, and my first Calendar both of which were closed this past week at a small profit for that set of trades. But we have some other trades on for December expiry which are looking good. I feel like I'm finally on right track to growing my wealth using options versus my prior experience which has been hit or miss. Time will tell.<br />
<br />
Finally, you can get my Fib Lines lines indicator for Thinkorswim - while they are still free. Just send an e-mail to fx-mon@yahoogroups.com.<br />
<br />
Thanks for reading and have a great week.<br />
<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com2tag:blogger.com,1999:blog-372310485171478003.post-22598291511371185562015-11-16T17:36:00.002-08:002015-12-08T16:45:37.743-08:00More Facebook Fiblines<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-pjYAAgDhPTo/VkqC0NPF0qI/AAAAAAAAFxY/SsXMuOyLVFc/s1600/FB-Voodoo-20151116.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="249" src="http://4.bp.blogspot.com/-pjYAAgDhPTo/VkqC0NPF0qI/AAAAAAAAFxY/SsXMuOyLVFc/s320/FB-Voodoo-20151116.png" width="320" /></a></div>
Welcome Back Traders.<br />
<br />
Its been a wild few weeks in financial markets. One of my favorite stocks Facebook had a wild ride after earnings, rallying from the high 90's at my last post up to the upper snow line just south of 110. <br />
<br />
Recall this was one of the potential stopping points from my blog post <a href="http://fx-mon.blogspot.com/2015/10/fb-breakout-again.html">FB Breakout - Again</a>.<br />
<br />
Since then noticed how Facebook bounced off the white line at 109.75 (within 8 cents) then sold off down to the lower red line at 100.45 (within 2 cents) then bounced hard.<br />
<br />
I used this information to sell against the upper part of the range, and buy into the lower end of the range. The trades were not perfectly executed by any means. But it shows the power of the Fib Lines in predicting support and resistance levels ahead of time.<br />
<br />
FYI - you can get my Fib Lines lines indicator for Thinkorswim for free, just send an e-mail to fx-mon@yahoogroups.com.<br />
<br />
Take care and good trading.<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com6tag:blogger.com,1999:blog-372310485171478003.post-91622645635258252132015-10-25T08:54:00.001-07:002015-12-08T16:46:34.372-08:00FB Breakout - Again<div class="separator" style="clear: both; text-align: center;">
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<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-b_toqKnhddU/Viz1Q7egXVI/AAAAAAAAFwY/RNheR-gmA9g/s1600/FB-Weekly-2015-10-25.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-b_toqKnhddU/Viz1Q7egXVI/AAAAAAAAFwY/RNheR-gmA9g/s1600/FB-Weekly-2015-10-25.png" /></a></div>
Welcome Back traders.<br />
<br />
We saw a major breakout in many tech stocks last week and the market is once again on fire to the upside.<br />
<br />
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.<br />
<br />
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.<br />
<br />
The next most important upside level is the next green line overhead at 115.49.<br />
<br />
<a href="http://2.bp.blogspot.com/-MJ5LvRsmb9g/Viz5t2VKUAI/AAAAAAAAFwk/gFZvLGopEe0/s1600/FB-Weekly-2015-10-25-Extensions.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://2.bp.blogspot.com/-MJ5LvRsmb9g/Viz5t2VKUAI/AAAAAAAAFwk/gFZvLGopEe0/s1600/FB-Weekly-2015-10-25-Extensions.png" /></a>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.<br />
<br />
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.<br />
<br />
FYI - you can get my Fib Lines lines indicator for Thinkorswim for free, just send an e-mail to fx-mon@yahoogroups.com.<br />
<br />
Have a great week ahead.<br />
<br />
<br />
<br />
<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com0tag:blogger.com,1999:blog-372310485171478003.post-39966304214639964962015-10-18T08:31:00.000-07:002015-12-08T16:47:17.266-08:00FB Breakout<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-8sbo52xpXug/ViO3usdSQ2I/AAAAAAAAFv4/1yxkG02qad0/s1600/FB-20151018.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://1.bp.blogspot.com/-8sbo52xpXug/ViO3usdSQ2I/AAAAAAAAFv4/1yxkG02qad0/s320/FB-20151018.png" width="171" /></a></div>
Welcome back traders.<br />
<br />
One of my favorite stocks and largest individual stock position is in Facebook. <br />
<br />
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.<br />
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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.<br />
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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.<br />
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FYI - you can get my Fib Lines lines indicator for Thinkorswim for free, just send an e-mail to fx-mon@yahoogroups.com.<br />
<br />
Have a great week ahead.<br />
<br />
<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-24074051297072068572015-10-04T07:44:00.001-07:002015-12-08T16:48:32.525-08:00Waiting out the Bear<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-i3T2K2bkmyc/VhE06YM52SI/AAAAAAAAFvU/sJQuurEZVAQ/s1600/AZO-Voodoo-20151004.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://3.bp.blogspot.com/-i3T2K2bkmyc/VhE06YM52SI/AAAAAAAAFvU/sJQuurEZVAQ/s1600/AZO-Voodoo-20151004.png" /></a></div>
Welcome back traders.<br />
<br />
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:<br />
<br />
1) Look for Strength<br />
<br />
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.<br />
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<a href="http://1.bp.blogspot.com/-P984eyu0VSI/VhE09rkzxcI/AAAAAAAAFvk/Ym71ayREwzs/s1600/FB-Voodoo-2015-10-04.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-P984eyu0VSI/VhE09rkzxcI/AAAAAAAAFvk/Ym71ayREwzs/s1600/FB-Voodoo-2015-10-04.png" /></a></div>
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.<br />
<span style="text-align: center;"><br /></span>
<span style="text-align: center;">2) Consider your alternatives</span><br />
<span style="text-align: center;"><br /></span>
<span style="text-align: center;">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.</span><br />
<br />
<a href="http://3.bp.blogspot.com/-zNLqk_mtR4I/VhE09gmyLtI/AAAAAAAAFvo/rTFlAYWMPxQ/s1600/AMZN-Voodoo-20151004.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://3.bp.blogspot.com/-zNLqk_mtR4I/VhE09gmyLtI/AAAAAAAAFvo/rTFlAYWMPxQ/s1600/AMZN-Voodoo-20151004.png" /></a>3) Remind yourself of the fundamentals<br />
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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.<br />
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4) Turn off the monitor.<br />
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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. <br />
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By the way, you can get my Fib lines indicator for Thinkorswim for free, just send an e-mail to fx-mon@yahoogroups.com.<br />
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Have a great week and hang in there.<br />
<br />
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<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-32437265083286237292015-09-06T04:46:00.001-07:002015-09-06T04:46:20.383-07:00Embrace the Bear<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-mKR7hBblqPk/VerrTJ91VlI/AAAAAAAAFuM/OCL2WdJuaxo/s1600/SPY-Big-Picture.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-mKR7hBblqPk/VerrTJ91VlI/AAAAAAAAFuM/OCL2WdJuaxo/s1600/SPY-Big-Picture.png" /></a></div>
Welcome back Active Traders and Wealth Preservers. In case you haven't been paying attention, we have a major bearish setup developing in the markets.<br />
<br />
Most media outlets consider 10% to be a correction. By that measure and from their tops, SPY is down -9.87%, DIA is down -12.2% and QQQ is down -10.6%. But that's just from the top, On a year to date basis, SPY is down 6%, DIA is down -12% and QQQ is down a mere -1.09%. Not such a big deal, right?<br />
<br />
Things get ominous however when you look at the weekly chart which shows a downside break of the ascending trend line formed off the lows set back in 2011. And immediately after that (it's tough to see but trust me), prices spike lower, race back up to the trend line, then fail and turns back around to the downside. That's where we are right now. What I am expecting next?<br />
<br />
<a href="http://4.bp.blogspot.com/-nFINl4lp3EM/VewbGCxrWfI/AAAAAAAAFuc/o5WBUKDDVZM/s1600/SPY-Targets.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://4.bp.blogspot.com/-nFINl4lp3EM/VewbGCxrWfI/AAAAAAAAFuc/o5WBUKDDVZM/s320/SPY-Targets.png" width="312" /></a>I expect we are going to revisit the lows set last Monday 8/24 which is about 6% down from here on the SPY and that's just getting started. After that, the next likely target is 173 on the SPY. Looking further out I think the eventual down side target for this move is going to be the 161% line which is about 155 on the SPY. That is down a hefty 20% from these levels and could take several weeks to reach those levels.<br />
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So what can you do about it?<br />
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1) You can raise cash if you have not already. I am about 50% in cash at this point.<br />
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2) Buy short ETF's to offset your longs. This may be preferable to simply selling your longs since that may trigger paying a long term capital gains tax on positions you may have been in for several years.<br />
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<a href="http://2.bp.blogspot.com/-9a9_OKJ1Qv0/VewctbfKx7I/AAAAAAAAFuo/qE6noT1SgbY/s1600/ShortETFs.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-9a9_OKJ1Qv0/VewctbfKx7I/AAAAAAAAFuo/qE6noT1SgbY/s1600/ShortETFs.png" /></a></div>
Use this table to find matching short exposure ETF's to offset your longs. Note that you may have to buy a multiple of shares of the underlying to offset your exposure. For example, if you are long 100 shares of DIA, you will need to buy 430 shares of DOG to effectively offset your long stock.<br />
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Now if you are long a bunch of ETFs (and I am long nearly every issue in this table) you may not want to put on 10 offsetting positions to offset the 10 you are long already. You might just want to put on 1 or 2 large positions to offset your entire long side exposure. This way you can get out with just 1 or 2 trades instead of 10-12.<br />
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Another benefit of the short ETF's is that when things get really ugly, you can just close out the short ETF's and take a profit which is much easier to do psychologically then to have to enter new longs.<br />
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3) Put on some offsetting options positions. <br />
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Dan Nathan from CNBC's Options Action recommended the SBUX October Monthly 47.5/52.5 put spread for a debit of 1.0. That trade as a max gain of 4.0 for a max loss of 1.0. I like those and options positions with a similar risk/reward scenario.<br />
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4) Hold your nose and buy. <br />
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This would be an option for you buy and hold types. Put in a limit order to buy SPY at 182.6 then 172.5 and finally 155.15. This way you will scale in on the way down. This strategy has the highest chance of success in the long term, but you will experience some pain on the downside.<br />
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Good luck in the weeks ahead.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-84633392993353267832015-08-29T05:06:00.001-07:002015-12-08T16:50:14.437-08:00Wow, what a week<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-aBIu1Y1doLU/VeGVWkUPxzI/AAAAAAAAFrg/nhg4U9iBUwQ/s1600/SPY-Voodoo-20150829.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://4.bp.blogspot.com/-aBIu1Y1doLU/VeGVWkUPxzI/AAAAAAAAFrg/nhg4U9iBUwQ/s320/SPY-Voodoo-20150829.png" width="136" /></a></div>
Wow, what a week it was in the financial markets.<br />
<br />
Let's see how my prognostications from last week held up in terms of the Fiblines. Recall I expected we would find support at about 188 on SPY just south of the tree line.<br />
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On Monday we opened just below the 188 level and quickly plunged down to the next lowest level at the 182.5 level and bounced hard and ended up closing for the day at about 187.5. From there, we rallied back up to the upper white line at about 195 and got deflected back down again and closed the day Tuesday at about 187.2, just below Monday's close. <br />
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Tuesday's close was the lowest close for the week from there we shot up and closed for the week just shy of the breakdown point at about 199 on the SPY. So while we violated my expectations in terms of the maximum moves, the extremes of the price moves were very well bracketed by the Fiblines lines we knew in advance. If the chart on the left does not convince you, nothing will.<br />
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As to how I traded it, I didn't! Instead I went into the week already with a high cash position as a result of analysis done earlier in August and detailed in my post <a href="http://fx-mon.blogspot.com/2015/08/time-to-raise-cash.html">Time to Raise Cash.</a> I did put on a small offsetting short position in SPY on Friday since I think we may have run our course to the upside for the short term. In other words, I think the rally off the bottom was just a relief rally back up to the breakdown point and we have further work to do on the downside before all this is over.<br />
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As for the rest of out favorite stocks, the FANG stocks (Facebook, Amazon, Netflix and Google) had big rallies of the lows of the week. But experience tells me not to chase these rallies regardless of what the market does. Instead, I'm going to stay on the sidelines for the next few 6-8 weeks since we have a very strong seasonal tendency for increased volatility (to the downside) between now and the last week of October.<br />
<br />
So keep a high cash position, keep your powder dry and have a great week ahead.<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-78579116335106213362015-08-22T05:40:00.000-07:002015-12-08T16:51:13.898-08:00SPY - How Bad is it?<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-RCphpd2pTQk/VdhnzCRHTsI/AAAAAAAAFrM/30qU7XtGmAU/s1600/SPY-Voodoo-20150822.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="http://4.bp.blogspot.com/-RCphpd2pTQk/VdhnzCRHTsI/AAAAAAAAFrM/30qU7XtGmAU/s320/SPY-Voodoo-20150822.png" width="188" /></a></div>
Welcome back Active Traders and Wealth Builders.<br />
<br />
Long bull markets with periods of low volatility tend to lull us into false sense of security. This past week's carnage in the financial markets is a healthy reminder that stocks can and do go down. <br />
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The weekend gives us a chance to step back and put the declines into perspective. So let's take a look at the biggest declines in the SPY in the past 15 years. To this, I used a weekly chart of the SPY and the excellent trend line tool in Thinkorswim to build the following table showing the declines greater than 12% since the year 2000<br />
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<table border="1" cellpadding="2" cellspacing="2">
<tbody>
</tbody><thead>
<tr><td>Start</td><td>End</td><td>Weeks</td><td>Pct Decline</td><td>Angle</td></tr>
</thead>
<tbody>
<tr><td>4/2000</td><td>10/2002</td><td>136</td><td>-50%</td><td>-71 Deg</td></tr>
<tr><td>10/2008</td><td>3/2009</td><td>76</td><td>-57%</td><td>-84 Deg</td></tr>
<tr><td>4/2010</td><td>7/2010</td><td>10</td><td>-16%</td><td>-83 Deg</td></tr>
<tr><td>5/2011</td><td>10/2011</td><td>23</td><td>-21%</td><td>-82 Deg</td></tr>
</tbody></table>
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The angle of the decline is important since it shows the steepness of the move. Just for sake of comparison, I took a look at the angle of the upward move off the lows of 2008 to the recent high and found in increased at about 66 degrees. That is some solid evidence that stocks go down faster than they go up.<br />
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Now let's look at a table of the current decline assuming it ends now - which I don't think it will.<br />
<br />
<table border="1" cellpadding="2" cellspacing="2">
<tbody>
</tbody><thead>
<tr><td>Start</td><td>End</td><td>Weeks</td><td>Pct Decline</td><td>Angle</td></tr>
</thead>
<tbody>
<tr><td>5/2015</td><td>8/2015</td><td>10</td><td>-7.5%</td><td>-66 Deg</td></tr>
</tbody></table>
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To put it into perspective, we have not yet declined even 10% from the recent high in SPY! So I expect we have further to go to the downside before we find some support. How much further you may ask? Let's take a look at voodoo to concoct a few likely scenarios, along with some advice as to how to play it.<br />
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The chart above shows a weekly chart of the SPY. The lowest red line on the chart is the 161% move off the lows of 2008 at about 155 on the SPY which also corresponds to the highs set in March of 2000 and September of 2007.<br />
<br />
Most of the meaningful declines since 2008 cross 3 voodoo boundaries before finding support. If that plays out in this case, I expect we will find support at about 188 on the SPY which is the green line just south of 190 on the chart. That would be about a 12% pullback which is about another 4.5% to the downside from Friday's close. <br />
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As to how to play it, here is my advice:<br />
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1) Don't sell into a panic<br />
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For those of us who are careful with our money, the dollar losses is these moves can be staggering. Its easy to panic and sell at the worst possible time. Don't let the dollar figures freak you out. Instead, turn off the monitor, go for a walk and look at the big picture.<br />
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2) Don't buy the first dip<br />
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If you were looking a buying a great stock like Facebook, you might be tempted to jump in early in the decline and pick it up a bargain prices, right? Don't fall for this, you will probably get a better entry later, see #3.<br />
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3) Stay on the sidelines and wait for it!<br />
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Don't base any buying decisions on a single day's action. You won't pick the bottom since they typically occur on large one-day capitulation-type moves to the downside. Instead wait for a few days confirmation that the market has found its footing before changing to a bullish mindset. Remember bottoms take time to form and don't try to be a hero and pick the bottom, particularly this early in a decline. <br />
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Seasonally speaking, the odds of a decline being over don't occur until the 3rd week of October. So I expect we are relatively early in this bear cycle.<br />
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A much better play from here is to wait for a rip-the-shorts-heads-off rally up the breakdown point at 200 in the SPY before entering some bearish positions.<br />
<br />
4) Look at the bigger picture<br />
<br />
Pull up a weekly or monthly chart to see how far we have come off the bottom. This decline is not that bad and I expect it will get worse before it gets better. So keep your powder dry, and cash on the sidelines, because I expect you will get a better entry point in the future.<br />
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Have a great week ahead.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-9247503463772269072015-08-15T06:50:00.000-07:002015-08-15T06:52:39.674-07:00Time to Raise Cash<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-MsDPTuYuosU/Vc8ZrMm0deI/AAAAAAAAFqU/e5ycqgkLa1s/s1600/Reminiscences.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-MsDPTuYuosU/Vc8ZrMm0deI/AAAAAAAAFqU/e5ycqgkLa1s/s1600/Reminiscences.png" /></a></div>
Welcome Back Active Traders and Wealth Builders.<br />
<br />
One of the things I have learned from all of my years of investing and trading is that it doesn't pay to fight the market. Put another way, if the stock market is in retreat generally, odds are against making money on the long side in stocks. Sure you might find a few stocks or sectors making new all-time highs, but they will be few and far between. During these times, you hard eared assets are better just sitting in cash.<br />
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In his classic book 'Reminiscences of a Stock Operator' author Edwin Lefevre made a strong impression about observing <em>general conditions</em>. Taking a cue from the author, here are my top reasons why I have the highest levels of cash I have had all year.<br />
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5) Market Breadth is Declining<br />
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<a href="http://4.bp.blogspot.com/-xFlcNNZsffE/Vc8qjf9Kd_I/AAAAAAAAFqk/PTFE4k1S13E/s1600/DecliningBreadth.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://4.bp.blogspot.com/-xFlcNNZsffE/Vc8qjf9Kd_I/AAAAAAAAFqk/PTFE4k1S13E/s1600/DecliningBreadth.png" /></a></div>
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Recent all-time highs in the SPY have not been confirmed by the broader market. The chart on the right shows a weekly chart of SPY for the past 2 years versus the T2107 which is a proprietary Worden indicator measuring the percent of stocks above their 200 day price moving average. You can clearly see a divergence between the SP-500 price and the percent of stocks above their 200 day moving average.<br />
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Keep in mind this is not a particularly new phenomenon and looking at the same chart for the past 10 years, the T2107 peaked back in mid-2009 at nearly 94% and currently stands at about 39%. In practice this means fewer stocks are taking the market higher and you know who they are, AAPL, AMZN and NFLX to name a few.<br />
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4) USD remains strong<br />
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The US dollar remains strong and is up about 7% for the year and up about 20% in the past 2 years as measured by the Dollar Index DXY. This is a mixed blessing since it makes our exports more expensive, but it makes the dollar buy more when US citizens travel abroad. Where is really hurts is the earnings of US-based multi-nationals who make a large portion of their sales outside the US. When those overseas earnings have to be translated back to the USD, the currency conversion cuts into profits. A strong dollar also makes Oil and Energy cheaper since its priced in USD which leads us to #3.<br />
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3) Oil and Commodities<br />
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Oil and Commodities in general have been in major bear markets, in part due a strong USD. In fact this past week oil prices actually pierced (to the downside) the lows made during the Financial Crisis of 2008. As an oil consumer, I love this trend because energy is one of the non-negotiable expenses of modern living and every drop in the price means more money I have to spend for other things. In fact, your humble blog author filled up his car (along with his portable gas can) this past week in Irvington, NJ for $2.18 a gallon cash! <br />
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Keep in mind that gasoline prices are very much a regional item. A quick look at the national Gas Price heat map <a href="http://www.gasbuddy.com/GasPriceMap">here</a> shows that the Chicago area and most of the state of California have the highest prices in the country due in part to issues in refineries in the region.<br />
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<a href="http://1.bp.blogspot.com/-UjNwvStZe2w/Vc8-epg6lHI/AAAAAAAAFq0/JSKPD5fcT-k/s1600/FXI.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-UjNwvStZe2w/Vc8-epg6lHI/AAAAAAAAFq0/JSKPD5fcT-k/s1600/FXI.png" /></a>So what does all this have to do with stock prices? The fact is about 30% of the SP-500 are energy companies and low energy prices do not help earnings of these companies. Take a look at long term charts of the Select Energy ETF (XLE) and SPY and you will see how closely correlated that the price of energy stocks are to the overall market.<br />
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2) China<br />
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The Chinese market as measured by FXI has had a spectacular round trip in 2015 rallying as much as 28% from late 2014 levels, just to give it all back.<br />
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To say Chinese government has an awkward relationship with Capitalism is putting it mildly. They <br />
like the positives of market economies, growth and development and rising standard of living. They also like a rising stock market, but don't like when it goes down. So how does the Chinese government react to a falling market? They order people and companies to buy and prevent then from selling. This of course defeats one of the major benefits of investing in stocks to being with which is their liquidity. In the course of this fiasco, they have destroyed the faith of the people in the market. And it will take a long time to rebuild this faith given the fact that the Chinese public has little experience with stocks to begin with.<br />
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Now you could easily make the case that what goes on in China has a limited affect on the US. After all, the US markets didn't follow the Chinese market up and therefore should not follow it down. But the fact is that many large US companies (for example APPL and QCOM) get a large portion of their sales from China and a defensive consumer in China does not bode well for future earnings growth. Plus the world is more interconnected than ever and stock prices around the globe are highly correlated.<br />
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1) Seasonality<br />
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Its well known that stock prices typically suffer their biggest losses in September and October. I did a detailed study in seasonality back in 2013 in my post <a href="http://fx-mon.blogspot.com/2013/08/active-trader-evidence-of-autumn.html">Evidence of Autumn.</a> The bottom line was that stocks to tend to decline in the fall, but guess what? They almost always end up higher for the year in the rally that follows between Thanksgiving and Christmas.<br />
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Granted stocks sometime rally in September and you may see a marginal new high in the SPY between now and the end of September. But don't buy into that rally, wait for things to get ugly in October and then buy when you see a close above the high of the low bar in your favorite stock or index.<br />
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0) The Fed<br />
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In all my years of playing the markets, I have never seen a Fed this easy for this long. Interest rates as measured by the Fed Funds rate have effectively been zero for the past 8 years. To see how extraordinary this is, look at this chart here <a href="http://www.newyorkfed.org/charts/ff/">http://www.newyorkfed.org/charts/ff/.</a> Of course, stocks love low rates which explains why they have done so well, effectively tripling since the lows of the Financial Crisis.<br />
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Now after years of speculation, it appears the Fed is ready to start raising rates in September. In fact, many have argued that the Fed has been too easy for too long and that an interest rate increase will actually signal the Fed has more faith in the economy and trigger a rally in stocks! But the rally will likely be short lived because higher rates are not a positive for stocks.<br />
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Overall, I don't want to give the impression of being bearish on stocks or the economy. I'm only suggesting that if you have some gains, take some profits and raise some cash. You will likely get better entry point in the next few months.<br />
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That's all for now, enjoy the fruits of your labors and have a great week ahead.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-38946726938926711952015-08-01T16:00:00.003-07:002015-08-01T18:02:01.660-07:00Active-Trader - Flash Boys<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-2dGCDRqIyLE/VbzthcuKi0I/AAAAAAAAFp0/puyPEJEIgxA/s1600/FlashBoys.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-2dGCDRqIyLE/VbzthcuKi0I/AAAAAAAAFp0/puyPEJEIgxA/s1600/FlashBoys.jpg" /></a></div>
Welcome back, Active Traders and Wealth Builders.<br />
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I'm back from a week of sailing the high seas and had a chance to read Michael Lewis's book Flash Boys. It was an excellent read and an eye-opener as to how you can be taken advantage of when trading on-line.<br />
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Here's a quick overview of what I learned and how you can protect yourself. There are many types of algorithmic trading going on in the market place. What surprised me is how much of it occurs with little or no risk being assumed by those trading against you. And it explains why many market-making firms pay the brokers for order flow. Its because when a trading firm has your order to buy or sell in hand, they have the opportunity to transact elsewhere or at a different price and use your order to offset it.<br />
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There are 3 of the most basic type of high-frequency trading HFT trading scenarios: <br />
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- Front Running - You place an order to buy 1000 shares of a stock. The first hundred goes off at close to the spread and the HFT firm goes out immediately (and I mean microseconds) goes out and buys up the available shares on the remaining exchanges driving up the price just to turn around and sell them back to the original buyer at a now higher price. This gives the HFT firm a small but relatively guaranteed profit.<br />
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Front running successful requires physical proximity to the exchange computer since the advantage requires the minimal amount of delay between receipt of the order and execution. HFT firms pay dearly for this proximity.<br />
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- Rebate Aribitrage - As mentioned above many retail brokers (including the ones I use) receive payment for order flow. Some exchanges will rebate the firms who send them orders versus charge them which is the standard arrangement. Rebate Arbitrage occurs when the firm sends your order where they get paid the highest rebate. BTW the only broker I am aware of which does not accept payment for order flow is Interactive Brokers.<br />
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- Slow Market Arbitrage - This method involves monitoring the difference between prices on various exchanges and transacting on one then making offsetting transactions on other exchanges who are slow to update their quotations.<br />
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You might think all of this was impossible due to regulation NMS which requires that all transactions be executed at the "NBBO" or National Best Bid or Offer among the available exchanges. To implement regulation NMS, all of the prices from the various exchanges are aggregated at the SIP - Security Information Processor. What was unforeseen was that other non-public versions of the SIP data exists on the computers of the high frequency trading firms inside the exchanges which get a first look the data and have a time advantage in terms of how to use the data to their advantage.<br />
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Now granted I don't trade that much, so I am not particularly outraged about this arrangement. Things are still much better now than they were back in the bad old days when a commission of $14.95 for 100 shares was considered a 'Deep Discount Broker'. Now I can trade the same 100 shares for $1 through TradeStation with a bid-ask spread measured in pennies.<br />
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So what's the take away, how to protect yourself and your hard earned money?<br />
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1) Use Limit Orders<br />
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This one is so obvious and Cramer also preaches this same mantra. When you put in a market order, you are essentially telling the market maker and HFT firms - here, take my money! Instead, put in a limit order under the market or in the middle of the spread. You might still get HFT'd, but at least you got can transact on your terms and not someone else's.<br />
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2) Use Market on Close orders.<br />
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Large investors avoid these issues by using "Market on Close" orders which is a special match up of buyers and sellers which occurs on the close at the New York Stock exchange. Why would anyone want to get just an "average" execution? Just to avoid this entire mess and when you are a large institution with a lot of average investors, average executions work just fine.<br />
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3) Transaction with IEXG.<br />
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If you have a platform which allows you to route orders to a particular exchange, send your orders to IEXG. That is the Market Participant ID (MPID) for the IEX Group which is the exchange formed by Brad Katsuyama who is one of the heroes of the book. The exchange was created, and at a great personal and professional cost to Mr Katsuyama, to create a fair exchange for buyers and sellers to transact.<br />
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4) Start following VIRT<br />
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If you can't beat them, join them as the saying goes. One HFT firm which was identified in the book which is publicly traded is Virtu Financial ticker VIRT. This company came public back in May of 2015 at about $23 a share and has trade as high as about $24.70 and currently stands about $23.50. The company is a market maker and liquidity provider. It's unclear how much of their income comes from market making versus HFT activity, so more research is required.<br />
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Thanks again to Michael Lewis for an excellent read. And have a great week ahead. C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com2tag:blogger.com,1999:blog-372310485171478003.post-25049344072592895732015-07-18T14:11:00.000-07:002015-12-08T16:52:53.980-08:00AMZN, FB, NFLX, GOOG - breakout palooza<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-zifHdndcUkw/Vaq82uSnbgI/AAAAAAAAFpI/JE86ggD4rp8/s1600/NFLX-Voodoo-20150718.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="http://2.bp.blogspot.com/-zifHdndcUkw/Vaq82uSnbgI/AAAAAAAAFpI/JE86ggD4rp8/s400/NFLX-Voodoo-20150718.png" width="237" /></a></div>
Welcome back Active Traders and Wealth Builders.<br />
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It was a great week to be an investor, worries about Greece and a signed Nuclear deal with Iran gave the markets a reason to cheer and cheer they did.<br />
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We had spectacular breakouts in AMZN, FB, NFLX and GOOG. Most of these symbols respected the Fib lines nicely. <br />
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I had my eye on NFLX post earnings, and was able to trade it due to knowledge of the 161% line. I noted at the time the way price reacted to the line and traded accordingly by selling puts at the 108 strike. As it turns out, it was pretty close to the low of the which was was 107.68 and the 161% line was at 107.75. Close enough for government work as they say.<br />
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And therein lies the answer to a common question about Fiblines. How do you know which lines the stock will respect in advance? The answer is,you don't, but the price action itself will often give you the clues you need to take advantage.<br />
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<a href="http://2.bp.blogspot.com/-1qw6kCP7AQo/Vaq_jnzLLQI/AAAAAAAAFpU/vA2xGmy5f6Y/s1600/FB-Voodoo-20150718.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em; text-align: center;"><img border="0" src="http://2.bp.blogspot.com/-1qw6kCP7AQo/Vaq_jnzLLQI/AAAAAAAAFpU/vA2xGmy5f6Y/s1600/FB-Voodoo-20150718.png" /></a>Facebook also rocked out to new all-time highs and the next target is the 161% line at about 100.49 where I expect it to make it too this coming week after earnings. <br />
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Overall, keep in mind that the 161% line is relatively low in the fib sequence and long term, I expect Facebook shares to go much, much higher.<br />
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Have a great week ahead.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-29625091823293535142015-07-05T14:02:00.001-07:002015-12-08T16:53:58.791-08:00Trading around Facebook<div class="separator" style="clear: both; text-align: center;">
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<a href="http://3.bp.blogspot.com/-zCeHn47RkC4/VZmV54TblPI/AAAAAAAAFow/1iS1ylpAxeg/s1600/FB-Voodoo-20150705.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://3.bp.blogspot.com/-zCeHn47RkC4/VZmV54TblPI/AAAAAAAAFow/1iS1ylpAxeg/s1600/FB-Voodoo-20150705.png" /></a></div>
Welcome Back, Traders and Wealth Builders.<br />
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Readers of my blog know I have been a fan of Facebook for some time. After many months of sideways action, Facebook finally broke out to new all times highs in the past few weeks. Recall from my prior post <a href="http://fx-mon.blogspot.com/2015/03/active-trader-fb-breakout.html">FB Breakout</a> back in March of 2015, I recalculated Fib Levels and came up with what you see on the left. <br />
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As the move ran its course, I realized that prices topped out right at the green line at the 89.28 level - or within 12 cents of the level I calculated back in March! Well I took that as a hint and closed half of my position in the lower 88's and at a nice profit. Then as the stock came in and found resistance at the lower snow line about 86 I bought back my Facebook shares sold about 2 points higher.<br />
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Needless to say, I am finding the fib levels to be a big help trading around a core position in Facebook.<br />
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In the past few days, I have been hard at work updating fib levels for several key stocks that have exceeded the 423% level which is the end of the voodoo sequence. These updates include key stocks suck as AMZN, NFLX, NTES, REGN and TSLA. <br />
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Unlike prior posts, I'm not going to reveal the levels here, but I will save the details for those who get the indicator free from my Yahoo Group. You can get my Fiblines indicator for Thinkorswim for free, just send an e-mail to fx-mon@yahoogroups.com.<br />
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Good luck and good trading.<br />
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<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com1tag:blogger.com,1999:blog-372310485171478003.post-78555262629329828942015-06-19T13:32:00.001-07:002015-12-08T16:55:30.133-08:00More Fib Lines<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-_-DdumtaIHo/VYR02y_Bc_I/AAAAAAAAFnI/fYzYVFcpOQM/s1600/AMBA-Voodoo-2015-06-19.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-_-DdumtaIHo/VYR02y_Bc_I/AAAAAAAAFnI/fYzYVFcpOQM/s1600/AMBA-Voodoo-2015-06-19.png" /></a></div>
Welcome back traders. I had another decent week trading with the help of the Fib Lines lines. Here are few examples to whet your appetite.<br />
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First up is AMBA. I didn't trade this one but I was tempted to sell a call spread earlier in the week when it approached then exceeded that gray line at about 120. I decided not to step in front of that freight train and the stock ran away to the upside Note however that it paused and turned back at the 423% line right at about 127.<br />
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<a href="http://3.bp.blogspot.com/-QA9nR5cmkxo/VYR3KJfnelI/AAAAAAAAFnU/10Fh3IC_OCw/s1600/AET-Voodoo-2015-06-19.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://3.bp.blogspot.com/-QA9nR5cmkxo/VYR3KJfnelI/AAAAAAAAFnU/10Fh3IC_OCw/s1600/AET-Voodoo-2015-06-19.png" /></a>
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Next up is AET. Recall I traded this one in my prior post week and sold my calls right at the red line at about 120.05. This week I noticed that the stock popped up through that old resistance level and quickly moved up to the 123 area. At that point, I figured the stock would go higher but was not exactly sure how high. So I did a conservative trade and sold the 120/122 put spread for a credit of 0.7 and got filled on a pullback. That trade went out at max profit since the stock closed just above 124.<br />
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<a href="http://2.bp.blogspot.com/-GPPEsKPrDqo/VYR34tYLhxI/AAAAAAAAFnc/aTGdUSDFbQY/s1600/Gild-Voodoo-2015-06-19.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-GPPEsKPrDqo/VYR34tYLhxI/AAAAAAAAFnc/aTGdUSDFbQY/s1600/Gild-Voodoo-2015-06-19.png" /></a>Next up is GILD. I had a monthly 118 call expiring this Friday for which I paid about $2.20. As the stock rallied up above the 120 level, I had my limit order in and sold the contract at $2.60 since I noticed there was a grey voodoo line right at the 120.50 level. The stock traded well above that and up as high as $121.78. But it closed the week at $119.78 so in retrospect, my exit at 120.60 was not so bad. That is one of the reasons I like the tool because it gives you a target and sometimes when a stock is moving in your favor, the last thing you want to do is take profits but that's exactly what you should be doing.<br />
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<a href="http://2.bp.blogspot.com/-MT8jIwzQ2Tw/VYR5NbLPpBI/AAAAAAAAFno/-B1fsaQ4Oqo/s1600/CBPO-Voodoo-2015-06-19.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://2.bp.blogspot.com/-MT8jIwzQ2Tw/VYR5NbLPpBI/AAAAAAAAFno/-B1fsaQ4Oqo/s1600/CBPO-Voodoo-2015-06-19.png" /></a>Last up is China Biologics symbol CBPO. I didn't trade this one either this past week, but recall that I took profits when the stock got deflected at the 423% line after making an unexpected rip to the upside. The stock traded down as low as $100 before finding support more or less at the tree line at $99.04. Then the stock made a decent recovery and then traded all the way back up and was turned back once again very close to the 423% line at 120.37. The high for the day was 120.39 just 2 cents from the Fibline. I don't know about you, but I consider that to be pretty amazing considering thee levels were known ahead of time.<br />
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In summary - and I know I have said this before - I think Fiblines are the most amazing discovery in my 30+ years trading the markets. What's also amazing is that others charge $1000 plus $50 a month for this indicator, yet I give it away completely for free.<br />
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To get your hands on the free Fib Lines indicator for Thinkorswim, send an e-mail to:<br />
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fx-mon-subscribe@yahoogroups.com<br />
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Enjoy your weekend.<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com2tag:blogger.com,1999:blog-372310485171478003.post-81997036399240214762015-06-05T14:38:00.001-07:002015-12-08T16:56:42.637-08:00Fiblines for SPDR's and Health Care<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-ZRVIrdr_8Zs/VXIQq8Aki-I/AAAAAAAAFl4/0ZuU-sZz9K8/s1600/AET-Voodoo-20150605.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-ZRVIrdr_8Zs/VXIQq8Aki-I/AAAAAAAAFl4/0ZuU-sZz9K8/s1600/AET-Voodoo-20150605.png" /></a></div>
Welcome back loyal blog readers.<br />
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Things are starting to click for your humble blog author. Twice this past week I had profitable option trades where I exited at Fib levels I knew ahead of time. One of them was Aetna (AET) which you can see of the chart on the left. I bought on the breakout of the prior high at about 116 and sold just 3 days later when the stock was 120.5. And just like magic the stock pulled back.<br />
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The other was was GILD which didn't pull back with quite the same predictability, but it didn't matter. I took profits and moved on.<br />
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<a href="http://3.bp.blogspot.com/-_AeaBIG7V5s/VXITrt7dH0I/AAAAAAAAFmI/Ms-Ny6ZdR1g/s1600/SelectSectorSPDRs.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="199" src="http://3.bp.blogspot.com/-_AeaBIG7V5s/VXITrt7dH0I/AAAAAAAAFmI/Ms-Ny6ZdR1g/s320/SelectSectorSPDRs.png" width="320" /></a></div>
In an effort so share the wealth, I am ramping up my efforts to offer you free Fibline levels on a new set of symbols. <br />
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First up are the Select Sector SPDR's shown in the graphic here. Overall I'm not a fan of these tradables but I do use them for exposure to sectors I don't have at lot of familiarity with, for example XLE for Energy and XLB for materials. I avoid it for sectors I have a handle on such as technology. This graphic shows the symbols for which I have now developed Fibline levels.<br />
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Next up is the health care sector and insurers. This sector has been on fire lately and includes such household names such as CVS, AET, CB, CI and HUM. I have made some money on AET, CI and another Chinese Biotech company called CBPO. In fact, I just sold CBPO this past week as it approached the 423% Voodoo level and it was my biggest winner of the year.<br />
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I also added Fibline levels for a handful other interesting symbols such as CMT, CSX, DNKN and MA. I will be sending out those updates to members of my Yahoo group shortly. If you want to get your hands on free Fib lines indicator for TOS send an e-mail to:<br />
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fx-mon-subscribe@yahoogroups.com<br />
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Enjoy the fruits of your labors and have a great weekend.<br />
<br />C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com3tag:blogger.com,1999:blog-372310485171478003.post-6576256743162248682015-05-24T06:40:00.004-07:002015-12-08T16:59:23.694-08:00BABA - Change of Character<div class="separator" style="clear: both; text-align: center;">
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Welcome back, Traders and Wealth Builders.<br />
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Back in September of 2014, Chinese Internet retailer Alibaba (BABA) went public in what was the largest IPO of all time at least in terms of market capitalization. After a nervous opening day (perhaps due to the previously botched IPO with Facebook) BABA opened in the 85 range and soon rallied all the way up to the 120 area.<br />
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After that it was a slow grind down and BABA disappointed many initial investors. Earnings have been decent, but the prospect of ongoing litigation regarding not doing enough to stop the selling of counterfeit goods as weighed on the shares. And your humble blog author lost some money on the shares, looking for a low around 90 but washing out in the high 80's once the shares broke down.<br />
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But things changed when the company reported earnings back on 5/7/2015. Not only did earnings beat estimates by almost 100%, the issues around litigation seem to be resolved. Since then there has been a steady stream of good news including a partnership between AAPL and BABA. Add to that the fact that fellow internet retailer AMZN shares have been on a rip to the upside along with the rest of the market. <br />
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Taking a look at the voodoo, BABA still has yet to make it back to the top of Elliot Wave 1 at $100. I traded some call option and sold a put spread this past week (Carter would be proud) and had one of my best option trades of the year. As for now, I have no position, but I expect BABA has some further upside at a minimum up to the top of Wave 1 at $100. A pullback to the breakout point at $90 would provide a good opportunity for re-entry.<br />
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Have a great memorial day holiday and a great week ahead.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com2tag:blogger.com,1999:blog-372310485171478003.post-871703494615003692015-05-10T14:20:00.001-07:002015-12-08T17:00:52.933-08:00FB, Amazon and Netflix Revisited<div class="separator" style="clear: both; text-align: center;">
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Welcome back traders and Wealth Builders.<br />
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In my prior blog post, I covered these same 3 stocks, FB, AMZN and NFLX. But they are so interesting, and respect the Fib levels so nicely, the trio is worth another look.<br />
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First up in Facebook. After reaching a new all-time high back on March 24 the stock has been in retreat. This past week is found support just 10 cents from the white line at 76.95. <br />
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Obviously this stock has under performed recently. But sometimes, the long-term trend trumps any short-term weakness and I remain fully positioned to the long side and have not sold any shares. <br />
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Next up is AMZN. After an upside earnings surprise, the stock ripped out to a new all-time high gapping past the 423% line. In my prior post, commented that I expected the stock to fill the gap before resuming its uptrend. But instead, notice how the stock came down and kissed the 423% line then headed straight higher.<br />
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I have no position in AMZN, but I am starting to rethink the company. It's not so much about earnings per share. Its about the dominant affect this company is having on retailing. Amazon is disrupting traditional retailing and creating entire new economizes where they facilitate business. <br />
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I recently listened to a presentation by a John Carter friend who described how he sets up businesses to sell things on Amazon. He selects the products and has the manufactured and shipped to Amazon who handles the fulfillment and shipping. He never has to handle the the inventory and his risk is limited more or less the price he paid for the inventory. Of course he was also selling a course and mentor ship for $5000 where you could learn to do the same. I passed on that of course, but the impression is made was palpable.<br />
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Think about this for a second. If you wanted to buy something, and knew more or less what you wanted, why not buy it on Amazon? Up there there is the worlds single largest collection of sellers competing for your business on price and user feedback. And when you are done, you point and click your way to fulfillment. And with the prospect of Amazon Prime (which includes free shipping) I can see more and more people do business on Amazon. To summarize, its not about earnings its about market share. I have no current position in AMZN, but will be watching as the stock approaches the previous high.<br />
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Last up is NFLX. After an upside earning surprise the stock has been consolidating just under the tree line at 574.60. But it seems determined to make a break to the upside and once it does, the next green line is overhead at 606. That's neatly a $30 move and could pay off quite well on a small (1 lot) option position. <br />
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To summarize, here are 3 fascinating and disruptive companies with the shares all within striking distance of new all-time highs. Watch them carefully and pounce when the time is right.<br />
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And have a great week ahead.C. Smithhttp://www.blogger.com/profile/09412551371638188354noreply@blogger.com3