They just don’t lie.
When you see the shares of some of the fastest growing publicly traded firms in the world continue to be bought up by institutions in this kind of macroeconomic environment, you would be remiss not to factor that into your analysis. As you know, I have been as cautious as anyone on the broad market since late April. In fact, I warned of the megaphone bearish topping pattern before most chartists, a few days before the flash crash. On May 3rd of this year. I posted this chart on chart.ly– click here (see chart below).
My point is that I am far from a perma bull. Recently, a big reason for me being cautious was because of the sloppy chart patterns of some of the market leaders. Although they have held up relatively well during this correction, their daily charts were less than inspiring in terms of compelling me to rush in and put on longs.
However, I have seen some strong buyers come in to support several key high growth names. Below are some charts of the high flyers, where I have denoted the underlying bid that helped to firm up the sloppy patterns. As The Fly notes in his evening post tonight, The PPT confirms that we are certainly extended in the short term. If we continue to rally in a straight line higher from here, I will not chase. On the other hand, if we get the expected pullback or sideways consolidation, I believe some very good buying opportunities could present themselves, providing the market does not see more heavy distribution days.
While it remains troubling that the volume in the broad indices continues to be fallow, it is hard to ignore the price action supported by strong volume in these fast growing names:
I took a little NFLX on the early morning pullback and DECK had a decent entry as well(didn’t take it) but most out there are too extended for me.
Beautiful post, couldn’t have said it better myself.
Thanks, TA. Trying to keep it objective.
Nice post! Love most of these setups. But like you said, not going to chase here.
Thanks, PT. Much respect for you.
Chess,
You said , ” fastest growing publicly traded firms in the world continue to be bought up by institutions”
So you know this because of what?.. Volume, reading articles..how?
Also, I think I now understand why you’re going for this pattern a little better.
As I said earlier, today I bought some NTAP and I have also be looking at VMW for awhile now.
Keep up the great posts!!
Thanks–re the fast growers–look at their growth rates/business models/etc, plus their inclination towards being momo names that institutions love. Wall Street loves growth and will always pay up for it, when the market is healthy.
Hey Chess,
Rookie question:
Assuming the market behaves tomorrow, would you wait for a pullback on these charts, or would you go in on an intraday entry?
they’re extended short term-no need to chase at this juncture
Thanks Chess
The quant funds pile into momo regardless of value.
Most of these names can whipsaw 5 – 10% a day based on the quant crowd behavior. Not sure if charts can even help these days. By the time you see strength, it’s time to sell — The Fly seems to be more of a reversion to the mean swing trader with his ‘PPT’ scores but it’s probably fairly effective as long as you can take heat before the reversion occurs.
could be–that is definitely a “skeptical” view of the markets, but entirely reasonable.
FWIW chess, I notice a lot of your potential longs have a tech bent to them…would you be better served to take market wide cues from QQQQ rather than the S&P? I guess it’s a question of which is leading the other.
true–that is where the growth and momo is, I guess. I do have a lot of non tech names on my scans, but I will just go where the best charts are. But, if the S&P is doing badly, it is tough for me to see the QQQQs doing well.
The guy shows Shakira’s hips, and everybody talks about charts. Un. Fucking. Believable.
Sausage party! LOL