Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.
I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.
Members can click here to view and save the screen.
Sorted for at least 500,000 shares of daily average volume to ensure liquidity.
To follow-up on my last blog post, the S&P 500 Index area just above price is going to be a huge battleground in determining the sustainability of this bounce. You can see the hourly chart, zoomed-out, suggesting 1837-1840 represents the immediate breakdown scene from late-last week.
A check-back, or retrace, back up to it is not inherently bullish. In 2013, we would simply rally back up to it and then gap over it several days in a row.
But if this is a real correction, we should see bears reassert themselves the closer we get to that level.
Elsewhere, keep an eye on the softs today on the long side, with CORN JO SGG WEAT showing promising signs.
Mon Apr 14, 2014 8:44am ESTComments Off on Shooting Stars from the Hip
The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday.
Following-up on the S&P 500 Index and Dow Jones Industrial Average, which have valiantly tried to hold the market together even as leading indices, stocks, and sectors have been under clear distribution, you can see that even they are now beginning to break.
Both the S&P and Dow, on top of the cautious commentary from last weekend, have now confirmed their respective “shooting star” bearish reversal candlesticks printed two weeks ago during last week’s selling.
In Japanese candlestick terminology, a shooting star looks exactly the same as an “inverted hammer,” (literally a hammer flipped upside down) in terms of outward appearance. However, a key difference is their respective placement on the chart. After a prior steep downtrend, the inverted hammer can actually signal a potential bullish reversal coming, whereas the shooting star is the term given to the same candle after a prior uptrend, and signals a potential bearish reversal.
A few elements of the shooting star (and inverted hammer):
The upper “shadow” (wick) of the candle is longer than the real “body” (the head of the hammer, so to speak).
There is no, or a very limited, lower “shadow,” below the real body of the candle.
A true shooting star (or inverted hammer) is going to “gap” away from the prior trend, via not overlapping the prior week’s price range.
The larger the upper shadow, the more prominence the candle takes on.
There must be an established prior trend in order for the a reversal candle to take on any type of significance.
Beyond the basics, the most important element is that there must be confirmation of the shooting star, since a mere one candle is insufficient to base high probability trades off of in any type of aggressive manner.Applied here, both the S&P and Dow have been in established, multi-quarter uptrends. The look of both shooting star candlesticks complies with the elements, though they did not gap free and clear above the prior’s weeks price range on the whole. Still, most of the elements have been met to the point where I would take these candles very seriously on the S&P and Dow.
This is my quarterly post that I publish at the beginning of every earnings season. It is as much a reminder to myself as it is to you.
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WIth a rebalanced Dow Jones Industrial Service Average, consider this a friendly reminder to check and then double-check your current portfolio holdings to see when they are scheduled to announce. As a relatively short term swing trader, I am almost always looking to significantly reduce or outright close a position into earnings. There are simply too many variables for me to have an edge.
Even if you have illegal inside information about what a particular firm’s earnings will precisely be (and would thus face the distinct possibility of winding up in a federal pound-me-in-the-ass prison, with no conjugal visits) there is still no way to know how the market will react. Stocks can just as easily sell-off on great earnings as they can on horrific ones, and vice-versa.
Technical analysis has its clear limitations in that it can only demonstrate what is currently known and knowable by the markets. To presume that charts can dictate everything into the future is pure folly. Trading IS gambling, as we are wagering on outcomes yet to be determined. Instead of running away from that fact, a better approach is to embrace sound risk management.
In sum, leave the heroic all-in bets on an earnings play to old men trying to recreate their youth as they imagine themselves as Steve McQueen in The Cincinnati Kid. For those of you who have seen that movie, they will likely face the same fate as McQueen’s character did in the end as well.
I am eyeing trucking play Ryder on the short side, seen on the daily chart, first below. I still expect the strongest holdout transports to succumb to broad market pressures.
But if a sustained market bounce does come, keep an eye on CPE over $8.90 and $9 as a long idea, holding up very well in this market in the energy patch.
