Two Setups for the Summer Friday Warriors

TWTR is still a long setup, coiling nicely on the 30-minute chart, first below. Watch it over $45.50 to see if it can finally sustain another breakout.

And with Russia tensions heating up again, I am watching the RSX to see if it rolls over from its recent rally. The 30-mintue chart for the Russia ETF shows a potential bear flag under the highlighted support trendline. RUSS is the highly-levered bearish ETF.

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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.

Please click on image to enlarge.

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Leading issues are still largely consolidating in a fairly benign manner, as they have pretty much throughout this week (AMZN FB GOOG NFLX PCLN TSLA TWTR, etc). Apple is still trucking higher, though, likely to hot $105 sometime before Labor Day.

Commodities are still under pressure, especially gold and silver, though corn and wheat may finally be ready to curl higher for a snapback rally next week. Crude and natural gas are choppy at best for now.

Sectors which have seen tremendous moves in recent weeks, namely the REITs, rails, and semis, are finally experiencing some weakness this morning.

All in all, the tape is a typical summer Friday one, even with Jackson Hole. I suspect we see a delayed reaction next week.

What are you trading this morning?

With Jackson Hole and Yellen’s speech underway, the market is undoubtedly processing it in real-time to see if there are any subtle shifts in Fed policy.

In the meantime, the tape is mixed, with JD still a long idea over $31, and the major casinos like MGM remaining weak and short ideas.

GMCR just broke higher from its consolidation, while CRM is trying to negate a larger topping pattern with a gap up of its own.

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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.

B. STRATEGY FOR PLAYING THE LATEST NEWS HEADLINES, EARNINGS SEASON, AND MACROECONOMIC DATA; SPECIFICALLY TUESDAY’S CONSUMER PRICE INDEX AND HOUSING STARTS, WEDNESDAY’S FOMC MINUTES, AND THURSDAY’S JOBLESS CLAIMS, PHILADELPHIA FED SURVEY, AND EXISTING HOME SALES. 

[Please click here to see the full earnings slate of which firms report and when. Please also click here to see the full economic calendar for the week ahead (you might need to click ahead to Monday, August 18th)]. 

Moving our way through earnings season, keep in mind there are plenty of different styles that can be profitable in the market as a trader. My discipline is to usually not hold trades through earnings reports. If you do want to hold a position through the firm’s earnings report, I would suggest that you consider lightening up the position a bit before the announcement in order to mitigate the known unknowns/risks you are assuming.

Either way, I urge you to check and then double-check your current portfolio holdings to see when the firms you own are scheduled to announce earnings. As a swing trader, I am almost always looking to significantly reduce or outright close a position into earnings. There are simply too many external variables, particular to the firm in question, from an earnings report for me to have an edge. As an example, even if you do possess some type of insider or unique information about a given firm’s impending earnings report, 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.

With that in mind, I want to point out one crucial difference between specific earnings reports relevant to the stocks of firms you own versus politics, a broad economic report, and monetary policy decisions. In trending markets, up or down, the macroeconomic data (not microeconomic, such as earnings reports) tend to be interpreted by the market in favor of the prevailing trend, even if the numbers wildly miss or easily crush expectations.

In sum, macro reports should not be treated as the sole reason to exit a stock, whereas a specific firm that you own reporting earnings most certainly can. Moreover, the reaction to the initial reaction in terms of the price action by the market after a given data point or earnings report is what matters most to swing traders.

Technical analysis has its clear limitations in that it can usually only analyze that which is currently known and legally knowable by the markets. To presume that charts can dictate everything into the future is pure folly. Trading, for all intents and purposes, 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 principles and become astutespeculators.

Please click here to continue reading

In the event we see heavily-shorted names squeeze again, here are some actionable long ideas.

Please click the screen shot below for a larger view of my “12631 FINISH HIM! SHORT KILLER SCREEN” inside The PPT. Obviously these stocks are going to have the highest percentage of shorts and, according to the algorithm, are set up well to squeeze further.

If this bull goes buck wild, this is a great idea screen.

Members can click here to view and save it.

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