WATCH OUT FOR THE BEAR CLAUS

A hot topic here recently has been the growth names and how to handle said stocks trading significantly off their 2014 highs going into next year. We even had a friendly wager going on in the chat on how these stocks would perform into year end, specifically by last Friday.

While the daily charts are still an acquired taste, take into consideration the weekly chart set-ups that I blogged about not long ago.

FB is a good indicator for this idea, which hit 52 week highs today. So long as FB is leading the way, I’d take it upon yourself to nibble into weakness on a handful of names. If I’m right about this, you’ll be quickly rewarded for your efforts.

This should set the stage for a “fat pitch” as we call it. If the dips remain shallow, the rallies will be fast.

OA

I just scanned myself into a coma this morning.

As a result, here are a few watchlists I’ll be banging to death into year end.

Broken into a few catagories:

Swing Longs: CLICK HERE

Gone, but not forgotten (buy dips): CLICK HERE

Longer Term Low Beta: CLICK HERE

Shorts: CLICK HERE

More later,

OA

This was the 3rd major conviction day in the Russell since the October lows. Breadth was on fire today, scoring the highest ADV/DEC read in over 2 years. Volatility came in, the Russell led, the Yen was parabolic, TLT sold off, and TWTR was flat.

It’s been a challenging year, and I’ve given back all my gains I had earned. Even if the sun, moon and stars align, even if Santa brings me a rally, or even if my Joe Jacobsen turn date comes as planned….I’m still playing for breakeven at best.

I haven’t been willing to trade against my convictions, which is something I am determined to work on moving forward. Despite being mentally and emotionally drained, I’m still relatively in tact here. I’m ready to put this year behind me and get back to a more productive output for the time we’re investing here.

In closing, I hope everyone is wading through the speed ok. I don’t root for anyone to lose, but the later part of this year has been filled of a whole other element of hate and anger in the comments about who’s right and who’s wrong. I’d rather wave the white flag here and start getting back to a more productive group think. You assholes wear me out. To the others, thank you to those who constantly fill the stream with ideas. That’s why we’re all here.

I’m purging my watchlists tonight and will toss some fresh ideas out here tomorrow.

Stay Frosty,

OA

Engaging a market that has short term memory issues is tough. But the conviction in breadth here ahead of the Fed is strong, having generated the second highest $TICK reading since the 10/15 bottom. Likely a little short covering and risk rotation ahead of the Fed.

Historically, a $NYMO under -80 is a layup long. Even if just for a few days, but be nimble here this afternoon.

Crude and the energy sector is lit, which should leave lows in most of these stocks that won’t be touched again for quite some time.

If you look over the price action in the Russell 2000, you’ll see a miniature set-up that looks similar to the year long range. “Conviction day” as we refer to in After Hours with Option Addict, was defended this week, and prices have rejected the attempt lower to trade back into this range.

Today’s close is important in the $RUT, as it seems to be on a daily basis. Acceptance back into this trading range is an important signal, and puts small caps back on track for its anticipated seasonal gain going into year end.

OA

The 1998 references are swirling the internet these days referencing the dollar strength and oil weakness comparisons. Again, we’ve been following this same analogue since March. The most critical difference is that during that time period, the S&P 500 saw roughly a 22% decline in the fall of 98. This year, we’ve had three market declines of 4%, 10%, and currently working on about 5%. Despite the lack of the big correction, underneath the surface we’ve had countless stocks down more than 20% on the year and still holding those losses.

For tradeable lows, I follow the $NYMO which printed -81 yesterday. Oil is somewhat stable, and the oil service stocks are bid here. The divergence in risk stocks is mixed, but look at the divergence in the Russell here, being the first Index to go green this morning.

As we discussed last night in After Hours with Option Addict, in this high volatility environment, go easy with options. They tend to get expensive in these environments. However, this has the look of bounce here…so start building a list.

Top picks: BABA, BAC, FB, SCTY, ERX.

OA

Epic fade off the strength this morning. Apparently, the market still won’t sell its TWTR, YELP, FB or P just yet as all these stocks continue to hold gains and get bid underneath the broad market weakness. As for our discussions on this matter going back to last Friday, I still think this cannot go ignored.

As of this moment, the $NYMO has tripped oversold. If your view point has changed in regards to this market, there will be a rally for you to sell soon.

More later,

OA