31
Oct

Fed Aftermath Market Update and Stock Scan for October 30

At the end of QE3, stocks continued higher on the reported GDP growth and the S&P 500 tagged the underside of the 2,000 index target.

Let’s update our levels and note the top trending stocks so far in today’s post-Fed session:

After a logical sell-off from a knee-jerk reaction to yesterday’s “End of QE3″ announcement (see yesterday’s post), stocks traded higher and broke sharply higher on a Bull Flag pattern earlier this morning.

The result was a short-squeezed impulse toward the 2,000 index target, at which point the S&P 500 turned lower and traded into the 1,990 support confluence.

For now, we’re monitoring the neutral zone between 1,990 and 2,000 with a breakout above 2,000 setting the stage for a future rally to new all-time highs… or a move under 1,990 targeting the 1,980 or even 1,975 downside targets.

Sector Breadth (after the Fed) revealed another bullish picture:

The Defensive Sectors took the lead today with Energy – yesterday’s leader – becoming today’s laggard.

Still, we see relative strength across the board with almost all sectors reporting more than 70% of stocks positive.

We have potential bullish trend continuation plays in the following stocks:

Bristol-Myers SQUIBB (BMY), AmeriSourceBergen (ABC), MasterCard (MA), and the big-winner Visa (V).

Potential downtrending candidates exist in stocks showing relative weakness today:

Avon Products (AVP), Intel (INTC), Ball Corp (BLL), and Trip Advisor (TRIP).

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade


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29
Oct

Fed Day End of QE3 Market Update and Stock Scan Oct 29

Oct 29, 2014: 1:15 PM CST

As expected, the Federal Reserve announced an end to its QE3 stimulus program and stocks reacted immediately with a knee-jerk sell-off lower.

Let’s update our levels and note the top trending stocks so far in today’s special session:

Continue watching price action closely in the high volatility period after today’s Federal Reserve announcement.

The key level will be the 1,975 index in the S&P 500 and a break above the 1,983 level could trigger an impulsive bull flag breakout.

Otherwise the market is a bearish play under 1,975.  The Fed Day aftermath makes today unique.

Sector Breadth (before the Fed) revealed a slightly bullish picture:

Our strongest sector today is Energy which is rebounding after a large sell-off, and Health Care with Discretionary and Technology (sectors) are the second tier leaders for the day.

Materials and Utilities so far are the weakest sectors of the session.

We have potential bullish trend continuation plays in the following stocks:

Newfield Exploration (NFX), Petsmart (PETM), Medtronic (MDT), and Occidental Petroleum (OXY).

Potential downtrending candidates exist in stocks showing relative weakness today:

Garmin (GRMN), Facebook (FB), Thermo Fisher Scientific (TMO), and Gilead Sciences (GILD).

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade


Afraid to Trade.com Blog

28
Oct

Opportunities from Three Stocks Extended Nine Days in a Row Higher

At the moment, three stocks have traded higher nine days in a row and may be ripe for a pullback.

Let’s highlight these three names from our simple scan and note potential opportunities from these lesser-known names.

We’ll start with Darden Restaurants (DRI):

All stocks will have the same logic but of course be sure to do additional analysis if you’re considering trading these candidates.

Each stock has closed nine consecutive days in a row higher in an impulsive move and logic suggests a pullback or stall is more likely than an extension well beyond 10 consecutive days in a row to the upside.

This is a mean reversion type of aggressive strategy.

The alternate method of trading these stocks would be to wait for the pullback/retracement (not trade short) and then buy shares as the pullback finds support.  This strategy allows you to play into strength but on a pullback.

Darden (DRI) would be cautious/bearish under $ 51.50 or else “breakout bullish” above it.

Genuine Parts Company (GPC):

Similarly, GPC is uptrending in a stable trend from March to present.

Fortunately, we can see a similar instance of consecutive up-closes that took place in February 2014.

Note the spike in volume and consecutive closes higher from $ 75.00 to $ 85 per share.

The result was a choppy pullback that took price to $ 83.00 per share which was a good spot to trade a “strong stock getting stronger.”

We’re simply seeing another pattern similar to that of February (cautious into $ 94.00 per share).

Finally, Interpublic Group (IPG):

This stock is different than DRI or GPC because it is trading up into a known resistance level at $ 18.75.

The logic of a stock trading into a known resistance cluster is similar to the opportunity in Caterpillar (CAT) I highlighted in this morning’s post.

IPG would be bearish/cautious under $ 18.75 on a likely swing down against this level or else “breakout bullish” above $ 19.00 per share.

Here’s a bonus opportunity in Yahoo (YHOO) after a stellar rally recently:

Yahoo (YHOO) shares saw similar strength on the rally up from $ 37.00 per share to the current breakout above the $ 44.00 level.

Keep your eye on Yahoo for any sign of weakness at the highs – it’s an interesting “Gap and Run” pattern nonetheless.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

26
Oct

Stepping Inside Sector Strength During the October Rally

When we see large price movements in the market – like our recent strong rally over the last week – we can break down the picture into smaller pieces by looking at “Sector Strength.”

We can study which sectors were strongest, which lagged behind, and what this may suggest for the broader market.

Let’s take a look at Sector Strength on the way down from 1,900 (on the S&P 500) and now the path higher:

When discussing sectors, we often break them down into the six “Risk On” or Offensive Sectors that typically do best (outperform) during bullish market phases.

These include Financials, Discretionary, Technology, Industrials, Materials, and sometimes Energy.

We then break down the other sectors as “Risk-Off” or Defensive sectors that tend to do best during down-markets or retracements.

Let’s focus our attention first at the bottom of the chart on the “Defensive” Sectors of Staples, Health Care, and Utilities.

At the moment, Consumer Staples (XLP), Health Care (XLV), and Utilities (XLU) are at or above their recent new highs.

This reveals relative strength because all other sectors are clearly beneath their recent September price highs.

It suggests defensive or cautious money flow from the “Big Money” as they are electing to be more protective during both the retracement and the current rally.

We’ll take a more cautious approach as a result of the stronger “Defensive” sectors relative to the “Offensive” sectors and will monitor the S&P 500 rally closely.

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

24
Oct

Fun Facts from 2014 About Up and Down Days in the Market

Like any year, 2014 has seen its share of ups and downs in the market (more ups than downs, actually), so I thought it’d be interesting to compare the up and down days for the S&P 500 so far in 2014.

If anything, it’s a different way to see price and study the character of the market.

Let’s start with a special look at just the up-days that have taken place so far in 2014:

While there’s dozens of methods to view charts, you’ve likely never seen a “up-day only” chart!

Nevertheless, we can look at the frequency (number of up-days in a row) and size of the up-days in 2014.

Specifically, there have been 115 up-days so far in 2014 (out of 203 days), which means that 57% of days in 2014 have been positive.

Taken together, the Average of all up-days in 2014 is 9.3 points in the S&P 500 with a Standard Deviation of 7.40.

Let’s compare that to the down-days in the S&P 500  so far in 2014:

In terms of down-days, there have been 88 down-days so far in 2014 (out of 203 days), which means that 43% of days in 2014 have been negative.

The Average of all down-days in 2014 is higher at -11 points with a Standard Deviation of 10.53 points.

It shouldn’t necessarily be surprising that down-days report a higher average and standard deviation.

Price tends to be more volatile – as we saw through October – when the index falls.

We can even see above that one-day sell events are more visually larger than one-day buy events.

Price more commonly falls faster than it rises.

We also see “holes” on the sell-chart which is where price traded higher consecutive sessions to the upside.

The theme so far in 2014 involves the cluster of smaller, often consecutive up-days against the backdrop of larger, less consecutive down-days.

This type of comparison chart can be helpful for spotting patterns and themes as they emerge and shift over time as trend and volatility also change in the market.

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

23
Oct

Join John Person’s Trader Tools that are Working Right Now Webinar Thursday

Oct 22, 2014: 4:30 PM CST

I wanted to call your attention to a special live educational webinar taking place Thursday, October 23rd at 4:30pm EST from my colleague and friend John Person.

Entitled “Best Tools for Traders Working Today,” John will discuss the top tools for traders as adapted to today’s new markets.

I’ve worked with John for many years and highly respect his work with traders.

He is a fellow presenter on TradeStation’s Morning Market Briefings with me (he updates on Thursday and I’m on Tuesday morning).

Here’s a description from John:

Let John Person help you reach your trading potential.

Join us on Thursday October, 23 at 4:30 p.m. EST for an educational trading webinar, as he demonstrates the tools he uses to trade both personally and teaches stock traders to use all over the World.

John has helped traders take their trading to the next level and become more successful following his techniques.

In this hour long webinar he will cover the following topics:

  • Making Stock Candidate Selections using his Top 3 Indicators
  • Seasonal Sectors using the Top Down Approach
  • Favorite Risk Management Techniques

This is a rare chance to join a webinar and have a one on one experience featuring John Person’s wisdom and expertise. If you are unable to attend the live event please register and we will follow up with a recorded copy of the webinar.

If you are looking for concrete ideas to sink your teeth into then be sure to attend this special fast-paced session.

To register click here and get ready for a great educational webinar!

When: Thursday, October 23, 2014
Where:  On line at Personsplanet.com  Omnovia Trading room
What Time: 4:30PM (ET)

See you there!

Corey


Afraid to Trade.com Blog

22
Oct

FT: Adapting to dark pool rules

European regulators are to finalise their rules for regulating dark pools soon. Rob Boardman, European chief executive of broker ITG, explains to Philip Stafford how the market will adapt to the likely stipulations, in particular caps on trading.

FT Trading Room

21
Oct

Bouncing Range Market Update and Scan for Oct 20

With a narrow bounce continuing to drive the market into a known resistance cluster, let’s view the key levels, highlight the trending stock candidates, and update our S&P 500 chart as we start the week of October 20th.

Here’s our S&P 500 update and trending stock scan for the day:

Again we watch the 1,900 confluence which represents a “Round Number” level with the 38.2% Fibonacci Retracement as drawn, along with the important 200 day Simple Moving Average near 1,905.

The market is simply “Breakout Bullish” to reverse the intraday downtrend via V-Spike Intervention Reversal or else bearish into resistance should price instead move down against the 1,900 cluster.

Sector Breadth is Bullish at the moment with clear caution signs:

We continue the theme of “almost all sectors are performing similarly” with most S&P 500 sectors returning Breadth readings near 80%.

However, the strongest cluster appears to be the Staples and Utilities – Defensive names – and the weakest is the Industrial sector.

Keep your eye on the relative performance (strength at the moment) of the Defensive/Risk-Off names.

We finally have uptrending bullish intraday candidates today:

Cigna (CI), Trip Advisor (TRIP), Intuitive Surgical (ISRG), and Celgene (CELG).

Top bearish downtrending candidates include the following stocks:

IBM, Cognizant (CTSH), Hewlett-Packard (HPQ), and John Deere & Co (DE).

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

21
Oct

Up Up and Away Market Update and Stock Scan for Oct 21

Just like the prior times when buyers intervened to force a short-squeeze, we’re seeing the same breakout into shot-squeeze outcome this time above 1,900.

Here’s our S&P 500 update and trending stock scan for the day:

After the recent V-Spike Intervention at the lows, we’ve seen the market creep like a serpent ever higher into the first resistance cluster at 1,900.

This morning’s gap triggered yet another Short-Squeeze Breakout outcome (see yesterday’s planning) and we continue to trade long with the buyers (and perversely, long with the bears/short-sellers who continue to drive price higher collectively with their buy-to-cover stop-losses).

With the market above 1,925, we aim for 1,945’s confluence target.

Sector Breadth is Bullish at the moment again:

Today’s price action – as confirmed with our Sector Breadth stock grid – shows clear bullish indications.

Our strongest sectors are all the Offensive/Bullish names while the weakest sectors of the day – excluding Health Care – are the Defensive/Risk-Off names (Staples and Utilities).

Uptrending bullish intraday candidates today include the following:

Waters Corp (WAT), FMC, Robert Half (RHI), and Equifax Inc (EFX).

Top bearish downtrending candidates include the following stocks:

Coca-Cola (KO), Chipotle (CMG), Lockheed Martin (LMT), and IBM.

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

20
Oct

Surging Toward the 200 day SMA Target

As was generally expected, the market retraced higher after several down-days in a row took price to a key monthly support level (1,825).

Let’s look at the current S&P 500 and Dow Jones charts and highlight the surge back to the underside of the broken 200 day SMA:

On the breakdown under the confluence of the 200 day SMA and the August price low with the 1,900 “Round Number,” the S&P 500 collapsed into a vacuum of buying until bulls supported the market aggressively off the 1,825 target.

Now, we see a logical bullish price pathway surging higher toward the underside of the 200 day SMA and this same confluence.

It should be our focus for planning the next swing in the market into next week.

Quite simply, a trigger-break above this level that continues above 1,910 suggests the index will continue a rally toward the 1,945 level (green highlight).

However, this is an inflection point to be monitored to determine if sellers once again strike the market into a critical resistance level.

We’ll treat it similarly on the upside (testing resistance) as we did on the downside (testing support).

The picture is similar in the Dow Jones Industrial Average:

We have a wider “Neutral Zone” for the Dow and it extends here at the 16,400 prior spike low from August into the 16,600 level which is roughly the 200 day SMA.

When price breaks through a key support or resistance level, it often comes back to test (or touch) the level to determine the supply/demand relationship.

Will sellers once again liquidate into resistance as they did on the break… or will buyers overcome the selling pressure to trigger a breakout and thus likely “short squeeze” above resistance?

That’s the question we should be asking without bias as price returns to a key decision point on the chart.

Join me live for a special presentation with 8 speakers in an all-day educational event Saturday!

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


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