10/20/2018 Markets flat this week. Looks like a trend reversal, but still good to average in here. Discussion of QQQ, FB, MU, BABA, and SSEC (Shanghai index).

Hi everyone, I hope you all had a great week.  

QQQ Daily 10_20_2018.PNG

Above is QQQ on the daily chart.  Notice that this is the first time it’s had an RSI reading clearly below 30 in the last 2 years.  That represents the possibility of a long-term trend reversal which I’m still favoring.  Either way, if you have cash, now would be the time to consider buying a little.  

QQQ weekly 10_20_2018.PNG

On the weekly timeframe, QQQ has broken down from a 2-year uptrend line on high volume.  This trend line break is following an RSI divergence, meaning the index made higher highs, but the RSI indicator did not.  I think we could see the low 160s or high 150s in the next 2 months. 

MU monthly 10_14_2018

Last week we discussed MU on the monthly chart and noted that it looks like it will retest the high 20s or low 30s.  MU is currently testing a key support level at 40 and would be a good place to buy for a quick bounce as well as a long-term hold.  I’m still avoiding MU because I believe it will go much lower in the next 6 months. 

MU weekly 10_20_2018.PNG

Above is MU on the weekly chart.  MU is trying to hold onto a key support level here.  If we see impulsive selling in the next few weeks, this will confirm the new downtrend.  

 

BABA weekly 10_20_2018.PNG

Here’s the weekly chart of BABA.  Although I don’t think we’ve found a bottom yet, buying shares now and in the 110-120 range seem like good choices for long-term investors. 

FB weekly 10_20_2018.PNG

Facebook (FB) looks like a great purchase here in the 150s for the long-term investor.

SSEC 10_20_2018.PNG

Here’s the SSEC, which is the Shanghai Index.  The index has broken through a key support zone but also has bullish RSI divergence.  Notice how the price has made lower lows, but the RSI indicator has made higher lows.  This suggests we are forming a bottom here.  Generally, global markets are correlated, so if one market starts recovering, other markets will follow.  

I hope to see you all next week! 

10/14/2018 Markets drop more than I expected this week, and this selling was reminiscent of February. We will discuss QQQ, BABA, MU, and FB today.

Hi everyone, welcome back.

Let’s take a look at QQQ, BABA, MU, and then discuss what I think will happen in the next week and onwards.

QQQ daily 10_14_2018.PNG

QQQ broke through the 175 to 177.5 support level last week.  It looks like we should avoid taking any trades here, and look to buy near the most recent low (169-171 ish) or short sell in the 177.5 to 180 level.  I believe there’s a higher chance we move up first, and then drop to retest the high 160s.  Overall, the market looks very damaged, and I expect a lot more downside in the coming 3-6 months.  

 

BABA daily 10_14_2018.PNG

Daily chart of BABA above.

I think that BABA is beginning a new downtrend.  I believe it would be smart to buy here if you plan to hold for at least 1 year, but waiting until a retest of the lows at 135 would also make sense.  The short-term direction is unclear, but my gut says we move lower next week.  

MU monthly 10_14_2018.PNG

Here’s the monthly chart of MU.  Notice how we’ve broken the uptrend line, and the next area of support is between ~26 and 38.  If we drop like we did in 2015, we will be retesting the mid-20s (bottom of rectangle above).  I am not buying here as I believe we have begun a new downtrend and will hit at least the low 30s.  

Facebook has reached my add-on target of 150, so I think it would be a good idea for long-term holders to add here.  The next level to buy at is 115-125.  

10/7/2018 Markets drop this week, and I’m expecting more downside next week. Chinese stocks continue to drop.

In the last two weeks, I suggested that we would see QQQ retest the previous all-time high, and then drop from there.  It seems like I was right for once.

Anyways, although I favor a small move upwards in the next few days, I ultimately see the indexes moving lower in the next 2 weeks.  I suspect QQQ will touch 175 by Friday the 19th (highlighted in the rectangle below).

QQQ daily 10_7_2018.PNG

 

FB Weekly 10_7_2018.PNG

Above is the weekly chart of Facebook (FB).  I purchased some shares for my Roth IRA back in late July after it dropped 20% in one day.  I bought around 175 and plan to buy more near 150.  The support levels highlighted by the rectangles above are where I plan to buy more shares.  

From a technical perspective, the chart looks ugly.  Facebook has broken down from a 3-year uptrend line (highlighted by the diagonal line above) and has negative RSI divergence on the weekly chart.  Price made a new high, but the RSI indicator did not.  I plan to hold this stock for 2-5 years, with a selling price target between 215-300 depending on my mood.  

We will look at BABA and MU next week, but they are dropping and will likely continue to drop.

A stock that I am considering buying for the long-term hold (2+ years) is WB.  

WB Weekly 10_7_2018.PNG

Here’s the weekly chart of WB.  I did some short-term trades on this 6 months ago which didn’t go too well.  Anyways, WB peaked in early 2018 at about 140, and is now less than half that price.  There is no doubt that this stock is cheap when compared to where it was before.  However, cheap stocks generally get cheaper, so you may want to buy some shares in the next support level (40-50), and then at the 2014 IPO price of 20.  My price target is at least the previous all-time high at 140.  If you buy at an average price of 35, you have a risk reward of at least 4 (35 x 4 = 140) even if the company went bankrupt.  Seems like a bargain to me.  

I look forward to blogging for you all next week!  See you then.  

 

9/22/2018 QQQ stays flat while DIA and SPY reach new all time highs. BABA and MU mostly flat this week. Detailed weekly charts and analysis this week :) Please enjoy!

Let’s look at some weekly charts since we haven’t done that in a while. 

QQQ 9_22_2018.PNG

The QQQ has continued to grind upwards, and although I think we will continue to move higher in the next few weeks, I expect a 5%+ correction (possibly >10%) within the next two months.  The reasoning for this drop is the bearish rising wedge, which is confirmed by negative RSI divergence.  QQQ keeps making new highs, but the RSI reading fails to make a new high.  

The price target of a broken rising wedge is calculated by the largest distance of the wedge, which happens to be about 20.  The bottom of the wedge is at 180, so a break of that trend line suggests a price target of 160.  

 

The SPY and DIA performed significantly better this week, both reaching new all time highs.  

 

BABA weekly 9_22_2018

Here’s BABA on a weekly timeframe.  BABA is having issues breaking through the 165-170 level, which was previously strong support.  That level is now acting as resistance.  My first thought would be to purchase BABA near the previous low at 150, and then buy another batch between 100-110, and finally buy more at 80-90.  Of course, these are long term support levels to watch for, and these levels can mostly be ignored if you are trading on much shorter time frames (like I used to do).  

MU weekly 9_22_2018.PNG

From a 5 year perspective, MU looks extremely bad to buy at this price level.  Maybe I’m just finding too many obvious sell signals, and having a big bias towards where I think the price will go.  Here are some reasons why the price looks bad here.

  1. MACD crossed below 0, and the last time that happened, stock price collapsed >60%.
  2. Same pattern of RSI divergence on the weekly chart
  3. From the above reasons, we can see that clearly the upward momentum is gone

Here’s where I think price will go based on my weekly price analysis.  Within the next month, if we break below 40, in the following 3 months, we will see a price in the low 30s. Following that, we will continue to grind lower for the next 4-6 months until we bottom out in the low to mid 20s in May-July of 2019.  

Again, we could easily retest the 50s, and then move lower, or just move higher from here.  Price is telling me that the top has already been reached.  

Oh and one thing, this time the volume is significantly higher than the last time the cycle ended.  I have no idea what that means.  Another thing to consider is that the company announced a 10 billion dollar buyback which is planned for fiscal year 2019 (October 2018 to September 2019). 

It’s interesting that the cyclical cycle is projected to end in May-July range in 2019 (by my pattern recognition skills), which is when their buyback roughly ends.  Perhaps the company has already predicted a collapse in their stock price and are trying to stabilize it.  

Hopefully this post can make up for me being a day late last week.  

Good luck, trade safe, and have a nice day!  Thanks for reading.  

9/18/2018 QQQ bounces off channel support. BABA and MU continue to slide lower.

Hi everyone.  I just realized that I posted yesterday that I missed the blog post on 9/18, but today is also 9/18 hmm… I guess it must have been just past midnight when I looked at the date yesterday.  Anyways… here’s QQQ:

QQQ 9_18_2018.PNG

I mentioned 2 Fridays ago that I was expecting a move down in the indexes.  That has happened, but now I suspect QQQ will bounce back to the 187 area by sometime next week.  As you can see, QQQ has bounced off the 50 day moving average the last couple times, which also happens to be the bottom of the trend channel I drew in the chart above.  

BABA 9_18_2018.PNG

BABA is now below 160, and looks like it will slide even further.  I still love the company fundamentally, but would stay away due to the technicals not looking good.  There’s a slight chance I will buy some at or below 153 (the previous low), but will probably stay away for now.  

MU 9_18_2018.PNG

Although MU bounced strongly off the low 40s towards the end of last week, I would avoid buying any right now, unless it is for a very quick bounce trade.  Like I mentioned in previous posts, I think MU is entering the downward cyclical cycle now, where DRAM and NAND prices drop significantly and MU stock plummets.  Again, this is just a guess, and I could certainly be wrong.  I think in the next 3-6 months, we will see MU in the mid 30s.  

9/10/2018 Markets drop from last week with technology stocks dropping the most. MU drops a lot, and BABA continues to struggle.

Hi everyone!

Last week the markets dropped quite a bit off all-time highs, and now we are looking at a possible recovery (at least in the next few days).  I think this is the next leg down, so selling your positions, or going short into the next pop up might be a good idea.  

Also, I believe that MU is now nearing the end of it’s cyclical cycle, and will continue to drop further in the next 6-12 months.  

BABA has also had some bad news, which has lead to it dropping below 160.  This may be a good buying opportunity.  

Here’s a chart of MU below. 

MU 9_10_2018.PNG

Notice how price has moved below the 200 day moving average, and has stayed below that for a while.  This looks extremely bearish to me, and hints at further downside. 

 

BABA 9_10_2018.PNG

BABA is at 156.1 as of this writing.  Although I think this is a good price to add for the long term hold, the short term (2-4 weeks) points at more downside.  I’m leaning towards buying some here for a long term hold.  I will update you if I decide to buy some shares.