5/9/2018 Markets rally led by FAANG stocks. QQQ breaks through key 167 resistance level. MU jumps 5% on positive outlook from Morgan Stanley.

Fun Fact #45

Companies do stock splits to “signal” to shareholders that their company is doing well.  A secondary reason for a stock split is to increase liquidity (more easily converted to cash) by allowing people to purchase shares at lower prices.  Let’s say you had $1,000 and wanted to invest in Amazon, but since the share price is currently near $1,600, you wouldn’t be able to buy any Amazon.  If Amazon did a 10 to 1 stock split, making the share price $160, you would be able to buy 6 shares with your $1,000! 


 

 Market Stocks 5_9_2018.PNG

 

Although yesterday I was quite bearish because the price action was hinting that we would close red today, since we closed green, I maintain my bullish bias from 5/7.  Google hit my “if wrong” target after jumping nearly 3% today.  

I’m still skeptical on Apple’s current price action and think it will pullback to 180 soon, but the markets don’t care about what I think.  


 

QQQ 5_9_2018.PNG

QQQ broke above a key resistance level at 167 today.  This is very bullish, but beware that since everyone looks at the same chart, this could be a classic “bull trap.”  Bull traps occur when bulls get baited into buying right as price reverses sharply lower.  

 

BABA 5_9_2018.PNG

Generally, I’ve found that if BABA drops when the market goes up, this is a sign that BABA will drop further.  We will likely find out if this is true after tomorrow’s close.  

 

CMG 5_9_2018.PNG

Chipotle (CMG) has been trading in a very tight range in the last 2 weeks.  Look for a breakout in either direction either above or below the rectangle that I’ve highlighted in the chart above.  You can buy CMG on a break above 430, and short it on a break below 415.  Or you can be aggressive and just short it when it hits 430 with a tight stop.  I favor a downward breakout with a target of 390.  

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