5/11/2018 Markets close slightly higher, and volatility drops again. Weibo (WB) looks like a screaming buy, much like MU was near 47 last week.

Fun Fact #47

Apparently, it only costs 9.5 million dollars to live in a space hotel.  This space hotel should be completed by 2022!  

Source


 

Market Stocks 5_11_2018.PNG

Markets are looking like they are due for a pullback, but until I get confirmation, I’m still bullish.  I’ve modified the “watchlist stocks” section to only being stocks that I have a strong conviction on that are nearing good levels to buy or sell short at.  

I’ve also started writing my book which is exciting.  

The title will most likely be:

What I Learned Watching My Grandmother Trade Stocks: A Beginner’s Guide to Navigating the Financial Markets and Developing Your Trading System” 

I think the book has a nice clickbait title 😀


 

Anyways, today I will be discussing Weibo stock in depth since nothing too interesting happened with the broader market.  I will be reviewing some longer term charts of the indexes tomorrow and/or Sunday.  

WB Daily 5_11_2018.PNG

Above is the daily chart of WB.  I’ve been keeping a close eye on WB since the big earnings selloff on May 9th (2 days ago).  Although WB has broken through the 109-111 support level, I believe there’s a good chance we snap back above that level and resume the uptrend.  I will be buying aggressively in the 100-105 zone, and may start adding on Monday if we move above 109 again.  If we quickly close above 109 again, that would trap a lot of bears due to the false breakout.  This would likely fuel another move higher.

In case I’m wrong and WB doesn’t resume the uptrend, we will get stopped out for a loss somewhere near the 95-96 level.  Our target is somewhere between 132.5-140.  We risk about 5 dollars for a reward of roughly 35, an astounding risk to reward ratio of 7:1.  This means that you can be wrong 7 times and right only once on trades like this, and still break even.  If you’re clever, you’ll argue that volatility drag would make it so that you end up losing money if you lose 7 times first then win once, but don’t tell anyone that or else I’ll look stupid :^).  

The biggest risk here is that the momentum might continue to carry WB down, which would take out our stop loss.  If you wanted to wait for confirmation before buying, you can still get a low risk/high reward entry near current price levels.  

 

WB weekly 5_11_2018.PNG

Here’s the weekly chart of WB.  I’ve drawn a nice big arrow to show that we have been up-trending since 2015.  An uptrend is defined by price making higher highs and higher lows. 

For your viewing pleasure, I measured the pullbacks from the highest weekly close to the lowest weekly close.  Note that I did not include the tails of the candles in my calculations.  

I find it interesting that the current drop from the highs is almost exactly equal to the average drop from the highs before price reverses.  I’m still patiently waiting for WB to drop another 2-5% before adding aggressively.  

 

5/10/2018 The S&P500 breaks through a key resistance level as Apple continues to climb. BABA reaches a quarter shy of 200 and reverses sharply lower. NVDA smashes earnings but drops over 3% anyways.

Fun Fact #46

Since a stock price drops the same amount as the dividend declared, you may be wondering why companies even give out dividends at all.  I recently learned in my accounting class that dividends are a “signal” that the company is financially healthy. 

Growing dividends = healthy company.  It’s as simple as that! 


 

Market Stocks 5_10_2018.PNG


 

SPY 5_10_2018.PNG

If SPY can sustain the breakout above 271, we will likely see a test of the resistance zone from 275-280.  

BABA 5_10_2018.PNG

BABA continues to have trouble pushing through the resistance zone from 197.5-200.  An upward break above 200 might send the stock soaring above 205.  I expect some profit taking soon.  

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.  

5/8/2018 Markets flat as markets fail to break through resistance. QQQ to retest 162 by the end of the week?

Fun Fact #44

When a company buys back its own shares (share buyback), the common misconception is that the EPS will increase.  The EPS is Earnings “Per Share,” or Earnings/Shares, so if the company bought back shares, lowering the denominator, wouldn’t the EPS go up? 

Unfortunately, the denominator of EPS is actually the “weighted average number of shares,” meaning the number of shares is averaged over a year.  Thus, buying back shares will not impact the EPS ratio. 


 

Market Stocks 5_8_2018.PNG


 

QQQ 5_8_2018 Daily.PNG

I think that if QQQ doesn’t close green tomorrow, we will probably see a retest of 162 by the end of this week or early next week.  Notice how the downtrend line from the March highs intercept with the 162 support level.  That makes the this level even more important.  If QQQ did drop to 162, that’s a drop of another 4 points.  Since 4 points is only 2.5%, this drop could happen in one day. 

The reason why I’m bearish all of a sudden is because I think Apple will see a pullback due to aggressive profit takers.  Also as a side note, I just sold my Apple position today. 

See you tomorrow!

5/7/2018 Technology stocks lead the way higher. Time to take profits on Apple (AAPL)?

Fun Fact #43

Warren Buffett still plays Ping-Pong!  He played against Bill Gates at Berkshire’s annual shareholder meeting today. Source. 


 

QQQ daily 5_7_2018.PNG

QQQ is running into overhead resistance. We will have to see if QQQ can push through this level tomorrow or if we pullback from here.

AAPL 5_7_2018

Apple is the largest component of QQQ, and it looks like it has found a temporary top.  It looks good to buy in the 177.5-182.5 zone, although I favor the high 170s since it offers a better risk to reward. 

BABA 5_7_2018.PNG

One more push, and BABA will be at 200 again! Unless you think we break out over 205, it’s probably a good idea to take partial or full profits near this price. 

5/6/2018 Weekly Analysis and Stocks to Watch!

QQQ Weekly 5_6_2018.PNG

The weekly chart of QQQ is above.  I’ve circled the lower tails displaying buying pressure, as well as highlighting a divergent high.  A divergent high means that the index/stock made a higher high, but the RSI indicator made a lower low.  That is bearish.  However, we are still in an uptrend, so it’s generally a better idea to buy on dips instead of short selling high points. 

SPY weekly analysis 5_6_2018.PNG

The weekly chart of SPY is currently stuck between the support and resistance area.  That makes the direction unclear, although currently, there’s more evidence supporting a move up. 

BABA weekly chart 5_6_2018.PNG

Look at the weekly chart of BABA above.  I’ve mentioned in multiple posts that BABA was a good buy in the 165-175 zone, and a good sell in the 190-200 zone.  BABA is now approaching the 190 area, which represents a good price to sell at.  However, I believe BABA can hit 200 on this move up before pulling back because BABA had good earnings last Thursday.  Note that a break and close above 205 on the weekly chart would be very bullish.  

MU weekly 5_6_2018.PNG

Here’s the weekly chart of MU.  I think MU is a good long term hold and represents a good swing trading opportunity here.  As long as MU holds 45 on the weekly chart, I think we retest the highs near 60.  Do note that we’ve made a divergent high.  Like I described in the QQQ chart near the top of the page, this is bearish.  As you can see in the chart, prices fell from the recent high. 

AAPL 5_6_2018 Weekly Chart.PNG

Apple broke out to an all time high (ATH) after selling off hard in the last few months. Although Apple is up 13.25% in just one week, the chart hints that Apple has enough juice for another move up before pulling back.  If we move up, I suspect a test of 190 since it’s a nice round number. 

CMG weekly 5_6_2018.PNG

Chipotle (CMG) recently broke out upwards after releasing a very strong earnings report.  Judging from the price action and moving averages, I think CMG will pullback to at least the 380-400 area from a weekly perspective, which is another 5-10% down.  Of course, the upward momentum could easily carry the stock higher too, but my bet is down. 

Thanks for reading!

 

5/4/2018 Markets rocket higher, with Apple leading the way and reaching a new all time high. BABA had a wild swing today, but closed significantly higher.

Fun Fact #42

A deer market is a flat/neutral market, being neither a bull nor bear market.


 

Market Stocks 5_4_2018.PNG

Apple hit my target 3 weeks ahead of schedule… Interesting. I’ve put in a target for BABA now that earnings are out of the way.

From the current look of things, it looks like the markets won’t drop unless some unexpected event happens. Perhaps most of the above stocks will reach my “If wrong” targets instead.

This morning, I woke up to see BABA in the premarket hovering near 191 due to an earnings beat. By 8:30 AM, BABA was red (dropped 4% from where I was watching it), which was quite uncomfortable. After checking back on it at the end of the day, I was pleasantly surprised 🙂

Warren Buffett announced a purchase of 75 million additional shares of Apple (AAPL) in Q1 this year. That sent the stock flying today, carrying the entire market up with it. Job payroll numbers came in much lower than expected, which I guess was “good news.”

BABA 5_4_2018.PNG

Notice the extremely high volume today. Although the target is set for 5/25, I could see BABA hitting that 200 target within 5-7 trading days. If I’m wrong, I expect BABA to retest 175, which is the bottom black horizontal line in the chart above.

AAPL 5_4_2018.PNG

Apple has hit my 183 target 3 weeks ahead of schedule. Although I could see it moving higher in the coming weeks (perhaps to the 188-190 level), taking partial or full profits here seems appropriate. After glancing at the last few times when Apple made a new all time high, it seems to either rocket higher, or have a significant correction.

I look forward to updating my blog with weekly charts this weekend! Thanks for reading, and have a great weekend.