4/24/2018 Markets Slump and QQQ breaks through a key minor support level. MU is a “screaming” buy.

Fun Fact #34

Did you know that lump sum investing (investing all your money when you get it) is significantly better than dollar cost averaging (investing a fixed amount spread out over time)? Here’s the source from Time magazine.

Market stocks 4_24_2018.PNG

As you can see, the stock market sold off really hard today. The major indexes did significantly better than the FAANG stocks, with most of them selling off over 3%. The Russell 2000 index (IWM) only dropped .57%, signaling that small cap stocks are still holding up nicely. That is the one reassuring thing about today’s price action.

As I was saying yesterday, I believe that if QQQ broke through 162 and closed below it, I would turn bearish. That is exactly the case. You can see that I’ve switched sides for my targets. However, I am not short, and wouldn’t advise shorting until QQQ retests 162. Your target would be 154 since that is the next support level down.

In conclusion, I still prefer sitting on cash over shorting an up trending market.

I do favor a bounce upwards in the next few days, but I think we are ultimately heading lower to retest the previous lows since QQQ broke through 162.

IWM 4_24_2018.PNG

Above is ticker IWM, which is the ETF that tracks the Russell 2000 Small Cap Index.

QQQ analysis 4_24_2018.PNG

Here’s the QQQ. Since we broke through and closed below 162, I would either sit on cash until QQQ tests 154, or be aggressive and short QQQ if it retests 162 from blow.

MU analysis 4_24_2018.PNG

I think MU is a screaming buy here because this trade presents an excellent risk:reward ratio. Also, MU has fallen into a support region highlighted by the rectangle above while being in an uptrend. Your stop loss would be placed at or near 44, with a profit target somewhere between the mid 50s to low 60s.

4/10/2018 Stocks surge as Xi Jinping calms trade war fears. A look at the daily and intra-day charts of QQQ.

Fun Fact #23

Did you know that AveXis (AVXS) went up 81.6% yesterday due to a buyout offer?

4_10_2018 Market Stocks.PNG

The 165 Facebook target was hit 10 days ahead of schedule. I will probably adjust the target for FB (upwards) tomorrow since I think Facebook will continue to rise if the market goes up.

The global markets (notably the US, EU, and Asia) saw stocks roaring back from the recent panic selling. This was due to Xi Jinping’s speech late last night where he announced that he will open up China and ease trade tariffs.

Let’s look at QQQ below.

QQQ analysis 4_10_2018.PNG

Notice how QQQ has broken out above the steep downward trend line. I think that as long as QQQ holds 154, the bulls are still in control. The volume is still light, which tells me that shareholders are holding onto their shares for the upcoming earnings season, and are refusing to sell. I think that if something bad were to happen, we will see high volume selling that would tank the markets.

Take a look at the intra-day chart of QQQ below (15 minute candles). Notice how QQQ has made an inverse head and shoulders pattern. The distance from the head to the neckline is about 6 dollars. If QQQ breaks out above the neckline at around 161, we can expect a move up to about 167, give or take a few dimes.

QQQ inverse head and shoulders pattern 4_10_2018.PNG

4/9/2018 Low volume day – the big selloff in the afternoon wiped out most of today’s gain. Block orders in after-hours hinting at more upside tomorrow?

Fun Fact #22

Did you know that the Russian market (RTS index) dropped over 10% today? This was because of the new Russian sanctions that Trump imposed last night. You can read more about that here.

Market Stocks 4_9_2018.PNG

QQQ 4_9_2018

Today we saw a gap up on the major indexes with a follow through run up into the afternoon, but ended up selling off hard to close the day. The volume was still relatively low compared to the last two months, hinting that neither buyers nor sellers have control of the price action.

The Chinese stocks did well today and held onto some nice gains along with the rest of the technology sector. As you can see in my targets for April 20th, I am still bullish for the next 2 weeks largely because the overall sentiment is still very bearish. Here’s my source.

Xi Jinping, president of China, will be giving a speech tonight and will address the trade concerns. This will almost certainly be the catalyst for tomorrow’s price action.

I noticed some big block orders (on the buy side) in the early after-hours trading session through my level 2 quotes. This may hint that tomorrow is also an up day, but who knows. I still think it makes no sense to be net short (more positions short than long) at these levels, but we all trade differently.

Big QQQ Buy orders.PNG

Take a look at the yellow colored orders on the right side. The yellow color signifies that the stock traded above the inside ask price, which displays the buying pressure. Here’s the source.

Good luck tomorrow! I expect a wild ride.

4/6/2018 A Look at Next Week. QQQ, BABA, HLF, TSLA, AAPL.

Fun Fact #21

Did you know that Bill Ackman, the famous manager of the hedge fund “Pershing Square,” had a one billion dollar short position on Herbalife (HLF)? His reasoning for the massive short position was because he claimed Herbalife was running an illegal pyramid scheme. Thus, he mentioned that he would take his Herbalife short position “to the ends of the earth.” Unfortunately, he had lost so much money for his hedge fund that recently he announced that he no longer has a position in Herbalife. There’s a movie about his story regarding Herbalife called “Betting on Zero.” I found the movie quite entertaining.

4_6_2018 Market Stocks

I’ve modified my two week targets (for April 20th) down a little bit, but I’m now short term (2 weeks) bullish. I’ve also added Tesla (TSLA) to the watchlist because I think there’s a good chance it will resume the downward trend. Unfortunately there are no shares available to short (at least for me), but you could always buy puts.

Today we had another sell-off that accelerated into the afternoon. I had an intra-day update where I predicted that as long as QQQ held above 158, we would see a 160-161 close. Unfortunately, we blew down below 158 and closed well below that level at 156.63.

Although today’s leg down puts QQQ slightly below the weekly trend channel at 160, I’m still bullish for the next two weeks. I’m bullish because the current sentiment is extremely bearish, which means everyone already sold. If there’s no sellers left, the price can only move up. For the intermediate to longer term (1-3 months), I’m neutral or slightly bearish due to political uncertainty and mid term elections. Until the 200 day moving average starts curving downwards, I think the uptrend continues. I don’t think it makes much sense to short the indexes since they are near support levels and could see a big bounce.

Being too heavy on the long side also doesn’t make much sense with all the political uncertainty. The best approach would be to be net neutral or slightly long. This means you short sell stocks and go long on stocks such that your overall exposure to the market is approximately 0. Hence, even if the market goes down a lot, your short positions would realistically make you money while you would lose money on your long positions. If done properly, this net neutral strategy could maximize returns and reduce a lot of risk.

I really like the trade of going long on BABA right now. As long as we don’t break down below the 160-165 level, I think we are going to bounce back to the 180 – 190 level.

BABA weekly 4_6_2018

Above is the weekly chart of BABA. Notice how buyers get aggressive near this price level. The short term momentum is still down meaning you could wait for confirmation and then buy in. However, if you wait for a confirmation that buyers are present, you won’t have as good of a risk reward ratio. The entire market could have another sell-off next week due to more trade war issues as well as Russia retaliating against the Russian sanctions. This would almost certainly drag BABA down below the low 160s.

QQQ analysis 4_6_2018.PNG

The daily chart of QQQ is above. I’ve drawn in a rectangle to show visually where buyers start stepping in. Although we could see another whipsaw like on February 9th (when QQQ hit 150 briefly), I think the index will hold the 154 level here.

One thing to note is that if AAPL falls below 165, I expect QQQ to also break below 154.

Good luck trading next week, and thanks for reading like always! 😀

4/4/2018 Trade Wars Overblown? Buy when the market goes up on bad news. BABA, QQQ, TSLA, AAPL, MU.

Fun Fact #19

Did you know that Tesla (TSLA) stock went up over 34 dollars from the opening price today? That’s over 13% up from the opening price to the closing price.

I guess it’s true that TSLA stock moves as fast as its’ cars.

TSLA 4_4_2018.PNG

4_4_2018 Market Stocks.PNG

Update: If tomorrow we close green, I believe my April 9th targets will be hit by April 16th instead (one week later).

Today was a glorious day for me, and I’ve gained confidence as a trader. I didn’t sell into the morning gap down panic, and sticked to my trading plan. This morning, I asked myself, “Wait a minute, BABA is within the support zone of 165-175, and it is currently at 167.5 in premarket, why the heck am I not buying it?” And so, I closed my eyes and bought some shares at 167.5. I added some more at the start of after hours since I’m expecting a higher move tomorrow.

BABA analysis 4_4_2018.PNG

Lesson I learned today: The worst time to sell is when your emotions and entire body are begging you to sell.

Today the major indexes opened down about 2% due to trade war news escalating. Despite that, we ended up rallying hard and the major indexes closed up over 1%. Since we went up on bad news, I’m thinking we will close higher tomorrow.

QQQ analysis 4_4_2018.PNG

QQQ is back at the 160 level which is the key weekly level to hold. Another up day tomorrow will confirm that we’ve got a short term bottom in place. A test of the 162-164 range tomorrow would not surprise me.

AAPL analysis 4_4_2018.PNG

Take a look at the AAPL chart above. Notice how price bounced off the 165 level 5 times in the last two weeks. The rectangle I added shows the minor support level where buyers start getting aggressive. A close below the 165 level suggests a retest of the 150-155 zone. Since we are still above the support zone, I expect AAPL to retest the 175-177.5 level within two weeks.

MU analysis 4_4_2018.PNG

MU has defended the 49-50 breakout level which is very bullish. The momentum has now shifted to the buy side. As long MU doesn’t close below the 49-50 support level, I think MU has a good chance to retest the 52 week high around the 60-64 level.

MU is down quite a bit in afterhours trading, but I don’t think this will sway the bulls tomorrow.

3/30/2018 Friday – The market is closed and the weekends are boring because of it! QQQ, BABA, and EBAY review.

Fun Fact #15

Did you know that in the Chinese stock market, the color green is used to represent when a stock goes down, and red is used when a stock goes up?

China is communist, so red is an attractive color (hence red is up). If you’ve been into a Chinese restaurant or celebrated Chinese New Year, everything they have is red. Chinese people also give out 红包 for the New Year, which is a red envelope of money to celebrate.

Green is a bad color in Chinese culture because there’s a saying “戴绿帽,” which translates to “putting on a green hat.” This saying means “to be cuckolded by one’s wife” which translates to: your wife cheats on you with another man (I hope I got the translation correct).

Also, just in case you are wondering how I know Chinese, I am actually half Chinese and half Caucasian. I’m fluent in both languages even though I spoke only Chinese until I was two. I was born in San Francisco, California and moved to Boulder, Colorado when I was eight. I am grateful to have such a loving family, including a two-minute older twin brother who I deeply admire. We all support each other, and push each other to achieve the un-achievable.

Wow, that got off topic really fast. Back to analysis of weekly and long term trends!

QQQ analysis 3_30_2018.PNG

Above is the weekly chart and trend channel of QQQ. I’ve been mentioning that the 160 level is extremely important for the bulls. QQQ was below that level for a couple of days this week, but closed back within the channel. That is bullish. Also, Bulkowski’s CPI indicator has turned bullish. His CPI indicator is scary accurate, so I’ll just assume we bounce up next week. Here’s his site: http://thepatternsite.com/Blog.html#P3

BABA weekly 3_30_2018.PNG

Above is the weekly chart of BABA. BABA has been trading in a pretty wide range in the last 6 months or so. Assuming we stay stuck in that rectangle, I would look to buy near the bottom of the rectangle and sell near the top since I don’t think the bulls or the bears have enough pressure to push the stock past those points. Those levels are about 170 for the bottom of the rectangle, and 200 for the top of the rectangle. A break above or below those levels on the weekly chart would likely lead to momentum carrying the stock price further in that direction.

Notice how we are right in the middle of the rectangle, so I would not take a new position here. If you are long, I would hold for now. Aggressive traders can also look to short BABA in the 200-205 range which will likely act as resistance. This level also represents a good area to sell your shares if you are long. Of course, if we have good news regarding tariffs next week, BABA could also breakout above the 200-205 range and see much higher prices in the next few weeks.

EBAY analysis 3_30_2018.PNG

In an earlier blog post, I mentioned that EBAY was nearing a good buying level. Look at the weekly chart above. Notice how the last 4 times EBAY touched or crossed the 20 week moving average, it bounced and reached new highs within 2-3 months. Although I don’t hold stocks for that long, you could consider buying EBAY if you prefer holding for months instead of weeks. Also note that there was no fundamental catalyst for the drop. This recent drop from the 52 week high was due to technical reasons. Perhaps this offers an opportunity to buy when others are taking profits.

I will post more weekly charts tomorrow. I will probably look at ABBV, JPM, and OSTK since I mentioned those a couple weeks ago.

Thanks for reading 😀

3/29/2018 Review and Setups

Fun Fact #14

You might have wondered: Hey Nathan, what does your username mean? Did you know that my username has an interesting story, and can also teach you an important lesson regarding life and trading?

Click here for the story.

3_29_2018 Market Stocks

All I have to say is: At least my 2 week targets don’t look as ridiculous after todays’ move.

QQQ analysis 3_29_2018.PNG

QQQ had a nice close to the week. It looks like the bulls are in control again since we closed within the weekly trend channel. Remember that I kept stressing the 160 level? The volume was also larger than on March 26th, which suggests to me that either more people are covering their shorts, or more people are buying at these levels. It could also be both.

This could also be large fund managers killing puts, since there was a lot of put buying last week. This is also a reason why I don’t think we go down from here, or at least not much if we drop. If we break below 155, I think we at least retest 150.

If we close the day up next Monday on decent volume, I expect QQQ to quickly fill the gap at 170, but probably run into overhead resistance as well.

DIA analysis 3_29_2018.PNG

DIA is still in a short term downtrend, but if we break above 245, we are well on our way to the 248-255 level. Although the bears are still in control, if nothing bad happens next week, I think we gap fill to 246 and then test 250.

SPY analysis 3_29_2018.PNG

SPY looks just like DIA. A break and close above 265 signals we at least gap fill to 270, and probably retest the 272.5-277.5 zone. This could happen as early as next week given we don’t have bad news from the white house or have any negative tariff related news.

FB analysis 3_29_2018.PNG

Out of the FAANG stocks, FB had the strongest bounce. Perhaps a lot of people were buying $160 strike price puts, so the large fund managers couldn’t let it close below 160 without losing a lot of money. FB is running right up into the 160 resistance level, but I wouldn’t be surprised if we move higher next week and reclaim or at least touch 165.

AMZN analysis 3_29_2018.PNG

AMZN had a big gap down yesterday due to Trump going after Amazon on taxes. We are still in a strong uptrend, so if you’ve been waiting for this pullback/dip, now would be the time to start adding.

AAPL analysis 3_29_2018.PNG

AAPL was up a good amount and then randomly dropped 2 dollars within the last 15 minutes of the trading day. The chart looks neutral/slightly bullish, with 175 acting as overhead resistance, and 165 acting as support. A break above resistance or below support would likely result in a large price swing in that same direction. Since AAPL is a large component of the QQQ and DIA, wherever AAPL goes, the market usually follows. Warren Buffett bought a lot of AAPL in the last 6 months, so I’ll just stay bullish and see what happens.

NFLX analysis 3_29_2018.PNG

NFLX saw high volume buying today. It is bouncing off the 280-290 support level which is a good sign for the bulls. I expect 300-310 by next week on a follow through of today’s buying pressure.

GOOG analysis 3_29_2018.PNG

GOOG presents one of the best risk to reward opportunities out of the FAANG stocks (with FB and AMZN being close). Your stop loss would be below the double bottom formation at 1000 (something like 970 might be good), and your profit exit would be in the 1120-1180 range, depending on how greedy or conservative you are.

BABA analysis 3_29_2018.PNG

BABA also had a nice bounce today. The last 6 candles look identical to QQQ. It didn’t hit the 165-175 range which is where I will be buying. There’s a gap to fill at 195, and I wouldn’t be surprised if we see BABA in the 190s next week.

MU analysis 3_29_2018.PNG

I mentioned yesterday that I thought buyers would be really aggressive at these price levels, but it seems like the bulls are still hibernating. Perhaps Monday will be different. MU is still holding the breakout level of 50 which is a good sign for the bulls. Something about this chart just screams, “Buy me bigfry daddy!” Anyways, moving on…

SQ analysis 3_29_2018.PNG

SQ looks decent to buy here for a longer term hold (like 2-3 months), but we still haven’t reclaimed the breakout location of $50. The current momentum is still down, and we had very light buying volume today relative to the selling volume earlier this week.

Tomorrow I will review some weekly charts.

Have a great night, and I hope trading went well this week!

3/23/2018 Market Indexes, FAANG, MU, and SQ

Fun Fact #8

Did you know that when a company declares a dividend, the stock price goes down by the same amount of the dividend? This is done to prevent arbitrage opportunities. An arbitrage opportunity is when you make money without taking any risk.

Usually the dividend being declared is a small amount, so the drop in the stock is not noticeable.

Today was a stressful day for me, and probably for some of you as well. I somehow ended up slightly positive despite purchasing shares of FB and AAPL in the morning. FB has now broken below 160, so I was stopped out. My QQQ put saved me, but I noticed something strange about the pricing of the put. Although QQQ was down about 5 dollars, my put option gained less than 3 dollars of value. After talking to a Charles Schwab employee, they told me that this is because the market is anticipating QQQ not staying down for long, and that the demand for puts isn’t as high (buyers don’t want to pay as much for the put). Hmmm interesting…

I’ve noticed that MU, SQ, and AMZN have all crossed their 20 day EMAs after a powerful move up to all time highs. I think you should consider adding these stocks to your portfolio or at least put them on your watchlist.

I will analyze the indexes tonight or tomorrow, so be on lookout for that.

MU reported earnings last night. The report seemed decent, but I think that since MU had an overextended move up prior to earnings, it sold off today. Additionally, the market has been selling off violently the last week which has dragged it down.

MU analysis 3_23_2018.PNG

The current price looks like a good entry to go long based off the pierce of the 20 day EMA. However, this entry is quite aggressive given the political uncertainty right now. I said screw it and added a small position anyways. My QQQ put will protect me if something horribly bad happens with the tariffs.

A close below the breakout location of 50 would signal to me that this isn’t a normal pullback, and the resumption of the uptrend might not continue for a while. Entering here gives a nice reward to risk ratio of about 2:1, given you put a stop slightly below the breakout location, and a profit exit near the 52 week high in the 62-64 range.

The SQ chart looks similar to MU. The reason for the drop today is also probably for the same reason. SQ had a really nice run-up, and has sold-off violently along with the market. I would look to buy at these levels since we’ve got a healthy pullback to the 20 day EMA. This trade is very similar to MU. If SQ fails to hold the breakout level of 50, this would signal to me that this isn’t a normal pullback. Again, if the entire market decides to sell-off again next week, it would be tough for SQ to swim against the current and continue it’s uptrend.

Notice the touch of the 20 day EMA below. Before I move on to Amazon, notice that the volume for SQ is relatively light, whereas MU had a big volume sell-off today.

SQ analysis 3_23_2018.PNG

AMZN analysis 3_23_2018.PNG

I mentioned in yesterday’s post, and some previous posts that the 1450-1500 range was a minor support level for AMZN since this was the previous breakout location. I’ve noticed that after the last two earnings reports, any dip is aggressively bought up. Why should this time be any different? Unless the market sells-off again next week, I would be looking to start scaling into this position.

Summary: The markets violently sold off in the afternoon and closed near the low of the day. This is almost identical to what happened last month, so my thought is that you should consider adding aggressively on any subsequent dips.

I’ve been thinking about writing a stock trading/investing book that could benefit people of any skill level – from the complete beginner to seasoned veterans. The way I would provide value to the beginner is by explaining concepts, terminology, chart patterns, etc. in a simple and entertaining way. Speaking of entertainment, I hope to add some personal anecdotes in the book to make it a more interesting read.

I also plan to hand count all the times the stocks in the S&P500 bounced off a pierce of the 20 day EMA when certain criteria are met. Some criteria might be if we are in a bull market, if a support zone is hit, a no earnings driven drop from an all time high/52-week high, sector differences, etc. This statistical study would provide value not only for my own trading and the seasoned veteran, but for any trader that needs a solid trading system.

If you like what I write, please tell your friends and family members to come check out my blog. Word of mouth can really do wonders.

Have a great day~

3/22/2018 Review of Indexes and Key Levels to Look Out For

Fun Fact #7

Did you know that QQQ, SPY, and DIA options are taxed at the 60% long term tax rate, and 40% short term tax rate regardless of the time you hold those options for?

Unless something drastic happens in the stock market or a certain key level is hit, I will only review the indexes in-depth at the end of each week (on Friday or Saturday).

During the weekdays, I will have an in-depth look at individual stocks that I think you should consider buying or selling. I will also be changing the menu at the top of the blog as well as adding some other neat features (soon).

Levels to watch for in the FAANG stocks (these are the next support levels):

FB: 160-163

AAPL: 162-165

AMZN: 1430-1475

NFLX: 280-290

GOOG: 980-1020

It turns out today is a worthy day to have a discussion on the major indexes, so I will be reviewing QQQ, DIA, and SPY like normal.

What surprised me today is how the market reacted to the tariff announcements. My thought was that the news should have already been priced in, since everyone knew that Trump was going to be making that tariff announcement today. Right at market open, the market gapped down about 1% and stayed down for most of the day. Today’s price action makes me bearish for the next two weeks (from neutral/slightly bullish), although I think we are overdue for an upward bounce in the next 1-3 days.

Perhaps short selling into strength now would be a good idea if you think the market is topping out. You could also consider trimming your long positions and/or buy puts since these market conditions are very choppy and unfavorable for trading.

I think the market indexes (at least SPY and DIA) are bound to test the February lows. Look at the charts below.

QQQ analysis 3_22_2018.PNG

Although QQQ is still very strong relative to the SPY and DIA, generally the indexes move together, so maybe QQQ will also drop and test the 150-155 zone. But who knows, the markets are irrational and don’t follow logic, otherwise everyone would be rich right?

DIA is still the weakest of the indexes. Dow plunged 700 points today largely because the tariffs affect the steel and aluminium industry the most (think Caterpillar and Boeing).

DIA analysis 3_22_2018.PNG

Notice that Dow Jones failed to make a higher high between late February and early March. I highlight that in the slanted black line above. This failure to make a higher high displays that Dow Jones is really weak. Now we have broken through the minor support zone between 242.5 and 247.5. It looks almost inevitable to drop to the 230-235 support zone now. That’s a downside of another 4-9 points which represents another 400-900 points down on the Dow Jones Industrial Average.

SPY analysis 3_22_2018.PNG

The SPY is also testing a minor support level, but will probably fail to hold. My guess is since these sell-offs are extremely violent, we will see the SPY fall into the 252.5-257.5 zone in the next week.

I will be adding some new visually appealing features and a menu for my posts so you can navigate around this site more easily.

Good luck traders!

3/21/2018 Review of Major Indexes and AAPL + FB

Fun Fact #6

Did you know that QQQ, SPY, DIA, and IWM options trade until 4:15 Eastern Time, which is 15 minutes after the market closes? The volume is considerably lighter, so the spread (difference between the bid and ask price) is usually significantly larger.

3/21/2018 Market Analysis

Today the Feds hiked rates which was expected. We had a nice run up into the Fed announcement, but then tanked to close the day.

Facebook still held up nicely after a massive bounce off the opening price. If you listened to my suggestions to scale in in the low to mid 160s, you would be up a nice amount.

The indexes are below. The one to buy is still the QQQ.

QQQ analysis 3_21_2018.PNG

We are still below the 20 day EMA (highlighted in the green line above). Although you could make the valid argument that QQQ isn’t worth buying until it hits the 162.5-164 level, I still think it’s a good time to start scaling in.

DIA analysis 3_21_2018

Dow Jones is still chopping around in this range, and will probably do so for a while. My guess is it goes up from here if it wants to move one direction or the other. Otherwise, I expect the index to stay relatively flat for a couple weeks.

SPY analysis 3_21_2018.PNG

I would still avoid buying the SPY until it reaches the 263-265 level. I expect this to move sideways like the Dow Jones, but if it moves, I expect it to go up.

The FAANG stocks that are worth buying/considering are FB and AAPL.

Take a look at FB on the weekly chart below. Notice that the stock bounced off the 20 week EMA (green line) multiple times in the last three years. Each touch of the 20 week EMA resulted in a new all time high. With proper risk management and given you hold long enough (at least 2 months). Facebook shares look like they are worth buying here as long as we don’t close below 160.

FB analysis 3_21_2018 Weekly.PNG

AAPL slumped today and dragged the QQQ down significantly (AAPL is about 12% of QQQ). It is now in the buy range of 168-172. If you’ve been waiting for a pullback, now’s the time to add a half position. You can add more in the 163-166 range if it drops that low. If AAPL drops below 160, this signals to me that there will be a trend change. The weekly chart of AAPL is below.

AAPL analysis 3_21_2018

I’m predicting a significant up day tomorrow for AAPL, FB, and QQQ.