4/11/2018 Markets gap down on US – Russia tensions, but technology rebounds

Fun Fact #24

Did you know that David Tepper, manager of the hedge fund “Appaloosa Management,” has a pair of brass balls that he strokes whenever he needs luck? 

This is definitely not one of those moments where I say “Haha, got ya, it was just a prank bro!” Read about his (lucky brass balls) here


 

4_11_2018 Market Stocks.PNG

I updated my target for Facebook up to 172 (from 165) because it is showing strength when the entire market is showing weakness. 172 happens to be within the 170-173 resistance zone as well as being a gap. 

QQQ is still having trouble with the 162 level neckline resistance as you can see in the chart below. If QQQ can close above this level, like I was discussing yesterday, this would likely result in a move to roughly 167. Also notice that the volume is still really low. 

QQQ 4_11_2018.PNG

I think QQQ will retest the 162 neckline resistance level by the end of this week, and hopefully break above it. 

Have a great day! 

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! 😀