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. 

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!

3/22/2018 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. 

 

3/19/2018 Market Review

Fun Fact #4

Did you know that you can buy a stock, have the stock go down, and still make money?

This requires a simple options strategy called the “Covered Call.” I will discuss this options strategy in a future post.


 

QQQ analysis 3_19_2018

If you listened to my suggestions this morning on scalping the gap fill, you almost certainly lost money.

Facebook is down over 8% if you count after hours. Since Facebook is about 5.5% of QQQ, it is responsible for a good portion of QQQ’s downside today. 

For swing traders, I still think now is a good time to buy a partial long position (start scaling in) or hold onto your long position. QQQ has pulled back from all time highs and crossed the 20 day EMA, and as I discussed in my post “A setup that has an edge,” this represents a good dip buying opportunity. Or simply buy the largest components of QQQ, which are the FAANG stocks (FB, AAPL, AMZN, GOOG, and NFLX). These 5 stocks represent about half of the QQQ. 

Take a look at the QQQ chart below for the last year. Other than the February “mini flash-crash,” everytime the QQQ crossed below the 20 day EMA (as indicated with the circles in the chart), it recovered and reached a new all time high. 11 out of 12 times in the last year, the QQQ bounced. Remember that all the pros and my favorite trader are still bearish (since last week), so make your own decisions regarding what you think is best. Hey, you could even bet against my predictions if you find that I’m consistently incorrect. 

QQQ analysis 3_19_2018 Yearly
QQQ Cross below 20 day EMA

The weekly chart below seems to confirm that we will retest the 160-163 levels, and these levels offers a good risk to reward. Assuming the recent news and the Feds meeting on Wednesday doesn’t derail the bull market, I’d say patiently wait for the high 150s or low 160 levels to add to your long positions. Even better, you could wait for a retest of the February lows in the low to mid 150s. 

QQQ analysis 3_19_2018 Weekly

The daily charts of DIA and SPY are below. I would recommend that if you end up deciding to buy one of these ETFs, QQQ is the best choice because it is in a stronger uptrend and just pulled back from an all-time high. Notice how the 20 day EMA is below the 50 day SMA for both the DIA and the SPY where as the QQQ’s 20 day EMA is comfortably above the 50 day SMA. 

SPY analysis 3_19_2018DIa analysis 3_19_2018


 

Stocks to add to your watchlist:

Facebook (FB) is a noteworthy stock to consider buying. Take a look at the charts below:

FB analysis 3_19_2018
Daily Chart of FB

Notice the high volume selling on the daily chart above. This may indicate that everyone that wanted to sell already sold today. 

 

FB analysis 3_19_2018 Weekly
Weekly Chart of FB with the support zone highlighted in the rectangle.

FB has crossed below the 20 week EMA and has dropped into the 165-170 support zone. From a technical standpoint, this is simply too juicy not to buy for a swing trade. 

If FB drops below 160 (put your stop loss around there), that signals to me that price may continue lower. Otherwise, you can take a long position in the 165-170 price range with a profit target in the 185-190 range.

Thanks for reading, and I look forward to you coming back here tomorrow. Good luck trading! 😀

3/17/2018 Weekly/Monthly Trends of the Major Indexes

 

Fun Fact #2

Did you know that you can negotiate your commission price with your broker?

Wait WHAT, did I read that right!?

Click here to learn more. 😀


 

3/17/2018

Let’s look at the weekly chart of QQQ to find some key levels. By weekly chart, what I mean is that each of the candles represents a week.

Weekly Chart of QQQ analysis 3_17_2018.PNG

In the chart above, the green line represents the 200 week SMA, the blue line represents the 50 week SMA, and the orange line represents the 20 week EMA. I’ve also drawn in parallel red lines, which show a trend channel. What’s neat is that the bottom part of the trend channel is almost identical to the 20 week EMA.

Notice that within the last two years (start of the trend channel), the body of the candles stayed within the channel for all but two of the weeks. The only two spots where there are temporary breaks of the channel appear in July of 2016, and February of 2018.

We are still in a bull market. So unless we see a weekly close below 160 on substantial volume (bottom of trend channel support), I would still look to go long on any dips. For your reference, the upper trend channel happens to be around 175.

Many people would be tempted to short sell QQQ when it reaches the top of the channel in anticipation that price comes back down to the bottom of the channel. Although this strategy is tempting and might work for you, I don’t trade this way anymore. Remember:

“The trend is your friend”

I’ve always wanted to be a contrarian trader since I wanted to feel special. If I could sell before the crowd, I could take money away from all the other traders and feel proud of myself. 

Key Takeaway: Trading to fulfill your ego is not the right way to make money trading! I’ve learned this the hard way in recent months.

 


 

Monthly Analysis of QQQ

QQQ analysis monthly chart 3_17_2018.PNG

Above are the monthly candles of QQQ. As you can see, the 20 month EMA is resting significantly higher than the 50 month SMA. This confirms a solid uptrend.

The key level to look for on a monthly time frame is the 140-145 level, which is represented by the 20 month EMA. If QQQ were to drop to this level, it would need to decline about 15%. This price range noted above represents a good long term buying opportunity.

Take a look at the orange line (20 month EMA). You can see that QQQ has bounced off that area all but one time in the last 15 years. The only exception is the financial crisis of 2008. The conclusion is that as long as QQQ stays above the blue moving average, and both the blue and orange moving averages are upward sloping, I would suggest to aggressively add to your long positions on any 10-15% corrections and holding for a few months.

 

 

3/16/2018 Review of Indexes and FAANG stocks + setups for next week.

Fun Fact #1

Did you know that American options and European options differ in that American options can be exercised anytime before the expiration date, whereas European options can only be exercised at the expiration date? This means European options are cheaper than American options because American options have more options (pun intended).

Read more about options here


 

3/16/2018 Commentary of Indexes

Today was Quadruple-Witching Friday, which basically means a lot of options expire today. If a lot of options are expiring, a lot of people start selling off their positions, which results in high volume and a lot of liquidity.

The theory is that the large hedge funds and market makers pin the stocks at certain price points such that the most options expire out of the money (aka when the options are worthless). When these options expire, these large hedge funds and market makers get to keep the entire premium for the options that they sold.

Below are the three major indexes: The QQQ, DIA, and SPY.

QQQ analysis 3_16_2018.PNG

QQQ is still the strongest of the three major indexes, but it dropped a little bit today. Something to note is that a well-known trader that I highly respect is bearish for the upcoming two weeks.

However, I am slightly bullish on the QQQ and neutral/slightly bearish on SPY and DIA. If the bears were in control of QQQ, they would have already pushed the price down significantly lower in the last few trading sessions, but as you can see in the three major indexes, the selling pressure is insignificant.

I think the rationale for the bearishness comes from the fact that technology stocks (which represent a large fraction of the QQQ) are starting to drop. The negative sentiment for the DIA comes from the tariffs and a possibility of a trade war. The tariffs are negatively impacting the industrial sector, which represents a large portion of the DIA.

SPY analysis blog 3_16_2018

SPY is up a little. The key levels to look at are the 265-268 level support zone and the resistance zone in the 275-278 range. Like I mentioned yesterday, the SPY is running into overhead resistance at the moment, a break of this resistance signals to me that SPY will at least test the 285 all time high levels in the weeks following the resistance breakout.

DIA analysis 3_16_2018.PNG

Surprisingly, DIA performed the best of the three indexes today. The chart is still the weakest of the three since it’s hovering in the middle of the support and resistance zones. I expect the index to trade in the 242-255 range for at least a week or two.

I will now briefly look at the FAANG stocks now.

FB analysis 3_16_2018

FB had a strong move and ran up to neckline resistance of the W formation. The close was strong since the closing price was the high of the day. This signals to me that FB will likely breakout and retest the all time high levels in the $190s.

If you are a day trader, Monday would be a good day to buy the breakout for a quick scalp.

AAPL analysis 3_16_2018

AAPL didn’t really do much today. One more flush down to the 174-176 level is a good entry for a swing trade. If you are aggressive and are willing to take a worse risk:reward ratio, you can buy on Monday.

AMZN analysis 3_16_2018

AMZN actually dropped for once! Wow, that’s a first. Like I said yesterday, I wouldn’t take a swing long position until AMZN dropped down to at least $1530.

NFLX analysis 3_16_2018

NFLX is consolidating near the all time highs which is bullish since that means the sellers are not pushing prices down yet. I would consider taking a swing long position in the $290-$300 price level.

GOOG analysis 3_16_2018

GOOG actually had a substantial drop today. Another 15-20 points down and I’m a buyer for that juicy swing trade.


 

Two trades to add to your watchlist are “W” and “OSTK”

A trade that I like making is a big move down, then the stock bounces up, and finally retests the previous bottom again for a W formation.

Take a look at OSTK below. I told people on StockTwits to buy in the 40-45 range, but I didn’t end up buying it myself for various reasons. I am now waiting for a retest of the low 40s for a low risk entry. Notice you are risking $5 a share to gain $25 a share (if you entered at $40 today). Even if you enter now, you are risking $10 a share to gain $20 a share, which is still an excellent swing trade.

OSTK analysis 3_16_2018 for blog.PNG

Below is W. Notice how the stock looks like it wants to retest the 70-75 support range again. This offers a good low risk opportunity. I have marked two levels on the chart where you can sell. One of them is obviously more greedy, but as a trader, you can decide what style of trading fits you the best. What works for one person may not work for another. Find a strategy that works for you, and stick to it.

Honestly, I was quite upset I didn’t buy after the massive flush down off poor earnings in late March. But hey, hindsight is 20/20 and confirmation bias is overpowered!

W analysis 3_16_2018

I will share some other stocks to add to your watchlist tomorrow. I will also be reviewing the indexes on the weekly and monthly timeframes. Have a great day, and thanks for reading! 😀