Tag: Stocks

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! 😀

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3/19/2018 Setup Before Market Open

QQQ analysis 3_18_2018.PNG

Judging from the current futures price action, we will probably open red tomorrow morning. 

Please take a look at the chart above. The rectangle represents the breakout location for QQQ. I mentioned in a previous post that this price zone (167.5-170) offers a good buying opportunity especially for day traders looking for a quick bounce. 

Swing traders can start scaling in on any sort of weakness tomorrow morning (a gap down would count). 

I look forward to updating this blog post at the end of tomorrow. Good luck trading! 😀

 

3/18/2018 Notable Setups for Next Week

Fun Fact #3

Did you know that a Roth IRA account allows you to trade tax free? This can be extremely helpful to short-term traders who are tired of paying short-term capital gains taxes.

Click here to learn about IRAs. 

 

Tickers to add to your watchlist:

Ticker Symbols: EBAY, ABBV, JPM

Moving Averages:

Green: 20 day EMA; Blue: 50 day SMA; Red: 200 day SMA

EBAY analysis 3_18_2018

JPM analysis 3_18_2018

ABBV analysis 3_18_2018

 

Discussion: EBAY and ABBV have crossed below the 20 day EMA. JPM is still slightly above the 20 day EMA. Read “A setup that has an Edge,” to find out why this is significant. 

Note that in all of the above charts, the 20 day EMA is above the 50 day SMA, which is above the 200 day SMA. This proves that the stock is in a strong uptrend. We want to buy these stocks on pullbacks from all time highs, which is exactly what the 20 day EMA helps us with. 

Takeaways: Add EBAY, ABBV, and JPM to your watchlist, and be prepared for these stocks to resume their uptrends in the next few days/weeks. 

 

 

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! 😀

 

 

 

 

 

Daily Review of the Major Indexes (Will update blog with FAANG stocks later today or tomorrow)

3/14/2018

Nasdaq Index (-14.2 or -.19%) – ETF is QQQ

IXIC Analysis Blog 3_14_2018

Commentary:

Nasdaq dropped a small amount today. After breaking out to an all time high last Friday, the index has dropped to the previous breakout level. Generally, previous resistance levels, where sellers become aggressive, become the new support levels, where buyers step in. Prepare for another leg higher after the gap fill to 7400.

Setups for Nasdaq (the ETF that most closely follows Nasdaq is QQQ):

Day traders: Buy the gap down if Nasdaq opens at around 7400 on Thursday morning (3/15) and sell once the gap fills. Use a tight stop loss. For reference, a drop to 7400 on Nasdaq would be equivalent to the price of 170 for QQQ.

Swing traders: Be more patient and look to buy Nasdaq on the next pullback into the 7300 to 7400 range. Notice the green line in the chart above (20 day EMA), and how the index bounced off that level 5 out of 6 times in the past 6 months.

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S&P500 Index (-15.83 or -.57%) – the ETF is SPY

SPX Analysis Blog 3_14_2018

In the past week, the S&P500 chart looks similar to the Nasdaq chart although it is significantly weaker. The 2700-2725 range is an intermediate support, so look to buy (go long) when the index reaches this point. The best setup for buying is a gap down Thursday morning.

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Dow Jones Index (-248.91 or -1%) – the ETF is DIA

INDU Analysis Blog 3_14_2018

Out of the three major indexes, Dow Jones is clearly lagging behind. Dow Jones is testing a minor support level in the 24500 – 24750 range. Like with the other indexes, look to buy Dow Jones on a gap down tomorrow. Dow Jones will likely test the February lows of 23750 if it can’t hold the 24250 level.