6/9/2018 Market Review and Next Week’s Forecast. *Warning* Lots of material this post!

Market Stocks 6_9_2018.PNG

Greetings, and welcome back! 

I noticed I was spending upwards of 6 hours a day watching my account value go up and down during the day, so I needed to take a break from stocks for a week.  As a result, I couldn’t blog.  Counting gains and losses when they weren’t “lost” or “gained” yet made no sense and was extremely frustrating.  I’m currently trying to break that habit of wasting time watching intra-day fluctuations.  

I’m thinking of going back to the regular schedule of blogging 3 times a week (every other day).  However, I will likely do just one post next week sometime between Friday and Sunday, and take it from there.  

Anyways, back to stocks!  Most of the stocks hit my target a week ahead of time.  MSFT was about 30 cents off from my target intra-day, and DIA was the biggest laggard.  I think markets are due for a pullback here, so I flipped bearish for the next 2 weeks.  Please note that I’m not recommending to short sell, but perhaps trim some positions and wait for a dip to add more. 

I will update my targets sometime next week after I look at the price action.  

I’m glad to finally see the support zone bounce from WB and BRKB.  I don’t hold any BRKB, but it still looks like a promising pick if you bought in the 190-192 zone like I recommended.  A good level to sell BRKB at would be 200.  ANAB hit my stop loss on my paper trading account a couple weeks ago, but I wanted to mention that just in case you were wondering where that pick went.  Can’t win them all! 🙂

For WB, I added my initial position at 103.5 a couple weeks back, and then doubled my position in after hours yesterday (Friday 6/8).  To keep my risk the same, I’ve raised my stop loss up from 95 to 99.6.  I’m a little nervous that the stop loss is too close, but we will have to see what Mr. Market thinks about that next week.  My target is still the resistance zone near 130-140, and I plan to aggressively pyramid (averaging up) into this position if all goes well.  

Also, note that I’ve added a bunch of stocks that I’m currently thinking of buying.  You can find those under the “Watchlist Stocks” area in the image above.  The “Value Zone” is the distance between the 100 and 200 day EMAs on the daily chart.  I believe that is a good area to buy stocks at.  

Let’s look at some charts, and then wrap up.  

QQQ daily 6_9_2018.PNG

Above is the QQQ on the daily chart.  I’ve highlighted a strong resistance level near 170.  I suspect the market wants to retest that level, and then make a move higher.  Bulls do NOT want to see a close below the bottom of that rectangle (near 167), as that will signal that the Bears are in complete control.  From here down to support at 170 represents about 2.5% downside, which isn’t too bad.  

 

DIA analysis 6_9_2018.PNG

DIA looks similar to QQQ, but just significantly weaker.  Resistance is near 257, with support near 250.  I have no idea where price will move, but I favor a test of the 245-250 support zone first.  Of course, we could have good news next week and hit 257 within a day or two.  

 

SPY Daily 6_9_2018.PNG

SPY is at resistance right now.  SPY is clearly stronger than DIA, but weaker than QQQ.  I favor a retest of at least 275 in the next few weeks.  Any daily close over 280 is very bullish.  

IWM Daily 6_9_2018.PNG

The IWM, which tracks the Russell 2000 ETF (small cap stocks), is the strongest index of them all.  I have no idea what’s going to happen, but I would not buy or sell at this price.  If I was forced to pick a direction, I would say there’s a 51% chance it closes lower next week.  

 

Here’s a bonus chart since I haven’t blogged for a while.

WYNN 6_9_2018 Daily.PNG

Here’s a chart of WYNN on the daily chart over the last two years.  The blue line is the 100 day Exponential Moving Average (EMA) and the red line is the 200 day EMA.  The “Value Zone” is the area between those two lines (when the 100 day EMA is above the 200 day EMA).  WYNN has bounced off the value zone 6/8 times in the last two years (75% success rate).  Not only that, but the risk to reward ratio is excellent!  I will be aggressively buying if it hits 170.  I’ve learned to be more patient with my trades recently, but you could make a valid argument that now is a great time to buy too. 

5/16/2018 Markets post modest gains, and the Russell 2000 index (IWM) breaks-out to a new all time high. I think that WB is still a very good buy at these levels.

Fun Fact #50

Xiaomi, a popular Chinese phone company, recently filed for an IPO (they haven’t gone public yet).  Xiaomi made a loss of 43.9 billion yuan in 2017, but will still be valued at 100 billion.  Read more about Xiaomi’s IPO filing here


 

Market Stocks 5_16_2018.PNG


 

I’ve updated my targets for June 1st, 2018.  As you can see, I’m still bullish since we didn’t close down today.  If stocks were to fall, I think they will go down a lot.  From my “If Wrong” targets, you can see that I would not be a buyer of any of the above stocks (other than WB) due to the relatively low potential upside and large potential downside.  In sum, I am not buying any of the FAANG stocks unless they drop a bit lower, like 5% for example.  

I still like WB at current price levels because the stock is in an uptrend and offers a low risk, high reward trade.   

 

SPY 5_16_2018.PNG

The SPY didn’t close down today, so I am still bullish.  The other indexes also went up quite a bit.  Although I am not buying or adding long positions at these levels, I will continue holding.  

 

NVDA 5_16_2018 Daily.PNG

Nvidia (NVDA) is getting to a price level where it might bounce upwards and hit a new all time high.  Although I’m tempted to buy right now, the current price doesn’t offer a good risk to reward.  Thus, I’m waiting patiently for the price to drop to the 220-230 zone before buying.  I don’t think NVDA will drop that far, but if it does, I’ll be buying with both hands. 🙂  

5/15/2018 Markets sell-off, but sees a lot of buying near the close. The S&P500 and Dow Jones are at the pre-breakout level. If these indexes move lower tomorrow, we will likely go even lower.

Fun Fact #49

A company may choose to give out a stock dividend instead of the standard cash dividend in order to save cash.


 

Market Stocks 5_15_2018.PNG

 

WB Daily 5_15_2018.PNG

I bought some WB at 103.5 today because I think the 100-105 support zone will hold.  My stop is at 95, and my profit exit is at 135.  That’s a risk reward of 4 to 1, which is a very low risk trade.  

 

SPY Daily 5_15_2018.PNG

SPY broke-out above 270-271, and is now retesting that level.  I suspect that if SPY closes down tomorrow, we will continue lower due to the false breakout.  

 

DIA analysis 5_15_2018.PNG

DIA also broke-out from the 246-247 resistance level.  Much like SPY, I think that if DIA closes lower tomorrow, we will continue lower due to the false breakout.  

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.