Blogs

$CUR Heavy volume with 40% to pivot

2013-05-17T06:57:37Z

Lots of news out recently awaiting FDA approvals.

The Market hits the breaks Ends Lower

2013-05-17T05:04:44Z

The morning did not get off to a great start with disappointing economic data hitting the market. Weak jobless claims and a Philadelphia Fed manufacturing index showed how disappointing the economy continues to be. By mid-day it appeared the market simply didn’t care too much about the weak economic data. Just as new highs were being reached sellers took to the market pushing the market to the lows of the session. While the market didn’t close on the lows there was certainly a feeling this could turn into something more sinister. One day doesn’t change the market and this uptrend remains in place.

Last night we showed you how bullish the II survey respondents have become and today we got a read on the AAII and NAAIM. Neither survey was at an extreme in either direction. AAII survey bulls were less 40% and bears under 30%. NAAIM survey showed investment managers positioned bullishly at 84% with bears almost non-existent. Neutral appears to be the place to be in both surveys. Outside of the II survey there isn’t any evidence of exuberance from market participants. Now, CNBC guests are another story including their hosts. Stick with price.

TSLA this morning offered a nice place for the second time in three days to take some profits. The stock may be topping in the near term. We certainly aren’t going to call a top in the stock, but after this kind of run it is prudent to lock in gains. No one knows where TSLA will end up in the long run, but how many cars have Consumer Reports given a 99 rating to? If you get a chance to see the Model S or Roadster they are good looking cars.

There are a few Fed officials who have expressed the central bank will need to begin to taper its purchases of mortgage and treasury securities. Should they or shouldn’t they really isn’t much of a concern for us as we simply follow our pricing signals. Guessing on the direction of the market isn’t a sound strategy. Stick with Big Wave Trading to navigate the market waters.

Have a great weekend.

Question about selling QIHU prior to earnings rpt

2013-05-16T03:52:28Z

QIHU is reporting earnings on May 20. I would like to know if it is a good strategy to sell just prior to the earnings report. Stock is currently expected to be -33%.

RPXC (1st stage base)

2013-05-15T21:30:58Z

Bought today at $15.07

Breakout has rested inside it's pivot nicely

Hard to find 1st stage bases these days

NFLX: 8 week rule triggered

2013-05-15T21:21:13Z

Bought when up volume came in on 5/9/2013 at $211.86
Took 1/5th off today at $244.65 as a nod to the gods
Holding remaining per 8 week rule unless clear sell signals appear

Advice on setting a stop for GOOG?

2013-05-15T20:59:43Z

I purchased a few shares @ 844.50. I'm debating on where to set my stop so I don't loose to much of my gains in case this is getting extended. Any input is appreciated.

Thanks

Turnaround Tuesday Sends Stocks Higher as Trading

2013-05-15T03:22:50Z

The Dow closed higher on Tuesday for the 18th straight week moving higher by more than 100 points. Leading the market higher was the Russell 2000 jumping more than 1.25%. S&P 500 gained more than 1% while the NASDAQ lagged finishing higher by .69%. Surprisingly the VIX jumped more than 1.75% outpacing the S&P 500. Is a big point move coming? AAPL was hit hard during the trading session sending the NASDAQ lower and ultimately keeping the NASDAQ from bigger gains. Despite the AAPL sell off the NASDAQ found support along with the rest of the market pushing up into the highs of the session. Another bullish session for the market reminding those who are fighting the trend is very dangerous.

Financials were a hot sector today led by BAC, GS, and JPM. These stocks have been lagging the general market since March. A positive sign for this uptrend would be to have financials participate. GS breakout is solid with volume following price something we haven’t seen very much from this market. Many will look to find the catalyst for the moves, but in the end does it really matter? No, all that matters is that you take the signal and ride the move higher.

Volume pushed higher today and it was above average. We haven’t seen volume on new highs in quite some time and above average to boot. Low volume new highs have been a staple for this market and today was just a break from the norm. We don’t have any evidence today is a top in the market and given what we saw from Financials today we should continue to push higher. We can think of plenty of reasons for volume like we are beginning to see panic buying. However, until we see real signs of a market top we aren’t going to begin fishing for reasons.

One thing that will be interesting to watch will be JGB – Japanese Government Bonds and how their yields move over the course of the summer. The US 10 year treasury has moved roughly 30 basis points from their lows. A big move in yields will have adverse effects on debt servicing costs. Something to keep an eye on as time moves forward. Rising yields are not good for those who have a heavy debt load.

Until this trend ends we are going to stick with it.

Capitalizing on the Current Market

2013-05-14T18:38:25Z

Today's action is again quite positive. Our universe of stocks (leading stocks) is acting strong. All MarketSmiths should be invested in this market with one caveat; watch your entry points. DO NOT BUY EXTENDED. Pullbacks are inevitable on the way up and will always catch those that are not disciplined with their entries. Do not allow yourself to get hit hard right out of the gate.

With that said, quality stocks are breaking out daily. As the leading indices continue to make new highs, stocks from the “Weekly Report of Stocks Approaching New Highs” have been a good source of ideas for the watch list. Check out a short video on that report here in our video tutorial library.

Remember to use a predetermined price point and quantity based on a recognizable chart pattern and be careful about too much pyramiding.

Also, don't just own aggressive stocks. It’s good to have a mix of a few safer, more stable stocks in the portfolio. It helps you handle the coming pullback better mentally when you own a few conservative stocks that are barely down. Consider this Large Cap Consistent Earnings Screen we shared in the August 2011 Stock Guide.

Lastly, if you can build a profit cushion you might be in a position to add to existing positions on a pullback.

Risk on,

Scott O’Neil

President

MarketSmith, Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil

Capitalizing on the Current Market

2013-05-14T18:36:48Z

Remember to use a predetermined price point and quantity based on a recognizable chart pattern and be careful about too much pyramiding.

Lastly, if you can build a profit cushion you might be in a position to add to existing positions on a pullback.

Risk on,

Scott O’Neil

President

MarketSmith, Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil

Capitalizing on the Current Market

2013-05-14T18:33:02Z

Remember to use a predetermined price point and quantity based on a recognizable chart pattern and be careful about too much pyramiding.

Lastly, if you can build a profit cushion you might be in a position to add to existing positions on a pullback.

Risk on,

Scott O’Neil

President

MarketSmith, Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil

Nasdaq Broadening Top

2013-05-14T15:07:20Z

I've recently been reading up on various patterns on thepatternsite.com I'm currently watching the Broadening top pattern. The market seems seems to be completing this pattern. I've included the link for more information. The trading tip to buy on the third touch of the lower line would have worked well. Now we are approaching the upper line. We could break through or reverse. If it reverses that is a signal to sell.

Maybe this topping pattern explains how the distribution day count led to the market being in a correction and we are still at the highs.

I'm watching to see if we can decisively break above this pattern, which can lead to sizeable gains, with this leg or reverse lower once again. With the zig zag pattern a fall from here could get ugly pretty quick.

Update 4/28/13 Added the potential for a partial rise. If the Nasdaq reverses from here without touching the upper trend line that is a very bearish sign. We should find out this week. I included the link to the definition of a partial rise.

I'm building my potential buy list in case we are continue up. The IBD radio show said that if the Nasdaq closes at a high the market will go back to resume uptrend regardless of a follow through day. (this happened on 4/29)

4/30 Update: Looks like we touched the upper trend line. On the previous touch we hit and then had the stalling day. My plan is to continue to monitor my current holdings and to buy only on breakouts. With the different reports coming out this week I'm closely watching this pattern to see if we can breakout. This pattern looks like it can easily frustrate someone with the violent moves that seem to indicate a direction only to then reverse.

4/31 Updated chart showing the touch and the drop.

5/14 updated chart with Price Target

http://thepatternsite.com/bt.html

http://thepatternsite.com/partrises.html

Market Pundits Debate the end of QE while Stocks C

2013-05-14T04:29:19Z

A better than expected seasonally adjusted retail sales figure helped push futures off their lows prior to the market open. Volume was lower on the session staying true to form as far as Monday trading sessions go. The market did not get the benefit of POMO today, but tomorrow we’ll get up to 3 billion in fresh new money entering the market. This market has been relentless and today was simply another example of how powerful uptrends are. Leading stocks continue to power higher and we’ll look for this to continue.

Mondays have not been kind to this market uptrend. Tuesday’s have been the best day and with 3 billion of fresh new money it wouldn’t surprise us to see another positive close for Tuesday. The only day of the week showing negative gains has been Monday. It was no surprise to see the mixed close where the NASDAQ barely posted gains and the Dow to end in negative territory. Unless a catastrophic event happens prior to tomorrow the trend has been for Tuesday to end positive and we’ll expect it to close positive.

Does it matter when or if the Federal Reserve ends Quantitative Easing? It is a great question and one many will be trying to answer. Are you smart enough to figure out when it will happen? Or will you be like a 5 year old in a two hour car ride asking “are we there yet?” The reason why we’ll succeed is because we have a process using price signals. Taking advantage of natural price movements regardless of what our opinion may or may not be gives us an edge. What if the Fed never ends QE are you going to be taking advantage? Does endless QE even guarantee higher equity prices? Sure you may have the answers, but will the market prove you right? Stick with Big Wave Trading and you’ll navigate these waves with ease.

Make it a great week. Cut losses short and ride your winners.

Weekly Watch List

2013-05-13T04:18:01Z

OCN (3/17/13, +7.51%)
VLO (5/5/13, +3.22%)
CI (4/7/13, +6.63%)

Additions:
None

Subtractions:
GRFS (3/10/13, -5.58%)
PKG (3/24/13, +13.09%)

Last week all the major U.S. indexes moved higher once again. The NASDAQ bolted 1.7%, the S&P 500 jumped 1.2%, the NYSE composite gained 1.1%, and the Dow added 1.0%. The IBD outlook remains at “confirmed uptrend”. The market settled into a bullish groove with positive action coming mostly on increased volume and the isolated index losses coming in small amounts and on lesser volume. A significant number of index distribution days fell by the wayside and the levels are now reasonable. Most of the leading stocks are extended from proper entry points, so don’t chase. Concentrate on the few good stocks that are still just breaking out of bases and run with the rally, there’s a definite tailwind to the upside for the near term.

This week, one watch list stock is currently within a proper buy range. OCN, trading at $42.40, is still within buy range after punching through a $42.17 buy point on good volume, off of a 3rd stage cup base.

/as usual, your mileage may vary, always do your own homework

Trending Groups Blog - Methodology Revisions

2013-05-13T00:46:38Z

After back testing two plus years of Industry Group rating data, I am revising the methodology used to identify trending Groups. In short, the 6 over 3 month criteria in the current methodology is eliminating too many Groups in developing trends until well after they have made a major move in the new trending direction. The Current over Last week criteria is also dropping too many trending Groups that soon resume the trend detected.

The new methodology will involve compiling rolling sets of end of week Rating data into a graphical format that will be programed to identify changes in trend earlier and will smooth out small deviations from any current trend.

More to follow once I have completed the necessary programming and back testing of the new methodology. I'm about half way to a testable product.

Until then ... trade well!

Big Wave Trading Portfolio Weekend Update

2013-05-12T20:45:06Z

The Big Wave Trading Portfolios remain under a full BUY condition as we head into the upcoming week. There are currently zero items weighing on the model currently and it is not our job to try to guess when and if there will be any in the future. The trend continues to be higher highs and higher lows and until this changes there is no reason to try to top-call this market.

What are our concerns? We are concerned about the non-stop uptrend off the November lows without a 5% pull back. We are concerned about the non-stop uptrend from the 2011 lows without a 20% pull back. We are concerned about the lack of volume in the overall major market indexes as we continue to hit new all-time highs. We are concerned that none of our new longs are exploding out of the gate immediately producing the past gains they used to produce under these exact same previous conditions. However, these are just concerns and are not actionable problems.

When the index finally starts to change character, our new longs fail in succession repeatedly, we start to see churning and distribution in the overall market indexes, our current holdings start triggering profit taking signals across the board, we start to see leading stocks fail late-stage breakouts, and we start to see actionable short signals then we can start taking all of our concerns seriously. Until then, the trend is up, the market is hitting new highs, and our new long positions continue to make money immediately following a signal.

As long as all of that is occurring there is nothing to do but ride the trend higher. I mean, the mere fact every intelligent market analyst and every intelligent macro trader in wall street thinks stocks should have topped by now or should top sooner, makes me believe the contrary approach is the right approach on the short-term. As long as we continue to see top callers, the uptrend has the sentiment it needs to continue to move higher. When these talking heads flip and finally capitulate to the long side then we can start to seriously consider the contrarian position of looking for a top when the smart folks are speaking of bullish matters.

Great luck this upcoming week. We shall see if more highs or in store for us. Aloha from a very windy west side of Maui.