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Growth names/ IBD 50 under pressure and MarketSmith’s Near Pivot scans full of stodgy defensive  stocks like transportation, aerospace, oil and gas.    Yikes.   Is this the bond pivot-new norm?  Hope not but as traders we have to be ready for the twists and turns of the profession.

IBD50 own fund FFTY to us is important enough to always keep on watch-list.   Finding support on the 40sma weekly (the default SMA on MarketSmith) but for this picture to stay intact buyers need to step in pronto.

Instead of trading high beta growth names do we have to trade CSX type stocks now?  Maybe.   Nice base here as you can see breaks out thru 76

SYK gorgeous trend that breaks out 180

IWM, similar to FFTY, sitting on 40sma weekly.  We always think of IWM as the canary in the coal mine ETF which often leads the way.  If bulls want to keep the trend intact this is a good time to make an appearance.

There’s always ways to make money in the stock market but there are easier ways (high growth beta names which follow the momentum script more readily) and more difficult ways (stocks which have higher chances of head-faking/chopping thus making them more painful to swing– oil stocks being good examples).   Key to staying alive in this business and being consistent is to adapt.    It’s too early to tell whether this is it and we’re in for a more defensive nature stock market but at least be aware of such possibility and do your homework.  See you on the streams. HCPG

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To put it at the most basic level we use MarketSmith scans  to effectively shorten the time it takes us to find candidates for trading.   We usually do this via two strategies.  One is to scan for specific criteria — such as our China scan last week that netted some great winners such as current position in ZTO TCEHY.

ZTO entry post this scan last Thursday was a riding momentum back from support reversal — meat and potato HCPG type trade — long 18.9 zone.  We have 1/4 left from swing .

TCEHY  long under 42 on that bounce on weekly 40 level last week — also have 1/4 left from swing.

BILI we didn’t go long but some of our subscribers did from the scan last week, up currently 16% from our post.

The second way we use MarketSmith scans is to narrow down patterns — instead of blanket scans according to our own criteria, we use their criteria — mostly “Near Pivot” which we’ve discussed before, and for the following “Tight Areas”:

VRTX into interesting zone right now and if it can get over 180 will attract even more momentum trader eyes.

MA we got long yesterday on this tight area looking for lift-off but so far it’s still in basing mode.  Very close to our stop and quite possible it hits it today, and then do we delete? No, not unless it breaks down.    It’s not uncommon for us to get it right on second try.  Don’t worry about being right, wrong, getting revenge.   There’s no room for ego in this job. 

ROKU good example.   We had a decent swing trade in it before exiting on trailing stop (remember the gap up post earnings 52 idea from two weeks ago).  It set up again, we tried it last week but got scratched out on Friday.  We put it back in our newsletter on the weekend and last night with specific 58 breakout alert.   Today it offered a great quick 2 point trade and if it can close near 59 we would swing a partial.  Max stop 58 break.

Quick takes: be versatile, especially in the summer.   And if it stops you out the first time but stock does not breach the pattern, don’t delete it and keep it on watch-list.   We’ve been trading for over 20 years and writing this newsletter for over 12 years.  We’ve had countless interactions with traders — and the most noticeable pattern of all is that if you can’t check your emotions in this job you will not make it.

Everything else is infinitely easier.  Risk management?  Trade Ideas?  Easy, easy.

Patience to wait for right time to strike? Emotionally grounded enough not to engage in irrational behavior?  Oh so Much  Harder.

See you on the streams. HCPG

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We usually are less active in the summer as

a) for our type of trading there usually are fewer set-ups

b) when there are set-ups the momentum for a breakout is lacking.

The exception to this is trading immediately post earnings.  We’ve had 3 good post earnings swing trades this summer: NFLX on reversal on 20sma weekly support, AMD on 17 breakout, and TSLA on 332 breakout (all positions closed).  ROKU TWLO ZTO  three more examples from this week that we stalked for days before breakouts.  We sometimes buy the breakouts on the next day (often they don’t set-up, but when they do it can be excellent risk/reward) but usually focus on  for mini bases on the following days.  These trades often last from few days to a few weeks and all worked thanks to the earnings push.    All together in one earnings season we probably focus on only 10-15 stocks out of ALL the stocks in our universe — suffice it to say they have to fit pretty strict criteria.

Summer schedule:

Using MarketSmith we scan for upcoming, look for set-ups for day after earnings.  This is the stage we have been focusing on these last two months.

Note Tabs Earnings- Reported, Earnings Upcoming.

Next stage, mostly likely in September, a) will go through Reported and look for bases on the winners, or for those of you who like no gap fills, you can scan specifically for them (not our thing but a lot of traders like that).     b) go back to Near Pivot and look for set-ups that are about to trigger.

Rinse, repeat, back and forth.   During earnings season — focus on earnings.   All other times– look for bases in the Near Pivot section.

Remember kids, in the end trading is just a job.  Lots of homework and preparation, lots of humility, and lots of grind.  See you on the streams. HCPG