Category Archives: strategy

Plan for the week

charts, IBD, strategy

#IBDPartner

Our best guess is that market is not going back to highs anytime soon — our favorite momentum/growth stocks have been clobbered bloody and the technical damage is not going to be healed easily.    So we need to be ready for a few things according to different time frames:

  1.  active traders look for oversold quick rallies
  2. active traders look for shorting into support/shorting breakdowns
  3. swing trades in new defensive leaders

While SPY was flat on Friday  one of the best tells for momentum was down almost 3%.     FFTY, the IBD50 ETF sitting on 20SMA on monthly.  Huge spot.

IWM same thing —   let’s see how the rest of October plays out.

SMH also sitting on 20sma monthly  —   our favorite canary in coal mine ETFs (FFTY IWM SMH) all sitting on pivotal support.

We’re trying to prepare for different potential scenarios, including #3:  defensive stock longs.

We looked through some ideas from our MarketSmith scans this week:

 

Our favorite 6 all look good but need a bit of time to set-up  — we’ll have them in our newsletter when the time comes.

ANTM a bit more basing near 280 would do the trick.

AWR big move last week (for this stock) — slow but strong.   Would like some basing near 62

CHD solid bounce from 56 support — now needs to sit and set up  a handle near 60

CLX back to highs and we like it here near 152 — again, big move last week and would love to see some basing.

FE new highs — would love a few day pullback under 39.

 

All the above had big moves last week and for our type of trading — need some basing before we would jump on.    We would prefer to trade a NFLX over a utility stock any day but you have to do what you have to do!     See you on the streams.  HCPG

 

 

 

Old man sour turn from froth, excess and good times

IBD, strategy

#IBDPartner

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

The 3 second slide show

charts, strategy

#IBDPartner

In our job there’s one thing that never stops and that’s the hunt for new ideas.  Over the years we’ve honed our mental recognition skills and now only need around 3 seconds to discern between a chart we instantly have potential interest in and a chart that is an instant pass.

What we like to do at least 3-4x a week is to go through MarketSmith’s G250 pattern recognition stocks, in slide mode, timer on 3 seconds.  As soon as a name interests us we write it down without pausing slide.  Once we’ve gone through the scan (also use this for our favorite Near Pivot) we take a closer look at the names we have jotted down and do another cleanse.

Here are a few ideas for your lists:

NVDA was on our newsletter last night for trend-line break and doing well today.   We liked how it held the 20sma and then set up a trend-line break.

 

LULU high level base here — add this to your watch-list for a move to 160 hopefully soon or even better if she pulls back to that green line (20sma)

BRK.B fantastic longer term base here that breaks out over 217

 

BA we like this pattern — all these notes on chart are done via MarketSmith automatically.  Over 364.5 gets interesting.

 

PGR just adding to show what a nice quick trade that pullback to ascending 20sma would have been — we didn’t see this on time last week to have participated.

 

IDXX nice hold on the 50sma — looking for a move back to highs.

 

And MSCI which we talked about in our stream last night — what an incredible trend.  Why haven’t we been long this stock?  As Howard Lindzon says, “it’s all about data”.  We missed the latest entry on the pullback to the 20sma. We won’t miss the next one.

 

 

See you on the streams.  HCPG

 

 

 

 

 

 

 

 

 

IBD 50 non-extended ideas

charts, IBD, strategy

#IBDPartner

Market at highs trending on upper Bollinger Bands mean that trends are strong but new entries are tough to find.  If you are riding a swing, fantastic, be patient.  If you are looking for a new entry and don’t want to chase up — well, that’s more difficult.   We looked through IBD50 scan in MarketSmith for new ideas and this is what we came up with:

Most stocks in the IBD 50 look fantastic, but they all look like continuation moves on high trends, not set-ups for new bases.  But we did find some potential candidates.   Let’s review:

At #13 we have KEM (Kemet- Electronic Parts) with a decent base at 27.  Under the 50sma right now so not much interest until it gets near 27 for potential breakout.

 

BZUN at IBD #38 (Baozun Inc – Computer Sftwr-Enterprise) in one of the hottest sectors of the year  up 47% YTD.  BZUN earnings in August disappointed but stock found support on the 200sma.  However, last week the descending 50sma acted as resistance — if it can get over and into the 58 range we’d get interested long.  No interest in buying weakness on this stock.

MA (Mastercard, #36) is one of our current swings we talked about in our previous post, long on the 206 breakout.  Great example of most of the stocks we are seeing right now:  gorgeous trend, but no entry right here without chasing.   However if you are already long like we are, well, then just trail stops and sit.

 

Financials are starting to look interesting and we have our eye on SIVB (#27 in IBD 50 list).   As you can see in the MarketSmith pattern recognition — we have a flat base here which breaks out near 334.

 

We traded NFLX last week (#14 on IBD list) on the 50sma breakout at 368 but we didn’t have enough cushion to swing it into the long weekend.   However, sometimes (actually quite often) it takes us two tries to get it right and NFLX stays on the list.   We are looking for a move away from that 50sma.

 

 

Add these IBD 50 ideas to your lists — getting to be a challenge out there finding new entries in this runaway tape.    See you on the streams. HCPG

 

 

 

 

 

End of summer ideas

IBD, strategy

#IBDPartner

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