Sector Spotlight

#IBDPartner

“Computer Sftwr-Enterprse” : that’s the industry we are looking through in the MarketSmith scan.

Or we often reverse the process: after finding a stock we’re interested in we hit the “View Stocks in Industry” button and scroll through all the competitors.   As traders know some of the best trades you can get are sector trades.

For example we have been stalking WDAY which broke out yesterday —  once we enter the stock in MarketSmith screen we can see all the other stocks in the industry:

 

WDAY with the breakout of trend-line yesterday and follow through today:

BZUN held on the 50sma and now playing catch-up:

NTNX held weekly support but finding some resistance on daily here on the 20/50smas –  add to watch-list for next week.

ULTI has been on an amazing run — this is weekly chart:

Waiting for some type of secondary base before getting on this ride as it has run up from weekly 20sma with a V type move:

Also not a bad idea to go through the list and look for catch-up plays from lesser known companies — one thing we’ll do this weekend.

After a few short dips market is back at it flirting with highs — individual type moves though have been choppier than usual, very common in summer months.  We’re trading smaller and more defensive since we got back from vacation and waiting to see more consistent follow through — WDAY good action on that front.

See you on the streams.

Buying dips

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We love buying dips, even more than buying breakouts, but never on broken trends.   We buy support on stocks that are pulling back to longer term uptrends (daily might be broken but weekly alive, kicking and ascending).

First we like to start out by going thru MarketSmith’s Industry performance scan to see what is doing well for the year — consider this a very early filter:

For the purpose of this post three sectors stand out:

Let’s start with the first: Internet-Retail up 36% including behemoths AMZN BABA:

 

AMZN clean trend on 20sma — 1565 zone corresponds to horizontal support and 20sma.   Add that to your radar.

BABA at support now — use this as a tell for buyer appetite.

No surprise to any trader we have Computer- Software Security up 29% including names such as PANW:

You can quickly see what kind of pattern we like — PANW also horizontal support and 20sma near 193 zone

 

And one of our favorite sectors for trading, Computer Software Enterprise up 27% including CRM NOW WDAY SHOP NTNX BZUN among others

CRM near 125 would get us interested if buyers show up:

SHOP, like BABA is at support right now — if no interest here it has juicier support near 120.

 

NTNX currently at support — watch to see if buyers show up for follow through up. If not next support not until 38-40 zone.

BZUN at primary support right now — if that doesn’t hold 40 is next major level.

Many momentum stocks are at primary support right now — we’ll be watching to see if buyers show up and if they do we’ll try to hitch a ride up.  If current support does not hold we’ll be more patient to see if next levels hold.  Current tape:  Summer chop, Smaller positions, Quick trades.

SPY currently trending in ‘ugly spot’ (between lower dev 1 and 2– as opposed to sweet spot upper dev 1 and 2).      Longer trends still healthy so this could very well be summer messiness.

Not reading too much into things as long as SPY holds 263.  That 50sma weekly now has held since 2016 and it would behoove the bulls to defend it for bull confidence.

 

See you on the streams! HCPG

From Near Pivot to Breakout

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As traders always looking for the next move we try to have access to as many tools as we can and today we’re going to share with you one of our favorite ways of using MarketSmith:

Launch MarketSmith 

Go to Stock Ideas on top and a box appears with Reports, Screens, Market Analysis.   Under Reports go to Near Pivot, hit View

 

 

Once you do that the bottom field populates with  stocks that are below breakout, listing the pattern and other pertinent information.

This is how we found PYPL, which now is under actual Breakout list.    We try to stay as close as possible to the base and like to have stocks on our watch-list before breakouts. Why?

1) by watching them for days before breakout you become familiar with their behavior.

2)  a lot of time the intraday pattern for entry is actually before the breakout (remember BABA) while at the breakout point you have shenanigans that often stop traders out.  We’d rather be in a few points under relaxing with a profit cushion and watch the fireworks at breakout points.    Caveat here — the anticipation trade works very well in strong bullish tapes like the one we are enjoying, not so much in neutral/range bound tapes.

See you on the streams. HCPG

 

 

Sector moves, Best moves.

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If you ask a bunch of traders what is the most successful type of move you see in tape more often than not they will tell you “sector moves”.  That’s when you go in more aggressively — they don’t come that often, but when they do, you have to take advantage.

NTNX first made our newsletter on June 06 (and then stayed on watch-list until breakout today) when we were looking through our MarketSmith scans.    We were looking at BZUN, then decided to take a look at the sector it belonged to, and then found NTNX.   Working backwards from BZUN (which had already broken out) to find next move in NTNX (which broke out today).

NTNX chart, a beauty on daily and weekly.

There is no 100% successful trade/formula. But sector moves come close.  Use that to your advantage when you find leader stock moves.

And then our favorite – the anticipation to the breakout which statistically for us has more chance of working than actual breakout (even though breakout of course can garner more points when it works — different types of trades).   We like to be early in these moves — base breakout here near 58.50 (posted on StockTwits 58.64 — currently up 3%) and then actually start selling daytrade portion into breakout.  Swing portion we will keep unless it closes under 59.

Trading is tough and you have to work hard to always find that extra edge in strategy.  It never stops.   Hope that helps. See you on the streams.   HCPG

All stocks are equal but some are more equal than others

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One of the few advantages we have over computers is that we can get to know the “personality” of our stocks.  There are some stocks, like BABA NVDA, where we have much more confidence in reading the script than in random stocks we see for first time but with good patterns. This doesn’t mean you shouldn’t be open to other stocks– add them to watch-list, get to know them, and see if they behave well.

We have a lot of focus on very few stocks and that gives us the psychological edge to strike when the time comes.    All of our swings have been in these blogs and StockTwits now for weeks/months.    All stocks are equal, but some are more equal than others.  Indeed.

As a bonus when we see  MarketSmith is showing a pattern recognition buy alert on our swings we feel an extra edge of confidence.  Let’s review our current swings:

GRUB from 103– we only have 1/3 left here and trailing stop (currently 106).  Keep waiting to get stopped out on this one but it keeps trucking along.

BABA we posted mercilessly since April in the blog, StockTwits, and even earlier in our newsletter.    Pattern was perfect, but it stalled and didn’t go. When that happened more and more people caught on the pattern and it became crowded. It tried to go last Monday and failed, but finally went on Friday.   Crowded trades often fail the first time, don’t delete from watch-list!  Wait until fewer eyes on it and then it has a higher chance of going (Monday vs Friday in the case of BABA)

200 Breakout — we had this from 184 and closed the trade as it hit trailing stop.  Got in again for the secondary breakout.   NVDA BABA are best trading stocks for 2018 for our accounts.

 

Again note MarketSmith also has buy pattern in it — love that.

FB 180 yet another stock we posted mercilessly in newsletter until it went — up 8% in it and have 1/3 left.   Sitting tight on last 1/3, anticipating the big breakout into new highs.

NVDA our favorite trade right now with the support reversal on 240.  Again, another newsletter favorite.   Note also MarketSmith has a buy on it — fantastic.

Our entry was 243 against 240 reversal with stop on that day’s lows.   Up 9% on it.

SMH our longest holding against 50sma weekly and up over 11% on it — we love being long semis in bull tech tapes as they are often the engine of the market.

 

Things have dried up this week — we have 5 swings, but we’re always looking for more candidates.    Every night we go through  MarketSmith scans, especially Near Pivot, looking for more ideas.  Always be hungry, especially in a tape such as this one which is a gift.

 

See you on the streams. HCPG