Earnings and IBD

#IBDPartner

Earnings season is a time of adjustments for us: we have fewer swings as we don’t hold into earnings in the trading accounts (but yes in retirement accounts) and we are constantly looking for post earning swing ideas.

We go through MarketSmith earnings-upcoming and first sort thru IBD:

Next we look for solid bases and potential gap and go from those zones. GLW a great example with earnings coming up April 30. IBD #46

Next we hit “View stocks in industry” of our favorite sectors and go through those charts. Semis priced for perfection but small base here in KLAC worth a spot on your watch-list.

$MCHP #50 on IBD near highs — weekly shows a pretty severe cup. Would love a base here but if gap and go with decent risk/reward post earnings we will give it a shot.

Post earning trades can be fantastic but they don’t set up as often as watch-list candidates (with no earnings). NFLX good example — we would have loved a gap and go near 380 but it had no such plans.

But as we always write in our newslettters, alerts are free. Prepare for different scenarios and take them as they trigger. See you on the streams. HCPG

Near Pivot scan ideas

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Market acting very well near highs. Massive run on SPY from the December rally to now so any digestion here is healthy and will create new set-ups. The last base gave us set-ups in current positions NVDA BABA BIDU NFLX.

Let’s take a quick look through the MarketSmith Near Pivot Scan, one of our favorite scan to look for new ideas

ADSK nice looking chart under 168. Earnings out May 22, we think it will try to move out of this cup before then.

WDAY from the hot software sector basing under 200. A bit messy at the time for our taste but good enough to add to watch-list in case it calms down and creates a base in the high 190s

GLW blast from the past breaks out at 35

MCHP IBD #50 strong chart, needs semis to set up to really take off.

SMH at major resistance here — too V-ish we believe to breakout right now successfully; needs a handle and some work. Ideally we would like a high base 110-113.


A bit of chop would be welcome right now to build horizontal work on all the above. We want what many traders often want in these times: slight pullback, a bit of chop, and then GO! Breakouts from extended areas have higher failure rates and tend to be more volatile, which in turn often stop one out before making the real move.

So next time market is boring and choppy, don’t complain. Necessary part of the cycle. See you on the streams. HCPG

Post consolidation

After last week’s lethargy at SPY 280 it’s great to see the slow rise up into new multi month highs. First line in sand now is 280, and second more longer term support at 274. Good looking chart with a lot of support underneath and lot of potential clean air above.

We’re long NVDA, NFLX, ROKU and are looking to get more names on after last week’s basing — this is very common in bull markets: run, base, run, base. Don’t ever hate on the basing — it’s what creates new set-ups. Here are a few we found in our MarketSmith scans for your enjoyment/watch-list.

Great hold on ADSK on the 50sma and now going back to highs for a breakout. Add to watch-list for 170 breakout.

ALXN #28 on IBD 50 and in the Near Pivot scans — looking great here for base breakout.

WDAY great hold on 50sma and now needs to base a bit more for the big 200 breakout.

Keep it simple — long bias as long as SPY 280 holds. Don’t chase the breakouts — wait for the bases and then get in on a good risk/reward on the move away from the base. See you on the streams. HCPG

Different stages, different mistakes

The mistakes one makes after years of trading are usually very different from mistakes on makes when beginning. We wanted to make a quick post to review our experience:

1: Noob level. Here the mistakes are the most gaping of all — not having visualized the trade in terms of risk management. This means going into a trade without knowing your risk. If you don’t master this you won’t last, pretty simple. So at noob level you need to figure out risk management. Most basic thing you need as a trader.

2: Semi-professional. Jumping from one trading strategy to another. Trend trading is working I am a trend trader! Reversion to mean time, this is me! Wow metals going crazy, love me some gold! When you’re still in the beginning stages it’s fine to experiment around to see where your strengths are and what jives with your personality but at this stage focus on being good at one strategy and really master it. Once that occurs then you can think of adding different strategies; this business is much too competitive and difficult for the survival of a jack-of- all trades.

3: Professional. Treating every tape as if it were the same. Some tapes are amazing for trend-trading and benign in that everything works, everything is forgiven. You have the Midas Touch. Then a week later same strategies fail at a much higher rate. This is your sign to hit the brakes. One of the hardest lessons for a trader is to not treat every tape the same.

For example using the same strategy (we are swing trend traders) we take X amount of trades a month. Next month it could be X + 15, and the month after? X – 20. It all depends on a) how many set-ups we find and b) mood of the tape. If everything works then pedal to the metal. If it’s choppy and we keep getting stopped, we retreat and almost take no trades. Every day is not the same. This is one of the last nuances that seem to plague traders — they constantly want to trade.

It’s been a while since we wrote an educational post — hope it offers some food for thought. See you on the streams. HCPG

Base plus IBD

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As per our weekly habit we go through the IBD list and MarketSmith’s Near Pivot scan to see what type of set-ups we can find; market grinding higher and we are finding less than last week but still some areas of interest. Let’s review:

PANW is in the hot hot Software sector and IBD #6 — sitting on top of the 20sma so if you want to swing it entry would be here with stop under that 20sma near 238 for very aggressive short term and under 230 horizontal support for intermediate.

ALXN IBD #25 sitting under 138 resistance — we’d like to see some strength before we jump on this one — add to watch-list!

We rarely trade gold these days but KL has been on a tear and is IBD #1 so it has our attention. We like buying commodities on dips rather than breakouts so keep an eye out for reversal near 32 — our way of buying reversal is to set alert at support and then see if buyers show up. Buy it after bounce starts (say 0.5-1%) with stop below the support that held.

So far picture perfect on SPY with hold on 50sma weekly as it digested SPY 280. Bulls can’t ask for more — intermediate line in sand is that 50sma line at 274 on closing basis.

Good market for hanging onto swings — we have AMD NVDA FSLR GDDY IQ partials on right now. Hold, trim, trail stops, and be patient in this type of positive forgiving tape. See you on streams.