IBD 50 standouts

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Love the quiet early Sunday mornings before the family wakes up: Start up the computer, make a hot cup of coffee, and open up MarketSmith to look through scans for the week.   The first scan we go through is the IBD 50.

To become a consistent trader you have to learn to strike when a decent amount of balls line up (having every ball line up conversely can be a negative, but that’s another post).    One of the balls is IBD.   When our stock is in the IBD 50 — it gives it that extra level of confidence, and trust us, at this stage of the game (once you have the trade managment down) it’s all psychology.

We’re usually very early in our stalking and holding — here we are already in $BABA and $NFLX and you would think it was this week, but it was posted May 04. 

If a stock has decent potential but it’s not ready, we add it to watch-list. Ideally, we like to add early and then watch it for days before actually entering.  Why? Because you get to know the stock behavior — and we can’t emphasize how important that is to a trader.   To a certain extent you get to know the personality of the stock, how to treat the stop, whether to wait for breakout or get in early for anticipation — this is the small advantage we still have over computers.

Let’s go over 7 of our favorites in the 50:

First a  visual glimpse of how MarketSmith actually works —  relevant scans for any type of trader, but especially momentum traders like ourselves, and trading ideas and alerts.   We like to go through the Near Pivot list to take a look at stocks before any potential breakouts.

1. Momentum trader dream here — look at all those beautiful scans on the left to choose from.

 

2.  Automated recommendations  on entry, stop, and target.  BZUN a good example here up already 11% from pivot (red highlight is stop, blue is buy zone, green is target).   We also came up with BZUN in our HCPG scans — always good to get the IBD nod.  Again, balls lining up.

BZUN IBD #3

GRUB daily down from buy spot but weekly looks strong.  Keep on watch-list.  GRUB is IBD #4

 

NFLX we are swing long — what a rock star this stock is.    NFLX also IBD #14 and has already triggered their pattern recognition/alert.

NVDA we area long on 240 reversal (which was also bottom of buy zone on MarketSmith).   NVDA also IBD #21

MA is IBD #31 — great daily, and look at that beautiful hold on 20sma on Friday. Wish we had seen that in real-time.

 

VEEV is IBD #39 and also in the buy zone.   Great chart.

 

SGH another chart that looks good and IBD #42.

 

Should be interesting week.  We come in with month long swings on SMH  and  then some positions in NFLX BABA NVDA FB.   SPY has broken the sweet spot trend meaning we have lost that confidence in buying dip against the upper Dev 1 edge.    The range is small but important.  270-274.   Next time through 270 or 274 should finally break out of this 12 day range.

See you out there on the streams!

 

Deja Vu Chinese flufferbots

We’ve seen this movie before — attention to Chinese IPO type runners while market itself feels fatigued.   Banks and Semis ran today but they couldn’t get the market green.   Feels like a summer tape before the long weekend.    We’re a bit more cautious today — but still long.   SPY 270 goes though and things might get more volatile again.  For now though market in sweet spot, and IWM still leading.

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We wanted to take a quick look at  Chinese IPOs — opened up our MarketSmith (highly recommend a trial here)  and it took all of 1 minute to get out a filter, plugging in Chinese IPO — sorted by price:

This type of market is actually not our forte — we like bigger cap momentum stocks rather than these Chinese fluffer bots, but there are some good moves to be caught, like in IQ today which was trending on StockTwits as traders were hungry for anything that was moving.

 

IQ probably the best of the IPO bunch.

HUYA has some potential — we’d trade it on any Indy formation.

BEDU thinner but weekly somewhat interesting over this week’s high.

ZTO needs a base but decent chart here.

HMI breaking out of resistance:

Take a look at the scan and have at it!   Market near highs going into long weekend — small caps often where opportunity is during these type of times.   Small cap momentum stocks can be pretty ruthless if they fail, so please don’t chase!

In broader market — we’d like 270 to be defended on $SPY.   Market can’t seem to make headway away from support, but not breaking down either.    XLF SMH good action (we’re long both) and IWM still leader.

Retail

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FinTwit is giddy with retail this morning with lots of breakouts across the board.   Here is a quick and handy MarketSmith scan for retail stocks to go through:

 

Sometimes it really is as easy as it looks and as traders we make it too complicated.  Case in point, LULU:   it held like a champ on that 20sma while market dumped, and now breaks out.   Exactly what you want to see — we should have been all over it (but aren’t) under 100.     When market changes from range bound to trend you have to start trusting it more … let’s see if we can get our close above 270 for Friday close.

LULU look at how that 20sma was constantly bought — wow. Gorgeous.  We got too cute and thought it would break and didn’t trust it — mistake of course not to have on watch-list.   Never stop learning.

 

The greatest lie

We’ll start out by saying:  here’s a 1 minute 13 second clip by Mark Cuban that every high school student watch:

Don’t follow your passion, follow what you’re good at, and where you put your effort; as Cuban says “Nobody quits anything they’re good at because it’s fun to be good, it’s fun to be one of the best, but in order to be one of the best, you have to put in the effort.”

2018, we have Alexa ordering us toilet paper, and dog robots jumping around,  and Amazon supermarkets without cashiers but what we tell our children is probably the same as what some poor farmer told his son 4000 years ago, to be good at this (farming, trading, sales, whatever your chosen profession) you have to put in the work.

Such a simple concept, and yet for so many, so hard.

 

 

 

 

Change of market behavior= change of trading plan

For most of April we traded fast and furious assuming a range bound tape which means market goes up to resistance, gets hit hard, goes down to lower BB, buyers show up, back and forth.    How do you trade a range bound tape:    Active trading, tight stops, go for singles.

Last week though (weekly of April 30-May 04) something happened which we talked about in our blog last weekend and has been a recurrent theme in our posts.  $QQQ broke out of the 20sma weekly.    This meant to us that a change could come if SPY could follow QQQ — and this week it did with a solid close over 270.

Range bound tape:   from lower BB to upper BB, rinse and repeat.      This week though the tape morphed into a trending formation —  trend in sweet spot between upper Dev 1 and 2 (upper blue and black lines).    This means a change of plan.

So how does the change of plan reflect in actual trading?    Selling partials, keeping riders, setting wider stops, being much more patient.  Why? Because it’s  going to be more difficult to get back in as market doesn’t let buyers in, grinding higher in that sweet spot trend.

We still have all the stocks that triggered last week and which we posted about last weekend.   We still are holding onto $BABA $NFLX $SMH $XLF  plus adds from Monday to Wednesday of this week: $SPLK $FB $BIDU but we have taken partials in all of them.   If trending market continues we’ll look to add into pullbacks on support.

$IWM which had been the laggard for a long time has been the leader for the last few months, then $QQQ,  $SPY next and the laggard now is $DIA.     This week for us reflected a  pivotal time where you wonder if the leader can pull up the gang or whether the laggards will pull down the leader.    We found out this week as finally $SPY broke over 270.  Leaders won, for now.   Watch that level closely this week — we expect some digestion and chop but would want to see that level hold into Friday.

Happy Mother’s Day to all the moms out there reading this post!