Fed Aftermath Market Update and Stock Scan for October 30

At the end of QE3, stocks continued higher on the reported GDP growth and the S&P 500 tagged the underside of the 2,000 index target.

Let’s update our levels and note the top trending stocks so far in today’s post-Fed session:

After a logical sell-off from a knee-jerk reaction to yesterday’s “End of QE3″ announcement (see yesterday’s post), stocks traded higher and broke sharply higher on a Bull Flag pattern earlier this morning.

The result was a short-squeezed impulse toward the 2,000 index target, at which point the S&P 500 turned lower and traded into the 1,990 support confluence.

For now, we’re monitoring the neutral zone between 1,990 and 2,000 with a breakout above 2,000 setting the stage for a future rally to new all-time highs… or a move under 1,990 targeting the 1,980 or even 1,975 downside targets.

Sector Breadth (after the Fed) revealed another bullish picture:

The Defensive Sectors took the lead today with Energy – yesterday’s leader – becoming today’s laggard.

Still, we see relative strength across the board with almost all sectors reporting more than 70% of stocks positive.

We have potential bullish trend continuation plays in the following stocks:

Bristol-Myers SQUIBB (BMY), AmeriSourceBergen (ABC), MasterCard (MA), and the big-winner Visa (V).

Potential downtrending candidates exist in stocks showing relative weakness today:

Avon Products (AVP), Intel (INTC), Ball Corp (BLL), and Trip Advisor (TRIP).

Corey Rosenbloom, CMT

Afraid to Trade.com

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SMBU’s Options Tribe Webinar: Dave Stewart: The Caspian Sea Monster Options Strategy

On Tuesday, Dave Stewart presents, for the first time, his signature “Caspian Sea Monster Trade”. It should be a fascinating meeting and you won’t want to miss it! SMBU’s Options Tribe is an online community of options traders dedicated to sharing successful options trading ideas with all of our members worldwide. Each Tuesday, SMBU hosts an options webinar — the Options Tribe — during which veteran options traders and experts in the world of options trading share live presentations. Options Tribe meetings are generally free to the public and are held every Tuesday at 5:00PM ET. If you wish to register to this Read more [...]

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Quick Color Structure V-Spike Update Oct 28

Let’s take a quick glance at the “Color Structure” of the S&P 500 on the V-Spike Reversal into Resistance and chart possible price pathways from here.

We’ll start with the V-Spike Reversal Pattern on the intraday color chart:

We’re seeing the Color Structure grid which quantifies swings in the market (and impulsive phases like the purple area).

We have a green upswing into the prior resistance price cluster near 1,980 and we’re watching this level extremely closely.

In simplest terms, the market should be traded cautiously/bearishly on a swing down against 1,980 and otherwise continuously bullish for yet another breakout and short-squeeze trigger above 1,980 (it would target 2,000 on a breakout).

The bigger picture reveals the larger trend structure:

The same swing logic applies to the Daily Chart in a persistent uptrend.

We do note the first clear “Lower High” into October and we’re on guard against a sudden reversal and formation of a “Lower High.”

A Lower Low followed by a Lower High would be two steps in a larger Trend Reversal… but we’re not there yet.

For now, we note the potential turn-down into 1,980 and if price continues to break resistance levels as its been doing, then 2,000 is the next target followed by 2,020 and beyond as the uptrend continues.

Corey Rosenbloom, CMT

Afraid to Trade.com

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What Does this Trader Do Now?

Hello Bella, I read both those books and started a few more. The myelin concept got me thinking that I should be reading more every day so I don’t fall into the habit of being lazy with reading in general. Then on the flip side part of me thinks I should limit the reading and focus more on reviewing trading footage and charts. What time allocation do you recommend for a rookie trader like myself hours per day wise amongst: 1)reading investing and accounting books 2)reading trading books 3)reviewing charts and trading footage 4)reviewing trading journal and trading notes 5)working on financial modeling and valuation Read more [...]

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Stepping Inside Sector Strength During the October Rally

When we see large price movements in the market – like our recent strong rally over the last week – we can break down the picture into smaller pieces by looking at “Sector Strength.”

We can study which sectors were strongest, which lagged behind, and what this may suggest for the broader market.

Let’s take a look at Sector Strength on the way down from 1,900 (on the S&P 500) and now the path higher:

When discussing sectors, we often break them down into the six “Risk On” or Offensive Sectors that typically do best (outperform) during bullish market phases.

These include Financials, Discretionary, Technology, Industrials, Materials, and sometimes Energy.

We then break down the other sectors as “Risk-Off” or Defensive sectors that tend to do best during down-markets or retracements.

Let’s focus our attention first at the bottom of the chart on the “Defensive” Sectors of Staples, Health Care, and Utilities.

At the moment, Consumer Staples (XLP), Health Care (XLV), and Utilities (XLU) are at or above their recent new highs.

This reveals relative strength because all other sectors are clearly beneath their recent September price highs.

It suggests defensive or cautious money flow from the “Big Money” as they are electing to be more protective during both the retracement and the current rally.

We’ll take a more cautious approach as a result of the stronger “Defensive” sectors relative to the “Offensive” sectors and will monitor the S&P 500 rally closely.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT

Afraid to Trade.com

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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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How I Traded $YELP (Video)

There are three things you need for every trade. Below we discuss a short trade in $ YELP. More importantly we discuss how intraday traders must not just be right with direction, but also with time (or seeing the catalyst for the trade) AND while controlling your risk/reward. If you are just right about direction your results will be inconsistent, you will not be scalable, and at times you will place yourself in a position of weakness. *no relevant positions Read more [...]

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Options Trading for Income with John Locke for October 13, 2014

No relevant positions

Risk disclaimer

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Small-Caps Perk Up, but Risk Off Remains in Play

Stocks attempted to bounce in early trading, but selling pressure took hold and the major index ETFs fell back in the afternoon. The S&P 500 SPDR (SPY) finished with a small gain (.54%) and the S&P 100 ETF (OEF) ended with a small loss (.09%). Small-caps and micro-caps held up relatively well as IWM and IWC gained over 1% on the day. Relative strength in these two is only two days old…

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An Interview with Mike Bellafiore: His Favorite Trade, Trading Volatility, and Key Market Levels

In the video below, Mike Bellafiore is interviewed before Friday’s open by Benzinga- #PreMarket Prep Show. Mike discusses:

1) Market levels that may signal the end of the market’s uptrend

2) His favorite trade: The Trend Trend Changing Fundamentals Trade

3) What and how to trade when the volatility rises

*no relevant positions

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New Lows into Support Market Update and Stock Scan Oct 13

At the halfway point today, we’re balancing the odds of another bullish reversal off support against the possibility of a continuation of the persistent selling pressure we’ve seen lately.

We’ll start with our chart of the S&P 500 for clues:

For additional commentary, see this morning’s update on “Planning Another Possible Intraday Reversal from Positive Divergences.”

The main idea is that we may see another repeat performance of what we saw October 8th when price touched a new low against “triple” positive market internal divergences.

There’s no guarantee price will once again rally higher but do focus on this potential bullish outcome.

The market would be an outright, aggressive short-sale under 1,900 again.

Sector Breadth reveals a Balanced Bullish perspective:

Sector Strength today concentrates in Financials and Utilities which sends a mixed (yet balanced) perspective.

We see no sector deviating from others except for Energy which is today’s weakest performer.

Aggressive traders may look for a reversal and to play bullish stocks into the close:

Southern Co (SO), Wisconsin Energy (WEC), Ameren Corp (AEE), and Apt Inv (AIV).

Otherwise, bearish candidates include the following downtrending intraday stocks:

AutoNation (AN), Noble Energy (NBL), QEP Resources (QEP) and Ebay.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT

Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Typical corrections are 8 to 10%

At some stage market was bound to correct. It had spent more than 600 days above 200MA.

How far correction will go we do not know. But typical corrections are 8 to 10% and this correction is yet to reach that level, barring small caps which have corrected more than that.

Down moves are characterised by frequent counter trend bounce so one is again due in next couple of days.

Mot corrections since 2009 bottom have been few weeks affair, we will see if this one is different.

All corrections since 2009 has ended with some sort of Fed intervention . Sometime intervention has been just verbal intention. So watch for signs of that.

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GOLD: Bouncing Off Support

In our article on September 23 we postulated that gold seemed to be setting up for a triple bottom, but it was too soon to tell for sure. As of this week gold has reached the level of support drawn from the two previous bottoms, and it has bounced off that support. It is not yet a robust bounce, but it is at least a first small sign that a long-term bottom may be forming. Let me first acknowledge that Erin’s article of yesterday focused on a similar possibility in the chart of a gold miner stocks ETF. While there is often a similarity between the charts of the metal and the mining stocks, the price of the mining stocks ultimately depends upon the direction of the metal, so we want to be sure that we are keeping track of gold at this critical juncture.

In the chart below we can see the three bottoms that have formed at about the 1180 level. The recent bottom is not very prominent, but it hints at the possibility of a continued rally, and shows a window of opportunity beginning to open for gold bulls. The negative part of this picture is that the support line is part of a consolidation that is called a continuation pattern, which implies that it is just a pause before the preceding decline continues.

Continue reading “GOLD: Bouncing Off Support” »

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Options Trading for Income with John Locke for October 6, 2014

A great way to improve your trading results is by keeping up to date with the latest trading techniques and current market conditions!

Enjoy the Video!

Join me for my free group mentoring session Thursday 10/16/14 at 5:30 PM EDT

No relevant positions

Risk disclaimer

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Trading, 2014, income, john, Locke, October, Options, trading

[Free Video] How to Become a Professional Options Trader

Seth Freudberg gave a great presentation on how to become a professional options trader. He covered everything from psychology to practical trading tips. Also, Andrew Falde joined in at the end to share some exciting announcements about a trading contest and new services being provided to OptionsTribe.com members. Enjoy the video! Click here to join OptionsTribe.com Risk Disclaimer no relevant positions Read more [...]

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October 7 Stock Scanning and Market Update

Price continues its range between key boundary levels, making for relatively low volatility session into support.

Let’s start with our S&P 500 Chart then highlight the top trending stocks of the day:

Sellers ruled the immediate open this morning but buyers rushed to support the market and prevent a further sell-off by holding price up at the 1,950 index level.

The result is a short-term range pattern that continues as drawn, within the context of the broader Fibonacci Retracement Levels (see prior update).

We’re waiting for another “Repeat Pattern in the S&P 500″ or else a failure of this pattern which would likely set in motion a steep sell-off in shares.

Sector Breadth sends a bit of a conflicting signal with today’s sell-swing:

One would assume sector strength would develop in the Defensive Sectors like Staples, Health Care, and Utilities but clearly this is not the case today.

Our two strongest sectors are the offensive or bullish Technology and Industrial stocks – not what you want to see if you are a market bear.

In fact, our worst sector today is the defensive Staples stocks – again, not a bear’s delight.

We can focus our attention on today’s big trending (bullish) stocks:

Keurig Green Mountain (GMCR), CF Industries, Ameren (AEE), and Coca-Cola (KO).

Alternately, we can focus on bearish downtrending candidates:

Cummins (CMI), Black and Decker (SWK), Mastercard (MA), and Ametek (AME)

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT

Afraid to Trade.com

Follow Corey on Twitter: http://ift.tt/178Lhrq

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Trading, market, October, Scanning, stock, update

October 6 Stock Scanning and Market Update

Today’s session has been a reversal range session between clear boundaries.

Let’s start with our S&P 500 Chart and highlight the top trending stocks of the day:

Price rallied up into the key inflection (target) near 1,980 and turned sharply lower after the opening gap.

However, price found support as buyers rushed to support the market at the 1,960 pivot, creating a “neutral” zone between 1,960 and 1,980.

A clean breakthrough impulse above 1,980 continues our “Repeat Pattern” outcome, which you can learn more about from our morning update post.

At the moment, let’s continue our practice of market neutrality (range) or else a bearish breakdown bias under 1,960 (or breakout/higher timeframe trend continuity trigger above 1,980).

Sector Breadth confirms the Neutral Stance:

All sectors remain muted today with similar performance across the sectors (roughly 30% to 40% of stocks in each sector are positive).

However, the big leader of today is Energy, and not much can be gleaned from the pattern except for neutral money flow.

We can focus our attention on today’s trending (bullish) stocks:

Hewlett-Packard (HPQ), Expedia (EXPE), Netflix (NFLX), and Abbott Labs (ABT).

Alternately, we can focus on bearish downtrending candidates:

Micron Tech (MU), Kohl’s (KSS), Pitney Bowes (PBI), and Priceline (PCLN).

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT

Afraid to Trade.com

Follow Corey on Twitter: http://ift.tt/178Lhrq

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Trading, market, October, Scanning, stock, update

Trading Lessons from a Pick Pocket

I had the pleasure of meeting Apollo Robbins last week in Boston. For those of you who don’t know him he is the deception specialist on the TV show “Brain Games” and heralded as the world’s greatest pick pocket. Not only can he steal your wallet and keys but he can literally remove your neck tie and take the glasses off your face, without you noticing, all during what appears to be a normal conversation. It’s really quite amazing. So naturally when I got to speak with him I started wondering about how he can do things like take off someone’s wrist watch without them noticing, and I bet you’re wondering too. The Read more [...]

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Free Options Webinar: Seth Freudberg: How to become a professional options trader

This week, Seth Freudberg will discuss his thoughts and experiences on how traders can rise to the level of options trading proficiency, such that they can be considered for a professional options trading desk. SMBU’s Options Tribe is an online community of options traders dedicated to sharing successful options trading ideas with all of our members worldwide. Each Tuesday, SMBU hosts an options webinar — the Options Tribe — during which veteran options traders and experts in the world of options trading share live presentations. Options Tribe meetings are free to the public on the first Tuesday of each month. All other Read more [...]

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Compression Continues as Breakout Beckons in Apple AAPL

Apple shares (AAPL) continue their triangle or “EMA Compression” pattern as we await an official breakout trade entry trigger.

Let’s update our “Triangle Trade” chart from last week and focus on the key trigger-entry levels along with the potential targets to paly for should an actual breakout occur soon.

We’ll start with the daily chart:

Again, see last week’s post as the Triangle was developing (the triangle pattern continues for shares).

The Daily Chart simply highlights a compression of price between the 20 and 50 EMA as price plays ping-pong between these two indicators.

Officially, the falling 20 day EMA intersects $ 100.30 while the rising 50 day EMA plays at $ 98.70. Note how buyers and sellers have used these levels as short-term pivots.

A simple breakdown impulse under the $ 98.00 per share level opens a “sell pathway” toward the prior lows at the $ 94.00 per share level.

The divergences and distribution volume hint that this outcome may be favored for shares.

However, a pro-trend continuation breakout trigger beyond the $ 101.00 level suggests that price can rally toward the $ 104.00 prior high and perhaps even beyond that on a true trend continuation movement.

We can see the price pattern (triangle) clearer on the lower frame:

The hourly chart – in this case a compressed two-hour chart – shows the dominant price pattern – that of a Symmetrical Triangle or compression pattern developing as drawn.

The lower support line intersects today’s low (where buyers defended) at the $ 98.00 per share level and shares trade directly in the middle of the pattern at the $ 100 per share “round number” reference.

The main idea is that we should continue to remain neutral on Apple shares as price plays “ping-pong” between these two converging price-based trendlines.

A breakdown under $ 98.00 triggers a potential liquidation breakdown (targeting $ 94.00) while a breakout above $ 101.50 continues the uptrend and suggests $ 103.50 to $ 104.00 may be in play as upside targets.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT

Afraid to Trade.com

Follow Corey on Twitter: http://ift.tt/178Lhrq

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Why study breadth

If you want lower drawdowns

If you want to maintain sanity

If you want to anticipate turns

If you don’t want to panic at wrong time

If you don’t want to ride roller coaster of profit and blowups

If you want to make money in retirement account and keep the gains.

Few weeks spent understanding breadth will pay you lifetime dividend.

Good thing about breadth is:

You don’t need to be Market Wizard to understand it.

Once you understand the concept you can just using simple scans or using existing resources look at breadth trends daily and take decision.

It does not take more than few minutes to do it.

Start tracking breadth daily and it will start making sense as you would start questioning why is this number going up or down.

Why is this number so big or small…

and so on.

It will put you on path to profitability.

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