Time for the herd update from Rock.
As you know, I continually monitor ETF funds which are sector-focused to determine their relative performance to the S&P, and to attempt to determine if there is sector rotation going on. I call them "herds".
In addition to the ETF’s, I also draw channel trend lines for the stocks I follow in the various sectors. I look for an overview of the individual stock’s performance, and how it relates to or deviates from the market and herd indicator.
As a general comment, lately it seems the stocks I’m following are somewhat choppy. The research into the herd list supports this, the last 5-8 days are up-down-up-down days. A good way to make money is to identify a market trend, identify a sector trending with the market, and identify and trade in a stock trending with the market. As long as you’re monitoring the performance, then you ride the trend and get out or reverse your position when the market breaks trend, the sector breaks trend, and the stock breaks trend. This chop probably indicates a trend direction change, and is not an investment market.
Rock is always early. I said I think this week that the S&P weekly stochastics were on the bottom, as were the daily. This is the time to invest. This is the one time of the year you’ll make the most money. Well, over the last 3 weeks, the S&P has closed within 3 points, which says we’ve got some price stabilization. The Dow Transports are showing near all-time highs. Things are on the move. Early, but I’m full of bull again.
I saw a good pullback in AAPL, so I went long, and added over the last couple of days to a full position. I believe it to be undervalued. I think it’s time for that one to at least beta up and even beat the market.
We’re going into earnings season now. I look at the retail sector, and it’s pretty much holding steady. Holding steady means we’re likely to see like last earnings season, a significant number of outperforms. So I’m thinking the rally will likely come during the earnings season.
I know this is opposite to what Dastro thinks.
Looking at the media, the gloom and doom boys can’t see that solvent countries are going to do everything in their power to save the banks. Actually, the rich have the most to lose: If you’re holding dollar denominated securities and the dollar disappears, your securities can be used as wallpaper. So we’re going to save the rich.
Now let’s trade this one!
I went through the herd list, and found that many had broken their downchannel trend, such as XRT, IRET, $DJT, UCC. However, breaking their downchannel, and being positive relative to the S&P are different things. If their downchannel is so steep, breaking out may simply bring them to par with the S&P. Anyway, here’s the data:
0.03 BBH
0.02 XBI IBB XME XES
0.01 UTH ITB IGV XRT KOL UCC OIH SLX TAN
-0.01 GDX $BKX KRE KBE KIE
-0.02 KCE
-0.03 GLD
So if you’re investing in capital markets or gold, that’s down. Banks are suffering. People are getting out of that and getting into biotech, and metals again.
I will be going long in CENX into earnings. I believe in them more than AA but AA will report first and set the trend, for sure. That’s why I’ll get out of CENX before AA reports.
Thanks Rock for sharing your thoughts.
ReplyDeleteMarket yawns after the Greek vote. Nothing really changes.
ICan
ICan,
ReplyDeleteAll of the hysterical media coverage over the inevitable conclusion. One more hysterical than the previous.
There is no way that the EU, ECB, were going to create a financial crisis over Greece.
Rock,
ReplyDeleteX going out of it's mind today.
Crude is also going out of it's mind. Is this end of quarter window dressing, too?
ReplyDelete@Dss:
ReplyDeleteThanks for the wake up call.
X going out of its mind on less than average volume.
I haven't been in it for awhile, looks like I'm about to short again. Sign. I so hate to make so much money on one stock.....
@Dss:
ReplyDeleteOK, I did it. Started a position in X short. 46.15. will add as it traverses down.
I feel so sorry for that company.
Denise - Thank you for your previous post about a trend up day, it was very informative.
ReplyDeleteMangy Mutt
@Dss
ReplyDeleteSo I added to the short, the X dived down, and went back up to 46.12. I added there.
Starting to make a "M" where the right side is lower than the left.
I love these volatile stocks. It's sooooo exciting!!!
Morning all
ReplyDeleteNot sure what to make of this oil going up thingy.
ReplyDeleteFrom what I have read, we currently have a surplus of oil, if that is true that means the main reason we have such high oil prices is speculation.
Last week Obama released some of the U.S strategic oil into the market and oil prices started to go down.
If it is true that we currently have a surplus that means Obama released even more oil into that surplus, so now the surplus has a surplus.
If that is true then it seems the main reason Obama released the oil was to drive down prices, which means the consumer pays less to fill up and in theory puts more spendable money into the hands of the consumer, so they can buy more stuff.
So if we do have a surplus of oil and Obama’s move was able to drive down prices, what is causing oil prices to now climb?
Mutt.
Mutt,
ReplyDeleteYesterday's trend day was a very rare thing and a thing of beauty. It can be very profitable for traders if you can identify it. Gap up, few small pull backs, low volatility. Closes on it's highs. That is the tricky part as many days the last hour there is a sell off.
OK everybody, look at X on the 3 minute chart. It's a perfect M with the right side lower than the left. A perfect short.
ReplyDeleteNow, at 45.92, it seems to have started a retrace higher, so watch it and if it violates the 46.15 peak, get out. If it doesn't reach 46.15, tyhen add to the short position.
This one is textbook.
Rock - I am watching a couple stocks that have been pretty volitial and it is intersting to see the different types of patterns develope - Constitanly opens up (or down) trades higher (or lower) through out the day, then closes the opisit of how it opened.
ReplyDeleteI do not currently have the skills to try and trade these types of moves (Or maybe I don't have the guts)
So best of luck to you and I hope you get as much money as you can from them.
Mutt
Thor,
ReplyDeleteAs I was telling you yesterday, the market was set to go even if Athens was burning. Which is why I pay little or no attention to current events and pay lots of attention to what the market was saying.
Rock,
ReplyDeleteAnatomy of a Trade! Good play by play and retelling of the decision making.
@Everyone
ReplyDeleteIt takes a genius to recognize a setup like Dss recognized and posted.
What dss did in her wake-up call at 10:41 takes years of practice and skill.
Look at the formation and volume of X, and you will learn.
this formation is typical of how someone with deep pockets will try to move a stock, to permit them to unload their position without too much damage. If they just sold 1M shares, the price would plummet. So first, they buy to move the stock up, then unload, and end up with the effective sell price*volume equal to the start price.
This is why I'm so scared of Dastro's recommendaitons on $5 stocks. They do not follow the $ * volume constraints, and nayone with deep pockets will clean you out. A very good friend of mine, a multimillionaire, was cleaned out exactly in this way. Stay away from stocks < $15. there is a reason corporate investment managers are prohibited from trading these low-priced stocks.
Look at X on the 3 minute chart. See how there are buys at 46.oo, and see the volume really really tiny.
ReplyDeleteThis means there is no one except the market maker willing to bring up buyers from below, say 45.88.
You will see the stock traverse lower from 46 downward.
If there are no buyers, any price moves upward are false, made by traders on the floor, or the bots, looking for where sellers are.
Rock,
ReplyDeleteEven a blind squirrel finds a nut every once in a while. Saying that a stock was going out of it's mind takes absolutely no practice and no skill.
If I were so smart, I would have bought X on Monday.
Your assessment of X is very true. And I also agree that small price stocks are easily manipulated. I rarely trade individual stocks anymore but I never did like a stock under $20.00.
This is an interesting weekly chart on X:
ReplyDeletehttp://chart.ly/6v98cmf
Denise - yup yup! The banks got their money, and of course they knew they were going to get their money, so really not surprised the market is going up, or started going up the last week.
ReplyDeleteAnyone listen to O's speech this morning? I got as far as the first question where a reporter asked him if there was a line in the sand he had about closing loopholes. He of course didn't answer the question, which means he'll cave, again. Goodbye Social Safety Net. If he caves again I will not vote for him.
I have half a mind to vote for Hunstman. We have an open primary in California now as well.
Thor - No matter what, Obama will not get my vote this time, well he didn't get it the first time either.
ReplyDeleteNot sure who I will vote for this time, maybe Sarah Palin - I KID....I KID......
They pretty much all seem like the same pig, just different shades of lip stick.
Mutt
Gary Shilling weighs in on China...
ReplyDeletehttp://www.bloomberg.com/news/2011-06-28/shilling-why-china-is-heading-for-a-hard-landing-pt-3.html
mike
just go the RSS feeds a few minutes ago.
ReplyDeleteposted this on the other post:
Got caught by the lack of end of day drop. Took a hair cut, but I rebounded this morning.
The one day I try to play the end of day dip, it didn't.
Still up for the month.
Mike,
ReplyDeleteThanks for the link. I now have to go back and read part one and two.
Todd,
ReplyDeleteCongrats for being up on the month. Those trend days can be foolers. Have to go with the odds that the market is going to sell off, AGAIN.
today was gun shy after yesterday. I did have a chance to exit and make a tiny tiny gain, but didn't execute the trade then 2 minutes later.... gone.
ReplyDeletehere's a laugh for you today.
ReplyDeletecell phone
ooooh Mike yes thanks!
ReplyDeleteTodd - congratulations!! up is up right? :-)
Denise - Remind me never to doubt your TA skills again :-P I'm stubborn though know.
ReplyDeleteGood call on this rally my dear! :-)
Todd - That was an interesting article on students being able to use cell phones during tests.
ReplyDeleteThat just means they will never have to study again.
There will be one enterprising student, who will charge fellow students say…. $5 per test, put those people into their contact list and then test day they just text the answers to everyone who paid.
Just think how much those test scores will go up and George Double Ewe's No Child Left Behind Program will start to look like it was successful.
Mutt
Thor,
ReplyDeleteThank you for the compliment, but you should give everyone a reasonable doubt until proven otherwise.
I have learned from many years of study that the internal statistics do not lie but they are not the easiest things to interpret.
And as I have said before the external scary noises from the media has kept me out of trades in the past so I try to ignore them.
But everyone has to find what works for them and I also never stop learning.
Speaking of learning, I attended a free webinar by Corey of Afraid To Trade which will be archived at Trader Kingdom. It is about momentum, how to recognize it, and how to trade it on all time frames:
ReplyDeleteThe Momentum Kick-off – Identify and Trade Trend Reversals Ahead of the Crowd
There are numerous free archived webinars there if anyone is interested.
Denise - Thank you for taking the time to let us know about the webinar.
ReplyDeleteNow that the youngest is out of school for summer, I should have more free time to be able to view things like that.
Pssssstttttt Also, don't tell Thor or the others, but I will probably also be getting an iPhone soon, so that should allow more things like that to be watched.
Oh yea BTW - I bookmarked your above link, it looks like it has a lot of infomation
Mutt
Mutt,
ReplyDeleteIt was a really good webinar and I have been a paid subscriber to Corey's service in the past. He is one of the best when it comes to organizing the vast amount of technical analysis info that can be used. His free blog is also very good and he usually updates it with new things every day.
Denise - Thank you for the information.
ReplyDeleteMutt