Quick Summary:
Today was a day of chop and little has changed since yesterday. I entered KORS long on pullback. Still holding SPY short. GLD entry on weakness. The focus list still has plenty of stocks close to entry level, but will remain cautious with market at overbought levels.
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The Market
Key Pivot Levels: 191.52: new high resistance 187.56: 50 day moving average 181.31: recent low 181-184: plenty of buying in this range.
Under the Hood:
I can basically copy and paste last night’s comments on SPY, “SPY crept up a bit again. Nothing has changed technically. The big positive is the market has hit new highs. The negatives include extreme overbought stochastics, negative volume pattern, small up bars versus long down bars and a general apathy towards these new highs, as evidence by the small volume.”
My stop in SPY at $193.50 is getting closer to being hit. It is well within SPY’s daily range. If I do get taken out, I am hoping for a stronger run up so I can re-enter. The last thing I want is for it to turn back down right at my stop.
Take note of this chart from Telechart. It is the T2120 indicator, which shows the ratio of 26 week new highs/lows. The red line is SPY. Notice that when this indicator hits 95, it’s a slam dunk SPY short setup. We are at 86 right now. To get that slam dunk setup I would have to get stopped out here and re-enter at a higher price.
Some of you may be familiar with the T2108 indicator (stocks above 40 dma) that has become popular as an oversold/overbought indicator. I still watch that one, but so is everybody else. I choose to go where others are not.
Trading Game Plan:
Again not much has changed. Short strength or wait for a breakdown of the old high to short. For longs, we look for individual equities to pullback. For those that are new or want a review, please look at reports from last week. This one shows what SPY has done over the past year when hitting extreme overbought levels.
If my current SPY short (via reverse ETF SDS) hits its stop, I will look to re-enter SPY short again.
I entered KORS today, but passed on a few other stocks hitting buy points. I am being cautious with longs at these overbought conditions.
The Focus List
As noted yesterday, there are 19 stocks on the focus list. I have decided that is too many and in subsequent weeks even when there are a lot of setups, I will pair it down. For this week, I will leave the list at 19. (if you have an opinion about this, let me know. Do you want less or more stocks on the focus list). Click on the link to view the charts. (beav, kors, bid, axp, su, dlr, mcd, tol, win, ati, cxo, bcrx, wynn, fb, wlb, ibb, gmcr, amzn, googl). Rather than post an annotated chart of each one, I am going to make comments on each chart.
I entered KORS today and it is still a long entry on weakness. The big down bar from last Thursday is a concern, but support has not been violated and the down bar was not accompanied by high volume. You can expect to get some big movements from this stock, so don’t trade it if you can’t handle it. Stops should be under the 50 dma and target near the recent highs around $98 or round number resistance at $100.
WIN looks good on pullback.
A market pullback would likely set up a great entry in GOOGL. Remember that WYNN, FB, IBB are all very similar setups.
I am keeping my Sunday night comments here for the entire focus list:
BEAV: strength shows the $94 range is holding support. Expect a move to round number $100. Entry on pullback to $95.
KORS: Holding 50 dma. Entry on weakness at end of day to see if ma holds. This one is volatile and not for faint of heart.
BID: Bottoming pattern, entry between $38-39, stop under $38
WLB: Consolidating at top of breakout. Still needs pullback.
GMCR: Still working it’s way to gap fill. Looking to enter in $110-111 range.
AXP: just like WLB, consolidating at top of breakout range.
SU: pulled back to bottom of breakout. Still could fill gap at $37.50
GOOGL: consolidating gains. Like to see a pb to 50 dma.
DLR: nice pullback after run up. Good volume pattern. Entry at pb to 56-56.60.
MCD: let’s see if round number $100 holds. Entry on weakness in the $100-100 range.
AMZN: might be following footsteps of NFLX, GOOGL, FB . . .keep watching for pullback.
TOL: Nearing pullback entry at $35-35.50
IBB: entry on pb to 50 dma in the 531-535 range.
WIN: strong trend pullback. Entry on weakness.
ATI: Entry under 40.50. Stop under ma at 39.98.
FB: pb to 50 dma. Entry between $61-62.
CXO: ma pullback and bottom of trading range. Entry at $129-130.50.
WYNN: ma pullback. Entry $210.50-212
BCRX: breakout and moving average pullback. Entry $9.20-9.60.
As the week goes on, I will annotate charts from this list. If you have any questions, tweet, comment or email.
The Watchlist
HDB, AAL, CODE and EMES broke out today. Most stocks are either pulling back to good entries or are still extended. GDP’s move was disturbing near highs. Could signal a deep pullback.
Click here and scroll over ticker to see thumbnail chart
Market Leaders
These are stocks that I always watch, though they might not be in my tradeable watchlist, nor are they actually always leading the market (TSLA in recent months).
Most of these guys stalled today with small gains or losses after nice moves in previous days. GMCR, GOOGL, FB and AMZN are now on the focus list. We’ll continue to monitor CAT and TSLA as short setups.
Sector and International ETFs
GLD dropped some more today. If it reaches the buy zone marked on the chart tomorrow, I may enter long in anticipation of a bounce before another leg down.
Current Trades
Entered KORS this morning at $93.50. Stop is at $91.50 and Target is $97.50. An alert was sent this morning. Still holding SPY short.
Here is the Trade Journal with current open and past closed positions.
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