Sunday, November 4, 2018

Why Am I Not Consistent In My Trading?

Market Recap

October was a pretty dismal month for the stock market as it fell 6.9%, the worst month since September 2011 when it fell 7.2%.  If you believe in history repeating itself it may be interesting to note that the following month (October 2011) the stock market gained 10.8%, the best month for the stock market in 10 years.  I only mention this as I believe it does have some historical significance, but I do not expect the market to rally that much heading into the end of the year.  However, last week we did see three straight daily gains of at least 1%, the first such stretch in more than two years.

I do believe this little bump was caused by the positive reports coming out of Washington relating to the China trade dispute and the positive earnings reported by the main S&P 500 companies. I believe the jobs report will help sustain it, but I believe any major move in the market will not take place until after the mid-term elections on Tuesday.

Here are some things we need to keep in the back of our mind as we move forward into November:
  • The earnings season is winding down as close to 75% of the S&P 500 has reported results.
  • It's a bit too early to believe that this latest round of volatility has fully passed, but based on my analysis stated above, I continue to believe that that this is a temporary correction and not the start of a bear market. The market needs these healthy corrections.  
  • The Spotlight continues to be on the trade tensions with China.  I believe any major announcements in this area will be enough to give the market significant short-term volatility.

Profit Calendar

Due to popular demand I will reinstate my profit calendar.  I suspended it early this summer because I found myself trying to hit weekly goals and forcing trades, which is detrimental to growing small accounts.  I believe I am beyond that again so we will see how it goes.

Weekly Specials

You will need to go to this link to see the specials being offered this week:

Finishing The 4th Quarter Strong!
  • My beloved gamecocks were down going into the 4th quarter.  The defense stepped up in the 4th, made some key stops that they had not been able to do all game, and we brought it home.  The truth is Ole Miss outplayed us on every front but that 4th quarter got us the W
  • Auburn used a strong 4th quarter to come from behind and take out Texas A&M
  • Washington St.  who is ranked in the top 10, had to finish the 4th quarter strong to get past Cal
  • West Virginia really had a strong 4th quarter to come back and take out Texas

I could give you many more, but I also know not all teams that won finished strong, but those others started the 1st quarter strong, which is something we will talk about later in the next month.  The point I am making here, or should I say reiterating, is finishing the 4th quarter strong is imperative.  It also sets you up to start that 1st quarter strong.  This is our goal for the next 2 months.  We need a strong finish to 2018 and an even stronger start to 2019.

Rollin' With Ed

The questions I fielded this week in my episode of “Rollin’ With Ed, is; Why Can’t I be consistent in the market?  Why is it so hard to be consistent in the market?  I mean I have the strategies.  I’ve put in the screen time.  But I am still struggling to be consistent.

The bottom line is this, the stock market is random.  Trying to predict what’s going to happen with a stock next without truly understanding the context of the market is like a heads or tails coin flip.  You would be relying on luck at that point.  That is what most new traders do.  They are not willing to be patient and wait for the setups, which is a direct result of not taking the time to develop the proper foundation.  When you see me lose most of the time it is because I anticipated a move.  When I win, I would have waited for the setup and the perfect opportunity to enter.

You do, however need a certain degree of luck.  You see, we have our strategy, we have put in the time to vet the stocks we have on watch so that we have the best candidates, but as you guys who are in the community every day have seen, you must choose the right stock from your watchlist.  I know it can be frustrating, but we must revel in the fact that we have the movers on our watchlist.  Not bad considering there are over 7000 stocks in the market.

How do we improve our consistency in the market?
  • Have a process that we use every morning to prepare mentally and to locate and vet each stock that we put on our watchlist
  • Fully plan out each trade for every stock on your watchlist
  •  Once the market opens, focus on executing your trade plan, with an emphasis on nailing the entry.  The entry is everything. 
  • Reflect on your trades, especially the losing ones.
    •  Reflection is a very, very powerful tool that too few people use 
    • The most successful traders have a process to reflect on their losers and learn from them, which is why they continue to get better before your very eyes. 
The bottom line is that we are all human beings, therefore we will never be perfect, or will we have the ability to eliminate our biases.  Our goal here is not to be perfect in making money from every trade, but to perfect our ability to develop and execute our trade plans.  In that we will need to find balance, understanding that we will make mistakes, but feel confident because we have a process that allows us to learn from and correct those mistakes.  In this process, we will find true learning and consistency. 

Sunday, April 22, 2018

Weekly Market Outlook 4/22/18

U.S. markets were weak throughout Friday’s session as Wall Street worried over the rise of the yield in the 10-year Treasury note, currently at 2.96%, and representing the highest levels since 2014.
Although the major indexes extended their weekly win streak to two-straight, the close below key support levels was a slightly bearish development heading into the peak of 1Q earnings season.

The Dow extended its losing streak to three-straight sessions after giving back 0.8% while trading to an intraday low of 24,375. The S&P 500 fell 0.9% after trading down to 2,660 to end the week with back-to-back losses.

For the week, the S&P 500 was up 0.5% while the Dow gained 0.4%. However, both indexes closed below their 50-day moving averages on Friday after challenging their 100-day moving averages midweek.

The Nasdaq sank 1.3% after trading to an intraday low of 7,123 while closing back below its 50-day average but holding its 100-day moving average.

The Russell 2000 dropped 0.6% following the backtest to 1,561 but is slightly more than 1% above its 50/100-day moving averages which remain in solid uptrends.  The Russell 2000 rallied 1% for the week while the Nasdaq added 0.6%.

Financials were the only sector that closed in positive territory after rising 0.1%. Consumer Staples and Technology paced sector laggards after givingt, back 1.7% and 1.4%, respectively.

For the week, Energy jumped 2.7% to lead sector strength while Industrials were higher by 2.2%. Consumer Staples plummeted 4% and Real Estate declined 1.1%. Technology slipped 0.2% to bring up the rear.

The Q1 earnings season has gotten off to a strong start, with both the growth pace as well as the number of positive surprises. The Finance sector companies are heavily represented in the current results, with the Tech sector taking the spotlight in the coming week.  Total earnings for the 73 S&P 500 companies that have reported results thru Thursday’s close are up 25.8% from the same period last year on 10.6% higher revenues. Overall, 82.2% have topped EPS estimates with 71.2% beating revenue forecasts.  Total Q1 earnings for the Tech sector are expected to be up 20.9% from the same period last year on 11.4% higher revenues. This would follow 24.2% earnings growth for the sector on 11.1% revenue growth in the preceding quarter.

With expectations super high, it is possible that actual results may not live up to expectations. This could weigh on the Tech sector’s stock market performance.  However, the more likely scenario is the sector’s results will come in better than expected, helping push estimates for the coming quarters higher. If so, the current momentum could hold, setting up another run at record highs, possibly into May, and a month Wall Street likes to go away.

Global Economy – European markets were mixed on Friday after Bank of England Governor Mark Carney threw into doubt the possibility of a rate hike in May. UK’s FTSE 100 gained 0.5%, France’s CAC 40 was up 0.4%, and the Belgium20 was higher by 0.2%.  Germany’s DAX 30 declined 0.2% and the Stoxx 600 Europe was off a tenth-point, or 0.03%.  German March PPI rose 0.1% month-over-month and 1.9% year-over-year, both below expectations of 0.2% and 2% respectively.

Asian markets closed lower across the board to snap a broader two-session winning streak. China’s Shanghai stumbled 1.5% while Hong Kong’s Hang Seng tumbled 0.9%.  South Korea’s Kospi fell 0.4% while Australia’s S&P/ASX 200 dipped 0.2%. Japan’s Nikkei slipped 0.1%.  Japan March national CPI rose 1.1% year-over-year, matching expectations. March national CPI ex-fresh food rose 0.9%, while March national CPI ex-fresh food & energy rose 0.5% year-over-year, both also matching forecasts.

Baker Hughes reported that the U.S. rig count was up 5 rigs from last week to 1,013, with oil rigs up 5 to 820, gas rigs unchanged at 192, and miscellaneous rigs unchanged at 1.  U.S. Rig Count is up 156 rigs from last year’s count of 857, with oil rigs up 132, gas rigs up 25, and miscellaneous rigs down 1 to 1. The U.S. Offshore Rig Count is up 2 rigs to 18 and down 2 rigs from last year’s count of 20.

Market Sentiment – Cleveland Fed President Loretta Mester said she doesn’t expect inflation to pick up sharply even as unemployment is likely to fall below 4% this year and remain there through 2019.  She argues against a steep path for interest rates and that gradual rate hikes will be appropriate this year and next year.  Chicago Fed Charles Evans said some cyclical pick-up in inflation would be welcome as it would help solidify expectations symmetrically around the Fed’s 2% objective. He added, it was necessary for the Fed achieving their inflation target on a sustainable basis. 

Minneapolis Fed Neel Kashkari said he is surprised the 10-year rate hasn’t risen more on the back of the tax cut, big spending bills, and the Fed’s balance sheet normalization.  He is more concerned about the flatter yield curve than the higher rate, and wonders whether the narrowing is a signal that the Fed is not far from neutral. He’s not as worried that the curve is signaling recession, but does think it’s signaling caution.  Kashkari noted wages and prices are finally, albeit slowly, moving higher, with the latter approaching the Fed’s target and that raises the question about where is neutral.
He thinks the Fed could be closer to neural (a 2% funds rate) than others believe. In terms of trade and tariffs, he noted his business contacts are concerned and some are already raising prices in case tariffs are levied but added it’s uncertain how it will all play out. Regarding market valuations, he said just because stock prices are high doesn’t mean a downturn will lead to a financial crisis.
He closed by saying if investors suffer losses, so be it as it’s part of free markets and it won’t drive Fed policy, though the Fed does want to avoid a financial crises.

Fed Governor Brainard said she is pleased to see synchronized growth occurring around the world, with the recovery gaining traction in the U.S. and especially in other countries. She warned though about remaining vigilant as there are risks. One is the sizeable injection of fiscal stimulus, which is unusual for this point in the cycle, and the Fed will monitor to see if imbalances are starting to develop. She said trade is also a material uncertainty.  Brainard went on to say that the inflation outlook is starting to move more in line with expectations in terms of the impact of stronger growth.
But after many years below target, inflation is starting to move up to the FOMC’s goal, and she didn’t sound alarmed at that prospect. She added asset valuations are looking a little stretched versus historical norms, though borrowing is quite moderate.  In closing, Brainard said she will be focused on income data where she expects still solid growth with full employment. That outlook should keep the Fed on a gradual normalization course.  As for commodity prices, she believes the rising trend is more reflective of strengthening global demand.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for a third-straight session after tapping a low of $118.43 while closing back below its 50-day moving average.  Fresh support is at $118.50-$118 with a close below the latter likely leading to further weakness to $117-$116. Lowered resistance is at $119-$119.50.  RSI is in a downtrend with February support at 30 back in play. Resistance is at 40-45.

Market Analysis – The Russell 3000 Index ($RUA) extended its losing streak to two-straight following Friday’s backtest to 1,579 and close back below the 50-day moving average.  Support is at 1,575-1,570 with a move below 1,560 signaling a short-term top. Resistance is at 1,595-1,600 with continued closes above the latter and the 100-day moving average (at 1,599) being a bullish signal.
RSI is trying to hold support at 50 with risk to 40 with on a close back below this level. Resistance is at 55-60 with continued closes above the latter signaling a possible return of momentum.

The Materials Select Sector (XLB) traded lower for a second-straight session after bottoming at $58.75. Support at $58.75-$58.50 and the 50-day moving average held with a close below the latter being a slightly bearish signal.  Near-term resistance is at $59.50-$59.75 and the 100-day moving average (at $59.77).  RSI appears to be headed towards support at 50 and prior resistance from earlier this month. There is risk to 40 on a close below this level. Resistance is at 60 with continued closes back above this level being a bullish development.

The percentage of S&P 500 stocks trading above the 50-day moving average closed Friday at 45.63% down from an opening of high of 53.57%. Support is at 40% with a close below this level being a bearish signal. Lowered resistance is at 50%-55%.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average is currently at 56.31%. Support is at 50% with a close below this level being a slightly bearish development.
Resistance is at 60-65% with the latter representing last week’s peak.

Courtesy of Market Geeks

Sunday, January 21, 2018

Weekly Market Outlook 1/22/2018

U.S. markets traded in a tighter range on Friday while pushing record highs and fresh resistance despite worries over a government shutdown.

The Russell 2000 showed the most strength after rising 1.3% but failed the 1,600 level and its all-time high by 7 points. However, the close north of 1,597 and 0.3% weekly pop represented the third-straight week of gains and 8th record closing high of 2018.

The Nasdaq advanced 0.6% after closing at a record high of 7,336 to extend its weekly win streak to 3-straight. The index closed higher for the fifth time in six weeks after rising 1%.

The Dow climbed 0.2% while holding the 26,000 level but fell shy of its lifetime high of 26,153 set the prior session by 82 points. The S&P 500 rose 0.4% to finish at a fresh record close and all-time high of 2,810.  Both indexes also clinched their third-straight weekly advance and have traded higher in 8 of the past 9 weeks.

Consumer Discretionary and Consumer Staples jumped 1.1% and 0.9% to lead sector strength while Financials and Real Estate added 0.7%. Utilities and Energy were the only sector laggards after falling 0.3% and 0.1%.  For the week, Consumer Staples surged 2.4% while Health Care and Technology rallied 1.9% and 1.5%, respectively. Utilities and Industrials dropped 0.8% and 0.6%. Energy and Materials slipped 0.3% and 0.2% to round out the losing sectors for the week.

The Q4 results from nearly 10% of the S&P 500 companies that have reported earnings thus far have combined to account for 13.7% of the index's total market capitalization.  Total earnings for these companies are up 11.4% from the same period last year on 7.5% higher revenues, with 77% topping EPS and revenue estimates.n For the coming week of earnings, Technology, Industrials, and Financials will be the dominant sectors.  Approximately 22% of the weight of S&P companies will be reporting, making its impact on the index far-greater than the market has seen in the prior two weeks of 4Q earnings season.

Global Economy- European markets closed higher across the board to end the week with Germany's DAX 30 leading the way after jumping 1.2%. France's CAC 40 was up 0.6% while UK's FTSE 100 and the Stoxx Europe 600 advanced 0.5%. The Belgium20 climbed 0.4%.

UK December retail sales ex-auto fuel fell 1.6% month-over-month, weaker than expectations for a drop of 1%. UK December retail sales including auto fuel tumbled 1.5% month-over-month, weaker than expectations for a decline of 1%.

German December PPI rose 0.2% month-over-month and 2.3% year-over-year, matching expectations.

Asian markets ended mostly higher, with Australia's S&P/ASX 200 lagging after giving back 0.2% to post it sixth decline in eight sessions. China's Shanghai and Hong Kong's Hang Seng rose 0.4% while Japan's Nikkei and South Korea's Kospi were up 0.2%.

The University of Michigan January consumer sentiment index slid 1.5 points to a 6-month low of 94.4, after falling 2.6 points to 95.9 in December. Expectations were for a print of 97.

Baker Hughes reported the U.S. Rig Count was down 3 rigs from last week to 936, with oil rigs down 5 to 747, gas rigs up 2 to 189, and miscellaneous rigs unchanged.  The U.S. Rig Count is up 242 rigs from last year's count of 694, with oil rigs up 196, gas rigs up 47, and miscellaneous rigs down 1 to 0. The U.S. Offshore Rig Count was unchanged at 19 rigs and down 5 rigs year-over-year.

Market Sentiment- San Francisco Fed, John Williams, said economic tailwinds are being provided by financial conditions and confidence, along with tax cuts and the global economic environment.  He expects unemployment to fall to 3.7% late this year and views low inflation as good news while predicting it will return to 2% in the next two years.  Williams went on to say the Fed needs to get monetary policy back to normal and he doesn't view the Fed as ahead of or behind the curve, but well-positioned to keep the economy on a sustainable path. 

Fed Vice Chair of Supervision, Randal Quarles, said streamlining the Volcker Rule has begun and he supports a permanent transition to a 2-year cycle for bank living wills. He noted progress on the leverage ratio recalibration relatively soon, and expects the Fed to take concrete steps to recalibrate liquidity requirements for non-global large banks.  Quarles said he will also work with the board to simplify loss absorbency requirements along with promoting better, but not complete, disclosure of the Fed's stress-testing models.

Cleveland Fed, Loretta Mester, said the U.S. Federal Reserve should raise interest rates three to four times in both 2018 and 2019, and a pace that is a much faster than many of her fellow policymakers.  She said the economy should grow at about a 2.5% pace this year, fueled both by consumer and business spending, though the recently passed tax cuts could drive growth even faster and will continue to provide a lift to the economy next year as well.  Mester also forecast unemployment will sink below 4% by the end of the year, and inflation will return to goal within a year or two.

Fedspeak lightens in the coming week as the Fed enters the blackout window against policy remarks with a week to go before the January FOMC decision. Tuesday is the last official day of chatter and when Chicago Fed Charles Evans is scheduled to speak.

The iShares 20+ Year Treasury Bond ETF (TLT) traded lower for the 3rd-straight session after bottoming at $122.98. Fresh support at $123-$122.75 held into the closing bell.  A move below the latter and this month's low of $122.66 would be a bearish development with continued risk to $122-$122.75 and late October lows. Lowered resistance is at $123.50-$123.75 and the 200-day moving average.  RSI remains in a downtrend with October support at 30 in play on continued weakness. The 50-day moving average has rolled over and is also in a slight downtrend.  It is early, but the technical outlook is showing signs of a bearish death-cross forming in the coming weeks or months.

Market Analysis- The Spider S&P 500 ETF (SPY) traded to an all-time high of $280.41 on Friday with fresh resistance at $282.50-$283 now in play. Near-term support is at $279-$278.75 with a close below $277.50 signaling a possible short-term top.  RSI remains elevated with resistance near 85 holding since early this month. Support is at 80-75 with a move back below this level signaling additional weakness towards 70-65.

The Industrials Select Sector Spider (XLI) tested a high of $79.79 with resistance at $79.75-$80.50 and last week's all-time peak of $80.60 holding.  Continued closes above the latter could lead to a push towards $82.50-$83. Near-term support is at $79.25-$79 with a close below the latter being a slightly bearish development.  RSI recently peaked at the 90 level earlier this month with current resistance at 80. Support is at 70 and a level that has been holding since mid-December.

The percentage of S&P 500 stocks trading above the 200-day moving is currently at 78.4% with near-term support at 77.5%-77%. A move below the latter could lead to monthly lows towards the 76%-75.75% area.  Resistance is at 78.75%-79% with a close above the latter being a slightly bullish development but still signaling overbought levels.  The percentage of Nasdaq 100 stocks trading above the 50-day moving average closed Friday at 87.5% with current and February 2017 resistance at 90%-91.5% still in play.  Support is at 85%-82.5% with a move below the 80% level signaling a short-term top for the Nasdaq 100.

Courtesy of Market Geeks

Monday, January 15, 2018

Weekly Market Outlook 1/15/2018

U.S. markets traded higher on Friday ahead of the holiday weekend to set another round of record highs as 4Q earnings earnings season began.  The Dow rose 0.9% after testing an intraday high of 25,810 while gaining 2% over the week. The S&P 500 advanced 0.7% after closing a point off its late day run to 2,787 to book a 1.6% gain for the week.

It was the second-straight up week for both the Dow and the S&P 500, as well as their seventh positive week in the past eight.  The Nasdaq rose 0.7% after trading to an all-time peak of 7,265 and was up 1.7% over the past week, its second consecutive weekly advance.  The Russell 2000 climbed 0.3% after coming within 2 points of clearing the 1,600 level. For the week, the small-caps rallied 2%, its biggest weekly advance since September.

Consumer Discretionary and Energy led sector gains, and were up 1.3% and 1% respectively. Real Estate and Utilities were the only sector laggards, falling 0.7% and 0.6%.  Sectors for the week that outperformed were Energy and Industrials (3.3%), Consumer Discretionary (3.2%), and Financials (2.9%).  Real Estate and Utilities sank 3.4% and 2.1% while Consumer Staples fell 0.5% and were the under-performers sector for the week.

Next week will be the first real week of earnings season, with four more major weeks to come. By the end of next week a little over 7.5% of S&P 500 companies will have reported, representing over 12.6% of the index weight.  The week after will see an additional 19% of the components having reported, representing over 22% of index weight in that week alone.

Global Economy- European markets traded higher after German negotiators reached a preliminary accord on a coalition. France's CAC 40 was up 0.5% while the Stoxx Europe 600 and Germany's DAX 30 climbed 0.3%.  The Belgium20 and UK's FTSE 100 advanced 0.2%.  German Chancellor Merkel's Christian Democratic Union, the Bavarian CDU Party and the Social Democrats, came to an agreement that outlines a possible alliance.

Asian markets were mostly higher with the exception of Japan's Nikkei Stock which slipped 0.2%. Hong Kong's Hang Seng surged another 0.9% to close higher for the 14th-straight session and South Korea's Kospi rose 0.3%.  China's Shanghai was up 0.1% while Australia's S&P/ASX 200 added just over 2 points, or 0.04%.  China December new yuan loans rose by 584.4 billion yuan, weaker than expectations for a gain of 1 trillion yuan. December aggregate financing rose 1.14 trillion yuan, weaker than expectations of 1.500 trillion yuan.  The China December trade balance was in surplus by $54.69 billion, wider than expectations of $37 billion and the biggest surplus in nearly 2-years.

December exports rose 10.9% year-over-year, stronger than expectations of 10.8%. December imports rose 4.5% year-over-year, weaker than expectations of 15.1%.

U.S. Consumer Price Index edged up 0.1% in December, with the core up 0.3%. The 12-month rate slowed to 2.1% year-over-year versus 2.2%, but the core accelerated a bit to 1.8% year-over-year versus 1.7%.

November Business Inventories were up 0.4% versus forecasts for a rise of 0.3% for the month.

U.S. December retail sales increased 0.4% for the headline and ex-autos. The core matched expectations while ex-autos were expected to come in at 0.5%.

Baker Hughes reported that the U.S. rig count was up 15 rigs from last week to 939, with oil rigs up 10 to 752, gas rigs up 5 at 187, and miscellaneous rigs unchanged.  The U.S. Rig Count is up 280 rigs from last year's count of 659, with oil rigs up 230, gas rigs up 51, and miscellaneous rigs down 1 to 0.
The U.S. Offshore Rig Count is up 2 rigs from last week to 19 and down 6 rigs year-over-year.

Market Sentiment - Dallas Fed's Kaplan upped his GDP forecast by 0.2% due to tax reform and projects growth in the 2.5%-2.75% area for this year.  His base case for interest rates is still for three hikes, and not less and added acting sooner rather than later will prevent the Fed from acting more aggressively later and help sustain the economic expansion.  Kaplan went on to say he could see the unemployment rate drop under 4%.  He also expects a big jump in oil supply out of the U.S., possibly in the 10.25 million barrel area and said a re-balancing in China should be manageable.

Philadelphia Federal Bank Reserve President, Patrick Harker, expects two rate hikes in 2018 and shy of the three dot median forecast. He also said the economic outlook was pretty good.

Atlanta Fed's Q4 GDPNow estimate was boosted to 3.3% from 2.8% previously. The forecast of fourth-quarter real consumer spending growth increased from 3% to 3.8%.

Cleveland Fed's Median CPI rose 0.3% in December after a 0.2% November gain. The 16% Trim CPI rose 0.2% last month after the same gain in November.

New York Fed NowCast Q4 GDP estimate was trimmed to 3.88%, compared to 3.97% previously. For Q1, 2018, the economy is forecast to grow 3.21%, down from 3.45% previously.

The iShares 20+ Year Treasury Bond ETF (TLT) rebounded for the 2nd-straight session after trading to a high of $124.79. Lower resistance at $124.75-$125 held.  A close above the latter would be a slightly bullish signal for a continued test to $125.50-$125.75 and the 50-day moving average. Support is at $124-$123.50 and the 200-day moving average.  RSI is back in an an uptrend after holding mid-December support at 40.

Market Analysis- The Russell 2000 ETF (IWM) traded to an all-time high of $158.86 on Friday after breaking out of a tight trading range between $154-$155 to start the New Year.  Fresh resistance is now at $159-$160. Support is at $158-$157.50 with backup help at $156-$155.50.  RSI is cleared November resistance at 70 with fresh hurdles at 80-85 and September and early October highs. A close back below 70-65 would likely signal a short-term top.

The Technology Select Sector Spiders (XLK) traded to an all-time high of $66.90 with lower resistance at $66.75-$67 holding into the closing bell.  Continued closes above the latter could lead to a run towards $68.50-$70. Support is at $66.25-$65.75 with a move below the latter being a slightly bearish development.  RSI is approaching early January and mid to late-November resistance at 70-72 with continued closes above this level being slightly bullish for a possible run towards 80.

The percentage of S&P 500 stocks trading above the 50-day moving is currently at 81% after peaking at 83.56% midweek and a 52-week peak.  Resistance is at 83.5%-85% on continued closes above 80% but is signaling overbought levels. Support is at 77.5%-75%.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average is currently at 82.69% with late April and early May resistance at 85% in play on continued momentum.  Support is at 80%-77.5% with a move below the latter signaling a short-term top.

Courtesy of Market Geeks

Monday, December 25, 2017

Winning the 1st Quarter

Hi fellow traders, I want to wish all that are celebrating a very Merry Christmas and to everyone a safe and happy holiday season.  I feel one of the most beautiful things about the world we live in are the diverse cultures we have and how much we can learn from one another.   With the emerging technologies and our ability to reach some previously untouched facets of our society, we are becoming closer than ever.  This is an exciting time to be alive!

Last year we focused on starting where you were with what you had.  I started over 6 times with $1500 in my Suretrader account this year.  We only have 4 days left in this quarter but to put this in perspective, I have made $45339.30 to date in this year trading small.  I started a community in the time span of a weekend and have spent all year trying to turn it into something special.  All of this while trying to focus on my trading and teaching in chat.  I proved what you can do because you in the community saw it unfold live.

The focus again this year is starting where you are with what you have.  Getting started perusing a goal or dream is one of the hardest things we face as adults.  Too often we wait for the perfect time or the perfect opportunity and it never comes.  It doesn’t take near as much to get started as you think.  I changed the dynamic of my community going into this year to provide all those who are sitting on the fence waiting to get the money, or the time to get started an opportunity to do so.  Just by joining the AJT community you get a first-class education free.

So, you can start now, work at your own pace, and develop the skills you need to be a successful trader.  Don’t worry about trying to save 3k to 4k to join a community and start learning, or saving for extra monitors or a trading computer.  For as little as $50 a month, if you elect an annual subscription, you can learn and trade live beside me every day.  You get access to the live day, swing, and trading psychology classes as well as the recordings. My goal is to educate you and help you develop the skills needed to build a successful trading career.

Back in October I started the 4th quarter challenge.  We needed to finish the fourth quarter strong to set us up for the next year.  I pointed out the obvious:
The first 3 quarters are history
The only thing that mattered then was the 4th quarter
If you were unhappy with your first 3 quarters performance, then:
You had to change your mindset and habits
You had to identify and change everything that created your poor performance
The worse thing we could have done was continue to do the same thing and expect different results.

Let’s look at some numbers.  I had 21 traders to sign up.  I had a goal of 25 so this was good.  However, I had 9 to not stay past the 1st month.  I started with $1500 in the toughest market that I have seen recently, and I struggled to make any progress through the first 3 weeks of October. I only ended up making $399. The struggle was real and in the back of my mind even though I was frustrated I was happy that you were able to see the real deal.  Unfortunately, some did not see it that way. In my experience in education I have a good feeling that these are the prospective traders that may not have what it takes to see these tough times through and become successful.  You have to have mental fortitude and take the bad times with the good.  Now I am sitting at $10,304.30

This 4th quarter challenge was about facing adversity head on and building a foundation that we can take into the next year.  If you stuck with me, you saw this transition first hand and the mental fortitude needed to get through the hard times and into prosperity.  You saw exactly what it took live and unscripted, which at times was very embarrassing.  I didn’t quit.  I didn’t give up. But if you quit during this process, you missed the most important and valuable lessons of the 4th quarter.
To finish summing it up I had 12 stay active and out of that 12, I have 7 that have subscribed for the 1st quarter and one took advance of the early bird yearly subscription deal.  4 I guess are still on the fence!

You guys know by now that I am a college sports junkie so in line with that I want to share this example with you.  I watched South Florida and Texas Tech in the Birmingham Bowl.  As you can see, Texas Tech won the 1st quarter but they didn’t finish it strong. They lost the 2nd, won the 3rd, but didn’t finish it strong.  Meanwhile South Florida stayed consistent and continued to build momentum and finished the 4th quarter strong. That’s what won them the game. The body of work they put in during the 1st quarter, not folding up under adversity, and finishing the 4th quarter strong!

This year, we are not only looking toward the first quarter and wining it, we’re looking at finishing it strong.  Here is an example of a team, who didn’t have the skill, talent, or the capital backing them that their opponent had, but they won the 1st half and finished strong, and in turn won the game.  The game for Wofford was one in the foundation they laid in the first half.  The blows they landed in the 1st half set the stage and they followed through.  Sure, they took hits as well, but they remained focused and stuck to their game plan, UNC did not. Wofford College is a very small independent liberal arts school here in South Carolina.   Enrollment was 1,683 this past semester.  UNC is a public institution with an enrollment of 18,523 this semester and is a college basketball powerhouse.

This is what we need to do as traders going into this first quarter.  Don’t worry about the professional traders who may be more talented, experienced, or capitalized.  We stick to our game plan and see it through.  There is a lane for us.  Sure, we will take hits in the form of losing trades, but if we stay in our lane and stick to our game plan, we will be victorious.  So lets make 2018 our best year yet!


Sunday, October 8, 2017

Weekly Stock Market Outlook 11/9/2018

U.S. markets took a breather on Friday as the major indexes closed mixed to finish the week.
The Dow and S&P 500 traded lower for the first time in 7 and 10 sessions, respectively, while the Russell 2000 slipped for the second time in three sessions. Meanwhile, the Nasdaq is riding a 9-session winning streak with micro-caps in a holding pattern heading into the start of 3Q earnings season.   Materials and Financials were the strongest sectors for the week, rising 1.9%. The only sector laggards were Energy and Consumer Staples after giving back 0.6% and 0.3%, respectively.

Global Economy -European markets finished mostly lower as the political drama in Spain continued with the financial and political squeeze on the separatist government in Catalonia tightening. The Belgium20, France's CAC 40 and the Stoxx Europe 600 fell 0.4% while Germany's DAX 30 slid 0.1%. UK's FTSE 100 gained 0.2%

UK Q2 unit labor costs rose 1.6% year-over-year, the slowest pace of increase since Q4 of 2015.

Germany August factory orders jumped 3.6% month-over-month, stronger than expectations of +0.7%.

Asian markets traded higher with China and South Korea still closed on Friday for holidays. Australia's S&P/ASX 200 jumped 1% while Singapore's Straits Times index rallied 0.9%. Japan's Nikkei and Hong Kong's Hang Seng Index advanced 0.3%.

Japan's August labor cash earnings rose 0.9% year-over-year, stronger than expectations for an increase of +0.5%.

The Japan August leading index CI rose 1.6 to 106.8, weaker than expectations for a gain of 1.9 to 107.1. The August coincident index rose 1.9 to 117.6, stronger than expectations for a rise of 1.8.

September nonfarm payrolls declined 33,000 while the unemployment rate fell to 4.2%, down from 4.4%. Expectations were for an increase of 120,000 jobs added.

U.S. consumer credit rose $13.1 billion in August versus expectations of $16 billion for the month.

U.S. wholesale sales jumped 1.7% in August with inventories up 0.9%.

Market Sentiment - St. Louis Fed dove James Bullard did not address either current monetary policy or the economic outlook in his prepared remarks.

New York Fed Dudley repeated the gradual rate hike rhetoric that has been a recent theme, despite surprisingly low inflation, which he expects to rebound in the medium-term. He views falling unemployment and dollar, although it has been rebounding of late, and financial conditions as reasons to tighten.

He believes inflation has been held down by fundamental structural issues and hopes for clarity after the hurricane impact, which he says will boost growth over time.

The iShares 20+ Year Treasury Bond ETF (TLT) traded to a low of $123.03 shortly after Friday's open with lower support at $123.50-$123 holding. A move below the latter opens up risk to $122-$121.75 and the 200-day moving average. This area served as strong support throughout July.

Resistance at $124.50-$124.75 held on the rebound afterwards to $124.10. RSI is still in a downtrend and is pushing July lows. A continued backtest to 30 could be in the works and would signal oversold conditions.

Market Analysis- The iShares Micro-Cap ETF (IWC) has been in a holding pattern for four sessions following the September surge and breakout above $88 and the 50-day moving average. Friday's high reached $96.50 but failed the recent all-time high of $96.71.

Fresh resistance is at $96.75-$97.50 with a move above the latter likely leading to triple-digits. A close below $96-$95.75 could lead to a continued backtest towards $94.50-$94 to retrace the gap higher.  RSI tapped 90 last week and is signaling overbought conditions at current levels.

The Consumer Staples Select Spiders (XLP) traded to a low of $53.74 with July support at $53.50 still in play on continued weakness. A close below $53.50 would likely lead to a continued backtest towards $52.50-$50. The 52-week low is at $49.98.

Current resistance is at $54 and the 200-day moving average followed by $54.25. The 50-day moving average remains in a downtrend with RSI showing signs of continued weakness to the low 30's.

The percentage of Nasdaq 100 stocks trading above the 50-day moving average is currently at 70% and has cleared the 69% level from the first of September.  Continued closes above 70% would be bullish for possibly reaching 75%. The area held in April, May and July and could signal a short-term market top, if reached. A move back below 65% would signal upcoming market weakness.

The percentage of S&P 500 stocks trading above the 200-day moving average is currently near 73% with Thursday's peak reaching nearly 75% and a 6-month peak. The one-year high reached 80%-82% at the beginning of the year. A move below 70% would be a signal for a possible pullback towards 65%.

Courtesy of Market Geeks

Sunday, September 24, 2017

Weekly Stock Market Outlook 9/25/2017

U.S. markets rebounded off their lows on Friday to finish mostly higher aside from the Dow which traded lower for the second-straight session. The blue-chips and the S&P 500 ended the week with slight gains while the Nasdaq gave back 0.3%.  The Russell 2000 quietly made a run at its all-time high of 1,452 from July and fell shy by just over a half-point after gaining 0.5%. For the week, the small-caps were up 1.3%.  Sector action for the week was mixed with Energy, Industrials and Consumer Discretionary leading on the upside. Losing sectors included Utilities, Real Estate, Basic Materials and Consumer Staples.  The rotation out of safety, such as the Utilities (and gold), and into the small-caps could continue if market momentum stays strong.

Global Economy - European markets gained on signs the European economy continues to expand at a better-than-expected pace. UK's FTSE 100 jumped 0.7% while France's CAC 40 advanced 0.3%. The Stoxx Europe 600 gained 0.1%. Belgium20 fell 0.3% and Germany's DAX 30 slid 0.1%.

The Purchasing Managers Index (PMI) for the eurozone hit 56.7, topping expectations for a drop to 55.6. The manufacturing component rose to 58.2 and the services component checked-in at 55.6, both also topping expectations.  Germany's September Markit/BME manufacturing PMI unexpectedly rose 1.3 to 60.6, stronger than expectations of a -0.3 dip to 59.

German voters go to the polls this Sunday where Chancellor Merkel is expected to secure a fourth term, although she may not win an outright majority.

Asian markets were down, with stocks in Japan reversing early gains following fresh threats from North Korea, while China's markets declined on a credit-rating downgrade. Hong Kong's Hang Seng Index sank 0.9% and South Korea's Kospi tumbled 0.7%. Japan's Nikkei declined 0.3% and China's Shanghai index slipped 0.2%.

Bucking the trend was Australia's S&P/ASX 200 after climbing 0.9%.

Standard & Poor downgraded China's sovereign credit rating due to risks associated with its increasing debt. The downgrade had been widely anticipated, and brings its rating in line with Moody's, which downgraded China in May, and Fitch, which made its cut back in 2013.

The U.S. Markit's flash manufacturing PMI for September edged up 0.2 points to 53, matching expectations. The services PMI fell to 55.1 and below the 55.8 that was forecast.  September Atlanta Fed Business Inflation Expectations were up 1.9% for the year.

Market Sentiment- Fedspeak returned on Friday following from the blackout period ahead of last Wednesday's FOMC minutes.

San Francisco's Fed John Williams talked about balance sheet normalization, targeting a 2.5% Fed funds rate as the new normal with one more hike this year and three more next year. Williams said the Fed was very close to its mandate targets and that the economy is in very strong shape with the markets understanding what the Fed is trying to do.

Kansas City Fed Esther George said the full employment mandate appears to have been met going by the most recent Fed projections, while the weak inflation reading does not appear related to the economy.  She expects job growth to weaken but to remain at levels needed to absorb new workers and to keep unemployment levels low. However, she's concerned that loose financial conditions cannot be perceived until they become a problem.  George went on to add consumers are in a good position to keep spending and said the balance sheet plan was well telegraphed to the public and markets, saying she's gratified that the announcement did not cause a strong market reaction.
As far as the economy, she said it's a good sign that the balance sheet reduction can begin, while quantitative easing (QE) is kept in a box and used for emergencies only. She views gradual interest rate moves as appropriate, but said the Fed needs to keep the momentum on rates underway.

Dallas Fed Robert Kaplan is open minded about one more hike this year in December, but he said he has not made a decision. He said structural headwinds, including technology could hold inflation down.  He also sees a shortage of construction workers around Houston though he anticipates a snap-back in growth from Harvey.

Risk from China remains a danger zone in terms of rising debt levels there. He also said the oil industry is in a fragile equilibrium at around $50 barrel.

The iShares 20+ Year Treasury Bond ETF (TLT) held positive territory throughout Friday's session while trading up to $126.73.  Resistance at $126.25-$126.50 was cleared but levels that failed to hold into the closing bell.  Support is trying to move up to $126 with $125.75-$125.50 and the 50-day moving average serving as backup.

Market Analysis- The Russell 2000 ETF (IWM) made a run to $144.67 and a fresh all-time peak with continued closes above $144 being a bullish development.  This area served as prior resistance on the July highs and will try to hold as near-term support with IWM reaching $146-$147.50 on continued momentum.  A move back below $143-$142.50 would be a slightly bearish development and would likely signal a short-term double-top.

For the week, the largest single fund inflow was to the iShares Russell 2000 which was over 20% on ETF fund inflows.

The iShares Transportation Average (IYT) has been volatile this month but is approaching fresh 52-week peaks with Friday's push to $175.20.  A move above $175.75-$176 could lead to a continued breakout towards the $180 level. Shaky support is at $174-$173.50.  A move below $173-$172.50 would be a bearish development for continued weakness and would also signal a near-term double-top.

The percentage of Nasdaq 100 stocks trading above the 50-day moving average is currently at 56%.
Last Thursday's low reached 50% and represents the late August breakout above this level that led to a quick run to 75%.  The is risk to the 45%-40% area on continued Tech weakness and mid-August support levels. A move back above 60% could signal a return of market strength.

Courtesy of:  Market Geeks