Aug 082014
 
HIBB daily Aug 8th

HIBB daily Aug 8th

HIBB (Hibbett Sports Inc) gapped down 12.5% at the open today and came within a mere 3 cents of the first profit target, T1 at 43.48. Chances are that target will be hit next week so consider booking partial or full profits and/or lowering stops, depending on your trading plan. T2 remains the final target

Aug 082014
 

The SPY hit my downside target originally posted here just over 3 weeks ago within pennies before reversing. I’ve included that original chart from July 17th in which I stated “T2 is my preferred target, which is the bottom of the 5/27 gap as well as the 50% Fib retracement level.” The bottom of the 5/27 (Tuesday) gap was the 5/23 (Friday) high of 190.48 , following a 3-day holiday weekend. The SPY kissed a low of 190.55 just before the close yesterday while putting a divergent (bullish) low on the intraday time frames (15-120 minute charts)… a mere 7 cents above the bottom of the gap and a good example of how stocks, sectors & indices often reverse just above or below the actually support level (hence the reasoning for placing my buy-to-cover orders on short trades slightly above the actual support level, although I wasn’t trading the SPY in this case).

That brings me to a point that I have discussed here before which is what I consider to be a major shortcoming of the stockcharts.com charting platform: The inability to display the correct (true) price history of any dividend paying security on an intraday time frame. When viewing daily or weekly time frames, Stockcharts.com does allow for the viewing of the price history stocks and ETFs “unadjusted” for dividend payments (which I feel is a very important feature when using past price history to help determine future price direction… i.e.- technical analysis). However, the ability to view actual, i.e.- unadjusted, stock price history on intraday charts is not an option with Stockcharts.com. I have address this issue with them in the past, to no avail, and the main reason that I continue to use Stockcharts.com is the ability to provide RSOTC followers the ability to view the live charts via hyperlinks (a feature not available in the overall superior TC2000/freestockcharts.com charting platform).

As mentioned above, in this July 17th post, along with a static & live link to my 60 minute SPY chart from stockcharts.com, I had stated the target which has now been hit on the SPY. Below is the previous 60 minute chart from July 17th followed by a screenshot of today’s 60 minute chart from Stockcharts.com, in which it appears prices fell well short of the bottom of that 5/23-5/27 gap. However, in viewing today’s 60 minute chart from TC2000, one can easily see the almost perfect kiss of the bottom of that gap before prices reversed. Again, I have discussed this shortcoming of stockcharts.com in the past & don’t want to beat a dead horse but I feel that this is an important issue for those who trade using sc.com to be aware of, especially as sc.com is one of the more popular charting platforms in use today.

 

On the TC2000 60 minute chart above, I’ve also listed what I believe to be the two most likely scenarios for the SPY: Prices reversing at the former T1 level (now labeled R1 for 1st resistance level) OR prices continuing up to the R2 level (194.30ish) before reversing and kicking off the next major wave of selling. I’d have to give equal odds to either scenario at this time while a move above the 194.50 area would have near-term & possibly intermediate-term bullish implications.

Moving on to the bigger picture, earlier this week, the $SPX (S&P 500 Index) made a fairly solid intraweek breakdown below the uptrend line & is currently backtesting it from below. A solid close & follow-up move back inside the wedge next week would dampen the bearish scenario while a rejection off the trendline (on Monday) would likely trigger the next wave of selling & a move towards the 1750 area in the coming weeks. Should the $SPX fail to regain this key uptrend or even regain it into next week only to once again break below soon afterwards (a likely possibility), that would most likely lead to a breakdown of the $OEX (S&P 100 Index) below this critical bull market uptrend line generated off of the 2009 lows. As always, when trading off of the weekly time frames, it is the weekly close (end of Friday) that matters as intraweek dips below support are a fairly common occurrence and often prove to be whipsaw signals.

 

Aug 082014
 
GMCR daily Aug 8th

GMCR daily Aug 8th

GMCR (Keurig Green Mountain Inc) will offer an objective short entry on a break below this primary uptrend. Note the bearish rising wedge pattern with strong bearish divergences that has formed between the previous reaction high back in February to the most recent marginal new all-time high in the stock about a month ago. Since that recent new high, GMCR has rolled over, failing to build on the gains or even sustain the breakout to new highs (bearish) and will likely break below that primary uptrend line soon.

The official entry will be on any move below 112 with a more conservative entry or add-on below the 110.73 minor support level. The suggested stop for those targeting T1 would be 119.15 with a suggested stop over 121.25 if targeting T2 (the final target which would be good for a 25% profit if hit).    click here to view the live, annotated chart of GMCR

Aug 082014
 

REMX (Rare Earth Metals ETF) will trigger a long entry on a break above 37.80, which is the top of this potentially powerful basing pattern. Price targets are T1 at 46.55, T2 at 57.25 & T3 at 73.95 with a suggested stop on a close below 33.94 (the bottom of the base which is defined the trading range that REMX has been confined since mid-December).  Rare Earth stocks have been on a roller-coaster ride over the past five years, largely due to price manipulation from China (by far the largest producer of rare earth metals, producing a whopping 95% of the world’s rare earth supplies in 2010). I’ve included a chart of the STOXX Global Rare Earth Index to illustrate the roughly 90% plunge in rare earth prices since the 2011 peak.     click here the view the live, annotated chart of REMX

 

Although there are a few individual rare earth companies that trade on US exchanges (MCP, TROX, RTI, TC, & GMO… all which are components of REMX as well as a few others like AVL, QRM, & REE), the majority of the REMX holdings are global companies that trade on various overseas exhanges (click here for a complete listing of the REMX holdings). REMX will be added as both a typical swing trade as well as a long-term trade idea as I am looking for a likely primary trend reversal (i.e.- a new bull market), assuming that REMX makes a solid and sustained break above the basing pattern and the charts still look constructive at that time. As such, I would expect this trade to take anywhere from around 9 month to a year or more to reach the final target (a nearly 100% return), assuming that the trade plays out to its full potential.

As with most trade ideas on RSOTC, multiple price targets are used to accommodate various trading styles and time frames. Price targets, including the three targets on this trade, are placed at levels where I believe the odds of a decent reaction (pullback and/or consolidation) is likely. Some traders might opt to book partial or full profits at any of the initial targets while more active traders might chose to micro-manage a trade (e.g.- close the long position on the initial tag of the target, possibly reversing the trade or a quick pullback short trade, assuming the charts confirm, then once again going long on either the pullback or a solid break above the target level). Also keep in mind that in order to minimize the chances of just missing a fill on a closing trade, the suggested target levels are set somewhat below the actual resistance levels (the dashed horizontal lines).

Aug 072014
 

FISV (Fiserv Inc) was added as both an Active Short Trade as well as a Short Setup near the top of its bearish rising wedge pattern in this post on July 23rd. As expected, the stock moved lower from that point and has recently been tapping on the bottom of the wedge pattern, which is also the bottom of this much larger ascending price channel as viewed on the weekly chart below. I wanted to point this out as a break below that multi-year uptrend line (bottom of the wedge & the price channel) will trigger the next entry on what I feel is one of the better looking swing short trade ideas at this time. Remember, I can’t give specific price trigger levels on breakouts above/below trendlines as the price level of a trendline changes every day (only horizontal support & resistance levels are static). Therefore, it is best replicate the trendline on your own chart and set a price alert for a break below the trendline, assuming that you are interested in this or any trade idea using a trendline break as the entry criteria.

click here to view the live daily chart of FISV          click here to view the live weekly chart of FISV

 

Aug 072014
 

ANR (Alpha Natural Resources) is one of several long-side trade ideas currently on my watchlist that are showing some bullish developments on both the daily & weekly time frames. With many of the coal stock firmly entrenched in a bear market, these should be considered counter-trend, fairly aggressive trades at this time. For those who may have an interest in the coal stocks, to help adjust position sizing for each trade idea in order to account for the total target exposure to the sector, I currently have six coal stocks on my watchlist that are at or close to triggering an entry that may also be added as Trade Setups and/or Active Trades soon. In addition to the potentially bullish developments on those individual coal stocks, the DJ US Coal Index may be forming a right shoulder of an Inverse Head & Shoulders bottoming pattern following a divergent low at the formation of the head.

ANR will be added as long entry here around 3.60 following yesterday’s breakout on average volume. Suggested stops for those targeting T1 (4.08) would be below 3.40 while longer-term traders targeting T2 or higher (additional upside targets likely to be added) might consider a stop below 3.10 as well as considering a scale-in strategy to allow for a possible backtest of the downtrend line. The last trade on ANR was entered on a break of this downtrend & hit T2 for a 34% on Nov 4th. ANR is once again being added as both a typical swing trade (Active Long) and a Long-Term Trade idea on this breakout. However, longer-term & more conservative swing traders might wait for a solid weekly close (end of day Friday) before establishing a position.     click here to view the live daily chart of ANR     click here to view the live weekly chart of ANR     click here to view the live weekly chart of the DJ US Coal Index

 

Aug 072014
 
$SPX daily Aug 7th

$SPX daily Aug 7th

As we have seen some very significant technical developments lately in addition to a substantial increase in new trade ideas, I just wanted to summarize my current positioning & thoughts on the market. My positioning & outlook for the market has been pretty consistent since the beginning of the year: The risk/reward for equities in general has been unfavorable while gold, silver, mining stocks & select commodities have offered some of the most attractive R/R’s. With the U.S. markets essentially flat for the year ($DJIA & $RUT slightly negative and the $COMPQ & $SPX slightly positive YTD) and my expectation for considerable downside in the broad markets before year end, this has most certainly been a stock pickers (i.e.- traders) market and most likely will continue to be in the foreseeable future.

Even the precious metals & mining sector, which has comprised the bulk of my trade ideas this year, has been much more conducive to market timing (swing trading) than a buy & hold strategy. For example, in the gold mining sector we have experienced two strong rallies, one strong correction (retracing nearly 80% of the late Dec to mid-March rally) and the recent sideways market trading range in where prices have gone essentially nowhere for nearly 7 weeks now, in which I was able to side-step, just adding back exposure this week shortly before the breakout in gold. Equity trades, both long & short, on balance have been successful and have also benefited from a very selective market timing process. Since the start of the third quarter of 2011, barring a few relatively minor corrections, this market has been unusually conducive to buy & hold investing and BTFD (buy-the-*$%#@-dip) has most certainly been the mantra during this time.

While anything is possible in trading, my read on the charts indicates that buying the dips going forward, including this one, might not work out so well. As such, my current strategy is to sell or short the rips (back to resistance) and cover the dips (down to support) while continuing to be very selective in the sectors and individual stocks that I trade long or short… i.e.- trading the most attractive stocks, not the market (SPY, QQQ, etc…). As is often the case, my preference is to trade a long/short portfolio, consisting of the most attractive stocks and sectors, both bullish and bearish. Doing so provides the benefits of both diversification (amongst various sectors & industries) as well as hedging (holding both long & short positions), should my read on the overall direction of the market or particular sectors prove wrong.

With that being said, I have several new trade ideas, both long & short, to share and I also plan to remove some of the “dead money” Active Trades in order to streamline the trade ideas and focus on the most promising trades at this time. The broad market became quite oversold on the near-term time frame as the $SPX hit the primary uptrend line on the daily chart (above) and has been clinging to that key support level like an exhausted swimmer to a life preserver since it first fell to that level last Friday. Note how all previous tags of that trendline in the past resulted in nearly immediately and powerful reversals, i.e.- shorts covered & the dip buyers aggressively stepped in. So far for nearly a week now that has not been the case, a potential sign that the supply-demand dynamics of this market have finally shifted. Of course, with prices still hovering around that key support level, it’s still too early to declare victory for either the bulls or bears. A very impulsive intraweek move below that level and/or a solid weekly close below would certainly bode well for the intermediate & possibly longer-term bearish picture while a solid move back above the trendline would indicate that there are still more willing buyers than sellers out there at this time.

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