Dec 102013

LL daily 12-10-13The LL (Lumber Liquidators Holdings) short trade has hit the first target of 91.25 for a gain of 18.2%.  T2 at 71.72 remains my current final & preferred target although this trade may still be extended to the 49 area, should the trend indicators on the broad market start to roll over soon.  Updated daily chart shown.  Click here to view the live, annotated chart.

Admin note:  A feature will soon be added to Right Side of the Chart allowing those subscribed to receive email notifications of new posts to select which specific categories they wish to receive email notifications on.  For example, long-term swing traders and investors might choose to only receive notifications when a new Long-term Trade setup is posted while opting out of receiving notifications of completed trades, market analysis, etc…  This new feature is expected to be rolled out within the next week.

Nov 242013

LL daily 2This is a static daily chart of the LL (Lumber Liquidators Holdings) short trade idea mentioned on Friday morning as well as a link to the live, annotated chart.  Suggested profit targets are T1 (first target) at 91.25 and T2 (second target) at 71.72 with a potential, but not current, third target around the 49.00 area.  As various entry criteria were suggested for this trade, stops should be set according to one’s unique entry price(s).  LL remained below the primary uptrend line/breakdown level following the post on Friday morning, trading around 114 at the time of the post and then started to fall sharply just before noon EST on the news that Whitney Tilson of T2 Partners was short the stock (a well timed and probably not purely coincidental press release as the stock had just broken major support with strong bearish divergences in place on the chart).

As usual, the odds for a reaction (bounce or consolidation) off the first tag of T1 is likely so at this point, anyone who missed an objective entry on Friday might wait for either a bounce towards at least half-way back to the trendline before adding to or initiating a short position OR wait until the stock makes a solid break below the T1 level, preferably after a decent bounce or consolidation off that level.  Click this thumbnail image to view the static chart as of Friday’s close or click here to view the live chart of Lumber Liquidators.

Nov 222013

I will be away from my desk for most of the day and might post some charts or commentary later today, should we get any significant technical developments in the market or with an of the active trade ideas.  We did have a couple of trade ideas hit profit targets recently, which I will post updated charts on asap.  The ZNGA long trade hit the first profit target of 4.43 yesterday & the HSOL short trade hit the first target of 3.40 shortly after the update on that trade (with the target level added) was posted.   From a quick glance at my watchlist, I can see that the SPLK short trade has gapped up, exceeding the suggested stop.  SPLK was recently added as a short setup or active trade with an aggressive entry on Nov 8th or to wait for a break below the 59.50 support level, which never happened as the stock found support just above that level yesterday and followed up with the large gap today.  Anyone who took the aggressive entry & still holds a short position might consider a stop above the current HOD at this point, which is 74.45, trailing your stop lower should the stock fail to build on today’s gains.

There may be a couple of other trade ideas that have hit a profit target or exceeded their suggested stop(s) which will be updated later today or over the weekend.  There are a few new setups that might be added once the current trade ideas are updated.  I did receive a price alert on LL as a possible short entry as the stock has broken below the 2-year primary uptrend line generated off the Dec 19th lows (use a log-scale chart setting).  Exact targets & stops TBD but the first target would be just above the 90.90 area with a second target around 71.70ish.  Of course the trend is still very solidly bullish with a strong bid beneath the market so although we’ve had many successful short trades recently, shorts remain counter-trend trades at this time and as such, sell signals such as intraday breakdowns below an uptrend line or bearish price pattern are prone to an above-average rate of failure (false sell signals).  Therefore, waiting for a daily close below support, especially on a swing trade with fairly large profit potential such as LL, would be a prudent strategy for all but aggressive, nimble traders.  LL also has decent horizontal support at 109.  As such, one might wait for a break below that level before shorting or bringing the trade to a full position.  Chart to follow later.

Aug 072013

I spent some time pouring over the charts last night looking for trade ideas.  In doing so, I came up with numerous candidates, both long and short.  Some of these trade ideas are already listed as Active Trades on the site and/or Trade Setups while many are not.

I’m going to start with the short trades here & plan to follow up with some of the Long Trade Ideas soon.  Some of these trades are currently offering objective short entries at current levels while others are still setting up in bearish chart patterns, awaiting a formal breakdown or sell trigger.  I will post charts on as many of these as time & resources on the site permit.  However, web traffic to the site continue to grow, the capacity of the web-hosting resources are being stretched and we will soon be forced to migrate the site to a more powerful or dedicated web-hosting server.  Until then, I will have to limit the number of posts send via email notification to remain under the current email throttling limit of 750/hour. You may have also noticed a few instances where the site was down over the last few months, the result of overload on the server.  Both issues will be resolved soon via migrating the site to a more powerful server.

Here are some (but not all) of the short trade ideas that are either offering an objective entry (denoted with an asterisk) or are setting up in a bearish pattern, awaiting an objective short entry such as a breakdown or backtest of recently broken support:


As there are quite a few charts that I plan to update throughout the day, the new post email notification feature may be suppressed on some of the trade setups posted today.   If so, you will receive a brief summary at the end of the day listing all new charts that were posted.  Thank you for your patience & understanding in this matter.

Jun 212013

LL will trigger a short entry on a move below 78.80, which is just below this horizontal support zone.  Daily & weekly charts below.  Although my interest in the stock is based primary on the technicals as well as other fundamental issues, here’s a recent article on Lumber Liquidators from Seeking Alpha which was passed along to me be a follower of the site today (thank you):  Illegal Products Could Spell Big Trouble At Lumber Liquidators


Apr 242013

LL weekly 3As the LL short trade failed to reverse following the opening gap today and remains above the previously suggested stop, I will consider the trade stopped out and removed from the Active Trades category.  LL will remain on close watch for a re-entry as the long-term charts remain bearish. However, in order to keep those charts bearish, LL would have to reverse and close the week below current levels so as to keep the negative divergences intact.  Due to the large gap today, the weekly MACD and RSI are threatening to take out the downtrend lines that define those divergences but it is the end of week (Friday close) that counts on that time frame.   Also, just for reference, I have included the updated chart for lumber futures which shows a solid breakdown from from it’s primary uptrend line in place from Oct 2012.  That updated chart is preceded by the previous LL vs. Lumber Futures chart that I posted back in February showing a very high correlation between tops in lumber futures and LL stock.  So far, that past correlation has not played out but a reversion to the mean is likely to begin sooner than later.

Apr 242013

LL is indicated to gap above the suggested stop level this morning.  As with NFLX yesterday, my preference is to wait until the first 10-20 minutes or so before placing a stop.  I’ll post an update somewhat after the open today as well as some updated market commentary later this morning as well.

Apr 122013

LL weekly 2The LL active short trade, although currently trading above the original entry price, remains one of my favorite longer-term swing shorts.  As this updated weekly chart illustrates, the negative divergences continue to build as LL has recently manage to eke out a new high, albeit on rapidly deteriorating momentum.  The divergence in the MACD, although still in the formation process, will likely be confirmed soon on any downside or even additional sideways price action in the stock. (The difference between divergences forming and divergences in place/confirmed, was recently discussed in this post).  Confirmation will come via a bearish crossover on the MACD (i.e.- the MACD line crosses below the signal line).  An additional sell signal will come once the RSI drops back below the 70 level, which is also likely on any additional consolidation or downside in the stock.

As a follow-up to the recent post discussing intraday trendline breaches (when prices break above or below a trendline only to close back above said trendline by the end of the trading session), I’ve added some notations to the weekly trendline as currently drawn on LL.  Trendline drawing is an art, not a science in my opinion.  5 technicians can look at the same trend in a stock and render 5 (often more) variations of a trendline defining the uptrend.  The variations are even greater considering that some traders & technicians use arithmetic (linear) price scaling while others (myself included) prefer log (aka- semi-log) scaling, both of which will render different trendlines even if drawn by the same person.

My style of trendline drawing is highly subjective but basically, when I look at a particular security, in my mind’s eye I will usually “see” the salient points at which to connect the various price points/candlesticks.  This method often leads to the exclusion of several candlestick shadows (wicks and tails) and at times I may exclude an entire candlestick altogether.  These excluded sticks are typically “errant” candlesticks that for whatever reason, fell below or above a well-defined linear series of candlestick bodies and/or shadows.  For the most part, my trendlines are drawn in order to touch the largest number of bodies, wicks, and/or tails possible but again, there is quite a bit of subjectiveness involved in the process.

Mar 262013

As mentioned yesterday, my posts will be light this week as I spend time with my kids on their Spring Break.  I will keep an eye on the market and post anything that looks compelling but as of now, nothing has changed on my outlook or regarding my primary scenario.  I will say that I had expected the selling to have begun accelerating at this point, which other than some short term intraday dips answered almost immediately by basically equal rips, has not been the case.  However the market ($SPX) still remains below the 3/14-3/15 highs and more importantly, all the key indicators and oscillators have rolled over on the daily time frame (i.e.- bearish MACD crossovers; RSI & stochastics rolling over and crossing back below overbought levels, etc..) all of which are typically sell signals.  It also worth noting that most indicators and oscillators also look poised to rollover on the week time frames as well, which would be even more powerful and accurate trend change signals.  As my time is limited right now, I’m just going to cut and paste my reply to a question I received today on the LL short:

I wasn’t planning on posting much today but was about to update LL since it’s getting near that 10% +/- stop area.  I’m still giving my position some room but not a whole lot more.  Lumber futures have likely topped as well as LL.  However, the fact that LL rose so sharply back to new highs following that recent solid breakdown below the daily uptrend line is very odd and somewhat concerning.  Most likely a final short squeeze but it’s going to need to start rolling over soon, preferably by the beginning of next week.  I’ll try to post a chart soon as stock is trading at 70.82 right now after kissing 71.72 today and 10% above entry would be 71.36.  Do what you feel most comfortable with by I will probably wait to see a weekly (Friday) close well over the 71.36 before throwing in the towel.

Mar 202013

Irrespective of the recent false breakdown and snap-back into the wedge pattern, LL remains one of the better looking longer-term swing short trades.  Following the breakdown below the primary uptrend line in LL, Lumber Futures (to which LL stock is highly correlated) made what appears to likely be one final thrust to new highs, in which a nice shooting star topping candlestick was put in and confirmed via prices dropping sharply since.  As of today, we also have lumber futures trading down sharply and having broken below what looks like a well defined bearish rising wedge pattern.  Only time will tell if this trade plays out and although it is now down about 3 points or 4% from the original entry (64.87), it is still less than half way to the 10%+/- stop out criteria based on my preferred target of 35.10.  Updated daily chart of LL as well as an updated daily chart of Lumber futures: