Sunday, November 27, 2016

Market and holdings Overview,

The market has been on a non-stop rally.   Major indexes are now in overbought territory:


The Russell is up over 15% -- if you didn't make money you are doing something wrong.


Stocks



Financials have been leaders:


As have infrastructure related stocks:


Outlook
I think this rally has longer term legs but it needs a re-set .  There is too much froth in the market right now and the masses never win for long.  An overbought market looks for a reason to sell off and the Hillary re-count could provide a catalyst for such a sell off.  Tighten stops,  there's no need to put new positions on here unless the setup is fantastic.  

Current positions:
AMAG- Works its way into stage 2.  
Entry 33.90
Stop 30.70.

Size is small right now,  but this s one I would like to add to the position.  With size stop will tighten.


NUE: Bought the consolidation break.  Steels on fire and this may have some more to this move.
CMCO:

COUP:  Nailed this one with size. Now Up $6.00 and counting.

NTNX: Simlar to COUP got a great entry and have added on pull backs.  I now have enough of a cushion to take into earnings.  Stock is consolidating over last week perhaps a good sign to launch after earnings.

LN: This had looked promising but gap down on black Friday. Stop at 38.
NOVN:
IPO breakout -- volume was decent but still a thin one.
PCMI: This was one my more profitable  trades last quarter. This earnings season earnings and growth were fantastic as well.  I went back in.  I may be little early as the interday slingshot didn't hold. That said I'm up slightly in this trade.

If this is anything like last quarter the big advance didn't start for a couple weeks after earnings.
EVBG:  The range expansion was nice.  Put in some legs over last week, but nothing overly impressive.  I have started to trim this one.

Saturday, November 26, 2016

Stage Analysis - Buy early in the breakout

I'm a big follower of Weinstein's Stage analysis.  I want stocks that are just beginning that transition. The 30 week (150 day) moving average is our cue.    Also, I want to see some past power in the stock. 




  AMAG- which I entered on Friday fits the bill perfectly.    Let's see how it does. 



Wednesday, November 23, 2016

IPO Secondaries

I love IPOs.  At least 60-70% of my trading gains are in stocks that have IPOd this year.  But here's a secret: Every IPO that does well will price a secondary.  It just how these things work.  The longer you stay with an IPO after the lockout, the more of a game of chicken this becomes.  Here was a comment I made on the Stockbee site last week:

gravitarScot1and1:53 PM Nov 18th 2016
A lot of the more recent IPOs never got to make their initial run because the market sold off. Think, COUP, NTNX, TTD, ASIX. They have been impressive coming out of the bottoms. I think the IPOs that came out with ACIA, TWLO -- Like PI and AIRG for example are going to be riskier because we will start seeing secondary's like PI had last night. (AIRG - has high risk for a secondary)


I was right.   AIRG announced a secondary tonight and is gapping down.  I saved myself a losses in all these stocks,  Although I took had positions early in all of them, I was out well before they announced secondaries just by being familiar of where the stock was in its life cycle. 


Supernovas

Supernovas are the stocks that make insane moves, thousands of percent gains in mere days.    We've just seen  some major super novas in the dry shipping industry with DRYS being the biggest.


These moves captures everyone's attention and people start talking about how if they had only bought when they first looked at it at $5.00 they would be rich.  They then chase.  Early Shorts start betting against the trade add fuel to the fire and they get squeezed out. All this creates massive volume in the stock.  The entire float will turn over in a matter of hours in many stocks.


Supernovas then create a ripple effect in other stocks in the same sector because buyers want to find the "Next [insert supernova ticker here"  and they bid everything potentially related up.




Here's a few super novas from the last few years.  







Some of these stocks were theme driven, LAKE was pushed by EBOLA and DGLY was body cameras. Others came out of the blue.

LESSONS

You didn't catch the bulk  move and you never will.  Nobody did.  For those that were in at the beginning of the move,  a 30 or 50% profit in a short period is too good to pass up and you should not pass up such a gain.

For every super nova, there are thousands of low float stocks that move up 30% only to reverse just as fast.  For every trader that caught a large portion of a  supernova move, hundreds have lost on every shake out.  They short when it goes "too high" only to see the stock keep going. Then more Johnny come lately come in and buy high and lose when the nova collapses. And every nova will collapses.    After the stock collapses, it creates a black hole as more traders rush in for the bounce the expert will come and the rug is pulled out from under them.

CONCLUSIONS

Supernovas are fools gold.  They capture the imagination but  they are unpredictable when they will form.  They go higher than any one expected and fall back down quicker and farther than anyone images.

 If the main nova is still running, the secondary novas may be traded but set realistic trading expectations, if you make 20-30% in a few hours be satisfied and protect those gains and do not be dismayed if the stock goes up 100% from that point.  It will come down just as quick.  If you are short, do not short the front side of the move.  Let the Supernova collapse and then start with the secondary novas. Those will come down as well but the secondary bounces will be far less volatile.

Good luck

Saturday, November 19, 2016

Breadth Indicators-- Don't Swim against the tide.


Last week I plotted the adv/decline line as it gave a good "risk on" signal.


 Speaking of breadth indicators, I just plotted my equity curve against an adv/decline guppy chart.  It turns out that I do much better when I go with the flow.  

Mar 2016   35.16%
Apr 2016   2.62%
 May 2016   -3.00%  --- BREADTH DECREASES  (Why Am I still in? I was chopped this entire month and not positive at any time)
Jun 2016     8.28%
Jul 2016     5.96%
Aug 2016   18.83%
Sep 2016    2.68% ---  Into chop Zone == Get out of market
November 9, 2016  (re-cross of Fast guppy on ADV/DECL)   To present 25.01%

Win the easy ones..

Sunday, November 13, 2016

Where do we go now.

My starting point for market analysis is to first look at the big picture.  I like the Adv/Dec chart as shown on a guppy chart.  

The post-election rally has been broad and it has pushed the short MAs above the red quick.  This could push the markets widely higher.  The last occasion of such a decisive move occurred in march of this year.


Indexes:

Had given up support last week but then a big rally.   It remains to be seen if that was just a relief rally after 9 down days, which will subsequently be sold  or whether it is the start of something bigger to the upside.

Russell:
Very power full rally that Nearly pushed to an ATH.   We'll likely get some type of pull back over next few days, but if we can consolidate and hold that 1258 level, the market will be in great shape to expose higher.
NASDAQ:
Tech has lagged in the rally.  If this rally continues, Money should flow back into higher growth stocks as the "risk on" trade continues.

More recent IPOs should give us a good clue as to whether the risk on trade is going to happen:
TTD: Earnings beat, volume picking up.   Becomes traceable over the red line.

Coup:

Wednesday, November 9, 2016

Avoiding the Chop

I like following breadth indicators with a guppy chart.  When the blue goes into the red, choppiness ensues.