Market overview.

Earning season is now upon us.  Major reporters this week include a number of banks, GS, BAC,  some tech, MSFT, YHOO, GPRO

Indexes:

S&P breaks out.  Below was the chart I had posted right after Brexit was announced.  Where others were forecasting gloom and doom, I saw a range bound market.   Support was found and the level I felt would act at the first support and that held market bounced taking it to new highs.  As impressive as this move has been, I feel the breakout will be tested. 

I'm concerned that the breadth ratios that I follow are pretty overbought, which will limit the upside.  Just as they were at extreme levels after brexit, which I felt would mitigate the selling to the downside.  Quite a quick flip,  now consolidation, and a successful retest of breakout point is necessary before this market can get going to the upside.

Outlook: Choppy trading, minor pull back expected.  This pull back will be a huge buying opportunity.  Look for sslingshot sets

Nasdaq, impressive bounce back from Brexit, but note OBV has declining, divergence.  Nasdaq has not hit its highs yet.  With current breadth readings, I think it will be difficult for it to breakout without more consolidation and some working off of some of the breadth ratios.   

Outlook: Choppy trading

Russell: The Russell has underperformed the other indexes and the  S&P  by a large margin. But there are some positive things going on under neath the surface here.  Downtrend line has clearly been broken,  out of the major indexes its OBV looks the best.

That said, I am concerned that we have a weekly gap last week and the 121 level is where the IWM broke down last year,   That is often a significant resistance point.   Like the other indexes, I feel the breakout point -116 level will be re-tested

Breadth Measures:% of stocks above 40 MA,  78%,  = Danger zone.
Weekly stocks -- overbought
Vix:  at support lows.  -- 
$NYMO: overbought

In sum,  I believe this will present a challenging market for the bulls and bears alike.  My personal trading plan is to trade light this week,  I hope to continue to hold my longer term bullish trades as the market appears to be setting up to make a trending breakout move this year, but my stops will be key.

My favorite Daytrading Signal -- the 5 by 6

When I enter a short term trade, the 5 by 6 signal.  Using the 5 min chart with a 6 ema as guidance by the cross over for a trend change.  My XBIT trade this morning used the signal and worked to perfection.

IPOs- hot and cold.

iDvide IPOs into two separate categories, hot and cold IPOs. IPOs are divided based on first day flipping activity, an asset that is constantly flipped is considered hot. The authors found that cold IPOs continue to underperform and hot IPOs continue to do well in the following year. The possible explanation for this relies in underwriter’s willingness to let original shareholders win at the expense of new investors. This causes the market to correct itself in the first few days following the release of new information. 

Brexit - Situational awareness.

Okay, so the last few days have been brutal.  That said, I'm not overly concerned this market is still range bound  on the big picture and I don't see a crash occurring  Triple top above a double bottom.   That should tell us to manage our risk appropriately and not expect the big trade at some point the market will pick a direction. 

% of stocks above 50 Avg. -- not  quite to extreme levels yet, but very close.  A gap down is a buy signal.

PowerPlay BOSC

BOSC made a power move on enormous volume--higest ever-- on news that:

• 8.1 Mill in Revenues grew by 38% over the comparable quarter last year.
• Net profit amounted to $220,000 as compared to a net loss of $23,000 in the comparable period last year.
• Net profit, on a NON GAAP basis, amounted to $314,000 as compared to a net profit of $33,000 in the comparable period last year.
• EBITDA amounted to $413,000 as compared to $192,000 in the comparable period last year.

The stock responded in a big way making a Day 1 move from 2.50 to 4.70s.  Day 2 brought the fade which has halted, perhaps into a trading range. 

I want to find out if this has super stock potential.

Revenue History: 
The 8.1 Million in revenue is huge for this company as it is highest qtr in the companies' recent, if not all time, history.

But a one time revenue pop that is not sustainable does little to lift share prices.

Beginning of this year, the company completed two acquisitions  "IDnext" and "Next-Line acquisition, which is scheduled to January 1, 2016.

BOSC has had increased margins,   
Further growth is expected to come from far east. 
EBITA has shown a nice progression increasing from every quarter--- not just comparable. 

Conservative management, emphasis on profitability and paying down debt, 

Using the 5 min chart to nail an entry. (Not Day trading)

PACB was an excellent trade for me last week.  I had stalked this one on daily and weekly charts but I love the 5 Min chart for an entry.

A common mistake when a stock breaks out is to chase it.  But almost always that first move finds an immediate selling pressure.   PACB actually dropped 5% from its high on the first candle within the next 15 minutes.    I'm sure there are some frustrated traders out there who got stopped out only to see PACB rip the rest of the day closing up 19.24%.

A little trick I picked up using the 5 min chart prevents you from chasing.  It's very simple, wait until the 5 min chart first tests its 6ema.  A strong stock should find support in that area.  By waiting for that test we take a lot of risk off the trade. We don't chase and we find out whether the stock has enough buying pressure to carry for the the rest of the day.  

Feb 14

FN

LITE

SPKE

SVA

VHC