Thursday, June 12, 2014
Wednesday, May 7, 2014
Some market experts are trying to use the crystal ball and are preaching with this old saying to sell and stay away from the markets.
First of all if you are still long in May after two months of market correction and you are planning to sell now, you need to review your strategy ASAP.
Second, learn to embrace this corrections because they are great opportunities to identify new leaders and going long with a fresh new leader at the begginig of a new bull market is when the triple digits returns are made.
Use this time to sit back and review your past trades, learn from your mistakes and start building your watchlists. Look for stocks that are holding up well.
I'm shareing with you my personal watchlist for free for this correction, try to build yours.
Stay sharp wolfies.
Tuesday, February 18, 2014
Today we are going to talk about price/volume behaviour on pivot points.
Starting from our watchlist of leaders, those unique stocks that have EPS and sales growth above 30%, we need to follow them to have a preview of what the market is going to do next. That's why they are called leaders or growth stocks.
What we want to see on their charts is base formations: we can see flat bases, bull flags, cup with or w/o handle, 3 tight weeks, etc. The longer the base the more solid is the base. We want to see from this leaders when the overall market starts a new uptrend to breakout from these bases. That is when we know for sure that the uptrend is confirmed. When the big boys with the big bucks start buying these growth stocks.
The key of the reading is the VOLUME when the leaders go through this pivot levels breaking out from their bases. We will use 2 examples from today's action.
$UBNT broke out from an irregular base through the previuos high around 47.60 on INCREASED VOLUME. The more volume above the average, more sure we are that this is a genuine breakout. In this case was almost 4x above average volume, and ended at the round number of 50. Remember round numbers are key psycological levels like in every stock/index.
$GOMO a young IPO formed a cup without handle and broke it around 25 level with 2x above average volume.
Both of this stocks are leaders, that clearly are outperforming the indexes and we can see on the volume that the demand of this stocks is pretty clear. Stocks as well as any product from the retail industry, when demand increases above the supply the price tends to rise by its own nature. The supply/demand theory from economy I from school works very well with stocks. And we can check looking at the big winners from the past. Everyone of them had an abnormal demand from the stock before it starts the big move.
That is were the big bucks are waiting for us. Watch the price/volume action through key levels. Trust the supply/demand theory. But because the market can be tricky sometimes we must always cover our buys with stoplosses to limit our risk.
Have a great week all and as Livermore use to say "ride 'em until they stop moving"
Tuesday, February 11, 2014
After today S&P breakout of 50-day line with accumulation volume and with NASDAQ at almost the same high before the correction starts, we are back up and running.
Gentleman start you engines ! Whoohoo !
This doesn't mean that we need to go "all in" I like to start investing slow and as the stocks move as we expect I gradually increase my positions, but NEVER averaging down. Remember that market will do whatever it wants, we only invest on the best odds, so despite I believe this correction is over we always have to take some precautions and invest gradually to confirm our theory.
I share with you my top wolfie watchlist: $SALE $DATA $FB $UA $EFII $GLOG
Most of them start moving before today's confirmation so they are pretty extended, I started nibbling some $SALE today.
$SALE is a young IPO selling online coupons with impressive sales and earnings results that yesterday broke out from a nice cup without handle base ON VOLUME. Before buying a stock I like watching the product, it's easier when it's an online product because we can check it out in seconds.
I also love $DATA or Tableau products, looking to buy some soon, again based on impressive earnings and sales reports and volume accumulation.
Have a great week wolfies, bite some asses !
Monday, February 3, 2014
As we had forseen in our Sun Jan 26th post, we are under a correction, today it got pretty obvius to everyone. $COMPQ broke 4000 key level, which is a psycological level of support, as well as 1750 in $SPX, also broken. Both major long term support. The most logical path for this market is that we have a lot of downside potential. BUT, we never know, because we don't have a crystal ball.
How long this correction could last? Some studies say that most corrections last at least 8 weeks. That is what the history tell us, but the market is always trying to fool us, so we need to be ready to turn on a dime. But always after volume confirmation shows up. We need to have within a week after a first attempt of run up a day with at least 20% above average volume on the big indexes.
Never try to buy the bottom, because it's almost impossible. There's always another trade, another stock to buy, so we need to be ready to get the right set up and play it at the right time, when most of the conditions are on our side.
We have to learn to welcome this corrections because new fresh set ups will show up, new leaders will lead, and that is when the big green numbers are made, after a correction. Use this time to find solid stocks that are holding up well. They are like helium ballons, waiting to fly up in the aire but because of the wind that is blowing downwards they are not allowed to fly freely and they gain potential, and when the wind start to blow up again they will rocket to the sky.
Have a great week, take a vacation if you can't avoid staying on the sidelines, but wait for the right time. Have a good one wolfies.
Wednesday, January 29, 2014
After yesterday failed attempt run on light volume, today we had a new red day on strong volume confirming that the less resistance path is Down. $QQQ $SPY
Another clue are the bonds index $TLT showing a new uptrend, and forming a cup with handle base with pivot point at 108.8. These shows the money that is "flying to quality".
Yesterday was just a technical bounce to work off the oversold area. Remember that the market will try to fool you all the time to take your money. That is why volume is so important, to keep a heads up on the supply/demand of the general market.
Never try to beat the market unless you want to be slaped in the face. The market is driven by the big corporporations, mutual funds, etc and they will try to create a fake bounce/trap to make you think that the correction is over and then pull the rug from below you. That is why indexes never go straight down as never goes straight up.
In this environment don't be greedy trying to buy anything, you don't need to trade every day. Always when in doubt, stay out. Cash is the king. Preserve your capital to live another day.
I've learned all these tips the hard way, loosing money and making a lot of mistakes. I want to prevent you, the small investor like me, to live another day and in the long term get profits out of the market.
Why I do this? Because I love doing it, I want that the small investor keeps choosing the market to invest his savings instead of banks and big corps access only club. And I force myself to study to write these posts and stay updated, so is a learning tool for me too, so I thank you for that.
Sunday, January 26, 2014
I think so.
Both $SPY and $DIA broke below 10-week line, which I consider a clear picture of a long term support. On the other hand $QQQ are still having some cushion above the 10-week line, but we had many distribution days in the last couple of weeks, which means the big guys are raising money large off the table.
Note as well the strong bull market we had since the begining of 2013, we never know but this could be the end of it, but I welcome this corrections because we could find some strong new leaders and fresh new bull runs is where the big bucks are made.
Trade them well this week.