USA Stocks discussion - Part 2

[DukeCS33]

what will be your screening factor for short? same as long?

Pretty much the same but as the US market has been on a bull run, there are few stocks that meet the criteria - WDC was one that showed a nice downtrend and it is a matter of where one picks his level. Most of the stocks that I select for shorts need to be trading below its 50D EMA for at least 4 months and they cannot have ever closed above the 50 EMA - not even a single day. I have an additional criteria of it being also below the 40D SMA - the SMA is a slower moving average and for stocks to be below it every single day suggests also that the stock is on a downtrend. I then look for oscillators to hit overbought before I initiate a short - so very simple rules. Right now, I have refined my screeners so that they can find such stocks that never ever hits below or above a defined MA - not even a single day. Prior I had to depend on eyeball power and that can be very taxing.

Tonight, I may initiate another short and would stay more short than long in so far as 10y UST remains elevated. I read a report that the reason it stayed elevated is because the demand from foreign sovereigns have been declining due to hedging cost - I think there may be more afoot and we may be seeing a paradigm change in the term structure of interest rates.... economy is firing on most fronts, inflation may creep up slowly and speed up especially if all the corporates start implementing a higher minimum wage policy... trade is the other factor that impacts sentiments but it seems that the market is now choosing to focus on rates as the 10y hits new yield highs.

 

[peipei1]

What a worrying start to the last quarter, the last leg of good earnings?

This time is different, my guts tell me to expect ok or beats earnings, but lowered forecast going into 2019, this will drive the market lower out of fear, mass selling will happen!

China will start work next week, and expect panic selling, new reports of bear economy, more political drama with US.

Feeling US equity cannot escape the downtrend, to join global markets because the business economy cannot keep beating earnings.

I dont know to hold my MSFT or let go at 50% returns. This month MSFT have a chance to win the pentagon contract, that will be good news!

 

[coolhead]

Got into uvxy at $39. Wondering if I should sell now for a 10% gain...

 

[DukeCS33]

It is never wrong to take partial profit. If you are considering this then your instincts honed by past trading experience is sending you a signal. My instincts have saved me several times before and I have learnt to trust it... I managed to cut all my long positions 2 days ago as I was beginning to feel uncomfortable. Looking back that proved right.

 

[NewInvestor]

Is the correct strategy still to buy the dip?

 

[coolhead]

It is never wrong to take partial profit. If you are considering this then your instincts honed by past trading experience is sending you a signal. My instincts have saved me several times before and I have learnt to trust it... I managed to cut all my long positions 2 days ago as I was beginning to feel uncomfortable. Looking back that proved right.

Did a stop limit yesterday. Instead of 11%, only got 6%, better than flat bah.

 

[DukeCS33]

I dont know to hold my MSFT or let go at 50% returns. This month MSFT have a chance to win the pentagon contract, that will be good news!

I was eyeing MSFT as a target for a swing trading buy and looking for a reversal off current levels to pull the trigger. However the heavy volume sell down last 2 days is staying my hand - and that is normally an indication of more sellers coming out... most of the time I would prefer a low volume bounce above a support level.

 

[DukeCS33]

Did a stop limit yesterday. Instead of 11%, only got 6%, better than flat bah.

Good to take profits - we have some heightened volatility now so I would have taken profits too if I were in your shoes.

Many a times, I got greedy and waited till my profits turned into losses - now I make it a point to take profits when I hit my initial planned objective.

 

[DukeCS33]

Is the correct strategy still to buy the dip?

Dun know - some like to buy breakouts while others prefer buying dips. I normally overlay my decision with the index performance, preferring to dip in only when index bounces off key support. That said, one can never know with certainty if a dip is going to mothball into a sell off. It happened in Jan / feb and it can happen again.

 

[coolhead]

Good to take profits - we have some heightened volatility now so I would have taken profits too if I were in your shoes.

Many a times, I got greedy and waited till my profits turned into losses - now I make it a point to take profits when I hit my initial planned objective.

The recent dip has more volume traded than normal. Not sure if that is a sign of concern.

 

[DukeCS33]

Are you a practitioner or student of volume spread analysis or the Wcykoff methodology?

I am not sure where you obtained the information from but the Thinkorswim system that I use did not show any surge in volume. Based on that platform, I see 2.1B and 2.09B transacted on Thursday and Friday respectively. 30 day volume average is at 2.04B.

Higher volume means more transactions between buyers and sellers - the close indicates if the bulls or bears are winning. So the volume and price bar gives some color to the sentiment of the market. I see some tail across both thurs and Friday candles and that indicates some buying that prevents the candle from closing at its low. If anything, my read is that sentiment is still bearish, there is some buying support but this buying support is not strong enough to push and reverse the current bearish tide.

 

[archcherub]

If anything, my read is that sentiment is still bearish, there is some buying support but this buying support is not strong enough to push and reverse the current bearish tide.

better to be safe and wait for bullish volume before buying the dips

 

[DukeCS33]

better to be safe and wait for bullish volume before buying the dips

It is hard to tell if volume is bullish or bearish in nature. One of the classic Wcykoff concept, Bag Holding would see a small white or black candle with extremely high volume - typically in the standard sense, one things that if it is a white candle, it shows bullish volume and vice versa but in bag holding, Wcykoff is saying that this candle (can be white or black) means that the professional money is buying all the available stocks in preparation of a move to push prices higher if that stock in a downtrend - this would be the low and after buying up all stocks and absorbing all the selling pressure or supply, there is only buyers left. All sellers would have sold and prices would just move up from here. If you refer to my prior post, I have flagged out WCG on 14 Sep... there was a smaller than usual candle but a much larger than usual volume candle bar - the stock did gap up subsequently - this happened in an uptrend and while is not the typical bag holding per say, it does indicate something to me - useful information as I swing trade short term.

Adding volume information was another dimension that improved my swing trading odds and now, there are setups that I would not take (when I may prior) when I consider the volume... some info that I would like would be a stock correcting in measured tone to a support area - I prefer the volume to be light as it bounces off this support - the first white candle reversal can be low volume (lower better as it indicates an absence of selling pressure or supply) and gives me confidence that maybe the bounce can be sustained - I like for subsequent white candles to have increased volume as it shows participation from buyers and gives me confidence to maybe target a higher return objective. If the reversal candle has high volume, I would think twice - while it shows that bulls overpowered the bear, there is an increased in supply - critical for supply to be fully absorbed before we see a good swing upmove. Now this may contrast with what I pointed of WCG earlier where the volume was much larger, bouncing off a support - there are a lot more principles and factors to consider than what I have just shared and one really needs to study this whole concept further and in detail and not take sections of what I just shared and apply it.

 

[DukeCS33]

Last night, the S&P managed a close higher than its open though overall, it is still lower than prior day's session. Encouraging that the price has bounced above immediate pivot area around the 2863 level, indicating that sentiment may be less bearish. Reckon we may see some sideway consolidation from here.
From a more fundamental point of view, 10y UST still holds the key to short term price gyrations and it remains to be seen if the markets view the upcoming quarter's earnings to have peaked or if there may be some positive spin from the trade side of things.
Based on price action, reckon that rotation is out of technology shares. Utilities index has been gaining and when it does that, I tend to be more cautious in my stock picks.

 

[revhappy]

China, Europe and Emerging markets have been clobbered. The longer the US markets stay afloat, the harder they are going to fall, in my view.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[DukeCS33]

China, Europe and Emerging markets have been clobbered. The longer the US markets stay afloat, the harder they are going to fall, in my view.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

Given where things are, I do not really agree with what most analyst are saying over the new moneyFM radio, many are expecting a year end rally... Interest rates are on the rise and money is moving out of emerging markets and back to US to seek refuge - if anything, the rise of rates would keep monies out of emerging markets and down the road, US equities. The reaction post this upcoming quarterly results would be telling.

 

[Immortal]

Got into uvxy at $39. Wondering if I should sell now for a 10% gain...

Take profit bah...

Have seen 1 of my stock from 80% gain to 5% these past months...

Market is so bad that I'm considering selling everything, realizing all the profits and losses just to do a reset of some sort.

 

[coolhead]

Take profit bah...

Have seen 1 of my stock from 80% gain to 5% these past months...

Market is so bad that I'm considering selling everything, realizing all the profits and losses just to do a reset of some sort.

dun say alr...i waiting for my position to settle so i can uvxy myself again....

 

[Mecisteus]

Take profit bah...

Have seen 1 of my stock from 80% gain to 5% these past months...

Market is so bad that I'm considering selling everything, realizing all the profits and losses just to do a reset of some sort.

You can opt to do such a "reset" and channel your capital into the stronger stocks or ETFs.

Just don't do a "reset" and stay in cash. This will be costly if ever the market rebounds strongly.

The thing is nobody will know when the correction will end.

My take is a max 20% correction for the S&P.

 

[peipei1]

Yes! There is a sense of dread this round, there is no positive news coming, i feel the earnings period will report lower 2019 forecasts, that will drop the S&P. This in contrary to past mid elections years, where S&P rallied. This year in fact all historical news i read about stock markets moves, went the opposite. Unusual year caused by unusual US president?