Overbought?
I seem to hear the term overbought a lot these days. Personally, I believe it’s an overused word that is misleading and dangerous. When I was coming up as a trader, I would hear that term, and it would damage my ability to evaluate a chart objectively. It would bias my view of a stock or the overall market creating a couple of nasty problems. 1. I would be fearful of a fall not entering good trade setups and then have to watch from the sidelines as they rallied. Or 2. I would convince myself I needed to get short and fight the market. Both cost me a lot of money!
The solution? Ignore all the noise and form your own opinion with a focus on price action. Talking heads, analysts or stock gurus don’t care about your money. They rarely are called on the carpet for being wrong and even if they are the damage to your account is already done. You’re the boss. Make decisions based on what you see not what others might think. After all, no one cares about your money more than you do!
On the Calendar
There are three important and potentially market-moving reports on the Economic Calendar today. The first is the PMI Composite Flash at 9:45 AM Eastern. Forecasters expect another strong showing of 54.4 composite, 54.0 services, and 55.0 manufacturing. At 10:00 AM is the Existing Home Sales numbers is expecting a very solid 5.750 million annualized rate for December. The strong sales have driven down housing supplies to only 3.4 months of standing inventory. Then at 10:30 is the EIA Petroleum Status report which has shown a steady downtrend in supplies with the winter demand increases. There is no forward forecast of oil supply numbers. However, looking at strong gains in oil stock prices, investors seem confident that supplies will continue to decline.
The Earnings Calendar ramps up today with just over 100 companies expected to report today. To protect your capital, it’s imperative that all traders have a plan for earnings on anything they own or are thinking of buying. Failure to do so can result in painful lessons. Make it a habit of your daily preparation!
Action Plan
Another day of new record highs closes in the SPY, QQQ, and IWM. The DIA saw choppy 2-sided price action eventually closing down a whopping 11-cents. There seems to nothing that can stop this raging bull run. This morning the Futures are pointing to a bullish open and currently showing a possible gap up of nearly Dow 60 points at the open. Of course, that could change substantially with all the earnings reports before the open.
Although the market seems very extended, there are currently no clues in price action suggesting that is about to change. Stay with the trend but don’t chase. Only enter stocks with good risk/reward ratios at or near price support levels. Also, keep in mind as earnings reports ramp up intraday volatility can also quickly rise. Whipsaws and swift reveals are common.
Trade Wisely,
Doug
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Bullish J-Hook Continuation Pattern
The Price action in AUY is leading me to think yesterday’s Bullish J-Hook continuation pattern may be the beginning of money making a swing trade. Based on the chart patterns, trend, T-Line (that we discussed last night) support, T-Line Low, Volatility Stops. AUY might be a trade to the $5.50 area.
To learn more about my trading tools join me in the trading room or consider Private Coaching. Rick will help coach you to trading success.
Today At 9:10 AM ET. We will demonstrate live how AUY could be traded using our Simple Proven Swing Trade Tools
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On August 31, Rick shared TLRD and how to use the trading tools listed below. Yesterday the T-Line profits would have been about 105% or $1250.00 with 100 shares. Using our Simple, Proven Swing Trade Tools and techniques to achieve swing trade profits.
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Candlesticks • Price Action T-Line • T-Line Bands • Support • Resistance • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Continuation Patterns • Trade Planning… Learn More
► Eyes On The Market
So the market closed higher again yesterday, this has been the year for bullish T-Line Runs, profits and good times! There is not much to say about the market, seems the bears have given up. Here is a little fact I found looking at the chart…In the past 12 months the max distance between the 50-SMA and the closing price was about 4%, normally it looks like about 3% or so. Do you know what the distance is between the 50-SMA and yesterday’s closing price? Over 6%, so I have a question…How far will a rubber band stretch before it snaps?
The VXX short-term futures are still constructing a bottom based on the price action. Will the job die in bankruptcy or will walls go up? The chart is worth a thousand words.
Rick’s Swing Trade ideas
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Investing and Trading involve significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
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Public E-Learning Tonight
Date: Tuesday – January 23, 2018
Time: 5:00pm PT | 7:00pm CT | 8:00pm ET
Topic: The T-Line, Price Action and the Trend
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investing and trading involve significant financial risk and is not suitable for everyone. No communication or chat sessions should be considered as financial or trading advice. All information is intended for educational purposes. Terms of Service
T-Line Support
The Price action in MRO presented a type of a Bullish Morning Star yesterday that fond support with the help of the T-Line as has the past 23 days, that’s what we call a T-Line Run. MRO is challenging the December 2016 highs (weekly chart) at the moment. A successful battle would suggest MRO may want to challenge the $25.00 area. To learn more about my trading tools join me in the trading room or consider Private Coaching.
Today At 9:10 AM ET. We will demonstrate live how MRO could be traded using our Simple Proven Swing Trade Tools
► Learn the Power Of Simple Trading Techniques
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On September 13, we shared CRC and how to use the trading tools listed below to profit. Yesterday the swing profits would have been about 184% or $1500.00 with 100 shares. Using our Simple, Proven Swing Trade Tools and techniques to achieve swing trade profits. CRC printed a Bullish Morning Star yesterday with T-Line support.
Candlesticks • Price Action T-Line • T-Line Bands • Support • Resistance • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Continuation Patterns • Trade Planning… Learn More
► Eyes On The Market
So the children in DC came to some agreement, for the time being anyway. Yesterday the SPY did what it seems to do best… climb higher. This starting to sound like a broken record, The markets bullish, the bull trend is supporting, tada, yadda, yadda. Every day I watch price and how it acts around the 8-day trend using the T-Line, and its sisters. I must admit the T-Line family has supported price very well of late. So it would stand to reason if the T-Line family fails price we could see a little seeling. My point is – Watch how price and the T-line work together.
The VXX short-term futures slide a little yesterday closing below the T-Line trend but did not close below the January 16 candle. Note the January 16 candle is the candle making the VXX interesting. Keep reading the VXX chart; the story may not be over. Those 2 Dojis lead to a bullish gap day which is now leading to more healthy bottom construction.
►Rick’s Swing Trade ideas
30-Day Trial • Monthly • Quarterly • Semi-Annual • Annual
Candlesticks • Price Action T-Line • T-Line Bands • Support • Resistance • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Continuation Patterns
Investing and Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
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History-making bull run.
New records across the board as the market reacts to the government closure coming to an end. The bulls are running so hard it makes you wonder if their hearts could suddenly and without warning explode. One thing for certain, I’m grateful that I can participate in this history-making bull run. The futures have traded all over the place this morning. I can only guess its due to the tsunami warning for the west coast after a big earthquake in Alaska. The price action has been very fast so be careful at the open and for goodness sake don’t chase. There will be a day when the tide will go rushing out, and profit-taking will begin. Avoid complacency and have a plan to protect profits and capital if/when it occurs.
On the Calendar
Tuesday is another very light day on the Economic Calendar. The is a Richmond Fed Manufacturing report at 10:00 AM which is very unlikely to move the market. A couple bound auctions and a Fed Speaker after the market close at 6:30 PM.
On the Earnings Calendar, there are 67 companies expected to report earnings. Please make sure you are checking reporting dates of companies you own or those you are thinking of buying. Today we have a showing of some big blue-chip stocks like KMB, VZ, JNJ, and PG. Reporting after the bell is TXN, CREE, and UAL.
Action Plan
Due to a family emergency, I had to quickly lever yesterday missing out on the surge higher. Record highs in all four major indexes occurred as buyers rushed in after the news that the government shutdown was over. If you thought the market looked overextended before the yesterday stretched that rubberband even tighter. NFLX reported blow out earnings after the bell and futures were very bullish all night. However, starting at 6:00 AM Eastern the futures suddenly started moving south and at this moment are continuing to do so. The price action is very fast, so anything is possible by the open.
Without question the bulls are in control and the market trends are higher. However, the market also appears to very extended which could trigger some profit-taking at any moment so I think it would be wise to exercise a little caution. The current erratic price action in the Dow Futures should be a reminder just how quickly a shift could occur so stay on your toes. Having said that earnings could continue to propel the market higher so avoid prediction and trade the price action making sure not to chase stocks that are already well within their run.
Trade Wisely,
Doug
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Cautiously Optimistic
This weekend a friend asked me for my overall opinion of the market. My answer was Cautiously Optimistic. If you look at the economic markers such as jobs, interest rates, business growth, and wage growth, it’s pretty darn hard to be anything other than optimistic. A quick look at the index charts and all you can see is bullish trends. So why the caution? The short answer is the appearance of extreme complacency. Almost nothing seems to shake this market. Look at the same index charts with a critical eye and its hard not see a bit of complacency. The question on my mind is can earnings support these price levels or has complacency pushed us to high in anticipation? As a result, I’m Cautiously Optimistic as we move into the bulk of earnings reports.
On the Calendar
A slow start to the Economic Calendar this week, with no market-moving reports and just a few bond auctions. Perhaps that’s a good thing as the market deals with day-3 of the government shutdown and all drama whipped up by both sides of the aisle.
There are just over 40 companies reporting earnings today with HAL, PETS, & WYNN before the bell. After the bell, Tech will be in focus as NFLX will dominate the earnings news.
Action Plan
Friday’s market saw a Dow index and the Dow Futures oddly decouple. A good portion of the day the Dow index was trying go down while the Dow Futures relentlessly pushed higher. Ultimately the Index closed positively, but the futures were sharply higher. The SPY, QQQ and the IWM all closed at new record highs. Price action overall seemed to rather slow and choppy as we heading into the weekend.
Futures this morning are pointing to a lower open as the market reacts to the government shutdown. Currently, Dow Futures are pointing to a gap down of about 40 points. I’m honestly surprised the reaction isn’t stronger considering the stretched overall condition of the market. With no economic reports to react to the market may be a bit more sensitive to the congressional news as its spun one direction and then another. Earnings reports really begin to ramp up this week. Our first big tech report is after the bell today with NFLX steps up to report results. Don’t be surprised to see higher volatility companies must prove these elevated levels can be justified. There is a lot no the line!
Trade Wisely,
Doug
[button_2 color=”green” align=”center” href=”https://youtu.be/_8vXdNWBTsI”]Morning Market Prep Video[/button_2]
I seem to hear the term overbought a lot these days. Personally, I believe it’s an overused word that is misleading and dangerous. When I was coming up as a trader, I would hear that term, and it would damage my ability to evaluate a chart objectively. It would bias my view of a stock or the overall market creating a couple of nasty problems. 1. I would be fearful of a fall not entering good trade setups and then have to watch from the sidelines as they rallied. Or 2. I would convince myself I needed to get short and fight the market. Both cost me a lot of money!
