Monday, March 30, 2015

Monday Market Spotlight: $MNST $ULTA $NCLH


Did You Take 1 On The Chin?

Last week was a disaster in all 3 major indices, but the worst pain was totally avoidable. If you were hyper focused on profit targets then you were probably in serious trouble when the closing bell struck on Friday.  
The SPY, DJX, and QQQ each took a nose dive to the 50 day simple moving average (SMA) which was one of the biggest red flags for the coming technical correction.  

I closed out all of my losing positions by Tuesday so thankfully I'm riding above the 34 day exponential moving average (EMA).  You might be wondering how I avoided becoming part of the collateral damage?  Well, my routine forces me to map the "worst case scenario" possibility prior to placing any of my trades.  When the data starts streaming in, I match it against my trade plan - and execute immediately if I've dipped below my loss threshold.


What To Expect This Week

With Good Friday, we'll have a short week and, historically, trading volume during these short weeks tends to be light and a bit muted. Last week gave us a taste of what I believe we are about to experience throughout 2015. With the major indices hovering right around the 50 SMA, there hasn't really been any substantial progress.  Thanks to last weeks events, we are right where we were on Dec 30. 

Traditionally in the last 50 years, SPY has delivered over 2.25% on an average from Jan to March.  Monday is the last day of the quarter and it is likely that the market could bounce off the 50 day SMA but there's no telling which direction that will be. We'll have to wait and see how the Asian markets react to last weeks events.

What's On The Horizon?


When the market is in a "confirmed uptrend” it's typically a safe bet to focus on IBD® growth stocks but that's not the case right now.  We are facing 14 total distribution days and they have only been accumulated in the last 30 days. That is a serious sign of trouble and the situation becomes severe if we see just one more distribution day in the market. 

Now more than ever, it's crucial to have a disciplined approach to trading.  For me, it starts with utilizing my option strategy to establish a low risk trade.  In the current environment, that's an absolute must for me.  I am only looking at stocks that survived what happened last week. Also, I am only considering positions in the Health Care or Consumer Discretionary sectors.  Beyond that, I only look at stocks that are trading above the 34 day EMA. There aren't many that make it through that crucible but here are 3 that did:

$MNST
$ULTA
$NCLH



I give myself every opportunity to profit by taking positions that have a higher likelihood of going my way. I always plan my exit for profit but I have a plan for a loss too. I try to be robotic in nature and immediately execute what my plan called for.  

I highly recommend looking back my recent 3 part blog series on trade planning to help stay up to speed. Feel free to download the PDF checklist provided and use that as a guide in your own trade planning. I keep my own check list next to my computer as a constant reminder.

Starting this Wednesday I'll break down the art of building a stock Watch List in a 5 part series so watch for that!

Amin
investorspotlight@gmail.com

Friday, March 27, 2015

This Week In 10 Minutes


Which Way Is The Market Headed?

It looks like the market is moving into a correction.  Analysts and fund managers have been warning that a technical correction was overdue so if you didn't prepare some loss thresh holds, you're probably feeling a lot of pain this week.

It also looks like Janet Yellen will be speaking at 3:45 today in San Francisco so my guess is that the market will hold its breath and move at a snails pace.  If you were hoping to rebound quickly from a loss, that seems unlikely at this point but keep a close eye on the Nikkei on Monday morning to see how Yellen's comments resonate, 

Do You Trade Earnings?


In my last post I raised a concern about trading around earning because things aren't always what they seem.  This coming season is no different as I start to look more deeply at market currents.  There seem to be unintended consequences to the low price of oil and the high value of the dollar.  I came across this article which speculated American families getting lower gas prices and a stronger currency would lead to their increased spending.  

Unfortunately, there's no crystal ball here and the speculation was off base.  Not many people assumed that people would pocket the savings!

My Week On Twitter

I had another great week on Twitter and made some new connections.  Have a look at @sharptraders for some interesting info and one of my local Meetup followers @LeslieUrso

Enjoy the weekend, and look for my next post on Monday where I'll break down market conditions and some new opportunities I'm looking at.

Amin Hemani
investorspotlight@gmail.com

Wednesday, March 25, 2015

Trade Planning: Your Window Of Opportunity


This is the final part of our 3 part series on how to create a basic trade plan. If you missed the initial posts on identifying a profit target and establishing loss thresholds, you can start here and you may want download a free copy of my handy PDF check list.


PHOTOGRAPH BY RYAN MCGUIRE


Every trade has a Window Of Opportunity associated with it. For me, that window is identified by taking into account general market conditions and weighing all of the variables for positions I'm considering.

When I'm using CAN SLIM to identify a particular stock, I like to take a position based on its momentum. How do I determine momentum, you may ask? I follow 3 simple steps as a part of my routine:


1.) Use The Most Recent Data

For starters, I pull up a 6 month chart on the stock to give me some insight on how institutions are behaving. In the first part of this series, I mentioned the weight of institutions when planning a trade:
"Keep in mind that institutions are highly informed and quite well versed in trading so their investment behavior has a significant impact on the value of a particular stock."
I use this same reasoning to help me pinpoint my window of opportunity too.  If the chart shows increasing volume over the most recent 30 day period, that means the big dogs are getting behind this stock.  For me, that's a really clear signal that my window of opportunity is approaching.  

Another key data point for me is the Relative Strength (RS) line.  I use a very strict set of criteria on any position I'm considering and, for me, the RS line helps me to quickly identify whether a stock is a true leader of the pack.  If I'm seeing a 92 RS rating that's still pretty good but I want to see 95 or above before looking any further into an opportunity. 


2.) Don't Trade On Earnings

When it comes to earnings, there are two schools of thought.  Some people like to trade around earnings and have had a lot of success with it.  It's not something I choose to do, however, because it doesn't fit into my personal trade philosophy.  I think it really just boils down to risk management.

For me, the reason it's risky to trade around earnings is because you can't predict how institutions will react to the the information.  Even when a report looks good, institutions can react negatively.  I've always struggled to understand the "why" in these situations and since I can't really figure it out, I remove the variable.  I like to wait 3 sessions to confirm that institutions have really "digested" and settled down.  

Another thing that gives me a level of comfort is looking at other stocks in the industry group I'm researching.  If they're running in the right direction - you better believe I'm paying attention. 
   

3.) Trade During Uptrends

This is probably the most important factor in pin pointing my window of opportunity.  Given that my criteria are so strict, I need to make sure that the biggest market barriers aren't in my way.  Seeing the phrase "market in a confirmed uptrend" in my IBD® Market Pulse removes the last barrier for me.  I don't really understand how IBD® uses the data it gets to make such a statement - but I trust it. 

With trading, there are variables all over the place and it's basically impossible to keep track of all of them.  Having a market in a confirmed uptrend means that I can settle down, tune out the noise, and get back to business - cultivating my watch list.

What's Next?

During the month of April, I'll have a 4 part series that goes over the basics of building a watch list.  We'll dive right into specific and actionable tips that you can use right away.

As always, keep your comments and emails rolling - I love interacting with my readers!


Amin Hemani

investorspotlight@gmail.com

Monday, March 23, 2015

Market Spotlight - 03/23/2015


What Time Is It In Asia? 

PHOTOGRAPH BY RYAN MCGUIRE
It's easy to forget that the US market does not perform in isolation. When we are sound asleep on Sunday night the world's 2nd largest economy, Japan, is already open for business.  Keep in mind that on Monday, Japan takes its lead from how US markets performed the previous Friday.  Given how our markets looked last week, I imagine we'll see some gains in Asian markets come sunrise.

The Benefits of Low Oil Prices
With a depressed currency, Japan's exports are getting cheaper by the day. Also, with most of its oil coming from OPEC, Japan really feels the pinch when crude prices rise so we aren't the only ones benefitting from the low price of oil.  As a result, the Nikkei has rallied over 12% this year while the US market is up just 2%.
What I'm Looking At 
This week I will just focus on the strongest sectors. According to IBD®, we still have a very high count of distribution days. This high count is a reflection of institutions selling positions and harvesting profits. I am only looking at stocks that are very liquid and currently trading at 8 day EMA.  Here are 3 specific examples of US stocks and 1 Japans ETF that meets my very strict criteria:

US:

$AMGN
$QRVO
$COST

Japan:

$EWJ

It is critical to have a firm trade plan in place before executing any position to help mitigate potential losses while giving yourself the best shot at a profit..  You may want to review my recent blog series to help in that regard. 
IBD just called for a “Market in Uptrend” as of close. We are not completely out of the woods yet so I'm exercising caution and take positions only in the very best performing sectors.

Establishing a vibrant and collaborative community was one of my biggest reasons for creating this blog so your comments are welcome!  Also, I will be at the Clearwater IBD Meetup and would love to meet face to face with anyone local.

Amin Hemani

Friday, March 20, 2015

My Favorite Moments From This Week - In 10 Minutes

Verbal Judo From The Fed

People the world over were primed and ready for Janet Yellen's report to the FOMC on Wednesday.  Nobody, however, was prepared to travel back in time to the mid 90's!  I watched live as she delivered a measured and monotone speech and I felt like it was Alan Greenspan speaking to me.  

Former chairman of the Federal Reserve Alan Greenspan, left, talks with Janet Yellen, right,  Monday, Dec. 16, 2013 at the Federal Reserve Building in Washington. AP FILE PHOTO

Setting aside the packaging, though, the message was pretty clear. The Fed is considering something beyond just the unemployment rate when they look at the health of the economy.  I was surprised to hear mention of a lowered expectation for inflation and Jon Hilsenrath at the Wall Street Journal picked up on that too.


Is There a Currency War?

The talking heads have been hammering away for months about a currency war.  Looking past this noise requires a bit of research but I came across a few gems that are worth looking at.

My Week On Twitter

I'm still learning the ins and outs of Twitter but so far it's been a great tool for me to make connections and expand my research capacity.  One of the things I did this week was create a "list" on Twitter that's made up of people who are talking about IBD® or sharing their content.  You can find the list here and remember to follow me if you're on Twitter too!


Enjoy the weekend, and look for my next post on Monday where I'll break down market conditions and some new opportunities I'm looking at.


Amin Hemani
investorspotlight@gmail.com

Monday, March 16, 2015

Monday Market Spotlight - March 16th 2015


We've seen some crazy sessions in the market recently with the major indices dropping down to the 50 day moving average.  It's not all bad news though, one good thing that has happened in the market is that the price of oil has plummeted. The reason for this is simple, the price of oil is measured in US dollars and the dollar is outperforming all of the other major currencies in the world.  So what does this mean for average traders like you and I?

Well, my wife and I are excited to head to Europe this summer. She's looking forward to the art and history, while I'm just happy to know my money will stretch further than it would have a few months ago.  Putting aside my personal benefits, the currency situation puts a lot of pressure on companies that derive profits from Euro zone operations.  



Image courtesy of Stuart Miles at FreeDigitalPhotos.net


So the safe choice would be to focus on US centric stocks for now.  Specifically I am looking at stocks that withstood the downtrend and are trading above the 34 day exponential moving average (EMA). I am also targeting stocks that are very liquid, given this market environment. I prefer stocks that have a volume of over $150 million daily for now. Here are 3 specific examples of stocks that meet my criteria:

MYL
DIS
ROST


Keep an eye out for my post on Wednesday where we will highlight the second aspect of creating an effective trade plan - establishing a loss threshold.  If you missed the first part of the series, you can review it here.

Please remember to comment on any posts of mine that you find interesting.  Establishing a vibrant and collaborative community was one of the biggest reasons for creating this blog in the first place!

Amin 
investorspotlight@gmail.com


Friday, March 13, 2015

My Favorite Moments From This Week - In 10 Minutes

IBD® Market Pulse

In the Westchase meetup this week, we discussed at length that one great way to mitigate risk on a trade is to ensure that you're only taking positions when the market is in a confirmed uptrend.  I strongly believe that this is one of the most critical variables in any trade decision.   

One resource that often gets overlooked is IBD TV, specifically the "2 minute tips" section.  For example, just yesterday I was taking a look at this video which points out how you can use the Market Pulse section of the paper to identify when the market is in a confirmed uptrend.  


Is The Apple iWatch For You?





We saw some buzz this week around the Apple iWatch but I'm curious to hear from my readers - are you excited about the product?  Are you thinking about buying one?  Can you see yourself using wearable tech? 


My Week On Twitter

I enjoyed meeting some more people on Twitter this week too, looks like I might break 100 followers this coming weekend! Have a look at some of my recent followers.  Pretty good sources of news and content and worth following back if you're on Twitter too.

@helynbolanis
@RussellTheOO
@TedRubin
@DianeGCibrian

And most of all, I'd like to recognize Jason Ludwig (@FreewayPhoto) who set me up with some great new head shots last weekend.  If you're in the Tampa Bay area and in need of a photographer, I can highly recommend him!  Here are a couple of my favorites, let me know what you think.





I'm hearing a lot of concern from my Meetup groups and my blog readers regarding a potential market correction on the horizon.  A lot of you are asking me how to avoid it or when to take profits on a specific position.  I think questions like this come from nothing more than a lack of confidence in one's abilities.  I'm sure i sound like a broken record on this but I always answer the same way, "what does your trade plan say?"  

The bottom line is that bad things are always possible and that is why you have to plan before you take a position.  It's natural to worry but it's a waste of your time so you're better off diverting that energy into something pro-active!  Stay positive and focus on getting better every day.

Enjoy the weekend, and look for my next post on Monday where I'll break down market conditions and some new opportunities I'm looking at.


Amin Hemani
investorspotlight@gmail.com

Wednesday, March 11, 2015

9 Simple Steps To Creating A Trade Plan


If you were watching CNBC yesterday, two things were pretty apparent - the market is headed for a correction, and the Apple iWatch is a big deal!  It's times like this when it's good to plan for the next opportunity.  Something I've noticed, is that that many people don't actually know where to start with their trade plan.  

Without a trade plan it's incredibly difficult to identify and seize opportunities so I've put together a check list that lays out the basics.  I'll break down each element in a 3 part series over the coming weeks but essentially I'll be focusing on these themes





Identifying Your Profit Target
Establishing Your Loss Threshold 
Determining Your Window Of Opportunity

In today's post we'll dig into Identifying Your Profit Target.  With ANY plan, it's just good sense to set up a goal for success and it's no different with trading.  There are various approaches out there but I prefer to work under the $3 to $1 profit to loss ratio.  It's a simple discipline to follow and it allows me to both repeat my successes and mitigate my risks.

Here are some specific actions you can take that will help you identify a profit target for a particular stock



Review the most recent chart for your stock


Keep a close eye on the 10, 20, and 50 day moving averages.  You can even draw a "channel" based on these lines to help project the movement you expect to see.  Once you've got your channel, ensure that Relative Strength aligns with the uptrend.



Determine the ideal buy point


Typically, a buy point will fall within 5% of a breakout but IBD® is one of the best resources out there for identifying an ideal buy point.  They operate from a set of proprietary variables that basically produce a goldilocks zone for every stock.  

Acting within this range mitigates some of the risk variables for a trader.  In some cases, a trader may delay their decision and as a result they might miss the prime buying window.  It can be temping to chase a stock but I've found out the hard way, that's a bad idea.  

If the math isn't in your favor, it might make more sense to add the stock to a watch list instead.  There could be another buy point coming, or it may re-trace and provide an opportunity to short (for traders that are in that game). 

Perhaps another stock is moving into the goldilocks zone, and might be more advantageous to take that position instead. 



Measure the performance of the stock over time


I can't stress enough, the importance of measuring the performance of a position over time.  You shouldn't ignore road signs if you're driving around an unfamiliar city, the same holds true with charting a stock you're involved with.  

An often overlooked metric is the 34 day EMA (exponential moving average) which shows if institutions are still supporting a stock.  Keep in mind that institutions are highly informed and quite well versed in trading so their investment behavior has a significant impact on the value of a particular stock.  

Hopefully this gives you an idea of where to start with a trade plan, next week we'll examine ways to establish your loss threshold.  Keep yours eyes peeled for my Friday post where I'll share some of my favorite reading from this week!

Amin Hemani
investorspotlight@gmail.com











Monday, March 9, 2015

Monday Market Spotlight - March 9th 2015

Friday was an ugly day in the market with all the major indices dropping like a rock. It ended up as a 2% drop across the board last week. Looking deeper, all major sectors took a dive after consolidating for the last 10 sessions. You may recall, the market did a very similar thing during a major correction in Oct of 2014 and again in Dec of 2014.  Within just 7 sessions the major indices dropped below the 50 day moving average. This is not something you should have to experience under any circumstances!

The market behaves this way consistently so you've got to have an action plan ready to help mitigate your potential losses. You never want to be a deer in the headlights when things turn and you make sure you conserve your capital. March and April are traditionally the best months in the market so it's good to have capital on hand to take advantage of that.  If you play it right, these two months can make you or break you for the year. 

Here are 3 things that I am doing to mitigate my losses in the market so that I can conserve my trading capital:


  1. Review: I study my personal trade plan by looking over the stock charts.  I do this to make sure the position is performing to expectations.  If things aren't lining up and performing as expected, I look at what my next steps should be.
  2. Take Profit: Whenever I have a specific profit goal, I mark it appropriately on my trade plan.  If a position is doing well in spite of a market down turn then I may adjust my exit plan and, perhaps, add to my position. I may also take some profits to reduce my total risk and free up cash to take advantage of other opportunities that I'm seeing.
  3. Exit Planning: This may actually be the best way to conserve capital.  I study the charts and take immediate action to close out the positions when it meets my exit criteria. I take the emotions out of the picture and remain disciplined. Remember, you need capital to execute new positions when the market goes back up!
I recently highlighted several stocks:

  • SWKS
  • AVGO
  • PCYC
  • SLXP
  • VRX
  • NXPI
  • SBUX
  • BILB 

Several have already made substantial gains. If you took positions on some of these, make sure you review your trade plans for profit targets. I always like to take action and harvest some profits when I can. Stay with your original plan and don’t let emotions or greed get in the way. It's always better to avoid having to give it all back to the market. 

I am looking at some stocks that weathered the conditions last week.

  • SBUX
  • ROST
  • LNKD
  • ORLY
  • NCLH
  • HAR
If you're in the Tampa Bay area, we have an IBD meetup tomorrow.  Please let me know if you'd like to attend and I'll make sure we have space available for you.  The meetup is a great chance to discuss some of these stocks.  We can also share our trading plans and discuss loss and profit targets.

Keep an eye out for my post on Wednesday where I will dig deeper into how you can create a trading plan.

Amin Hemani
investorspotlight@gmail.com
Twitter: SpotlightAmin


Friday, March 6, 2015

What I Learned This Week - In Under 10 Minutes

I hope everyone is having a great week!  We've seen some movement in the financial space related to the stimulus in Europe and it will be interesting to see what effect that has when the markets open on Monday.

I've been keeping an eye on a lot of moving parts this week but there were several items I came across in my research that I'd like to share.

Here's an interesting video I watched this week from the folks over at Charles Schwab.  It's geared towards new investors but it's never a bad idea to brush up on the basics.

I agree 100% with their premise that:

  1. You have to start with a Risk Management Plan
  2. You should only focus on stocks that are going up
  3. You should always prepare an exit strategy in case that stock goes down.

We're seeing a lot of buzz around Apple jumping into the DOW 30 for the first time in their history.  Here's the Reuters report on the specifics, definitely worth reading before the markets open next week:

I'm also really excited about having joined Twitter this week!  I'm having some great conversations with others that are interested in investing and CANSLIM techniques.  If you're on Twitter too, make sure to follow them.

@smartertrader
@FrankHamptonFX
@JoeSpringer
@AllieL_Forex
@pbrat40plus

I know that things have moved sideways the past several days but keep in mind - that's a GOOD thing because it means the market is consolidating.  Stay positive and focused, use the weekend to prepare so that you're able to act decisively when the markets open.  Watch for my next post first thing on Monday morning where I'll put a spotlight on market conditions as I interpret them.

Amin
investorspotlight@gmail.com

Wednesday, March 4, 2015

Are You Measuring Progress With Your Trade Plan?


Month end is a great opportunity to allocate more of your time to analysis. You should be measuring your progress constantly but scheduling extra time once a month is a great way to keep yourself pointed in the right direction.  If you haven't already, you should get into the habit of reviewing your portfolio to make sure it aligns with your broader investment goals.

If you're like me, then the hardest part about starting something new is getting started so I'm coming up with a quick check list that can help.  Watch for my next blog post next week, I'll provide a PDF that you can use in this effort.

When I analyze my portfolio, I refer back to my own plan.  I focus on what the charts and data are showing versus what my "gut" is telling me.  It can be difficult to train yourself to think this way but the charts don’t lie. Think of charts as a map that show you how to get somewhere you've never been before.  For me, this isn't about ego, it's about limiting my risk and taking a sure profit.

Recently I highlighted some stocks that looked promising to me.  Each one of these stocks has gone on to perform as I predicted, so hopefully you were able to take positions on them.

  • AAPL
  • NXPI
  • SWKS
  • SLXP
  • MCK
  • BIIB 

From what I'm seeing, I expect the market to move sideways or we may see a slow grind upwards. Based on this, I'm staying bullish this month.

We are still seeing some negatives in Europe with the Euro being devalued and a lack of growth in the Eurozone. The dollar is still strong, though, and I foresee a slight dip in oil - possibly 5%. Given all of these variables, I'm focusing my attention on US stocks.  Here's what I'm looking at now:

  • KR
  • EA
  • BRCM
  • DATA
  • PCYC
  • SBUX
  • ROST
  • ORLY
  • ULTA
  • NCLH

Some of these are extended while others are reaching or hovering along their buy points. Last week I laid out a simple option strategy, to lower your cost of entry into a stock. This weekend might be a good time to study that strategy and figure out a way to enter some of these stocks.

Stick to your due diligence and establish a trade plan before entering any position. Feel free to reach out to me if you'd like some guidelines on developing a trade plan. I can help you establish specific entry points, profit targets and loss exit targets.

I want you to stay disciplined with your approach in the market.  Always be prepared because the market can turn on a dime. You need to be to be able to take action, either to harvest profits or to minimize your losses.  Let's be honest, tt requires a disciplined approach to be in the market and there are no short cuts.

Have a great week and let's all have profitable month of March!


Amin
investorspotlight@gmail.com



DISCLAIMER
Please don’t take my comments as advice.  My posts are for educational purposes only.  I am sharing my thoughts and perspectives of the market. I post to share my own interpretations of market conditions. If I mention specific stocks, it is only to highlight a potential opportunity. I expect readers to do their own research on any position they want to take.

DISCLAIMER



Do not take a position unless you are prepared to sustain a TOTAL LOSS. Your loss could include the money you invested as well as commissions and transaction charges.


The Information I provide is for education and informational purposes only. The Information provided is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information provided is general in nature and is not specific to you or anyone else.


YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A LICENSED PROFESSIONAL. You understand that you are using this Information AT YOUR OWN RISK.