Monday, November 23, 2015

The $DOW Stalls - Yet $QQQ Is Up 10% YTD

The $DOW Stalls - Yet $QQQ Is Up 10% YTD

We are at the same level now on the $DOW as we were on Dec 31 2014.  However, $QQQ is up by a whopping10% but the $SPY is up a mere 2%.  This is an indication to me that we are nearing the end of the 7 year bull cycle that started in March of 2009.  The last several months have been driven by the Technology, Health Care and Consumer discretionary segments of the market.  All of the stimulus from the central banks of US, Japan, Euro Zone and China has no effect on the earnings or sales of publicly traded companies.

We are nearing the end of third quarter earnings season.  The retail sector as well restaurants have done very poorly in the third quarter.  Energy and the Industrial sectors are still the worst performers year to date.  There are, however, opportunities to invest and trade stocks that are in the Technology and Consumer discretionary sectors.

A Traditionally Bullish Week

Traditionally, the week of Thanksgiving starts a bullish run in the market.  This is a short week too so the market could just keep the momentum from last week and take off on Monday morning.  Thanksgiving week momentum usually keeps the pace for the following six weeks until the end of the year.  Last week, all the three major indices, $SPY, $DJX and $QQQ lead the market with a +3.5 %.  Last year November was the best month of the year too.  Since $QQQ index is the leading performer year to date and last month it did +11.37%, it is best to look for stocks in the Technology sector.  Also Consumer discretionary is the leading sector in the market and with $ being the strongest currency in the world, it is better to be looking at stocks that are more US centric to avoid the currency headwinds.

Stocks on My List

Although we are heading into historically the bullish time of the year, I am also cognizant of the fact that we have 12 distribution days between the $NASDAQ and $SPY.  Most of these distribution days have occurred in the month of November.  Institutions took their profits during those distribution days and last week they started investing heavily into some select names.  I have developed trading plans for the following stocks:

  • $LNKD
  • $ORLY
  • $MAS
  • $STZ
  • $CRM
  • $LUV

Some of these stocks have passed their ideal buy points so I would monitor them on Monday to see if some of them retrace to their buy point for my ideal entry.  I also have a secondary list of stocks that have a bullish set up for a low risk option trade. They are:

  • $FISV
  • $AMZN
  • $DIS
  • $HD
  • $FB
  • $ATVI
  • $RAI
  • $V
  • $TRV

If some of these names look familiar to you then you have obviously been reading my blog.  I have brought these stocks to the attention of my readers in the last couple of weeks.  These are stocks that have good fundamentals and technicals.  They are big cap stocks that trade over $100 million daily and not subject to high volatility like the thin stocks would be.  They also are very liquid with a tight bid/ask spread with options.  It is not a bad idea to take small positions in several stocks to take advantage of the bullish sentiments during this week. 

Have a Happy Thanksgiving and enjoy the turkey dinner with the family.

Happy Trading!










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