Monday, June 27, 2016

How I Did Last Week

As promised to my followers, I am going to share the results of stocks that I had highlighted just 2 weeks ago in my blog on June 6th. My market outlook at that time was very dim. We had a pathetic jobs report of just 38,000 jobs created in May when in my view we should be looking for 200,000 to 300,000 range. The slow down in job growth and lower labour participation rate has been the theme for the last several months. Bulls have run out of breath after 7 yrs 6 months of bull market and it best to just follow the institutions. They have been piling their profits in dividend paying utilities and consumer staple stocks. They have been defensive in their investments and I found it best to look at GOLD mining stocks and staple items like FOOD.

Here is the summary of stocks highlighted:

  1. $AU  entry $15.96 up $16.77
  2. $ABX entry $19.73 up $20.47
  3. $AEM entry $48.47 up $52.03
  4. $NEM entry $34.99 up $37.19
  5. $GDX entry $25.13 up $$26.71
These are GOLD stocks that have attained over 6% profit in the last 2 weeks. I had planned for 10% as a profit target and 5% as a loss target.

Dividend paying stocks that I had highlighted were:


  1. $OKE entry $44.33 up $45.82
  2. $BGS entry $44    up $46.66
These stocks have attained over 5% profit overall and I had planned for 8% as a profit target and 4% as a loss target.

I had a failure as well. $AVGO was highlighted for entry @ $159.75 but was triggered for a loss @ 4% with a contingent order in place.


My Market Sentiments this Week

Brexit was not a good thing for the markets world wide. UK is the 5th largest economy and it is the first domino to fall. We are all interconnected and what happens in one part of the world is going to affect all of us. Most bull markets in US have been 5 years long and our current bull market has run over 7 years now. We are heading into the 2nd quarter earnings confession booth in two weeks. Increased earnings and increased sales is what drives the price of a stock. Projections are that this will be the 5th quarter of lower sales and lower earnings with $SPY. I have the following as my lower targets for the 3 major indexes.

  • $DOW ... 16,500
  • $SPY  ... 194
  • $QQQ ... 96.50
These targets may not be reached this week but I am keeping that as my support area. Quite often market bounces back a little after a dramatic move down of over 3.5% on Friday. History suggests that when the indexes drop to this level on Friday, Monday trading sessions it drops even further. This happened recently on Friday August 21st when the $SPY dropped 3% only to be followed by another 5% drop on Monday. Volume on last Friday June 24th was just as heavy as the one on August 21st. Monday following the volume increased even further by another 25%  Does history repeat? 

Stocks on My Watchlist

  1. $MLM
  2. $VMC
  3. $MO
  4. $SJM
  5. $DLTR
  6. $WEC
Once again I am looking at US centric, dividend paying and food stocks. They pose less of a currency risk and these are the stocks that institutions are favouring. They all show an IBD RS ratings of 90 and above and rising recently. 

Happy Trading!

Amin 


Monday, June 20, 2016

Be Defensive

Traditionally hedge fund managers and senior traders take time off in May and leave it for the junior traders to hold the fort. I had closed out most of my positions in mid April and headed out on transatlantic cruise to Europe for three weeks. Looking over the $SPY charts this weekend I noticed that we are exactly where we were in mid April. I made a note in my trading journal so I would be reminded of it next year. Being in CASH is a position too and as a retail trader I know most of us are inclined to fall into thinking that one has to have all their money working for them all the time in the market. One has to remind oneself that any money invested in the market be it currencies, precious metals, bonds, stocks or options on stocks are all exposed to market risk. It is best to mitigate risk and execute only low risk trades. I try to get into trades where the probabilities are on my side and plan my trades to harvest profits and mitigate losses.

Market Outlook

Currently there are a lot of uncertainties in the market. We had a pathetic labour report last month with measly 38,000 jobs created when we should have at least 150,000 to 200,00 job creation every month. Most US banks have announced they will be slashing jobs. There are uncertainties of Brexit (UK exiting the European Union) and we wouldn't know anything for sure until Thursday market close. Most banks have already indicated that they would exit UK and head off to mainland Europe if that happens. UK is the 5th largest economy of the World and their exit will depress the entire Europe's economy. It is bound to have ripple effects in depressing the emerging market economies as well as developed economies. Free trade in the last 20 years has made everyone in the world wealthier and Brexit would be a protectionism of UK's economy.

Stocks on My Watchlist

  1. $X
  2. $STLD
  3. $CLR
  4. $FANG
  5. $BCR
  6. $OKE
  7. $BGS
  8. $DG
I am also looking for a hegde with Gold mining stocks that I mentioned in my blog on June 6th There was selling volume in those stocks twice its normal daily volume on Friday June 17th and yet they maintained their trading above 20 dma. That is indicative of institutions buying up those shares and a sign of strength. They all have RS ratings above 96.  Stocks that I currently monitor are only the ones that have the highest possible RS ratings (above 92) They are the ones that institutions are buying.


Happy Trading

Amin








Sunday, June 12, 2016

My Performance This Week



Market took a sudden turn on Friday June 10th and I was stopped out of $NTES and $EDU for a loss. No trader wants to take a loss on a stock that is fundamentally sound and technically showing strength. Both these stocks were showing RS ratings in the 90's and kept appearing on IBD 50 stock screen and were showing up as the sector leaders. There was a strong institutional support and both stocks were trading over 1.5 million shares a day. These are very liquid issues but the market health just deteriorated on Friday with massive sell off. $SPY and $QQQ both had volume over 50% above average and gapped down at the open. Institutions were obviously harvesting profits and rotating into dividend paying stocks once again.


Most traders that I talked to over the weekend were very upset at the losses that they took on their stock positions on Friday because they did not have a stop loss limit order in place. I make it a habit of mine to have contingent orders in place for Loss as well as Profit targets on my positions. Had I not done that than I would be facing a loss of -5.39% on $EDU and -7.35% on $NTES instead of just -3% loss that I had planned with my Trade Plan.


Market Outlook



Traditionally looking over the last 50 years, June and Sept are some of the worst performing months in the market. In 2014 however, June performance surprised us with +1.58% and the $SPY was trading above the 30 day sma all month long. Currently institutions have begun to take positions in dividend paying stocks. In the last 3 weeks, $XLU (Utilities) have gone up a staggering +5%  $XLP (Consumer Staples) +3.78% and $XLV (Health Care) +2.87% Institutions are being defensive once again and that is where I see opportunities this week.


Stocks on My Watch List


  1. $T
  2. $VZ
  3. $TFX
  4. $BCR
  5. $BSX
  6. $IDXX
  7. $RTN
  8. $NOC
  9. $MO
I shall be watching the Asian markets tonight (Sunday) before going to bed to get a clearer sentiment of what to expect Monday morning. I am very cautious heading into the market next week with all the noise in the market about Brexit and the tragedy in Orlando Saturday night. It is best to let the stock charts be your guide. Stock charts are really human emotions on display.


Happy Trading!

Amin

 

Monday, June 6, 2016

Bulls Are Out of Breath


Last week I had a bullish bias towards the market because $SPY had surged +2.31% the previous week and all the 9 SPDR sectors were trading above their 50 day sma. I had a watch list of 9 growth stocks that were trending along the 8 day ema. Four of those stocks triggered a buy order earlier in the week. Five of the remaining stocks just took off on Tuesday and never got filled. $MAS got filled at $32.85 (.27 cents below buy target) earlier in the week only to be stopped out the next day for -3% loss. Major indexes were fumbling after Wednesday and by the end of the week, $SPY never managed to punch through the ceiling of 211 and finished at 210.28. This is pretty much where the index was with its bullish run just a week prior. Market just couldn't keep the momentum and all because We had a pathetic jobs report.


For the last 5 months, job increases have been slowing down. In Dec it was 281,000 jobs and in May it was down to 107,00.  June report showed only 38,000 This is a troubling sign of a slowing economy. I view this as a mild business recession. Most S&P 500 companies are hoarding cash and buying back their shares instead of investing in their inventories or technology to improve productivity. Businesses have not been able to take advantage of the low price of oil. What all this reflects to me is that there is an overall lack of demand from the US consumers.


My Stock Watch List


  1. $BGS   ($44 entry) Plan 8% profit/-4% loss
  2. $DG    ($88.64 entry) Plan 8% profit/-4% loss
  3. $AVGO ($159.75 entry) Plan 8% profit/-4% loss
  4. $OKE   ($43.88 entry) Plan 8% profit/-4% loss

There were 3 stocks - $EDU, $MXL, $AYI - that did not trigger a buy order last week but they are still on my watch list this week as well. The trade plans have not been altered from last week either. I would suggest to my readers to practice VIRTUAL trade at this time with some of these stocks. It will help sharpen your trading skills.


GOLD! GOLD! GOLD!


It is 8.30 am Monday morning as I am writing this blog. Market in Asia has been mixed and Europe is halfway through their session with no clear sign of where it will end. It seems very unlikely that the FEDS will raise rates in June. On Friday $DXY (US $ currency) dropped against all the major currencies of the world and major gold mining stocks all gapped up in very high volume. $XLV (Health Care Sector) is one of the few sector that has been up trending the last two weeks. This is a defensive play by the institutions. It is worth while to have some positions in the following names to protect against currency and stock market uncertainties. I have identifiied appropriate entry prices for each of those names.

  • $AU  ($15.96)
  • $ABX ($19.73)
  • $AEM ($48.47)
  • $NEM ($34.99)
  • $SLW ($19.50)
  • $GDX ($25.13)

Once again, I caution my readers not to chase trades and to do their own due diligence before taking any position. Don't take this blog as my recommendations. It is for educational purposes only.

Happy Trading!

Amin



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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.


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