Monday, October 24, 2016

Being in CASH is a Position Too


I just got back from a dinner party at my friends house and some of them were discussing the merger between  $T   and   $TWX.   They wanted to know if this would be of a benefit to $T - the acquiring company.   I am a growth stock investor and I focus my energies into looking for only those stocks that are highly accumulated by the institutions.   I also look for stocks that are trading above the    21 day ema (exponential moving average)    Currently   $T   is trading below the   200 day sma (simple moving average)   It sliced through the   200 sma   on August 16th and has been trending below it precipitously for the last 8 weeks.   This is the stock that has not been on my radar in spite of all the noise from the media about the merger.   I am mostly in  CASH   at present.   I know from history, October is a very volatile month.   It is better to hold onto   CASH   as a position right now.   Market is still under pressure with   10 distribution days  -  according to  IBD  (investors Business Daily)   There is an elevated risk under present market conditions in taking stock positions right now.   I consider   CASH    as a position too.


My Market Outlook


This week we are right in the midst of earnings season.   Lot of energy names, airlines and giant tech stocks such as $AAPL, $AMZN, $GOOGL, $BIDU as well as dividend paying defense stocks such as $RTN, GD, $LMT and $UTX will be reporting earnings.   They will move the market just because of their sheer size.   $SPY   and   $DJX   have been trending below the   50 day sma   for the last 8 weeks.   $QQQ    is the only index that is hovering above the   21 day ema    This is the only area where I have been focusing my energies for the past several weeks.   $XLK (technology)   is  even  and   $XLE (energy)   is up by   +2%   since the follow thru day 4 weeks ago.   It appears that we have a sector rotation going on right now.   4 of the 9 sectors -  $XLU (Utilities),  $XLV (Health Care),  $XLP (Consumer Staples)  and  $XLF (Financials)  are trading below the 200 day sma.   It appears that institutions are investing their harvested profits in the depressed energy names.   I had mentioned to my  IBD Meetup group on September 13th that energy sector is where there might be growth stocks popping up in the next growth cycle. 


Stocks on My Watch List


  1. $EMES
  2. $SLCA
  3. $PBR
  4. $CLR
  5. $FANG
  6. $PXD
  7. $APA
  8. $PE
  9. $REN
  10. $CPE
Some of these stocks are extended and may provide a good short term bullish Credit Put Spread Option Trades.   I would caution my readers however that we have a lot of stocks reporting earnings this week and the market could either tumble over or punch through the resistance.   It is all up to what the institutions decide to do.   They account for over 75% of the total trading volume daily.   This is the main reason why I have chosen to be in CASH mostly at this time.   I shall lay in wait - just like a leapord in the trees - for the right opportunity to come within my striking zone for a profitable kill.   I have already done my home work over the weekend and created a trade plan for any likely scenario in the market this week.   I hope my readers have done the same.


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.


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