Monday, February 20, 2017

My Market Outlook


My market outlook is still very bullish in the coming week.  Lately I have been getting a lot of response to my tweets and stocks that I have highlighted in my blogs the past couple of weeks.  I sense that some of my followers did not participate during the  "Follow Thru"  day on November 9th and instead have watched the market continue to go higher.  Now they are concerned that they are missing out on this rally.  There are others who did step into the market and are euphoric since the   $DJI  has catapulted over 600 points in just the last 2 weeks.  They are holding onto their gains and expecting the market to continue to trend higher.   The question I often get lately is    "What Should I Do?"    I will attempt to answer that question in my post today by letting you know   "What Would I Do?"


My Analysis


It is always a good idea to analyse the 3 major Indexes   - $DJI, $SPY   and   $QQQ -   that I follow to identify where the strength in the market comes from.  In the last 10 weeks since Dec 7th, all the three indexes broke out from their resistance lines and they have advanced:

  1. $SPY   +4.67%
  2. $DJI     +5.5%
  3. $QQQ  +9.67%
When I analyse all the 9 sectors of the market,  $XLK (technology)   is  +8.32%    That has been the leading sector for the last 10 weeks and that is where the opportunities have been. 


What would I do?


I will highlight 5 stocks that have appeared on My Watch List in the last 8 weeks.  Some of these stocks were mentioned in my blog and others were tweeted on my tweeter  @spotlightamin.  Some of them were mentioned in my posts and commentaries on  Linkdin.  These stocks have already crossed over their ideal buy point and would be risky to chase them.  Market will most likely consolidate the gains made in the last 10 weeks and these stocks may retrace too.  I am indicating areas of support and resistance where these stocks may provide an opportunity to take a position:

  1. $AMAT ...  $33.62
  2. $AVGO ... $208.85
  3. $ZION  ...  $44.43
  4. $CMA  ...  $71.30
  5. $CFG   ...  $37.08 

I prefer to take a  "Low Risk Trade"  since some of these stocks have already either passed their ideal buy points or they broke out in low volume.  I prefer high volume break out on Growth Stocks.  This volume sometimes comes before or after passing their buy zone.  Chasing a stock beyond its ideal buy zone is a losing proposition.  I would utilize   At the Money Credit Option Spreads   on these stocks to profit from their momentum.  They are all trading above the 20 dma (day moving average).  Some of them are very liquid issues that offer weekly option chains.  That is something I would highly consider for these stocks.  


Next week in my post, I will highlight some of the  Option Spread Trades  that were done on some of these stocks.  


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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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