Sunday, April 16, 2017

My Market Outlook 


We had a short trading week last week with the market closed on Good Friday.   Market took an ugly turn last week and all the 3 major indexes  -  $DJI,  $SPY  and  $QQQ   headed below the 50 day sma (simple moving average)   Market had been consolidating for several weeks to digest the gains made since Nov 8th.    Financial Sector was the one that had made the most gains since the   "Follow Thru   day."   Market needed a catalyst to propel it higher and earnings reports is a huge catalyst.   Some of the banks had earnings release on Thursday and the institutions responded by harvesting their profits.   All this harvested profits were deployed in the  $XLU (Utilities Sector)   This is a defensive move by the institutions and we as retail traders ought to be raising  CASH  right now.   We will have new leading stocks coming into the horizon after the market corrects and you want to be ready to step back in the market with cash in your account.


Where are the New Leading Stocks Emerging From


I know that is what my followers are thinking right now.   There has been a sector rotation going on for the past couple of weeks.   Stocks in the Financial Sector were showing signs of topping out 3 weeks ago.   Institutions were harvesting their profits from the Technology and Financial Sectors.   It was happening for several weeks.   We were getting  "Distribution Days"   during that time and now the market has an elevated count of distribution days.   One or two more days like the ones we had last Thursday could change the condition of the market  to   "Market in Correction"   This is the reason for using  "Trailing Stops"   to protect profits in stocks that have 5% profits or more.   You never want to give up a heathy profit in a trade when the market conditions change suddenly like the one we experienced last week.

One of the things I focus on when the market has an elevated distribution days count is to look for stocks that continue to trend along the   8 day ema (exponential moving average)   while the general market is trending lower.   These are the stocks that would exhibit high RS ratings of 90 and above and with some of them the RS line would be turning upwards too.   These are the ones that are showing signs of support from the institutions and they would be the ones that would emerge as the new leaders when the market conditions change to a healthy status.   This could happen anytime next week too.   We have lot of stocks in the financial, transports and the the dow 30 reporting earnings this week.   Increased sales and increased earnings is what drives the price of Growth Stocks.   

Stocks I will monitor This Week


Here is a list of stocks that are trending along the    8 day ema   Some of these stocks are already extended and have a profit cushion of  +5%   or more.   These are the ones that also show RS ratings above 90 and RS line turning up as well. 

  1. $WDC
  2. $CIM 
  3. $WYN
  4. $HDB
  5. $RAI  
  6. $DIS
  7. $VRTX
  8. $ADBE
Some of these stocks are also good candidates for a low risk conservative short term Option Trades.

Mentoring Service

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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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