Sunday, July 23, 2017

Why  I  Stay  Engaged  With  The  Market

July is traditionally a weak month in the market.   Over the last 50 years, market has done just   +0.32%   on an average for the month of July.   If you listened to the media  "GURUS"  on the financial network TV, they would have said   "Sell in May and Go Away".   What do they know?   I don't consider them to be the experts.   In 2016, we had a  "Follow Thru"   day on July 1st and the  $QQQ  was + 7%  for the month.   Media  "GURUS"  were wrong and they never admitted to that.   I was on a 2 weeks transatlantic cruise in June of 2016 but I stayed engaged with the market.   It was a very frustrating experience with the internet on the cruise ship.   It was unreliable and expensive.   At times I got up at 4.00 am just to gain a reliable access to the internet to review the market and to scrutinize the stock charts.   I am glad that I stayed engaged with the market.   I was able to take positions in the stocks that were on my Watch List and profit from it handsomely as a result. 

Market  Performance  for  July 

I learnt a very good lesson last year.   There was nothing but doom and gloom in the news media last year about Brexit or Grexit and yet the market took off on July 1st for a  +7%  gain in  $QQQ.   2017 year is no different.   Mr. Trump is being investigated by  Mr. Mueller,  North Korean leader keeps firing off missiles towards Japan,  OPEC keeps soliciting its members to cut production of oil and Iran is continuing on its quest to attain a nuclear weapon.   I consider this to be the noise in the market.   It is best to just make your decisions based on the market conditions and what the stock charts reflect.   Your decisions in the market has to be driven by the data.   Everything else is noise.   Here is what the performance of the 3 major indexes and the leading Technology Sector  ($XLK)  is for the first 3 weeks of July:

  1. $DJI ...   +1.08%
  2. $SPY ...  +2.10%
  3. $QQQ ... +4.70%
  4. $XLK ...   +5.03%

Stocks  on  My  Watch  List

Last week I had identified 3 stocks that I was monitoring.   Their performance for July is highlighted below.   They have acted very well for the past 3 weeks.   I have identified their ideal pivot target prices in brackets.   According to the   IBD (Investors Business Daily)   rules,  one should only take a position in these stocks if they punch thru the pivot in volume atleast 40% above their normal daily average volume.

  1. $AMAT ...   +15.31% ($47.96)
  2. $LRCX  ...  +15.63% ($167.15)
  3. $NVDA  ... +16.28%  ($168.60) 

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Amin

Sunday, July 16, 2017

My  Market  Observations

Two weeks ago, it appeared that the institutions were rotating out of the Technology Sector and into Health Care, Transportation, or Home Builders sector.   On Friday July 14th,  $JPM,  $C  and  $WFC   reported earnings and the market did not react very favourably.   That put a dent in the Financial Sector.   Since the institutions primarily dictate the movement of the stocks, it is prudent for retail investors to monitor the stocks on their Watch List.    $CPA (Copa Airlines)  broke out on Wednesday  July 12th  in volume that was twice the normal average daily volume. Stock was being accumulated by the institutions soon after the July 4th holidays.   They favoured this stock out of all the other airlines.   Retail investors should have made the decision to follow the institutions and start accumulating this stock on Wednesday July 12th  when it punched through its resistance of   $125.78 (buy point of   $125.88  which is 10 cents above the resistance).   Volume was the confirmation signal that the retail investors should have been paying attention to.        


Market  Status

I still have a bullish bias towards the market.   Markets don't always go straight up and there is always a counter trend in a bullish trend before the market adjusts and goes back into its uptrend trajectory.   Currently,   IBD(Investors Business Daily)   has   "Market Uptrend Resumes"    as a market status.    Volume  on the major indexex ,  $SPY   n  $QQQ  is low and we generally would like to see volume higher than average daily volume when the market resumes its uptrend.   Don't let that stop you from taking a small position in the leading stocks that are in the leading sector.   Last year we had a  "Follow thru"   day on July 1st  and the market just took off for a   +10%   gain within 6 weeks.  


Stocks  to  Monitor  This  Week 

My analysis of the market performance since the beginning of July is as follows:
  1. $DJI   ...    +0.74%
  2. $SPY  ...   +1.38%
  3. $QQQ  ...  +5.93%
  4. $XLK  ...    +4.64%
$XLK (Technology Sector)  has been the leading sector during the last 2 weeks.   We are starting out with the second quarter earnings season this week.    $V, $MSFT, $SWKS   and   $NFLX  are just some of the stocks that will be in the earnings confessional booth this week.   They have been up  +4%  to  +10%   in two weeks of July,  leading up to the earnings this week.   Their earnings will propel the market up or down, depending on how the institutions react to the earnings.   These are the stocks that I plan to watch this week.   Their performance for the last 2 weeks is highlighted.  

  • $AMAT    +12.46%
  • $LRCX    + 12.93%
  • $NVDA    +18.39%    

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AMIN



Sunday, July 9, 2017

My  Market  Outlook


In my blog last week I suggested that we should take a breather during the shortened   "Independence Week"  in the market.  Every once in a while, it's best to take a break from the market and observe it from the sidelines while the institutions slug it out.  They are the elephants in the room.  They account for  80%  of the total volume of trading every day in the market.  They are the ones that set the tone of the market.  You and I as individual retail investors, should observe their behaviour and follow their lead. 

Here are some of my observations.   Since the beginning of this year, the leading index has been the    $QQQ.   The performance of this index was  +21%  from Jan 3rd to June 2nd (22 weeks).  On Friday June 9th, We had a major  "distribution day".   $QQQ   dropped by  -2.5%   in volume that was 6 times the normal average daily volume.  I found that very concerning.  We have not had such a heavy volume during a   "distribution day"   since August 24th 2015.  The index dropped down by  -4%    on that day.  Institutions have been bailing out of the $XLK (Technology Sector) in the last 4 weeks and harvesting their profits.   Since the  June 9th    "distribution day",   we know for certainty, where the institutions are deploying their harvested profits.   In the last 4 weeks, this is what the data suggests to me:

  1. $QQQ ...  - 4.10% 
  2. $XLK ...    - 4.23%   (Technology Sector)
  3. $XLF ...    +8.43%   (Financial Sector)
  4. $DJT ...    +3.89%   (Transportation Sector)
  5. $XLV ...    +2.83%   (Health Care Sector)
As Retail Investors, we should look for opportunities in the leading sectors where the institutions are rotating into after harvesting their profits in the leading technology sector of this year.

Stocks  to  Monitor  This  Week

  • $WFC
  • $JPM
  • $WFC
  • $C
  • $HDB
  • $DAL
  • $AAL
  • $LUV
  • $CPA
  • $RCL
  • $FDX
  • $AET
  • $UNH
  • $MCD
  • $PKG
  • $NVR
  • $KBH
  • $MDC
  • $TOL
  • $PHM

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Amin



Sunday, July 2, 2017

Independence  Week  July 4th - July 7th


July 4th is the Independence Day for us in the United States.  We will be celebrating it on Tuesday with fire works and cook outs with the family gatherings.  It's also a good time to give thanks to the markets for allowing us as traders and investors to have prospered in the first 6 months of 2017.  Following are the highlights of the performance of the major indexes for the first 6 months of 2017:
  1. $DJI ...    +8.03%
  2. $SPY ...  +8.17%
  3. $QQQ ... +16.17%

July 7th is the Independence Day for people living in Tanzania, East Africa where I grew up.  This week has a very special meaning for me personally as such. United States has been my home since 1969 and it has afforded me the opportunities to excel in my professional, business and personal life.  I am glad that I made the decision to become the citizen of United States.  I am in my element, living and working in Florida and sharing my expertise of the markets with my readers and followers.  I invest and trade Growth Stocks and I utilize IBD (Investors Business Daily) principles.  Anyone utilizing this methodology, should have been able to duplicate what the  $QQQ  index has done for the first 6 month of this year.  At this rate, one should be able to double the portfolio within 4 years. 


Market  Outlook  July 4th - July 7th


Market took the bearish turn 3 weeks ago on Friday June 9th.   $QQQ  dropped by  -2.5%   in volume that was 5 times the normal average volume.  It was concerning that most chip stocks and internet related stocks were being sold off by the institutions that day.  It took first 5 months of the year for the  $QQQ  to attain a +21%  gain.   -12%   of that gain was wiped off within one day on June 9th.  I had tweeted trailing stops the following Monday as suggestions for 38 of the winning stocks.  34 of those winning stocks were stopped out with profits.  Trailing stops enabled to capture more profits and limit the losses from institutions selling them off in the next 3 weeks.  There was sector rotation going on as of June 9th.  Institutions had parked their profits in dividend paying stocks in the  $XLU (Utilities Sector)  and   $XLP(Staples Sector)  from harvesting their profits from the   $XLK(Technology Sector).     Last week it became pretty evident with institutions deploying their harvested profits from the technology sector into  $XLV(Health Care)  and  $XLF(Financial) sectors.


Stocks  on  My  Watch  List


Currently the market conditions have worsened and we have 10  "distribution days".   This is not the time to be stepping into the market.  Personally I have gotten out of the market and have only one position  $ATHM  at  $45.05.  This would be good time to watch the market from the sidelines and conserve  CASH.   Here are the stocks in Health Care Sector that I shall be paying attention to this week.  This is a short week in the market with Monday being half a day and market closed on Tuesday.  I plan to relax and just chill this week.  I suggest that you also might want to do the same.

  • $ABBV
  • $ABMD
  • $AMGN
  • $ALGN
  • $BSX
  • $COO
  • $CELG
  • $EW
  • $GILD
  • $PRAH
  • $UNH


Happy July 4th !

Amin
    

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