Sorry for the lack of comments since my last post but I am still long AREX with an average price of 6.01. Below is my comment this week to my subscribers regarding the stock:
AREX came within a “cat’s whisker” of generating another strong buy signal on the weekly closing chart, having closed just 13 points below the high weekly close for the past 18 weeks at 8.15. Nonetheless, the traders likely decided to wait to see what the market ends up doing this pivotal week before committing to higher prices. The stock did close in the middle of the week’s trading range, leaving the door open for either direction to be chosen. By the same token, the bulls do have a decent edge, having broken convincingly above the 100-day MA (first time since August) and building what seems to be a bullish flag formation (flagpole being the rally from 6.23-8.70 and the flag being the trading range between 7.61 and 8.70 seen the last 4 days of the week) that offers a 10.08 upside objective if 8.70 is broken. Probabilities favor the stock trading between 7.70 and 8.30 for the first few days of the week and then the traders deciding on the next direction. Probabilities favor the bulls.
....continued.... the traders are not likely to make any decisions until that report is out. That is turn means that Monday could be a strong day before the opening bell. Black Monday perhaps?
A daily close below 187.97 will weaken the chart further and a daily close below 182.11 would now be a strong sell signal.
My stop loss on the short positions has now been placed at 194.35.
Yesterday's rally was expected after Friday's green close and Yellen's words. Nonetheless, today's drop in the indexes is a decent negative that will "require" additional help from Yellen to negate.
On the "daily closing chart", the DOW and the SPX will end up having a "second" successful retest of the recent all-time high. Usually 2 retests are all that are needed to generate some new selling, or in this case, profit taking. Often though, no second retest is required but in this case it actually was likely occur for the simple reason that the NASDAQ had not even had 1 successful retest of the 5042 high seen 2 weeks ago. As such, with the red close today, it will make yesterday's close at 4947 into the first "successful" retest of the high. By the way, I do want to mention that on the 60-minute intra-day chart, the 4950 was an important and slightly pivotal resistance.
Simply stated, the bulls now need for the ISM Index and Jobs reports to help them and in my opinion those reports will not be of help to the bulls "no matter how they come out". A better than expected report will suggest the Fed is more likely to raise interest rates sooner rather than later (a negative) and a worse than expected report will mean things are not good but the Fed is now out of options as to how to stimulate the economy.
Anyhow, getting back to GS:
With the red close today, GS is now showing 3 successful retests of the high daily close at 196.89 and more importantly, a successful retest of the recent high daily close at 193.91, in which the bulls had been successful is getting above a previous high daily close, meaning it too had to be tested successfully. It now has.
All of these successful retests mean that technically speaking and chart-wise, the stock is now set for selling pressure and that the bulls need fundamental help. I don't see it coming from anywhere.
It is not likely stock will do much this week since the Jobs report comes out on Friday and ...continued..
....continued from previous post......................as they want them to. Figuring what the traders want the reports to come out as is difficult since a good report is likely to stimulate interest rate hikes sooner rather than later and that would not be a positive, and a bad report is not likely to help since there is no way interest rates can go lower. I therefore believe that the economic reports this week will not help the bulls.
It is possible though, and perhaps even likely, that the bulls will be able to generate some buying at the beginning of the week, following up on the small gains the bulls were able to generate on Friday. The bulls are likely to use whatever ammunition is available and the only ammunition I believe they have available was the prevention of a sell signal on the weekly chart being given on Friday, as well as the successful retest of the previous low daily close with Friday's green close. Simply stated, I believe the indexes will end up going up on Monday and Tuesday but then likely begin to fail when the big economic reports come out on Thursday and Friday.
Also keep in mind that the end of the month is on Tuesday and where the indexes close out the month is important since they are all having negative reversal months and from levels of important resistance. As such, I believe the bulls will try to generate enough buying a
First of all, let me state that I am a chart reader and not an analyst, and that means I react to what the traders do and adjust my probability ratings on the trade. In addition, due to the fact that I do not have a crystal ball, I do "cover my behind" with diversification (anywhere from 6-10 stocks), risk/reward ratios of at least 4-1 on each trade (meaning I can be wrong as much as 80% of them time and still break even or make a small profit), and pinpointing my entry points where my risk is always small and controlled.
Simply speaking, I am not a seer, just an investor looking to "make more money than I lose" in a market that is full of sharks that are ready to eat all the little people that are trying to fundamentally evaluate a stock in order to make a profit.
On a more specific way, the reason for the rally today has a lot to do with the rally in the indexes, which I did see coming when I did the chart evaluation on them this weekend. The rally has "dragged" a lot of stocks up, including OSK. Nonetheless, the bulls in OSK have not yet accomplished anything of consequence. In fact, I shorted additional shares today at 48.93.
Nonetheless, FYI, below is the comment on the indexes I made to my subscribers on Saturday:
I have evaluated the index charts and I have nothing much to add to what I said on Friday. All the indexes had a strong spike down week and more importantly from levels of importance, meaning that the bulls now "need" something tangibly positive to generate new buying and that is likely to be a tall order, especially since Yellen's comments on Friday only helped the indexes in a very small way. Simply stated, buying dips is not likely to work as well this time as in the past.
Nonetheless, this is a week where economic reports of importance are due out and as such, the bulls could not find a better time to stage a rally than this week, if and when the reports come out as they want them to. Figuring what the traders want the reports to come out
OSK generated a negative reversal week, having made a new 5-week high and then going below the previous week’s low and closing in the red. The negative reversal was even more notable given the fact that the stock got up to the 50-week MA, currently at 48.70, and responded negatively thereafter. The 50-week MA has proven to be a valuable indicator given that the stock broke below the line 35 weeks ago and has not been able to get above it since, in spite of the stock trading around the line for the past 5 weeks and having tested it successfully once before. Minor intra-week support is found at 45.36 and pivotal support is found at 44.16. Resistance that is probably pivotal is found at 48.52. Nonetheless, above that level the stock still shows resistance at 49.40 and at 50.27. Probabilities favor the bears.
KMX bulls were able to avoid the strong drop in the indexes this past week, having generated a green weekly close on Friday and keeping the recent short-term uptrend intact. Nonetheless, the stock only closed 14 points above the previous week’s close and the close was in the middle of the week’s trading range, suggesting the traders are still on the fence as to what to do and will likely follow whatever the indexes do this week.
By the same token and using the intra-week chart, the stock now shows a confirmed successful retest of the double top at 68.41/68.71, meaning that the bulls will likely need some positive fundamental news to generate new buying interest above last week’s high at 67.84. To the downside, likely pivotal support is found at the week’s low at 65.26 that also happens to be where the 50.day MA is located. Simply stated, a break above or below last week’s trading range (65.26-67.84) is likely to be decisive as to direction for the near future. Probabilities slightly favor the bears.
GS generated a classic reversal last week, having made a new 12-week high and then closing below the previous week’s low. In addition, the red weekly close made the previous weeks close at 193.13 into a successful retest of the 7-year weekly close double top at 195.45, suggesting that further upside at this point will require positive fundamental news. Nonetheless, the bears were unsuccessful in generating a sell signal on the weekly chart, failing to close the stock below the previous low weekly close at 186.91, in spite of the stock trading as low as 185.02 last week.
The stock did close in the lower half of the week’s trading range, suggesting further downside below 185.02 will be seen this week. Resistance is found at the $190 demilitarized zone and again at 191.33. Stronger resistance is found between 192.49 and 193.28. Important and probably longer term pivotal support is found at the 200-day MA, currently at 182.20. Probabilities favor the bears on a longer term basis as a bearish Head & Shoulders formation has now been built. A break of the neckline at 172.32 would offer a $146 objective.
I removed my stop loss at 193.38 due to the fact that I still believe the indexes are at a top to this rally. I believe the NAZ is just testing the all-time high weekly close at 5048 and having closed on Friday at 5029, the possibilities are high that at the very least the index will back off from this level, meaning all stocks will back off from this level
I will keep you abreast of what I do, but for now I am still short the stock.
GS has now gone below yesterday's low and that makes yesterday's high at 192.49 into a successful retest of the 191.95-192.68 resistance level. It does put one more nail in the coffin, strengthening the chart for the correction I have been expecting to see.
I added shorts here at 191.85. I am now averaged short at 189.63 (2 mentions). Stop loss remains at 193.38.
After last week's action I did expect the stock to get up to somewhere between 191.98 and 192.68 and it can be said that already occurred with this mornings 191.95 high.
GS generated a positive reversal, having made a new 4-week spike low and then closing in the green and in the upper half of the week’s trading range, suggesting further upside above last week’s high at 190.00 will be seen this week. Nonetheless, the stock ran into some selling interest on Friday when the stock failed to follow through on Thursday’s rally and close at 189.95 and got down to 186.16, opening the door for some doubts to emerge as to the strength of the rally to 190.00. Decent resistance will be found between 191.40 and 193.28 that seems unlikely to be broken, at least without the help of a resumption in the uptrend in the indexes. Minor intra-week support is found at 185.59 and decent between 182.40 and 182.79. Probabilities favor a rally up to around the 191.90 level but also favor a drop down to 185.99. Overall, the probabilities still the stock being in the process of building a top formation from which a strong correction can occur.
FSLR followed through to the downside and did close below the $60 demilitarized zone, suggesting that the stock will see 57.80 before any new buying is seen. The 200-day MA is currently at 57.70, so it is a viable downside objective. I will consider adding positions at that point.
Market has negated yesterday's rally and today has now gone below last week's low, suggesting that the selling has resumed.
I am now short not only GS, but AXP, COF, KMX, ORCL OSK, and TOL and all in profit. All of these shorts were given to my subscribers over the past 2 weeks.
In addition, I took profits on my long positions on QRVO, AMZN and PACB.
Then please answer the question as to why GS has not been able to get above the $200 level for the past 8 years even though the indexes have made new highs over and over again.
Your thinking does not make sense.
Per my newsletter mention, I shorted GS today at 187.41. Stop loss is at 193.38 and objective is the $150-$155 level. I am risking approximately $600 to pick up $2200-2700, which is a 3.5-1 risk/reward ratio.
By the way, in an answer to chedche88 that says that unless the stock breaks $170 that the bulls remain in control. That is certainly true but then again this market has not given the bears any trends, meaning that waiting for the $170 level to break means you would be "chasing" the stock and chasing most stocks to the downside has not worked since 2008.
The trading idea is to sell high and buy low and more importantly to get involved when there are at least some reasons to get involved, such as the successful retest of the December high at 198.00. The idea then becomes to use good risk/reward ratios to keep the winners giving more profits than the losers giving losses. If you make more than you lose consistently, you will end up a winner at the end of the year.
Anyhow, I believe this is a viable short position at this price.
Per my newsletter mention, I shorted TOL today at 37.24. Stop loss is at 39.35 and objective is 30.00. I am risking $211 to pick $724 per 100 shares, which is a 3.4-1 risk/reward ratio.
TOL Friday Closing Price - 36.92
TOL has been trading mostly sideways between $30 and $40 for the past 29 months but it is important to note that the stock made a new 9-year high at 39.95 in March of last year and a new 27-month low at 28.92 in October of last year, suggesting the traders are sensing the stock may be ready to break out or break down out of that trading range sometime in the near future. Nonetheless, for the time being and considering that the indexes are likely heading lower, it does seem that at the very least the stock will be heading back down to the $30 level, which is also where the 200-week MA is currently at.
TOL generated a red weekly close on Friday, making the previous week's close at 38.31 into a successful retest of the 9-year high weekly close at 39.22. The stock closed on the lows of the week and further downside below last week's low at 36.62 is likely to be seen this week.
TOL bulls have now failed to break the top of the sideways trend and as such, the probabilities strongly favor testing the bottom of the sideways trend at the $30 level, especially since the stock shows multiple daily closes (4) between 30.44 and 30.91 as well as around the 28.40-28.92 that are now highly likely to be a magnet for the traders, given that the indexes may have found a top to their rally.
To the upside, TOL shows intra-week resistance at 37.10, at 38.36 and at 39.08. Further resistance is found at 39.95 but if the 39.08 level is broken, it is likely the stock will get above 40.00. To the downside, the stock shows no support until minor support is found at 34.50. Further support is found at 33.26, a bit stronger at 32.34, and again at 30.81, that does include the 200-week MA, currently at 30.20. Strong support is found at 28.92.
Sales of TOL between 37.00 and 37.50 and having a downside objective of at least $30 will offer a 3-1 risk/reward ratio.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
GS Friday Closing Price - 186.91
GS has built a bearish Head & Shoulders formation over the past 7 months with the left shoulder at 189.50, the head at 198.06 and the right shoulder at the high seen 2 weeks ago at 193.28. The neckline is presently around 172.32. A break of the neckline would offer a $155 objective.
GS also now shows 2 successful retests of the 7-year high at 198.06 (seen the first week of December) with the first successful retest being seen the last week of December at 196.96 and the second one being the high seen 2 weeks ago at 193.28, meaning that the bulls have now done everything they could to re-generate the uptrend but failed.
GS generated a reversal day on Friday, having gone above Thursday's high and then closing below Thursday's low and on the lows of the day/week, suggesting further downside below last week's low at 186.56 is likely to be seen this week.
To the upside, GS shows minor to perhaps decent intra-week resistance at Friday's high at 191.40, a bit stronger between 192.68 and 192.87, and decent at 193.28. Nonetheless, on a daily closing basis, the 187.89 to 188.07 level will now be considered decent resistance. To the downside, the stock shows very minor support at 185.59, minor to perhaps decent at 182.40, minor but psychological at the 180.00 demilitarized zone and decent as well as pivotal between 171.26 and 172.32 (neckline of the H&S formation). Below that level, there is very little support until the $150-$151 level is reached.
The probabilities now favor the stock heading back down to the $150 level that has offered the same kind of support over the past 7 years as the $200 level has offered resistance during that same period of time.
Sales of GS above 187.50 and using a stop loss at 193.38 and having a $151 objective will offer a 4-1 risk/reward ratio.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
FSLR generated the 5th green weekly closing in a row but more importantly confirmed the break of the 50-week MA, currently at 59.00, with a second close in a row above the line. The stock closed in the middle of the week's trading range, suggesting the stock might follow whatever the market or oil prices do this week. Nonetheless, the stock did generate a negative key reversal on the daily chart on Friday, having made a new 6-month high and then closing below the previous day's low, suggesting the first course of action for the week will be to the downside. Minor support is found at 60.15 and decent as well as pivotal support is found at 57.80, which is also where the 200-day MA is located. Probabilities favor a pause-in-the-uptrend week, a drop below last week's low at 59.03, but a close next Friday above that same level. A rally above last week's high at 62.27 would likely negate the scenario, suggesting 65.99 will be seen.