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For those of you who don't know The Analyst Bomber, he once had a coveted spot writing for another publication. He is the most accurate fundamental analyst that I know of and while you may think I am biased because I am married to him, I assure you that his views should not to be taken lightly. While I have some experience with fundamental analysis, he is my in house fundy analyst and I am fortunate to have him.
I trade technicals for the most part. I believe that technical analysis lends better odds to those of us retail traders swing trading our portfolio but when Robert (AB) has fundamental ideas that match up with my technicals, those are often the strongest trades and that combination allows for even better odds. But as I have mentioned many times, fundamental analysis tends to be emotional as the very structure of it causes the analyst to say what "should happen" and makes it difficult for him to accept what "IS" happening. For those who don't know, fundamental analysis determines the value of a company while technical analysis charts the price of the stock for probable direction without concern for actual valuation. In this sense, fundies are better left for long term investors rather than swing traders since a good fundy analyst will likely see price go to its value eventually but not before some volatility. Charts, on the other hand, tell us what is now.
For this reason, Robert and I decided some time ago that I should manage all our accounts going forward. I use his fundamental views as an influence to my technical views and trade according to my strategy with discipline. Like any money manager, I enjoy a good valuation point of view and I am grateful to have such a great analyst on my team...and cheap too!
Recently we have been talking about the SOX or the Philadelphia Semiconductor Index and without further ado, here is my technical analysis of the SOX By Special Request from The Analyst Bomber.
SOX-X daily chart shows a pull back and currently the secondary trend or shorter term trend is down. The daily chart follows but be sure to keep scrolling down for the longer term charts and analysis.
When I zoom out to look at the weekly chart, I note that the index broke out of its 2014 level of resistance. It knocked at that door several times and eventually it opened in November. The index went higher for a couple of weeks before rolling over. It is now approaching that breakout level and the 8 week ema (my trigger line). Previous resistance often becomes support and as often as that resistance was rejected, I suspect it can deliver a strong level of support. Here is that chart, but again, be sure to scroll down for the big picture.
Then I zoomed out to look at the multi-year trend on the weekly chart and I note that a multi-year breakout took place in February of 2014 before it created the recent resistance level that it broke out of in November. There is no question when looking at the longer term chart that the primary trend of the index is up and as long as recent resistance/support confirms with an inflection, I will be a buyer of SOX components into the new year. But I also note that as a technical analyst, I reserve the right to be wrong and I have no issue with that. I do not state what should happen or what will happen but only what is probable based on the charts. If that resistance / support level is lost, I will be keeping Stox in SOX at bay. Here is the Primary Trend chart.
This is the first in a series of posts By Special Request from my followers. If you would like to see a ticker charted and analyzed, please drop me an email or twitter post with the ticker and I will put it on my list.
In the near term EPD (Enterprise Products Partners L.P.) is definitely being dragged lower in line with overall energy as oil drops to below $60. This shorter term trend on the daily chart is the Secondary Trend and is definitely down. That trajectory can be seen in the daily chart with its dumpling top followed by a bearish "M" pattern, but I note the trend line not far below.
EPD is an energy "transport" company that moves primarily natural gas and some oil but nat gas has held up relatively well compared to oil. EPD's weekly chart has held up even better than the commodity itself. As an MLP creating infrastructure to facilitate the country's energy independence, it also attracts investors interested in yield.
The trend line I see not far below in the daily chart is clearly reflected in the weekly chart as a Primary Trend to the upside. When I zoom in, I see that the candlesticks on the weekly chart continue to look menacing with the current candle presenting a large red Marubozu.
For long term investors, however, selling an MLP has huge tax consequences, so if an MLP loses technical support it means large scale selling which means something more menacing is likely on the horizon. The complication of selling an MLP makes it more likely that Primary Support will hold but I would watch for an inflection off of the primary trendline and a candlestick buy signal before considering an entry. Until I see that inflection, I have no way of knowing if that Primary Trend will hold as support given the current trajectory in the Secondary Trend and the overall sentiment in energy. As long as the trajectory is down, I must accept that it can lose support and continue lower. I keep the odds in my favor by waiting for that signal.
Here are the charts.
Markets are heavy today with news of more economic trouble in Greece and a lower demand forecast for oil from OPEC. There is no denying that some fear has come into these markets. My timer is firmly red with a chart that has lost recent support in SPY. Following is what I see for the next levels of support in SPY as it corrects more deeply.
While I await the final Small Cap Power Period of 2014, I find myself in a pretty light portfolio as markets put in a tiny correction. I call it tiny because the move does not currently have much conviction. Buyers came in to buy the bottom after SPY bounced on the 34 ema today and a previous line of resistance has become support. This gives us some nice consolidation of the recent rally. My trade timer is officially red, however, and I am holding off from adding much to my port. I do note some movement in shiny medals breaking down-trends that led me to take a position in silver name PAAS. Here are the SPY and PAAS charts.
Markets are continuing right along grinding higher into the holiday season. SPY continues to move up its channel and has a diagonal inverted head & shoulders pattern.
IWM has made a nice comeback into the last day of the second sub-small cap power period with strength in a "W" pattern. My TNA add yesterday is doing well for me. Here are the charts.
A little luck came my way when CY and CODE announced a merger last night and my position in CODE has been soaring since. The weekly chart shows a beautiful breakout.
Meanwhile, I put on a small TNA position on this morning after stopping out for gains on Friday. I note that was also a blessing as I locked in profits on a full sized position before it pulled in. I jumped in with a half size this morning for easy risk/reward to get in on the last two days of the second sub period which ends tomorrow.
Here are the charts.
CODE weekly and IWM daily
I have decided to start taking special requests for charts and analysis. If you have any tickers you would like to see analyzed, feel free to send me an email @ firstname.lastname@example.org and I will be happy to chart it for you. Here are 3 tickers that have been requested along with a brief analysis followed by their respective charts.
LVS (Las Vegas Sands) - Casinos have been setting up nicely after taking a major hit lately due to high debt in the gaming industry, but recent suggestions by CZR - (Ceasar's Entertainment Corp) of converting a large portion of its operation into a REIT has given some boost to the industry. LVS has managed to put in a double bottom "W" shaped pattern as it bumps up against a pocket of volume at price. A move through the pocket will take it to near the 200 day sma around $71.99. Here is the chart.
RAD (Right Aid Corp) has been reporting increasing profits after the ticker made a decent correction. The move back up is consolidating nicely as it puts in a Bullish Ascending Triangle while shaping a Cup and Handle. There is a clear breakout level above today's high of $5.68. Should it clear that level, the 200 sma is the next target, around 6.50.
$XLF (SPDRs Select Sector Financial ETF) tracks the major banks in the financial industry. It's component list can be seen by clicking Here. To view charts for all components in the ETF, Click Here. Banking is putting in its fourth quarter rally overseen by the turkey gods and likely followed up by the Santa rally. Seasonality is likely the biggest component to this good looking set up of a JHook pattern breaking out. Risk/Reward makes this an easy trade with a stop below the 8 ema at $24.17 targeting new all time highs.
Markets are continuing nicely today after pulling back on Friday from new highs. Many families have taken this entire week off in honor of the Thanksgiving holiday so participation is a little slow. I myself will be on the road Wednesday morning to spend the long weekend with family. Seasonal plays are working well and my full port is earning me money. Here are the charts.