Category Archives: Stock Market

Chinese Stock Market: Trade Like a Pro in 1 Min!

By Biiwii

I don’t know how literal this is, but by way of SoberLook’s excellent daily email service of macro signposts, here is a look at a street vendor quick-teaching kids how to read trend lines and trade like Buffett.  I don’t think Buffett uses trend lines but I do think this is a shoe shine boy moment for the Chinese stock market, to one degree or another.

tradinglesson

Biotech Sector Still Leading the Market

By Biiwii

The Biotech sector just keeps on going.  Exhibit A is AMGN, which this space noted had a target of 174 back in March when the price popped above 160.  Here’s the updated chart from that post.  It’s had a subsequent drop and rebound, keeping 174 in view.

amgn

We had an NFTRH+ update on an interesting pattern in GILD (daily and weekly charts were analyzed for subscribers) along with an upside target and stop loss parameters. GILD has been forming this pattern for months now.

Today was also interesting because several smaller, more speculative Bio’s were weak while the big boys were strong.  Here is the updated chart of the Biotech ETF (IBB), near the top of its channel.

ibb

What’s it mean?  Simply that an important market leader is still fully intact.  On that note, here is the BTK secular bull vs. NDX chart once again.  This secular bull is 15 years old.  Read into it what you may.

btk.ndx

Faro; Time Was…

By Biiwii

In Q4 2014 NFTRH (+) presented for its subscribers a long/short trade involving FARO and HURC, respectively.  I never got on the HURC short because it turned down before my optimal shorting point.  But I did get long FARO for a nice and profitable trade.

The gist was that any late year revenue bump – per our analysis of traditional year end sales increases in the Machine Tool and related industries – would be an opportunity to long a great company like Faro for a trade and short an over valued vanilla company like Hurco.

Why short Hurco (and take profits on Faro)?  Because of the effects of the strong Dollar, weak Euro and weak Yen.  That is the play that everyone (incl. Mr. Druckenmiller a couple posts ago) is on these days.  But in Q4 2014 few were.  We were.  It was the pro-USD exports trade, which would hurt the likes of American companies like HURC and FARO.

Now, Faro is suffering currency exchange fallout and getting killed in the market.  Wall Street catches on as Needham downgrades to ‘hold’ and Noble to ‘sell’ on a revenue miss.  Just look at this mess…

faro

For the same reason NFTRH is following closely the correction of quality Japanese machine tool and robotics manufacturer, Fanuc, we will once again do the same with Faro, a company that is not going anywhere over the long-term.  It’s best of breed in its highly innovative niche.

But still, this is what happens when you follow the Wall Streeters that have never set foot on a machine shop floor.  But it should have been considered possible by these financial types because it is for strictly financial reasons Faro is getting blown up.  Check these tidbits out from the press release.  It’s not manufacturing stuff, it’s macro financial stuff…

  • negative foreign exchange impact of approximately $7 million driven primarily by the decline in the Euro and Yen relative to the U.S. dollar;
  • weaker macro-economic conditions in Japan combined with the limited release of manufacturing stimulus funds which, in turn, decreased industrial demand in Japan for capital purchases; and 
  • weaker industrial demand in Brazil due to recent macro-economic events.

In addition to the negative impact on sales, changes in foreign exchange rates are expected to generate net foreign currency losses of approximately $1.3 million related to the Company’s intercompany account balances denominated in different currencies, primarily the Swiss Franc.

Whoa!  That’s a mouth full.  Time was, you were a manufacturing guy, you were productive and you tended to your manufacturing business.  Time was, you were a financial guy and even if you were not fully versed in an industry and the underside of your fingernails was completely clean, you at least were a crack macro analyst.

Time was…

A Good Run Continues

By Biiwii

As often noted to NFTRH subscribers, I believe now is a good time for swing trading.  Not day trading (whipsaw) and not investment (other than maybe a few items I’d consider investment worthy for my own reasons, largely stemming from my originally coming from the productive economy, not the financialized one).

Swing trading is defined here as the act of taking positions on downside buying opportunities and holding through some ups and down and then forcing myself to take profits when they are presented.  In 2015, for some reason they have been presented with great regularity.  I am not sure why, other than I did improve my own focus as a trader and decided to stop burning so many commissions.

I bought Intel on its big drop and decided to hold into earnings.  That’s often a tough call.  Today it’s up in AH after meeting expectations.

Then there are the Biotech/Specialty Pharmas. We have been following the index and the sector ETF, advising that until the trend is broken the trend is not broken.

Still, I decided to take profit on this one again after buying the recent plunge.

depo

I decided to continue holding this one despite today’s 10%+.  The chart and some light fundamental study (but it’s a spec. Bio!) kept me holding.

Continue reading A Good Run Continues

2 Market Leaders

By Biiwii

Market leader #1, the Biotech index is anything but broken as we noted for the oh, 100th time a couple days ago after many drums were beating for an end to BTK’s rally.  When it ends it ends, and the trends (esp. by the NFTRH weekly chart and its upward Arc) will instruct on that.  Meanwhile, the daily did not even test the channel line, instead it’s bouncing at the 50 day averages.

btk

Market leader #2, the Semiconductor index was suspect under the 50 day averages.  Now?  Not so much (though in this market, one day popping up or down needs confirmation).  SOX is 100% intact above the support level around 650.  It’s got some pretty gaudy upside targets by longer-term charts.  Above 650, bulls have the benefit of the doubt.

Continue reading 2 Market Leaders

Earnings ‘Outside Surprise’?

By Biiwii

Here is one way to put a happy spin on things.  Wall Street is increasingly aware of the deceleration in corporate profits and a potential for the upcoming earnings season to be a rough one.  This CNBC article dutifully notes these things, but the highlight is one sun shiny optimist who apparently thinks it may already be baked in.

Earnings season could bring an ‘outside surprise’

“Obviously there’s a ton of concern… but my view is that expectations have come down rapidly, and there’s a clear understanding that we’re looking at a real weak environment right now from an earnings perspective,” said David Seaburg, head of equity sales trading with Cowen & Co.

“I think there could be an outside surprise that could carry this market higher, especially given that you have every central bank working to inflate asset prices.”

There you have it, “expectations have come down rapidly”.  Surely this optimistic view that the worst may be behind us includes stock market valuations and prices that have adjusted…

dow.spx.ndx

Oh wait, never mind.  ‘The worst’ never even got started.

So let’s keep it real and simply realize stocks have been bullish, the trends are up and there has been no discounting of decelerating corporate profits in stock prices.  The market now decides between manic bubble making (defined here as an irrational separation from fundamentals, cooked up by policy though they have been) or a correction to get in line with said fundamentals.

Again, the theme has been that the US market was not over valued into 2nd half 2014 if one is willing to wear blinders to its dependence upon unconventional monetary policy.  But if those fundamentals continue to degrade, the market will look conspicuous even to the densest, most conventional of the herd.

Biotech Updated

By Biiwii

A trend is not over until the trend is over. Lately there have been many posts, research and articles discussing the end of the Biotech rally.  Okay fine, but the charts at least, have not indicated that yet.

While the Biotech sector has not resumed its short-term uptrend after the mini blow off, it is holding the 50 day moving averages and has not even touched the lower channel yet.

ibb

Weekly BTK never hit the Arc line.  From NFTRH 337:

Market leader  Biotech has dropped, but is not broken yet.  Certainly not by the weekly chart we usually review, but also the daily has not lost the 50 day averages or its uptrend.  AROON (trend) has ticked negative, but it has done that several times during the ongoing bull trend.  Looking through the ‘Jobs’ report, if the market’s reaction is negative we should watch BTK and other leading items like the Russell 2000 and Semiconductor Index for negative technical indications.  RUT is stable and the SOX looks suspect.

Here is the standard NFTRH weekly chart of BTK.  As for the other indexes mentioned, the situation as it was last weekend; RUT is stable and SOX is still suspect (below its 50 day averages).

btk.wk

As for personal positioning, Biotech and/or Specialty Pharma were my only stock market positions as of last weekend because the charts of the ones I held told me not to stop holding them.  Hence, I got rewarded with some nice news on one of them today and a chart pop to go with it.

Yesterday OMED dropped below the 50 day averages, just in time to get some Eli Lilly collaboration news.  I ignored yesterday’s drop below the 50’s because one day does not make a breakdown (or a break up, like today, for that matter).  That is day trader stuff.

omed

This thing has been up trending since I bought it (trading several times in the interim) for a year end tax loss play back in Q4 2014.  So I have remained constructive on it, as with the sector itself.

All of this said, I am going to do what the market says and if Biotech breaks down I’ll be fine moving on from it.  If not, I’ll hold some or all of what I hold (a couple others have better looking charts than the sloppy thing OMED’s has become).

This year the theme is definitely not to put ego or emotion into things.  Whatever the market says will go, and that includes the precious metals.  There are predictions, warnings and touts of all kinds flying around today.  Throw in the Fed’s clown show and you should definitely have the b/s detector set on its most sensitive level.

Stock Market: This Again?

By Biiwii

Back in the December to February time frame we had been noting a ‘swing’ market (swing baby, swing!) AKA a Whipsaw market AKA a market for nimble swing traders.  There is no trend (on the daily time frame).  What there was a few months ago was an extended period of fleeting hard ups and commensurate hard downs.  So swing baby, swing!… but stay nimble.  Today looks like one of those after the hard drop last week.

Market participants seem to literally be jerking to every piece of data or information that comes out.  Strong Jobs = panic drop, FOMC lameness = rally, some middle east noise last week and mixed econ. data = drop, some China easing hype today = rally.

dow

NFTRH’s latest US stock market rundown is posted at NFTRH.com if you want to check it out.  Besides this fairly normal run through of important US markets, #336 had a lot to say about keeping perspective on the whole ball of wax.

I really feel like we have got our shit together, to put it as a I would put it in real life if you and I were just sitting and talking. And I’ve got all the patience in the world to boot.  Not only for playing US stocks, but the precious metals (which I feel we have managed pretty close to flawlessly thus far, and much of  the rest of the whole ball of wax).

Hint:  Use real data and objectivity and keep ego and bias contained, tune out useless hype and it’ all going to work out just fine.

Googling Ruth Porat

By Biiwii

Sometimes we don’t know why a chart is doing what it is doing.  All I knew was that GOOGL was making a nice chart pattern, so it was noted as an NFTRH+ trade setup.

Having sold the initial run, I bought it back on the drop to a secondary buying area, as noted in NFTRH.  Today we are treated to some hype about Morgan Stanley’s high powered CFO trading her Manhattan view for Mountain View.  Ruth Porat joins the team.

Not to make light of it.  It’s probably a nice move for Google.  But the stock is moving on it and in that regard it is hype.  So I may decide to sell.  Since you don’t pay me to make decisions for you I’ll not publicly make that decision.  NFTRH subscribers who may have taken these trades are profitable and they are grown men and women who can make their own decisions as to what profit is acceptable as well.

The target of 590 remains, but I often sell below targets.  It’s just how I do it.

googl

Biotech ETF IBB

By Biiwii

[edit]  Make post, sector reverses on cue.  Manias include volatility.

Biotech ETF IBB is now taking on the look of… anyone?  Bueller?

ibb

Euro STOXX 50: Me Too!

By Biiwii

Since Mr. Draghi Jawboned the ECB’s coming QE actions we have had Europe on a ‘me too’ QE play to the US (asset price appreciation Über Alles).  While I took my marbles and small profit and went home on the European index ETFs, the big picture view of the Euro 50 continues to be a good one after holding lateral support and breaking above key lateral resistance.  The downtrend line could be another matter, however (but it’s popping through that too, as of now).

stox

Continue reading Euro STOXX 50: Me Too!