Category: Trading Articles

rollovers most everywhere

Temperature is Rising

Recap and Current Outlook 

When I was a kid, we used to fix gumbo or what is many times referred to as Creole. It's a spicy dish full of various seafood if you had money and for those of us that didn't we had crawdads - those poor little creatures we would catch and use for gumbo. The cooking process was simple - you basically lulled the poor crustaceans into a false sense of security and within a few minutes they were cooked alive. Start with warm water, put over a nice little blaze and bingo - meat for your gumbo.

The market is reflection of life's stories if you pause to consider it from time-to-time. Similarities and opposites abound most of the time and I cannot help but wonder if we are in that warm pot of water, all comfy and cozy and feeling good about things while the temperature is slowly turned up. I mean, why not? It's the most bullish time of the year and it's been a great one. In fact, you don't get many like this. But lately I'm noticing that waters are a bit more murky than they have been. Have you noticed, for example, that so many charts that look like this anymore?

It's not your imagination that it's harder to make money right now cause it is. For every winner you most likely have a loser. That's because the breadth - however you want to measure it, is thinner.

A week or two ago I said if you see more and more break downs on the lower time frames, then you will eventually see them on the higher ones. Here's a picture of the hourly chart of the S&P 500 futures from September 27 to October 26 of this year. Notice almost no bearish ABCD structures until the end of the period.

Hourly S&P Futures - Sept 27-Oct 26 2017

Here's what it looks like from October 24 through yesterday

Hourly S&P Futures - Oct 24 thru Nov 20 2017

Ugh ... looks very different doesn't it. These shorter term failures have started to cloud the picture a lot - even on the S&P which is the last to give in. There, we recently saw the first bearish ABCD complete off the highs. That hasn't happened more than a couple times all year.

S&P daily and weekly

 

Ideas and Final Thoughts 

So where does this leave us? Where we have been actually - leaning long but hopefully aware that we may be sitting in a slow heating pot of water. If you are going to jump eventually, you first must have some idea that the temperature is rising so to speak. With an ear to the ground, we should hear some pounding of the hoofs before all hell breaks lose - if it does.

  • Written by LA Little

Category: Trading Articles

Trading Ranges and the Bell Curve

Each morning, LA marks up the S&P 500 E-mini futures chart based on neoclassical principles. The desire is to define - each day - the expected range of the S&P 500 for that day and trade-to-targets if those range are exceeded. 

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  • Written by LA Little

Category: Trading Articles

Dollar Is a range trade for now

The US dollar had recently shown signs of take off with the promise of not only new highs but much higher highs relative to almost all currencies. But the new political tone grounded that notion near term and despite the US economy still being the primary driver of growth in the developed economies, the Federal Reserve has taken a pass on moving faster on higher rates despite their promises and instead are waiting to see more of the new administrations policies.

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  • Written by LA Little

Category: Trading Articles

Turning on a Dime

One of the frustrations of those who monitor or follow the suggestions of a market commentator is when the market starts to change.

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  • Written by LA Little

Category: Trading Articles

Bullish ABCD is almost done

Trump victory induced rally nearing exhaustion

A couple weeks ago I had thought that the odds that this Trump victory induced bull market run would immediately take another leg higher were not that great. I was leaning much more to the idea of us consolidating longer before taking off again.

Well, here we are, almost 2-weeks later after a smallish retrace and not only was it another leg higher, it was a powerful one that is now driving to the fulfill the daily and weekly targets.

Today is Fed day and again, we may see the culmination of the Fed meeting lead to yet another smallish retrace before we power on, or it may just provide the juice to go up and capture the larger targets which, not that long ago, seemed remote in such a short period of time. Right now we have no indications of a pullback other than anecdotal evidence and the fact that many sectors are extended and, in many case, have met their bullish ABCD targets.

What we do know is that regardless of the market reaction today, the odds are quite high that this run has more room to move.

 

Rotation

Strong bull markets moves, rather than consolidate for longer periods of time, instead run with huge force then eventually rest. That is what remains underway with this strong thrust higher. With the rotation back to technology stocks over the past week, this market has been able to continue to leg higher despite some resting by the early sector leaders like financials and industrials.

This rotation back to technology has enabled the lagging NDX 100 to finally breakout and join all the other major indexes at new record highs.

Bearish ABCD almost done

It's notable that the large cap technology stocks all chose to take off the past week or so - on the eve of a round table at Trump Tower. Always makes me a little nervous after a larger extension when the laggard finally gets rotated to in a larger way. Anecdotal but useful trading lore as I have seen it enough times to remember that this is when you are nearing a potential retrace again but realize it's not something you can time - you need the market behavior - the supply and demand you see on the charts to provide that evidence and that simply doesn't exist yet.

If we combine all of the above with the notion that the neoclassical mean-time-to-failure trend indicators MTTFs becoming extended on some sectors the end of this month but mostly the middle of next month across almost all sectors and indexes, you realize that we are indeed getting much closer now to the end of what has been a tremendous run.

MTTFs nearing exhaustion

(chart courtesy of TA Today Mentoring Member)

 

  • Written by LA Little

Category: Trading Articles

Looking to breakout on multiple time frames

Oil patch is starting to heat up for investors

With OPEC now perceived as serious about moving prices higher, it finally looks like a bottom is really in for the oil market. Here's the current neoclassical technical view (from a weekly perspective).

This sector of the market is a fertile area to be focused on. There are many stocks in the various oil related sectors that are set to break higher which is why TA Today mentors and I have been evaluating stocks in the sector for purchases. I'll share a couple of them with you today.

UNT is an oil and gas driller that possesses all the positive neoclassical markings one would like to see. Future price projections are huge and the stock broke out on all time frames last week which is the strongest neoclassical signal you can get.

Breaks out on all time frames

That was contribution from a neoclassical member. Here's another one that I had found, RES which is an oilfield services (oil and gas) and equipment provider. With production likely to ramp higher, they should see more business.

Breaks out on all time frames

Whether one legs into names like the above or picks of their own, one needs to have some longer term exposure to this sector in some form as many of these stocks remain heavily discounted from two years back and have a lot of topside potential still in front of them.

 

This article originally was published on MarketWatch on Oct 4, 2016 12:57 p.m. ET

  • Written by LA Little

Category: Trading Articles

Expect this market to find its footing sooner rather than later

Friday provided resets on the mean-time-to-failure (MTTF) statistics that we track in the neoclassical model, a model that I created and shared with the public here and here.

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  • Written by LA Little

Category: Trading Articles

The charts have good things to say about Intel and the dollar

While Intel and the dollar aren’t directly related to each other right now, the two are currently building ABCD structures that suggest a bullish slant for both. 

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  • Written by LA Little

Category: Trading Articles

Breaks out

These 3 stocks are set up for big breakouts

Last week we outlined how to identify potentially great trades using Alibaba as an example as it shined bright. This week there are over 75 trades that qualify for the same analysis. Finding potentially great trades using the neoclassical tool, Trading Signals, isn’t the problem – it’s sifting through all the potentials and picking out the best of the best.

This week I offer up a few more stocks that have broken out on multiple time frames as of last Friday. The first is in the biotechnology arena - Amphastar Pharmaceuticals Inc. (AMPH). 

The charts on this one are spectacular not just due to the breakout but due to the potential to carry farther which can be seen on the monthly time frame ... all-time highs now

Breaks out

Another stock is in the oil sector, Baker Hughes Incorporated (BHI). There were about 8 stocks in this sector and one could choose any of them including this one.

Breaks out

On a conservative basis, a 10-12% gains looks doable even if that's all there is. Like Alibaba last week, BHI has a similar setup with breakouts on the daily and weekly charts and the potential for even larger gains if crude oil does work higher.

The final name is in the transportation sector which has struggled for two years but you couldn't tell that by looking at this stock on the daily and weekly time frames - Kansas City Southern (KSU).

Breaks out

Both the daily and weekly time frames are just plain strong

Breaks out

As seen in the charts, the setup is the same – breaks of swing point highs on the daily and weekly charts simultaneously and sometimes the same on the monthly time frame. That is the setup that provides the best opportunity for a continued move higher without an immediate retrace and thus, the reason for calling them potentially great trades. In fact, the statistics show that a successful breakout with this common characteristic will likely carry higher for two to three bars on the greatest time frame witnessing the breakout – the weekly time frame in two of the three cases and the monthly on AMPH.

The problem with this market isn't getting good setups - it's figuring out which ones to take out of the plethora of opportunities.

 

 This article originally printed on Marketwatch Aug 23, 2016 9:04 a.m. ET

  • Written by LA Little

Category: Trading Articles

Mulitiple Swing Point Danger on S&P

Alibaba- Identifying potential great trades before they happen

Although it might not be immediately obvious, finding great trades and investments via the neoclassical technical analysis model is pretty much the opposite of avoiding potentially damaging losses using the same methodology. Let’s consider that for a moment.

If you have read articles I’ve written in the past, you know the one thing that all traders and investors must avoid at all costs is a breakdown on multiple swing points on multiple time frames. Borrowing from an article written many moons ago (August of 2015) here’s a portrait of what that looks like – before it happens.

If we were to look at the short term time frame as well, a similar set up was occurring there. Breaks of multiple swing points on multiple time frames is a necessary, though not sufficient, condition for significant losses and potential bear markets.

That was August of 2015 and now a year later the market is setting new highs on a regular basis and once more the potential doesn’t become the actual. So what about bullish setups that one can take advantage of?

Well, it just so turns out that great bullish trades have the exact same characteristic – multiple breaks of multiple swing points on multiple time frames only up rather than down. And like most technical analysis, the more the better.

Once such great trade began to setup recently, a trade relayed to TA Today members in our unique cradle-to-grave videos prior to the breakout and also as an addition to our members-only trading portfolio. The stock was Alibaba and the charts look like this now.

On the daily time frame, the stock broke out the day prior to earnings but the potential for that breakout across multiple time frames had us entering the position just prior to the breakout on August 8th. On the very next day it broke a swing point high and again the following four days. That possibility of a strong fast move higher is what got us involved.

BABA Daily Breakouts

But it isn’t just a breakout on the short term time frame that creates the setup for an exceptional bullish trade, it’s the breakout on multiple time frames. Here’s the weekly chart.

BABA Weekly Breakouts

As you can see here, the setup to break over not one, or two, but instead three swing point highs in one fatal swoop existed and that is exactly what took place this past week.

These are the highest probability trades that one can find and they work both ways – up and down. It is the recognition of such a trade and the execution of it with a higher percentage of ones funds that allows one to outpace the markets with a lot less risk. In this case, a 15% pop with very little risk in a single week. What’s better, it is unlikely to stop there. Take a look at the monthly chart.

BABA Monthly Breakouts

Finding and executing high probability trades that have the potential to be great is a huge part of successfully trading/investing in the markets. Finding and identifying multiple swing point breakouts before they break out is a key cog in that wheel of success and at TA Today we have to tools to do just that.


This article was originally published on Marketwatch on Aug 16, 2016 12:40 p.m. ET

  • Written by LA Little

Category: Trading Articles

Short term charts show bearish engulfing

Will gold fever last?

Gold and gold stocks have seen an incredible run so far this year providing ample rewards to all who were involved. After more than doubling in many stocks and providing a 30% gain in the bullion itself, there are neoclassical signs suggesting that another pause is beginning to form – a refreshing pause that allows wise traders and investors to build larger positions most likely for even more gains to come. Let’s take a look at the charts.

On the short term time frame we have now have two failure bars in a row with the last being a bearish engulfing candle. Those are typically not what you like to see if you are bullish

On the intermediate term time frame the overall bullishness is quite evident but being bullish doesn't necessarily mean "up" forever - at least not if it’s going to last for a long time. What you want is for the metal to stair step higher, surge, retrace, build a base and move on higher. Though I wouldn't call this a fever yet, it's been an exceptional move already so one has to be cognizant of the retrace potential. Some short term cold water on this feverish run higher would actually be beneficial - not long term detrimental.

So with the short term charts (daily) suggesting more immediate weakness, do the longer term charts agree? The answer is to some degree on the weekly charts and very much so on the monthly charts. Here’s the weekly view.

Intermediate term charts very constructive

First off, these charts remain very bullish but after breaking higher from the lower range, once more there is a surge in volume which typically results in a digestion phase (up and down choppy action). As such, one should not be at all surprised if prices retrace to the lower end of the upper range or even back into the top end of the middle range.

And it is this range action that offers the best opportunity for longer term investors for it will allow one to "trade around" a core position and actually increase the size of that position while waiting for the next larger leg forward and, make no mistake, legging forward remains the likely path when you consider the monthly (long term) chart.

It is on the long term time frame that overall bullishness is best understood since this chart has officially transitioned trend from bearish to sideways. Unfortunately, the current price area is likely to prove more difficult an area to scale than those that came before for there is the low currently being tested of a high volume, wide price spread bar from the month of May 2013. That was the breakdown bar from the higher range and ushered in significantly lower prices for almost three years.

Bullish action but now more serious resistance

 

This article was originally published on Investing.com on August 14, 2016

  • Written by LA Little