Ben C Banks

I am sure if you have even turned on the TV for one second you have heard the dow jones has been up 19 Tuesdays in a row. It truly is an amazing run and goes to show how strong this market truly is.People somehow still think this a shortable rally, why? I do not know why they choose to do this but I would expect that it has something to do with them thinking they are ‘smarter than the market’. No one can outsmart the market, but you can outsmart yourself.

Anyways, let’s get on with some of the action from the day and what I am thinking into tomorrow.

Stocks continue to see rotation which is keeping the indexes afloat very nicely so our job is to notice which stocks and sectors COULD be the next to receive the juice. As this rally has progressed I have found myself focusing more and more on the individual set ups rather than the indexes themselves. I still think that is a good mindset to have, but it takes practice to accomplish (at least for me).

Banks still look a little extended and could use some basing out action, nothing wrong with that at all and this would actually set up the charts alot better for the weeks ahead. A nice basing out pattern or some consolidation would work wonders for the banks in the coming weeks/days.

Apple ($AAPL) Not much to say here. Still in an overall downtrend but trying to form a new pivot low and a higher low as well. Something to note but that is just one step, it still has a lot of work to do to improve to the standard it once was. I feel like if you ignored Apple you would be much better. Forget it.

Google ($GOOG) is trying to consolidate out here and form a nice bull flag or a new channel. No, I do not think it is buyable quite yet. I would give it at least a couple more days.

Amazon ($AMZN) is still having trouble get back over the descending channel. I guess you can keep it on your radar but overall, I think it needs more time and needs to show strength before you really step in – it has not shown strength yet.

Lululemon ($LULU) is setting up nicely for a breakout to all time highs. This stock has a high short interest, it is sitting at all time highs, it is flagging before a breakout. Worth a look if you want to ‘do something’. I am long some.

$USO did not continue it’s breakout from yesterday, I would give it more time to develop a mature pattern. Not out of the game though by any means.

$GLD & $SLV seem to have gone back to their old selves, if this was the bottom (doubt it, but who knows), then they need to hold higher and show strength (bull flag). Until this happens, they are just bounces – that’s all.

With all this said, I hope you had a good day. I hope you are NOT fighting this trend (silly), take your time with new positions. Pick the ones that are basing out and flagging vs the ones extending.

Good afternoon. Welcome back to the Daily Analysis. There is a little more to talk about today compared to yesterday and then day before. Today we actually have some different action and we closed red (one day does not make a trend obviously). We made a new high and then closed brealey red, not bearish at all but it could signal some rest in the coming days rather than a skyrocket higher like we have seen. There also seems to be a slight lack of set ups in the works as well. Alot of the sectors have already extended and now need some basing. I know that there are some individual names that are still setting up fine ($YY, $LOCK), but as a whole the market seems to be leaving us with a lack of true a+ set ups.

What this lack of set ups means to me is that we are likely going to rest for a few days and after a few days of sideways action we will likely (because the trend is up), continue higher. A few days in alot of sectors will allow us to pick out the relative strength in individual names and then buy them for the next sector rotation and likely continuation.

Gold and Silver bounced today but are still in a macro downtrend though today was mildly potent.  For $GLD ad $SLV to build off of today they will need to ‘hold higher’ and break the macro downtrend line.

Oil – We talked about how the oil sector could see some inflows this week. Today was a confirmation of this thesis and it looks as if with some ‘holding higher’ they will likely be a good swing trade. Another oil ETF that is setting up is the $USO – it has a macro (yearly) wedge pattern that is developing and is trying the breakout of. From a micro perspective it is trying to breakout of small downtrend line today after it ‘held higher’. I do like this pattern in $USO and it looks as if it can continue.

Apple ($AAPL) showed some strength today and continues to try to develop the right side to it’s inverse head and shoulders pattern. Still needs some time to confirm this pattern but so far so good. Overall downtrend is obviously still in ract though.

$TSLA is holding higher and a few more days above the 8 EMA will likely set it up to make new highs and hit $100 a share. I think this is a natural target at this point.

Have a great evening.

Alright well there is not a ton of new information to share with you other than we are more extended (not a bearish thing). We are still in an overall uptrend but could obviously use some consolidation before trading higher. I know I said the same thing yesterday but sometimes the market does not give you what you want and that was the case today. We are extended so I think using a prudent approach with new longs is wise but also be extremely selective with those shorts. There have been short squeezes everywhere lately and I would hare for you to get stuck in a short position because you are fighting the trend! 

I hear people on Twitter every day that being extended is a reason to short, NO! Being extended is a reason to be prudent with new longs, not to be short. The only shorts it looks like you will get out of this market right now are little day trades (even those must be quick though).

I will cover all this and more in my week Ahead post that I post at 10:50 AM on every Sunday. In this post I have 2 videos (3 this week), 20+ annotated charts, and a solid 3 paragraphs. The purpose of this post is to prepare you for the week ahead and how to trade the stocks and some of the ones that are on my watchlist. I highly reccomend you coming and checking it out, it is a lot of work but I enjoy it and am proud of it.

Have a good weekend!  Continue reading

I mentioned on StockTwits that I wanted to share one of my favorite setups, called a 2nd day play (or perhaps more accurately called a 2nd day play to afternoon support setup). The setup is this: a stock is strong the previous day (preferably breaking out on the long-term chart), look for the afternoon support from Day 1, look to buy into that support on Day 2. Simple as that.

In this particular trade, AIG had been strong the prior day and was beginning to break some longer-term resistance levels. I identified the afternoon support from Day 1 to be $46.70-$46.80. This is where I wanted to look to get long on Day 2.

15min chart from Day 1 showing where I wanted to get long the next day:

The next day – Day 2 – the stock opened higher but was met with some profit taking on the open. I stayed patient. I got long some at $45.80 and some more at $45.76. I had an average cost of $45.78 with stops below 70 and 65 cents. So I was risking an average of 11-12 cents with a target of 60 cents, a 5:1 risk/reward.

By the way, a recent post of mine, “A Piker Trade” involving LULU was a 2nd day play, so you can check that out as well for another example: https://docs.google.com/document/d/1aU0ZT5q13RUqDi6m9RNEvcrjtDqH5aaTtxRcYQLr7lg/edit

5min chart showing entries & exits on Day 2:

(Note: right click & select View Image to make the chart larger)

Let me know if you have any questions or comments (@MarketPicker on StockTwits).

I wanted to discuss a trading setup that I’ve recently added to my playbook – the IPO setup. While all IPOs aren’t created equal (FB fiasco), the setup, as I see it, is as follows:

• Stock opens above the IPO price.

• Spot a clear level of support on the tape.

• Get long at or near that support level.

• You can have a trade on where the r:r is 10:1 in some cases (sometimes even more).

This is really a simple setup, but requires tape reading skills since there are no charts. Below I will discuss two IPOs, both of which opened up today at premiums and offered excellent risk/reward setups.

    First one is Marketo, ticker MKTO. The stock opened at a 54% premium to it’s IPO price ($13/share) – check. Right off the open, there was a lot of buying at $19.50. You could’ve gotten long there, but if you didn’t you were afforded another opportunity. The stock then consolidated above $20 for about 90mins, which was where it had opened. Support on the tape was $20.10. So the stock was trading at a premium & was being supported on the tape above that level – check. The thing with most of these IPO setups is their simplicity, as they tend to trade pretty clean on the tape.. In this particular case, assuming you didn’t get long at $19.50, you could’ve gotten long say at $20.10 with a 20 cent stop. It never traded below $20. The stock closed at $23 & traded as high as $23.37. This represents a r/r of 15:1 – I’ll take that r/r any day of the week.

(Note: right click & select View Image to make the charts larger)

2min chart showing the 90min consolidation above $20 where you could’ve gotten long:

The next IPO was Tableau Software, ticker DATA. Again this stock opened at a premium to its IPO price of $31/share, with an opening print of $47. The stock wasn’t as clean off the open at MKTO, but the levels to watch were the $47 level and the $50 level (intraday resistance). Around noon, the stock pulled back to that important technical level of $47. Again, keeping it simple – get long at $47, risk 10-15 cents, and look for a move up to $50, which represents a 20:1 risk/reward! The stock traded as high as $52.15.

5min chart showing the pullback to $47 & the $50 resistance, which could’ve been your initial target:

As always, it’s prudent to book some profits along the way, but there were really never any reasons to sell in either one of these names until they were several points in-the-money. These were 2 excellent IPOs that offered excellent risk/reward opportunities. This is a setup I would consider adding to your playbook.

Let me know if you have any questions or comments (@MarketPicker on StockTwits)

A down day, finally. I tweeted this afternoon how I am sure (even the bulls) would like a down day to just relieve some of the pressure and have an opportunity to buy something back after it consolidates for a while. The bears are probably happy right now that they got down a day but anyone who is not short from yesterday or early today, is still in a losing trade.

Overall, the market right now is a bit frustrating. The bulls and bears both want a pull back. A pull-back will set up the charts well once again and will create a lot of attractive looking charts. 

The other option that will happen now is that we just consolidate for a couple days (like have seen in the past) and then continue higher. This is definitely possible and because the trend is still up, I would have to say, the likely hood of this happening is higher than this being a major top in the market. Continue reading

I really do not have a better title for the daily analysis today. There really is not much to say different today compared to yesterday – almost the same candles. Anyways, at this point, I think it pays to be a little less trigger happy with new longs as we have extended up two days in a row now. A couple of days of rest would set up alot of charts for new and fresh breakouts. I do not know why people are calling a top in $SPY right now. Not that I am saying this will be like the 90′s but what IF it is? Will you (as the shorter), roll it up until a climax that could be 5, 10, 20, 30% higher? My point is, the trend is up and until it is not please do not try to be smarter than the market and short it all. You are not smarter than the market. Period. No one is. 

Another thing I would like to addresses is that the fact that the $VIX is making higher lows… So what. It is just another divergence. There have been so many divergences all year long, do not overcomplicate your strategy. The trend is up and right now any divergence trader is being put to shame.  Continue reading

Alright so today we did what we have been doing all year long, stair stepping higher with little bursts of power. If the trend is going to stay in tact we SHOULD consolidate for a couple days up here and then trade higher again. I do not know if this is going happen but if the trend we have been seeing all year persists, that is what we should do. I am not saying buy up here. I think that is a horrible idea. Managing risk at these levels is your number one goal and you do not want to buy after a large up day in the markets. No, I am not saying short the markets – people have been doing that for months and failing!  Continue reading

Even with the futures down over 7 handles last night we still managed to close flat on the day today, going to show how strong this market truly is. We continue to digest the past couple of weeks very well and with a couple more days, we could be on our way to make new highs again. I will be looking to buy some more once we consolidate (and show strength) in a couple days. I am not yet comfortable being long right now, some charts need some building first and once that happens I will step back in. Continue reading