Market Orientation & Bias: Negative, overall long term trend is still higher though

Conviction Level With Bias: 5

1. Recap of Last Week

Last Week’s Post:  Link HERE 

A. General Recap

This past week can be summed up with one word: CHOP. The choppiness that occurred this week was detrimental to those momentum breakout traders (like myself) who chose to trade this week. Luckily, by examining the QUALITY of the set ups this week, we came to the conclusion that it would be better to be patient and wait for new set ups to come than it would be enter new position. Ben C Banks Trading is all about capital and emotional conservation. Sitting on your hands was by far the best thing you could have done this past week if you are a swing trader, active traders had places to be but it was not anything ‘blockbuster’.  

Bernanke had his last meeting as Fed Chair this past week, of course it messed with the intraday market a little bit but by looking at the daily chart there is nothing on them that symbolize ‘FED MEETING’. Essentially, along with a lot of other stuff, his last meeting was simply noise. 

B. Past Set Up Recap

CWH – The highlighted downtrend last week broke nicely this past week and led this stock to gain greater than 3% for the week. Looks really nice on the weekly timeframe as well. Worth continuing to watch. 

CYTR – This one looked great ALL week and even was up about 10% early in the week. However after news on Friday, it closed near the flat for the week, losing 12% on Friday alone. Nothing broken in the chart though, still looks ‘fine’. 

MRK – Nice consistent stock this past week. After breaking out on Monday it continued higher in a grinding fashion. It still looks very healthy, but there is not a momentum set up in it right now. 

ROVI – This stock was the most disappointing one of the group. It held up most of the week and kinda lost it’s footing near the end of the week as it broke the 21 day. This one should no longer be on ‘watch’.

 

2. Strategy For Next Week

A. General Broad Market Thoughts

I think the chop will likely resolve this week, but whether it is Monday or Tuesday or even Wednesday – I do not know. As stated earlier, my bias is still lower for right now with the next major support level in $SPY (SP500 ETF) near 174.75. The reason for this bias is relatively simple:

1. The choppiness indicates indecision
2. We have not had a true, major capitulation move lower
3. The lack of long setups has kept me flat. 

The combination of these three things does have me slightly negative but more importantly, I am flat have little conviction in this area right now. We will need to see a breakout or breakdown of this past week’s range to get more conviction again. During times like this it is important to remember that capital conservation and emotional conservation is so much more important than the forgone money. So what, maybe you miss a move but in the end, I would rather live a more comfortable life emotionally than make a dollar. Be patient and consistent with your process, it is the best advice we can all use right now. 

B. Video Analysis & Watchlist

 

C.  Set Ups & Charts Watchlist

The Utility sector is something that stood out to me this week while scanning through my charts. Specifically, the weekly charts of some of the utilities. Below I will highlight some that in particular this link to view all the utilities on a fast manner on the weekly timeframe. It is worth it to put in some work with this sector. 

Now, onto the six stocks I have chosen to highlight this week. Along with last week, there is a lack of HIGH quality long set ups and because of that, all but one of these set ups is on the weekly timeframe. I like to use the weekly timeframe to find big winners and cleaner trends. 

2-1-14 bbep

BBEP – A VERY long weekly base pattern here and even setting up nicely on the daily frame. Worth keeping an eye on over the next few months if it can move out of this base. 

2-1-14 dte

DTE – An energy and utility name that has put in a very nice weekly consolidation all through 2013 and in early 2014 has shown ALOT of strength.  A move out of this consolidation would prove to be very bullish. 

2-1-14 himx

HIMX – The only daily set up this week, HIMX, looks very nice and a beautiful base here. A reasonable stop would go below Friday’s lows and look for a breakout over Friday’s highs. 

2-1-14 tol

TOL – The homebuilders have woke up alot this past week and many have already broken out. Perhaps TOL is next, TOL has a very nice weekly consolidation ad over this week’s highs it looks GREAT and a reasonable stop is below this week’s lows. 

2-1-14 upl

UPL – This is one that I am really excited about. Even on the daily chart it is setting up nicely and bull flagging. As you can see on the weekly chart, it has a very long base going back multiple years and if it can breakout from this base, the results should be extraordinary. 

2-1-14 wr

 

WR – Finally, WR, this one is another energy and utility stock that is setting up amazingly well on the weekly timeframe. The consolidation below the downtrend line is perfect and signifies accumulation and anticipation of a breakout. Love these type of set ups. Keep an eye on it the next couple months. 

3. Current Positions 

I am currently FLAT and have been all week, the lack of momentum set ups put me into defensive ‘mode’. Until a plethora of new set ups come about, I will remain flat and defensive.

4. General Tips & Reminders

1. It is still earnings season, be sure to check those earnings dates! 

2. Here is a quote from Brett Steenbarger from our conversation earlier today, it is really insightful and extremely true, especially in today’s markets: 

“But many times what gets the emotions going is the frustration of trading one way and having markets change on you. It’s bad trading–the failure to adapt–that creates the emotional challenges, not just emotions causing bad trading.”

3. Get some exercise today! You’ll be happy you did! 

 

Have a great rest of the weekend. Email or Tweet me with any questions or comments. 

The purpose of the Week Ahead post is to prepare you for the upcoming week in the markets. I do this not only to help others learn and develop trading skills but also to develop and cultivate my personal thoughts for the Week Ahead. Below you will find a written commentary portion followed by a Video Analysis the stock market and the set ups I am watching this upcoming week. This post is organized into sections, see bold titles and skip the items in which you are not interested in! Enjoy!

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The Week Ahead Outline & Set Ups 2/1