Market Orientation & Bias: Positive but not actionable
1. Recap of Last Week
Last Week’s Post: CLICK HERE
A. General Recap
Last week we spoke about how it would be nice to see a commitment pattern to the bounce we saw off the lows before we attacked higher prices. We did not get this, instead we just continued to rip higher to (just about) new all time highs. With this type of action it is very frustrating for equity swing traders like myself to really dig into positions without any consolidation. Regardless of this personal problem, this past week was without a doubt won by the bulls. The bulls made a stand that will likely have effects on the action for the next couple weeks, this is because of how ‘potent’ the move off the lows was. My guideline I like to trade by is the more potent the move is the more likely it will continue in this direction in the days/weeks to come.
Traders who tried to ‘fade’ this week were hurt, badly. Sometimes buying support and selling resistance works but when it does not it will hurt. It very difficult for one to define their risk in these trades because of the tendency for traders to just continue to ‘roll up’ the trade because it gets ‘more extended’ and they consequently believe it must come back in. I have been there before and it was not for me and therefore I only trade momentum breakouts, not range bond stocks.
B. Past Set Up Recap
TOL – TOL was a set up from two weeks ago that broke out on Friday. It looks poised to have a massive trending move higher. A must watch, if you are a swing/position trader hopefully you got some two weeks when we listed it here. (org. post here – TOL POST)
DTE – Another stock was talked about two weeks ago on the week ahead outline, it had a beautiful breakout this week. A text week bull flag before the breakout as well. It is a little late to jump in on it but it looks awesome. (org. post here – DTE POST)
CLR – CLR was a set up from last week that did rather well, likely helped by the market bounce. A clean breakout from from the large wedge, looks good heading into the next week. Too extended to enter now though.
CSIQ – Ended week down slightly. A very volatile mover this week, likely news related though I follow price so I really do not concern myself with the news.
DEPO – Another stock that ended the week about flat. Not much momentum in this name, which was kind of disappointing. Either way, I think the trend remains up and it is ‘fine’.
GDX – This was the cleanest move out of all the stocks we highlighted. Amazing move out of the bull flag, likely started a new uptrend as a result of this.
CORN – I have held CORN for a week now, spent most of the week doing NOTHING then on Friday it finally woke up and looks poised to breakout of it’s bull flag.
2. Strategy For Next Week
A. General Broad Market Thoughts
This past week surprised both the bulls and the bears, leaving a lot of traders (like myself) confused and a little flat footed. The v-shaped rally made another appearance in 2014 as it did all of 2013. I was looking for a bull flag consolidation pattern before attacking higher prices however this did not happen, at all. Heading into next week I am looking for a minor pullback or consolidation before attacking new highs, this would allow alot of the charts to set up back up again with very defined risk to reward.
I had to look elsewhere for trades this week as the equity markets were not as favorable for my type of strategy. Commodities were the highlight this week and may continue to shine into next week given the patterns that are currently developing in the space. I am watching CORN and JO carefully next week.
A short pullback and some tightening up of some charts in the equity space would the best case scenario from a trading perspective for the week ahead.
B. Video Analysis & Watchlist
C. Set Ups & Charts Watchlist
AER – If I am not mistaken I believe we have covered this set up before in the week ahead post. It still has not broken out, or down, but it is extremely tight. I do believe in the next week it will either breakout or break down. Some momentum in this name, so keep an eye on it.
GPS – A huge gap up a couple weeks ago and then some digestion has created a nice bull flag with very defined risk. The stop would go in the gap. I also like the fact that it has a very large base going back many months.
LUV – I posted a chart on this stock on StockTwits a couple days ago but it still looks very nice. It is extremely tight and will likely breakout or down, my bias is higher on this name though. Trade it versus the 21 ema.
PEIX – Not an actionable set up, right now. This stock needs to base out some more before we can call it actionable. One more pullback to the 21 ema would set it up the best for a strong breakout and swing trade. Something to watch but not to trade, yet.
THC – This is a weekly chart of THC. I wanted to include this one because it has GREAT potential to really do well over the next couple months. A massive base. The larger base, the higher in space, as they say.
3. Current Positions
CORN – Ben holding this one for a week now, I was a little early on the entry but it looks like it may be finally ready to move out of the bull flag to attack new highs. Stop is below 31.00.
JO – I really like this bull flag pattern here and if coffee is going to make a run at a new bull market this bull flag should work out higher. I enter on Friday versus 27.ish.
SLV – I am long from Thursday, took off half on Friday and holding half for a swing versus the breakout level of 19.75. silver may be trying to put in a major bottom.
Very odd I have no equity exposure and all commodities but I am not complaining. It is what it is, I think it has a lot to do with the lack of conviction I have right now the equity markets. We will see how it works out this upcoming week!
4. General Tips & Reminders
1. How do you like the new theme to the website? Send me a email or Tweet to let me know!
2. Be consistent, don’t try to be the hero and everything else will take care of itself.
3. Keep everything in perspective.
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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