Market Orientation & Bias: Neutral, further consolidation likely.

1. Recap of Last Week

Last Week’s Post: CLICK HERE 

A. General Recap

This is what we wrote last week regarding this past week: 

Heading into next week  I am looking for a minor pullback or consolidation before attacking new highs, this would allow a lot 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.

This is very much what unfolded this past week. A whole lot of ‘nothing’. The SP500 essentially closed flat for the week after sputtering out at new highs a couple times. A lot of chopping around and almost no momentum. The lack of strong momentum has been a theme all of 2014, in equities, a lot of false starts have resulted in many sloppy/loose charts. As a result of this, you have really got to be on your game and be looking for the highest quality set ups in stocks, which rarely come around.

The commodities complex did very well this past week. JO, CORN, GLD, SLV, SGG, etc all out performed. I think they have the potential to make new bull markets, but a lot of work is still needed in this sector before this is the case. They are on watch.

B. Past Set Up Recap

AER – Finally broke out of it’s base. We have been talking about this one for many weeks and even months now. Looks like it may finally be on it’s way for a trending move higher.

GPS – The bull flag that we highlighted last week broke higher and now it is threatening to start a new trending move higher out of a very large base. Looks strong and potentially a new leader on a new leg higher in the overall markets.

LUV – Spent most of the week consolidating but then on Thursday it woke back up. Still in a very large base but overall it is setting up nicely for a move out of the base to new highs. Best case is an inside day or two before breaking out.

THC – This stock remains high on my watch as it consolidating near highs in a tight pattern. Weekly chart is poised to make a move, it is a much watch going forward. When it breaks, likely will give a strong trending move in that direction.

 

2. Strategy For Next Week

A. General Broad Market Thoughts

The lack of momentum in breakout plays continues to plague 2014. I do not believe this is going to stop this next week either. More consolidation is necessary if we want to see a strong breakout to new highs with ‘A+ Set Ups’ confirming and showing themselves (something that has been obsolete in 2014). For momentum players to be rewarded, the commodity sector has been the place to be, this likely will continue into next couple weeks if we they are able to hold higher and form strong patterns.

Trend following continues to be a lucrative business to be in, as it does not matter as much if you get the breakout dead on right, all that matters is if you are in on the trend. We here at Ben  C Banks Trading try to implement a strategic mix of the two, that being playing a momentum breakout while also following a trend.

Long and shorts likely will continue to work in a choppy tape but I tend to favor the short side as of now in select relatively weak names. This is because the momentum higher is waning and the probability of success in long breakout trades will continue to diminish. Therefore, I want to focus on the A+ Short and Long set ups with keeping in mind sound risk management as well as incorporate some of the commodity complex trades into the portfolio.

B. Video Analysis & Watchlist

 

C.  Set Ups & Charts Watchlist

2-22-14 agmo

SGMO – A strong looking basing pattern above the MAs. A couple inside days would set this one up very nicely for a breakout to new highs. This stock has the potential to build an A+ Set up.

2-22-14 amzn

AMZN – This is a SHORT SET UP. The relative weakness is extreme and it appears to be bear flagging. Under Friday’s lows it could the see the 200 day, near 330 (not shown).

2-22-14 ko

KO – SHORT SET UP. A massive head and shoulders pattern seems to have formed on the weekly time frame of KO. A consolidation/flag before breaking down would be idea but overall, this stock looks bad and has extreme relative weakness.

2-22-14 thc

THC – This is one that we have highlighted a couple times the past month or so but it finally looks ready to go on the daily timeframe as well. A very long base and is poised to breakout. Check earnings.

2-22-14 yrcw

YRCW – A nice bull flag pattern here in a high-momentum name. Something to watch for a quick trade.

3. Current Positions

JO – Half position. Holding for a trending move. Looks fine, needs to consolidate some more though.

CORN – A bad day on Friday but nevertheless, the CORN futures chart looks alot better than the CORN ETN chart. I am still long for a trending.

SLV – Half position. Nice bull flag developing in SLV in the latter half of this past week. Needs to hold above 20.50 for me to remain long this name.

AMZN (short) – Entered this one on Friday. I am short versus 356.50 (ish) for a swing with a target near 330.

4. General Tips & Reminders

1. The larger the stop, the smaller the size, the longer the timeframe.

2. Check earnings.

3. The big winners are NEEDED. Cut the losers, HOLD THE WINNERS.

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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Week Ahead Outline: Strategy, Recap & Set Ups 2/22