Stocks & Equities

Use This Trade to Stomp a Boring Market

tradingboard

  • A tight range ahead of Dow 20,000
  • Dominating the post-election melt up
  • Plus: Holding our breath before the inauguration…
  • Rude Numbers: When to Buy When to Sell

The weeks following the election lit a fire under the stock market.

In an epic rally, the Dow Industrials shot higher by 2,000 points in a matter of weeks. Forgotten sectors offered traders fresh gains every single day. The struggles from earlier in the year vanished.

How quickly things change.

 

Right now, the market action is downright boring. The major averages have barely budged in 2017. Just as the market spit out a record gain to finish the year, a new record for standing still is now in the books…

“A funny thing happened after the third-largest rally since 1900 for the Dow from the U.S. election until year-end (+7.8%)—it is now in the midst of the smallest monthly range ever,” explains the LPL Financial Research team. “That’s right, with the Dow flirting with the big 20,000 level, it has simply stopped moving, up or down, and the daily ranges have been historically small.”

There are just too many distractions for investors these days. As a result, stocks are holding their breath as we barrel toward the inauguration.

But that doesn’t mean there aren’t any trades lurking under the surface of the major averages…

While almost every investor on the planet is laser focused politics and Twitter rants, our eye is drawn to the tech sector.

The big tech darlings that everyone left for dead in late 2016 have come roaring back to retake their rightful throne as market leaders. This is one of the best places to look for a new trade—even if the market is stuck in a tight range for now.

It’s important to note that big tech hasn’t completely dominated the post-election melt up. At the beginning of December, traders kicked the market’s most flashy, popular tech stocks to the curb. The FANGs—Facebook, Amazon, Netflix, Google— received the biggest beating as folks piled into materials and banks. By Dec. 1, each of these once-coveted stocks had dropped at least 4.5% since election day.

The new year has been much kinder to these mega-caps. Facebook shares are up more than 11% so far this year. Netflix is up 7%. Google has gained 4%. Tech stocks are officially back in favor as the averages tread water.

But if we truly want to book outsized gains, we have to hitch a ride with the most powerful stocks in the sector. 

That’s where semiconductors come into play.

Semiconductors have slapped around the rest of the market since they fought off their lows and broke out to new 2016 highs all the way back in June. Now they’re ready to continue their dominance as the tech sector comes back into focus.

SemisDominate

The S&P 500 has gained 18% over the past 12 months. Over that same timeframe, the tech sector has posted gains nearing 25%. But semiconductors blow them both out of the water. The VanEck Vectors Semiconductor ETF (NYSE:SMH) boasts 12-month gains of more than 48%.

Semiconductors were the ultimate snapback trade for a market melt-up—especially when you consider the sector’s lagging performance leading up to its big breakout back in June 2016. You probably recall that investors wanted absolutely nothing to do with these stocks when the market was struggling in 2015.

But now that the semis have regained a leadership role, we can expect to see the trend continue higher. That not just bullish for the tech sector, but the entire market.

Sincerely,

Greg Guenthner

Rude Numbers
When to Buy… When to Sell

Screen Shot 2017-01-18 at 7.12.16 AM

….also:

Will the Stock Market Bull Continue to Charge or is it time to sell the news

Be Afraid of the Fear of Missing Out – V.MMS – T.QRM

tyler

perspectives commentary

Stockscores.com Perspectives for the week ending January 16, 2017

In This Week’s Issue:

  • Weekly Commentary
  • Strategy of the Week
  • Stocks That Meet The Featured Strategy
  • Stockscores’ Market Minutes Video – Adapt to the Market
  • Stockscores Trader Training – Be Afraid of the Fear of Missing Out
  • Stock Features of the Week – Stockscores Simple Canada

Stockscores Market Minutes – Adapt to the Market
Trading strategies can be improved by considering the state of the overall market. What works in an up trending market may not work as well if the market is heading lower or sideways. That topic, my regular weekly market analysis and the trade of the week on Sanchez Energy (SN). Click Here to Watch
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel

Trader Training – Be Afraid of the Fear of Missing Out
Traders, particularly those who need to make money rather than those who would like to make money, tend to have a fear of missing out. They hear about a trading idea or find an opportunity with their own effort and make the trade with less thought than they might put into buying a microwave. They can invest thousands of dollars on an impulse, much like the drunken gambler who throws down $1000 on Five Red.

 

One reason for this sort of reckless approach to trading is the belief that trading ideas are like gifts. They only come along from time to time and you should feel grateful for the opportunity. If you spend 10 hours researching a company or receive the occasional bit of insight from someone who should know more than the rest of us, it’s easy to understand why you wouldn’t want to let a seemingly promising trade slip through your fingers. The problem is that this gratitude for trading ideas leads you to lower your standards and place trades that are not much more than a gamble.

Have you ever made a trade and then, just a few minutes or days later, asked yourself what the heck you were thinking? If you are normal, then it’s likely that you have because it is easy to focus on the dream of making a profit. You should focus your attention on the trading situation as it has been presented to you by the market rather than the words of an expert. Some trading opportunities are so well marketed that it’s hard to see the truth because you fixate on the profit potential that has been dangled before you as the prize.

It is critical to only take trades that meet the criteria of a strategy that you have found to have a positive expected value. Rather than look for a reason to take the trade, which is easy, look for a reason not to. Ask yourself, “If I buy this stock, who will be selling to me, and what does she know that I don’t know?” Looking at the other side of the argument will often highlight considerations that you have missed.

Being fussy is a lot easier when you recognize that the market-even a slow market-will give you opportunities. The markets have been pretty quiet this year but there are still stocks outperforming the market every day.

And if you can’t find a trade today, tomorrow or in the next week, eventually you will. There is always another bus coming down the road. If you miss one, just wait for the next.

I have found that you will actually make more money by trading less. If you maintain a very high standard for what trades you make, you will always pass on some trades that end up doing very well. By being selective, however, you will also avoid many marginal trades that would tie up your capital and then incur a loss. By being fussy and trading less, you end up taking only the very best trades and your results will be better overall.

It is easy to be fussy when the market is strong and there are lots of opportunities. It’s like fishing when every time you cast your line you get a bite. With that kind of success, you will quickly throw back any fish that is too small because you know there’s going to be something better coming along soon. You only take the best of the best.

When the fish stop biting and you spend hours with no bounty, you take the first fish that grabs your hook. It could be a tiny fish that you would never keep on even an average day, but with your desire to catch something, you keep it anyway. It would be better to have just not gone fishing at all.

You’ll do the same thing when trading a slow market. Eager to make a profit, you will take trades that show some potential even if they don’t meet all of your requirements. You will work hard to uncover a trade rather than wait for the obvious no-brainer trades that you take when the market is in a giving mood.

I like to say that in trading, when the going gets tough, the tough get lazy. You can’t control the market, so if the market is not giving you opportunities, it’s better to do nothing. Your hard work will not change what the market does.

This is hard for many people who have been programmed to relate hard work to success. If you try harder than the next person in a sport, you should get a better result. If you study harder for an exam, you should get a better mark. If you work longer hours at your job, you should make more money. In the stock market, if you work harder to find good trades, you will probably lose money.

The best trades are easy to find. Working hard to uncover something leads you to find questionable trades that you have to talk yourself into. It’s better to walk away when you have doubts.

This is not to say that hard work is not rewarded in trading. Traders who work hard at practicing their analytical skills or developing new strategies will be rewarded. People who devote their time and effort to improving their emotional control will be better traders. These are things that you can control and affect with hard work, but hard work won’t change what the stock market does.

US markets were closed Monday for the Martin Luther King holiday and that meant Canadian markets were quite slow. With that in mind, I ran the Stockscores Simple Canada market scan and found a couple of penny stocks that look interesting after Monday’s session:

perspectives stocksthatmeet

1. V.MMS
V.MMS is breaking up from a rising bottom after recently breaking its pull back. Support at $0.07. (Weekly chart – M/T Ed)

sc

2. T.QRM
T.QRM breaking through $0.21 resistance today on strong volume after building an optimistic rising bottom over the past month. Support at $0.15. (Daily chart M/T Ed.)

sc-2

References

Disclaimer
This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don’t consider buying or selling any stock without conducting your own due diligence.

 

Rally in Gold & Gold Stocks Has More Upside

Gold and Gold stocks have rallied as expected and the consolidation in the miners in recent days looks bullish. GDX and GDXJ have digested the recent recovery quite well as Gold is testing resistance around $1200/oz. While the price action portends to more gains so does the breadth in the miners as well as short-term structure in the US$ index and bond yields.

In the first chart we plot GDX along with its advance decline (AD) line at the top. The AD line is the holy grail of breadth indicators as it is a trusty leading indicator. At the January 2016 bottom, the AD line was showing a strong positive divergence. Presently, the AD line is trading at a 3.5 month high and above its October 2016 high. If GDX were trading at the same relative level then it would be about 17% higher. Moreover, the AD line only retraced 38% of its 2016 advance while GDX retraced 62% of its advance. This suggests continued strength in the gold stocks.

Jan162017GDXADline

GDX Advance/Decline Line

The current short-term trends in the US$ and bond yields also support more gains in the precious metals complex. The US$ index tried but failed to break 103.50 and should test at least 100. It could potentially decline to as low as 97 and test the 200 and 400-day moving averages. Meanwhile, it is no secret that bonds (like Gold) became extremely oversold (and yields extremely overbought). The 10-year yield, which closed at 2.38% should test at least 2.20% and could fall to 2.10%. Declining yields are immediately bullish for precious metals.  

Jan162017USDTNX

US$ Index & 10-Year Yield

Strong breadth coupled with continued weakness in the US$ index and bond yields supports more gains in both Gold and the gold stocks. Our targets for the miners remain $25 for GDX and $40 for GDXJ. Those are the strongest and most reasonable targets but $26-$27 for GDX and $41-$42 for GDXJ are possible. Look for Gold to test $1220/oz while maximum upside on this rally is $1250/oz. We have turned more constructive on the miners but definitely expect another buying opportunity after the US$ and bond yields resume their uptrends. Consider our premium service including our favorite junior miners for 2017.

Jordan Roy-Byrne, CMT, MFTA

Jordan@TheDailyGold.com

…related: 

Gold Stocks: A Fabulous Rally Accelerates

What About Collectibles?

Hunt-Decadrahm

Collecting is instinctive within humanity. Everyone has formed a collection of something, no matter how small. From childhood, we all have accumulated objects in different categories, be it matchbox cars to collections of Barbie dolls. Their questionable usefulness is only second to the fascination of playing with them. The first coins used in China were cowrie shells. They were beautiful and rare since they could not be found everywhere. The first attempt to expand the money supply, and make bronze appealing and acceptable, involved making the money into the image of a cowrie shell.

I got the bug when I bought my first Roman coin for probably $5 when I was 10 to 12. I would recommend ancient coins, for their market is global. Canadian coins are salable in Canada just as the best market for the U.S. coins is in the United States. Yet, ancient coins cross all borders. The Chinese and Russians are big buyers these days. Cars are too hard to store. Fine art is also something I have collected over the years. I can more than quadruple my investment in things like Rembrandt etchings (the one pictured is of his father).

I have collections of rare books and autographs as well. There are collectors for every category of object. There was the Villa of the Papyri, a private house in the ancient Roman city of Herculaneum, who collected art and books. This tremendous collection has fascinated visitors beyond belief. 

….read the whole article HERE

 

10 Potential Black Swans And Opportunities For The U.S. Economy In 2017

socialShareImage.imgSummary

* We’ve reached that wonderful time of year when financial pundits pull out their forecaster hats and take a crack at the future.

* This time the exercise is particularly interesting because we’re at several turning points.

* Any one of them could remake the entire year overnight.

We’ve reached that wonderful time of year when financial pundits pull out their forecaster hats and take a crack at the future. This time the exercise is particularly interesting because we’re at several turning points. Any one of them could remake the entire year overnight.

I should probably say up front that I am actually somewhat optimistic about 2017 – optimistic, meaning I think we will muddle through – but that’s a lot better outcome than I was expecting five months ago. However, mid-course corrections may be warranted.

Instead of trying to answer questions about the future, I’ll try to list those we should be asking as 2017 opens.

We can’t afford for any of the major components of the global economy to break down; so, it’s smart to ask, “Where are the weak points?”. That’s what we’ll do today. We’ll poke at the economic mechanism as it grinds along.

Trumping DC

…continue reading HERE

…also:

Jim Rogers: Wall Street is wrong, ‘you should put all your eggs into one basket’