The price/action of the last few days has been very positive. With the DOW Jones hitting a new high above 10,000 the market resumed its confirmed uptrend. Many important earning reports were better than expected with good improvements on both top and bottom line. We did see a little bit of “sell the news” type of reaction especially in names like INTC and GS.
Because of this picture, I started 3 new positions this week. A speculative one on Celgene, ticker CELG. They are set to report earnings next thursday. I am playing this event with out-of-the-money November $60 calls which already increased in value due to a small move up in the stock since I bought them.
I also initiated a new position in GS when the stock dipped to the $184 level which has acted as decent support over the last few days. With the numbers that Goldman reported I am looking at a price target of $200. The “sell the news” price/action is a great opportunity to establish a new position in GS.
Lastly, I established an aggressive position in LFT, Longtop Financial. This stock is working on a base-on-base price pattern. On Wednesday the stock moved up $1.61 in heavy volume and kept most of its gains in the next two sessions with yesterday decline happening in very low volume, a sign that institutions are holding onto the stock. If LFT shows more signs of accumulation next week, there is a very good chance that the stock can pass the $32.94 high set on the last attempted breakout on 8/10 which later failed. Bottom line, buy LFT above $30 if the stock gains in good volume and look for a breakout above the $33.04 level.
TechnicalTrader My recent trades, Trading Ideas celg, celgene, Goldman Sachs, GS, intc, LFT, longtop financial
The market is behaving poorly lately. We declined 6 times out of the last 7 trading sessions. What do we make of such action?
Let’s start with the facts: if we observe the price/volume action of the last two weeks, we can clearly see at least some institutional selling in the market. Some leaders have been outperforming the major indices however when the market goes down, 75% of stocks will follow. The current uptrend is therefore under pressure. Technically speaking the market made a bearish reversal on 9/23 and the only up day in the last few trading sessions occurred in very soft volume. Now we are quickly approaching the 50-day moving average and also a key area of support around 1,020 in the S&P. If we hold, there is a good chance of a bounce; if we go through, I would recommend to close most of your positions as we can easily drop to 1,000.
Currently, I haven’t taken any action. I am really waiting to see what happens tomorrow. I would be encouraged to see signs of institutional buying in the case we trade to the upside. No buying conviction would be reason to sell into strength.
My current position in GS is still well in the green. GS has been trading very well lately but today was a bad day for the stock even if volume on the downside was contained. Technically speaking GS reversed from $188 to below $180, rallied back to around $186 and today dropped again below $180. It is now $0.51 below last’s week closing price. It looks like a mini double top pattern at this point and if GS closes below the recent low of $177.70 I am out of this trade.
Also CTRP has been trading well in this last market correction and it is only slightly below last’s week closing price at $57.17. Today’s decline came in volume 40% below average, a sign that the stock was only being sold by retail investors. When institutions are not dumping a stock, there might be a much greater upside potential if the market starts trending higher.
Summing up both of my holdings are outperforming the market this week but any sign of further weakness is a good reason to cash out.
TechnicalTrader Market Direction correction, ctrp, Goldman Sachs, GS, october, support
Goldman Sachs
Closed the trading day at $177.71, up 1.72% and outperforming the broad market once again. By looking at the chart, I see possible resistance around the $190 level but for now it looks like the stock will continue to trade higher. Hold your position, today GS marked another 52-week high @ $177.90.
Visa
This stock traded higher as well today closing @ $72.87 and marking another 52-week high @ $73. There is still time to get in this trade as V is only slightly more than 1% extended from its buy point. The only red flag on this breakout is lack of volume during the upside move. I would very much like to see volume pick-up as the week progresses otherwise I might cut my position.
TechnicalTrader My recent trades Goldman Sachs, GS, profit, V, Visa
When the market wants to go higher, is somewhat easier to select profitable trades. You can’t afford not to invest right now. Opinions on where the market is headed are worthless, just observe the price action and trade accordingly. Of the last few trades I recommended lately, RHT is working GS is working, BIDU cleared resistance at $368.59 and V cleared resistance at $71.34.
I got out of RHT because of lukewarm fundamentals, GS looks like it will continue to go higher, BIDU is still very close to the buy point and Visa is just above its buy point as well. In fact yesterday afternoon I got into Visa with naked calls at the October $60 strike. I am not looking for much here, however if V has a good volume surge while increasing in price next week, I believe a 10% move in the stock is realistic. That will translate in a 70% move in the calls. If volume however doesn’t pick up by tuesday, I will close my position.
TechnicalTrader My recent trades BIDU, Goldman Sachs, GS, Red Hat, RHT, V, Visa
The opportunity to safely jump onto the GS train is almost over. The stock is currently trading at $176.60 and it broke out of a seven weeks flat base yesterday at $170.94. The stock is not quite extended in price but you have to jump in right of way as any level above $179 is riskier. GS is trading up on monster volume this morning, up almost 300% from average. My call options are already showing a nice gain of $6.50, slightly more than a 20% gain in two days.
I see no reason to take profits at this level as it looks like Goldman Sachs can easily trade near the $200 level.
TechnicalTrader My recent trades $190 level, breakout, earnings report, flat base, Goldman Sachs, GS
Today the major indices reached new highs for the year and closed higher in good volume. The Nasdaq outperformed once again the DOW and S&P. The market health is improving with some fairly old distribution days losing relevance as time goes by. Today I closed my position in RHT however given the somewhat lukewarm fundamentals of the company. The stock broke out of a consolidation at $23.82 just a few days ago and I decided to take small profits today at the $25 level given the lack of conviction in upside trading.
On the other hand I initiated a position in Goldman Sachs based on the impressive volume on the upside in the last 20 minutes of trading. I am playing the stock with naked calls at the October $140 strike. Goldman sliced through the $170 level which previously in the day acted as resistance. I will closely watch the stock tomorrow to see if it faces any additional resistance at the high of the seven weeks consolidation @ $170.94.
Given the exposure that call options provide, I will be very fast at closing this trade if Goldman Sachs falls more than 1% from my purchase price. That will translate in a 5% loss on the options trade. If the market trades well tomorrow and GS breaks through the $171 level, then I see no reason for closing the trade anytime soon.
TechnicalTrader Market Direction, My recent trades, Trading Ideas distribution days, fundamentals, Goldman Sachs, GS, market uptrend, Red Hat, RHT, trade