As the market conditions continue to be challenging, we are entered a few swing trades on today's bounce. We are entering using the same criteria we would for a trend trade, but with a short term price target (We don't have confidence yet in the trend of the market). It has Very Bullish Chaikin Power Gauge rating, strong industry group, price above a rising Chaikin Trend line, solid relative strength. We are however using half size positions and tighter stop losses, as the market has been choppy.
With market volatility continuing to wreak havoc on our bullish trades, we accept victory as our trend trades come to an end. We entered Boeing last July at $104 and stopped out today at around $131. As the Chaikin system promises, the gains are large and losses minimal. That's why we love trend trending when the wind is at our back with Chaikin Analytics. Here's a look at how we're doing.
The wind is decidedly not at our backs now. A review of market conditions shows that price action is against multi-month trend-following stock trades. And with volatility comes opportunity, particularly when it comes to selling short-term options spreads. We're waiting for a market support break before committing to more. -- Mike and AA The breadth in the market has been has been narrowing. We now only have 2 bullish sectors out performing the SPY-- Healthcare and Tech. The Power Gauge ratio is now below 1. Despite today's bounce, we remain skeptical of entering trend trades. We're staying nimble and trading short term options as the market bounces around. Check out our daily Market Analysis.
We are not taking any long-term bullish trades, as the price action of the SPY has fallen below both the long term Chaikin trend line and the 21 Day MA, as you can see in Market Conditions. We are looking for short term bearish trades in weak stocks that belong to weak sectors.
We are following our system, and found no bullish trades that meet our criteria today. However, we note that XLY has really fallen in our Sector Analysis, and we are licking our chops for the opportunity to sell option premium to the downside once the S&P and XLY become overbought. We are watching YUM, SBUX, MCD, LULU and JWN and waiting for overbought sell signals.
Though we generally avoid speculative trades...NFLX has turned bearish in the last several days, with earnings today. Price recently fell below the Chaikin trend, relative strength is waning. Moneyflow is bearish. and there is a lot of insider selling and short interest. Here's a calendar trade with a 54% chance of success. And, if you believe NFLX will take a hit today, your odds of success are higher if you have conviction it will fall. Grab a free trial to Chaikin Analytics here and take advantage of 3 extra months and a $300 iTunes gift card when you sign up for a year. That's a great deal, and it should easily pay for itself if you follow the system. -- Mike and AA One sector has twice the bullish/bearish Power Gauge ratio of the next leading sector, showing the greatest potential for relative performance in the coming months. That's where we found our Bullish Trade of the Day In this still-trending market (but one of diminishing breadth), stock picking matters more now. That's where Chaikin Analytics really helps. We follow the Chaikin Power User rules to find our best bullish trade idea for next week. This system has produced far more winners than losers, with large gains compared to small losses. That's the way we like it! How I Use Chaikin Analytics to Assess Market Conditions to be Rigorous, Diciplined and Profitable1/18/2014
The video above is better viewed after you've watched the introduction to trading with Chaikin Analytics video. Find it here.
I spoke with Dan O'Connor on the Chaikin staff. They're extending a special offer to Chaikin Power Users. It's a great deal. We took no bullish trades today, but market conditions could be favorable for bullish trend trades next week, with S and P technicals rolling up out of oversold, albeit in an increasingly narrow list of sectors: Industrials, Healthcare and Tech. See our complete market analysis using Chaikin Analytics for iPad and Desktop. See how our portfolio is performing in real time here. Grab a free trial of this amazing app here. We need a catalyst - perhaps earnings next week will provide one to get the market out of the sideways channel.
With the market metrics pointing to a possible bullish trend continuation and industrial showing recent and potential future relative strength, today we took a trade on DHR as our bullish stock trade of the day. With earnings in less than two weeks, it's a bit risky to enter a trend trade. The more faint of heart could consider a risk defined option trade to protect against an ugly downside earnings surprise. We, on the other hand, put our faith in the Chaikin Power Gauge, which hardly ever lets us down.
The market Power Gauge Ratio continued to bounce from its low earlier this week, while the overbought/oversold oscillator dropped out of overbought territory. Sector breath continues to be narrow, with only 4 sector ETF's having a Power Gauge ratio higher than the market. However, Healthcare looks like a very attractive place to fish for buys.
The bottom line: with today's weaker than expected jobs report and Fed's tapering program, it will likely take a good earning's season and doveishness from the Fed to catapult the market to the next high. We're likely to chop around for a while. But, the uptrend is in tact, and we are waiting for our opportunity to take bullish trades on Oversold Buy signals in strong industry groups with Very Bullish Power Gauge ratings (and Money Flow Buys as well). While we wait, fellow Chaikin Power trader Aaron Montell suggested this short term bearish trade on Noble. It takes advantage of weakness (both fundamental and technical in the Energy sector). He's also giving himself the chance to win if the stock stays sideways or even goes up a little. And, he's defined his risk through options in case that insider buying he's seeing turns into a big earning surprise. I like the trade, and it's the best way to be Bearish when the trend is against you. Symbol: NE ( Noble Corp PLC) Oil Services
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