The Chaikin Power Gage Bull:Bear ratio has fallen below 1.  Since it's a mostly fundamental reading of market conditions and often a harbinger of things to come, we are treading cautiously.  Trend trades work best in bullish market conditions.  Technicals and Fundamentals suggest further choppiness, which will likely persist until economic data, earnings or something surprising from the Fed change things.  Utilities are showing strength, leading all sectors with a PG ratio of 8, a rising Chaikin price trend, a rising OB/OS Chaikin Oscillator and strong relative strength vs. the market.   We note that the TLT (ETF's that tracks 2o Year Treasuries) broke above an important resistance line, and when bonds rise stocks usually fall.    -- AA, Mike O

See our full market conditions analysis here.

While the market is weakening overall, it is oversold and we will play any bounce with swing trades. AA is taking a short term  option spread trade today on DAL (Delta).  He sold the April 34 and bought the 32 puts for a credit of $.60.  He has a return potential of 47% and a 70% chance of making at least some money on the trade.   This is an out of the money bull put spread.  DAL threw an Oversold Buy signal earlier this week and is in a strong industry group. 

As we mentioned earlier last week, the market has been getting defensive.  With Utilities now leading the way in our sector analysis of Bull:Bear ratios and the SPY Bull:Bear ratio turning neutral, we are cautious.  This is a good time to hedge about 1/3 of bullish exposure with bearish trades.  We're not directionally short  We prefer using the Future, because it's a single transaction.  But puts, bear call spreads, and inverse ETF's are all potentially appropriate here.   Chaikin VERY BEARISH stocks, below the Chaikin trend line are a great place to look for trades.  SBUX, for example. 

Today we established a long stock position in Keycorp.  Our daily market analysis puts Financials at the top of the sector heap, and a very bullish Power Gauge rating, strong industry, money flow and relative strength make KEY a likely out-performer within the group on a 3 - 6 month basis.   What makes this trade unusual for us?  We're chasing momentum a bit and earnings are coming up on 04/17.  We see strong support around $14 and a retest of what technicians call a "cup and handle" breakout happening now.   So we're "renting" this stock and plan to be out of it at the close on 4/16 or $16, whichever comes first.   (Oh, yeah and we could always stop out)  We generally don't like to enter trend trades with less than 30 days to go before earnings.   We have a lot of trades on now.  See how we're doing in real time here.  Play along with us using the world's best stock analysis tool, Chaikin Analytics.  Try it free for 2 weeks. 

With a market rebound Monday, we have added four trend trades in bullish sectors out performing the SPY, as seen here.  It is worth mentioning that XLU is now ranked second on a  bull v bear ratio following XLV.  XLU( Utilities)  is thought of as a defensive sector, as Utilities generally deliver attractive dividends.  As money comes into XLU, we need to be mindful of  why the 'big boys" would be rotating into such a defensive sector. That said, we followed our rules of entry and added 3 long stock trend trades and 1 bullish option trade.  All of these trades  have achieved a "Very Bullish"  Chaikin Power Gauge Ratings, Strong Industry and Technical rating, in a long term uptrend and have a recent Chaikin Buy signal.   

* First trade, PRGO, Perrigo CO Plc. PRGO belongs to the top rated XLV and the Medical Products sector. PRGO has a very bullish power rating, with very strong insider buying, analysts opinion and estimate revisions.  PRGO is currently oversold on the Chaikin oscillator and flagged an Oversold Buy Signal.  We entered a full size trend trade at the open.  See all of our trades here.   

* Our second trade was FLEX (Flextronic Intl.)  also a trend trade, belongs to the XLK ( technology) which is also outperforming the SPY, which you can see here.  Flextronic has a Very Bullish Chaikin Power Gauge rating, excellent analyst opinion, strong estimate revisions and very little short interest.   The Chaikin Overbought / Oversold Oscillator recently turned up while in oversold territory and flagged a Relative Strength Breakout Signal.  We entered a FLEX trend trade at the open which you can see here. 


*  Our final trend trade of the day belongs to the XLI, which is also outperforming the SPY, however by a much narrower margin. We entered a position in LYB (Lyondellbasel - A) a chemicals company.  Once again, a Very Bullish Chaikin Power Gauge, very strong analyst opinion, virtually no short interest, strong technicals and belongs to a strong industry group.  Chaikin Analytics gave a Money Flow Buy Signal while at the same time falling well into the oversold territory on the Chaikin Overbought / Oversold Oscillator.  See our entry here.  

Lastly, we entered one bullish options trade.  We initiated a spread called a Bull Put spread. This is where you sell a put at or just below support, with action suggesting the stock will close above the strike of the sold put at expiration. It becomes a spread when, at the same time, we buy a put further away from the money as an insurance policy, incase the trade turns against us, capping our losses at the distance between our sold put and the put we purchased.   the name we are trading is BIIB (Biogen IDEC INC) which belongs to the top rated XLV.  BIIB met all of a criteria for trading, but, because the stock is over 350.000 per share we decided to trade options.   Again the strategy is called a Bull Put Spread.  We sold the APR 335 Put and collected a 8.30 credit,  at the same time buying the APR 330 Put as insurance for 6.70, which gave us a net credit of 1.60. as long as BIIB closes at or above 330 on APR expiration the credit is ours to keep.  You can see all of our options trades here.   

We have started tracking all Chaikin buy signals in bullish sectors.  We wont take every trade that makes it to this list, but will watch them until we either take the trade or feel they don't belong on the list any longer.   Most of the time we will be waiting for a bullish 10 / 40 EMA cross on both a weekly and daily basis before initiating a trade, if it meets all of our other requirements. You can see our bullish watch list here.

Happy Trading.  Mike & AA

Our weekly inter-market analysis reflects some of the fears resulting from Russian inspired geo-political turmoil and fears of a China slowdown.  European stocks, lead by Germany, are showing signs of weakness as are certain commodities, like copper.  Meanwhile, soft commodity prices have exploded.  I have added ETF DBA, which tracks grains, corn, soy, etc.   In the US, Utilities and Healthcare have the strongest Bull:Bear ratios while Tech and Consumer Discrteionary have cooled, all of which suggest that money is rotating to defensive areas of the market.   Was the sharp sudden spike in interest rates the canary in the coal-mine last week, or are the shorts wrong and being squeezed today?  For our money, the Chaikin Analytics don't lie and while it doesn't appear Armageddon is upon us, quality stock picking is the game that must be played.

Here are some stocks we like, and for which we will be considering trades this week.

We have seen a change in sector leadership over the past few days.  Defensive sectors XLV (Healthcare) and XLU (Utilities) now show strong bull/bear ratios and lead the S&P.  We currently have 2 positions in the Drugs industry group, LLY and ACT.  XLK ( Technology)  has cooled, and we've stopped out of HPQ. See our Sector Analysis  here.   As money has shifted to the typically high yielding  XLU, generally thought of as a "flight to safety" , we  entered a defensive trend trade in PCG (Pacific Gas & Electric) on a Chaikin Analytics Money Flow Buy Signal.  PCG has a Bullish Chaikin Power gauge Rating, with Analyst Opinions and Insider Buying very positive.  The Overbought / Oversold oscillator  has entered Oversold territory and has begun to turn up.  See our trade entry here.  We have position sized for our account and set our stop 3% below support at 41.71    Happy Trading - Mike & AA

Very Bullish rated and up-trending drug manufacturer, Actavis, threw off an oversold buy signal today.  The stock pulled back to an 8 day low, while achieving oversold status on the Chaikin Oscillator, yet maintaining a very bullish rating.  Those are the criteria for the signal.  The stock is in a strong industry group with g technicals and relative strength.   

As the market achieved another all time high the healthcare ETF, XLV, once again leads a broadening rally.  See which other sectors are outperforming the SPY here.  

This morning we entered another bullish trend trade in the XLV (healthcare).  ALXN (Alexion Pharmaceuticals) on an Oversold Buy Signal.   The stock recently rallied sharply after earnings and has pulled back to the 21 day EMA while at the same time entering Oversold territory on the Overbought / Oversold oscillator.    As  mentioned earlier, ALXN belongs to a strong industry group, strong technicals, very strong relative strength  vs the SPY and a  Very Bullish Chaikin Power Gauge.   Fundamentals drive the Chaikin Power Gauge, most are very bullish. Including very strong expert opinions and estimate revisions.   

We position sized for our account and set our stop loss at 165.42.  Follow all of our trades here.

If you haven't got your free trial yet, get it here. 

We entered a bullish trend trade today in PNC on a Chaikin money flow buy signal. 
PNC belongs to the XLF (financials) which have been gaining quite a bit of momentum as of late The XLF is now out performing the SPY, using our Bull v Bear ratio seen here. PNC has a very bullish Chaikin Power Gauge Rating, belongs to a strong industry group and possesses strong technicals.   The chart tells a great story. Price action is above a rising Chaikin along Term Trend-line, price recently re tested and bounced and the overbought / oversold oscillator has just entered oversold territory.   It's also worth mentioning that estimate revisions are very positive. 

Again, we entered this trade a bullish trend trade.  We position sized for our account and set a stop 3% below support, which makes our stop order approx. $77.66  

See all of our current and past trades here. 

Happy Trading.  Mike & AA

The market shrugged off the situation in Ukraine today.  The  bulls appear to be at the reigns, as the base of the rally broadens.  See our market analysis here.  As tech is now leading and the industrials continuing to gain, we entered two bullish trend trades belonging to those ETF's today.  

First, HPQ (Hewlett-Packard Company)  HPQ  belongs to a  strong industry group, has strong technicals and strong Relative Strength vs the SPY.  HPQ also has a Very Bullish Chaikin Power Gauge rating, which is based on several fundamental factors.  One of fundy's that drives the Power Gauge ratting is expert opinion, which HPQ is rated very strongly.   Money flow has been mixed, but the long term Chaikin Trend is up, and price is above the trend line, as the Overbought / Oversold oscillator approaches Oversold.  We entered this as a bullish trend trade and will set our stop loss 3% below support, and let this one ride.  See this trade here. 

Our second trade of the day was NSC ( Norfolk Southern)  NSC belongs to the rising XLI  ETF 
(Industrials)  which, as we mentioned above is outperforming the SPY measured by the Bull vs Bear ratio seen here.   While NSC currently has a Bullish Chaikin Power Gauge rating, NSC recently broke out on good volume. NSC belongs to a stung industry group, which it has been outperforming and possesses strong technicals.  Price is above the Long Term Chaikin Trend, while the Overbought / oversold oscillator is currently rolling back up out of oversold.  Relative Strength vs the SPY has been very strong over the past 6 moths, even as it has weakened a bit as of late.  We entered this trade as a bullish trend trade, so we will set our stop 3% below support. 

If you have yet to grab your  free trial to Chaikin Analytics, get it here.   Happy Trading!   -- Mike and AA