- SPY price trading above both the short (dotted) and long (orange) Chaikin trend lines
- Both trend lines curving up
- The bull:bear stock ratio of the SPY greater than 1.00
We've been limiting our multi month large cap stock trend trade entries to periods where we find market conditions most favorable for continued upward movement using Chaikin Analytics indicators. Monday, we re-entered such a period. We require a mix of positive technical and fundamental readings before we make a "market up" call, including:
A 22% Gain In a Month! Hey, We're Not The Only Ones Paying Attention to Very Bullish Power Gauge Rated Companies.
This week, we were rewarded for our best trade since the inception of our Chaikin Analytics powered portfolio, which we've been managing for a year and half. A 22% gain in about a month in Microfinancial.
The collapse in oil prices continue to wreak havoc in the Energy sector. The predictive properties of the Chaikin Analytics Power Gauge in individual stocks can help us forecast where money is likely to flow over the next 3 - 6 months, as the result of this major catalyst.. I look at the relationship between Bullish/Very Bullish and Bearish/Very Bearish stocks in sector ETF's or industry groups as a starting point, then fish for the best stocks. . Sector Trends powered by The Bull - Bear ratio from Chaikin Analytics and tracked at ChaikinPowerUser.com will help you do your own divining. This is a "quantimental" model that leans heavily on Fundamentals to help you accurately predict "where the puck is going".
Given the sector trend analysis, we're not inclined to bottom fish in Energy. Lack of fundamental strength backs up the extreme technical weakness there. The collective Power Gauges in XLE tell us that those stocks will be weak relative to the market over the next quarter or two. We'd rather put our money to work in Consumer Discretionary, where lower prices at the pump and forgiving winter heating bills will leave a few extra bucks in consumers' wallets for meals out and trips to Disneyland. The XLY has moved from Red to Green over the past few weeks.
That whopping jobs report not only adds tail winds to sectors and industry groups buoyed by consumer spending and late bull market economic expansion, but it will likely affect the market's opinion about the timing any Fed interest rate hikes. The XLF has undergone an accelerated shift to the bullish side of the market in recent weeks, and we've made sure to bolster our portfolio of Very Bullish sector stocks from strong industry groups likely to benefit.
The great thing about the Chaikin Analytics Power Gauge is that it help you avoid value traps. It depends on 85% fundamental metrics to develop its posture for individual stocks. The Power Gauge will often turn green ahead of technical strength. So I never chase beaten down sectors and industry groups that remain in the red.
Today, we were able to add diversification and tech exposure to our Chaikin Power User Portfolio. Here are12 key factors that triggered our bullish trade in pursuit of outsized Santa Claus rally returns:
1. Price above a rising short and long term Chaikin Trend
2. Very Bullish Power Gauge Rating
3. Insider Buying
4. Outperforming its peers in its industry group and outpeforming the market
5. Persistency of Money Flow
6. Strong Industry Group
7. Strong Sector
8. Analysts bringing up earnings estimates and upgrading the stock
9. Financial metrics suggest LRCX remains slightly undervalued
10. Strong Earnings growth
11. Management delivers on earnings expectations consistently
12. Momentum Breakout buy signal.
The best part of this analysis is how quickly we were able to arrive at a buy decision thanks to Chaikin Analytics dashboard of key "quantimental" metrics. It's like having an analyst and chart technician at our beck and call. Our holiday stock shopping is nearly complete. Hold us accountable - view our entire portfolio (entries, P/L's, stops) here. Gain confidence tracking our trading, then put Chaikin Analytics to work for your own wealth building.
With price above a rising short and long term moving average, money flow positive and relative strength vs. SPY in the green, we took ADM as a trend trade today. Our initial stop is 2% below the long term Chaikin Trend line. The entry was risk optimized though the OB/OS oscillator at a low point and a Money Flow Buy signal. The industry and sector are also outperforming based on Power Gauge's of underlying stocks.
We were stopped out of most of our positions during the October pullback, and then waited for market conditions to return to our acceptable level for trend-following trading. It's tough to be patient during a screaming V-Bottom. Nevertheless, we're slowly building a solidly performing Chaikin Analytics powered portfolio of very bullish stocks, in up-trends, while "Market Up" conditions prevail. It pays to follow your rules.
See our current & closed trades here. Take advantage of the Santa Claus rally with a discount on monthly and annual Chaikin Analytics subscription. Get Off Code.
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