$HD earnings are out this morning and the stock is gapping higher. On the surface, the volatility is good, but is the move higher over with the gap?
A gap and sideways is frustrating. There is no other way to say it. You salivate at the potential price action, but then you get a dud. Then you force trades.
This vicious cycle is expensive.
This brings up a good topic- How to Break a Trading Slump…
If you are a member of our mentor room, you know I am very open about my early trading struggles. It’s the reason I am so passionate about helping. I already went through the tough times, my mission is to help you reduce and then eliminate the rough patches in your trading career.
If you’re struggling, you can quickly break it by getting back to basic criteria. Forget all of the amazing indicators and simply get back to tape reading. Specifically the most recent price action.
The recent move higher has frustrated a lot of people day trading because most of the stocks going higher are in down trends, so the sell-short is the correct trade. If this is you, try this simple fix:
For a long, trade only in the direction of:
- The current net change must be positive.
- The current change from the open must be positive.
- The current last price must be above the previous day’s high.
- The stock must be “well-bid for the last 2 days (higher-highs, higher lows)
This is one of my favorite slump busters. I am confident it will work for you. Go back and look at charts of the stocks you traded the last 5 days and I am willing to bet you will see a different picture.
To help you find stocks that meet this criteria (for longs), here is my scan, give it a try.
Pete’s Day Trading Notes:
- The stock market melted higher again yesterday. I would be shocked if we close above the open again today.
- Quite a disconnect between many commodities and stocks. Oil and airlines going higher, gold and stocks going higher.
- The commodity usually wins.
Stock Market Today: Map of the S&P 500
(click the map for a full view)
–> Top 25 Proprietary Trading Secrets
Home Depot Earnings Report 2-23-16 | Stocks to Trade
Home Depot posts earning beat
Home Depot delivered quarterly earnings that topped analysts’ expectations on Tuesday, helped by strong demand from professional contractors and builders.
Consumers spent more on houses, home improvement products, appliances and autos than on discretionary items such as apparel in the August-October quarter, analysts said.
Smaller rival Lowe’s, which will report on Wednesday, is also expected to have benefited from strong spending on housing.
The report sent Home Depot’s premarket share price higher.
The home improvement retailer posted third-quarter adjusted earnings of $1.36 per share, up from $1.11 in the year-earlier period. The quarter’s earnings were reduced by one cent a share due to costs associated with a 2014 data breach, the company said.
Revenue rose to $21.82 billion from $20.52 billion a year ago.
Analysts polled by Reuters expected the company to post earnings per share of $1.32 on revenue of $21.82 billion.
Home Depot’s Profit Boosted by Housing Recovery
Home Depot, the No. 1 U.S. home improvement chain, reported better-than-expected quarterly sales, helped by a rise in demand amid an improvement in the housing market.
Shares of the company, which also raised its quarterly dividend by 17 percent and announced a $5 billion share buy back plan, rose 2.6 percent to $126.04 in premarket trading on Tuesday.
Sales at stores open for more than a year, or same-store sales, rose 8.9 percent in the United States in the fourth quarter ended Jan. 31. Analysts on average had expected sales to rise 5.3 percent, according to research firm Consensus Metrix.
Home Depot has benefited from rising home prices, combined with job, wage and credit growth that has prompted consumers to spend more money on improving their homes.
— WLST.com (@wlstcom) February 23, 2016
Chart Reading the SPY ETF
$SPY breakout on light volume is driving a lot of day traders crazy. On the shorter time-frames we are not getting momentum, price action is more a burst and then nothing. If you are finding this tape challenging, don’t trade. Stop punishing yourself, wait for things to be obvious.
Veteran trader Vic Sperandeo discusses this in his great book “Methods of a Wall St. Master.”
(click the chart for a full view)
Technical Analysis | Charts of Interest
The Home Depot Inc. (HD – Analyst Report), the world’s largest home improvement retailer, released fourth-quarter fiscal 2015 results, wherein earnings of $1.17 a share came ahead of the Zacks Consensus Estimate of $1.10 and jumped 11.4% year over year.
Earnings Estimate Revision: The Zacks Consensus fiscal 2016 Estimate portrays a downtrend trend in the last 30 days. However, in the trailing four quarters (including the quarter under review), the company has outperformed the Zacks Consensus Estimate by an average of 2.5%.
Revenues: Home Depot’s net sales increased 9.5% year over year to $20,980 million, also surpassing the Zacks Consensus Estimate of $20,350 million. Comparable store sales grew 7.1%, while comps for the U.S. stores rose 8.9%.
The company issued its outlook for fiscal 2016, taking into account the impact of currency headwinds. Sales for the year are expected to increase in a range of 5.1%-6.0% with comparable store sales growth expected to be 3.7%-4.5%. Earnings per share is envisioned to come in a band of $6.12- $6.18, reflecting a 12%-13% year over year growth. – See more at: http://www.zacks.com/stock/news/208199/home-depot-hd-q4-earnings-amp-sales-beat-guides-fy16#sthash.MWoGfqdQ.dpuf
(click the chart for a full view)
Stocks to Trade 2-23-16
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: WPZ, PAA, GLNG, ETP, APA, NBL, AER, TRGP, HES, WDC, JWN, FDX, AMBA, CRUS, KORS, CBS, GPN, QCOM, EOG, IRA, UAL, LYB, AET, ETN CAT, CVX, BBBY, UNP
Negative last 20 and 5 trading days | closed 2% lower from the open: vrx
Quarterly Order Flow:
Bullish Stocks to Trade: DAL, KORS, GPN, LVS, UAL, UNH, WYNN, CVX, OXY, TJX, VNTV, TSN, CAM, CCI, CB, ED, NEE, MMM, KMB, UPS, PM, ITW, JNJ, AEM, XOM, CHRW
Bearish Stocks to Trade: vrx, trip, now, endp, lly, aig, gs, kss, vtr, twx, cern, lnkd, myl, rcl, mpc, egn, dvn
2x Normal Volume: HON, VRX, UTX, FIT, TRN, DVN
Inside days: wy, t, bmy, tmus, stx, tyc, ip, cf, duk, gis, mos, vod, gsk, rax, expe, cvc