Today’s Trading Education…
Finding the correct stocks to trade takes time.
There isn’t one correct trading strategy for everyone. We all come to trading with different skills and resources. Different trading education, different trading experience, different risk capital, different risk tolerance, different time available to trade.
If you’re smart, each of these resources must be considered before you make your first trade.
In my sixteen years trading, these are the top three methods that have worked the best:
- Build a Universe: This trading strategy focuses on the same stocks day-after-day. You ignore stocks in the news and simply look for trading scenarios in this list. If you’re a new trader, or struggling, this strategy would be my recommendation.
- Scan for Patterns: Our second strategy scans the entire market and focuses on pattern recognition. You scan for break outs, bull flags, and pennants. You look for long-term trends and a short-term spot to enter. This stock picking method offers much more opportunity but challenges your skills because the stocks are not familiar. In this scenario you are familiar with the patterns but not the stocks.
- Industry or sector specific: Many hedge funds and mutual funds specialize. The trade “gold, oil or retail.” The major advantage here is deep knowledge of the securities you trade. The major disadvantage is a dead sector. When a sector or industry consolidates you struggle to find acceptable trades.
Each of these three trading strategies gives you a solid place to start. My advice is to choose only one and fully commit to the process.
You have a better chance of succeeding when you know exactly how to run your trading business. Jumping around creates overwhelm which leads to hesitating.
If you would like help, leave your question in the comments.
On the Tape Today...
$C | Citigroup shows well-bid price action and a solid breakout. $48.50 limit to buy, $54 target to sell. (see chart)
$UTX $100 sell-stop, swing trade short sale with a target to cover @ $96.
$QCOM $64 momentum breakout paused last week, expect continuation today. $68.50 day trade with a $70.25 target to sell.
$TJX bearish engulfing candlestick triggers a $73 sell-stop. Swing trade with a target to cover @ $67.
$C 10-10-16 (Click to Enlarge)
U.S. stock futures rise as earnings kickoff blots out presidential debate
Alcoa helps kick off earnings season this week.
U.S. stock futures on Monday pointed to a higher open, as investors prepared for the start of earnings season and scratched their heads over the second U.S. presidential debate.
“Last night’s U.S. presidential debate might not have provided the electorate with the substantive direction it was looking for, but in terms of financial markets it seems like another nod for Mrs. Clinton,” said Paul Webb, CEO of ADS Securities London, in a note.
Corporate news: Third-quarter earnings season gets its unofficial start this week, with Alcoa Inc. AA, -1.29% due to report on Tuesday. The iconic aluminum maker is presenting its last quarterly earnings report as a single company, as it plan to split in two on Nov. 1.
Economic news: There are no top-tier U.S. economic releases due to hit on Monday, as government workers get a holiday for Columbus Day.
Continue reading on marketwatch.com
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 10-10-16 | $HON
Stocks End With Small Losses; Job Growth Slows; Honeywell Dives
Stocks ended the week with modest losses Friday as Wall Street mulled a lukewarm September jobs report and lowered guidance from Honeywell (HON).
The U.S. economy added 156,000 jobs in September, just below the consensus estimate of 168,000. The unemployment rate ticked higher to 5%.
Among blue chips, Honeywell crashed below its 200-day moving average, falling 7.5%, after the company lowered its full-year earnings and sales forecasts.
Alcoa (AA) kicks of Q3 earnings season in the coming week when it reports Tuesday before the open. The aluminum giant is above its 50-day moving average as it works on a shallow, cup-shaped base with a 33.01 buy point. Alcoa is a higher-priced stock now after a 1-for-3 reverse stock split.
Watch Video and Read More on investors.com
Tape Reading the SPY ETF
$SPY “pennant” chart pattern continues to coil. Expect volatility out of the trading range.
Anticipate volatility but don’t guess. Yes the $SPY is trading near all-time highs and yes the up trend remains intact.
But order flow is anything but obvious. Using your tape reading skills, can you say price action has an edge since July?
Can you say “buyers or sellers are definitely in charge?” I can’t, there fore I do not have a market call. The $SPY is neutral. For me to change that analysis I need to see multiple days in the same direction, with volume.
Look for a day trading bias, if we get one, great, trade your game plan.
If we continue to get trading on either side of the open price, trade for cash flow and be smart with leverage.
Stocks in Play: $HON research on finviz.com
$HON NEWS: Honeywell CEO Addresses Surprise Shortfall
Honeywell International Inc. said an unexpectedly weak September prompted its forecast for lower annual sales, which spooked investors in the aerospace-and-building systems conglomerate.
Chief Executive Dave Cote told investors Friday morning that sales in areas such as aftermarket services for business-jet engines and hand-held scanners for shippers and logistics companies “failed to materialize” in the third quarter, requiring the company to cut its targets for earnings and annual sales.
“We expected short-cycle orders that normally materialize,” Mr. Cote said. “They usually do, but in this case, they didn’t.”
Honeywell shares fell 7.5% Friday, pressuring shares of other industrial players, including General Electric Co. and United Technologies Corp.
Honeywell Dives On Aerospace Warning; GE, Textron, United Tech Fall Too
Honeywell (HON) fell sharply Friday after the aerospace and building systems industrial giant cut profit and sales forecasts, citing weaker business jet and general aviation shipments.
Honeywell warned late Thursday that it sees full-year earnings per share of $6.60-$6.64, down from its prior forecast of $6.60-$6.70. It now sees core organic sales down 1%-2% vs. the prior target for a 1% decline.
Stocks to Trade 10-10-16 | Monday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: KSS
Negative last 20 and 5 trading days | closed 2% lower from the open: tsn, fslr, car, myl, vrx, tsla, rh, dvn, mur, slw, nem
Quarterly Order Flow:
Bullish Stocks to Trade: KSS, JWN, WDC, BHI, QCOM, PG, C, JPM, PE, STX, LRCX, SWKS, TRGP, HAL, DISH, AMZN, UNP, PRU, REN, APC, A, LVS, EOG, NVDA, CAT, APA, CLR
Bearish Stocks to Trade: myl, ctsh, gild, abc, teva, aep, duk, d, lulu, vfc, cvs, dg
2x Normal Volume: HON, TSN, CLVS, SRPT, ETP, LRCX
Inside days: csco, orcl, kr, csx, amat, qcom, schw, wfm, hd, epd, wmb, wu, stx, oxy, nov, mur, cof, ua, cien, ctrp, nfx, sfm, chtr