Today’s Trading Lesson…
How to Game Plan if the Stock Market Collapses
The last-minute FBI announcement, Trump victory, decline and rally wore out the keyboard the previous two weeks.
How do smart traders prepare for the coming reality check?
Traders love momentum but we really want order flow. We want obvious, and we want room to go (profit potential). Traders lose money in two key scenarios. By accepting risk in poor trade ideas, or by not earning more in great trading ideas.
The profit potential to the up side, means the stock market needs to trade through, and hold, new all-time highs. A 10% correction lower gives us some meat on the bone. I’m not saying I want stock prices to trade lower. I am saying to be prepared if it happens.
First, throw out your long-term moving averages. They are misleading when prices trade back-and-forth like this. Use the 20 sma or old-school trend lines.
Second, trade stocks with relative weakness to the market. Make a list of stocks that see selling pressure, while the market rallies.
Third, dig into sector rotation. Which sectors or industries remain vulnerable to new Trump policies? Which companies could suffer should dismantling Obamacare become the priority?
Fourth recognize if you are trading with the general market or simply with the sector. This scenario will dictate your trade management. Build positions in the first scenario, cash flow in the second.
Trump rally to be followed by 11% stock-market tumble, forecasts Tom DeMark
Dow could first hit 19,000 in next few sessions—but then fall, technician says
Prominent technical strategist Tom DeMark predicts that stocks, which have rallied mightily following Donald Trump’s victory in the U.S. presidential election on Tuesday night, are on the verge of peaking and then subsequently tumbling by as much as 11%.
DeMark told MarketWatch that he’s forecasting the S&P 500 index SPX, -0.14% to hit 2,213 by next Wednesday, followed by a correction. “Expectation is for U.S. stocks to endure at least 11% decline after top recorded,” he said. A correction is typically defined as a drop in an asset of at least 10% from a recent peak.
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On the Tape Today...
$NKE 11-14-16 (Click to Enlarge)
$NKE selling order flow remains in play but...price action caught up with the down trend line. Continue to look for a short-sale but set alarms for the $52.50 area. A violation of this price nullifies the bias. (see chart)
$KMX momentum closing in on a saturation point but not seeing exhaustion volume yet. Looking for one more bullish day on a swing trade. Initiating a new long at this level is a bad trade. Be smart.
$M Macy's sitting at $41.50 resistance with decent profit potential ahead. After recent momentum the smart play becomes a pause in this area and then a swing trade with a target to sell $44.75.
$NFLX continues to see massive resistance at the $127.50 level. Despite the recent decline and resistance, the profit-taking appears to be over. Looking for a spot to buy @ $112.50 with a $127 target to sell.
Napoleon Hill Part 1 Success Principles Definiteness of Purpose
New to Napoleon Hill? Start here with Think and Grow Rich.
Dow poised for another record with Trump rally set to resume
Wall Street was set to resume its post-election rally on Monday, with stock futures indicating a new closing record for the Dow industrials, on continued hopes that the policies of President-elect Donald Trump will deliver strong economic growth.
Alongside rising stock futures, the dollar was surging across the board, while U.S. Treasury bonds came under renewed pressure.
“A Trump Presidency has suddenly gone from being the least desirable outcome, to say the least, for the markets to being responsible for the Dow soaring to record highs and bullish hysteria sweeping through the markets,” wrote Craig Erlam, senior market analyst in a note to clients on Monday.
But he said investors need to wait and see how Trump will […]
Continue Reading on marketwatch.com
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 11-14-16 | Stock Futures Bounce
Stocks Rally Into Close; Dow Caps Best Week Since 2011
U.S. stock indexes rallied into the close, as volume dropped sharply from the anxious pace of the previous two sessions.
Small caps again showed leadership. The Russell 2000 popped 2.5% higher, as the small-cap index enjoyed its sixth consecutive gain. The Philadelphia semiconductor index leapt 3.8% as it rubbed out the previous day’s 2.1% loss.
Among the higher priced issues in the price-weighted Dow, Goldman Sachs (GS) roared 16% higher for the week; JPMorgan Chase (JPM) soared 13%; and Caterpillar (CAT) sprinted 13% higher, enough to clear a 89.97 handle buy point on a long bottoming-base structure.
With Trump a supporter of infrastructure improvements and a self-declared opponent of the Dodd-Frank law — a repeal of which would make it easier for banks to operate — banks and construction equipment are natural fits.
Continue Reading on investors.com
Tape Reading the SPY ETF
$SPY price action showed signs of exhaustion on Friday.
Who can blame it? Price hammered lower the ten days before the election. Election night results crushed futures to the point of absurdity, and now we have raging bullish momentum…
Notice I said bullish momentum. Momentum implies recent price action. The $SPY “roller-coastered” back into the $212-$216 trading range.
Having fun yet?
You should be.After snoozing for almost four months the $VIX exploded and gave us opportunity. Short-term heaven. Traders pulling their hair out the last two weeks are most likely looking long-term.
If you’re in the red the last two weeks, you must make faster decisions and drop your time frames. Trading off the 50 sma is worthless right now.
If you struggled in a two week period of volatility, you must find a plan to adapt to changing market conditions. Wake up, get a new plan or become an investor.
You can’t complain when the market is slow, then miss out on good trading when it’s good. This concept remains the mantra in our weekly meetings. “Be ready. Don’t let the market put you to sleep. Be ready for the volatility.”
Look back on the recent daily charts of the $SPY. Beautiful big red or green candles with volume.
If you weren’t ready. Maybe it’s time you joined me for coaching.
Stocks in Play: $MENT | $SIE research on finviz.com
$MENT | $SIE Siemens Buys Software Maker Mentor Graphics for $4.5 Billion
Siemens AG agreed to buy Mentor Graphics Corp. for $4.5 billion in its biggest acquisition since 2014 as the German engineering company extends its industrial software capability.
Siemens will pay $37.25 a share for Wilsonville, Oregon-based Mentor, the industrial giant said in a statement on Monday. That’s 21 percent above the closing price on Friday. Elliott Management Corp., which owns 8.1 percent of Mentor’s shares, backs the offer, Siemens said.
The acquisition “will allow us to supplement our world-class industrial software portfolio,” Siemens board member Klaus Helmrich said in the statement. “It will complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems.”
Read More on bloomberg.com
Siemens agrees to buy U.S.-based Mentor in $4.5 billion dea
Siemens AG SIE, +1.38% said Monday it has agreed to buy U.S.-based Mentor Graphics Corp. MENT, +1.79% in a merger deal worth $4.5 billion.
The German engineering company will pay $37.25 in cash for each share of Mentor, which makes software for automating the design of chips, boards and other electronic products. The offer price is a 21% premium to Mentor’s closing share price […]
Continue Reading on marketwatch.com
Stocks to Trade 11-14-16 | Tuesday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: NVDA, JWN, CLVS, KSS, IONS, KMX, WDC, TSCO, COF, URI, GS, PRU
Negative last 20 and 5 trading days | closed 2% lower from the open: aem, nem, hca, cvs, cern
Quarterly Order Flow:
Bullish Stocks to Trade: NVDA, JWN, KSS, COF, RCL, GS, BA, UAL, PRU, IR, MA (distribution), MAR, PNC, STT, CAT, AET, NUE, HOG, CVX, AKAM, BHI,
Bearish Stocks to Trade: aem, nem , hes, agn, mck, cvs, cern, amgn, oxy, acia, cci, wynn, bidu, tlio, fslr, hcn, teva, vtr, tsla
2x Normal Volume: NVDA, DIS, KORS, NEM, JWN, KSS, CCI, HCA, AET, GS, CERN, PRU, ABC, AEM
Inside days: ge, msft, aapl, fb, jom, csco, ms, csx, met, pypl, qcom, usb, m, jnpr, pg, crm, bhi, mo, v, cf, unp, amzn, low, pru, tgt, nue, mcd, pnc, scty, tsla, adbe, wba, ccl, ba, fslr, tjx, ma, cah, twlo