Today’s Trading Lesson…
Tape reading remains one of those mysterious subjects around traders.
My definition centers on order flow. Essentially we look for an answer to the questions:
- Are buyers or sellers in charge?
- If so, for how long? (How much of a commitment?)
- Do I see see signs of exhaustion, indecision, distribution or accumulation?
The chart of Prudential gives you an excellent example to print out and put into your trading folder. The stock price continues to advance, however, 14 out of the previous 16 days show indecision.
The stock shows only one day of “fuel,” and multiple closes below the open as the closing price advances.
This lesson is one that many traders never understand. There is more to reading price action than the closing price. Great traders look deeper and ask “What is happening? Can I visualize the order flow?”
All new highs are NOT the same. To succeed you must start putting the pieces together. What happened yesterday compared to the market? Same question for the last week, month and 3 months.
The new highs in $PRU, and the daily price action, show institutions selling on the way up…
On the Tape Today...
$MA | Mastercard continues to show distribution and relative weakness. The previous five weeks of price action gives an opportunity to game plan a short-sale in the face of a bullish tape. Long scenarios with the indices would be the top of your list but this trade must be in your watch list. The market closed on the highs again yesterday and MA closed on the lows. (see chart)
$NFLX | Netflix produced an inside day breakout yesterday provides a bullish momentum trade with one more day of profit potential before it hits resistance. Looking for a $125 buy-stop and a target to sell of $129. Inside days typically lead to solid 2-3 days of momentum. Look for this to get follow through today, but be aware of the topping tails in the $129 area.
FREE Trading Course | New 7-Part Video Series | Trading Essentials
Thrive Leads Shortcode could not be rendered, please check it in Thrive Leads Section!
Dow industrials aim for fresh all-time high
U.S. stock futures on Wednesday pointed to a slight rise at the open, putting the Dow industrials on track for another record close. Analysts are marveling at the stock market’s post-election advance, which has recently sparked warnings that it’s time for a pause.
“It appears that nothing can stop the equity rally,” said Naeem Aslam, chief market analyst at ThinkMarkets UK, in a note. “If you look at the volatility index, it has dropped near the 11 handle, which confirms that appetite for riskier assets is strong,” he added, referring to the CBOE Volatility Index VIX, -2.29% .
“Buying volatility at these levels may not be that much of a bad idea.”
Continue Reading on marketwatch.com
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 12-7-16 | DJIA Soars
Dow Scores New Closing High; Netflix Rallies On iPhone App News
Stocks closed near session highs Tuesday after hovering near the flatline for most of the session. The Dow climbed to a new closing high, while the small-cap Russell 2000 rallied 1%.
Chipmakers, airlines and movie-related stocks led the upside in the stock market today, while gold miners, restaurant operators and alcoholic beverage makers suffered modest losses. West Texas intermediate crude prices slipped 2% to $51.77 a barrel; gold futures dipped 0.6% to $1,169.60 an ounce.
Hawaiian Holdings (HA) lifted 2% to a new closing high in average turnover. Shares remain in buy range from a 51.63 entry of a shallow cup base. Among other carriers, Allegiant Travel (ALGT), Delta Air Lines (DAL) and United Continental (UAL) rose more than 2% each.
In the Leisure-Movies group, Netflix (NFLX) surged 4% in normal volume as the stock works on a cup with handle with a 129.39 buy point. The movie-streaming service has become the top-grossing Apple (AAPL) iPhone app in the U.S., according to a Monday report from SensorTower.
Continue Reading and Watch Video on investors.com
Tape Reading the SPY ETF
$SPY set to test new highs again.
NASDAQ is knocking on the door again, the DJIA exploded three weeks ago and hasn’t looked back.
Clearly the long side is the “right” side. Getting plenty of emails from traders making the same statement…
“How far can this go without a meaningful decline? I am hesitant to get long, especially when my stocks have a weak morning”
I completely understand this mindset but you need to get over it. If the order flow continues, you must bid for stocks. Yes the time for profit taking remains a valid expectation, but if the bulls support the bid, you must join them.
You can’t get behind the wheel afraid of an accident.
If you have a solid money management plan and good discipline, act like a pro and place the trades.
Stocks in Play: $COST research on finviz.com
Costco Earnings News: Costco (COST) Q1 Earnings: What’s in Store for the Stock?
Costco Wholesale Corporation (COST – Free Report) is slated to report first-quarter fiscal 2017 results on Dec 7. T
he question lingering in investors’ mind is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the final quarter of fiscal 2016, the company outperformed the Zacks Consensus Estimate by 2.3%. Let’s see how things are shaping up prior to this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Costco is likely to beat earnings estimates this quarter.
Read More on zacks.com
Costco Headed Into Make or Break Earnings Report
Costco Wholesale Corp. (COST) reports earnings after the closing bell on Dec. 7, with shareholders hoping the big box retailer can shake off recent lethargy and join a broad sector advance, driven by growing optimism about 2016 holiday sales results. That might be a tall order, given similarly weak action in rival Wal-Mart Store Inc. (WMT), who has also missed out on the sector buying spree.
Sector capital has shifted out of top tier players and into beaten down sub-groups in recent weeks, in an oversold rally that’s lifted a basket of brick and mortar behemoths to multi-month and 52-week highs.
However, this rotational behavior is unlikely to continue, given the multi-year paradigm shift out of physical operations into e-commerce sales. As a result, it’s possible that funds will jump ship and buy COST at the first sign of renewed strength.
Continue Reading on investopedia.com
Stocks to Trade 12-7-16 | Tuesday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: ADSK, CLVS, NFLX, KMX, UAL, CAR, WYNN, NFX, DISH, IONS, WDC, CRC, X, COP, URI, HES, BHI, CLR
Negative last 20 and 5 trading days | closed 2% lower from the open: amt, cern
Quarterly Order Flow:
Bullish Stocks to Trade: NFLX, UAL, CAR, X, COP, URI, MAR, ADNT, COF, GS, DE, PRU, KSS, BHI, CAT, NUE, STT, TRGP, CLR, UNP, HAL, BA, PNC, APA, APC, UNH, TGT, DLTR, CVX, EOG, SLB , AET, DVN, PCAR
Bearish Stocks to Trade: nem, amt, tsla, khc, crm, agn, tsn, mnk, trip, htz, mdt, hca, ew
2x Normal Volume: TEVA, ADSK, BWA
Inside days: msft, ms, gild, nem, sbux, txn, mdt, pypl, vod, bby, jblu, gps, wdc, luv, crm, tsn, ntap, tsla, stx, aa, unh, aet, fslr, rrc, tjx, amgn,