Today’s Trading Lesson…
Trading stock market news versus trading the charts. The eternal question in search of new trading opportunities.
Technical analysis provides a simple method of finding stocks to trade. The limitless possibilities for developing a trading strategy give all of us many lost weekends diving into every indicator in the book. And that’s actually the problem with technical analysis, there are too many choices. Eventually you get smart, and pick what feels “right” and give it a go.
If you’re keeping a journal and paying attention, you choose a strategy and stick to it. Chart reading becomes your new best friend. Trading stocks in the news is a different animal. Actually a different business.
When you begin trading you make a declaration. “This concept gives me an edge.” With charts its easy to feel in control. Trading news has hundreds of factors, not to mention how fast news gets distributed today by email and social media.
If you asked which to pick. I would say start with the charts, then diversify if you feel the need. I understand the allure of news driven volatility, but remember, we accept risk because we believe we have the odds in our favor.
Ask yourself if that’s true the next time you place a trade, based on a headline.
On the Tape Today...
$CVS | CVS Health Corp showing resistance on two fronts. The gap fill and the selling order flow in place since August. Looking for an $81 limit order to sell-short with a target to cover to buy in the $77.25 area. If the market reverses and the stock is well-offered, looking to hold a swing trade to $74.
$HD | Home Depot shows a "fuel" candlestick and room to go. After emerging from a five day consolidation, closing near the highs and solid volume, the breakout trade triggers. A $133 buy-stop and a target to sell in the $135.75 area.
Opinion: The stock market’s oldest indicator just flashed red
I hate to rain on this parade. But the latest lurch upwards in stock prices has just taken market valuations up into the skybox levels, according to the market timing measure with the longest pedigree on Wall Street.
It’s just gone from flashing amber to flashing red — meaning, if it’s right, that there is now a significant and rising risk of a crash, and a bigger risk of simply very poor returns.
This has little to do with President-elect Donald Trump, by the way — and much more to do with President Ulysses S. Grant and all his successors. Wall Street’s jump this week has taken the S&P 500 SPX, +1.32% to an eye-watering 27.9 times the corporate earnings of the past 10 years.
That’s according to data compiled by Yale finance professor Robert Shiller and some simple math.
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 12-8-16
S&P 500, Dow Notch All-Time Highs; Dave & Buster’s Soars 19%
Starbucks (SBUX) rose about 2% after departing CEO Howard Schultz outlined his vision for the coffee company over the next five years. In response to slowing sales, Schultz proposed 20 to 30 Roastery locations around the world, a series of Reserve stores, and more of a retail footprint for the “Reserve Bar.”
Starbucks Reserve is the company’s new high-end retail location that serves and sells exotic coffees.
Dave & Buster’s (PLAY) gapped up 19% following Tuesday’s quarterly earnings release. In addition to surpassing both top- and bottom-line estimates, the company raised its full-year guidance, prompting analysts to raise their price targets for the company.
The stock initially broke out of a double-bottom base in mid-November.
Read More on investors.com
Tape Reading the SPY ETF
$SPY price action shows no sellers in sight.
Not much to write here other than make sure you have a trailing stop in place.
New all-time highs, closing on the highs, over 100 millions shares traded, and all major indices joining the party. I’m getting a deluge of emails about fear of buying the top.
I can understand the question from a swing trading perspective, but absolutely not from a day trader. Day trading offers the opportunity to time your entries down to the minute. For almost a month now, 90% of your game plan dictated long ideas.
One or two industries had selling order flow, but that idea hovered near the bottom of the list.
I recommend using the hourly trend as your main reference point. We all know the market has gone too to extremes but the long trade still gives you the best idea.
If your stock trades below the open and the current hour is negative, wait for that to resolve itself or look for a short.
If both criteria remain bullish, be long and trail.
Stocks in Play: $SBUXresearch on finviz.com
SBUX Starbucks News: Starbucks is adding soup to its menu
Starbucks will soon be adding soup to its menu in an effort to grow its food business.
This spring, Starbucks will begin a regional rollout of a new line of organic soups, Sharon Rothstein, the company’s global marketing officer, announced on Wednesday at Starbucks’ Investor Day.
Varieties will include chicken and tomato soup. Rothstein said that with 50% of Starbucks’ traffic coming after 11 a.m., there is an opportunity for Starbucks to grow its food business beyond breakfast.
Read More on businessinsider.com
Starbucks Plan to Win Lunch Crowd Creates Tough Task for New CEO
Starbucks Corp. wants to persuade its coffee-loving customers to come back for lunch, after stumbling several times in previous attempts to expand its food offerings.
The beverage chain is seeking to boost the food category to about 25 percent of total U.S. sales, compared with 20 percent now, said Chief Operating Officer Kevin Johnson, who will take the helm from Chief Executive Officer Howard Schultz next year.
That will largely depend on Starbucks’ ability to capture the lunch crowd, a foray that some industry analysts view with skepticism.
Continue Reading on bloomberg.com
Starbucks Will Soon Have Bakeries Serving Pizza
Now CEO, Schultz is turning to Milan for new inspiration: Italian bakeries. Starbucks SBUX 2.30% on Wednesday confirmed that it will open standalone Italian bakeries under the Princi name beginning in late 2017.
The first Princi Italian bakeries will appear in Seattle, New York City, and Chicago.
Read More on fortune.com
Stocks to Trade 12-8-16 | Thursday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: DLPH, ADSK, KSS, MPC, PCAR, JWN, LULU, VLO, X, KMX, ADNT, TSO, ACIA, LRCX, LB, CTSH, UNP, HON, HD, CHTR, IBM, ACN, MMM, PSX, RCL, MAR, CAT, UAL, COF, COST, GS, NVDA, APC, SWKS
Negative last 20 and 5 trading days | closed 2% lower from the open: myl, mnk
Quarterly Order Flow:
Bullish Stocks to Trade: WDC, ADSK, KSS, MPC, PCAR, JWN, VLO, X, KMX, ADNT, UNP, CHTR, MAR, CAT, UAL, COF, URI, GS, NUE, PRU, CVX, UNH, BA, PNC, TRGP, COP, BHI
Bearish Stocks to Trade: ua, mnk, myl, swhc, trip, jnj, htz, nwl, mdt, ew, teva, cern, crm, atvi
2x Normal Volume: WDC, CELG, ADSK, LULU, BWA, DFS, DLPH
Inside days: kmi, teva, apa, eog, bhi, mnst, clr, wynn, htz