Today’s Trading Education…
Twitter’s price action from last Friday brought a few discussions about short-covering.
Traders hear the term short-covering by the talking heads but many have no idea what it is. Sure you may know it means many traders are short the stock. The implication of what happens next confuses many.
- If traders are short (betting the stock moves lower), to exit the position, you must buy the stock back.
- If buying becomes evident, additional traders begin buying for new long positions.
- This means two groups of traders are aggressively buying stock.
Sounds great, but how do you recognize short-covering and how do you profit from it? A short covering rally off the lows, versus any standard pull-back, may seem the identical.
Learn to spot the difference, and learn to earn fast profits…
On the Tape Today...
$AAPL remains bullish despite recent sloppy price action. Price targets of $116 and $120. (see chart)
$FSLR bullish momentum sets up a short-sale today on a higher open. $38.25 short sale area.
$FL showing relative strength on Friday. $67.50 buy-stop with a target of $69.50. $NKE still weak in this industry. $UA in a trading range.
$CRM bearish energy candlestick amid $TWTR talk and plenty of room to go. $70 sell-stop, gap fill target of $64. $CRM is in the news so be aware you are not simply trading chart points, could be volatile.
$AAPL 9-26-16 (Click to Enlarge)
U.S. stocks brace for sharp losses in nervous wait for presidential debate
Wall Street was bracing for losses Monday, as stock-market investors grew increasingly nervous ahead of the first U.S. presidential debate and gains for oil prices evaporated ahead of an important meeting of major global producers.
Losses looked set to resume Monday, with U.S. stock futures tumbling and Asian and European markets both in the grip of selling. Part of the selloff was due to oil prices, which wobbled Monday as investors questioned whether the Organization of the Petroleum Exporting Countries and other big non-cartel members such as Russia will make progress on a deal to limit production.
The producers will meet on the sidelines of an energy conference in Algeria Wednesday.
Continue reading on marketwatch.com
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 9-26-16 | $TWTR in Play
Stocks Join Oil Sell-Off; S&P 500 Slips Below 50-Day
Stocks closed near session lows Friday as oil prices slumped. Apple (AAPL) lagged in the Dow, while Verizon (VZ) bucked the trend, rising about 0.4%. Apple lost 1.7% on new worries about sluggish iPhone 7 orders.
Crude oil prices were down 4% to $44.48 a barrel on reports that Saudi Arabia is not expecting an agreement among major producers on freezing oil output next week. Curbing production would lift crude prices, but such an agreement has been elusive. U.S. crude futures rose 2% for the week.
In the stock market today, Facebook (FB) gapped down below a 128.43 buy point, but damage was limited, after the company said it overestimated the average time users spent watching videos between 60% and 80%. Shares of Facebook 1.6% to 127.96.
Shares of Twitter ($TWTR) soared 21% on a CNBC report that said the company is nearing a sale, perhaps to Salesforce.com (CRM) or Alphabet (GOOGL). Alphabet didn’t move much on the news but Salesforce.com gapped down and lost nearly 6%,hitting a six-month low.
WATCH THE VIDEO on investors.com
Tape Reading the SPY ETF
$SPY price action formed a “swing high” on Friday.
With lower lows and lower highs a short-term change of momentum unfolded. A close on the lows gives the bears a cherry on top.
Lack of volume makes the analysis taste empty, but I remain stead-fast in my call of a stock market top. Based on the distribution produced in the churning immediately following Labor Day.
A quick trading lesson — >> My market call does not mean to abandon the long side and short-sell with abandon. A potential change of trend and a new trend are different scenarios.
I am simply reading the tape and letting the market tell me what to do. When we spot accumulation or distribution, it represents a potential change of trend. A trading range is the most likely follow up price action.
This means I will lower expectation for follow through. This means I will be in a cash flow mode.
If the $SPY breaks $212 support with a “fuel” energy type candlestick (large red body with volume), then traders can increase position size and hold longer.
- If this is new to you, read this lesson about order flow and TAPE READING — >>
Stocks in Play: $TWTR research on finviz.com
$TWTR NEWS: Twitter’s stock rockets after report a buyout is near
Short squeeze may have helped fuel the surge to the best-ever one-day gain.
Shares of Twitter Inc. rocketed Friday to the best one-day advance in their history, after CNBC reported that the social-media company was closing in on a sale.
The rally reversed sharp losses seen ahead of the open, in the wake of an analyst downgrade to a rare bearish stance.
The stock TWTR, -1.86% shot up $3.99, or 21.4%, to its highest closing price of the year. That was the biggest percentage gain since Twitter went public on Nov. 7, 2013. The second-biggest gain, of 20%, came on July 30, 2014.
Volume hit 190.8 million shares, about eight times the average daily volume, and enough to make the stock the most actively traded on a U.S. exchange.
Twitter’s Buyers Would Get Valuable Data and a Long To-Do List
Salesforce.com Inc. and other companies eyeing Twitter Inc. may pay more than $16 billion to get their hands on the social-media company’s valuable data. But they’ll also inherit challenges, including management turmoil, lackluster growth and an unsolved identity crisis.
Then there’s the lack of growth — the reason the company is said to be considering a sale in the first place. Twitter’s user base has stagnated in the U.S. for six straight quarters.
Advertisers aren’t spending as much as expected, mostly because they can’t justify buying more ads if the audience isn’t growing. “Twitter’s value proposition to advertisers could be waning,” RBC Capital Markets analyst Mark Mahaney wrote, after surveying advertisers recently.
Stocks to Trade 9-26-16 | Monday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: ENDP, RCL, LN
Negative last 20 and 5 trading days | closed 2% lower from the open: crm, dvn, mur, nfx, eog, cxw, oxy, mbly
Quarterly Order Flow:
Bullish Stocks to Trade: CLVS, REN, WDC, TWLO, LVS, BABA, APA, TRGP, APC, CHTR, YELP, MA, AMZN, NVDA, PRU, AAPL, FB, DKS, STT, AMGN, EA
Bearish Stocks to Trade: crm, oxy, hes, viab, lulu, cost, abc, bmy, vfc, dg, low
2x Normal Volume: PG, CRM, ENDP, MAR, APC, SRPT, CLVS, YELP
Inside days: wfc, srpt, mgm, bsx, sbux, abt, nvda, dal, m, aal, dis, esrx, wdc, jnpr, pm, ip, tgt, mdt, ual, kss, rax, wba, dltr, nwl, hig, chtr