08 Jan Weekly Trading Ideas and Forecasts Report
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Another week, another new high for the SP 500 and other indices. We had been looking for a high end of 2738 on the SP 500 for 6-7 weeks now, and we hit it this past Friday with a close of 2743 on the SP 500. The market is now officially extended in terms of the type of Fibonacci and Elliott Wave analysis patterns that we use to forecast. This being what appears to be an overall 5th wave of a 5 wave bullish pattern, anything can happen now in terms of getting more overbought or a fast reversal to the downside. Clearly the market is rapidly pricing in the benefits of a 21% Corporate Tax rate vs 35% prior and that can be hard to forecast on it’s own.
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This weekend we are going to look at a few longer term charts from the February 2016 lows to current to give some perspective on this rally. The small caps up 71%, NASDAQ 100 up 64% and the SP 500 up about 50% since the 2016 lows.
Chart updates: SP 500, XBI, IWM and QQQ
SP 500 showing 50% gains off the 2016 lows. 5 points past our 2738 pivot and stretched.
XBI: Biotech in a 19 week base pattern, looks like it wants to breakout. This past week at SRP we updated our Members saying a pop towards 89 should be met with a 3 point or so pullback to 86 area. We hit 86.40’s late in the week and bounced. This sector could break out soon.
XBI Daily View: Classic double top pullback, should push and try again to break old highs.
IWM: Small Caps on a percentage basis up the most from 2016 lows, but they also took the biggest hit in the last Bear cycle 2015-16. Close to a 6 week base breakout here.
QQQ: Nasdaq 100 up 65% since the 2016 lows
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Swing Trading: VUZI Sample- Moving stops and understanding the fundamentals.
We had a period recently at SRP where we were telling our members to be patient, many of our open swing trades were forming 6-8 week base patterns, and sometimes you cant always get alpha. However, we focus on fundamental analysis of every stock we swing trade, and then look at the chart pattern and try to marry them up. We do not mind waiting a few weeks for a move either. We also try to avoid washout stop loss runs, often computer generated and taking traders out of good companies for no reason. We use stops near the close of the market, not intra-day for a reason.
Case in point this week is VUZI. This one was breaking out over $7 per share, and then obviously smart money got wind of a secondary at $6.05 per share and the stock began to decline. Finally the secondary was announced and the stock washed out to 5.55 area, we lowered our stop from 5.85 near close to 5.60 near close. As of Friday, about 10 days or so later the stock was trading at $8.80 in after hours. By moving the stop and understanding the fundamentals of the company we had an open swing trade in, we avoided getting washed out of a good trade. Now SRP Members are firmly in the black on this trade with average entries from 6-6.75, and some lower. We felt it could run up to as high as $10 into the CES conference and we are moving in the right direction.
18% Move in 1 day…. worth the wait.
We also have several other positions that did nothing for a few weeks, but again we focused on small cap names thinking they would get their day in the sun. Many of our swing positions were popping late in the week in our favor, proving again that fundamentals and proper chart analysis combined can pay dividends for the patient trader.
15 Swing Trade Ideas:
This week we have another new list of names that are setting up to consider. We are nearly fully invested at SRP right now so we may have to drill down hard to just 1 name here and or remove a few from our Positions on strength this week to allow room for new alerts:
OLED: 9 week base pattern, LED’s for consumer electronic markets.
ANET- 9 week base, software and hardware for Data Centers and more
PETS- 5 month base pattern, on our list often of late. Meds and Health products for pets
SUPV- 7 week base pattern, Argentina financial institution
FND- 5 week base pattern near highs, Flooring and Accessories
CBG- 8 week base pattern, Property/Real Estate management
WUBA- 8 week base pattern, former SRP play, Craigslist of China, close to breakout
HOME- 6 week base pattern near highs, 123 Home Decor stores
LOMA- 10 week IPO breakout pattern, Argentinian Cement company
JAG- 3 week base near highs, Post IPO close to multi month breakout, Permian Basin driller
SEDG- 9 week base pattern near highs, Solar play
WTTR- 3 week ascending base near highs, Water for Oil and Gas industry
AYX- 9 week post IPO base near highs- Data Analytics
EXTR- Base on Base pattern a current SRP position moving in our favor
WLH- 10 Week base pattern, home builder on a light pullback off highs here
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“I really like what you’re doing (and it’s not just because you’re on a hot streak right now). I feel like you have the whole package – solid fundamental and technical expertise – combined with a very realistic grip on trading psychology.” A.W. – 3/28/17- SRP Member
“David, you are, without a doubt, one of the best if not the best Elliott Wave guys I am aware of” 8/30/17
Peter Brandt, CEO, Factor LLC (One of the worlds top Commodity Traders and Technical Analyst)