Tuesday, December 30, 2014

What does the weekly chart tell us about Tesla?

My default chart for swing trading is the daily chart, but often it pays to take a step back and look at the weekly.  While the weekly chart will not give you a precise entry level, it does signal powerful clues about the stocks trend.

Tesla recently pulled back 100 points from it's $290 high earlier this year.  Now on the weekly chart a hammer candle formation has formed.  Hammer candles often signal a trend reversal and is a good timing mechanism for entry on pullbacks or corrections.  Price is also holding the 50 day weekly moving average.  As long as price can hold these two levels, TSLA is still in a weekly uptrend.

Keep in mind that the hammer to moving average has a range of 35 points.  While the weekly gives you a good macro view of the stock, you will need to drill down to the daily chart to time a precise entry point.


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Friday, December 26, 2014

You need to know this fundamental change in oil's character

Swing Traders focus on two key elements when assessing a stock's trend, volume and price action.  Volume often precedes price action as the big players leave footprints that are tough to hide.

During oil's parabolic downtrend, volume has consistently shown a distribution pattern while basing before it's next leg down.  However, the current volume pattern has changed the character of the oil ETF, USO.

Notice that the current basing range over the past 8 trading sessions, we see increased volume.  Not only has there been an influx of volume, the pattern shows positive accumulation, as upside volume clearly outpaces negative volume.

This often occurs before a strong bounce or change in trend.  When I see this type of clear change in character, I start accumulating.  I already have a position in oil and may look to add some more.


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Tuesday, December 16, 2014

Chart of the Day: SIG

One of my favorite swing trade setups is the breakout-pullback setup.  While the market has pulled back, retail jeweler $SIG has held up well, pulling back to the key 50 dma level.  An entry here with a stop under the 50 dma and target near recent highs around $133 offers a nice 3:1 reward to risk ratio.  This is the type of risk ratio that successful swing traders salivate over.


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Thursday, December 11, 2014

Is Tesla's stock headed to the graveyard?

The market is littered with fad stocks that made swing traders lots of money off amazing runs only to fall by the wayside after a few years.  Pick up any of William O'Neil's books on trading and you will find tons of examples.  It looks like Tesla may be on it's way to the momo stock graveyard.

Everyone of these fallen leaders forms a topping head and shoulders pattern, followed by a trend line break and increased volatility.  That is exactly what we are seeing in TSLA right now.  In the chart below, take note of the classic head and shoulders pattern, along with the break of the trendline and 200 day moving average.



How do we trade this pattern?  Short weak bounces until they no longer work.

How does Tesla recover?  A remount of the 200 dma and trendline would bring it back from the dead and turn it into a momentum stock once again.

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Monday, December 08, 2014

The explosive biotech stock you must add to your focus list

Swing traders know that biotech has been the sector leading the market.  My favorite biotech stock right now is CEMP.

The keys to a great momentum stock are volume and price action. Volume has been pouring into the stock early October breakout.  Each new breakout has been followed by strong volume and low volume pullbacks.  These pullbacks show strong price action, with each breakout forming a trading range or box followed by a new breakout.

The new breakout forms a new box.  Let's watch for a new range to develop and then buy the bottom of the range.


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Friday, December 05, 2014

Trade Entry Review: VEEV

As a swing trader, one of my favorite setups is the breakout-pullback setup.  Yesterday I entered VEEV as it pulled back and tested and confirmed the bottom of the breakout bar.  The stop is under the breakout bar with an initial target near the recent high at $33.  This gives me a 3 to 1 reward to risk ratio.



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Wednesday, December 03, 2014

Chart of the Day: Zillow

A great swing trading strategy is finding broken down stocks that are ready to reclaim a previous uptrend.

Z was a momentum favorite that broke down a few months ago.  When a momo stock breaks down, I keep it in a special focus list in case the stock remounts a trend line and continues the uptrend.  Z is in that breakout-remount zone now and is consolidating above the moving averages.

An entry here (I and many Trade Report members have a position) with a stop under the 50dma and target around $130 offers great reward to risk.  These are the types of low risk/high reward setups swing traders look for.


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