Daily AM Prep - April, 15

** Prep for Morning Session**

MARKET CONDITIONS

World Markets News: European markets are broadly lower today with shares in London off the most. Asian markets finished sharply lower today.
Economic Calendar



SPY - Market has broken the range and started to develop value above previous range. As long as we are above 157.25 and holding, the longer time-frame bias is bullish. If start to hold below this level, buyers are no longer in full control and this could be seem as a fail break, leading to a stronger down movement. The down move today was a reflect to the world markets being red. I expect the market to find support around 157.50 / 157.25
Bias: Bullish
Accuracy: 80% - strange move today. Lot´s of buying and selling, but nothing was moving. Could be a longer time frame change of control.

AM Stock Selection Sheet download - Mining sector appears to be in play.
Updated at 8:20

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:
1.Educational purpose material only. Use this information at your own risk 2.Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.3.The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.4.The morning sheet will be updated between 8:00 and 9:00.5The afternoon sheet will be updated between 13:00 and 14:00
No comments:

Building Blocks - Time

The next building block is Time. Previous examples will be used, so I suggest you read the other two articles about this series: Building blocks - Price, Building blocks - Volume.

 Most people start trading with the knowledge acquired from reading books or a weekend seminar about technical analysis. The first thing they pay attention is price, the second is volume and the last one is time.I say that because this was how I started. We forget the a chart has to axis price and time, so I believe more time should be spend in this topic. Now I usually give all tree of them the same importance because these are the building blocks of value. How value is formed we will discuss on another series of articles. Now we just want to focus on the role of time. Same way we did with Price and Volume, looking to them individually. 

 Quick review: Our Ipad value is U$400 and a deal between a buyer and a seller is closed at U$325.

 Let´s assume that our Ipad Dealer at Apple Market Place or Apple Store decide to make a discount and offers 10 Ipads for U$10. How long would you think it would take them to sell? Anyone passing by would probably buy, and not just one, probably all ten of them. You can keep one and make a profit on the others, U$50, U$100 or even U$325 as it happen on the last deal, as long as people are willing to pay the offer.

 The other scenario, let´s say Apple Store is trying to sell it´s Ipads for U$375 and nobody is buying. We will not analyse why that is happening, but could be another better product in the market, a newer version of the Ipad is to be released or who knows. A couple weeks go buy and no sales, they drop prices again: U$350 and still no buyers. This cycle repeats until the Ipad price is let´s say U$200.


Read more »
No comments:

Trade Review - WFC - April, 12

Stock Selection Information

WFC had an earnings release today. Wells Fargo (WFC): Q1 EPS of $0.92 beats by $0.03. Revenue of $21.3B misses by $0.29B. (PR).

More on Wells Fargo (WFC) Q1 earnings: Loan growth of 4.3% Y/Y. Deposit growth of 6.3%. Net interest margin of 3.48%, down 8 bps Q/Q, down 43 bps from last year. $200M (about $0.04 of EPS) released from credit loss reserves. Bank expects continued releases throughout 2013. Mortgage banking income of $2.8B, off 8.9% Y/Y. Tier 1 capital ratio of 10.38%. Book value/share of $28.27. Shares -1.4% premarket. (PR)





Watch List Reason - Before
Pre-Market Volume - 6%
Trading Plan - Inflection @ 36.75. Could´ve played on both sides. If held below 36.74 short it, if holds above, buy it.

Management

Entry Setup used: Open Range @ support failled to break down, consolidation @ support


Trading Comments

A lot of green prints in the stock as it was falling down, meaning buyers were paying the offers when the stock is below a support. This usually means a lot of interest in the stock.
If the stock were to fall and sellers were in control, one would expect a lot of red prints because sellers would be hitting the bids. This is tape reading being put to use.

Evaluation

I traded the stock really well I think. After that first momentum trade, I could´ve bought it again as it was making newer highs, but there was a close resistance and the risk reward was not so god. Must consider this in other stocks when momentum works. Keep it mind that momentum will work untils it stops working.
Second trade I use the "Easy way in" building into a position.
It is important to know that the stock was trading inside it´s daily range formed at the open, meaning I should have a modest target.

No comments:

Daily PM Prep - April, 12

** Prep for Closing Session **

MARKET CONDITIONS



SPY - After a strong up move yesterday and world markets coming lower today, selling preassure was predictable. As noted in the morning prep, this movement looks more of a pullback. For this to be a fail break, we need prices to go back below 157.25. The longer it takes to go below this level, the less likely that will happen. The chart is already showing some bullish divergence. Considering we just broke up a range  and are in treding up mode, my expectation is the buying preassure to come back. Do not expect the daily range to be broken today to either side.
Bias: Neutral
Accuracy: 100%. The up move expected and the respect for the daily range is great. Bulls still in control.

PM Stock Selection Sheet download - I am only watching half of the list. Already some potential in it.
Updated at 13:45

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:
  1. Educational purpose material only. Use this information at your own risk
  2. Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.
  3. The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.
  4. The morning sheet will be updated between 8:00 and 9:00
  5. The afternoon sheet will be updated between 13:00 and 14:00
No comments:

Daily AM Prep - April 12

** Prep for Morning Session**

MARKET CONDITIONS

World Markets News: Asian markets finished lower today with shares in China leading the region. European markets are also lower today, with Germany leading the region. Markets are lower today. Important to notice that China and Germany are leading. The most strong economies leading the down move is very significant. Retail Sales (MoM) /Core Retail Sales (MoM) to be released today before market opens.

Economic Calendar



SPY - Yesterday´s move was very strong and as long we are above 157.25, today´s move is just a pull back. If below 157.25 and holding, buyers would be trapped meaning a potencial strong short (fail break out). Has some resistances to break before getting to 157.25. Depending o how hard these level are broken, we can identify the potential of a stronger short presence.
Bias: Neutral to Bearish
Accuracy: 100% - As expected a pull back to the previous levels.

AM Stock Selection Sheet download - pre-market volume on the stocks are low.
Updated at 08:15

Want more information about the Stock Selection Sheet?
Legends - Click me
Read this before using the information provided in this page:

  1. Educational purpose material only. Use this information at your own risk
  2. Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.
  3. The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.
  4. The morning sheet will be updated between 8:00 and 9:00
  5. The afternoon sheet will be updated between 13:00 and 14:00
No comments:

Trade Review - FSLR - April, 11

Stock Selection Information

The stock had no relevant news today. It was a second day play as it had an important move 3 days ago.



Watch List Reason - 2nd day play
Pre-Market Volume - N/A
Trading Plan -  Go long above 36.50

Management

Entry Setup used: Open Drive Flag, Pull back and Consolidation play


Trading Comments

Tape reading helped to enter at a very good price in the pull back and I also could feel the buying preassure in it. People were willing to pay the offer to come in. 

Evaluation

The second trade was very well executed, but I had a little trouble building into the position. The fact that I could not get any prints at 37.35 suggested the stock was strong. This is the first time I try building into a position and I like this idea.
You find a level and put the order with a very short stop. If trade start to work, you add another lot on the way up. This way, you have a strong position on the stock if goes in your favor. If not you only losse a few pennies on it.  
No comments:

Building blocks - Volume

The next building block I would like to talk about is Volume. I will continue to develop the idea based on  the same example used in the article: Building blocks - Price. If you did not read it, I suggest you do before continuing.

A quick recap: the example suggested that a buyer an a seller concluded a deal of 1 Ipad at a price of U$325. We also have stated that the Ipad´s value is U$400 (determined by Apple) and it was not changed by this deal because there was not enough volume and there was not enough time.

The questions I ask myself now are: Why value was not changed and would is necessary for it to change? To answer this question, we will have to make some assumptions.

Let´s suppose that before that deal was made, Apple had only sold one Ipad for U$400 and we stop time. Now, you decide to buy an Ipad, how much would you expect to pay? I believe the answer to that is "something between U$325 and U$400". Those are the references you would have after 2 deals.

Starting the clock again, but  this time, the seller is not an Apple as one would expect. It is our Ipad Dealer at Apple Market Place who has the inventory to sell. His price is U$325 and he sells 1,000,000 Ipad for this price. Now Apple comes into the market with the same Ipad for U$400. I believe Apple would have a hard time trying to sell Ipads in this scenario because the perception of value is U$325 and you would have to be a sucker to pay U$400 instead of U$325. For value to shift back to U$400, the dealer must be out of inventory and Apple has make a lot of deals with the desired price to change the perceived value imposed by the dealer.

We now understand how volume affects price and this is what you should take from this. In order for the value the change, a significant amount of volume must be made at a single price. The more volume has happened at a price, the greater the weight it plays in determine the value.




No comments:
Subscribe to: Posts (Atom)