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Showing posts from 2019

A Decade in Charts

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The ten years period, from  2010 to 2019, finished and leave us many transcendental changes in different branches, like the economy, technology, work, home, or retail. Let's review those moments through the way we love: charts.
Many of the charts and texts are taken from Morning Brew's daily newspaper, definitely a great weapon for our Wall Street stock trading. Thanks, Brews!











Three Useful Tips When Trading Stocks

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Stock trading, through technical analysis, is an art. There are full of ideas, strategies, and tips for doing it. You need to be alert to all of them and choose the adequate before you trade. Here are some simple, but useful ideas, that can help in your daily work.


1. Fibonacci "Golden Zone"
Traders love Fibonacci retracements. They are easy to learn and draw, and certainly accurate as alert zones.  Obviously, it doesn't work all the time (there's no infallible indicator or strategy), but as many retail/professional traders and big banks use them, its lines become important levels of support/resistance to place or close trades as price reversals can happen there.

But not all Fibonacci levels have the same importance or attention from traders and investors: the area between the 38.2% and 61.8% is called the Golden Zone, since its the most powerful of all.  They are many (payable) strategies on the web, about this zone, all of them based on the same principle: is an ar…

Two Post-Earnings Stocks for December: AMBA and ROST

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In these tense weeks on Wall Street, where on one hand we have the indexes in all-time highs, and on the other a series of fundamental problems (Trade War with no-solution yet, global economic slowdown, possible recession in 2020, negative interest rates, investment of the yield curve, etc.), an attractive investment to refine the short-term side of your portfolio is to observe stocks with good recent earning reports positive ratings from the analysts but, for "strange" reasons (of course, market manipulation from smart-money), their shares can't get a trend, keeping up the expectation to go up.

As I commented earlier, buy and hold a stock before its earnings report is a bet: can be highly profitable or devastating for your portfolio. You decide the risk you face.  Personally, I always prefer to wait for the report, to compare their numbers with the estimates in eps, sales, and guidance, review the conference call for some additional data and see the analyst's action…

Breakout Sectors for next X'mas Rally (if happens...)

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It all depends on Trump-Xi decisions in the next weeks. Let's check some popular sectors with its shares near to make a breakout:

1. Semiconductors ETF SOXX, $234.74

Since May, the popular Semiconductors sector (really a subsector, not properly a GICS sector), followed by the ETF SOXX, was ranging forming an ascending triangle with a strong resistance that finally breakouts last week at $221.40. And was a successful breakout as you verify its daily chart, with its three phases clearly distinguish: action, reaction, and resolution, all of them with its volume requirements. Technically, its shares may begin to rise, despite being in all-time-highs, as all technicals signals are very bullish now. Shares are above the three main SMA averages, above the Ichimoku cloud and its pivot line at $219.26.
But be careful with two details: as usual, the Trade War developments (a bad or no agreement will be devastating for Wall Street), and next Qualcomm QCOM and Nvidia NVDA earnings, two giant…

My Stock Watchlist for November-December 2019

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November- December 2019
On my Thinkorswim trading platform, I manage several watchlists, differentiating them according to the instruments it contains. There are stocks, futures, ETFs, sectors, and indices.

My different ETFs watchlists (not shown below) usually keep the same symbols in time, diversified by sectors, industries, countries, commodities, both at 1X normal speed and 3X triple speed, combining long and short positions. My indexes, sectors, and futures watchlists (also not shown) are also fixed, covering the main index and commodities in Wall Street and major foreign exchanges, the usual managed by all traders.

Those that do change, usually weekly, are the symbols of my Main watchlist, shown below, 18 stocks which I follow on a daily basis, due to my own research, that consider both fundamental and technical analysis, news topics or popularity. Over time, it appears in the list a new stock, disappear other, according to the importance they are acquiring, in my opinion.





Ke…

Are Buybacks driven the Stock Market Rally?

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Definitely, YES. And they have the main credit for the stock market's rally since the 2009 crisis, and especially the latest years as they been reinforced during Trump's government due to the Tax Reform. It is enough to watch buyback' charts prepared by investment analysts to verify it, I add some of them below. 

Briefly, let's define the stock buyback. And what a better way to explain it that Investopedia, which defines that "a buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake." In days of a struggling economy, where get growth and profit increases are difficult, buybacks seem a good reason for companies to artificially inflate their share price.




Example of a Buy…

Gilead, Illumina and Twitter Q3 Earnings this week

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Three companies from my stock watchlist report Q3 earnings this week, all on Thursday 25 at the close of Wall Street's session: Gilead, Illumina, and the popular Twitter.

Traders love earnings' days. It's the right moment in which stocks get momentum and volatility, ideal for a quick day trade or a swing trade. One of the first rules of risk management in stock trading is don't traded longs or shorts before the ER, because it's just as gambling. Don't hurt your portfolio with bets. In that case, better use option spreads like the popular straddle ATM or buy a cheap call (or put) OTM, risking little capital with minimal, but existing, chances of a great profit.

The other way is taken by cautious traders: previously check chart trends, latest news of the company for key data, recent earnings surprise, insider trading, volatility, market sentiment, short-interest, and so. When earnings are published, checks and analyze quickly the main lines of the report (EPS,…

Market Indicators give divergent signals

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Although denied by several media, its macro data and yield curve say so: the US economy is entering a cooling cycle, a slowdown that is not yet a recession. The last data of Retail Sales was devastating: there fell the last hope of a stable economy after the Manufacturing sector's last readings confirm its contraction of several months, while the Non-Manufacturing is in a limit of 50.

While the US and China have achieved a commercial truce, which does not eliminate the uncertainty between the two countries, the above factors probably stimulate the Fed to reduce its interest rate at its next session. Add to this fact, that the end of the stock repurchase blackout is this week (the real engine of the stock rally). All this makes Wall Street live a false illusion today, happy and carefree, hovering around its historical all-time highs. Investors and cautious traders have already become aware of this panorama and are changing their portfolios, not closing positions but being more def…

Volatile days until Trade War meeting this Friday

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After multiple downbeat economic reports earlier in the week, the SP500 SPX finally recovered little to finish the week down only 0.3%, thanks to Friday Jobs Report. Early week, poor numbers out of the manufacturing and services sectors, pushed the SPX down more than 1% for consecutive sessions for the first time this year. Friday’s jobs report showed that the U.S. economy added 136,000 jobs in September which was slightly below expectations, and the jobless rate dropped from 3.7% to 3.5%. This marked a 50 year low in the figure.


ISM index drive the markets
We already knew that the manufacturing sector has been struggling. Still, the ISM came in at 47.8, which is worse than expected. It’s the lowest number in more than 10 years, but not yet a recession (comes below 45). But last week it seems there was a "contagion". The ISM Non-Manufacturing Report was also below expectations. The reading was 52.6, which was the lowest in three years. Wall Street had been expecting 55.…

Rotation: Value Stocks are overperforming in September

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In a week plenty of important economic news (Fed rate cut decision at Wednesday, Trade War concerns, Crude Oil price /CL spike after a drone attack, the recent ECB stimulus, the Friday Quadruple Witching, the huge spike in Repo Market rates yesterday), one is going unnoticed and I think it's crucial for exchanges in the mid-term: the "Great Rotation", as it has already been baptized by investors.

As you know, the Value stocks are those with low PE (Price/Earnings) and very stable fundamentals, and are opposite to the Momentum (or Growth) stocks, more focused on the aggressive growth of its value in the mid and long-term. This last, that have driven the bullish Wall Street rally for almost 10 years, is followed by the iShares Edge USA Momentum Factor ETF MTUMand includes giants companies such as Visa V, Mastercard MA, Microsoft MSFT, Disney DIS, among others. Meanwhile, the value stocks are followed by the iShares Edge USA Value Factor ETF VLUEwhich portfolio contains st…

World Economic News, at a glance

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- Retail Sales just doubled estimates at 0.4% along with a bonus revision in the month previous to solidify the overall staying power of the consumer.
- The good news may be enough to inch the SP500 SPX closer to its all-time high of 3,027.98 which is now less than 20 points away.

- The ECB announced plans to cut its bank rate by 10 basis points to an unfathomable 0.50% yesterday as stagnant growth persists in much of the region.
- Monthly QE purchases will begin in November at a rate of 20B Euros in an attempt to jumpstart the latency.
- European markets appear to be ending the week on a positive note other than the UK which is off modestly as the Brexit hash-out continues.

- Encouraging news on the trade front indicated that China just exempted some agricultural products like soybeans and pork from enforceable tariffs as sure appeasement to further negotiations. The largest soy purchase since June was also ordered which will hopefully open the floodgates to more sizeable purch…

Importance of the Yield Curve

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(Update from August 2018 post)
The Basics:
Mentioned here in several posts, the yield curve, take importance in these weeks because it's reaching a flat level that had not since 2007, with possibilities to invest for 2019, this with clear damage to the stock market. Why? Let´s briefly explain to you.

Understanding how this curve is drawn, its types (normal-reverse-flat-humpback), its inclination (steep or flat) and its relationship with the market, will allow us to make better trades. Also knowing its basic principle: the direct influence of the short-term yield bonds is the i-rate assigned by the FED, while the long-term ones depend, also directly, on inflation and how it is eroding the value of the bonus in time.

The yield curve is formed on an XY chart with the maturity times of the US Treasury Bond on one axis and the interest rates on the other. In an expansive cycle, there is a growing slope, as it is obvious that, at a longer time, higher yield is expected through a higher…

Important FED Speaks this week

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(Update from January 2019 post)

A Hawk and a Dove.
A preamble: a hawk, in monetary policy, is generally in favor of higher interest rates and less stimulus. He believes that inflation is already high and he needs to adjust the monetary policy to avoid it, even at the expense of unemployment, and thus maintain stable prices. A dove is quite the opposite: it prefers to maintain or reduce rates and favors more stimulus because he fears the high rate of unemployment and does not believe that the current inflation rate is high enough to worry about. 

FED Board of Governors
The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the FED. It is charged with overseeing the Federal Reserve Banks and with helping implement the monetary policy of the United States. The Republican Jerome Powell is the current Chairman. The other 15 current members of the Board of Governors, and mainly its position (hawkish, dovish or neut…