Showing posts from February, 2019

Identifying Breakouts and False Breakouts

Breakout Traders.

After years of reviewing investing blogs, and sharing experiences and trading styles in chats with colleagues with a lot of trail in this world, I'm sure that (one of) the most popular traders are the "breakout traders". This is a type of trader who uses technical analysis to identify high conviction breakout patterns that can profit on bullish rallies or bearish downtrends. They use popular patterns as the Bohlinger Bands, wedges, head and shoulders, etc to find breakouts that happen at support and resistance levels. Personally, I prefer the most powerful of all: the horizontal lines, support and resistance levels. Yes, simply: price levels.

All traders (day, swings, investors) are exposed to a false breakout or a whipsaw. Markets have many false breakouts below support and above resistance, with prices returning into their previous "range zone" after a brief violation. Whipsaws happens when a sharp price movement is quickly followed by a sh…

Bonds: the most attractive market today

(Update from August 2018 post)

Undoubtedly, for a trader, the most attractive market to follow since June is the primary one, of fixed income or debt issuance. Thus, today in Europe, a weak auction of French bonds deepened the fall in the price of these, raising its yield 10 points. The same happened in Germany (9 points), the United Kingdom and Spain. The Bund, a 10-year German bond, the European benchmark for this market, comes with its yield up more than a week ago, reaching its maximum in 18 months, this since Draghi made his hawkish comment on European bonds.

The truth is that it is already necessary for the health of the European market that this immense debt be deflated, I had already commented it months ago here, but the disaster can take on epic dimensions. After seeing his ambiguous minutes today, it remains the feeling that the ECB does not have total control of the situation ... very dangerous.

In the US, by contagion, its counterpart TNX follows the same bull path. We will …

In my Radar for February: CREE, MRVL, UBNT

Market Pulse.
Despite world economic slowdown, the rally continues unstoppable in Wall Street, and now the SP500 SPX is testing its important SMA200 average, that probably crossovers these days due to the crazy momentum it's having for near six weeks. Isn't clear why but the rebound is powerful. Seems that the US government shutdown ends for now, Powell and the more dovish FED, and the slow advances in Trade War negotiations are enough arguments for the stock market to climb 16% since its bottom in December 26th, overcoming the 61.8% of its Fibonacci, and definitely enter in bull territory. Time to check some stocks of my February' watchlist.

1. Cree Inc. CREE, $51.87

2. Marvell Technology MRVL, $18.31

3. Ubiquiti Networks UBNT, $109.59

Interesting ETFs for 2019: HYG, EEM, FXB

1. High Yield Corporate Bond ETF HYG, $84.41.
In the present scenario of global economic slowdown, some signs of a recession (for example, yield curve investment) are appearing in the US. The FED finally understood it and adopted a sudden and strong tone dovish for this year, so many analysts in wall Street estimate that this year it's possible not to give any Rate Hike. This would be very beneficial for the bonds, of all types, ratings and maturity: the short-term ones that depend on these rate increases and the long ones that do so on inflation, which is expected to be slowed down with this probably decision of the FED. This week is the FOMC meeting and it must give its first announcement of the year, and most important, the guidance for 2019.

For risky or less conservative traders, high-yield corporate bonds, or junk bonds, followed by the HYG ETF, are a good option for their portfolio, since this fund take a universe of several BB to Ba rating companies that relieves us of th…

My Stock Watchlist for February 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 ETFs watchlists (not shown) 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 shorts positions. My Indices, sectors, and futures watchlists (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 permanently (usually weekly) are the symbols of my stock watchlists, shown below. I divided them into two groups for follow-up: Main15, which I follow on a daily basis, and Active, important stocks to follow due to news topics, popularity, unusual volume in shares or options, or huge changes in price or volatility. Over time, appears there a new stock, disappear other, some ascend to Main…