3 Stocks I'm Watching for 7/6/17

Jazz Pharmaceuticals was down slightly today on low volume, but its daily chart looks primed for a breakout above heavy resistance around $160.
I'll be eyeing the $158-$159 area closey in $JAZZ before I put on any position. Biotechs have been hot in the past few weeks, & I'm looking for that trend to continue.

Calithera Biosciences closed at a 52 week high today on strong volume. RSI is still not in the overbought territory (>70) on the daily chart. I'll be watching for a continuation play if it can get above today's high of $17.90. $CALA could also retest it's breakout area of ~$16.50 before it resumes higher.

I'll also be keeping a close eye on the Nasdaq tomorrow (holding overnight positions in both $AMD & $PYPL). The Triple QQQ's have been getting hit pretty hard in the past few weeks after a prolonged period of out performance earlier in the year. It was a nice bounce back today, but 1 day does not make a trend. It will be a healthy sign if the $QQQ can regain & close above it's 8 day EMA around ~$138.25 tomorrow.

US Macro Update - August 15, 2016

SPY Weekly

The $SPY finished slightly higher & with a Doji candle on the weekly chart above.  A Doji candle represents a neutral candle & illustrates the indecisiveness of the overall market.  The market got a big boost from a beaten down retail sector with Macy's ($M), Nordstrom ($JWN) & others beating on  their quarterly earnings.  The $SPY looks good overall with both the 10 Week & 50 Week Moving Averages rising.  I'm waiting for a pullback to the 10 Week Moving Average (~$211) to add to any long positions.

IWM Weekly

The Small Cap Index is looking to play catchup & break out to it's all time highs above $127.50.  The $IWM is still about 4% below it's all time highs, and if this were to happen it would be a very bullish signal for the overall market.  

QQQ Weekly

The Nasdaq chart has the best look of the major US indices.  The $QQQ has gone straight up since the Brexit scare in June.  I'd wait for a pullback to the $115ish area before looking to add to any positions.  

The US Indices all look good at this juncture.  We are pretty much finished with the majority of earnings season at this point.  The market will be reliant on central bank speak/decision-making and economic data in what should be light trading up until after Labor Day Weekend.  I won't be adding to any long positions in the $SPY unless we get about a 2-3% pullback.  

Good luck & God bless!

US Macro Update - August 10, 2016

SPY Weekly

The SPY broke above $213.78 a few weeks back & has held up nicely.  The 50 Week Moving Average is finally perking up for the first time in the past year.  The 10 Week Moving Average (Red Line above) is sitting between $210-$211.  I'll be waiting for a pullback to this area before adding anything to my position.  Overall, it is a very bullish chart.

GLD Weekly

Gold is also still acting very healthy.  The precious metal took a hit on the big NFP/Jobs number last Friday, but this is likely just a healthy pullback before another move higher.  

TLT Weekly

Long dated Treasuries have been a huge performer this year.  They are digesting the recent breakout above $138.50.  As long as it holds the $136.50 area on a closing basis, I like this to also continue higher.  

The US indices are hitting new all time highs almost on a daily basis.  The fact that safe havens like the $TLT & $GLD are still holding up well, gives me pause & is preventing me from aggressively adding to any long term US equity positions.  Overall I believe the US markets look complacent, but like them to continue to grind higher.  

Good luck & God bless!

Taking a Longer Term Approach for Effective Passive Investing

I'd like to introduce the 50 Week Moving Average Strategy to anyone who doesn't want to obsess over each tick of global markets. This is a much more passive approach to investing that utilizes macro investing principles in an effective manner.

The above is a weekly chart of the S&P 500 index dating back to 1999. I used 2 different moving averages in the above chart; the 10 week in Red & the 50 week in Blue. I went back to the year 1999, so that it is easy to illustrate multiple Bear (2) & Bull (2) markets.





Facts about this strategy:

1. If you choose to use this strategy, you will never sell at the very top or buy at the very bottom; however, you will catch the major trends in both directions.
2. You will occasionally get chopped around, but that is where your discipline as an investor comes into play. You must stick with the strategy to make it work & remove all emotion from your decisions.
3. With the use of index funds (i.e. $SPY, $QQQ, $IWM, $FXI, $EEM, etc.), which I highly recommend for this strategy, you will be well diversified.
4. Most index funds pay a dividend. For example, the $SPY is currently paying 2.10% yield at the time of this post.
5. The strategy will beat the market if you stay disciplined.

How the Strategy Works

Its a very simple, passive strategy that will take a max of 15 minutes a week (I know this sounds almost too good to be true, but bare with me). The thought process behind the strategy is to own the market or a particular portion of it when it is acting "healthy." When the market is acting unhealthy, I prefer to invest my money in safe havens such as precious metals & treasuries, but you can choose to keep yours in cash.

1. Buy an index fund that is currently trading above it's 50 week moving average right before the close for the week (I recommend the $SPY). Weekly candles normally will finish completing on Friday's unless it is a shortened trading week. In my opinion, the S&P 500 is the best barometer for the US Market, but if you prefer something different (Nasdaq, Small Caps, China, Japan, Europe, etc.) then by all means choose which one you are most bullish on. Ideally, we are entering a market/index that has been below the 50 Week Moving Average and is crossing above it for the first time in a good while (possible major trend change). This is not a requirement, but you will likely see higher returns &/or get chopped around.

2. As long as the index you bought closes above it's 50 Week Moving Average on a weekly basis, then you do not have to make any changes. It is best to save a chart in any various charting programs available to easily track the weekly market close. I recommend Trading View or Stockcharts.com (both free sites), but any charting program will do.

3. If the weekly candle closes below the 50 Week Moving Average for the index you chose, then sell the full position. At this point you have the option to put your money in safe havens such as Precious Metals or Treasuries (my preferred strategy) or merely leave it in cash.

4. When the index/market regains the 50 Week Moving Average, get back in.

So in summary, you want to be in the market when it is acting "healthy" (my preferred barometer is the 50 Week Moving Average), and out when it is acting "unhealthy." This strategy removes your emotion in investing & completely blocks out the noise and narratives attached to each trading day.

Stocks I'm Watching on Monday, 7/20/15

With the Greek Crisis seemingly behind us & what appears as Chinese market stabilization taking place, the focus has turned to Earnings season in the US. Earnings season has begun with a bang. All of the major banks (JP Morgan Chase, Bank of America, Citigroup) as well as other behemoths like Google & Netflix, have beat expectations by a wide margin. At this point we are almost priced to perfection, as the Nasdaq closed at all time highs on Friday (with the S&P also only nominally below it's all time highs). We aren't technically in the extreme overbought zone on the McClellan Oscillator, but are getting close. I'm leaning slightly bullish, but with a wary eye. I took off all open positions on Friday since I didn't want to carry any risk into the weekend after such a large run up the past 5-6 trading days.

Taser International Inc., looks like it wants to test it's all time highs in the $35-36 range. $TASR popped last week on the Chattanooga shootings & is sitting right below it's breakout range. MACD received a bullish cross on Thursday after the tragedy, Stochastics is pointing up but not overbought & RSI is in a bullish range as well. I like this above $34.25 with a stop placed at $31.70. Earnings are 7/28.

Box Inc. just IPOd back in January of this year, so it is a fairly new issue. $BOX is in the Technology sector, which has been red hot on the backs of the Google & Netflix earnings last week. The chart above shows that there is very firm support in the $16.50-$17 range. It has tested that support area six times & held on each. Recently it has been acting better & closed on Friday at $18.74. I like this above $18.95 with my first target being $20.60. If it can close above $21, it could really squeeze the shorts (over 27% of the shares in float are shorted, which would take over 6 days for all to cover - Short Ratio is currently 6.10). My stop will be placed at $16.35. Earnings are 9/8.

Cal-Maine Foods, Inc. had a major breakout of the $45 area & ran all the way over $60 back in May. $CALM has digested this move for the last few months & now looks ready to retest it's previous highs. It closed Friday right below it's 50 day simple moving average. MACD just had a bullish cross & all other indicators are perking up. I like56 this over $54.10 with a stop placed at $50.50. My first target is $56.

Garmin Ltd. got hammered last Thursday after giving a very disappointing outlook for the upcoming year. The chart above shows that it fell on huge volume Thursday. MACD & Stochastics have a bearish cross & RSI is barely oversold on a very short term time frame. I am looking to sell $GRMN below $42.66 with my stop placed at $43.50.

Best Buy fell a weak sales report last Thursday. The chart shows $BBY tumbled on big volume. Stochastics had a bearish cross & is pointed straight down with RSI just shy of Oversold territory. I am watching to sell this below $32.56 with a stop at $34.40 (right above the gap down & 50 day simple moving average). Earnings aren't until 8/24.