Weekly vs. Daily Chart – Which One Wins?
It looks like the market is rolling over on a daily chart and is looking overall bearish. Sami is expecting a selloff this week, but the weekly chart is maintaining an uptrend. Which chart will fail, and which one will prevail? In this video, Sami explains: – Why the market has stayed relatively close to the ATH – When a breakout might trigger in ASPU – How AVIR compares to ARDX – Where he finds most of his swing plays – Which 3 telecom stocks he’s watching
Continue Reading -->Traders Love Gold
The big takeaway in this week’s sentiment survey? Traders love gold! SPX Bullishness Falls Given the emergence of the Omicron variant, it’s no surprise that SPX sentiment fell this week. 58% of traders believe the SPX will rise over the next 30 days, down from 67% last week. Bitcoin Sentiment Remarkably Steady This is the most unusual thing we’ve seen since we launched T3 Sentiment. Bitcoin sentiment has been pretty much dead flat for 3 straight weeks at around 55%. Apple Doubters Just 49% of traders are bullish on Apple (AAPL), the lowest reading since we launched the Sentiment Survey. Traders Doubt Tesla 51% of traders are bullish on Tesla (TSLA), down slightly from last week. It appears that Elon Musk’s controversial Tweets are not helping the stock… Gold Bullishness Skyrockets A whopping 78% of traders are bullish on Gold for the next 30 days, up from just 55% last week. Why? Because of the combination of Omicron fears and rising inflation. Oil Bullishness Slips With oil prices continuing to fall, it’s no surprise that bullishness on oil fell:Save 25% With Our Customer Appreciation SaleClick here to learn more!
Continue Reading -->Scott Redler’s Dog Bytes: How I’m Trading Crypto
SPX futures are -55 and we’ll see if the 4495-4513 area holds. Otherwise the 200 day can’t be ruled out in the sessions ahead. Look at tech for clues today and see if leaders can go green to mute the selling. Cooler heads usually prevail.I don’t think Bitcoin or Ethereum have bottomed. Bitcoin moves fast and also follows active sequences. On 11/9 it gave \ a sell signal around that 69k pivot which was confirmed when $63k broke to get me into 75% cash. It just hit $45k and bounced a bit but I’m still waiting. I’d be interested closer to $42k down to $37.6k if we get a whoosh. I warned that Ethereum is vulnerable and can play downside catch-up after the double top and loss of the 8/21 day near $4250. It broke below the $3960 area but didn’t accelerate lower. I’d be interested closer to $3400ish, $3200ish, and then $2700ish. Otherwise I”ll stay away until I see a more constructive price pattern. I sold more than half of my CRO as it hit .97c. I kept 25% and got filled Friday night into the .40 area. I took most of that off into the .60+ bounce. Be careful! If Ethereum and Bitcoin break this can see the .30’s again which might be a spot to accumulate. WAX was a huge winner. I started at .08. I sold 25% at .74 and another 25% at .97 to get me down to half. Recently, I got very heavy into the .40-.50 area again but was able to trade around that as it hit .73 on the AMZN news. This is still my biggest alt coin. But the market still seems vulnerable so I’m being careful. I’d be interested closer to .35-.42 again if it sees it.Positions Disclosure as of 12/20/2021 at 8:03 a.m. ET
Continue Reading -->Is the Market Bullish Now?
The market had a major reversal last week, and the SPY is now bullish (QQQ is close, but needs to break out more). Which indices should you be watching to determine market movement this week? In this video, Sami explains: – Why FLR is still a long swing idea for this week – What looks good about FULC – Which JXN chart looks the best – Where to find a transition A breakout in MTCR – How to find an entry in a stock like PDBC
Continue Reading -->Apple Bears Were Wrong
Traders came in slightly cautious last week… and it turns out they were wrong. Because the broader markets, led by Apple (AAPL), hit a string of record highs. SPX Bullishness Bounces Back Last week, just 56% of traders were bullish – the lowest reading we’ve had since launching the survey in October. With the market rebounding, bullish sentiment pushed up to 67%. Bitcoin Sentiment Steady Traders remain ambivalent towards Bitcoin, with bullish sentiment at 55% for the second straight week. And as you might expect, the downtrend has traders more wary of Bitcoin. Apple Doubters Proven Wrong Last week, just 53% of traders were bullish on Apple (AAPL)… but the stock proved the crowd was too pessimistic as it hit a string of all-time highs. Bullish sentiment rose to 63% for this week. Tesla Bears Back Off Last week, just 36% of traders were bullish on Tesla (TSLA). This week, that number is up to 54%. Unfortunately, Tesla is selling off today. Gold Flat Gold sentiment is essentially unchanged from last week, with 55% of traders identifying as bullish. Oil Bullishness on the Rise Bullish oil sentiment rose for the third straight week to 64%, even with crude oil slipping.Save BIG With Our Customer Appreciation SaleClick here to learn more!
Continue Reading -->Scott Redler’s Dog Bytes: 6 Big Tech Names I’m Watching
SPX futures are +15. Last week the index digested above the 8 day after reclaiming all the moving averages. We’ll see if it holds 4713 and builds or fades. It’s a tape of “haves and have nots” which has some traders frustrated because only a few names are driving the action. We’ll see if that changes.Now let’s dig into some of the big tech names I’m watching: AAPL got back in charge as it cleared $152 and $157 back in mid-November. It has been special since then. I did well with calls and stock. It got a double upgrade and is above $179.63 this morning. I’d trim into strength and wouldn’t start a fresh long up here because it’s extended. That doesn’t mean it’s an easy short. GOOGL is back above all the moving averages. It held the $2900 area all week. Some are long vs. that range. A close above $2980 opens the door for a test of all-time highs, or even more upside.AMZN is trying to rebuild after holding the 200 day. It’s still not special but the longer it holds the $3410 area, the higher the probability it clears $3549 with the next spot above near $3675. I might put on a macro call spread for late January if this channel finally wants to resolve higher.NFLX lost special status weeks ago. Recently it held the $594 area. Maybe it works vs. $606 for a move to $632, but it’s not very compelling. QCOM has a nice technical set up. Some are long vs. $180 to engage it. Others are waiting for a strong volume move over $188 to break out to new highs. RBLX is getting very loose and wide. We’ll see if it can get tighter and hold the $113 area to get constructive again.Positions Disclosure as of 12/12/2021 at 8:03 a.m. ET
Continue Reading -->When to Exit a Winner
When your trade is going well, when do you get out? How do you know it’s time to book that profit? The answer depends upon the type of trade that you’re involved in. I categorize trades into two groups: with the trend or against it. Watch the video or read on below. What is a trend? An uptrend is a pattern of higher highs and higher lows, while a downtrend is a pattern of lower highs and lower lows. If a stock or index is in an uptrend and I’m long, I would be with the trend. If that name is trading down and I’m buying it, that would be a counter trend trade. I have a different plan for each trade when it comes to exiting for-profit. One of the key things to remember about trends in the marketplace is they tend to last longer than anyone expects. It’s a great rule to assume that whatever trend you’re looking at will last forever, until it shows you that it’s changing. 1) With the Trend Strategies When taking a trade that is with the trend on the upside, my reward is theoretically unlimited, as the S&P 500 has trended higher over the course of its entire history. When taking a trade that is with the trend on the downside, the maximum possible reward is just 100%, which would mean that stock goes to $0.00. When you’re with the trend, look for continuation chart patterns such as bull flags and bull pennants, with all of your moving averages (short and long term) sloped upward in the same direction as the trend. Trailing your stop when you’re with the trend, based on the pivots of higher highs and higher lows, can help you maximize your reward. 2) Against the Trend Strategies If I’m against the trend, I often exit on the way up. When I’m looking for a retracement higher to certain points, I like to utilize an 8 and 21 EMA (exponential moving average) to show me technical equilibrium for any stock or market that I’m looking at. If I’m going counter trend and I get a bounce back to the space between the 8 and 21 EMA, that’s usually a great spot for me to book the majority of my position for a profit. Then, maybe I’ll hold a smaller percentage of it — 10 to 25% of my original core holding of that counter trend trade — just in case that retracement actually becomes a reversal. Managing the Position with Trailing Stops I don’t always want to completely exit out of a position when it’s going in my favor. Rather I’d want to maximize my reward by implementing a trailing stop system for a percentage of my core position. A trailing stop system will allow me to slowly raise my stop, locking in more profits over time. Eventually, when that trend does change, I’ll get stopped out of the position for a win. Ideally, you want to give the name as much breathing room as possible to maximize reward, but always keep the proper stops in place. That’s how you can get the unlimited reward I’m always telling my team to focus on with their trading!
Continue Reading -->How to Think About Moving Averages
Moving Averages are NOT Support or Resistance One of the most common mistakes I see from people who are getting involved in trading is they think moving averages are support or resistance. This is not true. Moving averages are just averages. They’re little squiggly lines in your chart that are composed of the average of the last however many bars the average calculation is measuring. For example, a 20 simple moving average is the average of the last 20 candles, or 20 periods, on the timeframe in which you are looking at. While these moving averages are not support or resistance, they can be powerful tools if you use them correctly. For my own trading, I look at an 8 and 21 EMA (exponential moving average). I also look at 20, 50, and 200 SMA (simple moving average) particularly on larger timeframes. Equilibrium (8 / 21 Exponential Moving Average) The space between the 8 and 21 EMA on a chart represents what I call technical equilibrium for the marketplace or that individual stock. If a stock or market has moved far away from its 8 / 21 EMA, I would consider it to be extended from equilibrium. Understanding extension in markets is really important for evaluating risk and proper entry / exit spots. If I’m buying a stock that’s extended, I’m going to have a worse risk-reward and a lower probability of success on the trade. Pivot Points with Equilibrium (Higher Highs & Higher Lows) I also utilize the 8 / 21 EMA to gauge where a stock might create a higher low. For example, a new pivot point to continue a trend. When looking at an extended stock I think, “alright, the stock here is extended because a lot of momentum came in. I should be patient. Maybe a bull flag comes in, which would be more of a time correction that allows those moving averages to catch up.” Once the moving averages have caught up to price, a trade in that name may have a better risk-reward and higher probability of success. SMA (Simple Moving Average) The simple moving averages I like are the 20, 50 and 200 SMA. I use them on larger time frame charts, such as daily and weekly charts. For me, the most important part about the SMAs is the slope of the moving averages. Are they pointed higher, sideways, or lower? Are they crossing over each other? Or are they all telling me the exact same story, such as a rising 20 SMA above a rising 50 SMA above a rising 200 SMA? The simple moving averages tell me the essence of the trend for that timeframe. There are about 20 trading days in a typical month. If I’m looking at a 20 SMA on a daily chart, the direction of the slope of that moving average tells me the nature of the trend over the course of that last month. The 50 SMA measures about the length of a quarter. I call it my intermediate time frame when looking at a daily chart. The 200 SMA measures around a year. This is a really important moving average. It represents the long term essence of the trend for any stock or market. Putting It All Together If I’m looking at a rising 200 SMA, above a rising 50 SMA, above a rising 20 SMA, I know the essence of trend for every time frame is the same. All are trending higher. Generally, if I’m going long an uptrending stock or market, I’ll have a higher probability of success than if I’m going long a stock trending downward or sideways. Again, the key with these moving averages that people need to understand is they are not support and resistance levels. They are tools to help identify trends on different timeframes. If you can learn to utilize moving averages, they can be very powerful for your trading. They can help you understand risk, reward, and probability of success for any trades you take.
Continue Reading -->What is a Short Squeeze?
A short squeeze is forced buying from short sellers who are already in the marketplace. A short seller is someone who is trying to profit from a stock going down. When buying a stock, the worst thing that can ever happen is that you lose 100%… but in short selling, you have unlimited risk. Stock can go up hundreds or thousands of percentage points – especially if the stock is getting squeezed by forced buying from short sellers. The GameStop Squeeze Short squeezes became in fashion earlier this year in January, with the WallStreetBets Community focusing first on GameStop. GameStop had a short float, a short interest of 140% of the outstanding shares. Due to naked short selling, hedge funds were shorting the stock on the stock without even borrowing it. When the WallStreetBets community recognized that, they all started buying. Their buying caused the stock to go up, resulting in some of the shorts starting to get squeezed. When that happens, you get a virtuous cycle of buying. That’s how we were able to see GameStop go from the price of about $20 to $500 in a matter of days. Other Notable Short Squeezes We also saw short squeezes come into a lot of other stocks – $AMC $SNDL $BBBY $BB. There’s been a constant rotation of these mini short squeezes we’ve been seeing. GameStop itself has had three major squeezes, AMC had two major squeezes. My team and I now are paying attention to stocks that have high short floats. Anything with a short float above 20% is in squeeze territory. Some of those layers of probability also apply. If we’re seeing the heavy volume along with momentum coming in, that could be the beginning of a squeeze. Risks in Short Squeezes Being too late A lot of these companies are not necessarily the best companies out there, fundamentally speaking, and it’s probably why they had really large short interests. Once the forced buying is done, there’s a real risk that the stock can go right back down to its more fair, fundamental value. We want to make sure to get in on the ground floor of that squeeze – getting involved early – before it’s gone up a couple hundred percentage points, and when the technical setup was still there. If not, you risk buying in too late at too high a price and losing the very next day. Secondaries (Capital Raises) An IPO, initial public offering, is when a company’s shares first become available to the public. They can always add on more shares to that IPO by doing a secondary. A secondary offering is when a company decides to utilize their stock price to raise additional funds for the company’s operation by offering out additional stock. Now, let’s think about what secondary offerings mean from the perspective of supply and demand. Demand is coming into the stock, and some of that demand might be from the short squeeze. You also have a limited number of stock supply, which is what we call the stock’s float. Now, when you do a secondary offering, the overall stock float will increase. If you’ve got the same amount of demand, and all of a sudden, you’ve got much larger supply because the float is increased, that stock will most likely go down. AMC’s Secondary Offering That is exactly what happened to AMC. Many people don’t realize that a secondary offering actually caused the top of AMC. AMC had that crazy short squeeze on June 2. It was actually the second short squeeze in the name. In one day, it went from about $35 to $70+. Then they announced a secondary offering the next morning, and the stock went all the way back down to $38. Something to keep in mind regarding a lot of these companies…why were they so heavily shorted to begin with? They’re usually strapped for cash, don’t have strong balance sheets, and possibly even lose money year over year.
Continue Reading -->Probability in the Stock Market
Finding the risk/reward probability of a trade is simple math. But most people don’t talk about the other side of the formula: probability of success. Probability is very dynamic and not as straightforward as risk/reward. In this video, Derrick will walk you through what he calls the seven “layers of probability” – all of the factors that will increase the probability of a successful trade. Get all of these layers in order and you can improve your chances of success.
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