TWTR: 3 Easy Pieces of a Winning Trade | Jeff Cooper
Jeff Cooper’s Daily Market Report In today’s lesson, Jeff discusses a recent trade is TWTR Twitter. Today’s video outlines 3 easy pieces of any winning trade. Stack the right variables and profitable trading becomes a reliable event.Get Jeff’s all-new home-study course Hit & Run Trading 2.0 for free when you start a 30 day trial for just $47.50>> Hit & Run 2.0 Home-Study Course << Get 30 Days of the Daily Market Report Best-Selling author Jeff Cooper
Continue Reading -->Sentiment Report: Are There Still Too Many Bulls?
Last week, the market was in the most boring position possible. Stocks were consolidating and sentiment looked just a tad bearish. So there was no extreme in the technical position of the markets, and no extreme in sentiment either. That mad it hard to have a firm opinion on where things could go. We started the week on a happy note, before the bears took control and put in 4 straight down days. So let’s take a look at our sentiment indicators to see if the bulls are freaking out. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish On Tuesday, February 6, the VIX hit a multi-year high at 50.30. Then it slowly drifted back into a more “historically normal” range between 16 and 20. But it’s hovering around 25 on Friday as the fear gets ratcheted up. The VIX curve is still inverted, with a 3-month spread around -6.00 This means traders are still pricing in significant volatility, which makes sense. Ever since volatility exploded in early February, we’ve seen a huge expanion in range. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 8, which is dowm from 15 last week. This index operates on a 0-100 scale, and a reading of 8 means traders are very fearful (or bearish). 3) AAII Sentiment – Neutral Sentiment among individual investors is turning. The American Association of Individual Investors (AAII) said that 37.3% of individual investors are bullish, according to their latest survey. This is a substantial change from last week, when 44.7% of investors were bullish. The long-term average is 38.4%, so 37.3% is more or less neutral. 4) CBOE Equity Put-Call – Neutral The newest reading of the CBOE equity put-call ratio is 0.72. The 10-day moving average is now 0.623, which is slightly below the long-term average of 0.654. Options traders were insanely bullish from December through early February. Then they got incredibly bearish as markets started breaking down. Now they’re looking modestly bullish. Conclusion Out of 4 sentiment indicators, we have: 1 bullish (flat from last week) 1 neutral (flat from 0 last week) 2 bearish (flat from 3 last week) Sentiment is still modestly bearish. I’d argue that it’s just a little more negative than last week, and certainly not indicative of panic. This is good for the bears. If the market keeps declining, there are still plenty of bulls that can be turned bearish, which could mean more negative selling pressure. The bears should be most excited about the CBOE equity put-call ratio, which indicates a lot of call option demand over the past couple of weeks. Typically, we see very bearish CBOE equity put-call reading around market bottoms, and we’re not even close to that. I’d like to see a 10-day moving average above 0.7, and a 1-day reading over 0.8. An extreme 1-day reading sometimes marks short-term capitulation. Unfortunately, we won’t have Friday’s reading until the evening. So I’ll keep everyone posted Monday morning to see if things change.
Continue Reading -->Trader’s Digest: The 10 Stories We’re Reading Right Now
Wonder what traders are talking about today?We’re here with the top 10 stories we’re sharing with colleagues today, covering topics like:What the Semiconductors Are Yelling Through the MegaphoneS&P 500 Hits Tech-Heavy Milestone Last Seen With Dot-Com BubbleHow to Use Relative Strength for Options/Earnings PlaysAnd more!So check out these links right now and get up to speed: 1) What the Semiconductors Are Yelling Through the Megaphone (T3 Live)Tech leads the market. And the chips lead tech. Right now, they’re sending traders a very important message. Read the Article -> 2) S&P 500 Hits Tech-Heavy Milestone Last Seen With Dot-Com Bubble (Bloomberg)The high-flying technology sector hit a potentially ominous milestone on Tuesday: It now amounts to more than 25 percent of the S&P 500 Index. Read the Article -> 3) U.S. stocks to keep recovering, set to climb 8 percent this year: poll (Reuters)U.S. stocks will build on the recent recovery from a selloff earlier this month to rack up an over-8-percent gain for the year, according to a Reuters poll of Wall Street market strategists, extending a bull run that began in 2009. Read the Article -> 4) Most Current Projects Will Disappear in 5 Years, Says ‘Godfather of Ethereum’ (Bitcoinist)’Godfather of Ethereum’ and founder of Aeternity, Yanislav Malahov, explains why he believes most cryptocurrency projects will fail in the next 5 years. Read the Article -> 5) Scott Redler: Mapping Out SPX and QQQ Resistance on a Tricky Day (T3 Live)T3 Live’s Scott Redler breaks down how he maps out resistance levels for SPX and QQQ on a tough day for the market. Read the Article -> 6) The Fed’s Powell Inadvertently Gave a Rare Stock Tip in His Consistency (USA Today)New Federal Reserve Chairman Jerome Powell has given his first testimony before the House Financial Services Committee. Investors who were listening carefully got a rare stock tip from him. Read the Article -> 7) How to Use Relative Strength for Options/Earnings Plays (T3 Live)In this options trading lesson, Daniel Darrow reviews an options play in Dillard’s (DDS). Algo, learn to use relative strength/weakness to know which stocks to play. Watch the Video -> 8) Why Broadening Formations Are Your Key Guidelines for Profit-Taking (T3 Live)Rob Smith reviews Broadening Formations in multiple time frames, and shows us how they should be your main guidelines for profit-taking. Watch the Video -> 9) Porsche opens up about the electric Mission E, takes jab at Tesla (AutoBlog)Porsche is readying its Mission E for launch, with a 2019 target sales date. The all-electric Tesla Model S competitor has a lot of car fans excited, and has been drawing covetous looks since the concept’s unveiling back in 2015. Read the Article -> 10) The Mentality It Takes to Achieve GreatnessGet inside the mind of the notoriously competitive Kobe Bryant.
Continue Reading -->Sentiment Report: Volatile Markets, Neutral Traders
In last week’s sentiment report, traders were somewhat fearful, even with stocks rising like a phoenix off the February 9 low. Since that low, we had: -6 straight days up with markets finishing near the highs each day -2 down days -1 anemic up day with a finish near the day’s lows So let’s measure how traders are feeling in this new age of volatility. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish On Tuesday, February 6, the VIX hit a multi-year high at 50.30, and it’s slowly drifted back under 20, which puts it within range of historical norms. The VIX curve is still inverted, with a 3-month spread around -1.5. This means traders are still pricing in significant volatility, which makes sense. Ever since volatility exploded in early February, we’ve seen a huge expansion in range. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 15, which is flat from last week. This index operates on a 0-100 scale, and a reading of 15 means traders are very fearful (or bearish). This is a shocking change. Fear & Greed was at 76 just a month ago. 3) AAII Sentiment – Bullish The American Association of Individual Investors’ Sentiment Survey shows that 44.7% of those surveyed are bullish. This is down 3.8% from last week’s 48.5% reading. The long-term average is 38.4%, so we’re back in bullish territory. But keep in mind that AAII sentiment tends to lag the action a bit. It was pretty neutral for most of 2017, even with markets hitting one record high after another. 4) CBOE Equity Put-Call – Neutral The long-term average of the CBOE equity put-call ratio is 0.63. The 10-day moving average is now 0.662, which is basically in-line with the long-term average of 0.654. Options traders were insanely bullish from December through early February. Then they got incredibly bearish as markets started breaking down. Now they’re looking neutral. Conclusion Out of 4 sentiment indicators, we have: 1 bullish (flat from last week) 1 neutral (up from 0 last week) 2 bearish (dowm from 3 last week) Ack! We’re in the most boring positions possible. Stocks are consolidating and sentiment looks just a tad bearish. There’s no extreme in the technical position of the markets, and there’s no extreme in sentiment either. That makes it hard to have a firm opinion on where things can go from here, but here’s an ideal possible scenario for the bulls. We keep bouncing sideways for the next month or so, perhaps between 2660 and 2760, with several breakdowns and breakouts that don’t have follow-through. If that happens, perhaps bearish sentiment will build up to provide the market with upside fuel for a breakout back towards the 2872.87 high. On the flip side, the best scenario for the bears would be a slow, ugly descent before a major break below the SPX’ 200 day moving average, which was lost and then quickly reclaimed on the big 2/9 rebound day. Here’s an SPX chart laying out these levels: Another thing to wonder about is whether we’ve set a higher baseline range for the VIX. As you can see, it spent an awful lot of time between 9 and 15, which was outrageously low. It will be interesting to see if traders price in a “closer to normal” range for expected volatility. (Related: Primer on the VIX)
Continue Reading -->Trader’s Digest: The 10 Stories We’re Reading Right Now
Wonder what traders are talking about today?We’re here with the top 10 stories we’re sharing with colleagues today, covering topics like:Using Classic ‘Tape Reading’ Skills with NVDAWhy the Stock Market Is Ignoring Strong EarningsA Top Trader’s Most Accurate StrategyAnd more!So check out these links right now and get up to speed: 1) Using Classic ‘Take Reading’ Skills with NVDA (T3 Live)Expert trader Jeff Cooper shows you how a ‘Lizard’ sell signal in the SPY gave us a nice setup in leading semiconductor name Nvidia (NVDA). Watch the Video -> 2) Art Cashin warns there’s a chance the market could retest February’s correction lows (CNBC)Wall Street vet Art Cashin warns that there’s a chance the stock market could retest the massive lows seen earlier this month. Read the Article -> 3) The stock market is ignoring ‘one of the strongest earnings seasons on record’ (Marketwatch)Investors may not be paying enough attention to one of the most significant – and most positive – trends in the economy. Read the Article -> 4) Risky Crypto Bet Blows Up Dennis Gartman’s Retirement Account (Bloomberg)Making big bets on speculative assets with retirement money is something most advisers warn against, but Bitcoin fever is prompting all sorts of puzzling decisions. Read the Article -> 5) Inside Ifan Wei’s Most Accurate Strategy of 2017: ‘The Gap Bully and Gap Bury’ (T3 Live)Black Room Moderator Ifan Wei describes how an idea developed into his most accurate strategy for 2017 Read the Article -> 6) Dow Theory shows market turmoil isn’t signaling a coming crash (USA Today)Panic is a bad investment strategy. Yet that is exactly how many investors reacted this month when the stock market dropped precipitously. Read the Article -> 7) Trading LRCX with the Time Frame Continuity Strategy (T3 Live)In this Quant Edge lesson, Rob Smith discusses the rotation into the semiconductor stocks, and reviews a day trade in Lam Research (LRCX). Read the Article -> 8) Wall St. climbs as tech stocks, Amazon gain (Reuters)The Fed left rates unchanged at the January meeting, but investors will look for its opinion on inflation and interest rates, especially after strong economic data raised concerns of an overheating economy and triggered the recent selloff. Read the Article -> 9) Apple in Talks to Buy Cobalt Directly From Miners (Bloomberg)Apple Inc. is in talks to buy long-term supplies of cobalt directly from miners for the first time, according to people familiar with the matter. Read the Article -> 10) What Successful People Do Every DayLearn what successful people do that others don’t.
Continue Reading -->The Gap Bully and Gap Bury | Black Room Lessons | Ifan Wei
Black Room LessonsWith Ifan WeiIn today’s lesson Ifan teaches one of his top strategies: The Gap Bully and Gap Bury. — This is an interesting lesson because Ifan describes how an idea developed into his most accurate strategy for 2017. — He walks us through the criteria for the setup and gives multiple examples from the month of FebruaryJoin Sami and Ifan in the Black Room Just $7 for Your First 30 Days Watch today’s lessons then join the Black Room for 30 daysSami Abusaad Black Room
Continue Reading -->Sentiment Report: High Fear, Higher Stocks
Last week, following the explosion in market volatility, the bulls were finally brought down to earth after 13 months of straight-up action. In January, sentiment was as bullish as I’ve ever seen it in my 14 years of watching the market. Now, traders are clearly more fearful, even with 6 days of bullish buy the dip action. Let’s dig into our handy dandy sentiment indicators so you can see just how much things have changed. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish On Tuesday, February 6, the VIX hit a multi-year high at 50.30, and it was around 30 last Friday morning. But with stocks rebounding hard this week, the VIX elevator dropped down hard. As of late Friday morning, the VIX was around 18, right in-line with historical averages. The 3-month VIX spread is right around 0 now. This means traders are still pretty bearish. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 15, up from just 8 last week. This index operates on a 0-100 scale, and a reading of 15 means traders are very fearful (or bearish). This is a shocking change. Fear & Greed was at 76 just a month ago. 3) AAII Sentiment – Bullish The American Association of Individual Investors’ Sentiment Survey shows that 48.5% of those surveyed are bullish. This is up huge from last week’s 37% reading. The long-term average is 38.4%, so we’re back in bullish territory. 4) CBOE Equity Put-Call – Bearish The long-term average of the CBOE equity put-call ratio is 0.64. And from December 7, 2016 to February 1, there wasn’t a single day above that long-term average, which means there was an above-average level of call buying. The trend changed on Friday, February 2. Since then, the CBOE equity put-call has averaged 0.716, which means a sudden increase in demand for put options. So options traders went from incredibly bullish to moderately bearish. Conclusion Out of 4 sentiment indicators, we have: 1 bullish (up from 0 last week) 0 neutral (down from 1 last week) 3 bearish (up from 0 last week) Things have changed, and traders are presented with quite the interesting pickle. Sentiment has changed so much in the past 2 weeks, and it’s evident that fear levels are very high. Traders are freaked out, and perhaps rightly so. We went an eternity without a real pullback, so it could be argued that we should have had a bigger one. However, Friday marked the 6th straight day of buy the dip action, and the VIX is back to normal levels. This is is right out of the 2017 playbook. That was when it made sense to buy every single dip, regardless of the news and the ‘feel’ of the market. If you didn’t comply, you sat back and watched the train leave the station with all the money, every single time. The big question now is this: is the sudden rush of negative sentiment a sign that there is sufficient buying power on the sidelines to keep the market going? And if the SPX keps going to say, 2800, will buyers rush because of the greatest fear of all? You know, the Fear Of Missing Out.
Continue Reading -->Level Two Scalping Method | Black Room Lessons
In today’s lesson Sami Abusaad reviews an old-school trading style known as “level two” trading. This method was the primary trading strategy for most prior to stocks changing to decimals.Does this “scalping” method still work? Sami says YES, and he shows you how to use it.
Continue Reading -->Trader’s Digest: The 10 Stories We’re Reading Right Now
Wonder what traders are talking about today?We’re here with the top 10 stories we’re sharing with colleagues today, covering topics like:Trading the VXX Explosion with Options in PlayIs Somebody Rigging the VIX?Today’s Hot Inflation Report, and What It Could Mean for the FedAnd more!So check out these links right now and get up to speed: 1) Trading the VXX Explosion with Options in Play (T3 Live)In this options trading video lesson, Daniel Darrow explains why the VXX explosion should not be a surprise. Watch the Video -> 2) What If Somebody Really Is Gaming the VIX? (Bloomberg)The claim sounds dubious: the VIX, that index at the center of the stock market’s wild gyrations over the past week, is somehow being manipulated. Read the Article -> 3) U.S. inflation firms broadly in January, puts spotlight on Fed (Reuters)U.S. consumer prices rose more than expected in January, with a measure of underlying inflation posting its biggest gain in a year, strengthening expectations the Federal Reserve will have to quicken the pace of interest rate increases this year. Read the Article -> 4) Boeing and these other Dow stocks outperform when inflation is running hotter (CNBC)Boeing and Apple are among the top performing components of the Dow Jones Industrial Average one week after inflation readings come in greater than expected, history shows. Read the Article -> 5) Jeff Cooper’s SPX Momentum Targets (T3 Live)Jeff gives us profit targets on recent SPX momentum trades on the long side. Read the Article -> 6) Coincheck Exchange Sees $373 Million Withdrawn in One Day (Coindesk)Japan’s Coincheck exchange reinstated Japanese yen withdrawals yesterday and investors are already flocking to take out their funds following the firm’s recent hack. Read the Article -> 7) How I Called the Friday Market Bottom (T3 Live)Learn why this top trader called the bottom last Friday, and how to know if it will stick. Read the Article -> 8) If you’re under 40 you should be hoping for another stock plunge, says pundit Josh Brown (LA Times) It’s normal in that pretty much 5% and 10% corrections are an annual event if you look back through history. What’s abnormal was the speed with which this one happened. Read the Article -> 9) Google’s Chrome ad blocking arrives tomorrow and this is how it works (The Verge)Google is enabling its built-in ad blocker for Chrome tomorrow (February 15th). Chrome’s ad filtering is designed to weed out some of the web’s most annoying ads, and push website owners to stop using them. Read the Article -> 10) How Elon Musk Improves His Odds of SuccessLearn why Elon Musk doesn’t believe in wishful thinking.
Continue Reading -->Sentiment Report: The Fear Factor
It took a while, but the bulls were finally brought down to earth after 13 months of straight-up action. And sentiment was remarkably positive from December 2017 until last Friday when volatility exploded, leading to the VIX spiking over 50 on Tuesday morning. It’s common for the market to top out when sentiment gets to extreme levels. But it actually took 2 whole months for that to happen during this once-in-a-life-time stretch of happiness! Now, let’s take a look at how the mood has changed using our handy dandy sentiment indicators. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish As of Friday morning, the VIX was hovering right around 30. It was actually under 10 in early January, so this is a major change. And the 50.30 spike high matched the 53.29 high set in the August 2015 mini-crash. The 3-month VIX spread is completely blown out at around -10. This means traders are very bearish and expect a lot of volatility. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 8, down from 59 last week. This index operates on a 0-100 scale, and a reading of 8 means traders are very fearful (or bearish). This is a shocking change. Fear & Greed was at 76 just a month ago. 3) AAII Sentiment – Neutral The American Association of Individual Investors’ Sentiment Survey shows that 37% of those surveyed are bullish. This is down from 44.7 last week. The long-term average is 38.4%, so this is basically neutral. Interestingly, this indicator was mostly neutral in 2017, and only turned bullish in January 2018 — implying that individual investors were a bit late to the party. 4) CBOE Equity Put-Call – Bearish The long-term average of the CBOE equity put-call ratio is 0.654. And from December 7, 2016 to February 1, there wasn’t a single day above that long-term average, which means there was an above-average level of call buying. The trend changed on Friday, February 2. Since then, the CBOE equity put-call has averaged 0.736, which means a sudden increase in demand for put options. A single-day reading around 1 would indicate extreme fear, and we’re not even close to that yet. In the past 5 days of volatility, the highest reading was 0.77. So options traders are bearish, but only moderately so. Conclusion Out of 4 sentiment indicators, we have: 0 bullish (down from 4 last week) 1 neutral (up from 0 last week) 3 bearish (up from 0 last week) On October 6, I made the following melodramatic declaration: Let’s not mince words: the bulls are clearly insane. They think they’re destined to ride into the sunset on a magic carpet made of cold hard cash. I can see both sides of the coin here. The bulls may be insane… but they may also be right. Timing market turns based on sentiment indicators is awfully tricky. And remember, the trend can go on a lot longer than may seem reasonable. I threw in that sentence “Timing market turns based on sentiment indicators is awfully tricky” for a very good reason. These indicators are for color. They are only one part of the investment process, not signals on their own. Turns out that sentiment indicators were not very helpful in calling the 2018 top, because they’ve been very bullish since early December. So unfortunately, they may not be helpful in calling the bottom either!
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