The Shakedown 2/9/19

 

Watch Your Pecker! 

Ever since we got those December 26th lows, this market has been sky rocketing higher, giving us a 17% move in a matter of six weeks. We finally saw signs of consolidation from Wednesday to Friday in the broad market as we stalled at resistance and saw some weakness Thursday. I was definitely paying attention to that warning shot. In those two days Wednesday to Thursday I went from about 95% invested to about 30%, taking a ton of profit off the table that I had been riding out. 

So many times in my career I have gone on these runs and gave back 25-30% of my profits trying to push it at the end of the run, which is what I look to avoid now by being extra picky with my setups. 

There are plenty of stocks out there sporting "Mickey Mouse Flags" as Ben loves to call them -- imperative to not fall in this trap. A Mickey Mouse flag could be described as a stock stalling out after a big run and giving signs to take profit -- not to start buying. Many of these names *could* absolutely move higher, but the stocks look tired and the time to be aggressive has been the previous six weeks. You can only focus on the best of the best after the type of market run we've been on and the "meat" of the move is likely behind us.

That doesn't mean there isn't a ton of opportunity out there to the long side, there definitely is. But when the market goes on these types of runs, nearly every chart will have some sort of bull flag on the daily chart. As our lord & savior Jesse Livermore once said, "Not all bull flags are created equal." We only want to buy the best of the best (which is why we focus on stacking layers of probability in refining our watchlists). But don't worry, that's what you got me for.

The good news (for us as traders) about the trade war and these concerns about stocks earnings is that it is much easier to pick out the best earnings names to focus on. I'm sticking to the best charts with the best earnings growth as always. 

Another busy week of earnings ahead of us

Click above for detailed look 

Bear Flag of the Week

WWD Long

WWD just reported some feasty earnings, beating estimates by 30%. As a result, their stock soared the second the report hit the street. In the 8 trading days since the report, their has been consistent buying causing the stock to give us a relatively tight momentum flag after an inside week. Need to see some relatively high volume in this thin name, but I'm watching $91 resistance for an entry.

Trigger: $91

Stop: 88.89

Target: $99-102+

Hope to see you in the chat Monday!
Watchlist coming in the following email.

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