Trix Saying Buy, Not Rushing It This Time

First, I would like to apologize, in my last post, I broke one of the most important rules of technical analysis: Discipline. I tried to be cute and be ahead of the curve, telling you the Trix was saying buy before it really had confirmed it. While it is true that the signal looked good and it seldom gives a fake signal at that point, it id this time. let me remind you what it looked like (You can click on charts to see them better):

sp500

In the blue circle, I show the fake signal that never turned. I assumed that because the daily Trix was turning, that the weekly Trix will follow, but it was not meant to be, there was no confirmation and in a couple of weeks, the Trix turned down and the market followed (or led) for which I apologize.

But, as you can see, the Trix is now giving a buy signal at an even lower level and this time, there is a confirmation, it has turned around (I have actually been watching it all week, but the week closed today and it stayed that way with the string close today). Thus, this time, it is conformed, TRIX says buy and this should take us to the prior levels. At that time, we will see, for now, I see a test of the highs where there is very strong resistance.

You can buy the market, or you can buy individual stokcs. many are turning, but sticking to the discipline, I will only note that have confirmed the buy signal in their weekly charts.

First, one of my usual favorites, $AAPL:

aapl.jpg

As you can see, a very clear signal in the Trix upturning after the stock was beaten down on somewhat exaggerated expectations.

Others giving confirmation:

cbm

$CBM a leader in the previous rise, it dropped quite a bit and now is clearly saying  buy. Or take $NKE, clearly saying buy for a but now:

nke

Or take $PM; old Phillip Morris International, not only showing a strong TRIX, but squeezing and breaking out:

pm

Or, take battered $DIS, a  clear case of sell on the news when the last Star wars movie was released:

dis.jpg

Others are a bit behind, but given the strength (and discipline!) of the $SPX signal, I expect they will confirm in the next week or two.

Hope this time, discipline pays off! If history is any guide, it should!

TRIX Rules, Now What In 2016 For Stocks?

It was very appropiate for me to write the last post, as the TRIX showed once again its power and predicted we were going up short and medium term and that is exactly what happened. and on Oct. 8th., people were really scared. TRIX said: Go for it!

And the market went up with force!

The question is what happens now, almost three months later. Everyone is fairly negative, so I once again turn to the TRIX for wisdom and what I see is fairly positive.

In particular for the S&P 500.

First let’s look at the monthly TRIX for a number of charts. This is really, really long term. For example, the monthly TRIX (red line) for the S&P 500 seems to be turning up as shown in the next graph:

SP500Notice how few monthly signals there are. Two deep ones in 2002 and 2009 and a few clear intermediate ones in 2006, 2010 and 2011. The current one is not yet clear, but if you look at the weekly chart:

sp500wThe weekly TRIX also shows it is turning up, even if it has yet to turn. But if I look at the Daily TRIX:

sp500dThe daily TRIX is turning up, which will drive the weekly TRIX to turn around and so should the market.

Yes, this could all fail, there were two bounces in 2001-2003 that failed, but this is very rare, the higher (much higher) probability is that we will see a short, medium to long  term move up in the SP500, according to the TRIX. That is what the TRIX is telling us at a time of markets being negative, which is very good if you are contrarian.

Now, we all know that the market in the second half of 2014  was driven by the FAANG stocks, which I like to say is the FAANGM stocks since I include $MSFT in the group.So, let’s see what each of them is saying:

$FB Facebok

Monthly:

fbm$FB monthly has not had a very long run. It gave a sell signal in early 2014and a buy in May 2016. The uptrend seems to be intact. Thus, we have to check at the weekly chart to see what it is telling us right now:

fbwWell, as you can see the TRIX is down, has yet to turn, but anytime it has been down like today it has been an opportunity to buy. Thus, I expect from my experience for the TRIX to turn, the daily TRIX (not shown, does not show much, except that the graph shows compressing Bollinger bands.

Let’s look at $GOOG

Well, the monthly TRIX is very nice:

googmit gave a beautiful signal in mid-2015, which has been sustained up to now. The weekly chart is down:

googwBut that is good, if it were up, it would mean the monthly uptrend could be dead. But once the weekly turns, it will certainly continue to go up, just wait for it to turn up.

$AAPL on the other hand is not pretty:

aplmthe monthly chart is not pretty, it is actually ugly, no suggestion that it wants to turn, which contrasts with the market. And the weekly chart is not better:

aaplwThe other “A” in FAANGM, $AMZN is not clear in the monthly chart, it could be toppy:

amznmbut the weekly chart suggests more good times are coming as it has corrected down, but has yet to give a buy, but it looks close. Note in particular, how the scalloped shaped TRIX has guided so well in the jumps so far:

amznwIn contrast, $NFLX is not sending a clear signal on the monthly TRIX:

nflxmbut the TRIX seems to be drifting, very much like it did in 2013, when it was certainly not a sell signal. But let’s look at the weekly indicator:

nflxwwhich is also drifting and telling us very little. Wait for it…

And thus we come to $MSFT, one of the best monthly charts right now:

msftBut the weekly is showing a minor correction on its way to much higher prices ($65?)

Thus, $MSFT and the SPX are showing the best charts at this time. I think $AMZN; $GOOG; $NFLX and $FB, will turn up eventually, the question mark right now is $AAPL. But with the market showing such a strength pattern short and medium term (months) I would not bet against any of them.

As a bonus, one of the strongest patterns I see now is that of Warren Buffet’s outfit $BRK.B, whose monthly looks outstanding:

brk.bmNote how since 1998, $BRK.B a monthly Trix signal has worked well 5 out of five times in 200, 2003, 2005,2009, 2012 and 2014. The sixth time should also be a charm! Base on my experience, this is a powerful signal by the TRIX on this stock.

 

 

 

 

 

 

 

Making a statement as to where stocks are headed

People are scared. They don’t know where stocks or markets are headed. Neither do I. But over the years, I have talked about how useful I have found the indicator called Trix to be. Particularly, when it comes to predicting long term changes in the market.

So, even though the blog has been abandoned for quite a while, here are my two cents: The Trix is saying is time to get back in the Market in on a weekly and monthly basis. In fact, some stocks are giving pretty nice buy signals.

Monthly

First, look at the monthly Trix (red line above) for the S&P (Blue candles) As you can see (you can click on all charts to enlarge graph), it is currently at levels comparable to bounce backs that took place in the past, except for the 2000 bubble and the 2008 financial crisis. Since I don’t believe that we are at a comparable stage, then the fact that the Monthly Trix is at this level, suggests to me we are going to turn soon. In fact, there is even a hint of turning present already. Not compelling? I know it is not, but recall that each candle is one month, this is really a long term indicator.

Why don’t I wait to say anything? Simple, because the weekly Trix, the one I follow the most, has already turned around:

Weekly

and as you can see, the signal has been fairly consistent in the past. This is why I don’t wait the 44 canonical days after a “crash” to call it a bottom.

But you don’t have to rush. According to the daily Trix, we have to rest first, as you can see below:

Daily

the daily Trix is high, suggesting there will be a restful period for 5-8 days before the market resumes its rise.

What to buy?

So many things. Oil stocks, for example, already said buy, like ConocoPhillips (COP):

COP

While tech stocks like Alphabet (GOOG) are barely giving the buy signal now:

GOOG

Buy what you like…I just like the market, thus I am making my statement…

Should You Play Ali Baba?

I am really not updating this blog too much, but since most of the last few posts have been about IPO’s I thought I should say something about the upcoming Ali Baba IPO.

First, the same rules apply. Much like the $FB IPO, what you should do will depend on the first day:

1) If the price “pops” stay with it as long as it keeps above the opening price the first day. If it wilts, get out and wait for a return to that price.

2) If it does not pop, don’t even try it. Wait for it to recover.

What do I think will happen?

I think it will “pop”. There is hype. It is not too expensive. It has real earnings. It has a big “moat” around China. ($FB was not as clear the first day, although it has executed flawlessly)

The problem is, it could pop too much and come back down.

In the long run, $BABA is formidable, it has little competition in China and it will expand all over the world now. Fund managers that like $AMZN; should prefer $BABA with a forward P/E around 30-40, compared to $AMZN’s 200-220. Think about it, $BABA is $AMZN, $EBAY and Paypal combined into one for all of China with over one billion people.

The IPO will start trading on Friday. I expect $90 per share or north of that after being priced around $70-$75.

After that, the market rules and I will update if necessary.

P.S. I should have mentioned that the way to play the $BABA IPO has been thru the $YHOO shares since this company owns 23.5% of $BABA. However, $YHOO is selling part of its stake, so that the pop would have to be large in order for you to benefit if you buy $YHOO shares today

 

 

What’s Up With $TWTR’s shares?

TWTR$TWTR shares have been soaring the last few days. The valuation is simply absurd, but as you can see from the graph, the stock keeps going up day after day. In four days, it has gone up from about $60 to a close of $73.31 today.

The valuation is absurd, but the graph above is the typical IPO graph, in which the stock opens up the first day, goes down, but it is only until it reaches the high of the first and second day that it soars.

And indeed, the day $TWTR went past the $50 of the first day, it just kept going and I suspect it will continue doing so.

Why?

Simple, $TWTR’s float is tiny. Today, 82 million shares of $TWTR traded, but there are only 70 million shares available for trading. So, if 50,000 people and 20,000 institutions decide they want to own 1000 $TWTR shares (and I have had at least four acquaintances ask if it was a good investment), then there will be few shares available for trading and the stock will go up. Like it is doing right now…

Think about it, more and more people want to own 100,200 or whatever shares, they hear it is going up and even more want it. Even if it is absurdly expensive. It may be the beginning of a cult stock and there are few shares to have around.

So, $TWTR goes up, not because of short covering, or because people are speculating, it goes up because its shares are scarce, very scarce.

In fact, the $TWTR IPO has been similar to the $FB IPO; the difference being that $FB did the IPO technical ride up it in slow motion.

A very similar graph occurred with $FB except there were of shares to trade, lots of them, there is almost two billions of shares available for trading. In this case very few shares are available but a sort of cult $TWTR shares is forming.. For those that do not seem the similarity, the FB graph is the same but took a year and a half to do its thing. Sort of like $CUDA, which is doing the same, but very fast.

Here is $FB

FB

So, I think $TWTR will keep going up, and one day it will fizzle, but it seems that that day is not close.

What to do with the Twitter IPO

Everyone wants to know whether the Twitter IPO will be fumbled like Facebook’s. So, I will give you my take:

Read the post on Facebook

and then read this post after Facebook went public, if Twitter goes down on the first day.

The same rules apply: It is expensive, there is hype and you will likely not get any shares before IPO day. So, if it shoots up on day one, you can ride it until it stops. If it goes down, don’t touch it until it comes back up to IPO day trading price.

About the only significant difference between the two is that Twitter will sell fewer shares.

The main difference between the two, is that Facebook was further along the line of generating revenue when it went public and had ore users.

People say the hype is less, but I hear a lot of hype. I hear a lot of “experts” saying that it is cheap, they are excited, etc.

At $17 dollars, Twitter is at what is likely a reasonable price, but I would bet it opens way above that, where it may expensive.

Trade it, don’t buy it…

yet. Like Facebook, there will be a time for that later on.

The Case For the QQQ’s

I don’t like to post a lot. It takes time. It takes research and you need something important to say. Thus, I only post when something unusual catches my attention. And something did today:

The $QQQ

For those that don’t know, the $QQQ is the PowerShares QQQ Trust, a “stock” that trades like a regular share, but “imitates” what the NASDAQ- 100 Index is doing. The idea is that the $QQQ will do exactly what that index does. Index up 10%, the $QQQ is supposed to mimic it and usually does very closely.

Well, let’s look at the daily $QQQ today:

QQQD

As you can see, the $QQQ in the daily chart has all of the important features of a stock that is breaking: Trix daily is on the way up, it is pushing the Bollinger Band and it is breaking resistance.

What is neat, is that the weekly chart is as good or as powerful as the daily chart:

QQQW

Again, the $QQQ in the weekly chart is showing a Trix that is turning towards up (not turning yet, but the daily leads it and it is flat), a stock that is breaking and likely the weekly chart also pushing the Bollinger Band in the next few days, or producing a “squeeze” in Bollinger band terms

What is most interesting about this, is that the $QQQ is not a stock, it is an index composed of 100 stocks. And when you think about it, 100 technological stocks and technology stocks have been in the doghouse for a long time.

So, this looks significant, I think.

It does not mean that you have to invest in the $QQQ, you can look at the components and pick your favorite stocks to follow or trade. If I look at the list, $AAPL, $CELG, $AMZN, $NFLX, $ALXN,$BIDU, $YHOO and many others are doing really well. Or you could go nuts and buy one of those nutty indexes like the $TQQQ, triple what the $QQQ does or the $QLD, double what the $QQQ does. Those are too risky, but the sky is the limit if you are aggressive.

The point is that I think the charts are saying that the $QQQ is turning up, looking good and if you had an investment idea in the technology world, it looks like it is time to go for it, the charts suggest so. If you find a component that looks better than this. Please! Let me know! You can make more money with individual stocks.
Good luck and be careful, this is not investment advice, just letting you know something significant is going on!