***Note: EWZ all gone at either 36.94 or 36.79-we gave this a lot of time and it just couldn’t get near a breakout-original stop was under 35.50 so reduced risk by ½.
***Please watch all the videos-critical to understanding the picks, how to trade them and when to exit.
The 5 Picks featured for this week:
EEM-Over the weekend I gave you the parameters over 40.30 which clears the 80-month moving average. On Monday, EEM closed on the intraday highs. Good tight risk is to 39.50-if you want to sit, another risk is under 38.71. If haven’t already, can enter between 40-40.30 looking for a target of 44.00-45.00 next-ACTIVATED-Today’s video is on the use of S3 and stops if want to reduce exposure (never took out S3)
URA-Held the 6-month calendar range low at 12.93. A good risk is just under that around 12.89. Monday could be the start of a reversal pattern against the calendar range low. Would enter over 13.40 perhaps a smaller position size. ATR .30 so at 14.00 you can go to a no loss stop. At around 14.50 take first target-STILL ASIDE
DNKN-Saw this reports in the morning. Sent out email. Should now hold around 54.90-55.00 for a swing trade. (Active risk is under 56.00) ATR is 1.00. Would watch for an OR breakout or OR reversal. If this clears 58.00 could see 60.00 (first target for active) or beyond-Big range and turnaround. Would watch to see how this 3x the average range day digests. Will report back on this Monday
FEYE-Reported after close. After hours it gapped up over 12%. If comes in trading above 12.94, watch for an opening range breakout. A gap over 13.20 would clear the 200 DMA. ATR .30 so risk is key. At this point, best risk seems 13.15-13.45 area. ACTIVATED Gapped higher post earnings-had an opening range reversal-if in like stop round 12.50 far and 12.93 closer
SMH-If closed over 80.00, a new active trade with risk to under 79.00 for those who like momentum trades. ATR is 1.05 so the risk should be no more than 1 ½ ATRs from entry over 80.00. Then, at 3 ATRs can take profits and trail stop to under 81.00. Could see 84.50-85.00-ACTIVATED-reduce risk by either putting in a no loss stop or using S1 with fudge. See today’s video
Still activated: GREK IFN. Should be out of SRCL ahead of report if chose to do so. Out of GLD.
If you have questions, please ask me on @marketminute my twitter account
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Existing Position: IFN: Long 1/3 at 21.63 ATR: .43
Name of Instrument: India Fd
Current Price: 26.59
TRAILING Stop: 25.47
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The Five Stages of Herd Disbelief
Why do some cows choose to bask in the sun while others choose to hang in the shade?
Turns out, cows may tolerate heat well, but add humidity to the mix and their comfort and performance declines.
Furthermore, the quality of the shade matters too. Cattle (or the herd) squeezed together for shelter create even more heat and humidity.
Why are some aspects of the market tolerating the heat and humidity while others find more comfort in the shade?
A copy of Market Overview: The Five Stages of Disbelief crossed my desk.
The report states that, “it helps to start at the top with the macro to get an idea of what your background timing is.” Macro Intelligent Report May 3, 2017
In the spirit of the cows who instinctively decide whether or not to use natural shade to escape heat, how do we know when to stay in the sun or run for shade?
The first of the two stages in Five Stages of Disbelief, the market is currently beyond. Seller exhaustion and those who may have initially bought but are essentially now aside. Both stages are driven by bleak social moods of the “herd.”
In Stage Three the cows divide between the sun worshipers and the shade dwellers. Social mood balances out. Bears buy. Optimism emerges. The cows in the sun lay down.
In Stage Four, the social mood increases. The Bears in the sun begin to call a “top” because this strange mood shift to the hotter shade appears delusional to them.
Logical stats may not support the rally. But just like more cows scrunched together in the shade do not support the heat logic, no matter for the Bulls or the cows.
The final Stage, the Bears throw in the towel and buy. Retail investors pile in. The economy begins to run hot. The market becomes crowded.
Like cows huddled together in the shade, buyers may be hotter but could care less because they feel safe inside the closeness of the herd.
What the report suggests rings true. Until you have euphoria strike the herd where all cows believe they will be happier in the shade, the run to it continues.
That makes the remaining cows in the sun the contrarians and the ones in the shade part of the herd mentality.
How can we know when the euphoria abates?
For one, the Economic Modern Family helps a lot. Still divided, if they all decline in unison, watch out. Also watch the unemployment numbers and other leading indicators. Presently, most are still in a strong uptrend.
Secondly, watch investor appetite for junk debt. If smart money runs from high yield junk, warning.
Finally, watch Europe. The French vote this weekend is key. If La Pen wins, Populism has a history of negatively impacting markets.
At some point, the cows in the shade will lose faith. That’s when those in the sun will find themselves the new leaders of the herd.
S&P 500 (SPY) Sideways 239-240 resistance 236.35 key support Subscribers: Positive Pivots in SPY QQQ Negative in DIA IWM
Russell 2000 (IWM) 140 pivotal. 141.50 to clear and 137.10 to hold
Dow (DIA) Resistance at 210-212. 207.40 support
Nasdaq (QQQ) 136 support
KRE (Regional Banks) If clears 55.40 better.
SMH (Semiconductors) 80.00 super pivotal
IYT (Transportation) 161.50 support and through 166 much better
IBB (Biotechnology) Needs to hold 292.25 and clear 300
XRT (Retail) 43.83 the 200 DMA and 42.40 key support
GLD (Gold Trust) 115.55-116 in focus
XME (S&P Metals and Mining) 28.00 interesting support level-if holds will watch for a reversal
TAN (Solar Energy) Nope-could not hold gains
TLT (iShares 20+ Year Treasuries) 120.77 to 120.17 support held. Then, 118 next. Resistance 122.50
UUP (Dollar Bull) 25.50 area support on multiple timeframes. Over 25.66 could see more
EEM (Emerging Markets) Subscribers: Lesson on S3 in video
IFN (India) Subscribers: A nice gain
GREK (Greece) Subscribers: Should hold above 8.70 but lower stop is 8.37.
EWZ (Brazil) Subscribers: Yes, still sideways but we cut the trade
CORN (Corn) Subscribers: Commodities still out of favor
WEAT (Teucrium Wheat Fund): Subscribers: Right back into unconfirmed bearish phase
DBA (PwrShs DB Ag Fd) Subscribers: 19.60 is a good risk. 20.25 resistance
BAL (Cotton) Subscribers: Futures over 80 looks really strong
JO (Coffee) Subscribers: Through 19 better
