Quick Post on YAHOO! ($YHOO)

Everyone is talking about YHOO & AAPL this week.  As you may have noticed, my last couple of posts have focused on the trend lines in weekly charts.  For a change, here is a quick post on an hourly chart of YHOO.

YAHOO!  (YHOO)

Here is an HOURLY chart of YAHOO!



Click the chart for a larger chart of YHOO



• Remember this is only an hourly chart.  Why would I repeat myself?  Because an hourly chart gives very short term signals that may not last very long.  But the trend lines look the same on short term charts and long term charts.  Just remember where your signal came from and you will be ok.

• Inside the shaded box - Notice that YHOO crossed above the red DT line yesterday afternoon.  The opening candle of today tested the red DT line but didn't break it.  That was a good indication that it could be bought.  Small size initial position was prudent.  The opening candle high of today also matched the top of a candle from yesterday afternoon.  So that tells us there is some resistance at $43ish.

• UT 1 has been a good trend for a week now.  I like it as my "line in the sand".  But it is interesting to note that, after yesterday's low, UT 2 began to take shape.  It is well defined at this point and can be used as a "tight stop". 

• Although these are short term signals only to be used for short term trades.  If you want to try one you could go long close to but above UT 2 and use UT 1 or UT 2 as your stop.  If the trade doesn't work out just get out of the way.  If it does work out, you may have a descent winner on your hands.

• Things to look for...  There is resistance at $43ish so expect some turbulence there.  The price of YHOO has to stay above UT 1 to stay in the trade.  Once YHOO gets above $43, I would expect it to go to $44ish.  There may be some turbulence there too as it would match the high from a couple days ago.

Trade What You See...  Not what you think, or feel, or hope, or ...

The Trend Is Your Friend... Until Its Not

Protect Profits & Limit Risk

Z, WFM, TRIP, AMZN, TSLA, AAPL : Selling Short & Buying Puts - Sept 12 Update

Let me begin this post by saying THANK YOU!

 

Last week's post was the most read of any of my previous posts.  I have to be honest, I am not sure why.  But none the less, I am thankful that so many of you took the time to read the post.

 

If you want to read last week's post, click here

 

I am going to update all the charts from last week and add a couple more.  I watch about 45 stocks each week.  So there is plenty to choose from.  I really love investing and I love sharing what I see.  I hope what you read here helps you in some way.

Zillow (Z)

 

Here is a Weekly Chart of Zillow

Click the chart for a larger chart of Z

Last week I talked about the weekly candle closing below UT 2 and that it may indicate lower prices for Z.  We did see lower prices for Z this week.  This week's candle closed right at the 21 week exponential moving average (ema).  Remember that moving averages are places where prices can turn around.  So be ready just in case.  Use stops to limit your risk.  Since we are talking about following DT 1, it makes sense to have a tight stop at $133ish and a line in the sand at $137ish.

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Whole Foods Market (WFM)

 

Here is a Weekly Chart of Whole Foods Market

Click the chart for a larger chart of WFM

Last week I gave some levels to watch and use as stops if you think WFM is going lower.  Everything still looks good.  Stick with the plan. 

• WFM is going sideways for the most part and has been doing so since the big drop in price a few months back.  Sideways movement is "consolidation" or indecision on the part of investors.  For whatever reason, there are investors out there willing to buy at $36ish but feel compelled to sell at $43ish.  You could always just play along while it goes sideways in the channel.

• It is noteworthy to mention that WFM has been making steady gains over the last several weeks.  But this week was a red week.  I would also point out that WFM broke the most recent uptrend line (not shown) that started at the beginning of August.  This could be a sign that we will see $36ish sooner rather than later. 

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Trip Advisor  (TRIP)

Here is a Weekly Chart of Trip Advisor

Click the chart for a larger chart of TRIP

 

TRIP doesn't look quite as negative now as it did last week.  It is still below UT 1 but it saw lower prices during the week and then was able to recover from them to close near the highs. 

 

• One thing to note is the high of this week never got as high as the previous week.  Yes it was only $0.23 away.  But it is a moral victory if nothing else.  Lower highs & lower lows are important if your are betting TRIP will continue lower.  TRIP is still below DT 1 so feel free to play it to the down side.  Just remember to use stops to limit your risk.  I would have a tight stop at $100ish (top of the 9/5 candle) and a line in the sand at $102ish (half way up the 8/29 candle).  If it tests DT 1, you may have another opportunity to play TRIP to the downside.  If it goes through DT 1, you still have $ to begin a long position. 

 

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Amazon  (AMZN)

 

 

 

Here is a Weekly Chart of Amazon

 Click the chart for a larger chart of AMZN

 

 

I feel like I cheated all the people who read last week's post because I didn't include this chart. 
I talked about it but that was all.  Here it is in all its glory.

 

• This chart is one of my favorite charts at the moment.  It is a clear example of  UT vs DT.  Which will win?  Say what you want about AMZN but the price has gone up for two years!  It is hard to argue with that.  If you like fundamentals, you probably have many arguments about AMZN.  Remember, I am a technical investor.  I trade what I see.  At the moment, the only thing I know it AMZN's price will break either UT 1 or DT 1.  When it does, I will be ready to follow it.  Which way?  It doesn't matter.  I know how to make $ either way :).

 

• Speaking of trading, I want to remind you that speculating is not technical analysis.  If you buy or sell short now, while AMZN is between UT 1 and DT 1, you are speculating.  Technical analysis says wait for a break above DT 1 to go long or wait for a break below UT 1 to go short.  I encourage you to wait...

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Tesla  (TSLA)

 

Here is a Weekly Chart of Tesla

Click the chart for a larger chart of TSLA

 

TSLA : Too far too fast.  The multiple is unsustainable.  The valuation is absurd.  Even Elon Musk is cautioning investors that, in the short term, TSLA's stock price may be too high...

 

• Everything in the previous paragraph is a "fundamental" view of TSLA.  Technically, if you bought TSLA in early 2013 you are VERY happy!  Now "technically", how do I get into TSLA so I can get happy too??

• TSLA is obviously following an uptrend line (UT 3).  How long will it continue?  No one knows.  But if you want to try to "get happy" you could begin a long position right here and stay in it as long as TSLA stays above UT 3.  You will need a tight stop because if TSLA closes below UT 3 it could go to UT 2.  If it gets there, I would rather lose a little bit of money with a tight stop at UT 3 and then retry a long position at UT 2 instead of being way underwater at UT 2.  A $40 loss is never a comfortable position to be in.  UT 2 is $40 below UT 3 at this point...

• Another feather in the cap for anyone who wants to be long is that TSLA closed above "all time highs" 3 weeks ago (on the 8/29 candle).  Many times, when a stock closes above all time highs, it will continue higher. 

• One more thing about TSLA.  Notice that this week's candle is "inside" the previous week's candle.  So if it gets above this week's high of $285.49 you can expect it to go higher.  If TSLA goes below this week's low of $273.66 you can expect it to go lower.  Remember there are no guarantees in investing.  But the "inside candle" rule is a great indicator.

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Apple  (AAPL)

 

Here is a Weekly Chart of Apple

Click the chart for a larger chart of AAPL

 

 AAPL is a great example of a stock in an uptrend.  How can I say that if there are no trend lines drawn on the chart? 

• Let's talk again about moving averages.  There are 4 of them on this chart of AAPL.  They are the 8 exponential moving average (ema), 21ema, 50ema, and 100ema.  If you are long a stock, the moving averages should be in order.  The 8 above the 21, the 21 above the 50, the 50 above the 100, and the 100 above the 200 (not shown).  This is a weekly chart so these moving averages are "weekly moving averages".  As opposed to daily moving averages or hourly moving averages. 

• Starting in May of this year, AAPL's chart turned a corner.  Although the moving averages have been properly aligned for almost a year, the price of AAPL didn't give a clear picture.  Notice that the price has closed above the 8 week ema every week.  There have been a couple weeks that closed right on the 8 week ema, but those were just great buying opportunities.  This week we see the same scenario.  AAPL closed right on the 8 week ema.  If you wanted to get long AAPL this may, again, be a great time to do so.  IF the stock price reacts like it did in the past, we should see higher prices next week.  Remember, the past is not always an indicator of the future...

• If I started a long position here, I would have to be willing to lose a little money and sell if the stock closed below the 8 week ema (currently $98.81).   If a new long position didn't work out right here, I would probably wait for AAPL to close around the 21 week ema.  Then I would try again.  Remember, stocks can turn around wherever they want.  Moving averages are potential places but there are many others too. 

• If you are one of those who is thinking about playing AAPL to the downside, you could try it after the price closes below the 8 week ema.  At that point you should be able to draw a DT line and use it as your stop.  You could also use that same 8 week ema as your stop.  This is just my opinion but there is a lot going on with AAPL right now that is potentially positive.  Personally, I would be hard pressed to try a short position.  I think I would rather stay away from the stock versus shorting it.  By the way, I don't use an iPhone.  So that is not clouding my judgment.

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Trade what you see... Not what you think, or feel, or hope, or ...

The trend is your friend... Until its not

Limit risk & protect profits

 



Z, WFM, TRIP AMZN : Selling Short & Buying Puts

Let me begin this post by saying I am not making a call on the market.  Nor am I saying that any of these companies are beginning a long downturn.  But they might be...

I will also say that many investors seem to feel like this rising market is getting long in the tooth and many are asking for a small correction for overall market health.  Some are predicting large corrections and some are predicting doom & gloom.  If any of these scenarios come to pass, stocks will go lower.  Weakest stocks will fall the fastest.  Weakest stocks during a correction are typically weak stocks in a rising market.  This post talks about 3 weakening stocks in a rising market.

All charts are weekly charts so they do take a longer time to show changes.  Take that any way you want.  Technically, these stocks currently  look like they are going lower from here.



Zillow (Z)

Here is a Weekly Chart of Zillow

Click the chart for a larger chart of Zillow

When I draw my trend lines on my chart, I see that the last candle closed below the uptrend line (UT 2) that started in May and has held ever since.  If I am right about Zillow, next week's candle has to close below this week's candle.  If you want to try a short position or puts, you can start your position now and keep it as long as Z is below 140ish.  Please use a stop of $140ish or $144ish to protect yourself.



Whole Foods Market  (WFM)

Here is a Weekly Chart of WFM

Click the chart for a larger chart of Whole Foods Market

 

In October of 2010, WFM began an uptrend line that lasted until April of this year.  For the last year, since April of 2013, WFM followed an accelerated uptrend line which ended in November of 2013. 

If I were long WFM, I would like to think that I would have sold some of my position in November of 2013 when the accelerated downtrend (UT 2) ended.  Now I will admit that I may have lost some money when the price went through the longer term downtrend line (UT 1) because I would have been looking for a bounce that didn't materialize.  Hopefully I would have used a tight stop and got out quickly.

Once the price went through UT 1, it would only make sense to start thinking about "Puts & Selling Short".  But would I have done it?  I honestly don't know.  This is really the whole point of me writing this blog.  I guess I am trying to convince myself that it's just as acceptable to try Puts & Selling Short as it is buying calls & going long.

I know the rules!  I really do!  Take a look at the downtrend line that has developed since UT 2 broke.  All you have to do is realize that WFM is not going meaningfully higher until it is able to cross above DT 1.  So buy puts or sell short when the price is close to DT 1 and use a tight stop.  I would go a step further and say that $42.50ish was resistance in mid June and may very well be resistance again the next time the price gets there.  So I would say it would be prudent to try puts or selling short around $42.50ish and use a stop just above DT 1.  It is interesting to me to realize that in about 4 weeks, the horizontal resistance & DT 1 will both be at $42.50ish.  That would give me two reasons to try puts or sell short.  I consider myself an optimist.  It just seems weird to bet that a stock is going down.  But the reality is I also feel I am smart enough to recognize the signs of a stock that may go down.  Now I just have to pull the trigger and build some confidence. 




Trip Advisor  (TRIP)

Here is a Weekly Chart of TRIP

Click chart for a larger chart of Trip Advisor

TRIP began UT 1 in November of 2012.  The price broke UT 1 for the first time in February of 2014, the second time in April of 2014, and the third time last month.  Each time the price dropped below UT 1, it came back up above it.  Will this time be different??

Here is what I see in the chart.  TRIP put in a double top from March to July of this year.  Also UT 1and DT 1 crossed and the price followed the downtrend line.  At least that is what has happened so far. 

Last week's candle closed lower than the previous week's.  And last weeks candle didn't get even half way back up into the previous week's candle ($101.74 is half of the previous week's range).  Last week's high was $100.23. 

If I were going to start a short position through puts or selling short, I would use $101.75ish as my first stop.  If I needed another stop I would use DT 1 ($104ish next week). 

If you think TRIP is just "having trouble with UT 1" and will continue to go higher then here is an investing / trading plan for you.  First thing you need to do is draw an uptrend line from the lows in April to the lows in August.  You can call it UT 2 if you would like.  But in my world, UT (x+1) is always above UT x.  You will need to open a math book if that last sentence freaked you out  :)

Now you should notice that last week's low was right at your new trend line.  It held so that is good.  In the coming weeks, TRIP has to stay above your new trend line.  If it does, the real test will be when your new trend line meets DT 1.  Whatever happens there should be your insight into what may come next. 

The cool thing about investing is that no one really knows the future.  So when you look at a chart and say, "I think it is going up/down from here", you have a 50/50 chance of being right.  Those are great odds.  Trade what you see.  It is just as correct, at the moment, as what anyone else sees.  Time will ultimately prove you right or wrong.

The key is to give your thesis some parameters.  You should pick an event or $ level that proves you are wrong.  If that event or $ level occurs, then admit you are wrong and get out of the way.  You can decide to stay away for a little while and then try again or you can choose to invest or trade with the price action that is actually taking place.  If you struggle with this aspect of trading then "join the club".  We all struggle with this...



Amazon  (AMZN)


All the financial media is talking about Alibaba (BABA).  Fact is Alibaba is bigger than Amazon & Ebay put together.  Also, Alibaba has profits and Amazon doesn't.  Which stock would you invest in?

I know that I tend to "raise money" to get into a better investment.  Do big investors do that too?  I think they do.  If I am right, that may explain why AMZN has been dropping since the beginning of this year.  Then again, maybe there is no correlation at all.

Although AMZN has been a great investment since 2009, is AMZN going to continue to be a great investment now that BABA is almost available to own.  Hedge funds like to choose one stock to play to the upside and another to play to the downside.  Could that combo be AMZN (down) and BABA (up)?

AMZN is currently between an uptrend line and a downtrend line.  The downtrend line is at about $355ish for next week.  If AMZN is going down it shouldn't get above there.  The closest uptrend line is, although very short, is about $340ish.  The next closest uptrend line is in the low $300s.  If it gets below there, the next uptrend line is in the high $200s.  There is some potential gain right there if you are short or buying puts...

What if AMZN goes up through the downtrend line?  Well then you should be playing it long.  There is potential resistance at $365ish, then at $380ish, then at all time highs of $405 to $410.  There is some potential gain right there if you are long or buying calls...

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As you can tell by my scenarios, I am not making an up or down call.  I don't know the future.  All anyone can do is invest or trade based on what they see. 

Trade what you see... Not what you think, or feel, or hope, or ...

The trend is your friend... Until its not

Limit risk & protect profits