Twitter Inc (TWTR) : More Perspective with Fibonacci

Twitter Inc  (TWTR)
 

This is a continuation of yesterday's post titled "What Happened to TWTR ??".

 
 

• Let's talk quickly about Leonardo Fibonacci.  He is historically credited with giving society The Fibonacci Number series.  There is some drama associated with this credit but let's just go with it.  The beginning of the list of Fibonacci Numbers is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, ...  If you want more info on Fibonacci Numbers just Google it.  There is more info out there than you want to know. 

 

How do Fibonacci Numbers apply to Investing?

 

• We all know that stocks go up and down.  If you like this blog you probably agree that stocks tend to rise and fall in trends.  What you may not have realized is that after a stock price rises to a peak, it may then fall to a Fibonacci Retracement level.  There are investors out there who have spent a lot of time on this.  Let's just accept it as another form of technical analysis. 

 
If you are curious how the Fibonacci Retracement levels are found then here you go.   If not just scroll down to More TWTR Perspective with Fibonacci Retracement.

0.618 or 61.8% :  If you divide any (large) Fibonacci Number by the one after it, your answer will be close to 0.618. 
 
0.382 or 38.2% :  If you divide any (large) Fibonacci Number by the 2nd number after it, your answer will be close to 0.382
 
0.236 or 23.6% :  If you divide any (large) Fibonacci Number by the 3rd number after it, your answer will be close to 0.236
 
** There are more retracement & extension levels available on your Fibonacci Retracement tool.  Some of those values can be found with similar rules.  Other values like the 50% retracement level are not actually Fibonacci Retracement levels.  These non-fib levels were added by investors over the years because they are relevant in investing.
 

                             

 

More TWTR Perspective with Fibonacci Retracement

 

• Let's focus on the word retracement.  We all know that retracement means a reversal of direction.  I think we would all like to know how much of the rise in stock price (uptrend) the reversal will take back.  There isn't anyone out there that knows the future before it happens.  So take all those price predictions you have read and realize that they are no more than someone's opinion.  You can also take this Fibonacci Retracement stuff and realize that it is no more than a potential guideline. 

 

• So how much of a rise in stock price will the reversal take back?  Maybe this reversal will take back 23.6 % of the increase.  Maybe it will take back 38.2% of the increase.  Maybe it will take back 50% or 61.8% of the retracement.  We don't know the answer to the question but for some reason, these retracement levels are quite commonly places where the reversal ends and a new rise in the stock price begins.

 
 

Here is a Daily chart of TWTR with Fibonacci Retracement levels



Click here for a larger chart of TWTR with Fibonacci Retracement Levels
** Typo : 28.2% retracement level should be 38.2% **



• Fibonacci Retracement levels have merit weather you are long or short.   In the case of TWTR we can build some perspective into Friday's reversal.  We may even be able to use Fibonacci Retracement levels to decide what to do next...

 

• Let's all agree that Friday's reversal felt POTENT.  It may have even felt painful depending on where you went long.  But in terms of Fibonacci Retracement, the reversal didn't even take back 38.2% of the uptrend.  This could get a lot worse...  If you are long the stock you should consider getting out of the way of this reversal.  What if the reversal eventually takes back 61.8% or more of the uptrend.  Now that would be painful!

 

• If you want to be long this stock then look for a new uptrend to begin somewhere around one of the Fibonacci Retracement levels.   The next lower retracement level from here is the 38.2% retracement at about $61.  If TWTR bounces around there then go long again.  But wait for the bounce.  Don't assume it's going to happen.  If the stock continues to fall through the 38.2% retracement then start watching the 50% level at about $57.  Continue this method until an uptrend actually begins.   You can, and should in my opinion, also look for a new uptrend to begin by using trend lines like the red & green ones on the chart.  Yesterday's post "What happened to TWTR ??" should help with the trend line method.  Remember, Fibonacci Retracement is nothing more than a potential guide.  So use it as such.

• I wouldn't advise anyone to stay long indefinitely and see what happens.  The thing everyone forgets is that you can always get out of a stock and then get back into it at a better time.  If a better time presents itself.  I am not a big proponent of averaging down either.  If you get long when a downtrend becomes an uptrend and you use a stop loss incase you were wrong on your entry, then you won't need to average down.  This method works on all timeframes. So I am not just talking to the "Fast Money" crowd. 

 

• Let's say that TWTR goes down to about the 50% retracement level and then turns up to begin a new uptrend.  What is the next area where you might expect a little turmoil?  I would say the next higher retracement level of 38.2% or around $61.  If it closes above the $61 area then look for it to get to the 23.6% retracement level or around $66.  Are you seeing how this works?  What if the price gets back to the All Time High (ATH) of about $75.  Then what?  Are there any guidelines for how far TWTR may run before another reversal begins?  You bet.  I am not going to get into it now but that would be called a Fibonacci Extension.  Google it if you are interested. 

 

• If you want to be (or already are) short this stock then realize that your max profits may be obtained when the stock price reaches these same Fibonacci Retracement levels.  It would be prudent to lighten up on your short position at the 38.2% area for instance because that is one potential level where a new uptrend may begin.  If the stock price closes below a retracement level then you should be safe adding to your short again.  So if the stock price closes below the 38.2% level or $61 then increase your short position again if you want.  You could then see if TWTR gets down to the 50% retracement level of about $57.  And so on.  You could do this all the way down to the eventual spot where the new uptrend starts.  I don't expect that TWTR is going out of business so I do expect that there will be a new uptrend at some point.  We all know the uptrend was a great long trade.  But it is yet to be seen how good of a trade this downtrend will be for the shorts.  Be careful.

 
 
 

Trade What You See...Not What You Think, Or Feel, Or Hope, Or ...
The Trend Is Your Friend...Until It's Not
Limit Risk & Protect Your Profits

What Happened to TWTR ??

Twitter Inc  (TWTR)

• What did happen to Twitter this Friday?  You can find lots of folks on the blogosphere and on platforms like StockTwits & Twitter that will "tell you the reason for the big fall".  If you believe everything you read on the internet, then I am a French Model - Bonjour!

• If you are anything like me, you may feel like there is probably not one simple answer to explain the dramatic fall.  Yes, I know TWTR was downgraded but that alone is the reason?  Yes, I know that TWTR is up HUGE in a very short time.  Everybody had to be get in but on Friday lots of people wanted out?  The bottom line is I don't really care to spend the time sorting out why the dramatic fall happened.  The reason(s), whatever it is (they are), will probably not help you stomach Friday's $10 loss any easier.  But there is a lesson to be learned here.  This isn't the first time this has happened and it won't be the last.  Let's take a look at some charts.

My intent in this post is to help you put things in perspective.  Let's start with a weekly chart.

This is a Weekly chart of TWTR

Click here for a larger chart of TWTR

• Here is some perspective for you.  TWTR is still following an Uptrend line that started in late November or early December.  If you bought this stock for your grandkids when it came public as a long term investment, you are still making money for them.  Next week the green uptrend line will be about 60.  If it falls below there, that is where I would begin to worry.  If you bought this stock hoping to just make some quick big money, you should have sold already.  Use stops to protect your profits if you can't watch the chart develop all day long. 

• Remember that TWTR is still a "new issue" and therefor we don't have much history to guide us.  But using what we have, we can look for price levels where this stock may gravitate to on the way down.  We can also look forward to potential levels on the way back up. 

• Notice that during the week of the 13th the high was almost 60, during last week the high was about 60, and during this week the low was about 60.  Out of 8 weeks of being in existence, 3 of those weeks have highs or lows around 60.  You have probably heard the phrase resistance becomes support.  Why should we be aware of the 60ish level?  Because the drop could be over when the price is around 60.  I would guess that many investors will either consider getting back in around 60 or actually pull the trigger on a small trade just to see what happens.  These small trades will probably create some up & down turmoil on the intraday chart.

• If the drop doesn't stop around 60 then I would say 54 is the next potential destination.  Notice that 54 is last week's low.  After the 54 area you could be looking at a test of 50.  Why 50?  Because it is the high of the first day of trading for TWTR.  If you have read my posts you have seen that the first day's high & low for an IPO are important price levels.

• Let's just say that TWTR gets to the green uptrend line and turns higher.  Where will it go?  No one knows.  But I will say that it has to get above 63.75 (this weeks close) to show any sign of strength.  Then eventually, if it wants to continue to be strong like it has been, it has to get back to the all time high of 75ish.  Get the picture now?  There is no crystal ball next to my keyboard.  I am just watching price levels that have happened in the past.  Closing above them shows strength.  Closing below them shows weakness.  This is a very simplistic approach but it should help any struggling investor.

 

                                                  

 



• Now lets look at a daily chart of TWTR.  Notice the circles were great places to get in.  Will we get another great place to get in?  Will the price just keep falling and go below the green uptrend line?  Those are both really good questions.  You can find lots of folks on the blogosphere and on platforms like StockTwits & Twitter that will "tell you where to get back in".  If you believe everything you read on the internet, then I am a French Model - Bonjour!

 

This is a Daily chart of TWTR

Click here for a larger chart of TWTR

• If I had to guess I would say there will be another great place to get into TWTR.  The thing is there is no telling when it will happen or how much profit you will get from your entry.  You will have to monitor your investment. 

• The end of a downtrend is a great place to enter a trade or investment.  You can see two examples of this on the daily chart.  Yesterday's candle allowed the creation of a new downtrend line.  Let's see how long it takes for the price to cross above it.  Maybe it will happen around the green uptrend line.  Maybe not...

• What is the major difference between a daily & weekly chart?  You get more timely data.  There is a candle for every day instead of a candle for each week.  How does it help?  It gives you more price levels to use for guidelines.  For example,  Thursday's close was at 73ish.  Once the price dropped below that level, some investors sold shares.  When the price dropped below Tuesday's low of  70ish, some investors sold even more shares.  All of this is a mechanism to protect profits and limit risk. 

• If you look at every daily candle you should notice that as TWTR was increasing in price, tomorrow's low is typically higher than today's low.  This is how the green uptrend lines are created.  you can use a trend line or the higher lows to make decisions about your long investment. 

• Even though TWTR is technically still in an uptrend, please realize that a stock can retrace back to a trend line at any time.  You have to protect your profits when the price is high above the trend line.  That way you can buy the same shares back at a lower price if you still like the company as an investment.

                         

 



Here is a Daily chart of TWTR with moving averages

• Why do I show you this chart too?  Because I want you to notice that Friday's close happened right about at the 8 day moving average (the light blue line).  In general, stocks that can stay above their 8 day moving average are strong and in a nice uptrend.  I also want you to notice the dark blue line.  That is the 21 day moving average.  Stocks that stay above the 21 day moving average are not as strong as stocks above their 8 day but can still be pretty good. 

• You should also be aware of the fact that the 8 & 21 day moving averages are good places to anticipate a change in direction.  Maybe TWTR will try to turn up right around this 63 level.  Maybe it will try to turn up when it gets to the 21 day.  Maybe it won't.  Remember, these are places to anticipate.  There is no way to know, for sure, what this stock will do.

• If I was long this stock, I would use the green uptrend line as a place to try to get back in.  It is a logical place for a change.  If the stock crosses above the red downtrend line before getting to the green uptrend line, then that too is a place to look for higher prices. 

• If I was short this stock for most of Friday, I would have taken some profits at the end of the day.  I would consider adding to my remaining short if the price drops below Friday's low and below the 8 day moving average.  I would then use Friday's low or the 8 day as a stop loss for my short. 

• At the moment, the trend is down.  So short the stock or strategically lighten up on your long position.  Don't try too hard to push your luck going long until the chart gives you a reason to. 

• Remember, stocks go up & down.  That is just what they do.  It's your job to be long on the way up or short on the way down.  This is a lot easier said then done.  It is also your job to protect yourself from reversals like the one we saw on Friday.  This is done by strategically lightening up on your position. 

Trade What You See...Not What You Think, Or Feel, Or Hope, Or ...

The Trend Is Your Friend...Until It's Not

Limit Risk & Protect Your Profits

Chart of AAPL

Apple Inc (AAPL)
** While I was writing this post the AAPL / CHL deal was announced**

• There are many examples of stocks that have peaked, dropped into a valley, and then come back to the old peak and even surpassed it.  Could AAPL be another one of those companies?  It just might be.  Especially with the looming CHL news.  But don't count your apples before they are ripe.  The deal between AAPL & CHL isn't official until it's "officially" announced.

• On this weekly chart of Apple you can see that the old peak was about $700 and now we are at about $550.  You can also see that the high weekly price over the last three weeks has gone lower & lower.  The red downtrend line is your guide if you want to go long.  Once the price crosses above this downtrend line it should be safe to buy again.  If the price breaks the green UT 2 line, then going short would be a consideration.  But let me just say that going short with CHL on the horizon is NOT SMART...

This is a Weekly chart of AAPL

Click here for a larger view of the Weekly chart of AAPL

• The daily chart is more encouraging to me than the weekly.  Why? Because I can see that since the double bottom, AAPL is following UT1.  And since September AAPL has been following UT2, an even steeper uptrend line.  As I have said before, the red downtrend lines represent opportunities to strategically get into AAPL.  If you look at the most recent red downtrend line you will notice that it is fast approaching the green uptrend line I call UT2.  If the price breaks UT2, then look for it to bounce around UT1.  If it breaks the red DT line, look for higher prices.  If the break of the DT line happens in conjunction with a CHL announcement, the price may go much higher.  I would say that the most recent high of $575ish could easily be in the cards in short order (oops!  That was an opinion).  Let's just say that once the red DT line is broken, the $575ish level is the next anticipated level if AAPL is going to continue along the uptrend.
• What are my expectations?  Well considering all the "leaks" of a deal and some great investigative work by the investment community, I would say that a deal is coming.  When?  Soon.  But no one can give a date except AAPL and CHL.  I am long AAPL in anticipation.  This deal could be huge for both companies...  

• If you want to get in, you just have to look for more red downtrend lines along the way.  It is also pretty safe to add to positions once the price surpasses a previous high (peak).  If you really study the chart below you may see places where you can take some profits and wait for a better time to redeploy.  If you have trouble seeing what I am talking about then drop me an email at LinearInvesting@gmail.com.  I am happy to respond (time permitting).  

This is a Daily chart of AAPL

Click here for a larger view of the Daily chart of AAPL

Good luck in your trading / investing.  Trade what you see.  Not what you hope for.  Protect your profits.

Apple Inc (AAPL)

I am going to start this post by giving you a longer view of Apple Inc. 

This chart begins late in 2012 when a share of AAPL was going for about $700.  This chart ends at present day. 

This is a Weekly chart of AAPL

Click for a larger chart of AAPL



• I find that many of us forget to look at the big picture.  Instead we get caught up in the smaller one and miss out on some details.  This chart of AAPL shows me some pretty handy info yet it is clean, simple to read, and lends itself to interpretation. 

What's on the chart? 

 

• Let's start with the long red downtrend lines (DT).  They show the decline from $700 to $400.  All three of them were drawn during the downtrend.  One of them follows the initial downtrend from $700.  The middle one starts at $700 and touches the top of an uptrend late in the downtrend.  The last one is similar to the middle one as it too starts at $700 and touches after an uptrend occurs.  Why draw these lines?  I was looking for the bottom...

• The smaller red DT lines are places you could have gotten into AAPL after the run back up began.  Do you ever hear people saying it's too late to get in?  They might be right.  But when you can draw a short downtrend line and the price breaks above, it is probably safe to try going long.  Don't worry that you didn't catch the uptrend at the Double Bottom.  Most people didn't.  It's ok to begin an investment after the beginning of a trend.  Just plan your exit so you limit your losses if the investment doesn't work out.  There is more detail about places to get into AAPL later in this post.

• The green line labeled "Double Bottom??" is exactly what it seems.  I was asking myself if this could be a double bottom.  If it was I knew there was a chance it was a sign that AAPL had seen the lows and it would be a good time to go long the stock.  Looking back it was a great time to go long.  That was about $150 per share ago...

• The green uptrend line labeled UT 1 shows the trend that AAPL has been following since that double bottom.  UT 2 is an accelerated trend that the price has been following since September 20, 1013.  As long as UT 1 holds, I will be long AAPL...

• The horizontal dashed lines are Fibonacci Retracement lines.  You don't have to have a Math degree to understand how to use them and what they mean.  But if you are in the Math degree club you probably know a little more about Mr. Fibonacci than you care to :-)  Anyway, I find it very interesting that AAPL came back to the 50% retracement line before turning up again.  It is common for downtrends to become uptrends around retracement lines.  The big question is always which one.

• My simple interpretation of the weekly chart is that AAPL is in a strong uptrend.  There is even an accelerated uptrend in place.  If you want to go long (or add to your long) you should try to do it after a bounce off an uptrend line or when a downtrend line breaks.

I showed you the Weekly chart of AAPL so I can show you the Daily chart. 

This chart starts at the end of the double bottom and ends at present day. 

 

 

This is a Daily chart of AAPL

• The daily chart is a little more erratic than the weekly but that is expected.  One thing to focus on though is that the Weekly and the Daily charts both show uptrends.  That is a pretty good indication that you are safe being long the stock. 

• There are many places you could have gotten into this stock after the double bottom.  The shaded green circles show you some of them.  All those shaded green circles show a downtrend line being broken.  And if you notice, they all lead to higher prices.  If UT 1 & UT 2 continue, there will be many more opportunities just like these. 

• Notice that I have drawn a red downtrend line beginning at the high on Thursday.  I drew it all the way down to UT 1 because it could take that long for the price to break the DT line if it is going to.  Based on what is happening with AAPL at the moment, I don't expect the price to even get to UT 2 before it breaks the red DT line.  But that is my expectation and it may have absolutely nothing to do with reality. 

• So how do I play this from here.  Well, first you should know that I took some profits on Friday.  The stock was following a VERY steep trend higher for 7 days.  Friday's price action fell below that steep trend so I took some profits.  The next place I will take profits is $545ish.  You can draw an UT line starting on 11/21 and touching the bottom of the next three candles.  It will be at $545ish on Monday and $547ish on Tuesday.  On Wednesday it will be at $550ish AND it will intersect the red DT line.  If apple breaks the DT line and stays above the UT line starting on 11/21, then we have a new and more accelerated UT line that has been formed.  These developments would be very positive for long investors.  If none of this happens then look for a bounce off of UT 2 or UT 1.  If it goes below UT 1 then then look for lower prices.  By the way, UT 1 is about $55 below the current share price.  That is about a 10% drop.  Do you really want to just jump in blindly and "hope" that the price doesn't go down 10% or more?  I sure hope not.

Base your investment decisions on the chart.  Trade (invest) what you see.  Not what you think, or feel, or hope, or ...    

Limit Risk & Protect Your Profits

 

Charts of KKD, PANW, & TWTR

• The first chart I want to show you is TWTR.  I wrote a blog post about this stock recently and you can find that post here :  http://trendlineinvestor.blogspot.com/2013/11/twitter-inc-twtr.html. 

Now that more time has gone by lets revisit the Daily chart of TWTR

• Changes to the chart : I moved the "H. Support" line down just a bit.  I added another horizontal line between the "Day 1 Low" and "Day 1 High" lines.  I also added the green uptrend line (UT) and the shaded box.

 

• How does all this change the outlook on TWTR?  The price broke above the downtrend line (DT) and continued higher. until Friday.  If you bought the break of the DT line you are doing fine.  Just realize that your UT line is about $3 below so protect your profits.  A drop to the UT line, from Friday's close, would be a 6% drop. 

 

• What does the shaded box represent?  I say it represents the next higher price range for TWTR.  If the UT line holds then the price will enter the shaded box.  Once it does that it should make it to the top of the box.  At least that is my near term target.  If the price drops below the UT line then it will probably test the "H. Support" line.  If it goes through there we have no history to guide us so be careful.  The UT line should be used to set stops and protect profits.  If it gets below there you should be out of your long so it doesn't matter how low it goes.

 

 

• The next chart I want to show you is PANW.  This stock has been around since late 2012.  It had a nice increase in price for about the first month.  Then something happened and it started going down.  I wrote a blog post about this stock too.  You can find that post here : http://trendlineinvestor.blogspot.com/2013/12/helping-fellow-investor.html

 

 

 

Now that more time has gone by lets revisit the Daily chart of PANW

•  You never know how long trends will last.  But the closer to the beginning you are able to get in, the longer you will get to ride it. The longer you are able to ride it the more money you will likely make.  So here is a long downtrend line that just broke.  Time to get in?  You could say that. 

 

• Lets talk about the green uptrend line (UT) that has formed recently.  It is your guide on the way up.  If you can make a little money and you have some room you may have to use some finesse on that line.  Feel free to adjust a trend line (finesse) if you are making money.  But don't alter your trading or investing plan. 

 

• If I was going to get into PANW right here I would set a stop for half my investment at 50.  I would set a stop for the other half at 48.  Another option would be to set a stop for a third at 50, a third at 48, and the remaining third at the DT line.  Today that DT line is about 46.  Your plan must be decided by how much risk you are willing to take. 

 

• Why $50 and $48?  Since the gap up on 11/26 and excluding Friday's candle, the tops of most of the candles is about 50 and the bottoms of most of the candles is about 48.  Use a cross hair pointer on a daily chart and you too will see it.  Or just use a ruler, held horizontally, against your monitor.  You can be a cave man if you want to...

 

• I have to say I like the developments over the last week.  If things continue on this course, I expect the price to make its way into the shaded rectangle.  Notice it's the day 1 range.  The day one range is key for an IPO.  Let's see what happens from here.

 

 

 

 

 

The last chart I want to show you is KKD.  I am only showing you the last 6 months of activity.  This stock is tough to understand.  It does great between earnings but horrible upon the actual announcement.  Why???  I have no idea.  All I know is that there is a lot of money to be made if KKD responds to this earnings report as it did the last one. 

 

Let's take a look at the Daily chart of KKD.

•  Let's look at the last earnings report reaction.  There was no indication, on the chart, that things were going to go badly after earnings.  But if you were long this stock you had a rough week after earnings.  Notice that UT 3 begins on the 5th day after earnings.  From then on you saw higher lows.  The first two down days after earning gave goals of price levels to achieve.  Notice that once the price broke above the lowest horizontal green resistance line, it broke above the next one the following day.  From then on it was a new uptrend line to follow.  Let's jump to this most recent earning release, look at that red candle below the uptrend line just before earnings.  That was a sign!  You had been following a trend line. Maybe you even adjusted your trend line (finesse).  But that red candle, closing below the uptrend line, was your chance to exit stage left.  Trend lines work if you respect them.  Adjusting them can be VERY dangerous to your investing account balance.

 

• Will KKD do the same thing this time?  I couldn't tell you.  Why did it react that way last time?  I couldn't tell you.  All I know it that there is a good opportunity to play KKD with very low risk and a pretty clear history.  Now, will the past predict the future?

 

• KKD closed Friday at about $20.  The horizontal green line in the most recent shaded rectangle is the "low so far" after this earnings report.  The nice thing is that the low and the close are very close to each other.  This means not a lot of risk before finding out if your thesis is wrong.  This is called a "low risk trade". 

 

• Let's say you go long here at $20.  If that was a bad decision you only have $0.40 of downside before the chart tells you so.  The price needs to stay above $19.57 if it's going to go sideways or go higher. That's only a 2% risk.   You could limit your risk even more by realizing that Wednesday's candle was inside Tuesday's candle.  Thursday's candle was inside Wednesday's candle.  And Friday's candle was inside Thursday's candle.  This is cool but it has to change at some point.  The theory is that if an inside day is broken to the upside then price should go higher.  If broken to the downside then price should go lower. 

 

• So how do you begin an investment or trade in KKD?  You could go long when the price closes above the last inside day's high or go short when the price closes below the last inside day's low.  If you go long, your stop could be $19.50ish.  If you go short your stop could be $20.50ish.  That's the top of the 2nd & 3rd days candles.  Once it closes above there it will probably go higher.

 

• I will be watching this stock pretty closely.  As I said on the chart, "I love Krispy Kreme Donuts."  And although I would love for them to succeed, I am not going to invest or trade with only my taste buds.  Trend lines make much better guides when it comes to investing.

Helping A Fellow Investor

First & foremost I appreciate simplicity.  I appreciate cleanliness.  I appreciate methods that work on a regular basis.  I understand that no method is pristine and most methods require some finesse.  The chart below shows an example of that finesse. 

Back in late 2010, ITUB began the downtrend that has lasted for 3 years now.  If you are investing in this stock you have to realize that the highs and lows are getting lower as time goes by.  The easy way to play this stock it to go short.  If you are going long, you are trying to make money the hard way.  Not that it can't be done but it will take longer and it will work less often. 

Look at how quickly this stock drops.  Look at the drops in July of 2011, April of 2012, and June of 2013.   Also look at the long red downtrend lines.  It makes sense that if a stock is in a downtrend, it will fall faster than it will rise. 

This is a Weekly chart of ITUB 

ITUB hit a high above the lower red downtrend line.  So I drew another downtrend line that starts back in November of 2010 and hits this new top.  This is the finesse I spoke of earlier.  But let's face it.  The 3 year old pattern continues as expected.  I drew a green uptrend line to show the last uptrend and where the price crosses below it.  I also drew a new red downtrend line.  The length of the line is arbitrary.  I have no idea how long the downtrend will last.  The angle of the line seems to be accurate though.  Time will tell.  I may need a bit more finesse along the way. 

I will say that I notice something I didn't put on the chart.  It has to do with the lows from mid 2012 and mid 2013.  Do you notice that these lows are close to the same level?  This may be a sign that $11.50ish is a level of support.

Now let's look at BBD.  Almost everything I said about ITUB holds for this chart too.  What are the differences?  Well I haven't needed any finesse yet.  And I am not willing to say that I see a level of support yet.  Here is a coincidence I just noticed.  It looks like the downtrend in both of these stocks started at almost the same time. 

This is a Weekly chart of BBD

I prepared one more chart to try to help you out.  That chart is of PANW.   This is a newer issue and therefor we have less history to go by.  That typically means there is a lot more finesse required. 

I noted the Day 1 high & low on the chart.  These are "mentally" important levels for an IPO.  You have to respect them.  I also drew a red downtrend line that started in September 2012.  The only other line on the chart is a green uptrend line that is much more of a horizontal support line in my mind.  I think this green line may show a double bottom that could lead to a change in trend. 

Friday's candle pierced the red downtrend line with greater than average volume.  It also closed above the red downtrend line.  If you want to go long this stock you may have good reason to do so.  Keep watching and let the story unfold. 

This is a Daily chart of PANW

Sorry this chart is so small but I can't get Blogger to let me change it's size.

You can click on it for a larger pic.

If there is any way I can help my fellow investor I am ready (as long as time permits).  I don't claim to be anything more than an investor who uses trend lines.  I am not the best investor out there.  I am not the most knowledgeable investor out there.  But I am someone who isn't afraid to spend some time helping out a total stranger.  I hope this post helps you. 

Buffalo Wild Wings (BWLD)

Buffalo Wild Wings has been cruisin' lately.  If you are looking for a good time to jump in, one may be coming up in the very near future. 

 

This is a Daily chart of BWLD

About a month ago, when BWLD announced earnings, would have been a good time to buy some shares.  It has gone from about $137 (after earnings) to $150ish where it is now.  In the process of getting up to 150ish it has created a well defined triangle.  The top of the triangle and the hypotenuse of the triangle are your guides for a new investment should you want to make one.

If you invest (long) here, don't let the price drop below the hypotenuse of the triangle.  If it drops below intraday then you can decide if you want to see where it closes.  If it closes below then going long may not have been the best decision.  Set your stop just below the green uptrend line.  I would say 145 to 148 is a good place to put your stop.  The uptrend line is currently at 148ish.  Remember that setting a stop is like you saying, "I am willing to throw $X.00 out the window if this doesn't work."  Investing is risky.  But you have to limit that risk so it's tolerable.

Once the price closes above the top of the triangle, you want to look for confirmation.  You want the next day or two to stay above the top of the triangle.  A close back below won't be a great sign if you are long. 

Monitor & adjust your stop.  The plan here is that the price will go above the top of the triangle and continue higher once that happens.  If you put your initial stop in at $146.50 to protect your initial investment just in case the plan didn't work out, then move it up to say 150ish or "your break even" once the plan comes to fruition.  Then move your stop even higher once the price has extended.

Protect your profits.  If this plan goes off the way I hope it will you could see a price increase of 3-10% in a relatively short time.  If you find your investment is up 3-5% in a month you should take some profits.  How?  Sell some shares.  Maybe sell 20% of your initial investment and let the other 80% run for a while.  As long as it follows the uptrend line just sit tight and watch it grow.  Eventually you will want to take even more profits. 

Base your investment decisions on the chart.  Trade (invest) what you see.  Not what you think, or feel, or hope, or ...    
Limit Risk & Protect Your Profits.

Timeframes Matter...

Charts Can Be Deceiving

I hope to get you to pay attention to other TIME FRAMES along with the one being presented.  You should look at the daily, weekly, and monthly charts before making an investment in any stock.  Then follow the trend.  Until it breaks.

 

 

 

I know, I know.  You are thinking that a chart is based on facts so there is no way it can lie.  Well, I don't agree.  What if the TIME FRAME used to create the chart doesn't give you enough of the history to really see the details?

I am about to show you a daily chart of JCP.  This daily chart looks like things are getting better for JCP's stock.  Maybe they are.  The daily candles have already crossed over a down trend (DT) line and are heading for DT 2.  They are actually following an up trend (UT) line very nicely. 

Let me just say that there are some reasons to "believe" that JCP's stock has made a turn for the better.  But I don't invest on what I believe.  I invest (trade) on what I see on the chart.  But which chart am I looking at?

Remember that the DT lines on the chart are places we should look for a potential change in direction.  Sooooo, be on the lookout.  Follow the up trend line until it breaks.  The one I am currently following is the green UT line.  And it's working.

 

This is a Daily chart of JCP

Now look at the weekly chart of JCP.  A larger picture of the stock's history tells a different story.  The weekly chart tells me that JCP is just going lower and lower.  It doesn't look like a turn around at all.  For me, I would not be willing to say that JCP is trying to turn around until the stock closes above DT 2.  When JCP closes above DT1, it will be safe to tell your friends & family to consider buying the stock in their retirement plans.  Right now though, DT 1 is a long way off.  So let's keep this between us active investors for now. 

Will there be opportunities to make money along the way?  Oh yes!  How about if the stock just follows DT 2 lower?  Sure, we all know there is a way to profit from a move lower.  Remember to trade what you see.  Not what you think, or feel, or hope, or ...

This is a Weekly chart of JCP

 

Do you see how some investors can be bullish while others are bearish?  It may be as simple as which TIME FRAME they are using to form their opinion. If I was recommending an investment to you and I only showed you the daily chart you might agree JCP looks bullish.  Looking at the weekly chart should damper your enthusiasm a bit. 

 

As I said earlier, I hope to get you to pay attention to other TIME FRAMES along with the one being presented.  You should look at the daily, weekly, and monthly charts before making an investment in any stock.  Then follow the trend.  Until it breaks.

Happy Thanksgiving :-)

As part of the family sleeps in and another part runs our local Turkey Trot, I spend my time looking at charts and reading other people's comments.  You have to study investing if you want to be a successful investor.  I have learned over the years that you learn a lot more when your mouth is closed...  This is a hard lesson for me as I was born with the "gift of gab".

 

This post is short & sweet so I can get ready for a day full of family & friends.  I hope you have an amazing day today.  I hope you have thankfulness in your heart and that you show it as you walk through your day.

 

Here are a few charts to ponder as you eat your turkey & ham and pie...

This is a Daily chart of TSLA

Click on the chart to see a larger one

The notes on the chart say most of what I want to say about TSLA.  Remember that the company is now under investigation for the fires.  If the investigation goes well then it's good news and the stock probably jumps.  If it's bad news then the stock probably falls.  This "event risk" is not for the faint of heart.  If you invest any money in this company right now, be sure you realize that you may be buying a lottery ticket.  What usually happens to the money you spend on the lottery?  You lose it...

This is a Daily chart of CZR

Click on the chart to see a larger one

CZR has been cruising for a while now.  Will it continue?  No one knows.  But I will say there is some added excitement about the gaming sector as internet gaming with real money has begun...

This is a Daily chart of VJET

Click on the chart to see a larger one

 



 You have to be very careful with new issues (IPO's).  They don't have a history so the stock price can go anywhere.   All trend lines are short and therefor not very reliable.  I find it interesting that the stock price is very close to the vertex.  It will show us a direction very soon.

 

Twitter Inc (TWTR)

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

• What I see on the chart below is a newly issued stock that is currently trading below the first trading day's range.  I also see that the current price is below the down trend line (DT) and just above the all time low line.  You should be able to see a triangle on the chart.  Horizontal bottom, red hypotenuse, imaginary left side.  This kind of triangle makes me feel like the stock price is being pushed down further and further and will eventually go below the horizontal base.  But that may or may not be the case...

• Let's agree that the price of TWTR has to either break above the right vertex of the triangle or below it.  Agreed?  Ok then.  Whatever it does may be a sign of things to come.  If it closes below the horizontal base, then I would look for lower prices for the moment.  If it closes above the hypotenuse, then I would look for higher prices in the near future.  Could both of these expectations be wrong?  Yes.  The price could go sideways.

• Notice that two days ago the stock closed below the horizontal base.  I took that as a bearish sign.  I expect that is telling me lower prices are coming.  But yesterday the stock closed above the horizontal trend.  Now I am not sure if my expectation is correct.  I am still leaning towards lower prices in the near future but how should I invest real money?

• My best advice would be to wait and see what happens.  Maybe the best thing to do is not invest in this stock at this time.  Now there is a novel idea.  There is always risk involved in investing so you have to decide how much risk you are comfortable with.  If you decide you want to invest now then maybe use 25% - 33% of the money you want to eventually commit to a TWTR investment or trade.  Start small and wait for the chart to give more definitive information. 

So there are three options : higher, lower, or sideways.  The chart could give us a better idea by the end of the day. 

This is a Daily chart of TWTR

 

Yahoo! Inc (YHOO)

• Did you have any idea the chart of YHOO looked this good?  I sure wish I was invested in it since the beginning of the trend...   But the reality is I didn't see the beginning of the trend.

• Every circle (elipse) is the beginning of a trend or a confirmation of the trend.  It is also a test of weather or not the trend will continue.  It can be a great place to get long the stock (if the trend continues).  It can be a great place to get short the stock (if the trend breaks). 

• UT 1 is the longest and flattest "Up Trend" line.  UT 2 is the next longest but steeper "Up Trend" line.  IMHO, it is always a good sign when a UT 2 is created.  It shows increased strength and a faster advance in the share price.  Just to be brutally honest, there are many trend lines not shown on the chart.  But I like to focus on what I feel is important at the moment.  I also like a clean chart. 

• I have come to the realization that you can't always catch the beginning of the trend because you can't watch all stocks all the time.  A battle I used to have with myself was the "Is it too late to get in?" battle.  This chart and many others will reaffirm the answer.  Which is "No one knows."  If you find a trend that is working then maybe try jumping in.  The trend might just last for another year.  Or more  :)   Or the trend might break within a few days.

This is a Daily chart of YHOO

Apple Inc (AAPL)

 

 

 

• First let me say welcome to the new Blog.  This has been a long time coming.

 

• This first post is more of a test to see how things go with the blog but I figured I would also give you an idea of what you will find here.  And Apple is as fine a chart to start off with as any.

 

• As you may know, AAPL reached a high of about $700 and then began a $300 decline to ultimately reach about $400.  Everyone seems to have an "opinion" about this stock but you probably won't catch me giving one.  My goal hear is to share the things I see in the chart.  Primarily the trends and retracements.  I typically make comments about the chart but I try not to give opinions.  After all, I invest based on what I see happening.  Not what I think or hope will happen.

 

This is a Daily Chart of AAPL