AAPL YHOO TSLA C : It's always your call...

Don't let someone else tell you how to invest your money!

It's always your call...

• It is natural to look for an easy way to start investing.  Or an easy way to continue investing because you are tired of losing money.  What you really need is more knowledge.  More experience.  More time to learn.  And a good teacher.

• I am not saying you shouldn't subscribe to some investing service or some trading room.  All I am saying is that every time you spend your money it should be your decision.  You should know why you are hitting the "submit" button on that order.  You should also know when, and how, you are going to cut your losses if the trade goes bad.  This is not easy people.  All of us struggle with the reality that we made a bad decision.  And what if the trade goes good?  When do you get out??  Sometimes this is an even harder decision.

• If you are invested in AAPL or YHOO you may be wondering what to do now.  If you are not invested in anything but you want to get involved because "everyone else is making tons of money", realize that some people are making money.  But there are definitely some people losing money.  Even in this market which is at all time highs.

• Let me circle back to my opening paragraph for a moment.  More knowledge will come as you read more.  You have to learn to distinguish between facts and opinion.  More experience will come as you make more trades.  But it will likely come with a financial cost.  Unless you are "paper trading".  Let's be honest, paper trading is great when you can walk away from a "paper loss" and start over.  But paper trading SUCKS when you make a huge "paper gain" because you got a trade just right. 

• And about that good teacher.  Good Luck to ya.  There are some traders / investors out there that would make great teachers.  But they aren't accessible to you and me or they want more money every month than is affordable to most.  By the way, there is never a guarantee that you will make money.  And you can't expect one.  This market isn't a place where guarantees work. 

• So why am I rambling instead of showing charts?  The charts are next.  But investing is rarely like going to school and having someone show you exactly what to do.  You have to learn by taking little bits from many sources and putting the bits together to form a cohesive plan.  I hope this blog is one of your bits.

C  -  Citigroup
      It's your call...

This is a daily chart of C

Click the chart for a larger chart of Citigroup

• Citigroup has been in a range (between the two gray horizontal lines) since about March of 2013.  The price did dip below the range once in 2013 and rose above the range once in 2014.  You will need to look at a 2 yr chart to see it clearly.

• What I am trying to show you is two things.  1) The lows have been getting higher & higher since April of 2014.  Notice the green uptrend line that touches the lows.  2) The price just approached the top gray horizontal line and now looks like it is heading lower.  Notice the short red downtrend line that touches the highs. 

• If you want to invest in or trade Citigroup you have a decision to make.  If you think it will go up from here then it needs to stay above the 21 ema (yellow).  If you think it will go down from here then is has to stay below the red downtrend line.  It's your call...

TSLA  -  Tesla Motors Inc

      It's your call...

This is a daily chart of TSLA

Click the chart for a larger chart of Tesla

• Tesla has been following the same uptrend line (UT 1) since mid 2013.  Going long when TSLA is close to UT 1 has been a great investment.  Take a look at a daily chart that includes all of 2013 and you will see what I am talking about.  

• I know there are several lines on this chart so it may seem confusing at first.  But let me explain...  If a trend line doesn't have a UT or DT label then ignore it.  Those are old trend lines that I am not talking about in this post.  I guess I could have removed them but I didn't.  Focus on DT 1, UT 1, and UT 2.  We have already talked about UT 1 and how it has been intact for about 1.5 years.  UT 2 has only been intact for about 3 weeks.  But it is crucial that you realize the price of TSLA is following UT 2 at the moment.  DT 1 was intact for all of September & October.  What is important about DT 1?  The fact that TSLA's price is now above it.

• How do we invest or trade TSLA from here?  If you think it will continue higher then it has to stay above UT 2.  If you think it will go down from here then I guess it has to stay below the gray horizontal line.  

• If you were short while TSLA was following DT 1 then you should have exited that position at the beginning of the week.  If you were waiting on the sidelines for a hint that TSLA was done going down, that hint came at the beginning of the week when the price closed above DT 1.  

If you initiate a trade right here, 

how do you know if you made a bad decision?

• One way is to only allow 3-5% of your money to be lost.  But that is arbitrary and only you can make that decision.  I like the range but if you don't enter a trade at the right time you could loose every time.

• Another way is to use a trend line.  If you feel TSLA or C are following a particular trend line and that trend line is breached, then you should get out of the trade.  What about the percent range?  You would've known how many percentage points you were risking before you entered the trade because you know where you were buying and you knew the price level of the trend line at that point in time.  If you weren't willing to risk that many percentage points then you shouldn't have entered the trade.

• Let's look at C first.  If you go long right here, you have to realize that C could go all the way down to the Uptrend line...  Ouch!!  That is a drop of about $4 from here or 8%.  Not my idea of a good entry.  If you go short right here, you want the price to stay below the red downtrend line.  Which is about $0.60 above Friday's close or 1%.  I can accept that kind of risk.  Either way you have to constantly evaluate your trade.

• Let's look at TSLA.  It you go long right here, the price has to stay above UT 2.  If it crosses below UT 2 you should sell because chances are good it will go to UT 1.  You could buy it back when it gets there.  If you go short right here, I would call you crazy  :)  But seriously, I would wait until the price closes below UT 2.  If it gets that low, watch for a turn back up at UT 1.  If it gets below that, I will short it with you...

Anything can change at anytime!  You have to constantly evaluate your trade.  If it is working, hang in there, adjust your trend line, and be patient.  If the trade is not working, get out of the way!  Don't be patient, don't hang in there, don't adjust your trend line.  You can always try another trade later on down the road if you still have money left because you were disciplined enough to get out of a bad trade...

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

The trend is your friend... Until it's not.

Limit Risk & Protect Profits!

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