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!

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.

_______________________

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. 

______________________________

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. 

 

_____________________

 

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...

 _____________________

 

 

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.

___________________________

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.

______________________________

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

 



What's next for GoPro (GPRO) ?

GoPro (GPRO)

• The cool thing about an IPO is that it's new & exciting.  Then again, new & exciting can be deceiving...

Any technical investor will tell you that it's nice to know where a stock has been in order to ponder where the stock might go.  An IPO doesn't give the investor that luxury.

So what can you do?  You can pay attention to shorter time frames while using the same investing & trading rules that you normally do.  Just realize that you will get more buy & sell signals so you will either buy & sell more often or you will take on more risk.  Caution: if you don't watch your stocks every day you probably shouldn't be investing in an IPO.

• GPRO started trading and was off to the races.  After a couple days we all wondered where it would stop. 

 

I don't have time to finish this now as it is very" early in the morning" and I need a little sleep.  I will try to come back and edit this post soon but check out the pictures below.  They tell a pretty good story on their own.

Remember to always look at multiple time frames.  In this case I am using the weekly, daily, and hourly.  You could look at the 30 minute, the 15 minute, the 5 minute, etc and see a lot more UT & DT lines.  The important part is seeing when the price crosses the lines. 

That is where the change in direction occurs.  Have fun...

 

OK. I'm back...

Turns out GPRO stopped right around $50.  Ever heard anyone say "round numbers are like hurdles"?  Now you know why.  Is there any way you could have known that it was going to stop there?  I don't think so.  But I do think you had some clues right up there at the top.  Take a look at the hourly chart below.  After a steady run up, the price crossed below UT 1 (look inside the circle near the top).  When that happened it was a clue.  Yip, just a clue.  But you can act on clues.  This was a clue to lighten up or just take notice.

 

On July 2nd, GPRO opened down.  That's not good.  Then it closed the first hour below the low of the previous day (July 1).  That was your second clue.  Yip, just a clue.

• Fast forward a couple days and you will notice the price creates a trading range.

GPRO trades between $40.50 and $44 for five days.  I call that indecision.  It is only a matter of time before the investing community decides what they think.  If they think GPRO is worth more than $44 then it will go above the range.  If they think it is worth less than $40.50 then it will drop below the range.  It is your job to wait for decision to be made and show up on the chart.  Then follow!

This is a weekly chart of GPRO - please ignore the lines on the right

Click here to enlarge this chart of GPRO

This is a daily chart of GPRO

Click here to enlarge this chart of GPRO

This is an hourly chart of GPRO

Click here to enlarge this chart of GPRO

• If you are looking at this hourly chart and you believe that GPRO may continue to fall, what is the next level to anticipate?  And the next?  And the next?  One more please.  What if it goes below there???  Let's just say I hope you used one of the circle areas to get out of this stock with a profit.  That way you can try shorting it if you like or just sit back and watch.  It will stop going down at some point.  When it crosses a downtrend line you can use some of your winnings to try to make more money :)

Answers to the above questions...

Price level below $40.50 ish is $38.00 ish / Price level below $38.00 ish is $35.00 ish / Price level below $35.00 ish is $32.00 ish  / Price level below $32.00 ish is $28.65 ish - why $28.65 you ask.  That was the opening print

__________________________

• Going Down???  I feel like this post is getting a little long in the tooth but here is some cool stuff that happened today

 

Take a look at the hourly chart that includes today's activity.  It clearly shows a downward continuation at the open and then some sideways movement for the rest of today.  First, it is nice to see things like that long red candle at the end of Friday that broke the trading range and have a clue that it might lead to more downside.  Second, it is nice to notice the indecision for most of the day today and realize that there will be a clue about future direction when it breaks.  "Breaks" doesn't necessarily mean keep falling either.

 

If you are short GPRO, you can stay with your short until the price closes above DT 2.  Remember that it is normal to make slight adjustments to UT & DT lines as you get more candles. 

 

If you want to get long GPRO, you should wait until the price closes above DT 2.  Be cautious, limit your risk, and get out of the way if you are wrong.  Don't take it personal.  You are trying to predict the future.  That isn't easy for anyone I know.  Making mistakes is part of the biz.  Keeping enough money in your pocket to be in business tomorrow is imperative.

This is an hourly chart of GPRO from 7/14

Click here to enlarge this chart of GPRO

• If you made it this far I thank you.  I think you deserve something a little above and beyond the basics. 

 

This chart includes Fibonacci Retracement lines.  It is amazing how well the UT & DT lines work but when you add in the Fibs you get even more information...

 

Take a look at the 5 day area of indecision.  It had a low right at the 38.2% retracement line.  Coincidence??  Now take a look at the low end of the candles for today (7/14).  Notice the lows are very close to the 61.8% retracement? 

 

Remember that all of these retracement lines are common places to look for price to change direction.  The faster it happens the stronger the stock some people say.  All I am going to say is that it pays to pay attention to UT & DT lines, previous levels of support & resistance, and Fibonacci Retracements. 

 

 

 

 

This is an hourly chart of GPRO from 7/14

with Fibonacci Retracement

Click here to enlarge this chart of GPRO

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

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.