Traders Corner   13 comments

Friday’s big move up flipped the S&P 500’s P&F chart back to bullish, with a triple top breakout and a new bullish price target of 1930. I am not quite ready to believe it until it lasts more than a day, considering this long-term indicator has flipped twice in 2 trading days, and one of those days was Friday’s quadwitching day, which tend to run in opposition to the overall market’s longer trends.

On top of this, we are seeing a return of overbought conditions: The weekly RSI, weekly Williams %R, and daily Williams %R all show overbought. With the S&P 500 not far from the top of the Bollinger Bands, there isn’t much room for a large move up. Also, the way the S&P 500 hit a new all-time high and dropped is concerning.

I won’t make predictions for today, but I will say to remain cautious here.

The S&P 500 levels to watch today:

UPSIDE: 1822 (top of the Bollinger Bands), and 1823 (December 20th’s high and the all-time high).
DOWNSIDE: 1810-1813 (5 data points and November’s high), 1808 (December 10th’s high), 1806 (2 data points), 1792-1803 (8 data points and the 20 day moving average), 1786-1788 (3 data points), 1779-1783 (5 data points), 1777 (2 data points), 1775 (October’s high), 1773 (bottom of the Bollinger Bands), 1772 (2 data points), 1774 (50 day moving average), and 1767 (December 18th’s low).


Posted December 23, 2013 by edmcgon in Daytrading, Investing, Market Analysis, Technical Analysis

13 responses to “Traders Corner

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  1. Marshall, believe you either own or did own BBEP. Anyone and everyone what are your thoughts on BBEP. Currently I bought BBEP on July 7 in my 401K. Bought at $16.35, current price is $20.08 for a 22.93% gain and my dividend based on my buy price is 11.92%. Is it time to sell or continue to hold?

    • Tom – I do hold BBEP. I bought it when it dipped with LINE around the 4th of July at a bit under $16. I am very comfortable with the management and long term prospects so I am holding. I will likely revisit in June/July of 2014 when it will be a LT holding for me. It does feel kind of fully valued, so I would not tell people to buy it here and I could understand people thinking about selling. Everyone has their personal reasons for buying/holding/selling stocks – so yours could differ from mine.

      • I bought because I like energy stocks and the dividend is huge. I already have cash to spend so I am going to continue to hold.

  2. Its that time of year to read year end reviews and what is coming next year. Cramer’s 10 long term buys.

    Of the ten I own two: Apple at an average price of $479.43 and BAC at an average price of $10.27. Will sell half of my remaining Apple when it reaches $590+.

  3. tom, did you buy this as a long term hold? Since it is in your 401K, I’ll assume you did. The weekly and daily charts are still in an uptrend. Unless you have a better place to put the money, I don’t know why you would sell. With a nice dividend and assuming it is fairly safe, you could ride out some up and downs. The whole energy complex looks to me like it wants to move higher. Based on long term charts, I would reconsider around 22 if it gets there.

    • Thanks Trader especially for your view on energy wanting to move higher and your chart reading skills. As I noted above, I am going to hold for the time being. I have spent most of the last six months moving my money into longer or long term holds. I still get an itchy trigger finger when I buy a stock which goes up 20+% in less than six months.

  4. Bought PVCT on the 19th for 1.42. Couldn’t resist and sold it today for 1.60. 12+% gain in less than a week. Merry Xmas

  5. I’m sure most of you have started to think about your investment plans for next year. Here’s a few thoughts for you consideration. 2013 has been a great year for the longs. Now what? Do you expect another year like this or something less? How do I make money if the market goes flat or down? How do I protect my existing profits without selling in case the market goes down? Is it too late to buy quality stocks? Am I going to be an investor or a trader? If you haven’t addressed these questions, I would suggest you do so before you buy or sell anything next year.

    First, I would suggest you not be too optimistic about next year. I’m not making any predictions, but another year like this would seem to go against the odds. I would approach the markets with a flat to down approach. If it moves higher then no problem. You should be able to make money in any market, assuming we don’t have a major crash. In that case all bets are off. I would then set a reasonable goal for next year. Let say you would be happy with 10%. Forget what every one else does. Stick to your goal. That’s all that matters. I’m going to use one of Marshall’s picks to give you an example of how to achieve 10% or better next year with reduced risk. Remember I am assuming a flat or down market. I would suggest you look at this approach for stocks you already own and stocks you are considering. And yes, I will recommend cover calls. They work best in a down or flat market. I’ll continue to beat that drum until it breaks. I’ll also assume you are an investor and will hold long term – at least a year or longer.

    Lets look at GNW. It closed at 7.90 on January 2, 2013. As I type this it is at 15.67. That’s a double. Now what? Can you still buy it here after a huge run or do I hold because I still believe the story but don’t want to expect another huge increase. The answer is yes. Here’s how. Let’s say you want to hold for a year from here. You could buy it at 15.67 and sell the January 17 calls for 1.67. This will reduce your basis to 14.00. If you are called out your profit will be 3.00 21.4%. If you are not called out your investment will give you a 10.7% return not including dividends if any. If you are not called out you can resell calls again. In either case you will have achieved or exceeded your 10% goal. If you currently own GNW selling calls here is good way to protect your profit and enhance your yield. This is a very conservative way to buy a stock that has doubled or hold onto profits in a flat or down market.

    I would recommend that you look at this approach. If you don’t like it fine, but it’s worth the time to consider. Remember, having a strategy to make money over time is more important than the stock you pick. I believe most retail players spend way too much time trying to chase the hot idea and not near enough time developing an approach to making money in any market.

    Merry Christmas to all and best wishes for a healthy and profitable New Year.

    • Trader – great advice. Your moves are certainly worth considering. It is psychologically painful to lose gains if/when the market drops. I have not pulled the trigger on options yet, but I have set up my accounts to do so and think about some form of hedging all the time.

      Merry Christmas to all as well, definitely a day to wear our Santa hats.

    • The other thing about that option strategy is that you get the 10% up front because you get paid the $1.67 now. You can then take that money and reinvest it elsewhere.

      As Trader said, Merry Christmas everyone and best wishes for a wonderful new year.

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