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Market Commentary

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Should You Buy This Dip In Tesla?

Tesla is a story stock with extreme upside momentum. If you are among those who have been complaining the stock was too high to buy and you were “waiting for a dip,” don’t say you never had one.

Buying dips in story stocks, however, is not as easy as it sounds. It usually means buying during a period of extreme uncertainty, when the company’s core business model is called into question . Nervous holders take profits on the rumors; that’s how dips are created.

The Tesla Story

A core premise of...

Apr 23, 2014
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July ICE Cotton Futures: Trading Idea April 23, 2014

Consider buying a put option on July ICE cotton futures.

 

See on the daily bar chart for July cotton futures that prices have backed off the recent high, including a bearish buying “exhaustion tail” formed in late March. It appears this market is “rolling over” from its uptrend. Consider buying a put option on July cotton futures, with a downside price objective of 86.00 cents, or below. The option expires in late-June.

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Apr 23, 2014
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May: Worst Performing Month For Stocks

The S&P once again has bounced higher with fury from the Mid April lows down at 1803.25 to rally over 77 points to trade at the 1880.00 level. This impressive bounce coincides with the price action since February and what the stock indices experienced for much of 2013 where dips in the market became nothing more than buying opportunities. Better-than-expected earnings, positive reaction to economic data both home and abroad, and most importantly in my view a backbone of support from the Fed p...

Apr 23, 2014
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New Stock Leadership: Watch Rail Stocks

The theme this year has been one of reversion. Darling momentum stocks, many in the technology sector, have taken a massive write-down as leverage is reduced in those positions. Emerging markets and China have both seen strong rallies, and beaten down sectors such as coal and steel have stopped going lower. So while all those high-beta tech stocks now have plenty of bag holders, what kind of areas can we look to for relative strength?

RAIL STOCKS

Late-cycle areas such as energy and utilities...

Apr 23, 2014
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Trading: How Tight Is Your Stop?

I personally have found that using tight stops produces a lot of stop outs.

Over the years I have given my trades more grace and wiggle room to really work. You could be trading correctly with the right entry but with the wrong stop. The program traders are in hunt of your stop and they know where you should properly place them.

On Tuesday, MDSO gapped down and technically had more room to go lower until it found a solid reversal area. My bias was to find a short entry on MDSO on the open ...

Apr 23, 2014
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Featured Stories

More Featured Stories
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3 Things Every Trader Should Do Each Spring

Spring is notoriously known as a time to clean. While many may be planning to tackle the closet, the garden, or the cupboards, Traders should be applying the same cleaning mindset by taking a look at their own trading processes. Below are three things that I think every trader should do to spring clean.

#1 Clean Up Your Charts

Far too many traders have way too many indicators on their charts. They believe that if they have charts that look complicated, they will somehow be able to decode the ...

Apr 22, 2014
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Which Holidays Are Good For The Market?

Last week we posted a brief outlook on the broad U.S. equity market heading into the Easter holiday, and we casually dropped a throwaway line: “the markets like Easter.”

A reader asked a simple question: “Is there really a seasonal bias in favor of Easter.”

Good question. The answer is yes and no.

The bump we expected going into the Easter weekend was certainly there: the S&P 500 was up 2.7% last week, the best performance for the year-to-date.

It is not so much that the market likes Easter ...

Apr 21, 2014
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Weibo’s (WB) IPO Faces Wobbly Market, Skepticism

Weibo , commonly referred to as “China’s Twitter,” is expected to price its 20 million share IPO the evening of April 16, within a range of $17-$19.

Before its financials and fundamentals are even scrutinized, this Goldman Sachs/Credit Suisse led deal is facing an uphill battle.  As the stock market – growth and momentum names in particular – have fallen out of favor, so to have IPOs.

Making matters worse, shares of Twitter have been clobbered since reaching post-IPO highs on December 26, 201...

Apr 16, 2014
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Trading And Spouse Relationships


How trading affects our relationships and relationships affect trading

In the past couple of months, I have received several e-mails from traders who were in emotional stress. With only minor corrections, the market moved up relentlessly for a year. This has been a difficult environment for traders, as a majority tends to fade market momentum, looking for volatility. I also received two e-mails from trader spouses—pouring out their hearts, as the emotional stress was effecting their relations...

Apr 15, 2014
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Overcome Fear In Your Trading

Why is it so important to be able to trade without fear?

The reason is that the emotion of fear clouds your judgement and makes it hard if not impossible to stick to your trading plan. 

For example, the  trader plans to enter a trade when it pulls back to a certain pre-defined level,  he waits patiently for the pull-back and when price pulls back it does so with a large candle and high momentum.  At that moment his fearful brain kicks in and starts rationalizing that this particular trade w...

Apr 14, 2014
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