With Father’s Day coming up on the weekend I hope everyone has a wonderful time. Holidays remind us of the importance of family and friends. For Saturday here is a bit of a review and some articles to reflect upon.
NASDAQ- Second Week of June 2017
I am leading with the biggest story of the week which is the decline in the NASDAQ. After weeks of climbing and leading the markets higher, the NASDAQ index broke down starting last Friday. This week it failed to recover and as you can see in the chart below, it broke through the 21 day moving average (or Middle Bollinger Band) and closed below it by week’s end. The 50, 100 and 200 day moving averages are still climbing which is bullish, but the breakdown has to now be contained and the index must regain the 21 day quickly or risk falling for much of the summer months.
Momentum is strongly negative and despite repeated attempts by investors to push the NASDAQ index back up, momentum to the downside strengthened all week. This tells us that rallies were being used by most investors to sell out of positions and take profits.
MACD issued a sell signal on June 9. Every subsequent day confirmed that sell signal.
The Ultimate Oscillator is still positive and tried to climb back by the end of the week. It failed to turn negative this week, which is a good sign for the bulls.
The Fast Stochastic however is showing a strong downturn in place. It also indicates the market is nearing oversold.
NASDAQ index 3 Months to June 16 2017
SPX – Second Week of June 2017
The S&P on the other hand, while weaker this week, continued to hold above the 21 day moving average. The 50, 100 and 200 day moving averages continued to rise which were good signs for the bulls. Momentum finally turned mildly negative on Friday but for the week, the S&P held a positive momentum, albeit weaker than from the prior week.
MACD issued a sell signal on June 15. It was a very weak sell signal, but it was confirmed by another slightly stronger sell signal on June 16.
Meanwhile the Ultimate Oscillator spent the week staying positive and by week’s end it was still rising, another good sign for the bulls.
The Fast Stochastic ended the week with a confirmed sell signal on the market. Overall though, the S&P does not look as poor as the NASDAQ.
S&P index 3 Months to June 16 2017
Weekend Reading List
For the weekend reading, the articles to review for the upcoming week all deal with taking profits. With the markets ending the week under some selling pressure, it might be worthwhile to review some articles that discuss profit taking.
Beat The Bear – Learn to close short option positions early
I am always surprised at how many investors set up trades and then forget about them, waiting for them to expire. Instead keep watch through a spreadsheet tied to Yahoo finance, or a manual spreadsheet or a spreadsheet within your own brokerage account that you monitor daily to see how the options you have sold are trading. As premiums erode in value as either the stock or ETF climbs or expiration looms ahead, consider closing trades when they have earned 50% of the original premium earned when they were sold. If you don’t want to close at 50%, consider setting a stop at 50%. If the shorted option continues to lose value, keep lifting your stop.
This is a sample of the Excel spreadsheet I use to time buying to close my short positions early. I review this spreadsheet each day around noon hour and each night after the market closes. It allows me to know which trades I have in place that I will be closing and which ones may even be opening up new trade opportunities. An investor can easily take this spreadsheet and adjust it for his or her own needs or investing style. This article is for members.
Walmart Stock and How To Use A Stop-Loss To Lock In Profits
When it comes time to sell a stock, no one can actually tell you that this is the best time to be selling. I know I certainly cannot tell you, yes or no, because a lot depends on what your outlook is and what your needs are, including tax implications for those holding stock whether in or outside a retirement portfolio. But you can learn how a stop-loss can go a long way to assisting locking in a profit in any stock. This article focuses on Walmart stock back in 2012 and as it turned out, it was a good time to consider selling the stock. The methods discussed can be applied to any stock or ETF and explains how a stop-loss can be setup and manually adjusted to eventually exit a position. This method removes all emotion from the trade and forces an investor to take profits.
This article is open to all investors and is lengthy at 2500 words. It will need 11 pages if printed.
Trading The Stock Market Direction – When To Go Long and When To Take Profits
The final article for this Saturday is a look at a method that can be used to time when to enter and when to exit the stock market for directional trading. This is an excellent method to apply the Ultra ETFS such as SDOW or UDOW against for above average returns.
This article is from July 2013 when a lot of analysts felt the bull market from 2009 was ending. The market direction was at that time as worrisome as it is today with a lot of investors and analysts concerned as signals from the Federal Reserve indicated the Quantitative Easing program was going to be ended shortly. Little did we know that it would not be until 3 more years before the Fed would begin to raise interest rates and not until this year, 2017, that they would signal a reduction in their balance sheet. The strategy showed that the bull market was not yet over in 2013.
This article is 2500 words in length and needs 12 pages if printed. Some of the article is open to all investors with the balance for FullyInformed Members only.
Enjoy the rest of the weekend. I will have further articles posted on Sunday, Father’s Day but for now, enjoy the articles above.
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