Weekly Thoughts Week of May 9, 2016 by John Person
5-9-2016 Weekly Positive Thought: Traders slow down and enjoy the positive moments, savor them by jotting the events into a journal. Try to identify three good things that happened in your trading day and talk about these events with another individual. This reinforces good habits into your subconscious mind and helps re-wire your thinking. It s a great exercise for those who struggle with discipline, especially for those who anticipate trades and for those individuals who hesitate to place trades. John Person Market Thoughts & Observations: Last week the stock market correction off the April highs continued, here in the U.S., Europe in China. Nine of the twenty sectors I track are now negative on the year with the largest YTD loser being biotech s ($IBB) now within 5% of its 2016 closing ow which was 243.90. Typically we see this sector move higher from the first week of May through the first week of June. Last week s High Close and Low Close Doji signal stock selections for the most part conformed to the immediacy of this phenomenal trade pattern, including identifying the sell signal in the China large cap ETF fund ($FXI). That instrument was down nearly 5.00 % last week from Monday s opening price (entry) to Fridays close. As a reminder to new members, I first published this powerful pattern that generates reliable buy and sell signals affectionately dubbed the HCD and LCD nearly eleven years ago in my second book titled Candlestick and Pivot Point Trading Triggers. As I am told it is becoming a more popular and tracked pattern from outside experts. I began filtering selected stocks that have a unique volume pattern and strong correlation with the underlying seasonality of its sector several years ago and it s a staple of this weekly publication. In addition I included one of my old times favorite strategies for trading highly leveraged commodities namely spread trades back when spread trading wasn t that popular. As a head s up most of these spread trades below all have over either a life of contract or no less than a 25 year back test result of over 82 win percent to make it in this weekly publication. Please note the new commodity spreads additions for the month of May. What to do next? As for last week s market action, with the downturn in energy especially the ($XOP) as it fell 6.72% and Biotech s ($IBB) decline of 4.73%, I find the fact that the Volatility index ($VIX) settling at 14.72 a bit encouraging. This might be the sign that perhaps the correction is closer to an end and we could see the major index s retest the highs that I have been expecting. In addition, I am still in the belief Bonds can trade lower. My analysis still is looking for lower prices and my research is targeting the 125 price level in $TLT by late June. I ve been stating that there s a strong chance we can catch a bid in retail apparel as it tends to be seasonally strong in May. Continue to keep names like ($M) $JWN, $DDS, & $JCP on our intraday and end of day (EOD) PPS & HCD scan lists. However I must warn, the Consumer Discretionary sector ETF ($XLY) has posted a double doji star on the weekly charts with a downturn in OBV. If this sector does manage to surprise us with a rally I expect a muted upside move. What I would like to see is all stock indexes pop in a daily PPS buy signal. As of last Friday the Dow 9$DIA) did form a both a Daily HCD and a PPS buy signal in Trade navigator s platform (see chart below) but due to several Dow component earnings out this week it may have been an anomaly in the algorithms from short covering. That s why I want to see strength in numbers or buy signals across the board before loading up on the long side again.
In conclusion: just like I stated last week, I am still holding out for a rally in the market but with a tempered upside objective. After all the $SPY did close positive for the Month of April and the monthly chart did in fact post a higher high higher low and prices remain above the longer term Moving Averages. I see the QQQ s by the June expiration with a strong potential to see a 5% move from last week s lows. I am on the watch for intraday and end of day buy signals in $SPY if we trade down first to the 202.50 203. 30 level. If that happens then I want to buy the June 208 strike calls and or the June 108 strike calls in the QQQ s my risk is a weekly close below last week s lows. If we open and trade lower Monday and test their corresponding monthly Persons Pivot support then I will be watching for a trigger for a long entry. ***NASDAQ 100 component heavy weight ($MSFT) and GOOGL formed daily HCD s. If more of these tech giants recover then we could see a rally materialize. After the last week or so of running scans what I have noticed is we are not defining tremendous buy or major sell signals, however I have been seeing Healthcare Facilities (take a look at $USPH) populate buy signals along with some small cap Biotech s. Case in point is look at these names (JNP) ($VRTX) ($ABBV) and ($ARIA). If we see this trend of subtle buy signals populate over the next couple of days it will support the strong seasonal tendency for ($IBB) or ($XBI) to rally 6-10% or test their respective April highs. Also take note that many real-estate property management companies exploded higher last week. Case in point look at ($RYN) ($KIM) ($SPG) ($STAG) & ($HIW) just to name a few. This is a sign of sector rotation, not abandon ship on every and all stocks as financial Armageddon is upon us as many would have us believe. I guess the fact that the real estate investment trust ($IYR) just close the week out at another 52 week high is another sign. On a side note: For what s its worth my Kentucky Derby pick to win was correct, but a loss on the side bets and the trifecta as I stated last week I got NyQuist to win, Destin to place and Mohaymen to show. With a side bet that Mor Spirit wins. All joking aside, trading stocks is absolutely much easier than picking winning horses.
Technical Points of Interest: $SPY,$QQQ, $IWM, are now in a weekly PPS sell mode, but all top 6 stock indexes are closer to their respective Monthly Persons Pivot support targets. Weekly Advance /Decline comp. levels are all above their Moving averages except QQQ s. Weekly McClellan Osc. at +170, the daily reading at -89.51,daily positive zero line cross is bullish. S&P 500 has 314 stocks above their respective 50 day Moving Average versus 340 last week.
Seasonal Spread Trades: Buy June Hogs / Sell June Live Cattle: About 2-25 liquidate before 5-18 Buy Dec. Cattle / Sell June Cattle: About 4-10 liquidate before 5-20 Buy August Soymeal / Sell August Soybean Oil: About 4-24 liquidate before 7-14 ---------------------------------------------------- ---------------------------------------------------- --- Buy Sept. Corn / Sell Sept. Wheat: About 5/12 liquidate before 6-17 Buy Dec. Nat Gas / Sell July Nat Gas: About 5-14 liquidate before 6-28 Buy August Feeder Cattle / Sell Dec. Live Cattle: About 5-16 liquidate before 6-11 Buy March Cocoa / Sell July Cocoa: About 5-19 liquidate before 6-14 Buy Dec. Corn / Sell July Corn: About 5-21 liquidate before 6-29 Buy August Soymeal / Sell March Soymeal: About 5-23 liquidate before 7-11 Seasonally Strong Stock Sectors for May: $BKX, $XLV, $IBB, $XTL, $XLP, $XOP, $UNG Seasonally Weak Stock Sectors for May: $ITB, $XLI, $XLB, $IYR, $XLU, $IYT, $OIH, $XLY REPORTS & EVENTS: Monday: German Mfg. orders 2:00 AM, U.S. Labor Conditions 10:00 AM, TD IMX 12:30 PM, Fed Speak 1:00 PM, China CPI 9:30 PM, Crop Progress 4:30 PM Tuesday: German Ind. Pro. 2:00 AM, Redbook 8:55 AM, Wholesale Trade 10:00 AM, JOLTS 10:00 AM, USDA monthly crop report 12:00 PM, API report 4:30 PM Wednesday: EIA Petroleum 10:30 AM, 10 Year Note Auction 1:00 PM Thursday: BOE announcement 7:00 AM, Weekly Jobs 8:30 AM, Consumer Comfort 9:45 AM, EIA Nat Gas Report 10:30 AM, Fed Speaks 11:00 & 11:45 AM, 30 Year Bond Auction 1:00 PM, Fed Speak 2:15 PM Friday: German GDP 2:00 AM, Euro GDP 5:00 AM, Retail sales 8:30 AM, Business Inventories 10:00 AM, Consumer Sentiment 10:00 AM, China Retail Sales 1:30 AM Earnings: Monday: BID, HTZ, IFF, KITE, MNKD, PRTS, SLW, SCTY, TESS, TSN, XEL Tuesday: AGN, CORE, DIS, EA, JAZZ, JIVE, LL, NCLH, RLH, RBCN, Wednesday: CA, JACK, M, WEN, Thursday: DDS, KSS, JWN, NVDA, RL, SYMC Friday: JCP Bullish Weekly HCD Signals: Software: $TTEC Biotech: $JNP Bearish Weekly LCD Signals: Credit Card: $DFS
For advanced trading training, resources and proven systems, visit personsplanet.com John Person President of John Person Inc dba PersonsPlanet.com worldwide known for his unique use of Pivot points and candlestick charting, also known as Person Pivots or PPS on TD Ameritrade / Tos platform, John provides online trading education for a beginer or advance traders with his University Program and daily trading room, John Person offers research for active stock and options traders with newsletters, trading software, trading seminars, forex trading systems, trading course, books using advanced technical analysis on candlestick, pivot points, fibonacci and indicators.