Monday, May 20, 2013

May 20th 2013: The case of the disappearing volume...

I like volume.  Volume = tighter spreads which results in better entries and exits.  I also like trailing a stop higher on runners with a stop market order because once my stop hits, I want out.  However, if you try to do this in a thinly traded stock, what often can happen is that your order will fill quite a bit lower than your stop activation price.  Not good, but at least you're out.  Worse, if you try to enter a stop limit order, the market can jump your order.  Meaning, the stop activation will trigger, but the sale can't execute because now the prices are much lower than your limit order.  Worse than that, you might erroneously think that your order got filled because you got a handy alert that said your stop was hit via email or text.  All of this nonsense has happened to me and I'm sure quite a few other people, too.  To sum up, I like volume and avoid thinly traded issues like a plague.

Lately, I've noticed that the volume in some ETFs that I used to trade is woefully inadequate for my needs (e.g., IWC) and even some of the high volume ETFs have much less volume than they used to.  Take the Q's, for example, QQQ busted out over 70 but the volume is about 10% of the 2008 plunges.  It should be easy to tell when a real correction (5+%) is upon us as volume will rip higher (at least double these anemic levels).

Here's the chart:

Tuesday, May 14, 2013

May 14th 2013: Solar stocks catch FIRE!

After a few months of consolidation, the solar stocks are catching FIRE again.  Maybe because it's summer?    Maybe because oil prices are still relatively high?  Who knows?  I don't pretend to be a fundamental investor.  I don't really care why.  I just care that they're going up.  Let's take the ETF "TAN" as an example.  The 6-month chart goes from the lower left corner to the upper right corner (i.e., the general trend is up).  We just had almost 4 months of consolidation (rest) followed by a breakout.  Very short-term (intraday charts), it looks a bit over-extended (overbought).  The bigger picture (weekly chart, see below) is showing a breakout supported by volume and FORCE.  During up-trends, boxes tend to act as continuation patterns and break in the direction of the trend.  A box-length move in the direction of break would put the target at $25.92.  Ideally, we'd get a light volume pullback to set-up a better risk/reward trade and then start to ramp up with volume.  I'd look to buy the start of the ramp on a 30 min chart.

Here's the chart...

I have no position in TAN or other solar stocks right now - although I might buy a light volume pullback in the future.  I did own some WFR calls which I sold yesterday.  In retrospect, there's not really much point in owning calls on a $5 stock - I should have just bought the common which acts as a deep-in-the-money call which never expires.  I still made money on the trade, but it wasn't ideal - especially when the option volume dried up.  After 10+ years, I'm still learning with every trade.  I guess that's part of the fun.

For more charts and to read a disclaimer, please see my public chart list on stockcharts.com...





Sunday, May 5, 2013

May 5th 2013: Is this time really different for the $NDX???

The last 2 breakouts in the $NDX (see chart) were mediocre at best.  FORCE barely expanded and price went flat for weeks after the "breakouts".  However, this time might be different.  The $NDX busted out with wide price spread and higher FORCE than its had in the last 6 months.  That certainly looks bullish to me.

For most of the last 6 months, the Q's have lagged badly and I dutifully avoided them on the long side.  (Sometimes half the battle is staying away from the dogs).  But this week, the tide seemed to have turned.  For the first time in a long time, I was long QQQ calls this week and sold half on Thursday and half on Friday for some nice gains and currently have no position in the Q's.

Let's see if this breakout can stick.  IF it does, I'd be inclined to buy another dip - just as it starts to curl up again.  The number to watch is the previous box high at 2863.66.  That's my line in the sand.  Long above.

Here's the chart...

For more of my charts and to read the disclaimer, please see my public chart list on stockcharts:
http://stockcharts.com/public/1109955