It’s always nice if a trader can find a sector early in a possible bigger wave move … its doubly nice if you can get that bigger move early in a new trading year, as it is sure to make the year taste much better. Looking forward to a possible out-performer in early 2019, I can’t help but be drawn to the Gold Miner Sector. Let’s take a look at this sector’s potential for early-2019. Continue reading
It’s almost that time of year … no, I don’t mean Christmas! I’m referring to tax-loss selling. Every year, I find several great set-ups in stocks that get punished/liquidated into year-end as traders try and sell their big losers to take advantage of the tax losses that those stocks create. I will try and post the work I do in this area again this year.
To start, I do a search for possible candidates … I concentrate on the biggest and most liquid names. So my search begins with the top 1000 market cap names on the US exchanges. Then I look to only stocks that have a YTD High/Low range that is at least 25% of the current closing price … I do this because I want to look at only stocks that have been punished this trading year and therefore are obvious candidates for tax-loss selling.
Then I want to only look at stocks that are in the bottom 10% of their YTD High/Low range … those are the stocks that are near their lows for the year, and probably the ones that are going to see pressure over the next month. There are only 69 stocks that make up this list as of Friday’s close.
I really don’t start to focus on this group of stocks until we get into December … but it is always interesting to see the names on the potential list as we move through November. I like to see the dominate sectors to see if there is a theme for this year’s tax-loss selling. Anyways, here is the current list of potential tax-loss sellers.
By Market Cap
The most notable/largest market cap name on the potential tax-loss seller list is FB. YTD FB is down 17.85%. interestingly, GE is once again on the tax-loss selling list here in 2018 just like it was in 2017.
GE – Daily Chart
You can see the circled area on the above daily chart, the price action at year-end 2017, and then the first 8 trading sessions of 2018 where GE made a bounce many tax-loss candidates will often make. GE gained over 11% in those first few trading days of 2018.
By Sector – Chart #1
By Sector – Chart #2
By Sector – Chart #3
By Sector – Chart #4
By Sector – Chart #5
I’ll update my watchlist as we get to the end of the month.
Cheers … Leaf_West
To set up a C-wave lower that will complete the price structure of what I think are ABC corrective waves in the major US equity indexes, price has to complete its move into resistance on the bounce out of last week’s lows. It looks like we are getting close …
S&P 500 Index Futures Contract (ES_F) – 240 Minute Chart
The ES futures contract has completed a minor abc corrective bounce right into a logical area of resistance. Price shouldn’t move much higher than the highs of this morning’s trading (around 2787.75)
NASDQ 100 Index Futures Contract (NQ_F) – 240 Minute Chart
The NQ futures have not yet broken the minor a-wave high of 7143.25 made on November 2nd. A break of that high is needed to make an official abc-structure for this bounce into resistance.
Russell 2000 Index Futures Contract (RUT_F) – 240 Minute Chart
The RUT has completed what looks like a minor 3-wave corrective bounce into logical resistance.
Bottom-Line … for the next wave lower to really have the flush-out power and thrust that the C-wave can often have, the market needs for all of the bull-tards to get back in long. The election news of a split US government may be just what gets the last trader back fully long expecting a clear sailing for the Xmas rally that is sure to come like it does every year. Maybe Trump’s speech at 11:30am eastern actually sets the absolute high for the corrective bounces.
Cheers … Leaf_West
While the NASDQ 100 Index futures contract did actually touch into my resistance zone last week, I expect to see two waves complete into resistance before I really start thinking about any counter-trend bounce being complete.
NASDQ 100 Index Futures Contract *NQ) – 240 Minute Chart
I think that we have almost completed the minor pull-back in the corrective bounce … maybe we actually push down a little more to the minor 61.8% support level which is right on the median line on the bigger broadening price pattern (say at about 6795). In any event, the next push higher (minor c-wave) should suck in lots of perma-bulls/bull-tards, which then will set-up the final push down into support at the end of the bigger, 3-wave structure C-Wave.
Cheers … Leaf_West
“Downtown” Josh Brown named JPM his final trade today for the half-time fast money show. Is he correct in his expectation that JPM is a screaming buy here? Only time will tell, but there is a lot of overhead supply facing the market and JPM here after the damage done by the market in October.
JPM – 65-Minute Chart #1
If my read of the overall market corrective pattern is correct (i.e., ABC correction), then JPM is likely to find resistance in the SLOT and pull-back one more time. That pull-back may make a higher low which will be bullish or it could follow the market down and make a lower leg (i.e., a final C-wave move).
There are lots of buyers of JPM during the market weakness that may be willing to sell their shares if they can get back to break-even.
JPM – 65-Minute Chart #2
The whole run-up in JPM from this past summer has also produced a lot of stranded traders down here at the current levels … the Point of Control that needs to be taken out before I would consider JPM bullish would be that $113.50 – $115.50 zone vs the $108.00 current price.
Cheers … Leaf_West
It is no secret that I like how Dan Nathan thinks … he appears to be one of the most rational traders that CNBC dares show on their daily programming. Dan has been saying for the past several weeks that the recent corrections in the momo, high-beta, over-crowded, super-cap tech stocks are going to be hard to recover from. Dan argues that this would seem to imply that the overall markets are also going to have a hard time making it back to recent all-time highs.
Is Dan right? The basis for Dan’s argument lies in the fact that many traders are trapped in these mega-stocks at much higher prices and will, to a large degree only be too happy to let some stock go if/when these stocks ever get back up to their recent highs. That is what is going to create problems for the market in any bounce from this week’s lows.
Let’s take a look at the volume profiles for the FANG stocks along with AAPL which is going to report its earnings and the all-important Xmas season outlook today after the close. Let’s start with AAPL … Continue reading
Tonight’s AAPL earnings report is pretty key for the market … if the outlook is disappointing, then all bets are off about what could happen in the market the next several days. I still think that the market is set-up to bounce higher into the SLOT resistance zones and therefore I want to do my work and be prepared for that next move into the final resistance levels. Here are some looks at the volume profiles for the two key futures contracts that I trade. Continue reading
At the close of the 195-min candle at 10:15am eastern today, the futures chart that I am using to trade the direction of the NQ during the corrective move I last posted on this past Saturday broke on a closing basis, the ATR resistance level.
To me, that ATR break allows me to mark an A-Wave low in the NQ’s ABC corrective pattern I am anticipating. I have adjusted my timing and retracement charts to that new low. Here are the NQ charts from this past Saturday’s post (click here to read that entire post) …
NASDQ 100 Futures – 195 Minute Chart (from Saturday Oct 27th)
NASDQ 100 Futures – 195 Minute Chart #1
Note that I am now looking for some chop in the price action to show me that price has accepted the ATR break higher. The timing windows are approximate, but the B-Wave high is scheduled for the day of the US mid-term election (Nov 6th), The C-Wave low, bigger support for this corrective pattern is for Nov 15th around mid-day.
Cheers … Leaf_West
Ok … that was a fun week. My mother-in-law passed away this past Sunday, I got a severe case of vertigo on Tuesday evening (which I still have, but to a lesser degree), and the market had some huge volatile moves. Today I can stand looking at my computer screens for more than a few minutes at a time so I thought it would make sense to assess where we are and what we should expect going forward.
Bottom Line … what do we know? I think it is safe to say that an important top was put into the US markets recently and I think I can safely say that because of the style/type of move lower we have seen in all the major US stock indexes. The US markets are finally correcting like the rest of the global markets have been doing since the beginning of the calendar year.
So if we assume that an important top was made in the US markets (not saying an all-time high, but an important high none-the-less), then traders should be looking for a larger and possibly a more complex corrective move than the traditional ABC corrective move seen during trending markets. So saying that, let’s look at the markets and try and determine if the first leg of the move lower is done for any or all of the major indexes. Continue reading