Market Recap Nov 30, 2015

Traders came back from the long weekend to see a session that basically took away much of Friday’s shortened action. The S&P 500 fell 0.46% and NASDAQ 0.38% as indexes were in the red almost the entire session. Sales on Cyber Monday, the busiest day of the year for internet shopping, were up 14% from a year earlier, according to data. Looking ahead, Federal Reserve Chair Janet Yellen is…

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Eight Stocks Poised for Breakouts

Here are 8 stocks which could benefit from new potential up wave in market. Comerica Incorporated (CMA) Green Plains Inc. (GPRE) Huntington Bancshares Incorporated (HBAN) KBR, Inc. (KBR) Old Dominion Freight Line Inc. (ODFL) The PNC Financial Services Group, Inc. (PNC) Regions Financial Corporation (RF) Washington Real Estate Investment Trust (WRE) Sinisa Persic, CMT – […]
Slope of Hope

Nov 30 Post Holiday Market Update and Stock Scan

Welcome back from the Thanksgiving holiday!

Stock prices sagged in a post-holiday decline, falling down away from the 2,100 level.

Let’s update our levels for the S&P 500 Index and note the big trending stocks today:

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Our dominant thesis (from the membership planning) called for a likely sell-swing down away from the 2,095/2,100 level.

So far, we’re seeing that initial swing lower as price trades toward – and perhaps under – the 2,080 level.

Further downside targets include 2,070 and Fibonacci Retracement levels.

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Let’s see what our Breadth Chart reveals about current market strength (or weakness):

With stocks declining, almost all sectors were negative today except Utilities (defensive) and Energy.

Offensive names Technology and Materials are slightly above the 50% line as all other sectors are down.

Here’s a top-level or full-perspective view of today’s S&P 500 stock performance (courtesy of FinViz.com).

Here are today’s strongest trending (intraday) names – candidates for pro-trend continuation:

ITC Holdings (ITC), Cirrus Logic (CRUS), MasTec (MTZ), and Ambarrella (AMBA)

Bearish downtrending candidates include the following stocks from our “weakness” scan:

Brunswick (BC), Lululemon (LULU), Caleres (CAL), and Lockheed Martin (LMT)

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Corey Rosenbloom, CMT
Afraid to Trade.com

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Here Comes Cyber Monday As Well As A Week of Big News

Cyber Monday

We begin Cyber Monday with the markets flat. I hope everyone had a peaceful and happy Thanksgiving.

In contrast to China and other Asian markets, the U.S. markets have started the week after Thanksgiving nice and quiet. Late last week the Chinese markets had a steep sell-off of more than 5%. Much of the China sell-off was due to Chinese authorities investigating the behavior of some of the big brokers in China. That sell-off spurred downward pressure on other Asian markets.

Even though we are starting off quietly, be alert! There are a lot of things going on this week that could move the markets. Of note, on Thursday the European Central Bank is meeting and all indications are that the EU’s monetary policy will be to continue to ease (the exact opposite of what the Federal Reserve is doing in the U.S.). Also of note is OPEC’s meeting on Friday on what their plans are for oil supply levels. If you want a refresher on why oil supply and markets move together, please check out this recent OptionsHouse blog post, “The circular argument: which is leading which?”

In the U.S. a lot of eyes are on the numbers being reported from retailers on our newly heralded holiday events: Black Friday and Cyber Monday. Initial indications are that total sales on Black Friday fell 10% this year from last year, coming in with a total of just over $ 10 billion. While Cyber Monday is just getting underway, perhaps people wanted to wait to shop online as it did get a bit “physical” at some stores with shoppers acting a little aggressively toward other shoppers. I think the takeaway from Black Friday is that the sales numbers were a little disappointing as well as some people’s behavior.

Lastly, since we move into December this week, and this Friday is the first Friday of the month, it means the U.S. will release the fresh batch of unemployment numbers. The forecast is for the unemployment rates to remain steady at 5%.

There is a lot of economic news to come out this week. Hopefully you can shake off the aftereffects of too much turkey. Stay alert! It could be a very busy week in the markets.

OptionsHouse » OptionsHouse Blog

The mosaic of Intel points higher

Written By: DragonFly Capital

180px-Intel_Inside_2011-Present

Intel, $ INTC, is one of the stalwarts of the technology space. A general during the tech boom of the 90’s and a core part of the computing world now. And today the stock looks ready to make a major move higher.

I follow a mosaic approach when looking at stock charts of price action. When there are multiple forms of technical analysis that all point in the same direction it re-enforces the view. And in Intel, the mosaic is strong.

intc

First there is the most famous of technical patterns, a Head and Shoulders. This is actually an inverse Head and Shoulders, and the price is right at the neckline. a break above that neckline would give a price objective of at least 44.85. The second is a 3 Drives pattern. This is a series of 3 moves higher with partial retracement. In the chart above this one is building with a 127% extension the second thrust, so targeting 40.50 for the final 3rd thrust.

If that is not enough the momentum indicators also support a move higher. The RSI is in the bullish range and holding. The unbounded MACD has crossed up and is rising. Finally there was a Golden Cross that printed in mid November as the 50 day SMA crossed up through the 200 day SMA.

All of these reads point to more upside in Intel. So what are you waiting for?

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Contact me at greg@dragonflycap.com today and use the code CYBER in the message can get either an annual subscription for $ 556 (10% off) or an annual subscription plus my book signed for $ 600.

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Touring the Mediocrity Factory (meeting with principal of rich suburban public school)

Everyone knows that the U.S. spends more per student on public education than nearly any other country on the planet (see page 205 of this OECD analysis, for example) but that the measured learning outcomes are mediocre. But how exactly is this mediocrity produced? I went to a “forum with the principal” event in a rich white suburban school district to find out (as noted in The Smartest Kids in the World, while Americans love to blame non-white and/or low-income for our poor performance, even rich white public schools and private schools in the U.S. underperform public schools in the successful countries, such as Finland). This was in Massachusetts, which, as noted recently in the New York Times, has some of the nation’s more effective schools (along with New Jersey, Texas, and Florida). This town’s school system is ranked as one of the better ones in Massachusetts so its performance is “elite” by American standards if not by international ones.

Based on what people said at the forum, the core driver of mediocrity seems to be the dual function of the American school. A home-schooled child studies for three hours per day. A Russian child studies for about four hours, from just after breakfast until just before lunch (with 10-minute breaks, but no recess). Children are parked at an American school for 6-7 hours per day and thus necessarily much of the time is spent on stuff other than learning. This leads to the school becoming a place for “social/emotional development” during 2-3 hours per day. The “social/emotional” aspects were the foremost concerns of the parents at the forum. One mother described how the first 20 minutes out of a 25-minute parent/teacher conference were spent discussing a child’s social life during recess. This was not a complaint, just a response to the question of how such conferences were going. When asked what was on their mind, nearly every other parent led with “social/emotional.” It makes sense if you step back from the situation and ask “What is urgent for a parent?” Of course we would all like our children to be well-educated at age 25 (or 30?) when they are done with the master’s degree that is now our entry-level credential. But the immediate (and therefore urgent) goal is to see one’s child smiling. If a child comes home in tears because of something that happened at recess it would be a rare parent who would say “let’s talk about how what you learned writing this history essay is going to affect your performance in college.”

As this was a new principal and the forum was a place for open discussion, I asked if anyone had read The Smartest Kids in the World, which was a New York Times bestseller and recommended heavily by Amazon, The Economist, and various newspapers. Everyone in the room was either employed by a school or interested enough to take time to show up at this forum, but nobody had read the book. So I mentioned that the Russian system (not much better results than ours, but absurdly cheap to run by comparison) and the Finnish system had schools and teachers concentrate on the single mission of academics. Day care, sports, and social/emotional were handled by people other than teachers in venues other than school. Then I asked if there were state regulations that would prevent the town from setting up a Russian-style system in which teachers taught until lunch and then a separate set of employees took over for the lunch+afternoon social/emotional/daycare shift. That way parents could concentrate on academics when talking with teachers. The principal responded that “children aren’t built that way” (i.e., the American way of alternating academic and daycare activities for 6-7 hours is the only possible way to run a school).

Despite the epic length of the school day, the elementary school kids are assigned homework and one parent asked what was the point of additional drill pages that were similar to ones previously done in class. The principal responded only that there were various theories as to the value of homework, the implication being that nobody knew whether or not assigning homework improved academic outcomes.

The previous forum had concerned math instruction within this school system. There is a single set of standards for all students in any given grade (i.e., everyone in 4th grade gets more or less the same assignments). A person with a basic knowledge of probability or statistics would assume a Gaussian distribution of mathematics knowledge among children within a grade. If the assignments are aimed at the average student, the mathematically competent person would therefore expect three groups of parents showing up: parents of children at the lower end of the math competence distribution complaining “too hard”; parents of children in the middle saying “just right”; parents of children at the high end objecting “too easy”.

This was apparently not what happened, however. The principal said that there were essentially two groups of parents: (a) those who felt that the math assignments were appropriate for their children, (b) those who felt the math assignments were too easy. From the absence of the “too hard” group, the person with an intro probability background would infer either that (1) a non-representative sample of parents had turned out, or (2) math in this school system is targeted at roughly the 30th percentile child. The principal, however, threw up her hands, implying that there is no way to please everyone and that any differences in opinion regarding the math challenge were likely due to personality differences among the parents.

I asked “Suppose that a child comes to the first day of 4th grade and knows everything that would be expected of a graduate of 4th grade. Will that child be given 5th grade problems to work on?” The answer was “no” and a denial of the possibility that a child at the beginning of 4th grade could have a true understanding of all of 4th grade math, even if tests showed an ability to do all of the required calculations. “We try to keep all of the children at the same level,” was the principal’s summary.

The principal described having recently completed an every-five-years certification process for kindergarten. She profusely thanked her bureaucratic predecessor for having teed up the paperwork in binders and said it was stressful for the teachers to be observed by the accreditation folks (unclear why this should be; after three years in this district it is effectively impossible for a teacher to be fired for poor performance (previous posting)). The principal said that it was possible to get certified in older grades but the only reason to do that would be to use the accreditation organization’s report identifying deficiencies to seek more taxpayer funding for a school (i.e., the purpose of certification was not primarily to increase performance).

The room was full of smart well-meaning people with, by global standards, near-infinite cash to be spent. Everyone was working effectively toward achieving the same kinds of results that better American schools were able to achieve in the 1950s or 1970s. Nobody seemed concerned about the possibility that other countries have gone above and beyond that standard.

Related:

[looking at a book jacket] Is this guy on the left Bill Gates?
Yes.
A [9-year-old] girl in school said today “When I grow up, I will marry Bill Gates, then quickly divorce him, and take half of his money! Mua-ha-ha-ha-ha!”

Philip Greenspun’s Weblog

Top Trade Ideas for the Week November 30, 2015: Bonus Idea

Written By: DragonFly Capital

mccormick

Here is your Bonus Idea with links to the full Top Ten:

McCormick, $ MKC, is looking to spice things up into the holidays. The spice company has been in a rising trend since October 2014 as shown by its ability to stay above the 200 day SMA and continue higher. 4 times over this period the 200 day SMA has acted as support.

Heading into next week the stock is pressing against resistance at 86 for the third time. The first two led to pullbacks. The price action is building an expanding wedge and a break to the upside would target a move to 94.40. There is a Deep Crab harmonic as well that has a Potential Reversal Zone (PRZ) at 91.15 above.

The momentum indicators also point higher. The RSI is bullish and rising and the MACD is crossed up and rising. There is resistance here at 86 and then free air above. Support lower comes at 85.20 and 83.55 followed by 82.30 and 81.60. Short interest is elevated at 6.2%.

Checking the options open interest sees the biggest size in December at 85 on the Call side and then 90. But on the Put side there is comparable open interest at the 75 strike. It is notable that most open interest is below the current price. In January there is little open interest, and it is still building in March, post the January 28th expected earnings report, but also mainly lower than the current price.

The chart points up and the options point down.

McCormick, Ticker: $ MKC
mkc

Trade Idea 1: Buy the stock on a move over 86.10 with a stop at 85.

Trade Idea 2: Buy the stock over 86.10 with a March 80/85/90 Put Spread Collar (collar at 65 cents).

Trade Idea 3: Buy the December 85 Calls (offered at $ 2.05 late Friday).

Trade Idea 4: Buy the January 85/90 Call Spread ($ 2.25).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into December sees the equity markets looking solid and maybe with new leadership.

Elsewhere look for Gold to continue lower while Crude Oil builds a bear flag in its longer downtrend. The US Dollar Index is breaking out to multi-year highs while US Treasuries consolidate with a short term bias higher. The Shanghai Composite broke consolidation to the downside and may be resuming the downtrend, while Emerging Markets are moving lower after failing at resistance.

Volatility looks to remain subdued and possibly fall keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ paused this week and the IWM has taken over leadership in the short term. All look positive on the intermediate term chart. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview April 17, 2015. This week only, all annual subscriptions will receive a signed copy of my book Trading Options.

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Contact me at greg@dragonflycap.com before Sunday kickoff and use the code GOBBLE in the message can get either an annual subscription for $ 556 (10% off) or an annual subscription plus my book signed for $ 600.

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The Best Insurance Policy Ever Written…….Bar None (pardon the pun)

StealthFlation.org Stop getting your rocks off making fun of the gold bugs.  Get the hard asset now while it’s undervalued my friends.  Hold your nose, dive in and simply consider it heavily discounted long term insurance, as you would any required insurance policy.   After all, wouldn’t you buy the best long standing health insurance […]
Slope of Hope

Top Trade Ideas for the Week of November 30, 2015: The Rest

Written By: DragonFly Capital

Here are the Rest of the Top 10:

Fifth Third Bancorp, Ticker: $ FITB
fitb

Fifth Third Bancorp, $ FITB, dropped hard in August from a consolidation zone. The next few months saw a failed attempt higher and then some consolidation before a move higher in mid October. That found resistance at the prior zone of importance and pulled back. It made a higher low and moved back up through the zone last week. The RSI is rising and bullish and the MACD is rising, both supporting further upside.

Huntington Bancshares, Ticker: $ HBAN
hban

Huntington Bancshares, $ HBAN, also dropped hard with the market in August and then consolidated for a couple of months. The rise that began in October met resistance at the pre-drop level and pulled back to a higher low at the 20 day SMA, before rising to test it again. The RSI is bullish and rising and the MACD is flat but positive. A new high is an entry signal.

Old Dominion Freight Line, Ticker: $ ODFL
odfl

Old Dominion Freight Line, $ ODFL, has been in a downward channel since March, with the exception of a small period riding the top of the channel as support in August. The price action may have changed in September though as it has been moving sideways since then. Into the new week the price is pressing against resistance with the RSI pressing against the bullish zone. The MACD is bullish and rising. Look for a move over that resistance to participate.

PerkinElmer, Ticker: $ PKI
pki

PerkinElmer, $ PKI, fell lower with the market in August then took a second leg down in September. A 25% drop in all, before a strong run higher to the prior resistance zone. After a small pullback the price reversed back up and is testing that resistance again. The RSI is bullish and rising and the MACD is crossing up after a short pullback of its own. Look for a push through the resistance as a signal to participate.

Zoetis, Ticker: $ ZTS
zts

Zoetis, $ ZTS, spiked 10% higher in June only to reverse and more the very next day. It then embarked on a downward journey finding a double bottom near 40 in October. Since then it has been slowly rising and looks ready for more. The RSI is in the bullish zone while the MACD is rising, both supporting more upward price action. Look for a break of consolidation to participate higher.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into December sees the equity markets looking solid and maybe with new leadership.

Elsewhere look for Gold to continue lower while Crude Oil builds a bear flag in its longer downtrend. The US Dollar Index is breaking out to multi-year highs while US Treasuries consolidate with a short term bias higher. The Shanghai Composite broke consolidation to the downside and may be resuming the downtrend, while Emerging Markets are moving lower after failing at resistance.

Volatility looks to remain subdued and possibly fall keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ paused this week and the IWM has taken over leadership in the short term. All look positive on the intermediate term chart. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview April 17, 2015. This week only, all annual subscriptions will receive a signed copy of my book Trading Options.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Contact me at greg@dragonflycap.com before Sunday kickoff and use the code GOBBLE in the message can get either an annual subscription for $ 556 (10% off) or an annual subscription plus my book signed for $ 600.

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