Thursday, May 18, 2017

Volatility Spike In Stocks

After non-stop talk about how low VIX  has been unexpectedly we get an enormous 1-day spike +46% to be exact. Summer months tend to get volatile so volatility might be here to stay.

Yesterday we printed 1,109 new 1-month lows when we get these 1-day spikes in new lows we typically get a couple of days of positive volatility in individual stocks as you can see in the chart below.

Click to ENLARGE

The red line graphs 1-month new lows and the white line graphs the number of stocks that moved +4% or more on that particular day.  Spikes in 1-month lows typically leads to spikes in stocks up 4% or more over the next few days. Mean reversion at its best.

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Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.

Two Growth Stocks To Keep On Your Radar

Zillow Group ($Z) and Impinj ($PI) are two stocks that many consider growth names. What's interesting about both stocks is that the reaction to their earnings results catapulted both stocks from long bases. The weekly earnings low on both stocks give you a clear stop loss if you were to get involved in the names.




I'm always intrigued by long bases, typically a prolonged period of contraction leads to a prolonged period of expansion, hence the term; the bigger the base, the higher into space it goes.

ZILLOW'S First Quarter 2017 Financial Highlights
  • Revenue increased 32% to $245.8 million from $186.0 million in the first quarter of 2016.
     
    • Marketplace Revenue increased 36% to $230.3 million from $169.0 million in the first quarter of 2016.

       •  Premier Agent Revenue increased 30% to $175.3 million from $134.5 million in the first quarter of 2016.

       •  Other Real Estate Revenue1 increased 93% to $34.8 million from $18.0 million in the first quarter of 2016.

       •  Mortgages Revenue increased 23% to $20.3 million from $16.5 million in the first quarter of 2016.
IMPINJ Highlights from IBD;

Impinj earned an adjusted 1 cent a share, reversing a year-ago loss of 7 cents a share, in the March quarter. Sales rose 47% to $31.7 million. Analysts were expecting Impinj to lose a penny a share on sales of $30.7 million.
Impinj RFID chips are used by businesses to track such items as apparel, medical supplies, automobile parts, luggage and food. Applications for its technology include inventory management, patient safety, asset tracking and item authentication.
"Demand for item intelligence continues to accelerate from a broad set of customers and industries, and will provide a sustainable tailwind" for Impinj, Piper Jaffray analyst Troy Jensen said in a report. "Impinj remains an industry leader and is well positioned to experience strong near- and long-term revenue growth as the industry continues to inflect."

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Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.

Looking Forward To Friday



The market came under pressure yesterday due to political reasons, the Dow Jones was off 370 points, volatility spiked 46%.  Without getting too much into politics, we can assume that the market will be under some pressure until we get a little more clarity. That clarity might come next week if FBI Director James Comey decides to accept the Senate panel invitation to tell his side of the story.

Recently we have had a streak of down Friday's, 7 out of the last 9 Friday's the SP500 has closed lower. The reason and or justification for this has been that investors are concerned of Trump doing something over the weekend that might hurt the market.

It will be interesting to see how the market reacts tomorrow, the reaction can give us some clues on how serious the current issue will be taken and if most of it is already priced in.


SIGN UP HERE FOR OUR STOCK PICK OF THE WEEK.


Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.

Monday, May 15, 2017

The Indices Are Rolling

The indices have been holding up well, we can talk about how 1-month and 3-month new lows are expanding, but that's all irrelevant until we start seeing some price deterioration on the actual indices.


$CAI, $PI, $COOL, $SCSS, $DY, $MSG, $CCCR are the stocks on my trading watchlist today.


I have an interest in these stocks on the long side if and only if they go through yesterday's high plus .10-cents. This single criterion will narrow down the list and get you involved only in the stocks that are on the move. The primary drivers of stocks in the short term is momentum and mean reversion. Stocks that have a significant move in the short term tend to rest and move sideways for a few days and then resume higher more often than not. These momentum bursts typically last 1-10 days and can produce gains of 5-20%.


SIGN UP HERE FOR OUR STOCK PICK OF THE WEEK.


Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.

Friday, May 5, 2017

A Prescription For Profits

I’m always intrigued by huge bases, typically a prolonged period of contraction leads to a prolonged period of expansion, hence the term; the bigger the base, the higher into space it goes.  We’ve pointed out a few bases over the last year that have made huge moves after we flagged them.  We pointed out $QSII on 7/10/2013 it ran 18% in a few weeks, $PVA on 7/17/13 at $5 and a few months later at its peak it was up 250%, on 9/13/2013 we highlighted $HZNP at $2.75 at its peak 6 months later it was up 481%. These huge bases don’t show up on a regular basis especially after a long-running bull market, but when they do you have stay on top of them because once they emerge from their bases (stage 1 to stage 2), they usually do very well.  

Stan Weinstein, the author of Secrets For Profiting In Bull and Bear Markets, has a great definition the "basing area," specifically the one's that are formed after several down months.

The Basing Area: "After XYZ has been declining for several months, it eventually will lose downside momentum and start to trend sideways. What's actually taking place is that buyers and sellers are starting to move into equilibrium, whereas previously the sellers were far stronger, which is why the stock had plummeted. Volume will usually lessen--dry up--as a base forms. But often volume will start to expand late stage 1, even though prices remain little changed. This is an indication that dumping of the stock by disgruntled owners is no longer driving down the price. The buyers who are moving in to take the stock off their hands are not demanding any significant price concession."


WebMD Health Corp. (WBMD) is the leading provider of health information services, serving consumers, physicians, healthcare professionals, employers, and health plans through our public and private online portals, mobile platforms and health-focused publications.
The WebMD Health Network includes WebMD.com, Medscape.com, MedicineNet.com, eMedicineHealth.com, RxList.com, OnHealth.com, Medscape Education (Medscape.org) and other WebMD owned sites and apps.
WebMD has been trading in a base for 9-months after peaking at $66 back in May of 2016. The sellers took charge and kept a lid on the stock until September of 2016, that's when the buyers and sellers started to find equilibrium and the stock began to trade sideways between $49ish and $54ish. Buyers supported the lower end of the range, and the sellers held their own at the top of the range. All that started to change in February of this year, the buyers began to get a little more aggressive on the buy side, they are no longer waiting for the stock to get to the bottom of the range to pick up stock. What we have seen is a pattern of lower highs, this is exactly what happens to right before a stock that has been stuck in a range finally breaks out.

Recently activist Clifton Robbins of Blue Harbor Group raised their active stake to 8.99% as of March 3rd.

Here's what he had to say about WebMD;



I like the stock here at these levels with a stop at $52.90.

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Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.

Wednesday, May 3, 2017

Do Less In May and Don't Go Away

There's very old saying on Wall Street; "Sell In May and Go Away," like everything else, sometimes it works sometimes it doesn't. The market has hit a short-term peak in the month of May enough times to respect the saying.

Here's the SP500 average return in the past 10-years and during post-election year; peak in May, low in June, retest in the fall. This could be used as a guideline.


The great Urban Carmel from Fat-Pitch.blogspot.com pointed out that the average intra-year decline when the SP500 has been positive January and February is roughly -7 to -9%.


The reason why Urban is highlighting only the years in which the market was up January and February is that historically when January and February are up months, the market does very well for the entire year.  Since 1950 when the SP500 was higher the first two months 26 times, 24 of those times it was higher by year end. Here's the research by Ryan Detrick.


What I found interesting was that the most recent pullbacks under this January-February criteria have commenced in the month of May.

  • 2013 it was a 1-month shake out that started in May -7.5%.

  • 2012 a 1-month shake out that also happened in May -11%.

  • 2011 a 19% pullback that commenced in May.

  • 2006 an 8% pullback that began in May.

Right now price action is not giving us any clues that we are going to roll over and follow the previous script, but if you look at the charts above we did not get any clues back then either. The SP500 just peaked at highs and rolled over.

Bottom line; as you can see on the charts above every pullback ended up being a buying opportunity, the short term pain became a long term gain.  

SIGN UP HERE FOR OUR STOCK PICK OF THE WEEK.


Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.

Friday, April 28, 2017

Leaders Are Going To Lead

We had big earnings reports from AMZN, GOOGL, WDC, all three acted well in the after hours and are higher in the pre-market. Microsoft, Starbucks, and Intel are not fairing as well.  Amazon and Google are extended in the short-term and putting new money behind them today is probably not a great idea, both stocks especially Amazon are in the "it's never going down camp".

I have quite a few names on my list today, a lot of small biotechs, they have been acting well.


I have an interest in these stocks on the long side if and only if they go through yesterday's high plus .10-cents. This single criterion will narrow down the list and get you involved only in the stocks that are on the move. The primary drivers of stocks in the short term is momentum and mean reversion. Stocks that have a significant move in the short term tend to rest and move sideways for a few days and then resume higher more often than not. These momentum bursts typically last 1-10 days. 

SIGN UP HERE FOR OUR STOCK PICK OF THE WEEK.


Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

We live in a world in which we are bombarded with information, tweets, blogs, etc., content is the new salesman, content is the new marketing, content is the new networking. With information being so readily available, bloggers try to differentiate themselves with their writing skills, volume, and consistency, putting out blog posts to meet quotas. We are seeking to stand out from the crowd by showing performance, by taking all the information and seeking alpha, that’s the sole purpose of the blog. It won’t always be pretty; it’s never easy, and performance is spotty, but we seek superior risk-adjusted returns, not notoriety for our writing skills.  If this is something you can relate to, then this blog is for you.