Wednesday, June 28, 2017

Going Back To The Well

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. Buying stocks emerging from bases is by far my favorite set-up. $Z $PI and $WKHS are some of the ones we've highlighted in the last couple of months. $Z and $PI on 5/18/2017, Zillow has moved 24% since then and PI +50% since the POST. WorkHorse (WKHS) went up as much as 33% since this post on June 2nd, POST. They are not all winners, but it's a high probability set-up.

Stan Weinstein, the author of Secrets For Profiting in Bull and Bear Markets, describes the basing area as follow.

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."

PDLI BioPharma $PDLI and Vical Incorporated $VICL are two biotech stocks that are just emerging from long bases. PDLI is emerging from a 7-month base and VICL from an 8-month base. If these stocks can manage to stay above the top of their respective ranges more gains are more than are likely to follow.



STOCK OF THE WEEK RECAP

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.


We Broke The 50-day, So What

Yesterday the Nasdaq Composite and the Nasdaq 100 (QQQ) both breached and closed below their respective 50-day moving average for the first time since December 2016.

The 50-day moving average is a widely followed moving average, whether this breach and close will mean anything, only time will tell. The outcome in the QQQ and Nasdaq composite in the near future will either strengthen or weaken the 50-day narrative.

What I think is more important, is something we mentioned on June 16th, here is the gist of it; The FANG stocks have been under pressure. They had a big sell-off that was followed by a small bounce, and then they sold off again. It's probably not a big deal, but the price action in these stocks before this week was very smooth and now they are loose and volatile. Typically, or at least in the past when the price action went from smooth sailing to loose and volatile it signified a trend change, we'll see. LINK

As you can see in the chart below, you can see the smoothness of the price action in the NASDAQ 100 until 6/9/2017. Since then the price action has been loose and volatile.

Click to ENLARGE

The Semiconductor index has been a leader in the market, and like the Nasdaq, the price action went from smooth to loose and volatile.


I would recommend some caution in the tech names until the price action tightens up.

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STOCK OF THE WEEK RECAP.

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, June 16, 2017

Another Amazon Derivative Play

On 4/4/17 Plug Power ($PLUG) announced that it reached an agreement with Amazon ($AMZN) to utilize Plug Power fuel cells and hydrogen technology in its fulfillment network (LINK).

Amazon was granted warrants to acquire up to 55,286,696 shares of Plug Power shares at $1.189. Under those terms, Amazon must spend at least $600 million over the life of its contract with Plug Power to take full advantage of that deal.Amazon and Plug Power will also begin further developing Plug's technology together, including expanding the applications for Plug Power's line of ProGen fuel cell engines.

Amazon has done similar deals over the last year with two air delivery companies ($AAWW, $ATSG) and T-shirt company ($KRNT).  $AAWW, $ASTG were big winners for us, we wrote about them here TWO AMAZON DERIVATIVE PLAYS.

I think today is a good day to mention the Plug Power/Amazon deal after Amazon announced that it will buy Whole Foods.


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.

Loose and Volatile

The FANG stocks have under pressure. Lately, they had a big sell-off that was followed by a small bounce, and then they sold off again. It's probably not a big deal, but the price action in these stocks before this week was very smooth and now they are loose and volatile. Typically, or at least in the past went the price action goes from smooth sailing to loose and volatile it signified a trend change, we'll see.


On another note, I still continue to see decent swing set-ups on the long side from smaller mid-cap names. Part of the reason is that the Russell 2000 has been acting very constructive lately.



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. 


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Stock Of The Week Recap


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, June 14, 2017

All Good Things

The Fed will announce a possible rate hike today, the consensus believes they will raise rates by a quarter of a percent.  No one knows how the market will react but here is how the SP500 reacted the last three times; 12/16/2015, 12/14/2016, 3/15/2017. One big pullback, two shallow ones. The good thing is, that we don't need to know.



We are also coming into the second half of June which historically has been weak. Here is how the average June has played out since 1950 and in the past 20-years, chart by Ryan Detrick.


On the bright side, the Small Cap index (Russell 2000) has broken out of a 6-month base and it has been holding up well. The Russell 2000 has been underperforming relative to the SP500 and the Nasdaq. If the Russell 2000 continues to act well it will broaden out the breadth and finally, we can stop hearing about all the breadth negative divergences. Small caps is where the big percentage moves happen. This looks like the beginning of something bigger, and that's a big plus.


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, June 12, 2017

Tech Risk Off

It was a TECH risk off day, the Nasdaq Composite sold off hard on huge volume, the FANG stocks had a tough day, and Amazon had a flash crash. Amazon dropped about 34 points in a couple of ticks. Pre-market it seems like the pressure is still on the tech names, many are bidding down.


The tech sell-off coincided with Citron's research cautious tweet about crowd favorite NVDA. The tweet reversed the stock from an 8 point gain to a 10 point loss on 92-million shares which is about 4-times the daily average.


For the old school home-gamers everything looked fine at the close, the Dow Jones closed the day up 89 points. The small caps held up well also with a half percent gain led by banks and oils. But the carnage was in tech.


The small caps are the ones to watch here, the IWM recently broke a 6-month consolidation zone to the upside and looks like it will take the lead from some of the larger names going forward.


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Stock of The Week Recap

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.

Tuesday, June 6, 2017

Buy Them Tight Sell Them Loose

When I get involved with a swing trade, I want the trade to work immediately. You want to look for a stock that has momentum and then is going through a consolidation period with very low volatility. You want the candles to get tighter and tighter as the days go buy and you want to jump onboard at the first sign of expansion. Buy them tight, sell them loose.

$KEM, $ALGN, $OLED, $MTLS are good examples of what I'm talking about.



They are not always going to work like this, but it's what you should expect if you buy them right and don't chase.

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Stock Of The Week Recap

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, June 2, 2017

How High Can They Go

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 few years and have done very well with them. 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.  

Two recent examples that we flagged here on the blog were $PI and $Z (LINK), $PI made a quick 20% move, and $Z is up about 10% since the post which was written on May 18th. Those two stocks are just starting to move in my opinion.

Stan Weinstein, the author of Secrets For Profiting In Bull and Bear Markets, describes the basing area as follow.

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."

$PDLI, $ZTO, $COTY, and $WKHS are four stocks that are trying to emerge from long bases.

$PDLI is a BioPharma name that has been trading sideways for 6-months. The buyers have started to get more aggressive recently, you can see the pattern of higher lows, they are no longer waiting to pick up the stock at the bottom of the range. The stock has also tightened up considerably in the last 15 days.


$ZTO is an express delivery company in China. The company recently came public, and it has a very interesting story. The stock has been trading sideways for 6-months, and it's trying to emerge from this consolidation zone. You can also see a pattern of higher lows as the buyers are starting to get antsy. The company just recently announced a $300 million buyback plan.


$COTY manufactures, markets, and distributes beauty products worldwide. This stock has been trading sideways for 6-months and also has a pattern of higher lows. The most interesting thing about $COTY is that the insiders have been buying up the stock hand over fist. In the last five months, the insiders have picked up 4.3 million shares in the open market at prices ranging from $18.39 to 19.05. There many reasons why insiders sell stocks, but only one reason why they buy them.


Base patterns can be very powerful, the longer, the better, and once they get going they are not easy to stop, a recent example is $SHOP. Shopify broke out of a 6-month pattern and never looked back.


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Stock Of The Week Recap

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.

Risk On

The Russell 2000 led the way higher yesterday with a gain of +1.93%, made breadth great again and this happened.


The sectors that have been lagging for weeks were the best-performing sectors yesterday; Bios, Banks, Energy, Small caps. Facebook, Amazon, Apple, Google, Netflix, Tesla, were down for most of the day until a late day push (Netflix and Tesla closed lower).

Risk on happened real fast, the key will be follow through, the Russell 2000 has been stuck in a range 6-months and now is testing the upper end of its range.


$KEM, $SGMO, $MZOR, $TRVG, $BZUN, $WKHS, $GRUB, $PDLI are the stocks on my watchlist today.  These names are some of the top momentum names currently that are going through a low volatility period. We want to get involved at the first sign of expansion.

Stocks move in short term momentum bursts that typically last about 3-5 days.

Here are two examples;


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Stock Of The Week Recap

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.


Thursday, June 1, 2017

Can't Stop Won't Stop

Underneath the surface the market continues to deteriorate, 1-month new lows and 3-month new lows continue to expand. The Nasdaq Composite is nearing all-time highs but yet the ten-day moving average of 52-week lows minus 52-week highs is almost at breakeven, but FAANG-T is doing well, and the indices minus the Russell 2000 is masking all the weakness. Negative breadth divergences are not really actionable, like everything else in the market, sometimes it works other times it doesn't, but negative breadth divergence is weak signal more often than not.


Regardless, we still have some decent set-ups, and we have to give stocks the benefit of the doubt, negative divergences can right themselves if more stocks start to participate, which can very well happen.

$SGMO, $CHGG, $MTLS, $BZUN, $OLED, $WRLD, $RLGT, $PDLI, $OSIS are the names on my swing trading watchlist, these names are some of the top momentum names currently that are going through a low volatility period. We want to get involved at the first sign of expansion.


Here are two examples of what we look for;


Like Pradeep Bonde says- stocks move in momentum bursts that last 3-5 days.

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Stock Of The Week Recap

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 31, 2017

Market Participants In Disbelief

Many are in disbelief of the market action, the indices continue to print highs while a majority of stocks are not following suit. It feels like a lot of money from small caps, energy, banks, biotechs is flowing out and flowing right into Facebook, Amazon, Netflix, Apple, Google, and Tesla.

As the Nasdaq Composite prints new highs every day the ten-day difference of Nasdaq stocks new 52-week high minus 52-week lows prints new lows.


We have 531 stocks up 25% or more in the last 65-days versus 506 that are down 25% or more in the last 65-days. That's pretty even for a market printing highs,

SP500 vs. the 5-day average of stocks up 25% or more in the last 65-days minus the stocks down 25% or more in the last 65-days.



We also have more stocks down 13% or more in the last 34-days than we have stocks up 13% or more.


What is the solution to this? Own the index ETF's; $QQQ, $SPY, $IWM, $ONEK. Simple.

Will this negative divergence finally catch up to the indices? Maybe. Individual stocks can also catch up to the indices and make all this bad breadth go away. Negative divergences, unlike positive divergences, don't work that often and can last a very long time. On the days when the big liquid leaders (FAANGT) take a breather, the laggards bounce.

This slow grind up is rocking many to sleep.

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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 24, 2017

Watchlist 5/24

$STDY, $PULM, $CGIX, $HIIQ, $BCLI, $CBAY, $RARX, $IPXL, $PDLI, $ZTO, $CMTL, $DXPE.



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.

STOCK OF THE WEEK RECAP;


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.

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.

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.