$TLRY – When the dummy becomes the genius

Posted on by diogenes227

Can a dummy become a genius?

With the right setup and a dose of luck, in stock trading, of course. Maybe not to the level I am about to chart (see below), but it happens more often one might think.

It’s the setup that creates the luck. And it takes persistence and experience to recognize the opportunity, and discipline to play it out.

In this link in early August – Buying IPOs For Dummies— I suggested the setup:

In the tradition of the “For Dummies” books, I give you the short and sweet on trading and/or investing in IPOs:

Buying into an IPOs is actually one of the easiest decisions in stock investing but never let a broker con you into doing it the day of the offering.

Instead, note the high price and the low price on the first IPO is traded. Those are the lines in the sand or the Darvas box around the first day of trading (see the charts below). The time to buy, invest, is on a close above the high of the first day with a stop loss below the high of the first day.

That is usually a low-risk trade since the real good news comes when the stock proves it can move up from all the hype surrounding the offering itself and if it falls back the stop to exit can close by and obvious – either below the high of the opening day or below the low of the opening day depending one’s own time parameters and risk tolerance.

Whatever the latest stock IPO, there is nothing more to say except maybe “Keep it simple, dummy!”

That having been said, let’s take TLRY (Tilray, Inc.), a timely recent IPO launched in the wake of the Canadian legalization of all marijuana products.

Talking about smokin’ hot! According to the setup (see the chart below), that was a buy at the $29.77 close the day after its IPO day, July 20th. If one happened to gamble on it as it gaped above its IPO high that day at $24.25 or so, all the better. At $29.77 it is now up 400% in two months.

This is a stock!

Granted this doesn’t happen this big this often — this took a MASSIVE DOSE OF LUCK — but it does happen regularly to a lesser degree (maybe I’ll bring up MESA next time).

By the way, if TLRY breaks that fast average on the chart be ready to get out of Dodge. That’s a parabolic and it’s likely to be a violent break. In fact today (at the moment) looks like a blow off. Might want to leave town any minute…

(click on the chart for a larger view)

Bitcoin and its buddies on the blockchain

Posted on by diogenes227

If ever there was a bubble that was obvious it was Bitcoin and its buddies – the other cryptocurrencies and finally the blockchain stock mania that lasted what…a week or so?

Every time someone would pump Bitcoin or whatever other Oreocoin someone dreamed up the night before last, I’d ask “Can you buy a snickers bar with that?” I suppose you can somewhere but I’ve yet to find anyone who has.

I thought this pseudo money would crash when it was reported that New Orleans lap dancers were having bar codes tattooed onto their breasts to be able to accept crypto-scans as tips.

Then along came the blockchain stocks (see the wild charts below), which is to say companies like Kodak (KODK) changing its name and tripling overnight, or Riot Blockchain (RIOT) which looked as if it was the brain child of two or three guys smoking weed in Colorado who became multi-millionaires almost as a drugged-out joke. Everyone tells me cryptos may go bye-bye but blockchain technology, stringing together each and every financial transaction, is here to stay. Of course, a million computers all over world grabbing and archiving when someone (say, in Latvia) finally gets to buy a snickers with a Bitcoin.

How much electricity goes into that single candy bar?

And of course, as history would have it (always), the obvious became utterly obvious when it all finally crashed.

These is just a nutty time, typical end-of-a-bull-market craziness. Keep that “end-of” in mind. It takes a while and it’s virtually impossible to pick a market top of significance but bit by bit the history of how it happens keeps showing up. AAPL hit a $1trillon market cap probably because the company has enough cash on hand to buy that prize for itself. Then AMZN hit $1trillion too – for one day.

One of these bellwether stocks — AAPL, AMZN, FB, good heavens GS –is going to take a tumble that matters and actually follow through to the downside while no one is really paying attention.

When that happens a bear will be here. Maybe tomorrow. Or maybe today.

(click on the chart panel for a larger view)

UPDATE – $SPY #Options trade on a “Turnaround Tuesday”

Posted on by diogenes227

Pretty great day in the gone-long options world.

Bought the Wednesday 287 call based on the immediate post below speculating that today would be a turnaround day suggested by history and by David Bergstom’s analysis at the “See It Market” site.

Several notable stocks were also up more than 3% from the open: NFLX, AMZN, BABA, and AAPL almost at up 2.95%. TQQQ, the Nasdaq 3xLeveraged ETF, was up 3.8% from the open.

An $AMZN trade that was a coulda, shoulda, but not a woulda…

Posted on by diogenes227

Shared the chart below of AMZN around the internet after the close last night with the suggestion that this was an obvious setup to buy puts or sell calls.

It was prompted by this post here yesterday:

$AMZN – a leader stumbles?

The idea was that the stock would continue its stumble today (and maybe for a week or so). See the blue boxes marking the spots on the chart when that has happened before as it comes off overbought (the yellow color coding on the chart).

Since long-term breadth had just turned down after a long run up and everything in the market was pretty much overbought, it was likely there would also be market pressure on the stock besides it being overextended on its own. Then there was that history thing in play again – the best indicator of all since it repeats or rhymes or whatever but it mostly whispers what’s going to happen next again and again.

It was a trade for today’s open. The most aggressive and least expensive entry would be an in-or-at-or-just-out-of-the-money put expiring Friday.

I coulda and probably shouda but I did not trade this. In general I don’t like stock options, don’t like the spreads, don’t like the lack of liquidity when it’s time to close it out, don’t like the complications (all those Greeks and spread strategies). I like my options trading plain and simple – it either goes up or it goes down, it is either a call or a put. I trade SPY options.

I threw this out there last night for entertainment purposes primarily, and, as it turned out, it turned out to be quite instructive for anyone who does like stock options. To each his or her own way to play these money games…

AMZN had a big move down (as history whispered it would). The 1995 Put, expiring Friday, from the open peaked during the day up 260% and ended the day up 161% (see the companion chart below). That’s somewhere between $26,000 and $16,000 on a small $$10K capital commitment. Not bad for a day trade? This could drop more tomorrow making that put even more profitable but come on…it’s a home run with no need to risk an overnight reversal.

And besides, moves like this happen again and again, nearly everyday, somewhere in the market.

I didn’t even notice TWTR. Market-timing, options-trading bears must have made some serious money there today.

(click on the charts for a larger view)

UPDATING getting high in the weed stock patch 9/6

Posted on by diogenes227

UPDATE 9/6: as suggested in this post yesterday the marijuana stocks were looking vulnerable to a correction. Today they took the projected tumble: TLRY down 15.4%, CGC down 4.5%, CRON down 7.55, the sector ETF, MJ, down 2.1%, and INSY down 7.6%. See updated chart below. There are still substantial profits on the table. Might think about lightening up, if not exiting completely (it’s been a great fast run). There is likely more downside to come since the market, even if it bounces tomorrow, is now in a down thrust and these stocks which have gone straight up and can also go straight down).

This is an update to this post two weeks ago:

A Serious Swing Through The Weed Patch

Marijuana stocks have gone crazy in the last 10 trading days, putting on the kind of gains that last marked the dot-com bubble in 1999 and 2000, which of course lead to the end of the nineties bull market.

TLRY up 189%, CGC up 52%, CRON up 87%, the sector ETF, MJ, up nearly 28%.

See the chart panel below. Gains per $100k traded are in the white flags on the lower right of each chart.

If I owned these, I would exit on any down bar to preserve profits. Note IIPR and INSY while still profitable have followed through currently on down candles. CGC turned in a red candle today which makes it worth watching on the open tomorrow. In fact, CRON and MJ also look vulnerable.

Congratulations to anyone hold these, but, me thinks, one should not fall in love with them.

(click on the updated chart for a larger view)

$AMZN – a leader stumbles?

Posted on by diogenes227

What if AMZN, after all the hoopla, only spends one day at a $1Trillion market cap?

As noted back on July 1, halfway through this year, in this link:

THE MARKET WALKS THE EDGE OF A LONG-TERM CLIFF

If a leading stock like AMZN stumbles…how mean will a reversion to the mean be? The stock’s 50-day moving average is nearly 150 points below today’s close (see chart below). Hard to believe in this the oldest of bull markets can end but a serious decline always begins with just one day down.

AMZN and AAPL have been the leaders. They both have had moves that resemble blow offs on this last upswing. Not often stocks as big as these run up 25% virtually out of nothing more than a buying panic. Now if AMZN follows today’s decline with more down to come, how long can AAPL alone hold up the market?

Just speculating here on a bit of market timing since it’s damn near impossible to call a market top, but more and more signs appear and one of these days one or the other of the signs will be telling.

Bear markets can come out of the blue. Out of the fog of complacency. Just when everyone believes the leading stocks and the bull itself can go up forever, they and it won’t.

(click on the chart for a larger view)

#MarketTiming – Pot stocks partying like it’s 1999

Posted on by diogenes227

Canada legalizes marijuana and the stocks get high.

In the past ten trading days, with confirmation from long-term breadth as a market-timing signal, sector newcomer TLRY is up 200%, CRON up 97%, all up, CGC 50%, the sector ETF MJ (this might be the more reasonable way to play the sector), even long-term steady, GWPH, which actually makes money in medical marijuana is up nicely. The cash/percentage gains per $100K invested are the white flags on the lower right of the charts below.

In 1999, it was the dot-coms gone crazy with no more than hopes and dreams of massive monies to be made. With, most notably AMZN, the hopes and dreams have come more than true. So it’s likely to be with cannabis too in the fullness of time, but like in 1999 with the dot-comes, it is now no more than party time.

If anyone rolled these up ten days ago, congratulations! If not, they will correct, probably any moment now with the market but, no matter, these stocks will be obvious prospects for the next market upswing.

(click on the chart for a larger view)

#MarketTiming – Summing up profits on a 10-day upswing

Posted on by diogenes227

How important is long-term breadth to the swing trader?

It is a trigger to get into the trade and an answer to one of the most difficult questions in market timing and stock trading — When to get out?

Measured here by the McClellan Summation Index ($NYSI), this latest upswing began on the open of of 8/20 and closed on the open today, a 10-trading-day swing. See the indicator in the center band of the charts below).

On the swing, the 3xleveraged ETFs made solid gains for the 10 trading days: TQQQ up 8.6%, TNA up 5.7%, UPRO up 3.7%, FNGU 11.5%, SOXL 19.7%, FAS 2.8%, LABU 18.8%, ERX 4.6%. There were no losses in the group.

On the swing, among my “bellwether stocks” AAPL racked up a 4.9% gain, AMZN gained 7.3%, NVDA 15.9%, NFLX 14.3%, TWTR 5.6%. But there were also losers – TSLA down 2.1% , GOOGL down .9%, BABA 4.4%. BIDU 2.4% and FB down 2.5%. The entire basket was up 1.98%.

The top-ten stocks in my nifty-fifty list coming into the swing outperformed both of the above stock baskets with CRC up 38.4%, TNDM up 36%, PVAC up 4.8%, RGNX up 13.2%, WTI 15.1%, ARWR 4.6%, I up 2.9%, HLG 4.6%, TLRD 7.7% and the only loser in the group was MDGL down 3%. The nifty-fifty stock basket for the swing gained 12.48%.

How important is long-term breadth for the swing trader?

The “When to get out?” was today’s open for everything (market timing). As of the moment of this writing all of the symbols mentioned above are down with the exception of MDGL, the only loser in the nifty-fifty basket (that, I believe, is the market giving a wink to traders just for the fun of it).

Except for the fact we are still in a bull market, today’s breadth sell could have been a short. For aggressive traders, it was.

A main path to the “persistence, experience and discipline” it takes to be a successful trader is the trigger-in one is comfortable with and the trigger-out one is willing to accept without question.

(click on the chart for a larger view)

#SwingTrading – a serious swing through the weed patch

Posted on by diogenes227

Marijuana stocks are the ruling weeds in the market garden on this upswing.


SWING TRADING TRIGGER – AUGUST 16TH

That was the technical trigger for the open three days ago.

The fundamental trigger came on the news Constellation Brands (STZ), U.S. distributor of Corona and Modelo beers, was investing $4 billion for 38% of CGC. All of a sudden, the Wall Street mob discovered it might be acceptable to pour money on the weed patch, particularly those springing up in Canadian gardens where marijuana has recently been made legal throughout the country.

As a result, of those traded in the U.S., CGC is up 26; a new IPO, TLRY, up33%; CRON, 27%. Even the most legitimate of the medical marijuana companies, the stalwart GWPH is up 3.6%. See the white flags on the lower right of each chart below which correspond to the cash and percent gained for each $100K invested.

Of particular note is MJ, up 10.7 percent, the sector ETF for the weed patch. MJ tracks the Prime Alternative Harvest Index, generally by holding many of these stocks and others traded on the Toronto Exchange.

(click on the chart panel for a larger view)

It’s been a great run for Ferrari but its $RACE is run

Posted on by diogenes227

Nothing like stair-steps in an uptrend.

See the chart below.

If this race was hill climb, RACE obviously finished in the money.

But, a couple of observations: 1) the stock has not had a breakdown from a boxed consolidation until recently; 2) there’s also a small head-and-shoulder top formation inside the box; 3) when leader flag it’s a warning for the general market too.

So what now? It’s a short the bounces until it makes a new high, and as long as it continues breaking to the downside.

And keep in mind this could be a warning in a possible transition from bull market to bear market.

(click on the chart for a larger view)