July 21, 2014

Earnings Continue – Monday’s Charts $NQ_F, $GC_F

Yesterday I spent sometime reviewing the technical structures produced by the broader indexes, treasuries and gold from last week and looking towards this week.  After Monday, there aren’t any real changes to make to the overall look of to either the broader indexes, treasuries or gold.  In fact all the markets appear to be on track to completing structures that should ultimately take the DJIA and SPX to new highs, the NDX to new recovery highs and the RUT – well to a B-wave high – more on that later.

gold forecastMonday’s trading was fair to active in the broader indexes, treasuries and gold.  Both gold and treasuries saw a renewed “flight to quality” on the brewing battle between Israel and Hamas.  The finger pointing continues regarding who ultimately holds the responsibility for taking down MH 17 last Thursday.  Fortunately, the pro-Russian rebels have agreed to turn over the “black boxes” to the Malaysian authorities and transport the remains of the 298 on board to the Netherlands for identification and eventual return to their families.  The global ramifications remain somewhat unknown at this point and in my opinion disregarded as unimportant by many in the US markets.  Remain alert though, as sudden changes in this geopolitical situation could produce a tsunami that would rush over the global markets with greater intensity and most likely without advance warning.

earningsWhen trading began the broader indexes were again reacting to geopolitical events unfolding in Gaza between Israel and the Palestinians or more specifically Hamas.  The pullbacks didn’t get very far before US traders determined that upcoming earnings were more important to focus on and it was off to the races.  The NQ was the only future that actually worked its way back to positive before getting caught up in after hours position squaring and lukewarm earnings from NFLX.  This has left the NDX in about the same position it left off with on Friday.  The market would need to break more convincing below 3900 to raise the stakes on a quick ride down to the 3850 area.  If additional selling is contained above 3910 expectations would be for another attempt (likely successful) at breaking above 3941 and on up towards 4000.  With AAPL and MSFT reporting tomorrow, FB on Wednesday, and AMZN on Thursday I’m not expecting much in the way of fireworks until at least APPL and MSFT report after the close tomorrow.

chipolteOn a positive note, Chipotle (CMG) drew a “blow the doors off” reaction after reporting a 26% in profits on strong sales, which just happen to offset the higher food costs.  The stock ran to a new all time high reaching $650.  That’s a lot of burritos – I guess folks don’t mind paying up for a burrito instead of absorbing the same higher food costs passed on to consumers by Safeway or Whole Foods Markets.  Must be that wonderful service and atmosphere Chipotle offers as customers spend $10 or more on average for a burrito or burrito bowl.  Ok, I admit I’m guilty of actually liking the chicken burrito bowl, and I pay $2.50 extra for guacamole.  I must be lazy since there are two huge avocado trees in the back yard that drop more avocados then my household or all the squirrels and raccoons in the neighborhood can eat.

netflixNFLX initially produced a “blow the doors off” reaction, but that was very short lived as the company then guided Q3 net income down to $55 million versus estimates of $67 million.  The stock reached $470 after hours before dropping quickly to $435 and then settling at $457 – net the stock gained about $5 post earnings report.  I’m not sure how long the company will be able to ride on the success of its hit series “Orange is the New Black”, but for now it is still producing good results.

Over in the tech sector Texas Instruments (TXN) also saw revenue increase by 8% but guided Q3 expectations in the band of analyst’s expectations, which put the kibosh on the stock rallying after hours.  Next up for the tech sector will be MSFT and AAPL – either way I suspect some fireworks from both whether or not they blow the doors off or disappoint.  Both stocks made new highs last week leading me to believe the street is anticipating some solid gains from these two titans.

The NQ remains my go to market for trading, as the volatility remains strong and for the most part stronger 2-way trade.  Gold (GC) was also active on Monday providing several opportunities to trade from the long and short side.  Check out today’s charts on the NQ and GC for discussion and trades.

7-21-2014 2-20-58 PM_NQ_Falcon

7-21-2014 3-14-19 PM_GC_FALCON


Steer the course and don’t compare yourself to everyone else.  You are not they and they are not you.  Remember to trust and believe what makes you unique at this moment in time and in this situation and allow others to choose for themselves.  Don’t be swallowed up by the chaos and false emotions swirling around.  Remember it’s just a number.

fair-valueTrading the number remains key to being able to reduce and separate the “noise” from opportunity.  This takes knowing and executing a well-defined strategy and allows you to see opportunities amongst the “chaos” and by trusting the mechanics of your strategy, be able to take advantage of them.

Opportunity continues to knock on our doors.  While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of.