Weekend Review June 13th, 2014

My anticipation coming into this week was that there would be a high probability of the general market indexes taking a rest due to extended breadth on a shorter term time horizon as indicated by the $MTMW. Whenever this reading is above 80 there are typically three scenarios I am mindful of: a pullback in price, a digestion through time, or rotation. What this information tells me is that the expectations on my open positions on my personal time frame should be muted and that my stops have a higher probability of being challenged.

These themes played out in the price action I noted this week from stocks on my watch list or trades that I took.

Break Out, No Follow Through, Pullback

HZNP and GOGO exhibited this action.

HZNP

GOGO

Break Out, Break Down

GMCR, QIWI, FB, and PANW exhibited this action.

GMCR

QIWI

FB

PANW

Into this up coming week I'm focusing upon stocks like QIWI, former high flyers that have corrected over 40%+ and have since seen an ~20% leg up followed by flattening out. Stocks like WIX and WDAY are exhibiting the characteristics of stocks that have been working in the current market environment for short term swings. YELP exemplified this pattern. If current history is a guide, anchored momentum from a correcting index low tend to be the first out the gate, then a few furlongs in momentum stocks and those near highs begin to close.

WIX

WDAY

YELP

Perusing my leadership scan, one theme that continues to populate the results has been biology, while another that has been increasing in numbers of late has been oil and gas related stocks. As much as I distrust Bios, there is a dot com market happening in them so while the window is open taking advantage of the speculation here would be prudent.

BIOLOGY

OIL/GAS

A quick glance at market breadth shows continued improvement over the past month even as grim headlines are being addressed and assessed. As of now, the number of set ups available indicate that market participants continue to be blasé here about all the perceived risk and negative tones that are rippling through. If there is a change in sentiment it should become evident in strong set ups breaking down instead and heavier selling hitting the tape.  When indicators are most rosy on my time horizon I usually find it a good time to was myself What If?

MM

Weekend Review June 05, 2014

Market breadth continues to strengthen and the longer term Primary reading is close to flipping bullish which would be a positive and suggest to me this move has more legs to come.

MM Past Month

Another positive I noted at the end of the week is the inclusion of the Russell which until recently had been deteriorating the most.  Continued improvement in this ratio bodes well for over all market health.

RUT_SPX

However, on a shorter term time frame the market is slightly extended here and a rest would not be out of the question as the % of NYSE stocks above the 20 period average is 78.

%Stocks > 20

Another sign of improved market health on my time frame is the number of stocks setting up as well. One of the problems however has been a lack of follow through from break outs or rather muted ensuing moves.  Hopefully this will improve, but if not tactical adjustments to holding period or expected move will have to be adjusted.  Some set-ups ready to trigger or in need of a few more days rest:

AFOP

FORM

HNT

HZNP

JWN

PTRY

QIWI

In addition to set ups I'm interested in, many of the high flyers that were taken to the woodshed appear to be bottoming out.  Many of these stocks have been clipped 50% and could be clipped 50% more, but now that the exuberance in the IPO market over the past year has waned and many of these stocks become heavily shorted or will fall into a stage of neglect, they are setting up well for a catalyst such as earnings.

DATA

TWTR

VEEV

VJET