InTheMoneyStocks Market Analysis

[InTheMoneyStocks]

Alcoa Corp $AA Has Been Crushed, But This Level Looks Solid

Leading aluminum stock, Alcoa Corp (NYSE:AA), has been under severe selling pressure since April 2018. At that time, the stock traded as high as $62.35 a share. Since that high pivot, the stock has been selling off and now trades at $28.93 a share. The next major support level that looks solid for the stock will be around the $25.00 area. This is where the stock broke out in November 2016. Often, larger time-frame breakout levels will serve as solid support when retested. This should be an area where the institutional money defends the name.

Nicholas Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Expect Micron $MU To Flush One More Time Before Major Buy Level

Shares of Micron (MU) will likely see one more major flush before a significant bottom is in place. The semiconductor player is getting attractive on valuation but still needs the $32.75 level tagged before the top traders will initiate a buy based on technical analysis. This will likely happen in late December or early January 2019. This level represents multi-factor support pivots and has a high success rate, reaching north of 80%. Expect a bounce as high as $40 from that level.

Gareth Solowaay
InTheMoneyStocks

 

[InTheMoneyStocks]

Epic Level On Crude Tagged At $47.30

Spot crude collapsed again today, hitting a low of $47.28/bbl. Based on an epic trend line and pivot support, pro traders are buying oil here for a lengthy bounce. Note the chart below. Oil was trading north of $77/bbl just a few months ago, now down almost 40%. This level should yield the first multi-month bounce in crude. Oil could see a move as high as $60/bbl over this period.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Even If This Is A Bear Market, There Will Still Be Rallies

Almost every talking head on the financial news is calling this recent correction a bear market. Technically speaking a bear market is when an index has fallen 20.0 percent from its peak. So yes, there are industry groups and sectors that are in bear markets right now. In fact, the Russell 2000 Index (IWM) has declined 20.0 percent and is technically in a bear market. The S&P 500 Index (SPY), NASDAQ, and Dow Jones Industrial Average (DIA) are not in a technical bear market yet despite the declines we have seen recently.

One thing traders should remember, bear markets will still have rallies and bounces. The same way bull markets have pullbacks and sell offs. Does anyone remember 2010? At that time, there was the flash crash on May 6, 2010 and a market that chopped lower into the end of August. In 2011, the major stock indexes plunged from May to October before rallying to new highs. There were two strong pullbacks in 2012 before another rally higher. Traders may recall the weak 2015 that we had and the tweezer double bottom in January and February 2016. Even during the 2008 bear market there were some monster rallies throughout the year.

The point here is that this is now a traders market. Stocks are no longer climbing the wall of worry. Almost every news headline that is negative is being viewed as negative. Even positive news is now being viewed as negative and this is a change in character from what many are conditioned to over the past nine years. Either way, it is traders market. This is an environment where you must cut down the share size and take your shots at the long side when the technical levels are talking to you. This means that you must have the major stock indexes trading into a major support level and at the same time make sure the stock or equity you want to own must also be trading into a major support level too. Simply put, the bull market will no longer bail you out if you are wrong like it did in 2017. That year was basically straight up without any meaningful pullbacks. Those days are over for now. Everything is technical, traders and investors must now adapt to the new environment. Just remember, regardless of a bull or bear market nothing goes up or down in a straight line. There are always bounces and pullbacks, that is what makes a market, so just trade the technicals until another trend is established.

Nicholas Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

The Emerging Markets ETF $EEM Sell Off Is Not Over Yet

Lately, many talking heads in the financial news have been calling a bottom in the emerging markets. Please note, the iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) topped out on January 26, 2018 at $52.08 a share. At that time, all of the major stock indexes also topped out and staged a minor correction before moving higher into September. The EEM never recovered and simply continued to decline into October 29, 2018. This low was when the Shanghai (China) market found a near term bottom. So we can easily see how tightly related the Chinese market is to the EEM. Currently, the EEM is trading at $38.98 a share which is still above the October low pivot. A weekly chart close below the October 29th low will signal another leg down for the EEM. The next major support level for this highly popular ETF will be around the $34.50 area. So it is critical for this to hold up at this time. Either way, this is now a traders market, so be patient and wait for these important technical levels to come into play.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Trading An Oversold Market

Almost everyone in the trading business is talking about an oversold market at this stage of the game. Stocks are now entering correction territory and there could still be more selling down the road. Generally, some of the best rallies come during a bear market and this makes many traders such as myself willing to take a shot at the long side when stocks are so low. Unfortunately, the stock bounces that we have seen lately have been met with heavy selling pressure. Often, traders will try to find many important timing factors for trades and hopefully we are entering one right now. Either way, traders and investors must still be very careful when it comes to markets like this. One old market saying that I have learned over the years is, it’s not how they open them it’s all about how they close them. This means that the intra-day action is really pointless if you do not see a strong finish into the closing bell.

Since the December 3rd pivot high we have only had two sessions that have finished stronger by the closing bell than where price has opened. In other words, there have been just two green candles on the daily chart if you view a daily candle stick chart. Today, stocks are rallying higher intra-day, but it will be the closing prices that will tell the tale. In the past, when stocks have behaved this way there has always been a few hedge fund blowups out there. So far, we have not heard of that happening yet, but these things can take some time to come to light. Either way, keep an eye on the charts and let the market tell you what to do.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Akamai Dips After Downgrade, Watch This Trade Level

Akamai Technologies Inc (NASDAQ:AKAM) is a leader in providing services that improve the delivery of content and applications over the internet. Today, the stock is declining by 4.0 percent to $56.64 a share. The fall comes after a downgrade was issued in the stock. Traders and investors should note that the market is still in a very volatile environment causing stocks to really overreact to any news. Either way, AKAM stock should have excellent daily chart support around the $50.00 area should it decline further. This level is where the stock was defended in October 2017 after forming a bearish pattern. I would likely be a buyer of the stock around this important support area when tested. Please note, AKAM is scheduled to report earnings on February 5th after the closing bell.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Delta Air Lines $DAL Hits Turbulence After Lower Quarterly Outlook, Watch This Trade Level

This morning, Delta Air Lines Inc (NYSEAL) warned fourth-quarter revenue would be slightly below its prior forecast. The stock is trading lower by more than 8.0 percent to $45.80 a share. The stock is now trading below its important 200-week moving average. This pattern usually indicates further weakness ahead. Traders and investors should now watch the $43.50 area as the next major support level. This area is where the stock was defended in April 2017 and will likely be defended again when retested. Please remember, Delta is scheduled to report earnings on January 10th 2019 before the opening bell.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Apple Inc $AAPL Collapses But Tags Dual Factor Buy Level

Shares of Apple Inc (AAPL) collapsed sharply today after the company warned of a major shortfall in earnings and revenue. The stock is down nearly 9% on the day, $70 billion lost for shareholders. While the situation looks ugly, investors are noticing a dual epic level tagged on the weekly stock chart. Apple has tagged the weekly 200 moving average today. In addition, a second factor of support is the 61.8% Fibonacci level for a retrace from the low of 2016 to the high of 2018. The combination of these two key technical signals alerts investors to a possible buy today on Apple stock.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Applied Materials $AMAT Downside Likely Until This Epic Target Reached

Shares of Applied Materials (AMAT) have bounced recently from an oversold condition. However, the bounce is likely just temporary as an epic target has yet to be reached. Shares of Applied Materials show a major support at $25.00 on the monthly chart. This is the likely target for the in the coming months. AMAT is down from over $60 in the last year, an almost 50% decline. The washout is likely to come and buyers should be ready to pounce.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Here's Where You Want A Dose Of This Pharma Stock $BMY

One pharmaceutical stock that has been declining recently is Bristol Myers Squibb Co (NYSE:BMY). Earlier this week, the company announced a takeover of Celgene Corp (NASDAQ:CELG) for $74 billion. As often happens when a company buys another firm BMY stock declined on the news. Many traders and investors are now wondering where this stock should now trade. One level that looks solid on the charts is around the $40.00 area. This is a major retrace level and also where a breakout took place in March 2013. Generally, these factors will cause the institutional money to step in and defend the stock around this price area.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Boeing $BA Nears Major Resistance

Shares of Boeing (BA) have surged from $293 back to a high today above $350. This move coming in two weeks. Analysts are jumping back on the Boeing bandwagon and investors love it again. However, the chart signals a pull back coming, likely down to $330. The short level is anything above $350 as there is a major trend line sloping down from the pivot highs of September 2018 and November 2018. Note the chart below.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

The Easy Money Has Been Made, Now It's All About the Pattern

Since December 26, 2018, the S&P 500 Index (SPX) has bounced higher by over 240.0 points. The rally from the December low has been nothing short of amazing, but this is what happens when stocks decline as sharply as they did from the September 20th top. Many talking heads on television are now looking at Fibonacci retrace levels and other technical tools trying to call the next top in stocks. Often, it is not always the retrace levels that will identify a top, it is usually a reversal pattern in combination with some other factors. The point that I'm trying to make here is that the market is not a one trick pony. If this business was easy everyone would do it.

These days everyone seems to be a market technician. Last year, everyone on Wall Street was a fundamental investor talking about P/E ratios, book value and the rest of the fundamental factors that the investing crowd follows. It's amazing to see how that has changed so quickly with a simple stock market correction. Now traders and investors will need to be nimble and combine all of the important factors using price, pattern and time.

2019 is expected to be a traders year. This means that there will be opportunity on both the long and short sides of the market. The difficult part of investing and trading in 2019 is going to be when to pull the trigger on such trades. This is where pattern recognition comes into play. For example, if you have a good bullish chart pattern setup and you enter a long side trade you must know when and if that trade turns against you. This is the secret to trading, knowing when you are wrong. Remember, the best market moves will often come from failed market moves. Hint, you must have the discipline to admit when you are wrong and more importantly be able to get out of that losing position. For now, the easy money has been made, so you better know how to read the patterns going forward.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Options Expiration Week Is A Time For Institutional Game Playing

This coming Friday is options expiration for the month of January. Usually, the trading week leading into options expiration is filled with a lot of game playing by the institutional crowd. This is generally a time when there will be a lot of rumors, ridiculous upgrades / downgrades and often some other far fetched news event. The bottom line, expect the unexpected during options expiration week.

Since December 26, 2018, the major stock indexes have surged sharply higher. Now with so many stocks trading off of their lows we could see a pullback this week. But then again, I have to think that after the Christmas Eve sell-off there are probably a lot of retail investors still holding put options into this expiration on a lot of the leading indexes and popular stocks. If this is the case, then the major stock indexes will probably hold up this week.

This week is also the start of earnings season. As you know by now, the street is looking for the earnings picture to be weak. At least that is what the market usually looks for when we have such a sharp correction like we have seen. In other words, market expectations have been lowered. So any surprise in earnings could certainly help the markets this week. Either way, traders will have to look at every stock on an individual basis. Many market leading stocks are trading into resistance, while many others are still lagging and should have a way to go before reaching a major resistance point. Just remember, this is a week to be on your toes as options expiration is usually filled with game playing and lots of whipsaw.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

This Specialty Chemical Company Is Now Getting Attractive $ALB

Albemarle Corporation is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The stock topped out in November 2017 at $144.99 a share. Since that high pivot, the shares have steadily declined and are now trading at $73.81 a share. Traders and investors should note that stock is now trading near its 2016 break-out area. Often, the institutional money will start to defend stocks when they retest prior break-out points. One particular level that I will be watching closely is going to be the $70.00 area. This is where the stock surged in May 2016 with volume. This looks like a solid level for a long side swing trade in the stock.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Financial Surge Nearing End, Here Is The Short Trade

Poor earnings by Citigroup (C) and JPMorgan Chase (JPM) have given investors a chance to buy the dip and they did... Both stocks opened lower after reporting their earnings. However, quickly investors bought and the stocks surged higher. Both stocks are entering overbought territory and likely to pull back in the coming days. The biggest tell for the financial sector is the $XLF, the financial ETF. The ETF is approaching the daily 50 moving average and a major pivot from October 2018. The combination of these two factors gives a short trade on the XLF at $25.25 a high reward, low risk success rate. Keep it on your radar.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

This Pharma Giant $JNJ Is Still Struggling Despite Market Rally, Know This Trade Level

One giant pharma stock that I have been following lately is Johnson and Johnson (NYSE:JNJ). Last month, the stock plunged lower after news was reported that the company could still have issues regarding its popular baby powder product. On December 13, 2018, the shares traded as high as $148.58 a share. On December 24, 2018 the shares traded as low as $121.00 before finding a near term bottom with the major stock market indexes. Today, JNJ stock is trading at $128.42 a share. So while the shares have certainly bounced higher they have not come close to their December 13th high. In fact, the stock is signaling weak relative strength at this time. Traders should note that the stock is still trading below its important 200-day moving average, this is actually a sign of weakness. Should the stock break below the key $121.00 support level it would trigger another sell signal in the stock. The next major support level for JNJ stock would be around the $113.00 area. Right now, JNJ is hanging in there, but this is a stock that I will be watching closely.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

On Days Like This Watch For Stocks That Are Showing Relative Strength $SBUX

Today, all of the major stock indexes are declining sharply lower falling by more than 1.0 percent on the session. This decline comes after a huge rally that started on December 26, 2018 and lead to a near term overbought condition. Whenever you see a big broad based decline such today it is important to look for stocks that are holding up in this sell off. A few stocks that are trading higher today include Starbucks Corp (NASDAQ:SBUX), McDonalds Corp (NYSE:MCD) and Chipotle Mexican Grill Inc (NYSE:CMG). The one thing these stocks have in common is that they are all restaurant stocks. Now if these market indexes decline further over the next few days or weeks it will be important to see how these key stocks hold up over that time period. In fact, the restaurant sector should be watched closely. These stocks could emerge as the leaders in the next rally. On days like this it is always important to watch for stocks that are showing relative strength.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Trade Lesson: One Method I Use To Spot Tops & Bottoms

Many traders will often ask me how I spot market tops and bottoms. This is not an easy process, but there are many factors that go into the skill. One easy to learn factor that almost anyone can recognize is extreme volume around a new low or top. For example, if a trader looks at a SPY chart of the low made on February 9, 2018 they will notice a nice bottoming tail pattern with 283.5 million shares traded that day. The SPY also hit the 200-day moving average that session which is sometimes a supporting factor. That reversal rally that took place that session to massive energy. Remember, the SPY made a new intra-day low at the start of the trading session and then reversed closing near the high of the session in positive territory. That is the markets way of talking to you.

Here is another example, the recent Christmas low. On December 24 (Christmas Eve), the SPY sold off on heavy volume, especially for a half day trading session. In fact, that day the SPY closed right on the low of the day at $234.27. The equity also made a new 52-week low that day and had almost everyone in the market frightened to death. The very next session (December 26, 2018) the SPY traded below the December 24th low at $233.76 before staging a massive reversal day. On December 26th, 2018 the SPY closed at $246.18, now that is some serious price action. The volume in SPY that session was 218.48 million shares. Anytime a market reverses with high volume the equity has a chance to make a significant low. I also had several other factors pointing to a major reversal on that session, but even if you did not know anything else you can enter long trade with a stop below the December 26, 2018 pivot. Traders and investors must remember high volume reversals are powerful and can be often used to spot tops and bottoms. Obviously, there are many more factors that should be incorporated into this, but this is an easy tip to identify for the beginner chart reader.

Nick Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

This Leading Auction Stock Is Struggling To Catch A BID, Know This Trade Level $BID

This afternoon, leading fine art auction company, Sotheby's (NYSE:BID) is trading lower by nearly 5.0 percent to $39.01 a share. This stock peaked in June 2018 at $60.16 a share. Traders can easily see how the stock has been very weak lately and trading in a choppy range over the past few months. It is important to note that the stock is trading below its 200 and 50-day moving averages. Traders must now watch for lower prices ahead in the near term. One level that catches my eye for this stock is around the $33.50 area. This level is where the stock broke out in August 2016. Often, stocks will be defended when they retest prior break-out levels.

Nick Santiago
InTheMoneyStocks