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A Note On Risk Management and HLF by Antichartjunk.com
http://antichartjunk.com/2012/05/01/...ement-and-hlf/
May 1, 2012:
"If you follow the markets intraday, you probably are well aware of the action in HLF. It currently sits atop of StockTwits trending tickers. I will not get into David Einhorn?s questions and the news surrounding the stock but I think there a few great lessons from today?s action.
First of all, for the intermediate trader, HLF highlights the importance of heavy volume when buying at a pivot point. HLF had been performing well this year through the strong uptrend and into the mild correction where it was supported at its 50-day. There were no major signs of institutional selling (until today). A square-box base (which you can read more about here) appeared with a buy point of 72.21 along with a moderate bounce from the 50-day while the overall market showed slight signs of accumulation. However, heavy volume in HLF did not appear in this buy range so a buy here was more risky.
A more aggressive trader, knowingly accepting more risk and thereby decreasing the position size, still could perhaps have purchased around 72.21. A reasonable stop-loss from this point would have been under the 50-day moving average around 66.33 or slightly higher than 66.33 just below the April lows which would have prevented a major loss (as evidenced today) but also would have given the stock enough room to handle the potential typical swings. Selling at around 66.33 would have resulted in an 8% loss which would have prevented a 25% loss by holding on. Of note huge volume to the downside like today typically points to future selling at least in the short term.
Another rule some traders follow is to avoid starting a position right before earnings. I do not follow this rule exactly but it is certainly something I consider before purchasing a stock. From my experience, growth stocks that appear to be performing well are performing well for a reason and strength before an earnings report can be a sign of a strong earnings report on the horizon, such as recently shown by ISRG, GNC and today in FIRE. Obviously, this is not always the case as evidenced by HLF today and in even AAPL which was performing poorly into a strong earnings report.
If one wants to signficantly lower risk, one could possibly steer clear of buying stocks within a week of their earnings report but one should also only buy with heavy volume within a buying range and always prepare a stop-loss before starting a position."
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DNDN - Dendreon Corp
Watching the 11.00 level into tomorrow as its a price resistance point and also the 50 day moving average is resting right on the same spot, which could be a double breakout causing several types of technical buyers to jump into the stock. Here's the chart:
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Default CSTR (Initiating Coverage)
CSTR - (LONG/$61.9 Stop) - Got a big pop to the upside on April 19th after reporting earnings and has been selling off ever since. Today, NFLX reported weaker subscriber growth and is down 15% pre-market. CSTR is the company that makes the RedBox, a convenient DVD rental service. The negative NFLX news should help lift CSTR shares. Aggressive traders would be buying today against a $61.9 Stop and the more conservative trader will wait for a close above $64 before getting involved. Either way, the risk/reward for the CSTR trade is very good.
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as Vegas Sands (LVS) - Quick Takes Pro Chart of the Day May 2, 2012 - Las Vegas
Thumbs up Las Vegas Sands (LVS) - Quick Takes Pro Chart of the Day
May 2, 2012 - Las Vegas Sands (LVS)
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AAPL - How high can it realistically go?
I've been in AAPL for awhile, so I have seen some GREAT results from them. However, how much is too much? When will this stock see a major pull back, if at all?
It is trading at 582.55 right now after another 3.6% increase. I know Apple products are selling like hotcakes still, but is their time running out, or am I just being a skeptic and getting nervous?
Any advice/discussion is appreciated!
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Dave Landry's Market in a Minute - Wednesday, 5/2/12
Random Thoughts
On a net net basis, the Ps had an okay day by gaining over ?%. This action has them within 1% of multi-year highs. Unfortunately, the rally did lose steam intra-day. Other indices didn't fare as well. The Quack and Rusty closed flat, giving up nice intra-day gains.
As I've been preaching, stalling action, even intra-day, can make a market at these levels look a little ominous. A big up or two would fix that. Since that didn't happen on Tuesday, we'll have wait a little longer.
In the meantime, I think you can still look to fire off a short or two. However, once again, avoid making any big picture predictions for now. Also, as usual, make sure you wait for entries.
Futures are weak pre-market.
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Barchart.com's Chart of the Day - Discover Financial Services (DFS)
Barchart.com's Chart of the Day - Discover Financial Services (DFS) for May 2, 2012
The "Chart of the Day" is Discover Financial Services (DFS), which showed up on Tuesday's Barchart "All-Time High" list. Discover on Tuesday posted a new all-time high of $34.75 and closed up 1.45%. TrendSpotter has been long since April 25 at $33.54. In recent news on the stock, Goldman Sachs on March 23 upgraded Discover to a Conviction Buy from Neutral and raised its price target to $39 from $36. Goldman cited improving financial metrics and below-normal credit losses. Discover Financial, with a market cap of $18 billion, operates the Discover Card with more than fifty million cardmembers, the Discover Network with millions of merchant and cash access locations, and the Goldfish credit card business in the United Kingdom.
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SWY - Safeway at Support
I would like to suggest that you keep an eye on SWY (Safeway Inc.) over the next week. Stochastics %K (14,3,3) are oversold at 23.70 and it is near the support level.
It looks like it may bounce of support and go up between 21 and 22 over the course of the next week or so.
Trade at your own risk.
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F - Ford Looks Great! ... Trade At Your Own Risk
- Ford looks really good to me. The daily stochastics (14,3,3) are oversold. It is sitting just above the support level. I would suggest keeping this on your radar for the next few days. I see this going to 12.5 or possibly 13.25.
Trade at your own risk, I'm simply passing on what I see in the markets.
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Stock Watchlist 5/2
Under $5: NFEC SGOC HTCH EMKR KWK TQNT GALE HSOL STP AAV ROIAK AIQ FFN LPHI FCH XOMA HUSA OPWV ZAZA ANTH EGT CRDC THM SMSI HDSN SVNT YMI MEMS NEXS
OTC's: LQMT NEOM ADMP AEGY AXCG CSSV FRHV EVDR MDCE SIPN
Over $5: HLF bounce watch, SHLD, SHOR, ATPG, ESIC