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MLR - PMP 4/22/14

Major averages were yesterday up on lower volume. The put/call ratio spiked to nearly 2.0 on April 11 and this was followed by the NASDAQ Composite and Russell 2000 bouncing off of their respective 200-day moving averages two days later. The market has bounced since though on anemic volume, and the volume on April 17 which seemed healthy was exaggerated due to options expiration. Currently the market is in the midst of what is so far a five-day rally attempt on the S&P 500 and a four-day rally attempt on the NASDAQ. A follow-through is of course a possibility at this stage of the rally, but potential leadership has been relegated to oil-related names which have led the market during the correction throughout March and the beginning of April. The bottom line is that even in the event of a follow-through and a so-called resumption of the market's uptrend, few stocks are positioned in buyable set-ups.

Netflix (NFLX) announced earnings yesterday and the stock is gapping up this morning. NFLX is coming up from a position well below its 50-day moving average, and pre-open the stock is still below the 50-day line despite the big gap-up. It is possible that this earnings-related gap-up rally might only serve to form the right shoulder in a possible Head & Shoulders formation that is still in-process. Therefore we might look for a failure of this rally as a potential short-sale opportunity. If this turns out to be the case, we will likely send out a Short-Sale Set-up report, so members should keep an eye out for this. Given that a number of former leading stocks, such as AMZN, GOOG, PCLN, DATA, WDAY, FEYE, etc., have formed patterns that so far resemble 2/3rds of an H&S pattern, e.g., the left shoulder and the head, earnings-related rallies could turn out to be the events that help form the right shoulder and thus complete the H&S formation.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2021 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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