Tuesday, July 04, 2017

AAPL | Volume Shelves

I've always believed that volume matters though I see plenty of folks who claim to have workable methods that don't rely on volume.  That's well and good.  Many ways to take money out of or put money into the market.

I'm in the volume matters category, particularly in looking at Volume@Price.  I wanted to give you a couple of time frame example, a 2 hour and a daily chart of  Apple, Inc. (AAPL) chart. (Click to make larger).

Below is the 2 hour chart of AAPL.The rectangular section in melon shows the volume gap on this 2 hour chart. You can see how precipitously price fell through that area. 

AAPL Volume @ Price | 2 hour chart


Volume@price are profiled differently for different time periods. It pays to take a broad view and look at a longer termed chart.  Below is a daily chart. Watching how price reacts to the longer time frames is constructive.  Let's take a look at the chart:


AAPL Volume @ Price | Daily
As you can see, as we zoomout from a 2 hour to daily chart show further areas that bear watching.  The area from $137.5 - $142.5 is vulnerable if willing buyers don't step in.

  Absent sufficient buyers, the price offered will have to decline and there is no real support in the melon-shaded area. Remember that for every price on a chart there is a willing buyer and seller completing a transactions.  However without sufficient sellers for eager buyers--prices go up; further, without sufficient buyers for eager sellers, price goes down.  I think that it is safe to say that watching what happens to price here is key

It's the longer term players, not traders, that move stock prices over longer periods.  They have to build positions over weeks and months.  Similarly, they have to unload positions over weeks and months.  These longer time frames help keep the price from moving up too quickly in accumulation or down too quickly in distribution.  Here's a chart of the number of Institutions, accumulated holdings (as of 03/31/2017), and portfolio rank.

What this tells us is that as of the 03/31/2017 reporting period, 1,238 institutions held AAPL as a top 10 position with more than half of that group weighted as #1.
Conclusion:  Volume@Price provides an objective, historical record of the volume of stock transactions have taken place at particular price points. Buyers late in the cycle have purchased at marked up prices and get caught on these ledges and jump when price moves against them.  Buyers early in the cycle are buying at discounts.  Once price has appreciated, the marked up price is sold.  Where we are in this cycle is where these Volume@Price ledges tell us. Gaps above provide opportunities.  Gaps below provide warning. Consider adding this indicator to your evaluative techniques.


Sunday, June 25, 2017

Weekly Sector Report | 06/23/2017

I've had some off-line life that took me away from preparing these for you.  I'm back on track. My goal is to share with you Super Sector and Sub Sector performance to give you a sense of where money is flowing by examining relative performance of super sectors and their subsectors. 

We are working in price relative universe.  I use the $DWCF as the US Stock Market Universe and compare all performance of all indices against this backdrop.  You may find the full PDF report here.  You can view as much or as little of the detail as you like.

Table 1 below are the Super Sectors as defined by Dow Jones.  All subsectors roll up into one of the 001-0010 SuperSectors.  Let's take an eagle's eye view and then move closer in.

Table 1 | SuperSectors

Notes on Table 1:  As you can see, the drubbing that technology took in prior weeks was repaired a bit.  Both Healthcare and Technology were the darlings of the week.

In the package that I prepare for you, I outline all of the subsectors.  Table 2 includes the top and bottom 10:

Table 2 | Top/Bottom 10 SuperSectors






Saturday, March 25, 2017

Weekly Sector Update | 03/24/2017

Here's the weekly look at sectors.  You may download or preview the full report here.


The market is sorting things out--raucously. The overall market ($DWCF) was down  For the 23 major sectors, $DWCUTI Utilities was the only winner and $DWCBNK Banks (a subsector of Financials) was the biggest loser. Below is the weekly performance of these major sectors and their comparative with the Total Stock Market Index.


Below are the top 10 | bottom 10 Subsectors


Monday, March 20, 2017

03/17/2017 Weekly Sector Update

I'm late out of the gate on this. First, you can download the weekly report here.

I was not able to run the 24 Sectors for last week; however, you can find them embedded in the larger report.  Below are the Top 10/Bottom 10 Subsectors.


IN the chart books, I made a few changes to the presentation of the charts.  The time frame is weekly.  To each chart I added the Guppy Multiple Moving Averages (GMMA) along with a 50EMA.  I don't typically work with Multiple Moving Averages in this fashion, but I ran across Daryl Guppy's presentation of it.  I was intrigued by using inferred contexts of Traders (short term moving averages) and Investors (long-term moving averages).  Using exponential moving averages, he uses the following indicators to segregate each group.

Short Term Exponential Moving Averages:    3, 5, 8, 10, 12, 15
Long Term Exponential Moving Averages:  30, 35, 40, 45, 50, 60
Because these are weekly charts, the above will correspond to weeks v. days.  I also pulled a 50EMA in an area shading.  I found that this combination of moving averages against the backdrop of the 50EMA provided an nice perspective.

Sunday, March 12, 2017

Weekly Sector Update | 03/10/2017

Last week was one where the market broke sharply and recovered. As I am sector-centric here, I want to present the sector moves for the week.

The table below represents the 24 sub industries.  These represent the major divisions under Energy, Financial, etc.  Not much green.


Below are the Top 10 Winners and losers in the  DJUS Subsectors (these are the further division from above).  Note that the first 2 digits number in front of the name corresponds with the industry code above.  So 37228 (Cyclicals Home Constr) falls under the 3700 Personal and Household Goods.




And I have created a weekly chartbook (in ticker symbol order) for your viewing pleasure which you can find HERE. I wish you a good trading and investing week, and I hope that you find this information useful in bird doggin' opportunities.

Saturday, March 04, 2017

Weekly Sector Report | 03/04/2017

I fell off a cliff due to work responsibilities (my busiest time of year).  I'm back with the weekly sector report for the week ending 03/04/2017.

You can find the complete report here

The report is a large PDF file which you can download or review through Box.com's previewer.  It contains the weekly charts for both the broad industry/supersectors as per the Dow Jones Sector Hierarchy and then all of the subsectors. 

I hope that you find this useful in your market research.


Monday, January 23, 2017

Weely Sector Report | 01/20/2017

Below are the 24 major sectors (alpha order) and their comparative performance to the Total Stock Market Index.  There is an even split 12|12 positive|negative for the week.


I have also provide a chartbook for you for ALL of the DJUS Sectors for those of you who wish to see more granular performance which you can find HERE.  I find that looking at chartbooks provides the best context for understanding discrete market information as it clearly shows which cylinders are hitting and which are missing--e.g. secotor rotation.

Wednesday, January 18, 2017

SQM


Today's chart is SQM.  I picked this up in a chart scan, and I entered a position. This stock has a favorable chart formation on a monthly basis.  The area in green represents the longest volume bar where the price memory may still be strong.

Below is a weekly chart.  I prefer to do my stock scans on a weekly chart as there is less noise.



The chart has made a strong move with pullbacks to the WEMA(21).  It has also pushed through the volume at price bars where the BLUE SKY area, the area I find allows for price to move through easily (chart ether!).  Now, this may not be so, but these short bars tell me that there is not much price muscle memory here $32 - $46.

I found the chart first, and then found the fundamentals.
  • It is a producer of lithium--a favorable commodity in the world of rechargeable everything.  Motley Fool did a write up on them, which you can find here
  • Institutional ownership is less than 20% (per J3SG) -- so there is room for growth here (so long as there is a compelling value proposition.)  (I note that Finviz and J3SG have different Institutional percentages.  I have no idea why.  Finviz notes 43%.  Either one has room for attracting buyers.
I care more about the chart than the fundamentals.  I like this price action, but it is clear that the chart is at a critical juncture.

Anyway, it is worth a look.  I'll update later, hopefully not with a PFFFTTT!

Embracing My Inner Nerd

The importance of having effective systems cannot be overestimated.  I mentioned in a previous post that I led a one-woman revolution and deleted every single chart in my Stockcharts account.  That was 9 years of chart growth.

It took me several days of invested time to rebuild my chart framework.  Utilizing the excellent framework of the the Dow Jones industry/sector build, my charts are presented numerically, so they order perfectly in accordance with their industry/sector, are named with the industry symbol and the sector name.  It creates the perfect index from my summary sector chart book with 108 charts to each of the individual sectors that contains a chartbook for all of the sector constituents.

  "Why bother?" you might reasonable ask.  There are two reasons.

Reason 1:  In test  driving my system this week, and I found that identifying opportunities occurs in a fraction of time of my other 'system': the speed due to the indexing nomenclature that allows me to go from the one list (all sectors) to the many (all charts).

I use the following resources, cobbled together in a fashion that suits my needs:

  • Stockcharts 
  • StockFetcher--this gives more flexibility in sorting and finding stuff than Stockcharts
  • Finviz - gives great profile information and summary information but lacks OTC data and their charting is not to my liking.
  • J3SG.com--provides institutional activity.
  • ThinkorSwim - This provides great granularity for making entries/exits.  
Reason 2:  This 'system' works for me because it suits my personality.  My professional life has always required that I wallow in detail and data to make sense of it.  Any system that doesn't give me that structure, which is how I build my understanding of 'stuff' is incompatible.

In the past, I've not let my system work as intended as I didn't trust what I was seeing because no one else was talking about it.  I want to share these two quotes comes from Justin Mamis, from The Nature of Risk--I offer them because I think that they are the cornerstones of how I feel that I must go about my work.

We need, we crave, the trust and belief from others, but when information is insufficient we need trust and belief in ourselves. We need the discipline to accept whatever is available, and the experience to understand all the ifs, ands, and buts, and yet still take the risk: we need to be able to make the decision. (p. 79).

Discipline means choosing what to do unencumbered by the fear of making a mistake. Confidence means trusting our intuition and that what we 'see' is what we "know." (p. 80)
There are 3 modes:
  1. Researching -- gathering the evidence
  2. Thinking -- integrating and making sense of the evidence
  3. Doing-- taking action on the evidence
 The market NEVER pays us to not take risk.  Risk is where the reward is.  So hand wringing and dithering are not constructive modes.  Accordingly,  the Mamis quotes that I pulled are centered on discipline, experience, trust and action of making a decision. If we have prudent money management and clearly state when we are 'wrong' about a position (time and price), then our risk can be quantified and mitigate.  That means that decision making is free of equivocation (hand wringing, dithering) .

So, my chart reorganization provided me with a disciplined approach to find strong sectors, strong charts in order to become more reflexive in my decision making.  And being reflexive centers on discipline and confidence (like 'wax on, wax off').


Tuesday, January 17, 2017

Weekly Sector Charts_01132017

I'm working my way up to providing a more comprehensive update on sectors.  I'm in a busy portion of my work life, so for now, I'll hit the highlights to include providing a comprehensive chart book on each of the sectors which you can find here.  This is not on the level of what I used to do, but for now you might find it useful.

Below is a list of the top 10 and bottom 10 DJUS subsectors:


Notice that in the middle of this table seats $DWCF which is the total US market--basically unchanged.




Friday, January 13, 2017

Sector Selector | Aluminum

Yesterday's all star sector was Aluminum.  CENX increased 15.3%, but there were several other strong peformers....and a bust for ACH and KALU.




Yes, it was news driven, WTO interested in Chinese subsidies for aluminum. And, per FINVIZ, 23% of CENX float is short.  Sustainable?  Unsure.  But it's worth keeping an eyeball on.

NVO Followup and More fun with Sectors









Bill the Cat sums up the NVO trade. Bad news came out (price fixing law suit) and knocked the chart below moving averages. (click to make larger)

More work needs to be done to repair the chart.  I'm out with a nominal loss as I had a good entry.  I'll let the chart figure out where it wants to go from here.

Housekeeping duties:  One of my housekeeping duties was to take wholesale delete all of my Stockharts' list.  Now, I've been a SC member for a long time.  What I don't care for on their chart lists is that you have to load both the symbol and then name into your chart lists.  Why on earth they just don't populate automatically, I'll never now.

I organized my charts in accordance with the S&P Dow Jones indices.  Click here to download your very own copy.  I downloaded from the website, but then I couldn't find it again--so I just uploaded my copy.

This document is a useful to see in a well organized fashion the hierarchy of sectors.   I created a master chart list with all of the individual subsectors.  I can see in an instant which sector is moving, and then go to the individual sector and see the charts that serve as the constituency for the sector.  Yes,  I LOADED all of the charts for each subsector in individual chart lists.  Yes, it was time consuming, but Excel helped.  I have a master spreadsheet that has the Dow Jones index symbol and all of the charts-it has almost 5400 rows on it.

Here's a snippet (above) of my charting.  I used the DJSubsector number, included the symbol, the industry and the subsector.  (Love concatenation in Excel).  The number ensures that my chart list always stays organized by major industry.

It's "bookish" work, but someone has to do it.  It was an investment in time, because it saves me time.  And while SC has charts by each sector, you can only look at them individually instead of in a more global fashion (e. g. chartbook, thumbnails, summary).  That's just poor design on their part, but I made it work for me.  In my next post, I'll share my chart setup.

Thursday, January 05, 2017

Chart to Share | NVO And Some Sector Stuff that's Nice to Know

I'm back at looking at charts again after being away from it for a while.  I have some favorite patterns that are high probability set ups.  There is always the probability that it goes the other way. So figure out your approach and manage your risks if you are wrong.

 Here's a chart that I would like to share:  NVO  I picked up a position @  $36.24 on 01/04/2017.  I wanted to share why.



(Click on image to make larger)

Context is everything in stock picking.  There is the market, the sector, and of course the individual chart as well as fundamentals.  Frankly, I pay less attention to fundamentals.  I don't have enough time nor interest to research and understand the salient fundamentals even though I am a financial professional.  Rather, I shortcut that by using institutional support as a proxy for fundamentals and do a quick look at summary data (BS + IS + Cash flow).   I figure those folks have the resources, so I'll just tag along and do cursory due diligence.  I never care what insiders are doing, and I never pay attention to that. 

Market and sector sentiment (e.g. what's happening to all the other frogs in the pot) all have to work together to increase odds of success in making a buy (long)/sell (short) decision with a favorable expected outcome.

 I've had many market data geekfests over the years.  One has to honor one's idiosyncrasies, and mine is centered on understanding salient data.  I've limited my data diet to 3 things:
  1. Understanding the contextual dynamics of sector rotation and where to mine that information
  2. Understanding the behavior of Institutional Holders (they are smarter and have more resources than I do) and where to mine that information. 
  3. Understanding how items 1 + 2 manifest in charts.
  4.  

 Sector rotation is a powerful thing....and the pharmaceutical sector's down draft is one that shows the effect on prices. Accordingly, my focus on sectors is one that points me where to look.  For me, I look at the 24 sectors, and then the 145+ individual sectors.  The sector performance is a signpost of where to dig for opportunities.

 I have all of the sectors (major + sub) mapped  in Stockcharts. I used to publish a weekly sector report on my charts to make it easy for others to see the work more elegantly  I may reprise that work.  For now, I use it as a gauge of understanding of what is going on in the church of what is happening now.

If you start to look at sectors regularly (e.g. a disciplined approach), you will realize that there is always a bull or bear market somewhere.  Let's take a look a pharmaceuticals of which NVO is a member of.  It is represented by $DJUSPR. 


(Click on image to make larger)

Pharmaceuticals tumbled 15.5% from August to early November due to the well-earned negative publicity regarding drug price overcharging.  The entire industry was out of favor as chart after chart will show.  But no need to look at lots of charts. We can see the encapsulation in this index.  Click here to be transported to the excellent WSJ FREE resource for this sector and explore other sectors.  Note that the Dow Jones index for any sector is composed of X number of items while the universe of stocks that populate that sector is larger.

For example, below are the eight stocks that are constituents of the he Pharmaceuticals Index.  Notice that NVO is not one of those; rather, it is a sector constituent along with 84 other stocks.  As these index stocks go in composite, so goes the index. Naturally, the other members of the sector are going to feel the emotions that are governing the index.   I encourage you to go to the WSJ website and explore, it is an excellent, free service with a wealth of tools that will allow you to see the market more broadly.



That's a long preamble...

As you can see from the DJUSPR index, it is making a nice "W" bottom recovery.  I picked up the NVO chart on a scan looking at compressed volatility and then did my due diligence.  Here's what I like about NVO:
  • In a sector that is recovering
  • Is showing recovery (accumulation) on its chart
    • prices are consolidating in a narrow range foreshadowing a range expansion (up or down--no one has a crystal ball)
    • volume is increasing
    •  volume air pocket above denotes a low volume of potential sellers waiting to ease their pain should price move up.  My experience is that such volume profiles attract price movement as there are not a lot of eager sellers. (The converse is if there is a large volume bar and low pockets below.  The sellers are in your current volume bar and if price drops they sell).
  •  It has excellent institutional support (though I qualify that below)
    • Renaissance Technologies holds this as its #1 position as of 09/30/2016.  Below are their top 10 holdings from J3SG.com (fabulous, free resource).


And I will close with the top 10 Institutional Holders in NVO.  Overall, there was a reduction of 10M shares among the top 10 holders. This number is not insignificant.  Institutional holders will need to step in to make this price expand into a higher range.  As this data is as of 09/30/2016, the 12/31/2016 filings might show

I'll be publishing more charts that I like. None of these are recommendations, but perhaps a little bird-dogging to show you some places to hunt.