MetaQuotes Software, the company behind popular platforms MetaTrader 4 and more recently MetaTrader 5, reached out earlier this month to have their new Trading Signals service reviewed. This is a paid review and my unbiased take on the product.
MetaTrader is a standalone trading platform used primarily for trading Forex and also supports Futures, Stocks, and CFDs.
The MetaTrader platform has everything one would expect: trading, charting, technical analysis, etc. The company's foundation began with MetaQuotes, and over the years has brought them to MetaTrader 5. Hundreds of brokers support the platform, and if you have traded forex before, I assume you already are familiar with MetaTrader.
The software can be downloaded for free, then you simply install it, link your online broker account, and trade. The default setup is with FXCM, a popular forex broker, so if you do not have a broker account, this is the broker they sign you up with (I recommend StockBrokers.com for broker comparisons).
Quick note: I have never personally traded using MetaTrader, this is because I do no trade Forex or Futures, which is the platform's primary focus. For a list of the trading products and services I use, see my 2013 Trade Tools post.
One of the primary reasons traders use MetaTrader is to build their own automated trading systems. These systems effectively analyze forex quotes or stock quotes and execute trades automatically; a trading robot if you will.
In fact, automated trading is such a big part of MetaTrader that MetaQuotes hosts an Automated Trading Championship each year. Traders build their own systems, enter them in the competition, and the highest return at the end takes the prize. Here are the results from 2012 Championship,
Trading Signals Service
Given the MetaTrader's community's focus on automated trading, MetaQuotes recently launched Trading Signals, a social trading / trade mirroring service provided through MetaTrader.
Using Trading Signals for MetaTrader 4 and 5, clients can pay for a system created by a fellow community member and run it thereafter to automatically trade their own accounts.
When browsing the available systems, I found there was little to choose from and the prices varied dramatically. I assume this is because the offering is new. 1 credit is $1.
Now, before becoming euphoric over the idea that you can purchase a system that will automatically trade your way to quick riches, a few key points should be immediately noted:
can be is certainlyis extremely risky. When trading stocks, typically you trade with whatever cash you have in your account or use margin to leverage up 2:1. Forex on the other hand utilizes leverage of up to 500:1.
- Automated trading is rarely a ticket to riches. Just because a system worked in the past does NOT mean it will work in the future. I repeat, past performance is not indicative of future returns.
- Trading systems often used skewed data. If I had access to the weather data of every day for the last 100 years, I am sure with some data mining I could come up with a great stat such as, "On every 3rd Wednesday of the month during leap years in English speaking countries, the weather is sunny 52.63% of the time." I completely made this up, but the point is that when creating a system, the data can be skewed to show a desired effect.
For example, take a look at this system, Freak, which is currently featured 1st for its five star reviews. The system costs 1139 credits ($1,139) to buy. Note the performance data, because apparently this system turned $1,000 into over $17 million over the course of three years.
If this was the case, and this author, Freak Universe, had created an automated system that could turn $1,000 into millions, then why the heck would he or she sell it at all, let alone for a measly $1,139?
Now, take a look at this Free system, ADXSign. The system has as clear cut formula using a common market sentiment indicator, "Implementation of the Average Directional Movement Index (ADX) indicator described in the book 'New Concepts in Technical Trading Systems' by Welles Wilder."
While I have no idea if this system actually returns profits over the long haul, I have far more initial credibility off the bat for this system since it is using a clear cut formula that I can understand.
My Bottom Line
All in all, the concept of the Trading Signals services makes sense on a macro level: MetaTrader is a platform used by traders to create automated systems for trading forex, futures, etc, so now traders can sell their systems directly to the community and help others make money.
However, just because a trader made a system with a gazillion percent return using historical data, doesn't mean it will work in the future.
Forex trading is extremely risky business. The reality is that significantly more traders lose money than make money trading over the long haul.
With that said, for those trading Forex and Futures, MetaQuotes has been in the business for over a decade, their platforms MetaTrader 4 and MetaTrader 5 are supported by hundreds of brokers, and thus the platforms are certainly worth a consideration.
And, for traders who have been in the game for a long time, understand the risks, and understand how automated trading systems work, not too mention how to select winners, Trading Signals by MetaQuotes could be an asset.
For everyone else, me included, it's probably best to stick to buying and selling stocks and options.
Original post: Trading Signals for MetaTrader Review
The 1000 point rally. To finish off yet another week of gains, the S&P 500 closed at 1666. Why does that number mean so much? Just over 4 years ago the S&P was 666 - a cool 1000 S&P points in 4 years and 3 months; remarkable really. These last 100 points have come almost at a breakneck pace; in about 4 weeks. While Wednesday and Thursday brought us a bevy of poor economic news (which the market mostly brushed aside), Friday there were some good data points. And when you cannot get the market to go down on bad news, you can see what happens when there is good news. The S&P 500 gained 1.03% and the NASDAQ 0.97%; much of this came in the last hour or so as the market has been rallying almost every session after 3 PM. It is now up 17 of the past 21 sessions and 10 of the past 12.
A preliminary reading of the Thomson-Reuters/University of Michigan consumer-sentiment index for May rose more than expected to help fuel Friday's rise. And the Conference Board's Leading Economic Index for April increased, exceeding forecasts.
You can see with the indexes we continue to hover at or even above the top end of this channel it has been in (with the exception of a pitstop in mid April) since November 2012. One of the stronger rallies in recent memory that is for sure. In the S&P 500 a break over the double top at 1597 set up a strong move off the jobs report in early May; that turned into a 4 day bull flag from which we cleared over 1636 and now we did not even rest at the index level (although individual sectors had small corrections) just going sideways for a day before a new high.
To put in perspective how overbought the market is in a longer term sense, the lack of any correction since November has pushed the S&P 500 way above its monthly bollinger band. This is a measurement popular in the land of technical analysis to mark overbought or oversold. Here is a 15 YEAR chart of the S&P 500 - even in 1999 and late 2006/mid 2007 the index hovered at or just above the upper bollinger band. You can see we are not hovering now - we have broken clear above. So on a long term perspective, the inability for any meaningful rest for this market has led to the most overbought conditions in at least a decade and a half by this measure. Rare air indeed.
Today was an excellent day for breadth as almost every sector participated. Some interesting names below:
SolarCity (SCTY) which was founded by the same person who founded Tesla - Elon Musk has seen the speculative money flow into it of late. It appears investors see the magic of Tesla and want to be in anything associated with Musk. (For those who don't know Musk, he was part founder of Paypal - which Ebay eventually bought, founder of Tesla, founder of a service to send people into space, and even has been used as a reference for the character for Iron Man!)
There were breakouts in refiners (which should mean higher has prices at your local pump soon!)...
... in auto stocks...
... in energy related names....
You name it, it was moving.
The only area to really completely avoid right now remains the precious metals. They have been a horror show in 2013, and remain so.
Original post: STTG Market Recap May 17, 2013
Stocks pulled back for just the 2nd session out of 11 (and 4th out of 20!) - losses seemed somewhat strong but that is only because we have become used to stocks up almost every day and when they fall it is of the 0.1% variety. Economic news was quite bad for a second day in a row - in the past 2 days there have been about 9 economic reports domestically and 7 could be characterized as misses. And for all that you have the most minor of pullbacks. Today's losses were not even due to the economic data (the market had been up much of the day) but due to comments from another Fed member about 'tapering' of QE purchases in the future - this is going to be a running theme go forward. The S&P 500 fell 0.5% and the NASDAQ .18% as a surge post earnings in Cisco Systems (CSCO) helped the latter.
Here is a sampling of the economic data today - a few years ago this sort of cocktail would have led to a -2% type of day.
Weekly jobless claims jumped,climbing at the fastest pace in six months, according to the Labor Department. Meanwhile, housing starts fell 16.5 percent in April to a 853,000-unit annual rate. Adding to woes, factory activity in the U.S. mid-Atlantic region unexpectedly contracted in May, according to the Philadelphia Fed index.
The S&P 500 and NASDAQ had what are called "inside days" - that is simply a day of rest in which the index did not go above the previous day's high or low. In fact the S&P 500 has not traded below the previous days low since May 1, quite remarkable.
All in all, a lot of bad economic news this week but the market continues to march higher. A pullback to the most recent breakout area near S&P 1636 would actually be a nice change as these straight up moves with no consolidation create an unstable base to work from. But the index could fall all the way back to the major breakout level of 1597 and still be in a bullish pose.
The rotational nature of this market shows up in the NYSE McClellan Oscillator - even as the major indexes are mere points away from all time highs reached yesterday and at the top of their channels, we have a reading near 0 again. So we are getting corrections in sectors, but as one sector sells off, another takes it place - hence the indexes remain uber strong.
A great example of this is the biotechs which today took it to the chin - the sector ETF (IBB) was down 2%, far outpacing the market. If this market pattern continues in a few days they will be back to being leaders while something else corrects.
Here is the move in Cisco Systems (CSCO) today. This once technology leader ramped to levels last seen in 2010.
In the currency markets most of the attention has been in the swan dive of the yen but lately we've seen a rally in the dollar. In fact it's back to peaks of summer 2012. A move over these levels would be an important trend change.
Meanwhile the very overbought 3D printing stocks took a break today as an analyst downgraded them - here are 3D Systems (DDD) and Stratasys (SSYS).
Both stocks were cut to Underperform from Market Perform by William Blair‘s Brian Drab this morning, writing that although he has a “positive outlook for the additive fabrication industry,” nevertheless expectations are too high for both companies. The shares fetch 45 and 49 times, respectively, his earnings projection for this year, which he notes is above long-term average multiples of 30 to 32 for both. Drab attributes health in the stocks of late to media frenzy about the trend to low-cost manufacturing, and the limited number of “pure plays” to invest in — DDD, SSYS, and The ExOne Company (XONE), and the companies themselves have contributed to that hype
Original post: STTG Market Recap May 16, 2013
If the market is getting repetitious it is not just you. The S&P 500 is up 9 of the past 10 days (and the down day was meager) and up 13 of the past 16 days. That's 80%+ of the days during the past month. The daily sector rotation continues and Wednesday the defensive sectors that have been pushed aside the past few weeks made a return to the action. The daily economic news is now almost meaningless to the market as we saw a few reports today such as the NY region manufacturing report that came in below expectations - but no one really cares. At some point actual data will matter again but not right now. The S&P 500 gained 0.51% and the NASDAQ 0.26%.
Our index charts just continue to grind higher along the top of their ranges; even the most minor of selling intraday is met with buying.
After the bell Cisco Systems (CSCO) reported and has jumped 8% in the after hours session to just under $23; this takes it to highs of the year. There is nothing super special about the report but it's just bull market action:
The networking equipment manufacturer reported earnings of 51 cents a share, excluding one-time items, on revenue of $12.22 billion, edging past expectations for 49 cents a share on sales of $12.18 billion. Meanwhile, the company handed in current-quarter earnings guidance that matched Wall Street expectations and said it expects revenue growth of between 4 and 7 percent versus estimates for 7 percent.
Google (GOOG) exploded today as it announced plans for an online music service:
Google Inc. unveiled a streaming music service called All Access that blends songs users have already uploaded to their online libraries with millions of other tracks. Google made it available in the U.S. Wednesday for $8 a month to early birds who sign up for service before June 30.
Tesla (TSLA) announced plans for a stock offering after the bell - usually this pushes the stock down, but it is actually up nearly 7% in after hours to the $90 area. Unique here is the plan for the CEO to buy shares.
Tesla Motors Inc. said it is planning a stock and notes offering that includes plans for its CEO and co-founder, Elon Musk, to buy a chunk of the shares himself. Tesla said that it will offer 2.7 million shares of its common stock and $450 million in convertible senior notes. Musk plans to buy $100 million worth of shares at the same public offering price. About $45 million will be purchased in the offering and $55 million will be purchased directly from Tesla. He currently holds about 27 million shares, nearly 24 percent of the company's outstanding shares.
On the not so happy side was Apple - which was most likely pressured by the Google news - after a nice rally off lows, it seems to be rolling over again.
Original post: STTG Market Recap May 15, 2013
As mentioned the past few days the market was internally correcting even though the indexes were not going down much. We could see this as the NYSE McClellan Oscillator dropped nearly 40 points and various sectors retreated as others took their place as daily leaders. So the market corrected via time (sideways) rather than price. That set up Tuesday's action where a catalyst in the name of hedge fund manager David Tepper drove the market to new gains. Who is this man? Back in September 2000 as Quantitative Easing program #2 was on deck, he came to CNBC and said either the market will go up due to a better economy OR the market will go up due to the Federal Reserve. He said it was a time to be "balls to the wall" aggressive - for those around back then you know what happened; the market rip roared for months on end until QE2 ended. Well now we are in QE infinity so investors were interested in his take. Let's just say he was no less bullish today than he was in 2010. The S&P gained 1.01% and the NASDAQ 0.69%.
Here is video of the first part of Tepper's interview:
As for our indexes - they roared again to new highs. The S&P 500 broke out of a 4 day "bullish hammer" where S&P 1623 was the floor for those very short term oriented traders and once this index broke the upside of the 4 day range a flood of buying came in.
Obviously things are extended in terms of our channel, even as we are not immediately overbought on some secondary indicators. But the bigger story is the indexes are in healthy condition after major issues in mid April and this allows for individual stocks to flourish. We are due for some pullback at some point as this has been almost a straight shot 8% rally since the lows in April.
In a perfect scenario you want to see leadership from the cyclical sectors - we are now getting that, even energy joined along today. Other areas: financials, consumer discretionary, and industrials. We saw a bit of a rest today in technology but again as one sector rests, another takes over that day - that is bullish activity.
Original post: STTG Market Recap May 14, 2013
A better than expected (but still weak) retail sales report helped keep stocks elevated as the market works off an overbought condition by going sideways rather than down. This data continues the "Goldilocks" scenario - not too hot (to make the Fed go away) and not too cold (to have anyone worry about the economy). The S&P 500 gained less than 0.01% while the NASDAQ added 0.6%.
Retail sales rose 0.1 percent in April, better than the 0.3 percent drop that had been expected and returning to growth following a decline in March. Excluding autos, gasoline and building materials, core sales rose 0.5 percent.
Other than being near the top end of their ranges there is little to add to these index charts. For the S&P 500 we now have a 4 day mini range where S&P 1623 has held as a low in each session; that would be a place to take note of for the very shortest term of traders.
Note the NYSE McClellan Oscillator got red hot middle of last week with reading of upper 58 and 60 back to back. Now we have seen a correction in the market via time rather than price as certain groups fall back but other groups rally each day. It is not apparent in the indexes but overbought stocks are correcting; this is quite healthy action.
After resting a bit the previous week, the biotechs have come back with a vengeance the past two days - this is exactly why the indexes continue to hold in - one group rests, another takes over.
A lot of short squeezes continue - the amazing run by Tesla (TSLA) continues. Look at the volume spike the past 3 sessions.
It's CEO is also the chairman of SolarCity (SCTY) which is getting attention due to that space being hot and Elon Musk being affiliated with the company.
Netflix (NFLX) squeezed shorts yet again.
Original post: STTG Market Recap May 13, 2013
Thursday's mild losses were made up Friday as any type of selling, however minor, brings in buyers. Friday's session was very quiet until the last 15 minutes when most of the gains were made. The S&P 500 gained 0.43% and the NASDAQ 0.8%. There were a lot of strange moves in the currency markets the past 48 hours as the Japanese yen continues to be the story of the year; with the Bank of Japan doing an easing policy 3x the size of the Federal Reserve's in relation to the size of their economy it has devastated their currency and hence pushed everything priced in yen (including their market) to the sky. A lot of other central banks have been forced to respond - this week alone Australia, South Korea, Poland - among others eased as we are in all out global currency war. Each country is trying to devalue their currency to support exports.
As for U.S. markets we continue to grind up almost every day - both the S&P 500 and NASDAQ are near/at the top of an ascending channel.
Here is the yen situation which many have their eyes on...
In return, Japan's market has been on absolute fire.
We are seeing far better internals than in late February through late April when defensives led the market. Now we have small caps regaining leadership along with a host of cyclical sectors.
Further bonds have been hit very hard this week - for a while there they were rallying with stocks which has not been a common situation in the past few years.
Gold and silver continue to be poor areas to be even with all the quantitative easing going on. Until something changes in their charts these are not areas to be exposed to.
Original post: STTG Market Recap May 10, 2013
Stocks pulled back slightly Thursday as investors looked for any excuse for profit taking and to work off an overbought condition. It was delivered via a market rumor that a Bernanke speech Friday morning would include comments about tapering bond purchases. Of course just two weeks ago the Federal Reserve meeting added language about increased bond purchases for the first time, so it was a silly reaction but with markets so skewed to the upside any excuse for some minor profit taking would do. The S&P 500 fell 0.37% and NASDAQ 0.12%. These are minor scratches; if the market consolidates a few more days in similar fashion it should be ready to make a new thrust upward shortly after.
Both the NASDAQ and S&P 500 are butting their heads with the top of their ascending channels....
The McClellan Oscillator came in nearly 30 points despite very mild selling; a bit surprising.
Aside from some names we mentioned with earnings in the after hours yesterday, the ramping of heavily short sold stocks across the market continued - popular names such as Sodastream (SODA) and Lululemon (LULU) had strong days.
Priceline.com (PCLN) reported after the bell, initial reaction was poor with the stock down 3% to the $715 area.
Priceline (PCLN) crushed first-quarter earnings forecasts, but shares fell 3% late Thursday after the online travel agency gave weak Q2 sales and profit guidance. The company earned $5.76 a share minus special items, up 35% from the year-earlier quarter. That beat the consensus of analysts polled by Thomson Reuters by 49 cents. Priceline beat by 23 cents in Q4 2012. Revenue surged 26% to $1.3 billion, narrowly topping analyst views of $1.28 billion on strong international bookings. It was the second straight quarter of accelerating growth. But for the current quarter Priceline expects revenue growth to slow to 15%-22%, with adjusted earnings per share of $8.87-$9.45. Those are below analyst expectations for 23.3% revenue growth on EPS of $9.58.
Original post: STTG Market Recap May 9, 2013
New day, same market. It is repetitious but there is little more to add - this is day 12 of gains in the past 14. In the absence of news, stocks go up. The S&P 500 gained 0.41% and the NASDAQ 0.49%. Since April 18th these indexes are up ~6.5-7%. Conditions remain short term overbought but prices continue higher.
Here are some longer term charts of the major indexes.
The McClellan Oscillator added a few points to finish just below 60 for those interested.
Bonds have come in sharply finally as the TLT ETF now sits on the trendline it broke through in early March. But net net this fallback in bonds is a positive.
The cyclicals continue to see rotation - today we had more strength in technology, financials, metals, and industrials. These are now quite away from any near term support but people continue to pile in.
After the bell a few earning reports from well followed names - Green Mountain Coffee Roasters (GMCR) is up some 12% to the mid $66s.
The gourmet coffee company posted earnings of 93 cents a share, excluding one-time items, on sales of $1 billion. Analysts expected the company to post earnings of 74 cents a share on sales of $1.02 billion.
Groupon (GRPN) is up 10% to just under $6.20 in the afterhours.
The daily deal website posted earnings of 3 cents a share, excluding one-time items, in line with expectations, while revenue topped estimates at $601 million, topping expectations for $590 million. Meanwhile, the company handed in current-quarter sales guidance that was in the lower end of the expected range.
Tesla Motors (TSLA) is up over 16% to over $65.
The electric car maker 12 cents a share, ex-items, on sales of $562 million, beating expectations for 4 cents a share on sales of $500 million.
Original post: STTG Market Recap May 8, 2013
Another day of autopilot gains for the market. Tuesdays have been extremely favorable in 2013; the DJIA is up something like 17 Tuesdays in a row; a strange situation. The market is also up 11 of the past 13 sessions. In the absence of any major economic news stocks simply melt up. The S&P 500 gained 0.52% and the NASDAQ 0.11% as technology stocks took a break from their recent big gains. Every day money rotates into something new so the indexes are generally holding up even as one group or another takes a day off. And it's not just in the U.S., over in Japan and Germany for example we are seeing multi year highs as every central bank pushes their chips in and asset prices appear to be the main target.
Nothing new to report on the indexes today other than they are now near the top end of recent ranges - we have not been here in quite a while.
The McClellan Oscillar is now in overheated territory - while it could in theory get well over 60 that is an extreme and rare case as you can see below with about 1 year of data, it happened over 3 short time frames. Probability says buying right here is not a winning strategy over the next 3-6 days as some rest is needed. This is the highest reading since early January.
Crude oil is also up against a key resistance area; bulls would like to see a new high here.
We'll take a look at some individual charts tonight using Marketsmith
First we have been mentioning the healthier action in cyclical stocks the past week and a half - you can see this in names such as Harley Davidson (HOG) which faces the consumer and Caterpillar (CAT) which is the essential cyclical stock. The former broke out of a range today on very good volume while the latter broke out of a long term downtrend late last week. CAT jumped over its 200 day moving average last Friday and 50 day today; in many ways it is acting similar to Apple after a long downtrend.
Meanwhile two stocks that were very hot cooled off today - First Solar (FSLR) and Tesla Motors (TSLA). These both have relative strength readings in the mid to upper 90s as they have been market darlings. Tesla is doing this right in front of its earning report tomorrow - no surprise as it is always a flip of the coin how a stock will do on its earnings and some momentum traders don't want to be around for that.
Speaking of earnings, we have Latin ecommerce play Mercadolibre (MELI) which is a poor man's combination of Amazon and Ebay in South America. The stock had a tremendous reaction to earnings it reported Monday evening.
The Latin American e-commerce powerhouse late Monday reported accelerating first-quarter sales that beat forecasts, though its EPS missed views. The Buenos Aires, Argentina-based company earned 40 cents a share. Excluding the impact of Venezuela's currency devaluation, MercadoLibre earned 53 cents, up 18% from the year-earlier quarter. That was a penny shy of the consensus of 11 analysts polled by Thomson Reuters. But Q1 revenue leapt 23% to $102.7 million, beating analyst views of $97.44 million. It was the second straight quarter of modest sales growth acceleration after four quarters of deceleration.
Original post: STTG Market Recap May 7, 2013
Back to autopilot mode..... After some excitement and a potential breakdown in the middle part of April, stocks have resumed their march upward with most indexes notching 10 gains in the past 12 sessions. In this environment the main concern is not piling in when stocks are short term overbought and of course buying every dip. Under the surface a move to more cyclical sectors continues as today was a rare day in 2013 that healthcare, utilities, and consumer staples all sold off yet the market rallied. The S&P 500 gained 0.19% and the NASDAQ 0.42%. News flow was slow; there was some Chinese service data released that showed significant slowing but the market is ignoring it.
The S&P 500 and NASDAQ are both back firmly in channel; while short term overbought they continue to grind up.
The two mega cap technology stocks that investors love are back on track - Apple (AAPL) continues to break out of this recent pattern while Google (GOOG) is making new highs.
Momentum stocks such as Tesla Motors (TSLA) and 3D Systems (DDD) continue to lead the way.
Financial stocks also joined into the festivities after not doing much the past two weeks, see Bank of America (BAC).
Overall, cyclicals continue to see a bid as money rotates out of safety sectors and into these groups.
Bespoke Invest has an interesting chart of how long it has taken for the DJIA to hit its 1000 point increments. You'd think the higher we go the quicker they come since 1000 points on 3000 is much harder than 1000 points on 14,000 but it has not been the case.
To get from 2K to 3K, the DJIA rallied 50% in the span of 1,560 days. To get from 14K to 15K, though, the DJIA only needed to rally a little over 7%, but it still hasn't been able to do so after more than 2,000 days!
Original post: STTG Market Recap May 6, 2013
We're in a bona fide bull market folks. After a tremendous bear trap two weeks ago where a nearly half year trend line was broken, the market has made another of its now infamous "V shaped" bounces, capped off my today's employment data. The report was not tremendous but expectations had been weakening during the week as a series of poor economic reports caused people to think this would be a miss. Not only was it a "beat" but previous months were revised upward as well. The ISM Non Manufacturing report, released later in the day, was not as rosy, but was lost in the bullish halo surrounding employment. The S&P 500 gained 1.05% and the NASDAQ 1.14%. For the week the S&P 500 gained just over 2% and the NASDAQ just over 3%.
The S&P 500 bounced perfectly off this lower trend line Wednesday - it was in question if it would hold again but right now there is no question. The index gapped up at the open and never even attempted to fill the gap. The gap up took it over the highs of the past three weeks just under 1600.
The NASDAQ is also within a channel, and with Apple finally cooperating should begin to act more in concert with the S&P 500 rather than lagging.
Most important on the day we finally saw the Russell 2000 make a new higher high - this has been a laggard the past two months.
With the two day move the McClellan Oscillator is coming in hot - the reading was actually nearing 60 in the early part of the day before falling just below 50. It's still an overbought reading for now.
We finally saw a selloff in bonds which had been curiously rallying WITH the market - something rare the past 5 years.
Copper had quite the week - from incredibly weak mid week due to China data to incredibly strong today. While still a broken chart, it is interesting to observe the wild swings.
Other than LinkedIn (LNKD) which had a rough day post earnings, today's rally was broad.
Original post: STTG Market Recap May 3, 2013
A solid recovery Thursday by the bulls as an interest rate cut by the European Central Bank and a general buy the dip mentality conspired to bring buyers in. Weekly jobless claims also fell to a 5 year low ahead of tomorrow's two key reports: ISM Non Manufacturing and the monthly employment report. The S&P 500 bounced back smartly from yesterday's losses to hit another all time high as it closed at the very top end of its multi week range, with a gain of 0.95%; the NASDAQ added 1.31% as tech stocks continue to see recent flows.
As expected, the ECB knocked down its key rate by a quarter-point to 0.50 percent, the first rate cut since July 2012, as global central banks raced to enact easier monetary policy. Draghi told reporters at a press conference following the rate cut announcement that inflation could remain subject to some volatility throughout the year. "Overall, euro area economic activity should stabilize and recover gradually in the second half of the year."
Technically today was a good day, as it showed the 5+ month support levels still have some sway - the S&P 500 fell back to this support yesterday and promptly bounced. This was the first real test of the support line since it broke through it in April.
The NASDAQ likewise is performing right in line technically bouncing off the same level.
Tech stocks continue to see a rotation as they have been major laggards this year.
A few key earning reports today - first LinkedIn (LNKD) reported after the bell and gave a low ball outlook which is pushing the stock down to the $180 level in afterhours. Expectations were immense and the stock rallied very strongly today into the report, as well as during the previous week so there could not be a single wart. It still remains an excellent company with massive growth.
The company said net income for the first quarter rose to $22.6 million, or 20 cents a share, from $5 million, or 4 cents a share, in the year-earlier period. Excluding items, earnings jumped to 45 cents a share from 15 cents a share a year ago. Revenue shot up 72 percent to $324.7 million from $188.5 million. Analysts had expected the social-networking site to report earnings of 31 cents a share on $317 million in revenue, according to a consensus estimate from Thomson Reuters. For the second quarter, LinkedIn said it expects revenue between $342 million to $347 million, short of the $359 million analysts expect.
Facebook (FB) on the other hand broke over this $28 resistance we mentioned yesterday on earnings and rallied all day. The stock is now attractive as long as it holds $28.
Facebook said 665 million users checked into their website daily last quarter, beating estimates of 640 million. That's up 26% from Q1 2012 and up 7.6% from Q4. Ad revenue met estimates, as better-than-expected mobile offset weaker-than-expected desktop results.
Sticking to the online theme review site Yelp (YELP) singed shorts today in a massive move off of earnings.
First-quarter sales climbed 68 percent to $46.1 million, the company said yesterday in a statement, topping the $44.5 million average analyst prediction compiled by Bloomberg. The first-quarter net loss narrowed to $4.8 million, or 8 cents a share, from $9.8 million, or 31 cents, a year earlier. Analysts on average were projecting a loss of 6 cents. Second-quarter revenue will be $52.5 million to $53.5 million, the company said. That compares with the average analyst projection of $50.4 million, according to data compiled by Bloomberg. Total reviews on Yelp’s sites, where consumers rate and comment on local businesses such as coffee shops, hair salons, pet shops and plumbers, increased 42 percent to more than 39 million, while average monthly unique visitors grew 43 percent to about 102 million, Yelp said.
Visa (V) reported another great quarter as this duopoly with Mastercard continues to be a powerhouse.
Last, Sunpower (SPWR) had its earning release a few minutes before the closing bell and it was positive - the solar sector is seeing a resurgence after being down in the dumps for years.
P.S. Warren Buffet joined twitter today @warrenbuffet
Original post: STTG Market Recap May 2, 2013
Markets came into today's session overbought near term but bulls would have preferred more of a sideways/mild down sort of day. Instead there was a relatively serious selloff. It was not seen as much in the major indexes which were down 0.93% for the S&P 500 and 0.89% for the NASDAQ, but that small cap Russell 2000 was crushed to the tune of 2.45%. Further a lot of sectors had what is called a bearish engulfing candle which is simply when one day's range totally engulfs a series of other days and closes at or near lows. The market remains tricky even as it grinds ever upward. Today's culprit was some poor data from China overnight which started the negative tone, followed by some disappointing U.S. data which finally mattered to the market for more than 60 minutes.
Some key economic reports today:
- The U.S. private sector added an unimpressive 119,000 jobs in April, according to the ADP National Employment Report, well below economists' expectations for an increase of 150,000 jobs. It was the smallest gain since last September.
- The Institute for Supply Management (ISM) said its index of national factory activity fell to 50.7 from 51.3 in March, coming in below expectations for 50.9. A reading above 50 indicates expansion.
With the S&P 500 we have a good test of our uptrend line as the market fell to it today. If it falls right back below and closes there in the coming sessions we have to rethink its utility after being a fantastic marker for nearly half a year.
Similar story with the NASDAQ.
Small caps continue to be an issue as they did not make a higher high on this rally and would be preferable as a leadership group. This is an example of a bearish engulfing candle - in 1 session, 5 days of gains were wiped out.
This was seen in quite a few sectors - for example the transports...
For those interesting the Oscillator dropped from +43 to +10 in today's session; so it was quite serious selling to have a 33 point impact.
A very poor day across the commodity spectrum as the weak Chinese data pressured the entire complex. Here we have copper and silver as examples.
After hours we had two interesting earning reports - Facebook (FB) and Las Vegas Sands (LVS). There was really not much reaction to the Facebook earnings in after hours - the stock has been stuck for a while and needs to clear this $28 area to make any significant change in its technical profile.
Facebook Inc's first-quarter revenue increased 38 percent year-on-year, as the world's largest social network continued to grow its mobile advertising business. Facebook said it earned $219 million, or 9 cents a share, in the first three months of the year, compared to $205 million, or 9 cents a share, in the year-ago period. Excluding certain items, Facebook said it earned 12 cents a share. Facebook's revenue in the first quarter totaled $1.46 billion, versus $1.06 billion in the year-ago period. The company said that mobile ads accounted for 30 percent of its total advertising revenue in the first quarter, up from 23 percent in the fourth quarter of 2012.
Las Vegas Sands (LVS) is up about 1% in after hours as this popular stock has regained a leadership status of late. The Chinese properties in Macau seem to be showing improvement.
Las Vegas Sands Corp. drew a record number of gamblers in Macau in the first quarter and took in more money from its Singapore casinos, helping lift net income by 15 percent to top expectations. The company says there were 14 million visits to its Macau properties in the first three months of the year. Macau is the only place in China where gambling is legal. Sands said Wednesday that it earned $572 million, or 69 cents per share, up from $498.9 million, or 61 cents per share, a year earlier. Excluding one-time items, Sands made 71 cents per share — topping analysts' estimate of 67 cents. Revenue also beat expectations, rising 20 percent to $3.3 billion, a quarterly record for Sands.
Original post: STTG Market Recap May 1, 2013
More poor economic news - more record highs; it's the market of 2013. The S&P 500 gained 0.25% and the NASDAQ 0.66% as the rotation into tech stocks continues and any and all news is considered positive. Today it was the Chicago Purchasing Managers index which fell to a contractionary level, and at its lowest level since late 2009. Doesn't matter - stocks sold off for all of 2 hours before roaring back. There was a decent consumer confidence figure but that usually is not a big market mover. For the month fo April the S&P 500 gained 1.81% and the NASDAQ 1.88% as this year's winning streak has no relent. News flow will pick up dramatically in the next few days as central bank announcements and key economic reports on manufacturing, services, and employment hit.
It appears we can now point to this uptrend from mid November as valid once more as the lower end of the channel is holding nicely for the S&P 500.
The NASDAQ has also pushed back into its channel with the outperformance the past few days.
The McClellan Oscillator is flashing short term overbought as we hit a new record on the S&P 500.
We can see the move into more "pro-cyclical" areas such as semiconductors below.
Apple (AAPL) continues its recent winning ways - today they priced a massive $17B bond offering which was gobbled up as there is so much liquidity sloshing around the world, desperate for any yield. More importantly as stock investors the stock has now finally jumped back over its 50 day moving average AND made a new higher high versus the most recent high - items we noted last Friday was key to a trend change. This should benefit the whole tech sector and especially the NASDAQ. That said the stock has come a long way in a few days and some consolidation would be beneficial.
Sources said investors could barely submit orders fast enough to get in on the deal from Apple, the only major tech company without a single penny of debt on its books. The six-part all-dollar offering attracted more than $50 billion of orders by midday in New York - a massive level of demand even in the current red-hot climate of the bond markets.
Emerging markets also have seen a nice bid in the past week as a major rotation seems to be back in place from the defensive sectors to the more aggressive sectors. See the major trendline that has been broken.
Tesla (TSLA) has been one of the superstars of the market of late - you can see it has surged far away from even the 10 day moving average. That said today could have been a short term reversal as the stock jumped over the previous days high and reversed quite sharply - on significant volume; usually a sign of exhaustion in the near term. But it has become a momentum favorite.
Speaking of, 3D Systems (DDD) which specializes in 3D printing seems to be back in favor after a turn with the momentum traders early in 2013, followed by a huge selloff. Today it had earnings which were received warmly.
The maker of 3D printing systems met earnings estimates, slightly beat revenue forecasts and reaffirmed full-year guidance. Earnings per share minus items came in at 21 cents, up 24% from Q1 2012. It was the seventh quarter in a row of double-digit EPS growth. Revenue rose 31% to $102.1 million, $1 million above consensus estimates of analysts polled by Thomson Reuters and the 13th straight quarter of double-digit growth.
Original post: STTG Market Recap Apr 30, 2013
Stocks finished at an all time high on the S&P 500 as all news is good news continues to be the mantra. The S&P 500 finished up 0.72% and the NASDAQ 0.85% as the correction of a week and a half ago is now a distant memory. The swearing in of a government in Italy seemed to make markets happy as the Italian market jumped 2.2%. The European Central Bank meets this week and expectations are now high for a rate cut. The tech sector took the lead in U.S. markets Monday which would be a welcome development.
It looks like the channel that held for almost the entire time since mid November, is once again providing support for the S&P 500 - this would be good as it would help provide a downside marker. This is the 5th session the index has closed above it after the first detour below earlier in the month.
The NASDAQ - to the contrary - continues to be stymied by the same support line as it continues to hit it almost daily of late.
However this could change if we see a rotation into tech stocks. This sector has gone nowhere since the beginning of March even as the markets creep up, but today was a strong day in the sector.
We mentioned Apple (AAPL) in Friday's recap as a stock that could be poised to make a change in tone - it had a super day up 3% and ran all the way to its descending 50 day moving average. It also broke above its major downtrend line for only the second time since October 2012. If it can jump over this 50 day MA, and make a new higher high we might finally have the old Apple back - at least for a while.
Here are some other interesting charts per Dan Zanger's Chartpattern newsletter:
Workday (WDAY) is a tech stock that has a descending channel that it just broke out of, a trader could partake with a stop if the stock falls back into the channel which would signify a short term failure.
Alexion (ALXN) is a company in the red hot biotech space - it is building a potential base here, and a new high would be a nice entry as Zanger points out.
ARM Holdings (ARMH) is another tech company - it reacted very well to earnings, now bulls want to see it form a "bull flag" (sideways for a few days) and then a breakout over recent highs, marking Zanger's $46.90 buy point.
Original post: STTG Market Recap Apr 29, 2013
Happy Saturday everyone. With the Q1 2013 survey now completed I wanted to share the results.
First off, we had a record number of readers participated this time around, 317, which is over 100 more than last quarter. There are over 16,000 subscribers to our Market Recaps, and on average about 2,500 of you read them each day. So, I am pleased with a 12.7% reach. Thank you!
Next, subscriber growth quarter over quarter was an impressive +1,586 subscribers (16,318 vs 14,732), or about 17 new subscribers per day. This is strong growth and I want to keep it up. Our market recap has a very low unsubscribe rate and I know many of you forward on the recaps and recommend the site to friends and family, thank you for your continued support!
Lastly, the StockTradingToGo Facebook fan page has grown in size, adding 164 Likes during the first quarter 2013. As of this post we currently have 745 fans on Facebook. If you are not a fan of StockTradingToGo on Facebook yet, then like us right now!
Opening facts aside, lets dive into the survey itself:
This is exactly what we want to see, tons of 8s, 9s, and 10s! We took your feedback to heart from last quarter's survey, and I am very pleased to know you all agree with our renewed efforts. The average scores for these three categories are below:
- Commentary = 8.6 (last quarter 7.9)
- Chart Analysis = 8.9 (last quarter 8.4)
- Overall = 8.8 (last quarter 8.2)
Pretty clear to you readers first and foremost you readers enjoy the daily market index (S&P 500, NASDAQ) chart updates most. Next, the individual charts and commentary. Thereafter, the opening speed market summary. Finally, the misc market facts and data we randomly share throughout the week are in a distant fourth as far as favorites go.
Question #3 is always an optional, open ended feedback area for ideas, comments, and feedback on how we can improve. This quarter we had 83 total responses. These are always tough because there are so many different thoughts (which is great!), however we also understand that we will never make everyone happy.
Below I have addressed some of the more broad comments and themes. We thank you very much for your feedback, and hopefully this helps some readers understand why we do what we do:
- We do not make stock picks. While we do trade ourselves, our goal is to share a variety of neutral information and allow you to make your own decisions. Among other reasons, as a free newsletter, we have no current interest in maintaining track records, tracking calls, fielding subscriber comments, and being a hero or hated for making picks, etc. With that said, if you like our chart analysis and would like stock picks, consider Dan Zanger's nightly newsletter, it is one of my favorites.
- We do not make market predictions. Instead, we state the facts, and react accordingly to what the market does thereafter. If we knew which way the market was heading every day we'd all be rich. Unfortunately, that is not the case, and neither us nor Warren Buffett can predict the market day in day out.
- Recommendations for more advanced technical analysis alongside less advanced analysis. Wait what? Yes, some of you would like us to go more in depth, while others make requests to get less detailed and simplify further. We have every type of investor, from professionals to first timers reading the market recaps, so our current content is a happy median to satisfy the majority.
- We cover US indices only. While we would love to expand and cover international markets each day, this is simply not possible at this time. This includes forex, futures, etc. Sometimes we will update the US dollar or make comments on these topics, but it is more rare. I apologize for this but appreciate all of you living outside of the US who still read each day. Thank you for your support!
- More commentary vs less commentary. This is similar to recommendations on more or less technical analysis. We have a wide spectrum readership, thus the current flow is what we have found to be the happy median. Plus, between you and me, I can't stand overly lengthy commentary. I am an avid KISS, keep it simple stupid, believer.
Thank you all again for participating in our quarterly survey. Your feedback helps to ensure we continue to provide the absolute best content possible on a nightly basis.
Also, thank you for reading StockTradingToGo, thank you for supporting the site, and I bid you a successful second quarter of trading. Cheers!
Original post: STTG Q1 2013 Survey Results
Stocks finished off a big week in quiet fashion with a mild consolidation which is exactly what bulls wanted to work off a near term overbought condition. Quarterly GDP was released in the morning at 2.5% which was not too hold, nor too cold - but at this point any economic data can be explained away as a reason to buy stocks (good data is good, and bad data means more intervention by central bankers). There were a lot of interesting earning reports which we'll dive into later in the piece. For the day the S&P 500 finished down 0.18% and the NASDAQ 0.33%. For the week the S&P gained 1.74% and the NASDAQ 2.28% nearly erasing all of last week's losses.
The S&P 500 came back down to the bottom end of this 5+ month range it had been traveling; we have to see in the coming days how valid this trendline still is as it was violated last week. If it provides support go forward it remains useful.
Meanwhile the NASDAQ was rejected yesterday on the underside of the same channel.
For those interested in gold, the very oversold metal rallied to its quickly descending 20 day moving average today - where it was promptly rejected.
The housing sector was a star this week, confounding those who thought the chart looked weak and might be signaling a much larger correction.
We'll use Marketsmith charts for the remainder of today's recap - first we'll focus on Apple which MIGHT finally be turning the corner, and then 3 key companies who posted earnings yesterday and were hit hard. The relative strength rating is obviously horrid, but with the stock buyback announced, it will be key for this stock to get back over the 50 day moving average to change its trend. One can see this would also mean a new higher high which the stock has not done in a long time.
Finally we have 3 widely followed companies which reported earnings yesterday - to boos and hisses. Amazon.com (AMZN), Chinese search engine Baidu (BIDU), and travel site Expedia (EXPE).
Amazon fell nearly to its 200 day moving average down at 251 ; we can see this was mid March lows hence key.
Baidu was a market darling for a long time but has been very "Apple-like" the past 6 months. Yesterday was the first visit over the 50 day moving average (the same spot Apple has been stuck under for half a year) since the gap down reaction to the last earnings. Unfortunately anyone who front ran earnings got crushed today as the stock dropped from the lower $90s to mid $80s - again a key support for Baidu has been low to mid $80s.
Expedia is a widely followed stock but astute chart watchers would note it has been making LOWER highs since January - a bearish signal. That can change on a dime after earnings but usually the stock is trying to tell you something when it does that. Expedia fell to its 200 day moving average - you can see how important this line is for stocks.
Next week will be very data heavy with a Federal Reserve meeting (although nothing new is expected), and some of the key economic reports we receive each month such as ISM and employment. We'll see if bulls can make new highs or bears have any fight left in them after a beating all year.
Original post: STTG Market Recap Apr 26, 2013
Thursday continued another breathtaking advance in a series of them since 2009. Since bottoming out a week ago the S&P 500 has essentially traveled 50 points up in a straight line despite a bevy of weak economic data, and corporate earnings that showed lagging revenue while beating (lowered) guidance. The bears seem powerless. The only thing that stopped the bulls today was a late day news report that Germany's court had some issues with the ECB's backstop plan for Italy and Spain - but it was essentially an excuse to breathe after a romp all week. The S&P 500 gained 0.4% and NASDAQ 0.62%.
The head and shoulders idea now looks kaput. While the S&P 500 has yet to make a new higher high it would appear with the way all data is seen as positive (good is good and bad means more central bank action) it is only a matter of time. Tomorrow we have a GDP report but will it matter for more than 3-4 hrs? A bad GDP report means more QE, a good GDP report means improvement in the economy, etc etc.
The S&P 500 is now back firmly in its channel and was making a run to all time highs before the German news report came out.
The NASDAQ has now rallied all the way back to the underside of its channel.
This week we saw the return of action to small caps and cyclical groups which is a net positive. The Russell 2000 of smaller cap stocks was the first index to make a new lower low - usually a warning sign but in a Quantitative Easing market, none of this seems to matter.
The McClellan Oscillator in a week has gone from -40 to +36, it was nearly +50 at the peak today.
Oil had another strong day - a natural move when cyclicals are in favor again.
In terms of sectors, it was a very similar day to yesterday - the cyclical groups outperformed while the defensives had muted moves.
As we enter the seasonally weak period of the year it will be interesting to see if the "Sell in May and go away" mantra holds true in the QE market. BeSpoke Invest takes a look at how it has done over the past 20 years.
"The first third of the year is coming to an end, and as we enter May, trading will begin to slow as the sun comes out and temperatures rise. In the investment world, the start of May is often associated with that awful phrase — “Sell in May and Go Away” — and each year we get a lot of requests to analyze whether or not the phrase is worth following. Historically, November to April has gained roughly 6%, while May to October has gained around 1-1.5%.A better way to highlight the difference in performance may be to show how well you would have done if you only owned the S&P 500 during each of the two time periods. Over the last 30 years, if you bought every October 31st and then sold the next April 30th, you would now be up 898%. If instead you bought every April 30th and sold every October 31st, you would be up a paltry 56%.
Original post: STTG Market Recap Apr 25, 2013
Tuesday was a quiet session of digestion and a quite stark rotation under the surface. Money moved from areas that has been leading the market for the past 8 weeks and into more aggressive sectors; if that can continue it would be a benefit in the intermediate term. The past few times this has happened it has lasted 1-2 days before those same sectors rolled back over. Both the NASDAQ and S&P 500 finished essentially flat on the session, almost to the penny. There was a poor durable goods reports in the morning but the market completely ignored it, as it has most negative news the past half year.
March U.S. durable goods orders slid 5.7% in March, the government said, marking the biggest decline in seven months. The March drop was slightly more than twice the 2.8% decline forecast by economists polled by Reuters.
No change in the indexes obviously - the S&P 500 is in day 2 of regaining the 5 month channel it lost last week - the best thing for the bulls after this quick move up is some sideways action to consolidate the move, and then a new charge towards highs late in the week or early next.
Oil woke up as did most of the commodity complex; the commodity is now back to its 200 day moving average - it would be a positive to see it break back above it.
Gold miners staged a bounce from their very oversold levels - we can see this in the ETF for the sector.
Other beaten down sectors rallied such as metals/mining and oil services.
...while a disappointing earnings report from Amgen (AMGN) hurt the previously unbeatable biotech sector.
Consumer staples also took a hit as Procter and Gamble (PG) disappointed on earnings; the stock gave back a month's worth of price in 1 session and sits at the 50 day moving average.
The fact the market held in even as the leading sectors were hit is a testament to the bulls. When one sector is down, money just goes to a new sector. While it is strange to see money flow into sectors that are more pro-cyclical, on a day durable goods orders were so weak, it is the current market we are in - strange things constantly happening as people continue to try to find a place to put cash in a world awash with central bankers money.
One individual name to highlight today was First Solar (FSLR) as speculative juices return to the market and this former momentum name gets a lot of new attention.
Original post: STTG Market Recap Apr 24, 2013