The NASDAQ was rejected at its 50 day moving average today as volume jumped from Tuesday’s level. However, it was small caps and the Dow leading the general market lower. Retail (XRT) was a big loser as retailing was down 1.9%, but it was Consumer Durables and Apparel falling more than 3.6% on the session. Apparel stocks like KORS suffered heavy losses as institutions stepped in to sell down their shares. Today is certainly a warning sign after yesterday’s solid session. While it is not out of the ordinary to see selling after a 3 day run, it is not normal to have this kind of action. Caution is definitely warranted here and tightening up stops is a prudent move.
Macy’s (M) outlook took down retail stocks in a big way. An easy look at how M took down retails is through XRT. KORS really had a tough day as the stock fell 11.8% on the session. UA and NKE are two names that have been darlings of the athletic world and they are struggling. Both stocks are looking like they are going to continue their downtrends and potentially set new yearly lows. Lots of selling pressure in retail today and it does not bode well overall for the market. Perhaps the rise in crude oil prices have put a stop to any glimmer of hope in the retail world. Oh wait, the one glimmer of hope continues to be AMZN!
Sentiment is negative and will likely continue to be negative. The move off the lows was not something many expected nor believed in. It does lead us to the question does sentiment even matter to the market? At extremes, sentiment does play a role. However, we have seen the NASDAQ struggle getting back above its 50 day moving average and sentiment remains negative. Price should always be your guide. Use it to your advantage.
It is prudent to remain vigilant with your process. Things are not looking all that great here and it is wise to proceed with extreme caution.
Joshua, Aloha from Brooklyn.
Not sure where else to write you, but it does say “speak your mind” above. Redirect me if not the right place!
A few questions for when you have time. Feel free to weave answers into your posts in the coming days, but I’d generally be interested to get your take on some of these items. If older posts cover them, would love to see!
Profile: Novice investor in my 40s. Fairly dumb luck on one stock over last decade or so. Decided to diversify last year, looked at a few services and obvs signed up for yours.
Getting some value, but want to maximize. I like when you provide a macro view of holdings, for example, “I’m half invested” etc. I like when you cite that a stock has a positive signal, bc then I can look at it more thoroughly.
Have time to be somewhat active, but not really a day-trader. I can research picks, pick up some shares to see if they ride, then cut losses on the bad ones later. Try to check in here each day.
1. I like seeing the recent top holdings when you include them, but it would be more valuable to know when you are really making moves on something and why. Sometimes I see that, not always.
2. Today you used this phrase. “Price should always be your guide.” I notice you use it fairly often. From context I gather some of the meaning. But I’d be interested to have a more full explanation on what we should take away from that. Price as opposed to the price last week? Price versus it’s x-day average? Price versus the ratings I see on the stock in my etrade window?
3. Would like your thinking on setting stop/losses. I see you advise them, but honestly I stopped using them a while ago. I set alerts instead. Yes, they can save you from a drastic, sudden loss — but I’ve found stocks ALWAYS have these micro-drops during a day, so you get stopped out from a split-second drop — and that’s another kind of annoying.
4. What’s your take on 2016 so far? From my perspective, it’s been sh**. Again novice here, but it seems to me Oct-May is usually when stocks tend to grow. This year so far, very turbulent. Hard to make anything work.
5. It would be interesting to see a little perspective on where we are in the year in relation to what your comments are each day. Actually, you probably do that. I just need to pay better attention.
You have your “go away in May” thinking out there — and recently I’ve read sentiment that in an election year that might not be the case. The market should see steady growth in an election year they say. Then again, look at the candidates. Don’t think that bodes well. And here we are, having another week of churn.
Thanks, keep up the good work.
-JJ
Hello Jimi. BK in the house! I am currently traveling over the next 10 days. Give me a few days to reply to your message. Thank you for your patience and I promise to get back to all of your questions very shortly!
I would like to echo the concerns and questions of Jimi.
I am not yet a subscriber of your service but I am considering it. I don’t know if you give different commentary to your subscribers than you give here to the general public. You have very good thoughts here for the general public but they are not specific enough for us to develop a trading plan off of. That is fine. Subscribers should get more detailed commentary. The question is do they? I would like to add some questions to those of Jimi. First a little of my history.
I am not a day trader. I work full time. I love looking at the market at night and making adjustments to my portfolio as needed. I try to seek out advice from many so called experts and follow a strategy that is conservative and works for me. The problem is the strategies that I develop never seems to make me any money. For example, the first of last year I was in the health care sector. It was doing well until the August 24 plunge. It wiped out my YTD gains. I followed the stop loss plan and sold. As advised by the “experts”, I started to look for the next best sector and ETF’s. I would get in some ETF’s and stocks that seemed to have good momentum and were recommended. They would go up quickly but then go down quickly. Again, sell stops were hit. Well, one of the best sectors for the last year was the consumer staples sector. It seemed to be doing well while other sectors fell. I decided to pick some of the best stocks on that sector (best of breed). Some had gone up over 50% during the year. So I got in at the first of 2016. They went up a ways and then came crashing back down while investors rotated to other sectors. Sell stops again were triggered. It is very frustrating to try and make any gains when the market whipsaws back and forth and the sectors take turns going up and down.
I have been following your free commentary here on your site and on Stock Twits for over a year and I like your ideas. Here are my questions:
1. From what you see of my history, could your system work for me?
2. It sounds like you are more of a day trader. Is that correct? If I am not, would your system be wrong for me?
3. What I am looking for is a different way of investing and an experienced trader that can give me some specific guidance. I don’t mind learning how to trade but I would prefer some more hand holding. I would like to use a proven service that will say what to buy, sell, and hold, when to do this, and give a reasonable explanation of why these moves are made. Is this found in your service?
4. I don’t want a service that says, “This is how you do it. Now you go out and make all the decisions. Sure, I don’t mind learning how to be a better trader/investor, but I would rather have someone with 20 years of experience and success give me his recommendations. That person can say, “This is what most people are doing and thinking at this time, but my experience tells me that x, y, and z can happen. It may be wise to stay on the sidelines or get in with tight stops.” You seem to have this way of thinking. I have been trying to learn from “experts” for years but it seems like they are often wrong and it seems, like I said before, I am “too late to the party” most of the time. Can your service help me with this?
5. If your service can help me, it would sure be nice to see the performance record of your recommended portfolio. I have visited websites where they say they have the best investment plan, but on reviewing their performance history, you see that they did not do well at all. Now, I know that you cannot guarantee any results and it is up to us to make our own investment decisions. However, it would be nice to see if a service beats the market and most of the other services out there. I am not looking for home runs. I would just like to make a decent return each year and be out of the market when it is best to do so.
6. I am unclear with the difference between the gold and platinum plans. Again, I am not a day trader. I don’t envision being in a chat room several hours during the day. Like I said, I am looking for an adviser that can say when and what to buy, hold, and sell and why. Would the gold plan do this for me?
7. I would also like a service that I don’t have to sign up for a year at a time. If the service is not working for me, I want to move on. With your service, what is the sign up policy?
Thanks for your responses.
A. Stott
A. Stott,
Thanks for posting the comment here.
1. Yes, this service is for you. You can take our EOD trades (posted nightly) and adjust nightly.
2. We are both position traders and day traders. For those who have the time to day trade we offer daily stocks to watch.
3. Our platinum service is for you. The chat room is a great place to get more hand holding!
4. We can help!
5. We will have to get your the performance from Josh (a little help Josh!)
6. Chatroom helps with questions you have regarding moves…while we do some day trading talk we are a lot more comprehensive.
7. We have Monthly and Yearly options. Monthly, just cancel and you will not be rebilled for the next month.
Let us know if you have further questions!
Thanks for the great reply.
AMZN is a good example of the volatile nature of the market and the problem I have been having with my trading strategy. After the stop losses of my health care stocks got me out on Aug. 24, I started looking for a good growth stock. Amazon was at the top of the list. Everyone said it is a great growth company that it would continue to grow and take market share away from other retailers. I followed it for a little while and bought in on Nov. 4. From there it went flat and tanked on Dec 29. It lost 31% to the bottom on Feb 9. My sell stop got me out with about a 10% loss. From Feb 9 it started rocketing up again. I need to have an adviser say, “Stock A has good numbers including sales and earnings potential and is ready to breakout for some good gains. Ride it until it hits this sell stop point or get out if it does not make an up move in the next 5 days.”
If a market is choppy and volatile like we have had for the last 18 months, it is very hard to make any profit. Since Dec 4 the S&P is down about 1 percent, so, a buy and hold investor would be down about 1%. But most conservative investors say you need to avoid buy and hold and have about a 7-10% stop loss point to really survive sudden downturns. If one were invested in the S&P most of the time, got in when it showed good momentum and got out when he hit a 7% sell stop, he would have lost 7% around April 23 and another 7% around Jan 6 for a total of about 14% loss. Geez! That is a terrible nerve racking way to try and make money in the stock market.
I look forward to seeing how Josh’s portfolio has done over this past turbulent 18 months. I need to find a better way to invest.
Thanks.
A. Stott
This remains one of the most difficult markets in known history. Knowing risk/reward and proper position sizing is key to this market.