January 19th, 2017 Watch-list
Hey traders! Another small red day for the market with the DJIA closing down 22.05 points. We're still holding the same sideways consolidation patterns we've been talking about. A lot of people are expecting a market pullback in the coming week with the inauguration. However, a lot of people were wrong about a pullback when Trump won so we'll take a wait and see approach. We have our position in SDOW there just in case the market does in fact fall. Daily chart for the DJIA is below with key support and resistance labeled.
Current Plays on Watch:
SDOW: Open position here. Another little green day for this one as the DJIA pulled back. As we've went over time and time again, if the DJIA falls, this one will rally. At this point, this is our hedge against the market in case we happen to be in other positions and the market falls and pulls them down with it. If that happens we'll be able to offset some of the loss with a position in SDOW.
AREX: Nothing new here. Still waiting patiently for this one to settle down into our labeled buy range for us. At this point we are 2 weeks away from earnings. If we do not see a buy signal within the next few days, we'll put this one on the shelf until after earnings (Feb 1st).
New Plays to Consider:
Honestly there just is not a lot out there in terms of potential reversal plays. With the market being topped out, a good amount of stocks and ETF's are also fairly overbought. Those trades that are in key levels of support are generally forming other longer term bearish patterns, such as a descending triangle (AMRS). With that said though, I did receive a handful of emails today regarding the same ticker, and that's SGY. I felt I needed to share my thoughts on this one as a potential play. Looking at the chart, right off the bat you can see that this one sees very rapid moves up and down, which makes it a very high risk/high reward trade. Shorter term we are forming higher lows and have an ascending support line. We are also finding support right near the 50sma as well. We do have that ugly gap down of nearly 50% that occurred in October of last year which is a red flag risk wise. If interested in trading SGY, I'd look to grab an entry no higher than $7 and no lower than $6.38. If we break below $6.38, we may be able to get this one much lower as it trends down. Buy signal wise, we already have 3/4 indicators curving up. The daily indicators are not as effective on this chart as they are on most charts simply because it does see such rapid moves, however I'd still look to have 3/4 daily indicators curving up along with a higher low forming on the 15 min chart before entering. Initial profit target, $7.45. Second target, $7.95. Stop loss, look to utilize a 1/2 R/R ratio. Chart below with buy range labeled along with key support and resistance. Remember, this is a high risk/high reward trade, consider reducing the amount of capital you go in with if considering trading.