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Chart of Day: All Eyes on the 50-Day

May 17, 2017

It was only a matter of time.

The Dow Jones Industrials plunged 300 points in a day. People panicked. Investors leapt from trades. Stop losses were taken out. Fear gripped the markets, sending the Dow well under its 50-day moving average support line.

All on rumors that President Donald Trump could be impeached at the time.

Now, all depends on if the Dow can hold that 50-day moving average. Should it break that line, the Dow could sink to double bottom support at 20,400 – or 300 points lower. One way to trade such an opportunity would be to buy to open the DIA July 2017 206 put at market prices. Be safe out there. And be sure to use stops.

Chart of Day: The Best Trading Advice I Ever Received

May 14, 2017

“You give the worst advice,” I was told.

“You want me to believe NVDA is a buy just because your technical indicators tell you to buy. It’s garbage. I’m not buying this. I’ll wait for your next trade.  Why do I listen to you?"

At the time, NVDA traded at $97.50 after taking a hit.

It was oversold, though. Relative Strength (RSI), MACD and Money Flow (MFI) were all beginning to reverse higher. The story was still red hot. And the stock was sitting at triple bottom support going back to late February 2017.

And I was supposed to ignore it? Come on.

When it comes to trading, go with what you know. Don’t trade on emotion. Don’t let some one else convince you that you’re wrong. If you’re strategy says buy, buy. Never let a critic talk you out of a trade that you beleive could bounce.  Will you be right 100% of the time?  Of course not... But if you have a system that's worked for you, stick with it.

I stuck by mine and watched NVDA pop $30.  Come to think of it, I still haven't heard from my critic since.

Chart of Day: The US Dollar Wedge Intact

May 10, 2017

On April 15, 2017, we noted we were looking for a potential bounce in the US Dollar as long as it maintained the falling wedge pattern. And that’s exactly what happened. Just days after testing 98, the currency is bouncing well off the lower line of support in the pattern. Now, should the pattern continue to hold, the dollar could easily retest 100.46 before moving lower. Draw your trend lines and you can watch it daily.  One reason to watch the direction of the dollar is to gain a general sense of direction in gold and silver prices, too. It’s just something to keep in mind.

Chart of Day: Never Ignore these 52-Week Lows

May 08, 2017

Never ignore industry giants at 52-week lows.

They’re actually great opportunities. Look at Palo Alto Networks (PANW) for example. We last spoke of the opportunity here on April 17, 2017 long after the stock gapped from nearly $155 to less than $110 on earnings. However, any one that bought the stock at recent lows is already started to see gains as it begins to break back above its 50-day moving average.

There were two catalysts folks were ignoring.

For one, as we pointed out on April 17, the cyber hacking story was heating back up. And the threat was only likely to get worse, needing what PANW provides. And two, at the time RSI and MACD were insanely oversold as the stock found support at $112.

It was only a matter of time before it bounced back, which it did to $116 a share.

Chart of Day: The UA Fade

May 02, 2017

This is getting tough to watch.

After a quick break higher on positive earnings, Under Armour (UA) still isn’t the stock you want to own. It’s become the stock to short even here. It may have grown revenues 7% and beat Street expectations with a loss of one-cent, but any chance of a rebound is far off. It just doesn’t have the strength to get it together anymore.  

Technically, it’s failing at a historic top dating back to February with reversing Williams’ %R and relative strength. The best way to trade this sick dog is with the UA June 2017 20 put at market, and or the July 2017 17.50 put at market.

Our target price at the moment is $17.50, which could pay us good money on the puts.

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