How frequently are the sector rotations turning lately, is it an overnight, weekly, few days, or midday reversal?
MAMA seems to have a consistent mid-day reversal but other than the odd upgrade intraday, I would look for an overnight rotation to confirm itself the next day like the big ship tankers sector have been with high relative strength for a number of weeks, the retailers (JWN, MIK etc) a number of weeks while the building sector has been with low technical strength for months. You can check the technical ranking and relative strength of sectors in Investor's Business Daily which is good for that. I check the sector leaders which you can also do with http://www.investors.com but its paid service which I think is $225 a year but saves me that almost a day. I do like to read, but not the overflow of information available here on messageboards, definitely not the trading rooms, but my favorite sources of information. That's where the newsletter plays come from and not from the 'momo' stock of the hour. Believe me I'm not knocking the momo stock of the hour, I would like to get in myself but the way we 'milk' our own plays leaves little room for 'intraday scanning' and following 'most up lists'. Yesterday I caught the move in MAMA and today so busy with our others, I just missed it. I'm losing potential gains because MAMA and MAGS have no options (on paper I would have made quite a bundle with puts in these two since their breakdowns)
I won't risk holding these volatile plays overnight again. I got away 'unscathed' the first time with MAGS and was lucky especially as we were in CDCY swing also just 2 days before the first breakdown. Now I'm more careful and don't really expect much from the home security stocks (except TASR, that's a great short)
Also when a number of companies reporting earnings from a sector do well, the entire sector stays in high relative strength for a quite a while. It will take an actual downgrade on valuation to rotate money out of the sector.
Another interesting point is that in the same sector (i.e. retail) a stock like FRED which has been under pressure will enjoy renewed money flow and high relative strength the same as JWN which is consistently making new high after new high)
Both JWN and have strong relative strength although poor FRED has yet to take out more than the 20 ma.
Something I've researched lately is that EARNINGS PLAYS that do well, outperform its own sector consistently and pullbacks are not sold (I used to sell after a few days but now I just sell incrementally and wait for the continuation of uptrend) Invariably EVEN TECHS that had good earnings are outperforming their peers.
And secondly, don't you always find some segment rising even when the entire maket is falling because
today the better biotechs were weak (IMCL, OSIP, BIIB), while the weaker biotechs (AMGN)Biotechs can always be influenced by outside influences but if you want to play the biotechs as a whole unit, the BBH is consistently the best way. That is the same for the internets. The HHH is the best way to play upside in that strong sector. At this point because the sector is overbought, I've been closing the second tier 'nets like INSP and ASKJ stopped me out today while I'd like to stay to 45, I'm not going to risk eroding gains when I can always reenter at a bounce.
GNTA saw the action, we'll see if there is a confirmation. Had a great play on GNTA . Most of our earnings plays that had good reports and we're talking dozens have hit 52 highs since their reports and since we've posted them. I never get impressed because its expected of earnings plays since that's the elemental and fundamental reason its up....earnings are good. You don't need fancy indicators or pie in the sky formations to find them. As for the 'fad' plays its was a matter of time before they break as did TASR, MAMA, CDCY and now HANS. I would have shorted that yesterday but it wasn't available. The biggest gainer this year is now TASR up to 2,000% which sounds incredible (as a penny stock or those print brochures that come in the mail and you throw away) but its true and no one is more surprised than myself.
I trade my newsletter plays a bit more than I post them of course and even more than most of my traders play them because I prefer familiarity with stocks and their trading patterns more than daily momo which I'm not too good with anyhow. My niche is milking the earnings plays for all they are worth and they become momentum plays (i.e. IMCL, ASKJ, NTES, SINA, MIK, DITC, FARO ) but I still find new ones for our traders who get interested in the most current earnings play. The list grows of 'replays' and buys after dips. I've traded FNM alone 13 times in last few weeks and I'm not even a scalper. I might miss a TZOO or a TBUS, but I prefer knowing where my set ups will be in advance and the next support resistance areas, etc. Very strong shorts in the building sector about as many as in the tech sector yet will always appreciate a BOL or a TK as well. Its difficult for our strategy to be wholly bullish or bearish because we tend to be both long and short different companies on the same up or down day. That's why I don't really care if we are ultimately up or down, as long as earnings keep coming out and that is 100% for sure whereas trends are changing, we'll be in trades until we retire. Our style is different but we embrace that difference, not to be clones of every scalper and every momo player out there. If you paper trade our stocks you will actually learn something because no one is telling you "I'm in XYX at $$$$" and you have to enter or lose the chance". Our plays last long or have sharp moves so you can 'plan in advance'.
We know when earnings are coming out, we don't know which stocks will be the momo trades until they have come onto the upgraded lists and on the 'most active' list so it might be too late by the time every trader who has real time news feed has entered the stock. It helps to "anticipate" when the move will be. PLL was exciting today. No one mentioned it but us, and that is the way we like it. No one called DITC or MIK or FARO or UNFI or a half dozen others last month so we didn't need to fight the mm's to get our trades.
The education center will be kept open and our archives are always available to brush up on our strategies.
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