The iShares NASDAQ Biotechnology ETF (IBB) allows exposure to this potentially profitable sector while moderating volatility. Here is my take on the IBB chart published on The Street this morning.
I have been following Starbucks (SBUX) for some time and my longer term view has not changed, which is that the stock is breaking down from a long term consolidation pattern and is eventually headed much lower. Here’s a link to my most recent article on the subject published this morning on The Street.
A link to my article on Universal Display (OLED) published last Monday on The Street.
A large triangle pattern has formed over the last nearly one year on the Starbucks (SBUX) daily chart. The stock price has made a series of lower highs above a horizontal support line, and it has underperformed the S&P 500 index by 13% year-to-date, and 31% over the charted period. Over the last two sessions hammer-like candles have formed just above the support zone, even as the S&P index is testing its own support zone on its chart. It seems like a likely place for a bounce, but anything is possible and the integrity of this zone should be monitored, as it could determine the intermediate term direction of the stock.
The S&P retested the top end of the support zone in Friday’s session and was able to hold the bounce off that level. It still closed down for the day but did form a hammer candle and remains situated in the middle of the neutral zone. The continued integrity of the support zone and the hammer candle are bullish signs on this timeframe, but the latest candle on the weekly chart has a different tone to it.
A shooting star formed on the S&P 500 and DJIA weekly charts. This is a candle that has a narrow opening and closing range positioned at the lower end of its overall range, and a large wick or upper shadow. It represents the bull’s inability to hold higher levels and sitting just above support adds to its tentative character. A spinning top formed on the Russell 2000 chart and this candle, which is similar to a doji has a narrow opening and closing range but in the center of its overall range, and it suggests indecision on the part of market participants. In opposition to the other weekly index candles, the white marubozu on the NASDAQ chart has a wide range, and the open at the low and close at the high indicates the bulls are in control. It could be that the composite index is taking on a leadership role and will pull the broader market higher or continued weakness in the other indices could eventually drag it lower.
Trading the volatility and diversions in these indices can be profitable if you are in sync with the daily or intraday oscillations, but it can be frustrating and costly, if you are not in time with the rhythm of the market. Patience preserves capital, and, as I have said, sitting on your hands while the market bounces around in the neutral zone is a plan.
This is a market that is in semi-panic mode; it is money that is afraid it will miss a move to the upside or to the downside, committed only to momentum regardless of direction or duration. It is under the influence of schizophrenic algorithms and random impolitic commentary by members of the Federal Reserve Board. The best action for many traders right now may be inaction.
I’ve highlighted the support zone on the S&P 500 chart between 2125 and 2110, and the index has tested and retested that area. Currently, it is in the neutral zone which is situated above the support zone and below the 2175 resistance level. As we all know, doing nothing is a plan – while the market has time to calm down and participants mechanical or otherwise come to their senses. It will be more manageable after it decides if it is going to breakout or breakdown from the neutral zone. Remember that patience preserves capital.
Here is a link to my analysis published on TheStreet this morning of five biotechnology stocks undergoing a classic volatility “squeeze.”
Carter Worth, of Cornerstone Macro, does some historical data mining on “Fast Money” and it supports his negative view of the S&P 500 chart. Today’s broad market bounce could be short lived. He’s fading the rally.
Here’s a link to my article on Wynn Resorts (WYNN) published this morning on TheStreet.