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Thursday, February 08, 2018

Earnings Season Stars: Twitter and Snap Spike Higher

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You may have heard of Snapchat (certainly your kids or your younger nieces and nephews have) and its parent company, Snap Inc (SNAP).

The youth-targeted social messaging and live-streaming app IPO'd in 2017, but quickly disappointed investors with a slow decline from its early highs near $28 into the mid-teens (how appropriate, given their demographic).


Well, after a nearly year-long decline, SNAP shares are roaring back in a big way. The stock surged higher this week on its first earnings beat (the company still reported a loss of -13 cents per share) and increased revenue Y-O-Y.

 

Here is the SNAP chart I shared yesterday on Twitter, with the following note: "There's the high volume, gap up move after earnings. Buyers, Wall St. proving their interest. Powering out of last year's downtrend."
 
SNAP Snapchat stock price chart earnings spike gap

 As noted earlier this year on Twitter, I could see a potential new uptrend shaping up in SNAP but my entry into the stock, on the initial trendline break, was just too early. That quick burst of strength faded and I was soon stopped out for a loss.
 

You know the old saying on Wall Street - "too early is just another way of saying wrong.". Now the stock is providing us with a message, "something has changed!", and the buying interest to go along with it.
 

If SNAP can hold on to some of its newfound momentum and continue moving higher in the coming weeks, then we may see a real turnaround taking shape. As it stands, the stock is now trading at 6-month highs on strong volume, an encouraging sign.
 

Now let's take a quick look at today's earnings season standout, Twitter (TWTR).
 

The company reported its first-ever quarterly profit (finally!) and the stock jumped 25% higher in early morning trading. As of this writing, midday New York time, TWTR is up 17% on the day. If the stock can close above $30, it will mark Twitter's highest closing price since late 2015.

This new uptrend in TWTR is gaining momentum. Here is an updated chart that shows the stock's recent upward progress and its slow climb out of a 2-year downtrend. Note the green uptrend arrows signaling a series of higher highs and higher lows, plus the recent 2-year high.

 
TWTR Twitter stock chart price earnings gap high

We don't know which company will ultimately "win" the social media landscape, but we can plainly see by the charts that SNAP and TWTR are signaling that they are back in the game. Only time, and price, will tell if these stocks (not to be confused with their underlying companies) are strong enough to hold their recent gains and continue higher.
 

Longtime Finance Trends readers have heard me say this about TWTR in prior years:
 
"...While I have been an avid user of Twitter since 2009, I have never owned the stock. I have owned Facebook shares in the past, despite never having used the service (in fact, I can't stand Facebook).

Why? Because I am a trader who prefers to buy stocks in uptrends. That means I want a stock that will continue to move higher. I want to own stocks that are being bought by professional investors and are increasingly being discovered by the wider investing public..."

 
TWTR and SNAP are showing us that things have recently changed for the better. Wall Street is starting to bet on these two social media stocks again. That means Facebook (FB) is not the only game in town anymore, so we have to change our minds and act accordingly.
 

For me, that means I have to be willing to step in and buy SNAP again. Maybe not today or tomorrow morning, but soon, given the proper risk vs. reward setup and a stop loss in place. It means I also have to look at TWTR as a stock to buy instead of a perennial loser. I can manage my risk and get over my hesitation with small initial long positions.

More on that (how to pull the trigger and buy or sell) in a future newsletter!

Tuesday, October 24, 2017

Dow Jones Soaring to New Highs: The Dow 30 in Charts

The Dow Jones Industrial Average (DJIA) climbed to a new high above 23,450 today.

Dow Jones Industrial Average (DJIA) at New Highs Dow 30 Chart


If the Dow Jones 30 can close the week positive, it will mark the seventh straight week of gains in this highly-followed US stock index. The Dow 30 has climbed over 5,000 points since last October, a 29% gain in one year.

Dow Jones Industrial Average (DJIA) New Highs - Weekly Chart


Supporting the DJIA this week are major components like Caterpillar (CAT) and 3M (MMM), both continuing their climbs on strong 3Q earnings. 

With big cap industrial movers like CAT and MMM, plus US banking leader JPMorgan Chase (JPM) making new highs, the Dow's uptrend is intact and has been propelled higher (despite the persistent "crash" callers).  



The Dow is also helped by the recent strength in chip bellwether Intel (INTC), which has just climbed to a 16-year high, and Microsoft (MSFT), which is trading at new all-time highs.

Intel (INTC) Monthly Stock Price Chart 1999 2017

Microsoft (MSFT) Monthly Stock Chart Price 1999 2017 High


So while the naysayers neigh, the US stock market continues its upward climb. We are in the midst of a powerful, multi-year bull market; it's time to respect the message of the market and position ourselves accordingly. 

Stay tuned...

Related Posts

1. Chip Stock Rally Broadens: NVDA, AMD, BRKS, SMH Charts

2. McDonald's (MCD) Near All-Time Highs, Market Outperformer

3. Nasdaq 6,000: Tech Leaders at New Highs

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Sunday, October 15, 2017

Market Wizard, Steve Clark on Trading: Grow Your Equity Curve

Trading wisdom recap: Steve Clark, founder of Omni Partners, was featured in Jack Schwager's 2012 book, Hedge Fund Market Wizards

Clark's interview with Schwager provided us with some valuable trading insights; "Lessons from Hedge Fund Market Wizards: Steve Clark" was one of our most popular posts ever.

If I had to pick my favorite sections from Clark's chapter, it would be boiled down to these two concepts: "Do more of what works (and less of what doesn't work)" and "Manage your equity curve".

Here's his full quote on the supreme importance of growing your equity curve

"Your job as a trader is to make the line of your equity curve go from bottom left to top right. That's it. Don't get hung up on other supposed "mandates". Protect your capital and the direction of that equity line."  

I will leave you with one last series of quotes from Steve Clark's interview with Jack Schwager. When asked about the characteristics of traders who succeed, Clark replied:

"They all work hard... Nearly all the successful traders I have known are one-trick ponies. They do one thing and they do it very well. When they stray from that single focus, it often ends in disaster."

"Really good traders are also capable of changing their minds in an instant. They can be dogmatic in their opinion and then immediately change it. If you can't do that, you will be caught in a position and be wiped out."

If you'd like to read more, just click on the Amazon links in our Hedge Fund Market Wizards post series and buy the book!

Related posts:

1. Your Job as a Trader: Manage Your Equity Curve

2. Maximize Your Trading Gains, Not Wins: William Eckhardt Interview 

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Friday, September 15, 2017

Tesla Rides Again (TSLA): New Highs Approaching

This post was originally published on September 14, 2017 in the Finance Trends Newsletter. Sign up to join our email list - you'll receive exclusive updates and market insights, plus the best of our website and social media content.

Tesla Inc. (TSLA) shares, which closed at $377.64 today, are trading just below their 52-week high.

A move above $387 would mark a new all-time high for the stock. That means no overhead price resistance, only the potential for blue skies above.


Here is a monthly chart (log scale, click to enlarge) that goes back to Tesla's IPO in 2010. It shows the stock's full trading history, including the breakout move from $40 to $290 in 2013 - 2014.


Tesla TSLA stock price chart monthly Elon Musk


The weekly chart below shows Tesla's recent breakout (from a long 3-year trading range) above $300 and the run up to its highs above $386.

If TSLA can hold these gains and advance an additional 4%, the stock will be trading at a new all-time high. $387 is the magic number here.


Tesla TSLA stock chart 2017 new highs breakout Elon Musk


Tesla CEO, Elon Musk sparked excitement this week with the announcement of a Tesla semi truck unveiling scheduled for late October. This marks Tesla's entry into the commercial transportation market. Production of the electric, long-haul semis will be underway "in about two years", according to Musk.

When I last posted on TSLA in late 2016, the stock was still stagnant and stuck in a rather wide trading range between $180 and $280.

At that time, the questions surrounding TSLA dealt with the Model 3 launch and mass acceptance of Tesla's products and corporate mission.

From our October 2016 update:

"...There is no doubt that Tesla Motors is an incredibly innovative and exciting company, and the Model 3 in question is a major product.
When the Model 3 is released to buyers in late 2017 and 2018, it will mark the full realization of Tesla's mission: to build and deliver an affordable electric car that will help kickstart mass adoption of electric vehicles (EVs)."

Last year, the market was still undecided about Tesla's future prospects, at least in terms of a Model 3 launch acting as a catalyst to new price highs.

However, by early 2017, Tesla shares were back above $250. In April 2017, TSLA crossed $300 and reached a $50 billion market cap, surpassing Ford (F), which has been in business since 1903 (and went public in 1956).

If TSLA can make a new high above $387, it will be a short hop to $400 and above. It should be noted that TSLA is prone to sell off in quick, sharp declines (see the plunge from $370 to $306 in July 2017) so your risk management safeguards must be in place, should you decide to buy the stock.

Tesla is among the top big-cap names in my watch list right now. I have been slowly building my exposure to US stocks in recent weeks and may add a starter position in TSLA to my portfolio sometime in the next week.

Note: Educational info is presented here, all stocks and securities mentioned are used as real-world (and real-time) case studies in trading. I offer no personalized investment advice. Readers must use their own due diligence and invest according to their unique needs and objectives.


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Friday, September 01, 2017

The Most Popular Posts on Finance Trends: Readers Choice

Welcome to our new readers across the globe. Be sure to check out our popular posts section, filled with market insights and valuable lessons for traders and investors of all levels!

Great starting point for new readers and traders: a selection of our most Popular Posts on Finance Trends.

Paul Tudor Jones PTJ Trader Insights Lessons Market Wizards Finance Trends Popular Posts
Paul Tudor Jones, photo by Annie Leibovitz via Audobon.org.

You'll find a newly expanded list of some of our favorite posts, with insights into emerging market trends. Plus, lessons on trading and investing from the masters: Market Wizards such as Paul Tudor Jones, Jesse Livermore, William O'Neil, Victor Sperandeo, Charlie Munger, and Sir John Templeton offer up their hard-earned wisdom. 

Equally as important, I hope you'll use our favorite posts to learn from the trading insights offered up by myself and some of the lesser-known (but no less experienced) trading practitioners quoted within. 

I have spent years and countless hours researching stocks, scanning charts, speaking with fellow traders, and poring through libraries of information in order to distill some of these valuable lessons down to a few readable articles. Money has been made and lost - a part of every speculator's "tuition" in the markets. I hope to learn more from my own small triumphs and mistakes in the markets in order to bring you additional insights in the future.

Thanks for reading. Feel free to explore, and enjoy some of our most popular posts!

Subscribe to the Finance Trends Newsletter - you'll get actionable trading ideas and valuable market insights sent to your inbox. You can follow our real-time updates on Twitter.