Next Big Trade In Search Of Bull Markets

25Jul/140

Tweets, Headlines, and Charts for 2014-07-24

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24Jul/140

Chinese ETF Makes Multi-Year Highs

I can't count how many times I've seen headlines saying the Chinese economy was doomed over the last few years.  Yet if you pull up a chart of FXI you simply observe a sideways bear market that is building a long term base.  Eventually China is going to break out of this base when no one is looking or cares, which could be now.  Most people have given up on China or are scared of it.  Most people would rather talk about Facebook or social media IPOs than a new bull market in China.

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24Jul/140

Here Are Your Leaders

One thing that I've been waiting for since the March correction in the market is the re-emergence of leading stocks making new highs.  We did have a rotation into energy, semiconductors, and utilities that helped power the market higher during the March-July time frame.  But certain market leaders, companies with new and game changing products needed to get back to making new highs to make this market healthy again.  This week we got some nice breakouts in UA, FB, and CMG and AAPL continued to make new highs as well.  For now those four horsemen are leading stocks that should help show the direction of the market.

There are plenty of stocks though that had huge moves in 2013 into early 2014 that are severely damaged and taking a long time to recover.  I'm talking about a lot of IPOs in the tech space like TWTR, FEYE, YELP, etc.  Many biotech stocks are still badly damaged, some are trying to make new highs again though like CELG and BIIB.  After hours tonight some big names are getting punished though like AMZN and NFLX has had a pretty serious drop since it's earnings report.

The point is there is some leadership coming back but there's still a lot of carnage taking place in certain stocks.  One other thing that I find interesting about the action in 2014 is the wide ranging volatility in some of these stocks over multiple months.  That action could be indicative of a bull market top if more stocks don't start making new highs.

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24Jul/140

Tweets, Headlines, and Charts for 2014-07-23

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23Jul/140

Stillwater Mining Consolidates High

Stillwater Mining is one of the best mining stocks to own right now if not the best.  As I've noted in previous articles this stock has trended higher ever since December 2013 when gold made a major bottom.  The underlying strength in this stock is the type of action you see in big winners when pressure from bear markets gets taken away.  Once the precious metals launch into a real uptrend this stock might start soaring.

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23Jul/140

Tweets, Headlines, and Charts for 2014-07-22

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22Jul/140

Chipotle Burritos And Big Profits

Chipotle was one of those stocks for me that "got away".  I've been a fan of Chipotle since 2002.  I had one of their burritos on the suggestion of a friend and my life was changed for the next 12 years.  Back in 2006 I bought the stock after the IPO.  But back in 2006 I knew far less about trading, identifying big winners, holding onto big winners, having a strategy, bull and bear markets etc.  Hopefully in another 8 years I'll know far more than I did in 2014.  But back then I sold the stock somewhere in 2007, taking a gain, but I never participated in the stock again.  I always would go back and look at it sometimes and think why didn't I just hold that and buy more?  Why did I buy other things and not get back into CMG?

Clearly if you held it in 2008 you suffered big losses.  But if you got back in in early 2009 you made huge profits into 2012.  Think about the difference between getting in at 50 or lower or getting in at 100.  In 2009 it was a matter of months between those two prices but the difference in entry point turns a 4-bagger into an 8- bagger the earlier you got in.  And more than a 10-bagger now if you bought in early 2009 and held until now.  Goes to show how buying early in new bull markets can produce huge profits.  Notice in 2009 how Chipotle was already making higher highs while the market didn't bottom until March 2009.  That's the sign of a winning stock.

People still love Chipotle burritos to this day, myself included.  But I think the big gains are already in this stock unfortunately.  It's expensive and had a monster run, and when a bear market rolls around it will need a rest.

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22Jul/140

Tweets, Headlines, and Charts for 2014-07-21

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21Jul/140

Cameco Breaks Above The 200-Day Moving Average On Volume

Uranium stocks had a nice start to the year, then had a big pullback that negated a potential Stage 2 breakout.  But if you look at longer term charts of uranium stocks you will see that their last major bull market ended all the way back in 2007.  In 2010 of course they started to initiate another bull market but the Fukushima disaster terminated that bull market in early 2011.  So uranium stocks are still very much a contrarian market, and with solid fundamentals with global uranium supplies not sustainable at current prices according to many analysts.  Today Cameco had a very bullish move back above the 200 day moving average on heavy volume, and it closed right at the highs of the day.  These uranium stocks have nice long Stage 1 bases that could easily launch a real Stage 2 uptrend.

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21Jul/140

Tweets, Headlines, and Charts for 2014-07-20

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20Jul/140

Stage Analysis Report

Notable items in the markets from last week:

  • Gold had it's first down week in 7 weeks last week.  I see a lot of bearish commentary on gold from various analysts currently, with some even predicting new lows still.  I think new lows for gold are extremely unlikely, given the fact that some mining stocks are now up over 100% from their bottom in December 2013.  In a transition period from bear to bull market it's not uncommon to see people scared of pullbacks early in the bull market because they are still conditioned by the previous bear to be scared.
  • Three great examples of strength in the gold stocks that I've mentioned previously are RGLD, TAHO, and SWC.  If gold were really that vulnerable here why would these stocks be acting so well?
  • The general markets had a big bounce back on Friday from the Thursday pullback.  Taking a look at something like IBB you notice that it held the 200 day moving average a few months ago and is now trying to hold the 50 day moving average.  If it continues to hold I think you have to be bullish on the market.
  • I see a lot of bears in the general market currently or disbelief that this rally can continue.  Previously I was thinking that if leading stocks couldn't get going again then the bears had a good case but stocks like AMZN and FB did start moving higher again last week.  So if we see more positive action in the leaders I think the bears have to wait a while longer.

For more information on Stage Analysis and how it's used check out this page.

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