Semiconductor Shares Slammed After Earnings

Many semiconductor stocks have had a rough time after earnings.  AMD, UCTT, FORM, AEIS, and now RTR position NVMI have all been hit.

While NVMI is still in Stage 2 I’ve decided to close out my position in the stock tomorrow.  Fortunately I reduced position sizes in all of my stocks that had upcoming earnings.

This allowed me to take profits in stocks like NVMI and COHU ahead of earnings.  NVMI was up over 20% since I mentioned it in the first RTR.  I’ll take a small loss though on my remaining shares in NVMI unless it moves a little higher tomorrow.

I’m also going to close out COHU and INTT tomorrow.  They both have earnings after the close tomorrow, and based on the way other semiconductor shares have traded I’m not sure its worth the risk holding into earnings.  I have no idea how those stocks will trade after earnings, they could go up or down.  COHU I’ll take a small gain on and INTT I’ll be taking losses on.  INTT hasn’t traded well since it gapped higher and it has closed the gap since then, and it is about to fall below the gap support.

It’s certainly possible these stocks just consolidate and keep moving higher.  But since I have other trades that are working better (DAIO, TEAM, TWTR), I’d rather either add to those positions or find other setups without the overhead resistance that now exists in these semiconductor shares.  TEAM and DAIO especially are turning into monster winners, and TWTR is trading well so far the week after it surged higher.  It’s quite possible we are seeing a rotation out of semiconductor names after earnings which isn’t surprising since they have been performing so well.

Had I not taken any profits on the way up in NVMI I’d have nothing to show for it after holding for a couple months.  Which is another example of why I’m a big fan of taking partial profits off the table when you get them.  All of the positions I take in stocks I trade in increments, if a stock continues to go up I will increase my position size but also take a portion of the profits and reduce position size when I get them.

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The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

 

Why I Bought Twitter After Earnings

TWTR shares exploded higher last Thursday on a big increase in volume after their earnings report.  TWTR has been an abysmal stock since its IPO in 2013.  It had erratic price action after the IPO, which is often a sign of topping action, and then a Stage 4 downtrend in 2015 leading into 2016.  It has since been in a Stage 1 base in 2016 and 2017 with a few false breakout attempts, which is the frustrating part of Stage 1 basing action.  For example we’ve seen a lot of frustration in the commodities sector over the last year as those markets continue to grind sideways and produce fake breakouts.

TWTR did 222 million shares of volume last week which is over 2x average weekly volume.  That’s the kind of volume to look for in a new Stage 2 breakout.  If TWTR does another week of over 2x average volume over the next week that’s an even better sign.  TWTR is also finally starting to outperform the S&P 500 which is what you want to see in potential big winning stocks.

Risk-reward wise I don’t want to see TWTR fall back below 20 since that zone has been resistance during the Stage 1 base.  The overhead resistance created from the Stage 4 downtrend in 2015 should be minimized now that the basing action has gone on for so long as weak hands sell to stronger hands.

Wall Street hates TWTR as evidenced by the ratings on the stock shown below.  This also means if TWTR does start trending higher a lot of money is on the sidelines missing out, which could turn into new buying pressure.  TWTR also has an 8% short interest against the stock.  Not surprising to see so much angst against a stock at the bottom of a bear market.

Source: Finviz.com

TWTR is new edition to the Real Trading Report series that I launched in September.  The first stock I mentioned in that report was DAIO which exploded higher on Friday after earnings.  I’ll do a follow up on that stock (which I increased my position in after earnings) this week.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

RTR Update – TEAM Soars After Earnings

TEAM absolutely soared after earnings on Friday up 24.7% on the day on massive volume of over 7 million shares.  Average daily volume was running at about a million shares so that is 7x the average.  That is around 300 million dollars of stock trading hands which likely means that big institutions are loading up on the stock.

I increased my position size in TEAM after earnings were out.  I put two orders to buy more shares of TEAM below 45, where it was trading around after hours on Thursday, and was lucky enough to get filled on both orders at the start of trading Friday.  I also bought one more lot of shares in TEAM at the close on Friday since it was not giving back any gains for the day.

TEAM is now up almost 30% since I added it as an RTR position on 10/8.  This stock is exhibiting all the characteristics you want to see for a Stage 2 stock that can make big gains:

  • Leading stock in a leading sector (enterprise software)
  • Outperforming the S&P 500 while the S&P 500 is in an uptrend
  • Under accumulation by the institutions
  • No overhead resistance

Depending how TEAM trades from here I may take some partial profits if it gets too extended from the 30-week MA, but I will definitely be holding shares for a longer term move higher.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

Real Trading Report – 10/15/2017

Last week I bought the breakout in INTT.  This is a very similar setup to COHU a few weeks ago.  As I’ve stated previously I look for entries where the stock is less than 20% above the 30-week MA (which is shown on the chart below on the PPO which measures the percent above the 30-week MA).  Ideally I’d like to buy as close the the 30-week MA as possible.  To accomplish that the best time to buy is either the break above the 30-week MA or a consolidation back to the 30-week MA.

The gap higher in INTT allows me to raise my stop above the 30-week MA (and thus less than 20% of risk, where the current PPO is a little over 30%) and right below the gap which occurred on 5x average volume.  This is because a stock that gaps higher on massive volume is showing a big increase in accumulation at that price level.  And since I only want to be long stocks under accumulation I can now use that price level as a signal to exit the market if things change.

I also took some partial profits (which means I reduced my position size but still hold a position) in stocks that I’ve mentioned on the RTR (DAIO and NVMI) and stocks that I’ve mentioned on Twitter (ICHR and YRD).  This is done to reduce risk in case a market correction does materialize, and if it doesn’t I can look for setups in other stocks since I have fresh cash to deploy back into the market.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

 

Real Trading Report – 10/8/2017

Last week I bought the breakout in TEAM.  As shown on the chart below TEAM broke out of a multi-month sideways consolidation on above average volume.

This trade had a great risk reward setup because the trading range support was right at 34 and so is the 30-week moving average.  The stock was less than 15% above this level  if you look at the PPO shown above.  As I discussed previously I look for trades that not only look good technically but have superior risk/reward setups.

This stock checks all the boxes I am looking for:  outperforming the S&P 500, making new all time and 52-week highs (and thus no overhead resistance), in a strong industry group (application software, see the charts of WDAY, TTD), taking above average volume and a good trade setup with well-defined risk.

I didn’t take a full position in this stock though even though the risk/reward was good.  Why?  Because they have earnings coming up October 19th.  Earnings can greatly influence a stock both positively or negatively, and since its impossible to predict which direction it’s not worth the risk to try.  After earnings I will size up the position depending on how it trades, and obviously if it moves below 34 I’ll be out of the position as that is my risk level on this entry.

Which brings me to the other trades I’m tracking currently for this series, DAIO, NVMI, and COHU.  All 3 have earnings coming up in October.  I will likely reduce position sizes in those leading into earnings as well to manage risk.

Position sizing is one topic I might explore more in an upcoming post since it is rarely talked about but is one of the most important aspects of trading successfully.  Most people tend to take too large of positions in stocks, and only reduce size when they are forced to by a declining market.  Or they always remain 100% invested no matter what is going on and never take partial profits in positions that are doing well.  Not being fully invested in the market has a lot of advantages:  it keeps you liquid for new opportunities and reduces risk if market volatility increases.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

Checkout my trading videos on Youtube

Twitter: @nextbigtrade

The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.