All posts by Scott Redler
Would I Buy Disney?
We have mostly red arrows around the world to start this holiday-shortened week. Remember the market is closed Thursday and shuts at 1 pm Friday. Europe is lower with the DAX -0.6%, CAC -0.2%, and FTSE -0.1%. Asia is lower. The Hang Seng is -1.8% but it’s had a huge move off the lows. The Fed’s Bostic said “we may be done within 75bp-100bp” this weekend. SPX futures are -24 to start the week. The question is do we hold the 3906-3935 area to keep this active sequence intact for another move above 4028? Or was that it? The next day or two will be important. DIS is gapping up on Iger’s return but I wouldn’t chase it. $102ish is resistance Now let’s get into some of the other names I’m watching: AAPL isn’t special but gives opportunities. If this market is going to hold up this week, it will need this to be decent. This morning it’s below the $149.97 low from Friday. See if that gets reclaimed. If not, $148.56 is key. I have some calls on, but no stock. I’ll see if it’s buyable today with a signal. TSLA lost special status on 9/21-9/22 when it broke $305. It has been for sale since then. On Friday it toyed with the lows of the year as it hit $176.50. See how it handles that spot today. Elon Musk created his own problems with Twitter. The monthly chart has been super bearish for a while now. NFLX: Ryan Cohen is building an active stake but that isn’t affecting the price this morning. It hit $312 and broke $299. We”ll see if it can go red to green and reclaim Friday’s low of $287 to relieve some pressure. GOOGL hit a high of $100.14 in this oversold rally. Now it’s faltering. See if it tries to reclaim $96.37. Otherwise it can see $94 pretty fast AMZN’s bounce was lethargic. It hit a low of $92.48 That’s your new pivot support to trade against. META hit a high of $118.72 in the recent rally. Now, see if it can hold $109.80. See if it can go red-to-green today for cash flow. Scott Redler Positions Disclosure as of 2022-11-21 at 7.37.58 AM
Continue Reading -->The Inverse Head & Shoulders on the Road to SPX 4,000
On October 17, Morgan Stanley equity strategist Mike Wilson said inflation peaked, and that the S&P 500 (SPX) could rally to 4,000. If you remember that time, the mood was super bearish. So the market was taken off-guard by Wilson’s bullishness. Now when someone smart comes out bullish, I don’t just buy – I go to the charts. Because an opinion is just an opinion until the chart confirms it. That’s why I use tools like moving averages and trend lines. So let’s break down the move. First, the SPX broke below 3568 to hit a low of 3491 on October 13. That was two trading days before Wilson’s call on October 17. Next, the SPX rallied off the 3491 low and held above the 3568 where the neckline of the inverse head & shoulders was forming. The SPX then declined for 3 days into October 21, which was a massive day because there was a powerful Red Dog Reversal long signal. The SPX also cleared the descending trendline in short order after that: Next, the SPX dipped to 3698, which held. That put in the right shoulder of the inverse head & shoulders: Then we had the big CPI report on November 10. The CPI came in cooler-than-expected, which set off a round of being. The SPX ignited through 3911, which was the high on November 1. And finally, the SPX hit a high of 4028 on November 15 when the PPI report was lower-than-expected: Remember, the biggest topic on traders’ minds was inflation, so two straight light inflation readings really put the bears back on their heels. The lesson here? Listen to smart people. But match what they say against what you see in the charts. We followed this move every day in The Redler Report, which helped us find great swing longs in names like SPY, UAL, JETS, TLT, and JPM. Not every idea works, but when you get the overall trend right, things tend to go your way. So maybe you should think about joining up! Scott Redler’s Positions Disclosure as of 2022-11-16 at 2.08.35 PM
Continue Reading -->5 Big Tech Names to Watch
SPY had a big gap and go on Thursday, giving some $385 to be long against. It cleared $390.39 to see $399.35 on Friday. We’ll see if it can digest above $393.61 to build a new flag to keep this active sequence going. The 20 day is above with a gap that might get filled up to $408ish. Now let’s dig into 5 big tech names on my radar: AAPL participated as everything ignited post-CPI. Now we’ll see if the $144 area holds to keep some commitment. The 200 day could be hard to get through above with Friday’s high at $150.01. TSLA’s bounce wasn’t great. After making a low of $177, it hit $196.52 on Friday. See if it holds $192-$194 to keep the oversold bounce going. It will be hard to get and stay above $204-$210 in the week ahead. MSFT had a better bounce pre-CPI and then was stronger than most names. It hit $247.99 Friday. Now see if it can digest above $241. AMZN had a decent bounce but these things need so much time to rebuild. Now see if it can hold the $96 area to stay a bit constructive. There’s a big gap above near $104. On Friday it hit a high of $101.19. GOOGL responded pretty well. Some news of Insider buying helped. Now see if it can digest above $93.92 to stay constructive. Scott Redler Positions Disclosure as of 2022-11-14 at 9.35.55 AM:
Continue Reading -->4 Stocks I’m Eyeing This Week
We have mostly red arrows around the world after a big four-week rally. Asia still doesn’t act well after China’s NBS PMI’s fell short. Hong Kong’s Q3 GDP report was soft. Developments in Russia/Ukraine are also weighing as Moscow withdrew from the grain agreement. SPX futures are -24. We hit 3905 Friday. I’d think a bit of digestion ahead of the Fed Wednesday makes sense. Holding 3862ish would be very constructive. 3803-3806 is the line in the sand for the active bulls and this active sequence. Now let’s go through 4 names I’m watching: AAPL responded very well to earnings. It gave us a way to be long as it cleared $149 to see $157.50. There is news that Foxconn will shut for Covid, but that shouldn’t change much. A little digestion above $152.50 should be constructive. Holding $154ish would even be better. AMD reports after the close tomorrow. It’s been pressured all year. We uncovered the H&S pattern helping us stay out of the way. I’m long a little into today. We’ll see if it goes green with pivot resistance at $62.72. If not, I’ll be out. COIN is after the close Thursday, We had a decent trade last week. I bought some back on Friday. We’ll see if it gets any more play prior. It needs to hold $5=69 and perhaps we can add over $73.72. TSLA gave us a very tradable move last week with a Red Dog Reversal at $202 and then another entry when it cleared $213.50. It hit the $233 area. For this week, we’ll see if it can hold Friday’s low of $216 or higher for an additional move towards $250. But we’ll take it somewhat slow. I’ll be active here if I get the signals. Positions Disclosure: *As of 8:20am ET October 31, 2022
Continue Reading -->4 Tech Stocks on the Earnings Radar
We have mixed markets around the world to start the week. In Asia, the Hang Seng was down 6%ish after Xi secured his third term. In Europe, the former Chancellor Sunak is the favorite after Boris pulled out. SPX futures were above 3800 last night and below 3725 early this morning. They are now firmer. We’ll see if the Inverse H&S pattern can measure a move to 3800-3900 in the next week or so. Holding 3656 keeps this active sequence intact. There are lots of big earnings this week. MSFT, GOOGL, and V are on Tuesday. On Wednesday, there is META and BA. On Thursday, it’s AAPL, AMZN, SHOP, and MRK. Now let’s go through 4 tech names that are reporting this week: AAPL cleared a small downtrend on Friday as it held $141.50 all week. I’m long and will see if it can go green and move towards $148.50 or higher pre-earnings Thursday. NFLX was a great focus last week. Some are long vs. $262 and there was a nice play Friday as it cleared $279.30 to see $290.75. I’m still long stock and I have a new call spread. The gap gets filled up to $331. Use your tier system. MSFT reports tomorrow, it will be important as it made new lows on the year. How it responds will give some clues if this rally attempt can continue. For today, see how it deals with $243 pivot resistance. GOOGL is in a troubled sector that made new lows on the year. Look at SNAP and META. It will be important to hear what it says Tuesday and how it responds. I’m staying away for now. META reports Wednesday. It’s made new lows on the year a few times in the past few months. On Friday, it came off the lows. I’m avoiding it but will see where it is Wednesday for an option play. We’ll see if it can hold above $126 to keeps some pressure off. Positions Disclosure:
Continue Reading -->The Power of Monthly Charts in Technical Analysis
In my technical analysis and moving averages lessons, I typically show daily charts. But sometimes it pays to pull back and look at longer time frames, like the monthly. This is especially true in a bear market, when daily charts can be full of noise without a clear trend. Let’s dissect the bust in Meta (META), which is down over 65% from its post-Pandemic highs, using a monthly chart. Positions Disclosure: Scott J. Redler is long AAPL, MBIO, PTON, QQQ, SPY, is short PTON calls, SPY calls, SPY puts Here’s the naked chart: Now let’s break the monthly chart down step-by-step. (A): It started with the $384 top set in August 2021, marked with the “A” on the chart: (B): META fell to $344 to confirm the false breakout, and to have us on our toes for more downside. (C): META then lost the 8 and 21 month moving averages as the stock blew threw support and free-falled. Remember, each bar on this chart represents a month, so traders had plenty of chances to just book the loss and avoid more damage on the way down. (D): Next, META broke below a bear flag $190, giving us yet another sell signal. (E): Meta breaks through $154 support to approach key levels at $123 and $113.55. The lesson here is simple: watch longer time frames, especially during a bear market. Sometimes, they can clarify things in a way daily charts can’t.
Continue Reading -->Moving Averages for Stocks Explained: The Ultimate Guide to Trend Analysis for 2023
Moving averages are one of the most important technical analysis tools I use. They help me figure out:How aggressive I want to beMy mix of day and swing tradesWhich stocks and sectors I want to be long or shortJust how strong the current market trend isWhat news matters, and what doesn’tI rate moving averages above news, economic data, earnings, and just about any indicator you can think of.If I was a starting trader looking to build my net worth, moving averages would be my #1 focus.And through a series of new case studies, you will learn:What a moving average isHow moving averages are calculatedThe specific moving averages I use, and how I use them to detect strength and weaknessThe biggest myth of moving averages Editor’s Notes: If you want even more moving average case studies, please check out The Ultimate Guide to Moving Averages. Positions Disclosure: at the time of writing, Scott was long MBIO, SPY puts; was short SPY calls, SPY puts What Is a Moving Average? And How Are They CalculatedLet’s talk about how moving averages are calculated.A moving average is a stock’s average price over a specific time period.A daily moving average is the average of a stock’s daily closing prices over a specified number of days.(a weekly moving average would be the average of a stock’s weekly closing prices over a specified number of weeks)We’ll focus on the daily time frame in this guide. For example, the 50 day moving average is a stock’s average closing price for the last 50 days.Every day, the newest closing price in the moving average replaces the oldest, which is why we call it ‘moving’ — a moving average change every day.Here’s a simple chart of Apple (AAPL) with its 50 day moving average. The Biggest Myth About Moving AveragesPeople often say “moving averages don’t work” or “everyone sees the same moving averages, so they have no value”But here’s the reality: most serious technical analysts understand that a moving average is not the same as a trading strategy or even a signal. I don’t buy and sell purely because of a moving average.But moving averages do help me understand the trend which contributes to my overall decision-making process.That’s why they’re so valuable to me.Simple vs. Exponential Moving AveragesThere are 2 types of moving averages — simple and exponential. They are calculated in slightly different ways. A simple moving average is exactly what it sounds like — a simple average of the stock price. (the closing stock price, specifically) An exponential moving average gives extra weight to recent prices, so it does a better job of measuring the near-term trend. Here’s Advanced Micro Devices (AMD) with its 50 day simple (blue) and exponential (pink) moving averages.They’re pretty close, but the exponential (pink) is closer to the current price.The Moving Averages I UseTechnicians and traders have tended to focus on the 10, 20, 50, and 200 day simple moving averages, which you can think of as follows:10 day simple moving average: very short-term trend20 day simple moving average: short-term trend50 day simple moving average: intermediate trend200 day simple moving average: long-term trendI use a slightly different set of moving averages in my own trading, and in Redler All-Access:8 day exponential moving average: very short-term trend21 day exponential moving average: short term trend50 day exponential moving average: intermediate trend200 exponential moving average: long-term trend(I matched the colors here on the charts below.)I use exponential moving averages because they are more sensitive to the recent action, which gives me a better read on the near-term trend.Going forward in this article, all moving averages are exponential.Is There a Difference Between an 8 and 10 Day Moving Average?You may be asking “why the 8 day moving average? Why not the 10 day?”Most of the time, they’ll be very close together, as shown in this Amazon (AMZN) chart:But here’s what most people miss about moving averages: It’s not the exact moving averages you use that counts.It’s how well you use those moving averages to find opportunities, avoid trouble, and manage risk. I pay most attention to the 8 and 21 day exponential moving averages. I stick with those because my brain is trained to judge the action based on those time frames.If I was using, say, the 10 and 20 day simple moving averages, I’d probably end up with the same results — I’d just get there in a slightly different way.The Power of the 8 & 21 Day Exponential Moving AveragesTraders often ask me why I talk about the 8 & 21 day exponential moving averages so much. Whether you see me on Fox Business, CNBC, Twitter, or the Virtual Trading Floor®, odds are you’ll hear me me talking about them.Stocks that are in uptrends find support at the 8/21/50day. Stocks in downtrends get rejected at them on Bounces. Below the 200day is real selling. Rules to live by— Scott Redler (@RedDogT3) November 14, 2018 It’s because these moving averages are the most accurate short-term road map I’ve found.And I value moving average more than any other analysis I see out there.8 & 21 Day Moving Average Case Study I: The Energy SectorFrom the 2020 pandemic low to the time I’m writing this (October 2022), the energy sector dominated the market.Here is a chart of the VanEck Oil Services ETF (OIH) from December 2021 to March 2022 with the 8 and 21 day exponential moving averages.As you can see, the moving averages are sloping up. What were they telling us?They were telling us the trend was strong. As you can see, OIH just trended up along the moving averages, with occasional breaks that were quickly reclaimed. This is a classic powerful uptrend. Even if you’re not long a stock or ETF like this, resist the urge to short. Remember, the trend can go a lot further than may seem reasonable. In this case, OIH was rising because the Ukraine war spiked energy prices. If something goes from $200 to $300+ while staying above the 8 & 21 day moving averages, don’t bet against it going higher. So I never, ever short stocks or ETFs that show momentum above the
Continue Reading -->Credit Suisse = New Lehman?
We have mixed markets around the world after an erratic SPX futures night. Europe is off the lows. The UK government reversed course and abandoned a plan to scrap the top 45% tax rate. Gilts aren’t moving much. Brent prices are up with OPC cuts, and Putin didn’t do anything crazy. Ukraine took back some stolen land. Credit Suisse remains in a news doom loop. Some are saying it’s not a Lehman moment. But let’s focus on levels first and headlines second. SPX futures are +25 after they were down 35 last night. We’ll see if new flows try and bounce the tape. There’s resistance at 3610-3636. The bears need to reject price there to keep active pressure on. Now let’s go through the major ETF’s I’m watching today: ARKK didn’t make new lows on the year. We’ll see if that means anything when this market wants to bounce. $37ish is pivot support to watch. Biotech acts better than most sectors but it’s hard to get excited. Active support is XBI $77.57. Resistance is $82ish. XLE acted better over the past two sessions as most sectors made new lows on the year. Oil is up this morning on news of an OPEC cut. There’s a gap to fill up to $75ish. It’s probably a better sale than add. XLF is trying to create a lower tight pivot area to resolve at some point. There is lots of talk about CS and comparisons to Lehman or Bear. This sector doesn’t act compelling. Watch $30.12 for market clues. Positions Disclosure
Continue Reading -->Are We Oversold Enough Now?
We have mixed markets around the world as Europe is flattish and Asia is broadly lower. Lots of currency moves are adding pressure to equities. The Fed funds ceiling forecast is now 4.75%, higher than the Dot Plot. Some think the BOE needs to do a pre-meeting hike to calm things down. SPX futures are -21 and we’ll see if the market is oversold enough to hold the 3636-3647 area this week. The active bearish sequence continues. The hot CPI brought some pressure, and then last Wednesday there was a Red Dog Reversal sell around the $386.25 pivot. Can the SPY hold $362-$363.29 to attempt an oversold bounce? We shall see. The Oscillator is -100 so it’s hard to short, but you can’t blindly buy either. Now let’s go through the major tech names I’m watching today: AAPL did a Red Dog Reversal sell on Fed day to get most long out around $158. It hit a low near $148.50 Friday. It will be important over the next day or so. It will be hard for SPY and QQQ to break the June lows if AAPL holds that spot. If it breaks and closes below, the bears will growl. TSLA played downside catch-up fast. It broke $305 and then $290 to lose any upper support. Now see if it can hold the $272 area for a day or so. If not, $265 is support below, MSFT led the tape lower over the past week or so. We’ll see if it can hold $235.20 for a tactical bounce. AMZN is in no man’s land. It’s not special, but it’s not at the lows of the year. $112ish is Friday’s low to use for today. Maybe it tries to go red to green. Positions Disclosure
Continue Reading -->5 Tech Stocks on My Radar
We have mixed markets around the world as we see if regions can find footing after Friday’s post-NFP bearish reversal. Some are asking if we will test the June low in the next 4-6 weeks? Can we break those lows? Or was last Thursday the low? These are all valid questions but we have to take things day-by-day within the context of what we can handle and what time frame we’re on. SPX futures are +23. If the candle from Friday wants to lead to more downside, then sellers must reject price in the 3954-3969 area. If the buyers want to push back a bit, they must reclaim that area to build a lower area to trade against. To see the lows of the year, we need to get and stay below 3903 first. So that’s the support pivot. The longer we stay below 4018, the higher the probability that happens. Now let’s dig into some important tech names: META tried to get out of the danger zone on SNAP’s news but strength got sold again into the $167 area. If it breaks and stays below $154-$155 in the days ahead, it would bring out sellers in most risk assets. It needs to bounce fast to get out of the danger zone. NFLX went from $216 to hit a high of $251+ post-earnings with lots of pivots to play for cash flow. Most sold into strength or used $241 as a stop. $233 is resistance. $218.74 is big support now. MSFT isn’t helping the tape. It broke its ascending channel on 8/19. It made a low of $254 last week. See if that tries to hold. If not, it won’t be good for tech. $264ish is resistance. NVDA was the first big name to make lower lows in a while. It hasn’t bounced much since then. Look here for some sentiment clues. The longer it stays below the $143 area, the higher the probability for lower lows. $132.70 is last week’s low. AMD broke its symmetrical triangle to the downside around $96ish. It got hit with NVDA but didn’t make new lows on the year. Watch it for sentiment. Does it catch up to the downside or diverge a bit? $78.52 is last week’s low. If that breaks this week, it will be bad for tech and sentiment. Scott Redler Positions Disclosure
Continue Reading -->