Bouncing market

Every time there is 2 to 3 days sell off the market continues to recover vigorously from it. But these bounces from short term strength have had hard time sticking or following through. That makes buying breakouts a risky proposition , unless you are very selective and look for very small moves.

The summer time trading some years tends to be like this. This week there is deluge of data being released and that might act as a catalyst for the market to get out of this range.

A range breakout attempt

Market has held up remarkably well in the face of lot of negative news. On Friday we had high breadth breakout to upside. All in all range is breaking out to the upside. Periods like these can be good for momentum swing trades.

Breadth deterioration

There has been a steady deterioration in breadth in last 14 days. 10 out of last 14 days had negative breadth on our Market Monitor.

As you can see the market has had trouble from 6th July onward in putting together a back to back sustained rally.

While the breadth has been negative, it has also not been very negative. We are not witnessing big sell pressure. There are no 300 plus days to the downside. This has been the character of this market for sometime. Weak buy and sell pressure is indicative of range.

The market has recovered from the 10% correction it had from April to June. But has had trouble putting a rally together.

Are you serious about your trading?

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is service for you to build your own scans and trading method to have your own daily pick based on your method.

Be warned it will take you time to learn to trade. Learning to trade is difficult art and unless you are willing to spend months or years to perfect your strategy and also develop your mental edge you are unlikely to succeed in this game. Unless you understand that no site, no service, and no mentoring is going to work.

Why traders come to stockbee?

The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site, no free trial  and no tall claims of making you instantly wealthy, and yet the site attracts new  members everyday. Members come from all walks of life and all kinds of trading size and trading styles.

You will see that many trading bloggers have been using my market timing methods, scans , stock ranking lists and chart templates. They have developed their own methods based on my methods. Many paid newsletter site recommend my site to their subscriber for learning about trading and market.

Over the years thousands of traders have been members and those who benefited from the learning talk about the site to others or talk about the methods used and that is how new members learn about the site.

What will I learn in the members site?

The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

As a member you will learn the basics of swing trading, momentum investing, growth investing and risk management.

You will learn about Stockbee Trend Intensity Breakouts method that uses momentum based swing trading to find 3 to 5 day swing trades for 8 to 40% profit.

You will learn about Stockbee Episodic Pivots Breakout method which uses Post Earnings Announcement Drift (PEAD) to find stocks that had a game changing earnings and that are likely to rally for 3 months to 12 months.

You will learn about  Stockbee Dollar Breakout method that uses momentum, range expansion and swing trading approach to find 5 to 40 dollar moves in high priced stocks.

You will learn about  Stockbee Lemonade Strategy for 401k which uses market timing and momentum to invest in 401k. You will get weekly update on how I am using the strategy on our 401k to do allocation decision.

You will learn about Stockbee Market Monitor method for market timing using breadth. It allows you to avoid risky periods in market and allows you to identify market turns. It is used for 401k allocation decisions.

You will learn about Stockbee Double Trouble method to find stock with confirmed upside momentum using anchored momentum and that are likely to continue their up move.

You will learn about Stockbee Night Time is Right Time method to find news catalyst based trade ideas for short term day trade and swing trade.

You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

You will learn about Telechart 2000 and how to use it effectively to scan for swing and position trade ideas and to set up your 401k strategy.

You will learn about Jesse Livermore Range Breakout, Darvas Box setup, and many other member shared methods.

You will learn how to set up your own scans, select right kind of stocks, how to set up stops, when to enter , when to exit, how much to risk, how to track your trades and all other details about trading. You will learn about developing your own methods and not relying on others for trade ideas.

The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

The site gives you opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different background and experience willing to help each other. The emphasis is on continuous learning and up gradation of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors and new traders.

If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

Do you have a trial?

If you are just looking for trial you are better off trying thousands of other trading sites that offer free trial or one month trial and offer you promise of riches.

It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.

How can I become a member?

To sign up go to www.stockbee.biz and follow the sign up process. The site uses Paypal for payment processing.

Three down days

Three down days in a row have been followed by bounce in this market. The bearish side has had time and again had trouble in real breakdown. The breadth was not supportive of big drop as of now. So we are back in to range.

Stalemate

Not much change in market view. It continues to be range bound and news flow dictates day to day move. Bulls can not get traction to upside and bears can not break it down. So currently it is a draw between them.

However this sideways move continues to build good bases for many stocks and in case market does break to upside there are lot of good setups developing. 

Europe Woes are back

Like a recurring bad dream the Euro crisis keeps dominating the market. For few weeks there was a respite from the bad news and market rallied. However breadth never took off like we would like to see in big rally.

Add to the Euro problem the lukewarm earnings and hints of slowdown in sales, no Fed action, US drought, talk of fiscal cliff, political uncertainty due to elections and you have a volatile cocktail of catalyst.

Some of these issues have been around for months. The market has not buckled under the weight of these catalyst and has held up very well so far. Will this time be different that is the question.

If we see big breadth days to downside then it will be worrying sign.

Still range bound

Market has recovered from the selling and is now near the range high established in few months. The market has got a bit of break from the constant bad news from Europe.

The underlying setups are developing very well and a big buy push will have lot of stocks breaking to new high.

The earnings season continue to bring new leaders to the market. 

Low volume

Market continues to be range bound here. Volume was below average. Summer months tends to have low volume.

Below the surface number of stocks are setting up well for possible breakout. As market has spent few months going sideways the stocks had time to put together constructive bases.

Any breakout in the index here would have number of stocks bolting out of such ranges. 

Reflex bounce

Market had series of negative days before Friday. So Friday witnessed a reflex bounce. The underlying breadth was not indicating major buy pressure.

This kind of action is in line with the possible range scenario. There are number of factors aligned together for a tough headwinds at this stage. China and other BRIC countries slowdown, European debt problem, slow down in US economy, political uncertainty. Considering all those negative issues market is holding up pretty well as of now. 

Market reacts to earnings warnings

Market had put together a good bounce in last 10 days, however earnings warnings from some of the bigger bell weather stocks put the market under severe strain.

Semiconductor makers like AMAT and AMD warned of shortfall yesterday. That was followed by warning of CMI slowdown . Combination of these news had the market reacting negatively and reversing hard from the early morning bullishness based on Europe news.

The DJ-30 and SP 500 have 4 down days now. Breadth has also been negative. This puts the rally attempt under severe pressure.

As more earnings come the market might come under further pressure.

How to trade the earnings season

The new earnings season starts this week. Every earnings season leads to new leadership developing in market. There are always some stocks that have significant earnings surprise either to upside or downside. Such earnings surprises lead to rallies in such stocks.

PEAD (Post Earnings Announcement Drift) is a very well known and extensively studied market anomaly. Ball and Brown first documented the PEAD phenomenon in 1968. Since then hundreds of thousand studies have confirmed their findings across world markets.
As its name suggests, the PEAD is the tendency of stocks that beat earnings expectations to continue to drift upwards after the announcement, or likewise for stocks that miss earnings to continue to drift downwards.

What does the Ball and Brown and similar study show. it shows that if you form 10 portfolios of stocks ranked by their earnings surprize then the portfolio of stocks that are in top 10% by earnings surprise outperforms the 9 other portfolio and similarly the bottom decile portfolio under performs the nine other decile.

Everyday during earnings season number of companies surpass earnings expectations or miss earnings. When earnings is announced it is compared to existing expectations. Iif the earnings is a major surprise to the market then the stocks reacts immediately to that news. Most of the time the stock with significant earnings surprise  will make 8 to 40% move on earnings day itself. Depending on market conditions these stocks can go in to multi week rally. In uncertain market conditions, they tend to pullback and go sideways or form range and then breakout nearer to next earnings.

When looking for PEAD candidates , stocks with first or second significant earnings surprises and significant earnings growth lead to big moves. After a few quarters of earnings acceleration, everyone notices it and the reaction is more muted as the earnings get discounted. Very few stocks can consistently surprise on upside for more than few quarters. 

Market reaction to earnings miss is often brutal if the stock has high expectations built in to price and has rallied for many quarters based on good earnings. Any miss on such stock can lead to big gap down. This makes holding stocks during earnings season a high risk venture.

While there is a vast effort by many institutional speculators to anticipate such earnings acceleration or deceleration  and take positions in anticipation, for small speculator the edge is in small , unknown stocks that no one is following. In these stocks the earnings effect is more pronounced. In these stocks even if you react to earnings and enter after the earnings announcement, you still can catch bulk of the move. Getting in to these stocks takes away the headline risk.

There is a cockroach effect in earnings trends. One earnings surprise is typically followed by many more earnings surprises. When you focus on first earnings acceleration there is good chance your stock will have more such earnings. So effort spent in researching stocks during earnings season can pay you off for many quarters. The structural factors which contribute to earnings acceleration do not disappear in one quarter. That is why earnings trends persist and price trends persist.

During this earnings season paying attention to stocks that have significant earnings surprise or miss can give you a good head up on future leaders or laggards. 

Related posts : 
How to trade earnings
How to trade earnings Part2
How to trade earnings Part3
Earnings and Bulkowski
Improving odds in earnings breakoutEarnings Season- Time to be very careful...
Earnings and Dan Zanger
Earning Surprise System for $1495
Trading Earnings Breakouts
Earnings Acceleration- Long Term Impact
Trading Earnings Breakout -Part1
Trading Earnings Breakouts -Part2
Trading Earnings Breakouts -Part3

Are you serious about your trading?

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is service for you to build your own scans and trading method to have your own daily pick based on your method.

Be warned it will take you time to learn to trade. Learning to trade is difficult art and unless you are willing to spend months or years to perfect your strategy and also develop your mental edge you are unlikely to succeed in this game. Unless you understand that no site, no service, and no mentoring is going to work.

Why traders come to stockbee?

The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site, no free trial  and no tall claims of making you instantly wealthy, and yet the site attracts new  members everyday. Members come from all walks of life and all kinds of trading size and trading styles.

You will see that many trading bloggers have been using my market timing methods, scans , stock ranking lists and chart templates. They have developed their own methods based on my methods. Many paid newsletter site recommend my site to their subscriber for learning about trading and market.

Over the years thousands of traders have been members and those who benefited from the learning talk about the site to others or talk about the methods used and that is how new members learn about the site.

What will I learn in the members site?

The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

As a member you will learn the basics of swing trading, momentum investing, growth investing and risk management.

You will learn about Stockbee Trend Intensity Breakouts method that uses momentum based swing trading to find 3 to 5 day swing trades for 8 to 40% profit.

You will learn about Stockbee Episodic Pivots Breakout method which uses Post Earnings Announcement Drift (PEAD) to find stocks that had a game changing earnings and that are likely to rally for 3 months to 12 months.

You will learn about  Stockbee Dollar Breakout method that uses momentum, range expansion and swing trading approach to find 5 to 40 dollar moves in high priced stocks.

You will learn about  Stockbee Lemonade Strategy for 401k which uses market timing and momentum to invest in 401k. You will get weekly update on how I am using the strategy on our 401k to do allocation decision.

You will learn about Stockbee Market Monitor method for market timing using breadth. It allows you to avoid risky periods in market and allows you to identify market turns. It is used for 401k allocation decisions.

You will learn about Stockbee Double Trouble method to find stock with confirmed upside momentum using anchored momentum and that are likely to continue their up move.

You will learn about Stockbee Night Time is Right Time method to find news catalyst based trade ideas for short term day trade and swing trade.

You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

You will learn about Telechart 2000 and how to use it effectively to scan for swing and position trade ideas and to set up your 401k strategy.

You will learn about Jesse Livermore Range Breakout, Darvas Box setup, and many other member shared methods.

You will learn how to set up your own scans, select right kind of stocks, how to set up stops, when to enter , when to exit, how much to risk, how to track your trades and all other details about trading. You will learn about developing your own methods and not relying on others for trade ideas.

The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

The site gives you opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different background and experience willing to help each other. The emphasis is on continuous learning and up gradation of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors and new traders.

If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

Do you have a trial?

If you are just looking for trial you are better off trying thousands of other trading sites that offer free trial or one month trial and offer you promise of riches.

It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.

How can I become a member?

To sign up go to www.stockbee.biz and follow the sign up process. The site uses Paypal for payment processing.

Nice follow through

Market has followed through in last 3 days and breadth is supporting this rally. Breadth has been improving daily.

Small cap leading....

After a few months of correction, the market is in a possible new uptrend. The small caps are leading the bounce back. They were the first to show downturn in January 2012.

The breadth based timing model :Stockbee Market Monitor has signaled a breadth trend change. In last 12 years the model has nailed every major turns. It helps you avoid the down moves and gets back in to the market at beginning of a rally.

The Stockbee Market Phase model is indicating possible first stage of an upmove after breadth reaching extreme zones.

The $BPNYA model followed by many Stockbee Members is also confirming a breadth trend change.

The Stockbee Lemonade Strategy for 401k is a conservative strategy for investing in 401k using breadth based timing model and momentum to select mutual funds has given buy signal this week and is now fully invested in Top ranked funds by STI42.  The model has generated 34% returns on an average in last 12 years and is up 10% as of now for this year.

When breadth is positive momentum based strategies tend to work best. The 3 to 6 month momentum based ranking strategies are best in such periods.