Trucharts - Stocks to Watch - Blog Update for week ending 10/31/2014
Another week and another major move up from such an oversold correction we had two weeks ago - now hardly anyone remembers that correction. Not only did we recover all the losses in the pullback - the markets closed at a new high. That is what markets do when the Fed is on their side - low rates are here to stay and markets around the world are not performing as well as the US markets. We think there is a huge inflow from investors and funds outside of the US that are driving the markets higher. First we had a big spike in volatility during the correction, we stated that the markets will move higher and the VIX would pullback - that is exactly what we saw - in addition, Bullard spoke and then the Bank of Japan announced a round of QE to weaken the yen and bingo - Friday the markets jumped. Japan debt to GDP ratio is over 200 but no one cares - commodities are getting crushed - along with Gold - we were wrong on our call on gold. In one of our blogs a few weeks back we stated that gold had broken a critical trendline and sure enough we see the follow through. We expect gold to reach $1000 now. We shorted AEM as we stated in our updates this week.
We expect markets to consolidate and move higher with weaker technical backdrop. We are heading into a strong period in the year for markets and into Q1 of 2015 - we do not expect any major surprises - unless there are wars and major breakdowns in the Euro zone. The Fed has basically stopped QE but with low interest rates - they are forcing people to take risks. Individual stocks are moving in the range of several $$ per day - just look at the biotech stocks - these are a day traders' dream come true. Along with this we have the internet stocks like LNKD, BIDU etc. There are other stocks in other industries that are moving several $$ a day. Reminds you of the 1999-2000 era. Unbelievable.. Well take advantage of this and make hay while the sun shines - we do not expect any interest rate hikes from the Fed till middle of next year - so be happy and make money trading.
From a stocks to watch next week - here are some of our top picks this week are - AAPL, LNKD, MA and short AEM/GM at 32+. We will go long MA and LNKD this week. Here are the weekly charts:
We closed TUBE and GM short this past week and are still long T/USO and AAPL. We are still short BIOTECH sector.
Here is a good lesson on technical analysis - this one is about Trend Channels:
http://finance.yahoo.com/blogs/talking-numbers/learn-trend-channels-211350606.html
We will publish an interesting sentiment indicator from our site which predicted the correction and move up these past two weeks.
Best of luck trading this week.
Trucharts team
