What's up with retail?

The holdings in the SPDR Retail ETF (XRT) are largely acting horribly.  Traditional retail just continues to get wrecked.

With that in mind, I took a look at the best charts and companies in the space.

The bullish argument for retail is e-commerce is winning by a landslide.  Of course it is.  At this point, everyone and their mother knows that bullish argument for Amazon.  It's mostly if not completely priced in.

Amazon is a must watch chart.  The 2015 rally was amazing.  Everybody wanted to show a large position in Amazon at the end of the year.  Can it continue to lead?  The trend is clearly still up on each timeframe for now.

Expedia's chart is really struggling right now.  The bear thesis of a slowly eroding global economy (therefore leading to less business travel) certainly is NOT refuted by this price action.

Ulta Salon is an amazing retailer with amazing management.  All systems are still go technically.  Can it continue to power higher?  My question is, what's stopping them outside of a recession?

Netflix has really lacked buyers in December.  It's really struggling to find a bid.  With severely waning momentum on the weekly, it's very risky to own these days.

NFLX weekly

Under Armour started discounting aggressively last spring.  Their management is WAY ahead of the competition.  80 has proven to be a solid support level and the stock's momentum has reset.  That's a big level to watch as a tell for the group moving forward.  

Remember, even the best companies throughout history have dropped 50%+ from their highs in meaningful corrections.

Finally, the SPDR Retail Index chart is stuck between the fall bottom and downtrends of numerous timeframes.  Resolution will be a major tell.  

Perhaps the most concerning fact about consumer discretionary stocks is the fact oil and gas prices have cratered in the last 18 months.  They haven't helped consumers at all.  THAT seems like a silent alarm going off.  It makes me wary of the sector until further notice.  

Trade 'em well

Good Reads

As many of you may know, for the past year I've written 'Top Trading Links' for See It Market. Unfortunately, things change and the linkfest will be housed here for the foreseeable future.  

Changes are coming to make this weekly post even better. I'd appreciate it if you let me know what you think about these linkfests on twitter or stocktwits @ATMcharts.

Now on to the Good Reads!

2015 was an odd year, as it was a year that nothing worked - @PensionPulse

@RyanDetrick explains how this was one of the worst years for diversified investors in recent memory.

@PeterLBrandt tells us why the major U.S. stock indices aren’t making head and shoulders topping patterns.

@hedgopia - Is the housing slowdown foretelling a consumer spending slowdown in 2016?

Howard Marks was interviewed by Finanz und Wirtschaft

“Investors are not doing what they want to do. They’re doing what they have to do. They are like “handcuff volunteers”. Today, if you want to make a decent return you have to take risks.”

China’s Hang Seng Index is at a critical juncture - @KimbleCharting

Dividend cuts are coming at a pace that suggests economic contraction via Political Calculations

10 Economic Questions for 2016 via @CalculatedRisk

The Pros and Cons of a sideways market via @awealthofcs

A dozen things @trengriffin learned from Michael Milken about finance

@BartsCharts looks at buyable levels in Sam Adams shares

@TrinityAssetMan shares his surprises of 2015

@psacosta notes flat market years have generally been followed by significant gains.

Trading Insights:

Experienced traders can relate to @AnneMarieTrades discussion of the turning point of her trading career:

“…..the pivot point was the real embracing of the pain, and fear associated with trading losses that redirected my behavior to put me on the path of consistent successful trading”

The root cause of traders’ emotional problems via @steenbab

“The core problem, however, is the need to fit markets into a style of trading rather than finding ways to trade that fit with market behavior.”

Gatis Roze shares how he stays the course in his trading process

News, Stats and Ideas:

A cash free future is coming fast in Sweden via @nytimes

Passive funds are increasingly popular these days @business - This is a major shift for industry. Of course flows to passive management kept rising in 2015 even though elite active managers won the year and we saw a massive volatility shock in August. The catalysts that might end this trend are a cyclical bear market in equities, or a new bear market in treasuries. We'll see if they comes in 2016.

Global M&A surpassed 5 trillion dollars in 2015 via @Dealogic and @businessinsider

15 Startups to watch in 2016 via @venturebeat

@techtraderdaily shares some analyst color on next week’s Consumer Electronics Show

Thanks for reading!  Happy New Year

Key Market Technicals

By: Gianfranco Carrion

Happy New Year. If I had to describe 2015 in a few words, I’d call it “violently flat.” No can “predict” what 2016 will bring. Thus, let’s focus on the state of the overall market right now and look for 2016 clues on specific charts of interest

$SPX (monthly) closed December and 2015 at 2043.94, below the 10 month moving avg of 2052. Further. The 10mma looks to be rolling over and on its way to undercutting the 20month at 2028. I would consider a bearish cross of the 10/20 month as the official start of a new bear market, similar to 2000 and 2008. A clear top is in place ~2125.

$SPX printed another inverted weekly hammer, closing at weekly lows and below the 10 & 40 (2060). Major concern - The bullish cross of the latter moving avgs is once again negated by the price action last week (12/28 - 12/31)

Zooming in on the daily, $SPY broke its upward trend from $200 and is now under its 5ema and 20 & 50 dmas. Given the trend break, I am waiting for the first green bounce and close under the 5ema to go short via $SPXS.

$SPX triple timeframe summary,

• Monthly - under 10 month (2052). Watch out for a 10/20 bear cross below 2028 for a bear market signal
• Weekly - printed inverted hammer again. More worrisome, 10/40wma bullish cross was negated again at 2060
• Daily - below 5ema on $SPY @ 205.13. I’m looking to short first bounce under the 5 and 20dma at 205.2
• Currently bear. I get bullish again (short timeframe) if $SPY retakes 5ema and 20dma for another run at 2100

So, what charts am I watching to determine market direction for next week and 2016 overall? Here’s the roll call

1. $WTIC – Oil continues attemp at bottom after -68% decline (current low at 34.5). Still believe higher is due
2. $XLE – last time the Energy Sector was this low, $SPX was -37% lower. Sector dropped -58% in 2008 crisis
3. $AAPL – looks weak and of heavy importance due to 11% weighting in the $QQQ
4. $RUT – small caps look vulnerable near a major pivot. If buyers don’t step in I take it as a sign of “risk aversion”
5. $SSEC – remember when China was the chart to watch instead of $WTIC? It needs to stay healthy for bull case
6. $EEM – emergin mkts w/ extremely weak chart influenced by $WTIC. Could trigger fear of weak global growth
7. $JNK – former two-day “hot topic” that brings lots of scary predictions on TV, but is the chart bottoming?

FINAL THOUGHT

Last week, I said my thesis calls for a continuation of commodity bounce, bringing the $SPX and $NDX with it. Crude is holding tough for now; however, $SPX $NDX charts have a bear bias on most timeframes at the moment. A 6-day uptrend was broken on 12/30; hence, $SPXS is on watch for a trade. Monitor the charts below regularly in 2016 to remain ahead of the curve on potential market direction triggers. Here is to a profitable 2016. Thx for reading - Gio

#1 $WTIC

Crude Oil is THE chart to watch going into next week

Crude is 6.8pts from the Dec low (~34.5) but being challenged by a falling 20dma at 37.15.

A breakout above 37.5 w/ force could target the upper bolli at $40 (+8%).

I still believe Oil is bottoming & more likely to “surprise squeeze” here rather than delcine to $20 as most predict

A break below rising trendline under $36 would compromise the bottom thesis and gets me defensive on overall market

#2 $XLE

Last time the Energy Sector was this low, $SPX was -37% lower.

Current downtrend from the July 2014 top to August 2015 low stands at -40%.

For reference, this sector dropped -58% during the 2008 financial crisis.

The $58 mark is a crucial level. A breakdown below could trigger an “implosion” in the chart.

Watch closely. Bear scenario on 12/8 post calls for an “implosion” in the energy sector to trigger the next bear market

#3 $AAPL

Last week I rec’d $AAPL as a buy @ 107.45 given daily RSI of 30. Price surged as high as 109.4 (+2%) before reversing

Last week I also noted that APPL topped on 7/20 and ex-APPL, the $QQQ % gains since would be flat vs -2%.

Above calculation for 2015 -  $QQQ all-in +6.49% / vs / $QQQ ex-APPL +8.31%. Apple held the Q’s 1.8pts behind this yr

Now, $105 level stands as a crucial pivot on longer chart. Losing this level will compromise a major advance in $QQQ

$AAAPL is -21% off its all time high and 12.5pts away from the 8/24/15 panic low

Notice how defined patterns always resolved to upside on the run from $55 to $125. The stock lost mojo in March 2015

#4 $RUT

The 1,100 level is the key pivot that must hold for Small Caps. A roll-over below could also trigger a bear market scenario

#5 $SSEC

China is +23% off the Aug lows and remains on an uptrend. This chart needs to remain healthy above 10wma (3,531)

#6 $EEM

Emerging Mkts -27% from May ’15 highs. A breakdown below uptrend at 31.55 would be negative. No bottom yet

#7 $JNK

High Yield +2.7% off Dec low printing long bottom tails. Hi/Lo decline at -13% vs -8.5% prior 3 yrs. Constructive signs

Gio's Weekly Market Outlook: Santa Rally

Let’s make this week’s post a quick hit – main thoughts on the state of the market and the charts I’m looking at. Last week (Dec 21-25), I listed out my points of concern and the possible positives in the charts. See positives below

#1 and #2 played out to the bulls’ favor and we had a broad advance - mainly due to #3 also playing out

$SPX ignored the inverted hammer printed last week and closed at 2060, right under the 40wma. Further, the 10/40 wma bullish cross was defended. All very positive in short term. A 4% range remains – I get bearish again under 2020. Taking out 2,100 is the next major step needed in the chart. I’m expecting a retest of this level into this week

$NDX continues to hold up the best. Tech took a back seat to energy names and the $SPX due to the broad commodity bounce. I’ve been long $TQQQ since last Friday and will continue to hold over the index 5ema (daily) at 4600. If bull run continues, a retest of 4700 is on deck for this index

Going to last week’s #3 positive – I “called bottom” on Crude ($WTIC) on Tuesday and is +10% 0ff the low at $34.5. My current thesis calls for a continuation upwards for Oil, bringing up all major indexes with it. $SPX should outperfom $NDX in this scenario; however, I rather “tag along” in tech versus being too exposed to crude’s whims in the $SPX

Another key chart on watch is $AAPL.

$AAPL weighting is 11% of $QQQ & topped on Jul20 at $132. It’s dropped -17.5% since while the Q's declined -1.94%. That means ex-$AAPL,  $QQQ is +0.06% YTD. For tech to go higher $AAPL will need advance at least temporarily

I shared this $AAPL daily chart on my stocktwits stream on Tuesday 12/22. Buying $AAPL at RSI=30 has been a succesful trade this year. Set up is to enter once $AAPL regains its 5ema at $108.28 expecting a retest of 20dma at $113

Lastly, the market looks cheap from a breadth perspective compared to 3 weeks ago. Ony 37% of the nasdaq is over its 200dma while 47% is over the 50dma. Contrast that vs 65% over the 50dma  from the $NDX early December highs around 4700. Media outlets will scare you with “bad breadth” headlines. I love seeing the $NAA50R lower – it means I’m buying in cheap

In summary,

• $SPX upheld 10/40 weekly bullish cross at 2060. Need to push higher from here
• $NDX made strides towards regaining it’s uptrend over 10wma – I expect retest of 4700 (long $TQQQ)
• I believe we have found a bottom in Oil ($WTIC) at $34.5 and expect another leg higher. $SPX and energy sector ($XLE) to be favored in this scenario
• Breadth tells us the market is cheap right now compared to 3 weeks ago – that’s a good thing

FINAL THOUGHT

The awesome thing about being a trader versus an investor is that I am trained to change my mind if the charts prove it. Last week, the weekly charts looked horrible. The only way to regain a bullish bias was to completely reverse the move – and it happened. This mini “bottom” on the indexes comes hand in hand with the reversal is crude oil and energy sector. My thesis calls for a continuation of this commodity bounce, bringing the $SPX and $NDX with it. Volumes this entering week will be low which should put a lid on volatility. I remain long and bullish over the indexes 5emas ($SPX 2049 / $NDX 4603). I am watching Apple closely to monitor a broad move in tech space.

As always, thank you for reading. Happy holidays. Trade ‘em well - Gio

My favorite breakout

First off, no my favorite breakout isn't a solar stock.  It probably should be, since every day people are making their quarter off them.

I don't know what the hell is going on here, but it doesn't matter.  The ticker:  CBPO.  It's a Chinese Biotech company.

It sounds like something out of a late summer horror show.  You don't need me to tell you nobody was buying this thing at the low and look at it now.  Amazingly, shares are now over 60% off the September low.

The main thing that stands out, other than the lack of sellers is the volume that came in on the breakout.

Also, Monday's response to Friday's candle was pretty awesome.  The range break measures to 175 and makes for a solid target area, but it's never that easy.  

The tough question is where do you put your stop?  For me, playing purely for a relentless Santa rip, I'd place it under Monday's low of 128.  Given the distance from the stop, the position will be a smaller size.  I'll take a position Tuesday unless we gap up a couple of points.

Also note the spread was about 1 dollar when I checked this thing out at 3:30pm EST.

Here are a few stats via IBD Investors

Trade 'em well