A lesson learned

So last night a couple of buddies and I were shooting hoops up at the local cage.  We were playing a seemingly never ending game of 21 when some kids showed up.  They were 11, 12 and 14ish.

After our game of 21, they asked if we wanted to play a game of 3 on 3.  We were like sure, why not?  Of course we didn't want to destroy these kids and be dicks.  But then the game started...

These kids clearly had played together a ton.  Right off the bat they started calling plays.  Not only did they call plays they had non-chalant hand signals for their plays.

On top of that, they were wily.  They knew we didn't care to guard screens all that well so they ran their shooter off of screens like Rip Hamilton and the Pistons.  They took advantage and got open threes (twos).  They also figured out they could run our late 20s asses out of the gym if they wanted to.  So they did!

The point is.  Get full use out of every advantage you have.  Whether it's the ability to move in and out faster than the large funds when things start to turn or a certain style of trading you've mastered or simply maintaining a clear state of mind when the market is full of emotion.  You'll be surprised by how it all adds up,

Trade em well!

HACK attack

the charts are getting pretty ugly in the group, but cyber security ETF HACK is testing the 50 day moving average today.  It's a bounce trade candidate.  Holdings CUDA, PANW and RDWR are testing support today as well.

Update: 11:30 AM

I just wanted to add some color on PANW.  This has me looking at the HACK potential bounce as a hit and run trade.  Meaning just take what it gives in more of a scalper mode.

The PANW weekly chart looks ridiculously extended.  This bounce off the 10 week will be telling.  How strong is it?  It could make for an awesome short here in a few days.  It has weekly options, but the spreads are so wide you'd likely have to leave an order open for awhile.  Plan accordingly.

Trade 'em well!

The rate trade: Staples

It's amazing how things come to mind when price is near an inflection point.  For instance, with this sharp short term rise in rates, the first thing coming to my mind is Consumer Staples REITs and Utilities.  Today i'm going to focus on the staples.

The market is very heavy right now.  Naturally, we'd expect the market to turn to staples in a market correction.  However, fundamentally or technically, the group doesn't look so compelling.

The staples seem grossly over-valued.  If somebody would like to pass along some historical valuation info, that would be awesome!  Here's what I've found on current valuations via Fidelity

The most notable stat here is the EPS has shrank nearly 10% year-over-year.

Looking at the chart, we see the momentum in the 0 rates trade has been crushed as XLP has now lagged the market since January.  A possible rounding top has formed here.

This area is worth watching as a further increase in rates really takes the makeup off the Staples sector.

Trade 'em well!

Best In Class

The one biotech chart that isn't like the rest is Regeneron (REGN).  It's actually trading quite well here and has managed to bounce at the 20 day moving average today.  

Unfortunately, earnings come Thursday morning and taking a long here is basically a bet on earnings.  As a swing trader, that's not an acceptable edge.  It'll be interesting to see if this can lead the group higher post earnings.  I tend to think not, but who knows.

Shanghai

China's Shanghai Composite lost 4% over night.  China ETF FXI is down nearly 3% in the pre-market.  This seems like the start of a multi-week correction.  Note there is still 12% until the rising 50D MA.

It's amazing how fast this market has moved.  In two months it's tacked on 30%!

Over the weekend I mentioned Ultra Short China play FXP.  This may have a rally into the 30's in it.  

It may seem like a stretch getting long FXP on a 5% gap, and it is, but we may not get another near term chance to sell China on strength around these levels.

Trade 'em well!